The iPad will compete on quality, not price

From Megan McArdle on the iPad dropping in price if sales are not hot:

The question, of course, is "how low can Apple go?" ...

One estimate is that the cheapest iPad costs $270 to manufacture. Throw in advertising, transportation, distribution, and so forth, and maybe they can cut the price $100 if they're willing to make a slim profit in order to establish a market. Of course, there's probably more room on the high-end models, and presumably costs will fall as they get more experience, and volume. But I don't see them getting within striking distance of a Kindle particularly soon.

I don't see them competing on price against the Kindle in the first place. No one wants the iPad for decoration. It is like a video game console -- not "a netbook without a keyboard" -- because consumers value it only to the extent that they value the games you can play on it. Or whatever it is that people are going to play around with on their iPads. Apple will try to deliver a cooler experience than what you get with a Kindle and charge a higher price for that. (Most people would pay a $10 premium just to avoid referring to their toy by the goofy name "Kindle.") That strategy seems to have worked for the iPod and iPhone.

It also worked for winners in the video game console industry. Nintendo had no real competition for its NES, and all three of the major 16-bit consoles were about $200. But from 1995 through 2005, prices varied; the cheaper consoles bombed and the winners were expensive. Sony's PlayStation cost $300 compared to the $200 Nintendo 64, and Sony's PlayStation 2 and Microsoft's Xbox both cost $300 compared to Nintendo's Gamecube or Sega's Dreamcast which cost $200. Only in the current generation has the cheapest console sold the best (Nintendo's Wii).

The reason that the PlayStation and PlayStation 2 could command such higher premiums over the Nintendo consoles is that consumers raved about the games for Sony's consoles and thought the N64 and Gamecube games were comparatively more forgettable. Expensive consoles that offered terrible games, however, obviously did not sell well, such as the $700 3DO or the $400 Sega Saturn. Video game consumers pick the console that offers them the best experience and figure that it's worth paying whatever the cost is, as long as it doesn't have a sticker price of over $500. So, there is no competition based on hardware price -- or software price, for that matter, since video games cost about the same from one system to another at a point in time. Competition here is based on the quality of the software that the console runs, so long as that wouldn't result in a $500 price tag (as with the ill-fated $650 Neo Geo, which had great games).

In fact, the iPad could get within striking distance of a Kindle right away simply by deciding to provide a crappier experience than originally planned, switching to cheaper parts, and so on. The supply side of "supply and demand" is just as subjective as the demand side -- Apple could take the money, etc., that it's now putting into whatever accounts for the $270 cost estimate, and reinvest that in cheaper parts, more limited capabilities, etc., in order to compete on price against the Kindle. In Apple's subjective evaluation, the current investment pattern is worth more to them than what they perceive as the next-best alternative use of that stuff. To put it simpler: price-based competition would have led Apple to design a much cheaper device in the first place.

Because no one knows quite what to make of this doo-hickey, it's like a movie, no two of which are alike -- you have to consume it in order to determine how you subjectively value it. (In Hollywood Economics, Arthur De Vany drives home this point and its implications for how the movie industry works.) Having used an iPod, iPhone, computer, ebook reader, etc., may give you the vaguest clue what the iPad experience will be like, just like watching Star Wars would give you a hint about what watching The Empire Strikes Back would be like. But there's so much noise in the guess about what a sequel will be like based on the first movie -- it could be a Nightmare on Elm Street 2 -- that you really do have to experience the sequel to figure out what it's worth to you.

So the planned-for price drops, if they happen, may be Apple's way of starting high and lowering it later just to feel out what the demand will be for this baffling sequel to the iPod and iPhone. It seems to have little to do with price competition.

Old men but not women in Super Bowl halftime due to menopause?

In the comments on a Super Bowl post at Steve Sailer's, there was some discussion of age and sex of the halftime performers. With a few exceptions, most of the old performers have been male ever since the halftime became a big event in 1987; female performers have been young or not so old.

While surfing YouTube to find some good female performers over 45 or 50, I discovered why they are unlikely to land a spot on the Super Bowl or other spectacle -- menopause. Forget the effect it has on their looks, as the audience could overlook the fact that the woman they used to fantasize about or imitate was no longer a spring chicken. The plummeting levels of female sex hormones means that they'll no longer have that girly energy and dulcet voice that they used to. That's what the audience really craves in female performers. Males don't stop producing testosterone, so they can continue on for awhile. Sure, The Who and Bruce Springsteen were bland, and most of Paul McCartney's set was dopey later-Beatles stuff, but Tom Petty and The Rolling Stones did well, and Prince was phenomenal.

