Austin Contrarian

"Let's Make a Deal" vs. "Deal Or No Deal"

One of the legal journals I subscribe to has a piece on "cognitive illusions" that starts out with the Monty Hall "paradox":

You are a contestant on a game show with three doors.  Behind one door is $10,000 cash; behind the other two doors are goats.  The host asks you to choose the door you want, and you select door number one.  The host opens door number three, revealing a goat, and then gives you the opportunity to keep what's behind door number one or switch to door number two.  What do you do? 

Most attorneys [and some mathematicians -- AC] would answer that the decision makes no difference, because there is a 50-50 chance that the cash is behind door number one.  That answer is wrong.  From the moment you chose door number one, you had a one-third chance of having selected the door with the cash behind it.  The other two doors, combined, had a two-thirds chance of hiding the cash.  When it is revealed that door number three does not have the cash, then door number two, alone, has a two-thirds probability of hiding the cash.  Thus, when given the choice, you should always switch doors, because you are twice as likely to win the game.

The writer then says the same principle applies to "Deal or No Deal."  The contestant picks one of 26 briefcases.  One of the 26 has $1 million in it.  "As more and more unpicked briefcases are opened without revealing the $1 million, the contestant believes that the odds he or she picked the right briefcase at the start must be increasing, resulting in the rejection of increasingly high-dollar 'deals.'  In fact, the exact opposite is true:  the odds are increasing -- [up to 25/26] -- that one of the unpicked and unopened briefcases actually contains the $1 million, and the contestant will be left with very little." 

This particular cognitive illusion is indeed deceptive because I think the author is wrong.  He's not wrong about the Monty Hall paradox.  That's right, but he leaves out the critical assumption, which is what trips up most people the first time they hear this: For the sake of suspense, Monty Hall never opens the door with the money. 

The author is wrong about "Deal or No Deal."  Contestants on "Deal or No Deal" pick briefcases at random and (almost always) hit the $1 million.  Suppose a contestant gets down to two briefcases with the $1 million still on the board.  Does he have a 25/26 chance of winning the million if he trades?   If Howie had been picking briefcases, and we knew that Howie would never pick the $1 million briefcase, then yes.  If the contestant had been picking at random, then no.

Update: I've done a more rigorous analysis using Bayes' theorem.

Farmer Samsung and Rancher Dell

Farmers and ranchers in Texas get an agricultural exemption from most local property taxes.  This weekend's W$J has a piece on who is really benefiting:

According to public records at Travis County Central Appraisal District, in Austin, Korean giant Samsung Electronics cut annual real-estate taxes on 54 acres outside its Austin semiconductor plant to $135.68 from $21,080 last year by implementing a wildlife plan.  Under its 2006 plan, Samsung's activities included hanging 10 birdhouses for wrens, bluebirds, chickadees, and titmice, and spraying for red fire ants.  Samsung also took a census count of the local habitat, recording among other observations that the sky was "mostly cloudy," "seven rock pigeons flew over," and "noise from the plant made surveying more difficult."

Cliff Kessler, who appraises the Samsung property for the county, says he has noticed other wildlife there as well:  "Squirrels, chipmunks, sometimes I see skunks come through."  Mr. Kessler says the corporate tax break "irritates the thunder" out of some Texans.

. . .

Dell Inc., pays $250 a year in property taxes on 65 undeveloped acres of commercial land in Austin on which it grows crops.  The company's founder and chief executive Michael Dell, also receives the tax break on his ranch in the nearby hills, according to Travis County property records.

According to the 2006 wildlife plan filed with the county for the Dell Ranch, Mr. Dell cut property taxes to $1,355 from $580,780 by taking actions such as spraying 185 acres for ants, filling six water stations, stocking 11 turkey feeders, and keeping 100 birdhouses for bluebirds.  He conducts "habitat control," of white-tailed deer through hunting done by "family/guests."  A Dell spokeswoman declined to comment.

Dell's also taking advantage of an exemption for ecolabs.

I wonder what the average homeowner's tax bill would be if there were no agricultural exemption, no ecolab exemption, and no other corporate tax breaks.  You know, if everyone just paid the same rate.

The article insinuates that the agricultural exemption just needs to be tightened up, but why not abolish it?  Farmers get (1) exemptions from local property taxes; (2) direct subsidies; (3) government price supports; and (4) tariffs on foreign food.  What's the real cost of a bushel of corn when you total up all the subsidies and tariffs and add the loopholes exploited by large landowners? 

Transferable McMansion development rights

Trying to get caught up . . .

From Time Magazine, on Boulder County, Colorado's new McMansion ordinance:

Michelle Krezek, Boulder County land use manager, said the commissioners "want to allow property owners who either have or want smaller-scale homes to be able to sell a portion of their 'unused' square footage." Homeowners willing to sign away their option to someday add additions to their houses would receive a one-time payment as well as lower yearly tax assessments on their homes. The forfeited enlargement rights would then be available for purchase through a specially established market. Residents planning to build or expand homes larger than the recommended thresholds — 7,000 square feet on the plains, 5,000 square feet in the mountains — would be required to purchase additional development rights at prices determined by the market, which might be in the hundreds of thousands of dollars per property. Krezek adds: "This will allow for an ongoing diversity of housing stock and allow for people of varied means to own homes in Boulder County."

Although both Boulder and Austin now have something called a "McMansion ordinance," they are nothing alike.  Austin's ordinance targets "McMansions" as small as 2,300 square feet (or smaller, if the owners have the temerity to include an attached two-car garage).  Boulder's is aimed at 5,000 to 7,000+ square foot homes, two to three times the size of the average new American home. 

But the bigger difference is probably the method of regulation.  Austin has chosen a heavy-handed command-and-control regime, with dense regulations that specify everything from gable height to roof pitch to the jogs ("articulation") in side walls.  Austin's regulations also freeze current entitlements in place, rewarding those who have already added to or redeveloped their property at the expense of those who have not.  Boulder has chosen a more flexible, market-like approach.  Owners who put a high value on extra space can buy the development rights from owners who do not. 

I think Boulder's ordinance is infinitely superior to Austin's.  I think both are wrong to arbitrarily cap the total square footage of housing space.  But at least under Boulder's system, the square footage will be allocated efficiently.

I'm not sure how Boulder justifies its ordinance, though.  It cannot be justified by concerns over massing, scale, neighborhood character, shadows, backyard gardens, or the privacy to lounge naked in your backyard with the salamanders, because super-size homes can still be built in the midst of smaller homes as long as the owners are willing to pay a premium.

Boulder's ordinance reinforces my belief that at root McMansion regulations are about status anxiety.  The home and neighborhood a homeowner chooses signal his relative status.  Tear-downs in a neighborhood change the relative rank of homes, forcing owners of older homes down the status ladder.  This may not be a big deal for those who are already at the bottom, or for those at the top who could match the new construction if they wanted to.  But it could matter a lot to the status-sensitive in the middle who can't help being outclassed.  (Whether our land-use regulations ought to cater to middle-class insecurities is of course a separate question . . . )

Did Lincoln's site plan for Northcross require a conditional use permit?

RG4N says "Yes."  This is the most important claim in its court petition.  RG4N makes other claims, of course, but this is the only claim that would (a) entitle it to a hearing before City Council; and (b) make approval of the site plan discretionary rather than a matter of legal right. 

I think the answer is "No," but I will set out the relevant ordinances and let you make up your own mind.