I will be looking at the economics of porn sites (specifically here, on the adult webcam business). I will start off by first discussing the statistics of the websites, their business models, and the estimated earnings, and then I’ll proceed to discuss the economic theories behind. Mainly, the theory of contestable markets and the principle-agent problem will be discussed.

What I did mostly, was to collect empirical data. I identified a few websites as case studies and went about collecting numbers. Of course, me being the lazy one, I went for sites where numbers are the easiest to collect – websites owned by Adult Webmaster Empire (livejasmin, joyourself, liveprivates, mycam, and cameraboys). They freely provide extractable statistics.

Also, besides the data provided by AWE, I used other methods to collect other datas and statistics. One website I use is Compete. I don’t use Alexa simply because I discovered that Alexa rankings can be gamed (this means the rankings can be manipulated). Though Compete isn’t exactly useful, it serves this purpose of estimation of statistics. But first, let’s explore the business model

The Business Model
The business model of the webcam sites above is quite simple. The company starts up a webcam site, hires amateur chat hosts on a contract basis, and opens it to the world.

The customer is entitled to free viewing of all the online and available model. However, if they want to continue in private with the model/chat host, they’d have to pay for the Private Times. This is done so with a credit system. The customer buys credits (for time), and spends it on the private chat with the host/model.

Why would anyone pay and go into private chat when there is a free chat available? This mainly works because the models on the free chat are contracted to only tease until someone goes into private chat. Only in private chat does the sex happen. Basically, to be a chat host, you just wait till someone decides to pay you to perform – not unlike the coin slot stripteases.

This then leads to a few questions. How then, does the company find its target market? One way is to excessively market it themselves. Another way is to use affiliates. Most porn sites use some form of affiliates system to get traffic to their sites.

The Statistics
How much money are they making exactly? That is a good question. But because I am not AWE’s accountant, I can only estimate. Based on Compete’s information, here’s what I get:

Please do note the last row: Average conversion rate. These numbers are extremely low. Multiply the number by a hundred, and you’d get the percentage. CameraBoys, the highest of them, has only a measely 0.4% conversion rate. This means, out of every thousand visitors to the CameraBoys site, only 4 actually pay to watch.

And here, we have the average price paid by the customer over the last month. I extracted it from the available data at AWE’s website:

Click to Enlarge

Basically, the customers fall in roughly to a log-normal distribution (i.e. the blue histograms fall under the yellow line) most of the time. The X-axis is the price. Most customers, do not pay more than $20 per session (with the exception of those 3 idiots who paid $70+). Using this as a sample, we can assume all customers fall within the log-normal range. Hence we can estimate that around 90% of the people would pay less than $20 per session.

Let’s use livejasmin as an example: With 2 million unique hits, and a unique:hits ratio of 1:2, let’s assume everyone who visits livejasmin visits 2 pages each. Livejasmin has a conversion rate of roughly (rounded) 0.36%. This means out of every 10000 people who visits the site, only 36 people will pay.

So, with 4 million page hits (more page hits means more chances of paying), and only a 0.36% conversion, this leads to roughly 14400 people actually paying for the content. Only the top 12th percentile is willing to pay more than $20. Let us assume the most optimistic – that everyone will pay the maximum they are willing to pay. That means, 78% of the 14400 people are going to pay $20 – 78% x 14400 x $20 = $224640.

$224640 is a very rough amount, and I don’t intend to refine it. It represents only 78% of the paying sample. The other 12 percent may pay waay more than $20, and it’s very hard to estimate how much the actual earnings of AWE is, but I suspect it’s in the millions.

The Economics of It
Right. On to economic theory then. The adult webcam market isn’t very saturated. A simple search on Google will yield anywhere from 750000 to 1500000 pages (as opposed to 23 million pages with the search term “book store”, or gazillions more when you search “porn”). While it seems that the adult webcam business is an oligopoly (it technically is, since there are only a handful of companies), the adult webcam business is in fact very contestable.The barriers of entry for this business is extremely low. All one needs is a webserver and software. Granted, the JamOnCam software (one of the softwares used for webcam sites) costs about $12000, but this is a relatively low sunk cost as compared to the profits reaped. Also, due to modern infrastructure, a site owner doesn’t actually have to own a webserver. Server co-location (and renting of the servers) provide lower sunk costs and lower barriers to exit.