Now don't get me wrong, at age 50, Susanna Hoffs of The Bangles is still very bangable, but you can notice how masculinized her face and voice have become by comparing these two live versions of "Manic Monday": first one (watch the short interview to see how feminine her face was) and second one. Here's yet another when she was about 40, which shows that she still had it. So it really does seem like a menopause thing. The only live performance I found of a post-menopausal woman who still sounded young was of a 57 year-old Rosie Hamlin singing "Angel Baby" with a teenager's voice.

The only way you could have a revival group with a female lead on the Super Bowl is to get one of the late '70s female rockers before they die. As I pointed out before, that period was so guy-driven that even the women were pretty hard-edged. No one expects Joan Jett to have a girly demeanor and light voice, so she could do it just as well as Mick Jagger did a few years ago. Here's a 58 year-old Chrissie Hynde singing "Brass in Pocket" in 2009, and it's not worlds apart from what it must have sounded like live in 1979.

Do young female musicians take menopause into account when they're deciding whether or not to make a career out of music? If they're girly, they'll have great success early but be unable to reproduce that later. If they're more masculine, they probably won't steal as much of the spotlight early on, but they'll be able to keep going for a lot longer.

Were beer ads always this doofusy?

While watching the Super Bowl commercials, I wasn't surprised by the level of stupidity, given that the infection of meta-irony spread to advertising as elsewhere in the culture. The only exceptions I noticed were for low-end cars, hi-tech -- though not consumer electronics -- and Coke (whose non-ironic slogan is "Open happiness"). Everything else was just a variation on those lame self-aware Orbit gum commercials. By the way, Megan Fox making a duckface for her camera -- minus 10 points.

The worst offenders by far were the beer commercials, half of which you could've mistaken for Will Ferrell movie trailers or public service announcements for Betaholics Anonymous. These are the only kinds of beer ads I've ever known, but then I wasn't of drinking age in the pre-ironic years, so I wasn't really paying attention then. Fortunately YouTube gives 354 results for "80s beer commercial".

Here is a montage from the '60s to the '80s -- nary a doofus ad to be found. Many, including this ad for Stroh's, focus on friends and family getting together and having fun, not a bunch of dorks who have no life. Several others, like this one for Busch, make a sincere congratulation to strong men who accomplish tough jobs, not an ironic wink at drone males who use alcohol to numb awareness of their weak and faggy behavior.

Beer commercials used to appeal to men's pride -- "this Bud's for you" -- but now they tap into their shame. Don't blame the ad companies, since they're just supplying the demand of fragile crybabies. Meta-irony avoids a sincere look at their lifestyle that would reveal what a joke it is, although you'd think then they'd buy more beer. People drink more to escape shame than depression.

Body scent attractiveness, climate change, and love poetry

From an NYT article on product differentiation in the online dating industry:

Consider ScientificMatch.com, founded about two years ago, which aims to create romantic chemistry via genetic testing. The site, which matches people based on certain genetic markers for the immune system, takes its cue from studies showing that women are more attracted to the smell of men who have very different immune systems from their own. The site charges $1,995.95 for a lifetime membership -- the lofty fee includes a cheek swabbing kit, DNA processing, a criminal and bankruptcy background check, as well as verification of age and marital status, the site says.

I have a more cost-effective way to find out which men smell better to you -- go to a gym, bar, dance club, or other place where there are lots of people giving off lots of odor. Now can I collect my billion dollar investment from a venture capital firm?

The company's website plays up the sweaty t-shirt studies, where evolutionary psychologists show that people are more attracted to the smell of t-shirts from others who have very different immune system genes. The idea is that by mating with someone who is different, the combination between you and your mate will be close to novel. In this way, pathogens will have a harder time figuring out how to infect your children -- if their genetic profile were one that already existed, they'd already know how to pick that lock. It's just an extension of the Red Queen hypothesis for why there is sexual reproduction at all.

Certainly if you planned to use online dating sites to find someone to have children with, having the genetic data would give you a more accurate estimate of how different your immune system genes were. However, few are interested in that, as shown on the company's website. They emphasize all of the child-irrelevant perks like finding your partner's smell more appealing, having a greater chance of female orgasm, and so on. It's clearly for daters rather than aspiring parents.

The trouble with that is that most of these studies are done on college students. For those who don't remember, teenage and college girls smell wonderful. The 30+ women who these genetic screening services are aimed at do not give off powerful pheromones like the young girls do. Because there is low ceiling on how intense older women's scent can be, the magnitude of these effects is going to be very small. The same goes for orgasming: it's not uncommon among college girls, but pretty rare for 30-somethings and beyond (lower hormone levels). Even if genetic screening ensured that the woman would derive the maximum benefit, it still wouldn't amount to much because the ceilings are too low.

By the way, I noticed at the most recent '80s night that a lot of the 18-20 year-olds have already begun to produce their powerful ovulation aroma. Last year, it wasn't until around March 20 that this happened. We had a much longer, colder, and snowier winter last year. This year, there's hardly been anything, and it's been mild enough during the past week that I could comfortably go out in an undershirt and sweater -- no coat. The more I think about it, the more it looks like human females really do have a mating season that responds on-the-fly to the weather. If it seems like there's going to be a harsh winter, their pussies go into hibernation. If not, they just rest it out for a little bit before concluding pretty soon that it's safe to come out and play. There's another reason to welcome global warming.

I wonder if we see this in history -- there was the Medieval Warm Period that saw the flowering of the courtly love and troubadour traditions. Something was getting those guys awfully worked up. Here's a graph of annual temperature over the past 2000 years. We'd predict hormone-governed love poetry to hit a nadir during the 17th C. during the Little Ice Age. Shakespeare's love sonnets are an exception in that century. I recall the rest of that period from my freshman English class as being much less raw and lusty, culminating in the work of metaphysical poets like John Donne. I rather like those elaborate conceits, but they sure don't pack the punch of troubadour-era songs.

We'd also expect highly hormonal love poetry to start coming out of hiding toward the end of the 18th C. and certainly by mid-19th C., when temperatures began climbing again. That's more or less when the Romantic movement broke out all of a sudden across Europe, followed by other losing-sleep-over-girls movements like the Pre-Raphaelites. Something about females started driving guys crazy again, and I'll bet it was a return to the warmer temperatures that allowed men, for the first time since Bernart de Ventadorn, to enjoy the ovulation scent nearly year-round. And of course the love song has only exploded further in popularity during the warm 20th C.

Social performers enjoy greater Flow than solitary hobbyists

I just read through two books on Flow, the state of mind where you're totally immersed in an activity, you lose self-consciousness, time passes by faster, etc. It's what athletes mean when they say they're "in the zone." What's so striking about this concept -- which does really exist -- is how biased its proponents are toward solitary Flow activities and against in-front-of-an-audience Flow activities. It's understandable that they'd rank a chess player or scientist above a dancer or basketball player, given that most professional psychologists were never the social and popular kids in high school. Still, it's time to correct some glaring misunderstandings about which activities lead to greater Flow among their practitioners.

In Beyond Boredom and Anxiety, Czikszentmihalyi provides four concrete examples of Flow activities: rockclimbing, playing chess, surgery -- as the surgeon -- and dancing to rock music. (The rock music referred to is later '60s and earlier '70s.) He grudgingly admits that dancing has all of the hallmarks of a Flow activity, and interviews with people who "get into the groove" (the dancer's "in the zone") show quite clearly that their mental experience is exactly that described by the Flow idea. If anything, they make it sound like they're much more energized, focused, and in a state of rapture than a rockclimber or a sculptor or a computer programmer.

However, he sees some flaws in rock dancing that lead him to characterize the experience as "shallow flow" in contrast to the "deep flow" that the three by-themselves Flowers enjoy. These three flaws, and my responses to them, are:

1) Ambiguity of feedback. Flow happens when the person matches their skill level to the challenge level, ideally pursuing a high-level challenge with high-level skills. He believes the feedback you get about attaining this ideal is unambiguous for the solitary Flow activities but ambiguous for dancing. How can you tell you're doing well? It seems much clearer in chess than in dancing. *

- For all Flow activities, the only unambiguous feedback you get relates to the barebones level of competence -- does a chess player make a series of illegal moves, does a rockclimber move steadily downward in altitude, does a surgeon see blood squirting all over the walls, and does a dancer lose his balance and fall? These are like the rules of grammar -- once you break them, you notice right away, and the feedback is crystal-clear. If you cannot even surmount these minimal obstacles, you are not any good at the activity and will never experience Flow because you cannot meet a high challenge with high skills.