Also, when one compares barriers to exit, it is arguable that the webcam business (or in fact, almost any online business) have almost no barriers to exit at all. Because the webcam sites are mostly one-(wo)man businesses, if need be, the webcam site owners can just close their shops (figuratively), and unplug the business at no additional cost.

Both the low entry and exit barriers are factors that the adult webcam business is in fact, very contestable. And this is the reason why you don’t see any webcam sites charging higher-than-normal prices despite the relatively low number of sites offering webcam services.

Economies of scale is a must for this sort of business. If run alone with a few visitors (my site pales in comparison to the amount of visitors to the porn sites), the business would surely not do well. Due to its low conversion rate, the company must serve a larger crowd of people (hence lowering marginal costs) in order to gain economies of scale. One way to do this, of course, is to get the attention of a larger crowd. AWE has done this since by addressing the LGBT crowd with CameraBoys. In a way, this can also be seen as AWE achieving economies of scope.

Economies of scale and scope can also be achieved by having a lot of models on the site. Livejasmin has over 9000 (literally) models (LJ offers 33%-45% payment to models. [source]). AWE wouldn’t have reached so many people on the internet by offering less choices. Also on the majority of the sites, there is a mix bag of sexualities – from the LGBT crowd to the fetish crowd. By offering variety, AWE is able to achieve economies of scope.

Economies of scale and scope for webcam sites can easily be achieved, through the franchise model (specifically name licensing). As I mentioned earlier, one of the main methods these websites get their traffic is through ‘affiliates’. Whilst affliates are not franchising per se, the model is roughly similar. Because of the nature of the internet’s openness, there isn’t really a need to hire people. Instead, a sorta reversed version of the franchising model is used – affiliates (think of it as franchising + outsourcing).

A website allows ‘affiliates’ to sign up for free. In return, the affliates market the site for the owner, and the site owner pays the affiliates for their effort. This would eventually lead to some sort of principle-agent problem. How would the owner know that the affiliate is actually marketing the site for them?

To solve this, the site owners usually introduce a tracking code. If you go to AWE’s website, it lists the top referring webmasters. With the tracking code, AWE is able to track and pay comission based on conversions the website made (30% of converted sales). This would give incentives for the affiliates to actively market the site. Because of the branding licensing in effect, repeat customers would not be going into any of the webcam sites through the affiliates in the future (and because it is thoroughly embarassing to bookmark porn sites, and risk being found out that you’re a perv).

The effect of the brand licensing is that it carves a memory into the viewer’s mind. In the future, viewers will not go to affiliatewebcamsite.com to view a livejasmin webcam. Instead, the repeat viewer would search for and go to livejasmin to watch the webcam. Through co-branding (or brand licensing), AWE has ensured that repeat customers come to their door instead of going to their affiliate’s doors, eliminating the need to pay the affiliates for the repeat viewers.

There are about 1.5 million websites being affiliates to livejasmin, and only a handful are making money. Conversion rates on most of these sites are poor, but the whole idea about affiliates is rather similar to franchising – to spread the brand. Think of affiliating as franchising, but operates on the rules of outsourcing. Instead of AWE starting 1.5 million websites to promote its sites, they’ve got normal people doing it for them for a very cheap price.

In effect, AWE is paying peanuts to get a whole banana tree worth of sales.

The principle-agent problem also applies to the models on the site. How does the site owner know that the performer won’t perform sexually for free? Well, incentives play a role in this. Why would a performer perform for free when (s)he can perform for money? In fact, since the performances are charged by-the-minute, one can expect a performer to extend their performance time as well – more teasing, less stripping.

This is a strong incentive. It could even propel performers to actively seek viewership outside the website. Some performers, would, for example, go on dating sites, and lure horny people to view them on the website.

Then there is also the other side of the problem. What if the model, in knowing that more time spent on him/her = more money earned? Instead of actually doing sexual acts, (s)he could just tease entirely through the private session. Naturally, that would cause some customer anger, as they paid to watch sexual acts but all they got were teasings. To overcome that, AWE devised an ingenious way – awarding good performers. Customers will rate the performers and the company will award them based on the ratings. The usual award is cash prizes, I believe.