Beyond those things, though, everything else you do is improvisational rather than like following a rigid script, and the feedback you get is necessarily ambiguous. Sure, rock dancers may be unsure of whether or not they're giving a good performance, aside from not losing their balance, keeping time with the beat, etc. But then how does a rockclimber know for sure that he's doing well? He's not going steadily downward -- great for him -- but could he be moving faster? Could he chose a more elegant path to the top? Should he have moved an arm then leg, or should he have moved one leg and then the other? None of this is clear.

How does a chess player know he's setting a high challenge and meeting it with high skill? There are so many options open to him at every step of the way, and some may lead to a faster win, a more bewildering and shocking win, and so on. His only feedback is what his opponent does, and that doesn't give him much to go on, other than to assure him that at least he isn't royally screwing up.

When a surgeon cuts into someone, nothing is exactly the same as it was the last time, and again he has so many options open to him at each step, even if not an infinite amount. There are all sorts of unanticipated obstacles, or opportunities for an epiphany: "Hey, I don't have to do it the way everyone else does -- there's a simpler way!" Once more, the feedback he gets doesn't tell him with complete certainty whether he's going as fast as he can, as seamlessly as he can, as inventively, or whatever.

So, for the part of Flow activities that actually give it the Flow feeling -- those that set up a high challenge and demand high skills -- there is no unambiguous feedback. That only comes from the parts of the activity that confirm his basic competence. Everything else is like aesthetics, not grammar, and therefore while not ungoverned, it is open to honest debate.

Indeed, social performances like dancing, live music, live acting, and doing spectator sports are more likely to give the performer quality feedback. Why? Because there's an audience full of impartial judges -- they're not the performer himself (who is subject to self-deception about what the feedback says about how good he is), nor his friends or relatives (who are also going to deceive themselves or politely lie in his favor). If you aren't setting a high challenge and meeting it with high skills in a dance club, then guess what -- no one will notice you, cheer you own, reach out their hand so that you'll pull them up, spontaneously praise you or confess that you're their hero, etc.

How does a rockclimber, chess player, or surgeon get such high-quality unbiased feedback? Unless they're performing before an impartial audience, they obviously cannot. Going it alone, or mostly with buddies, relatives, and workplace subordinates, is asking to get more self-deception, white lies, and butt-kissing in the feedback.

2) Greater chance for self-consciousness to spoil the loss of self. Here Csikszentmihalyi only quotes from the bad, awkward dancers -- who unsurprisingly feel incredibly self-conscious. But he makes a larger point about the social setting raising the chance of feeling stared at in a bad way. More solitary activities lower the feeling of being in the spotlight.

- Obviously it's only the good dancers who matter in assessing how self-conscious dancers feel during Flow. And they report that they completely lose themselves -- not just among the crowd of other people, but also in the darkness and in the music itself. Most performers, aside from athletes, perform in a mostly dark space too. I do notice that when the lights are brighter than usual during a song, I can't get into the groove as well. I know they're staring at me dark or light, but seeing their eyeballs drives that home. Still, provided the lighting is suitably dim, that's not a problem.

Moreover, when there's a crowd of people before you, your loss of self-consciousness is heightened because you're not only losing yourself in the activity and the physical environment but also into a sea of people. You're feeding off of their energy, and they're feeding off of yours simultaneously, like yin-yang. A rockclimber can only be at one with his physical motions and the environment.

More importantly, it's not true that the presence of a crowd ramps up the potential for self-consciousness. We automatically imagine a spectator or crowd when we're doing solitary Flow activities -- the patrons at the gallery where our sculpture will be on display, the panel of judges in a rockclimbing contest we're preparing for, our martinet math teacher who told us never to write "hack" proofs but to make them elegant, and so on. When you suspect you're not rising to the occasion, the feeling that you're failing your judges is only slightly dampened when they're in your head rather than in the flesh.

I will concede, though, that dancing in dance clubs (rather than in a ballet performance) somewhat opens the door to self-consciousness through other ways. If girls jump on stage and pinch your butt or bend over and start shoving their ass in your crotch, you become more aware of yourself. Overall, these interruptions of Flow are a trivial damper -- like the audience applauding in the middle of a piece of music rather than holding it till the end.