There is also the issue of oversexed performers who might perform outside private chats (their incentives are to fulfil their sexual desires, not earn money), and this would be bad for AWE, as then AWE would be paying a lot more for nothing (i.e. increased marginal costs). Heh, I bet if properly studied in this context, the whole Contract Theory would be revolutionized.

There are various other issues that I didn’t discuss. Offhand, I can think of is a proper discussion on moral hazards (the oversexed performers are one example), monopolies (why there are only about 47 companies offering webcam services) and the like, but I’ll discuss them later. Or maybe never.

As a final addendum to this article, I researched on this article mainly because I was bored, and because someone asked a question that I’ve been wanting to find out for a long time. I believe it somewhat echoes Cliche Guevara’s thoughts here. Well, mainstream economics won’t tell much, save that the demand is increasing, and someone would probably invoke the theory of diminishing marginal utility. . Behavioural economics, however, will tell more. Maybe some day I’ll actually address that question and not stray off (in case you were wondering, I did stray off).

I do not link to any of the adult sites because I do not condone porn addiction, and neither do I approve of running adult sites. Maybe it’s just me – you can call it moral fibre – I think them as vices. I think people who spend money on porn are stupid. And so do I think the running of adult-oriented sites.

I would like to thank my friends who have helped me a lot – especially cfgt (who helped me out a lot in the statistics department and in R), and Sam, who helped me collect data (you didn’t think I was able to collect data with TPG’s horrible throttling, was I?)

Cheers.

But coming to think about it, I do notice (well, at least, subconsciously), that some asians do have some form of reverse racism. They revere the caucasoids. But this hasn’t always been the case. Way back in the Ming dynasty, the whites were kicked out of China. The ideal then was that the Chinese were the most technologically superior race (technically true too), hence they don’t need foreigners to meddle with their affairs.

Similarly this happened in Japan. Until today, the Japanese have one general term to call non-Japanese: gaijin (lit. outside people, alien). It is usually used degradatorily in Japan (like drunken gaijin or rowdy gaijin). During the Tokugawa shogunate period, there was a lockdown of sorts in Japan – the sakoku (lit. locked country). The idea was to prevent missionaries (really irritating buggers trying to spread Christianity) from ‘polluting’ Japan (arguably, I’d say it was a good idea… the spanish and portuguese missionaries earn no respect from me, only disdain). But the point is that the whole ‘gaijin’ thing started then. Of course, after the Meiji era, things started to change.

European countries were then waaaay superior in technology, while asian countries lagged behind. The tables turned, and Emperor Meiji opened up Japan to the Americans (well, he was forced, but at least Tom Cruise did try to help preserve the samurai culture). The Qing Dynasty then, didn’t have the foresight to open up to modernization (thanks to a certain corrupt Empress Dowager), and hence lagged behind big time.

In a way, the Meiji Era and the end of the Qing Dynasty was a precursor to asian “reverse racism” towards the whites (damn, I hate using politically incorrect terms). Traditionally (tradition being the past 100 years or so), asians kowtow to the caucasians because of technological advantages over them. This has been brought on from generation to generation.. ultimately, the asians revere the whites in a form of reverse racism.

And, you’ve got the famous No Dogs and Chinese Allowed sign (which is a fake, btw. There were no historical records of such signs. But there are historical records of lists of people not allowed in a certain place, like a club in Shanghai, which includes, Chinese, Japanese, and Koreans. And dogs). This picture was from a Bruce Lee movie.

While this is they typical degradatory racism, I hightlight this as a point. Because recently something similar happened in Shanghai, albeit in a more politically correct manner. You can read it at the Shanghaiist.

Point in saying all this is to point out how silly the human race have been. We could have been learning from one another, but in the end, we shut ourselves away. And when we’re forced to open up, we end up revering those with the significant technological advantage. Add time factor to it, and we have our reverse racism we see today.

Idiots.

Now.. go watch a hare hare yukai dance by a british (i.e. caucasian) girl. Brilliant. Reverse Racism Much?

Wants and Needs

And what does ickle humie bean wants, above all? Not much. Ancient chinese texts say a human bean has 4 basic needs (衣食住行 – specifically, clothing, food, shelter, and mobility.) If a starving man gets food, he’s happy. If a homeless woman finds a place to stay, she’s happy. A fettered man, when unfettered, is free, and happy. These basic needs apply to everyone of the human race. There isn’t a specific barrier of humanity (like race, religion, or country) that dictates they do not need any of these. There isn’t a barrier of humanity that says, okay, Chinese people don’t need one of these basic needs – Chinese people should all go naked (though I wouldn’t mind seeing pretty girls not requiring the first basic need of clothes). Even though these needs are not the most basic ones (there are more fundamentally basic needs than that), it still transcends all barriers of humanity – race, religion, country, etc.

If we analyse carefully the simple four words (yeah, the ancient chinese are fond of using 4-word-phrases), we can pretty much break down any scenario to simpler terms. For example, clothings are more than just clothing, for they are also our pride, our ego. Rich people wear branded goods like Prada, while poorer people wear rags and run on the street naked. A very famous story, of course would be in the Bible, where after Adam and Eve ate the Forbidden Fruit of Knowing Good and Evil (you know, they should really come out with a shorter name), the first thing they discovered was shame – somewhat the opposite of pride. Therein, ‘clothing’ represents the innate human pride, aka ego.

Strip a human of any of the four basic needs, and he/she would be unhappy (babies excepted – they’re born naked). But should a person have ample supply of these basic needs, people are still not happy. They want more. In short, the basic thing people are seeking is plain happiness. There are many sources of this elusive happiness. Some people get happy by meditation, some people get happy by going to theme parks; some, by work. Some sickfucks get happy by killing a puppy. Some people get unhappy if you call them sickfucks.

Discrimination

Again, back to the biblical story (I use it as an example because that’s the thing most people can relate to) of Adam and Eve and the Forbidden Fruit of Knowing Good and Evil. Right, so with the knowledge of Good from Evil, humans were able to tell apart actions- discriminate the good from the evil. Also, humanity learnt to discriminate what it was familiar with and what it wasn’t familiar with.

Evolutionary psychology would tell you of course, this is a good thing, because in the beginnings of humanity, they had to tell apart whether the mushroom will kill them or make them high. Discriminating against something unfamiliar is, according to evolutionary psychology, part of the human self-defence mechanism which aims to protects its ownself. By far, it has been good (for if it had not existed, you wouldn’t be reading this blog).

But also, humanity extended this self-defence mechanism beyond its natural means and needs with the emergence of stuff like language and culture. A person form Culture X will be wary (the self-defence mechanism) of a person from Culture Y. A person of Skin Color #00FF00 will be wary of a person of Skin Color #0000FF; (which by the way, are lime green and blue).

Discrimination also comes from being related. The more a person can relate to something, the more attached he/she is to that thing. Be it religion, race, or country, it comes from being related to it. The more a person can relate to a country, the more he/she feels for that country, and the more he/she discriminates against others. This gives the birth of stuff like patriotism, nationalism, etcism.

This relatedness also works on an individual level. The concept of property rights have been ingrained in humanity since the earliest days – “this mine, I take, you take, I whack”; “This is MINE, and that is YOURS”.

Of course, with the concept of the self (as in Mine and Yours), it serves to only further increase the gap for discrimination. Anything that “I” can relate to, and “you” cannot should be discriminated.

It is natural then, for the formation of barriers and borders.

Barriers, Borders & Boundaries

Humans love barriers. which arguably, can be a good thing. Without the barriers of the Law, society would be chaotic. The barriers of the Law is obviously a response to the discrimination of Good and Evil and Something Else (in the case of senseless laws like Tax Laws, or Personal Injury Lawyers).

Asides from the Laws, we humans set up lots of boundaries for no good. Boundaries such as race, creed, nationality, political ideology have all been artificially created (I’m not going to argue that the Law is also artificially created, lest some religious terrorist issues a fatwa on me)

Back in the days of black slavery, Darwinism was a popular scientific base excuse for racism. This is a barrier that we artificially create. To this date, there is no significant difference between a white male and a black male in terms of their DNA. There might not be even a significant difference between their economic status. In fact, a black man and a white man can be entirely identical, and yet we can still discriminate based on skin colors.