3) Opportunity to drop the activity in the middle, rather than be caught up in it. Csikszentmihalyi believes that unlike rockclimbing, chess, and surgery -- where once you start you proceed inexorably to the end -- you can quit rock dancing during any of the breaks between songs, or even in the middle of a song if you wanted to! This makes dancing less absorbing of an activity, since you have freer exit.

- Again, only someone who can't dance would think that a dancer would just stop mid-song and leave. Like surgeons and rockclimbers who all take some kind of break, dancers might rest between songs to replenish their energy. But otherwise they aim to go until the club closes. Other than those required breaks, dancing absorbs close to 100% of a dancer's focus.

And besides, who says that rockclimbers, chess players, and surgeons are so drawn into their activity that once they start, they are assured of finishing? Does a rockclimber say, "Well, I made my first movement up off the ground, so by mathematical induction, I've scaled the entire cliff"? Each time he's lifted a limb from the rock and secured it in a new place, this gives him a natural time to say, "OK, I've made enough moves -- this isn't going anywhere," or "Just one more move and then I'll have given my arms a good enough workout, and I can go home."

Right after a surgeon washes his hands, he's literally on auto-pilot and couldn't stop to, say, attend to more pressing matters if an emergency patient needed him, or let another surgeon step in to finish the job? The pause between each snip gives him the opportunity to say, "Good enough so far -- I'm needed elsewhere," or "Somebody else can take it from here." When playing chess, a player is given a natural chance to just get up and leave the table -- namely after any move is made, like the breaks between songs in a dance club. So it's simply not true that solitary Flow activities don't have built-in pauses that tempt their practitioners to give up.

To sum up, the three criticisms leveled at rock dancing -- and by implication any Flow activity that consists of a performer before an audience -- are wrong. Indeed, the first criticism actually rules in favor of social performances because these give the person higher-quality feedback about how great of a challenge they're setting and how great their skills are. All the wishing in the world from adherents of Eastern philosophy or Positive Psychology won't make woodwork in one's basement a greater source of Flow than dancing, acting, jamming out, telling jokes, or dribbling a basketball before an audience. That's clear enough just by watching performers -- they are more absorbed, lost in the moment, and energized, and they're getting much less ambiguous feedback than someone whose only jury is himself or his hobby buddies.

I see the Flow proponents as a special case of the general tendency among modern intellectuals to favor individualistic or atomistic solutions to leading a good life, even if they admit that people feel happier in closely knit communities where people are like each other. They need to go back and read Adam Smith's Theory of Moral Sentiments, which largely inspires my response to the Flow concept. The Stoics, the early Christians, the myriad entrepreneurial schools of classical Greek philosophy -- they too focused more on how to lead a fulfilling life based on how you interact socially with your fellow man, not about how to find the right solitary hobby, how to trick yourself into eating less, or how to contemplate life in a better way. Just get out there and be active and social!

* Actually, his exposition after the list of flaws describes the ambiguity of the tasks involved in the activity, not of the feedback. For example, some dancers feel ambiguous about whether they're dancing for its own sake (Flow) or in order to make a thinly veiled pass at a girl they want to bed (non-Flow). This ambiguity is also present for rockclimbing, chess, and surgery -- how do they know they're "really" doing it for its own sake rather than to keep their muscles in attractive shape, to have a way to signal their IQ to others, and to impress the cute nurse he wants to bed? Dancing is no different.

Heartwarming

An undergrad friend and I made a trip to Starbucks today and chewed the fat for nearly three hours, so we got to hear a lot more of their musical selection than I normally do. Breaking out from a heap of contempo singer-songwriter crap, "Brass in Pocket" started playing, and she began to sing along to it. (She'd heard it on American Idol.) During the car ride back to her dorm, I had Roxy Music on, and she spontaneously remarked how good of a song "Avalon" is. About the kids these days with their music tastes, I worry less.

Teenage virgin sells body for $32,000

From the NYT. It mentions other cases too. I find it strange that she didn't even offer a picture, which means the bidders were only going based on her age and virginity. If we took all women who traded sex for money and predicted how much they could command in the market, using as predictors both their age and virgin/non-virgin status (or maybe lifetime number of partners more broadly), I would bet there would be a strong interaction effect between age and virginity. That is, imagine the extra boost above average pay you'd get from being 19 years old, regardless of virgin status. Also imagine the extra boost above average pay you'd get from being a virgin, regardless of age (i.e., including 30-something and 40-something virgins).