How do you tell apart a Republican from a Democrat? How do you tell apart a right-winger from a left-winger? These names and connotations exist because there is a barrier. How can you tell apart an Italian lady from a French lady if they both keep their mouths shut? How do you tell apart an Arabic woman and caucasian woman (if you think the Arabs are all wrapped up in their burqas, you’re probably right, but you should also watch more ART), if they both keep their mouths shut?

Heck, I bet you couldn’t tell apart a anorexic Israeli girl from a undernourished Palestinian girl.

Back when I was very much younger, I thought I could tell apart the different kinds of mongoloid people – namely Japanese, Chinese or Korean, but here’s a very good site to prove you wrong.

How can you tell apart a Malaysian chinese from a Singaporean chinese? Interesting question, that. I’ve been mistaken as a Singaporean almost 100% of the time, right from the moment I open my mouth (or type on the keyboard). Apparently, my ‘style’ of speaking is very Singaporean. But interesting to note was the guy I rented my camera from thought I was British from over the phone, and no, it wasn’t an accent I put on. I just had quite a heavy cold that day. Even Ania thought I was Singaporean, lol.

Ah, but where does this linking and stereotyping comes from? Some scientific sources put it as a mental ‘shortcut’ that our brain takes in processing information. But it also links back quite well to the concept of discrimination and distinguishing something from another.

Silliness

I think I have done pretty well in establishing that there is little difference from the first view between two differen human being. But does it make them any different?

Sure, each human is well, almost unique. They each have, for one, their own personality, which mostly is internal, and also, their sex, which can’t really be changed (though modern technology has since allowed that), but since every human is similar in 99.9999999999% of aspects, isn’t it silly that we discriminate through various (artificial) means?

For the purpose of this argument, let’s say religion is man made, because it’s not intrinsic in human nature. There is no part of a human being that dictates that so-and-so must be Christian, so-and-so must be Hindu. For the most part of this argument, religion will be seen as a human construct – a personal belief (Simple proof: everyone has different personal beliefs, hence not intrinsic, hence a human creation).

Isn’t it silly that people wage wars over human creations like religion? The Crusades, the Problem of the West Bank, the Jihad. Isn’t it silly, that for the want of belief, that people are willing to sacrifice others? Is the cause so great?

Isn’t it silly that the title of this post is Patriotism as a Superstition, but I end up talking about something else? No… that was just an intro, to help you better understand what I want to say later on. But this will end up to be a more general topic..

Superstition

A superstition is a belief, nontheless. There is no reason to separate superstition from other kinds of belief like racism, or religion, because they stem from the same thing – belief. It is only by convention we label something as ‘faith’ or ‘superstition’. Generally, a belief with no basis is a superstition.

Patriotism as a Superstition

I risk sounding like an anarchist (something I will address later on in this article) by saying that the concept of patriotism, nationalism et al are superstitions. But they are. The very foundation of patriotism and nationalism is ego and arrogance. It is of ignorance that once was. It tells us that the world, our planet is split into different countries and that we must fight to safeguard our ‘national interests’.

Granted, this is motivated in part by economic interests – you wouldn’t want bloody immigrants taking up jobs and replacing your citizens, do you?

But let’s look at this from another point of view. Ceteris paribus (all things being equal), do you realistically think countries will open their borders to one another and welcome everyone as an equal brethren? (The EU is taking a very good initiative on that, though it can still be very much improved).

Again, the concept of patriotism encourages you to stand up and fight for your country’s rights. The concept of patriotism is one concept where the ‘love’ for a country is so strong that it wills people to do things. But not unlike religions, it also can propel people to extremities – once again, the human concept of ego and attachment comes into play.

Humans put so much stock into what they believe in (in the case of patriotism – the belief in the ‘love’ for a country), that they are willing to harm others in the name of their belief. To these people, no cost is greater than the cause itself – the belief.

And is this belief grounded in any sense? Again, no. The whole concept of ‘countries’ are nothing more than psychological borders and boundaries put up by humanity to separate themselves from one another. To lamely attempt to distinguish themselves from one another. There is no physical distinction between country X and country Y. The Berlin Wall was erected to attempt to physically separate the two blocs of europe, but it is but a fallacious fantasy of humans – the will to separate oneself, to distinguish oneself is driven by naught but ego. The only reason why a person wishes to stand out of mediocrity is the human ego. Extrapolate that, and you have a group of people trying to stand out amongst the other ‘groups’ of people (note again, that this ‘group’ is yet another barrier put up by the mind)

So there you are. Patriotism isn’t grounded in any sense (if countries are nothing but human made barriers, then it is nothing)… ergo, it’s a superstition.

Malaysia…Negaraku(ku?) – An Example of Patriotism as a Superstition

This part is mostly about Malaysian politics, so if you’re not interested, you can skip to the next section…

I’m sure most of you have heard of Namewee. But for the severely uninformed, he sang the Malaysian national anthem in a rap, and because of that, he got rapped by the government. Of course, he touched some did touch on some other issues like race and religion, which the government, due to its extremely soft skin, is sensitive to.

Curiously though, those with extremely high egos are easily bruised. Some are bruised by mere words alone. And such is the case for the Malaysian government.

Words are empty. They carry no malice, save for the malice that was wrought upon by oneself. It is how you choose to intepret those words that bring pain and suffering to yourself. Or bring about improvement to yourself. This applies not only to individuals, but to aggregate individuals as well. Groups of people.

Because the concept of a country is so fickle, and yet you defend it ever so dearly, any little criticisms hurt. And for what? The country exists only by means of convention of the human mind!

If anything, I personally felt that Namewee was more of a patriot (if you go by the definition of a patriot being one who loves his country that he’d do anything for it) than any of the ministers in the cabinet. If anything, he stands up for the vox populi. He is a lone voice amongst many – many who are blinded by means of the power of the offices they hold.

But again, in my opinion, Namewee is being an idiot. For a number of reasons of course – none that fit under this category (that Patriotism is a superstition)

Through the education system in Malaysia, kids are indoctrinated into this superstition of patriotism. We are told of the greatness of a country, and that it is none other than divine duty to serve and protect the country.

Why? When this question is asked, the usual reply’d be something like “Because you are born here. Because its’ your responsibility”. Isn’t this nothing more than circular arguments?

My question remains: Is it one’s responsibility, if the whole concept of the nation, the whole concept of a country is naught but a make-belief?

Reality

You will not, however, find me ungrounded amongst the clouds of idealism. For the sake of convention, and the fact that humanity doesn’t change overnight, the concept of countries, though increasingly become obsolete (we have the bloody internet for goodness sake!), is still a very much needed concept. However, the roots of patriotism – plain belief, has caused a lot of damage over the years. Countries are militarizing for reasons none other than ‘protecting the homeland’. Think – instead of governments being so paranoid and defensive due to the concept of something pointless, think instead how much benefit humanity would get if the money used for militarizing is put into research for the betterment of humanity.

We should be deconstructing barriers as we go along each day in life. Slowly, one by one. I admit, some barriers are inate (like sex or sexual orientation) but the mental barriers can be removed. There is afterall, no reason to be prejudiced against someone who doesn’t share one’s belief.

Me

I know I may come off sounding like an anarchist or a nihilist with no zest to life. Rest assured I am not. I don’t believe in anarchy. I don’t believe in democracy. I don’t believe in autocracy, or any form of governance, to tell the truth. No country has nailed the perfect balance of governance yet. Democracy itself is far from perfect, but so is anarchism (which, technically, is worse), and so is fascism (equally bad as anarchism), or communism (theoretically the most ideal, but practically the worst shit).

I may come across as a transhumanist of sorts (yea, you transhumanists reading this blog would be shouting NOOOOO! now), but I am not. I don’t support transhumanist cause, but neither shall I be a Luddite in transhumanist affairs. Should the time come for me to get a neural implant so I can stay connected to the Internet, I would.

I may be hypocritical, if you know me in real life. I still have plenty of barriers set up by none other than my own mind. But nonetheless, attempting to remove them. Ah well. Shouldn’t you be doing the same?

We’re all humans. So why not put aside petty differences which mean nothing on a deeper level – differences like race, religion, skin color, sexual orientation and work for the betterment of humanity?

Naturally, this year is no different. Except this year, I was wondering how much I had lost by not actively seeking relatives who would give me ang paus due to my playing mahjong. From that, I proceeded to wonder how much I actually got from my relatives every year. From there on, a string of other weird questions arise, but ah, well, let’s tackle the first question:

So, how much I actually get yearly?