If these effects only acted independently, you'd predict a young virgin would make the average, plus the age boost, plus the virgin boost. I'd estimate the average sex-seller gets between $100 and $1000 for a single act, let's say $1000 to be generous. Being 19 might earn you a $5000 premium, all else equal. And virginity wouldn't get that much by itself -- maybe $1000? -- simply because that's not a very strong attractor per se, for Western guys anyway. So we'd predict 19 y.o. virgins to make $7000 -- far below what they can truly command. It looks like the interaction, synergy, or mutual reinforcement between the two has the most predictive power -- there's something especially fascinating about knowing she's both young and a virgin.

And likewise, a 40-something who's had over 100 partners is going to suffer for both of those things separately, but will probably be able to charge hardly anything due to the interaction of those deficits. Her anti-virginity actually compounds the effect of being middle-aged.

Are ebooks too expensive or too cheap?

Amazon and Macmillan got into a tiff over the weekend about the pricing of ebooks, with Amazon wanting to keep prices around $10 and Macmillan wanting them around $15. (Amazon conceded.) Tyler Cowen links to a good review of the problems that the two media giants are fighting over. It looks like Amazon wanted to lose money on ebook sales through low prices so that they could presumably enjoy the mythical "first mover advantage." There is plainly no such thing -- either google it, or just reflect on your own experience with technology. Beta came before VHS by a longshot and commanded almost all of the market during that initial period. Apple came long before Windows. And Roman numerals had a hold on learned Europeans more than a millennium before Fibonacci introduced Arabic numerals to the West.

That aside, the main question that everyone is asking is, "Should ebooks cost more or less than hard books?" Much commentary focuses on production costs, both in the comments at Marginal Revolution and in two links at the review above that try to decompose the list price of a hard book into various production costs -- author's time and effort, ink and paper, advertising, transportation and storage, etc. After all, if one thing costs more to produce than another thing, shouldn't it command a higher price?

Well, not if no one wants it. Ultimately consumers value the thing enough to pay a certain price or they don't. I can try to put together a car on my own, but what will happen when I ask a price of $1 million for the hunk of junk to reflect how incredibly costly it was to produce? That's right -- no sale, probably not even at $1. Value is subjective and determined by consumers; it is not intrinsic and determined by costs of production. That's why, to use a great example Virginia Postrel noticed, Apple could charge a decent premium for the black-color MacBook. It is otherwise objectively the same as, and therefore costs virtually the same to produce as, the white version. Evidently, Apple dorks "love the idea of" a darker laptop.

So the real question then is, "Do readers value ebooks more than hard books?" A commenter at Marginal Revolution thinks the answer is obvious: "The article missed some of the most important reasons that ebooks should be priced lower -- they cannot be resold, loaned, or given away." Of the entire reading public, though, for what portion is this a big deal? Most people don't read all the books they buy; they sit around unread, and certainly their owners aren't going to loan them out, resell them, or give them away before they've taken a crack at them first. Even the ones they have read continue to lay around filling up space. We conclude that, aside from people who like clearing out their collection regularly, most book-buyers find little value in reselling, loaning out, or giving away their books.

If an ebook seller could charge a higher price to those who want to resell, loan, or give away their books, and a lower price to those who don't really care, that would work out OK. However, price discrimination doesn't work if there are easy arbitrage opportunities -- where the person to whom it's sold at a low price can sell it to the higher-charged person for less than what the high price is, thus earning easy money. Also, the seller cannot do this unless they more or less control the market -- otherwise competitors will advertize to the higher-charged group: "Hey, those guys are trying to rip you off, but we'll sell it for half their price."

And if we're really trying to understand how the world works, let's ask if there might not be a group of book-buyers who would not just be indifferent about the option of reselling, loaning, and giving away, but who actually saw that as a cost to them? Other things equal, they would prefer a book that could not be resold, loaned, or given away. If your answer is "that's crazy," then you're stupid and unimaginative. What if you're giving someone a book as a gift, and you don't want them to cheapen this token of your relationship by going out and reselling it or giving it away, or loaning it out indefinitely? When ownership is highly costly to transfer, re-gifting is unlikely. And it's not as though books given as gifts are only a drop in the bucket of overall book sales.

What if you're the type of person who is possessive about his possessions, like most people become after a certain point of generosity? You'd love nothing more than a plausible and socially acceptable excuse for why you can't loan or give away your stuff to someone who keeps dropping hints about wanting to borrow something for the hundredth time. "Gee, I'd love to, but the technology won't let the book be read on anyone else's device. Yeah, they're horrible like that, but what are we gonna do?" Maybe once or twice you wouldn't mind, but I still remember feeling bothered and disgusted by one of my friends in high school who kept asking me to make cassette copies of entire CDs that I'd bought original versions of.

Or what if you view your books as though they were your children or pets or friends? I think a lot of packrats attach so much sentimental value to their myriad space-taker-uppers that they couldn't think of reselling, loaning, or giving them away. Maybe not to the extent that they value them as much as their own children, but still enough so that they couldn't recover the psychic cost of parting with them. They would probably feel guilty for even thinking about it -- as though books (digital or paper) were a cheap skank of a girlfriend who you blow your wad in and then loan around in exchange for dollar bills once you've experienced her once or twice. What would a normal parent think of themselves if they even momentarily thought, "Hey, I've had enough fun with my kid during childhood -- I'm sure I could get a decent buck by selling them to someone who hasn't had kids of their own to enjoy"?

I could think of a million other reasons why some people might value the option to resell, loan, or give away books, with a negative sign, but you get the idea. What matters is the full distribution of book-buyers along the continuum of "value placed on this option" from negative infinity to positive infinity. Just zooming in on the part where you are doesn't help. If things are that simple and you believe lots of insiders don't get it, then you should be getting rich.

But let's think of a few more reasons why ebooks should cost more than hard books, just to emphasize how little the costs of production matter and how much the subjective value of consumers does. Ebooks could be searched with something like google, rather than the primitive index found in hard books. If you can't remember what page a certain idea or phrase was on, or if it isn't in the index -- or even if it is but you don't want to keep flipping back and forth -- a search engine is a real boon. We touched on it before, but clearly the ability to free up tons of space is a plus for a medium that allows thousands of books to be squeezed into something that fits in your hand. That space has opportunity costs, so all else equal you'd like to free it up. And ebooks are much more portable than hard books for the same space-economizing reasons. You thought lugging around a CD player and 20 CDs was burdensome -- what about 20 hard books? Consumers will pay more for convenience.

There are many more reasons why the typical book-buyer will more highly value ebooks than hard books -- and certainly many reasons why they would be reluctant to switch to ebooks. The point is that the full list of pros and cons, one potentially unique list for every book-buyer out there, is what matters most in setting the price of ebooks relative to hard books. Predicting what that looks like is incredibly difficult and can only be figured out by entrepreneurial trial and error. We can thus safely ignore people who offer simple-minded answers about whether ebooks are too cheap or too expensive; if even the soldiers in the trenches are confused about what the best way forward is, faraway spectators are even less knowledgeable. We'll just have to wait until the dust settles to see.

Saturated fat not linked to heart disease or stroke

Michael Eades of Protein Power has a nice lit review of studies showing no health benefits from cutting down on saturated fat, motivated by a new meta-analysis whose take-away message is this:

Results: During 5–23 y of follow-up of 347,747 subjects, 11,006 developed CHD or stroke. Intake of saturated fat was not associated with an increased risk of CHD, stroke, or CVD. The pooled relative risk estimates that compared extreme quantiles of saturated fat intake were 1.07 (95% CI: 0.96, 1.19; P = 0.22) for CHD, 0.81 (95% CI: 0.62, 1.05; P = 0.11) for stroke, and 1.00 (95% CI: 0.89, 1.11; P = 0.95) for CVD. Consideration of age, sex, and study quality did not change the results.

Conclusions: A meta-analysis of prospective epidemiologic studies showed that there is no significant evidence for concluding that dietary saturated fat is associated with an increased risk of CHD or CVD. More data are needed to elucidate whether CVD risks are likely to be influenced by the specific nutrients used to replace saturated fat.

One of the authors, Ronald Krauss, is the pioneer in studying the various sub-classes of lipoproteins that cholesterol rides on. Way back in the early '80s, he'd already discovered that it was the small, dense variety of LDL that was associated with heart disease, and that this type was more common in people who ate higher-carb diets. It's warming to know that 30 years later he's still kicking ass.