To answer that, I’d first need to get hold of data – yearly collection of Ang Pau money. For that, I turned to my dad. My dad had meticulously collected data on how much money is collected yearly, inclusive of who gave how much. I had 21 years worth of data with me.

On first look, it seems that I collect more and more money each year, but do I really? The simple answer is no.

Taking into account inflation, I am actually getting less money each year (though there is a weird trend in the money collection). Below is a graph of what I receive and the inflation adjusted amounts.

The yellow line and dots are the amount I receive each year, while the blue line and dots are the inflation adjusted amounts I received. 2004 and 2005 are zero-amounts because of a data crash that happened prior to the Chinese New Year of 2006, and the latest backups didn’t have the data for those 2 years. There are no numbers for the amount received, obviously for privacy reasons, but you can rest assured that none of the years has had a total of higher than RM 600.

As for the inflation adjustment, I used 1987 (when the data just started) as a base, so it’s all in 1987-dollars. Because of the impossibility of finding out any price indices in Malaysia (Dept. of Statistics provides statistics for the past 3 years only!!) I used the basic assumption that inflation is at 4% per annum.

Hah! My relatives are actually giving less and less money per year! Next year would be a good year to brandish this graph in their face and demand more money lol!

Next Year?

Not that I worry anyways. Here, some guesswork is involved, but if it is as trend goes, the collection for 2004 and 2005 can be estimated. The trend for the previous 6 years can be seen to come in threes. If the trend prevails, it can be estimated for the year 2004 and 2005, the collection amount is roughly around the red dots in the picture to the left. So, with the missing information filled in with estimates and rough guesses, I can second guess what I will get next year, lol.

Roughly how much will I get next year? Excel’s forecast says I will get about 4 dollars less than this year. But if I treat the amount collected as sort-of-a-market, I can use moving averages to estimate whether I will get more or less than this year.

I used a 2-year (light blue line) and a 4-year (dark blue line) moving average for this um, estimation-of-sorts. Every time the two lines cross, it is an indicator that the trend direction will change. This year is a year where the moving averages cross, and since it’s been on a down trend, the cross would indicate a probable up trend beginning next year (probably for another 3 years of down trends)

Of course, it could also continue the down trend – hence breaking the trend where a high is followed by 2 consecutive lowers which is followed up by another high. One probable reason would be some of my relatives stumbling on this blog and collude not to give me any money next year, lol!

The cause of collection fluctuations

One reason why my collection seem to fluctuate is not because of the varied collections from different people. In fact, throughout the 20 years worth of red packet collection data, the collections from people is very consistent – i.e people who give every year. Even if the data used to plot the graphs and calculate the inflation adjustment was controlled – the people who did not give consistently (5 years in a row) are excluded from the total amount collected – the results would be very similar. The inconsistent givers are insignificant (they do not give much anyways).

So why the fluctuations? Because the relatives who actually give the red packet vary the amount yearly (especially from 1987 to 1993, where some would give RM 4 one year and RM 10 the next, and RM 2 the year after the next). The “rich” aunt and uncles do however, give the same amount consistently, while there are upgrades along the way by other relatives. Heh, but 10 dollars in 1987 is certainly worth more than 10 dollars in 2007. But there you go – consistency.

Another reason of the fluctuations are deaths and marriages. Some years, relatives die, and the total becomes less, but some years, there are new couples who got married and give red packets raising the total. Some how… they all sorta fit into a trend (see above). Hmm..

As all economics deal with incentives, I personally feel that there are some relatives who have the incentive to give more. Whether to show off that they are getting richer, or just to generate a feel-good feeling. Someone who regularly gave RM12 gave RM 30 this year (she has been suddenly nice to me all of last year). I have no idea why. Maybe she came into a windfall. Maybe something else. Personal incentives are indeed hard to figure out.

So how much did I miss out from playing Mahjong?

Surprisingly, not much. The difference between my collection and my sister’s is about 20 dollars. Which rounds to about 4 relatives who didn’t give me any ang paus. And it’s 2 lunches worth. Oh well. Then again, I assume that she was actively seeking, and not playing with the cat.

The cost and effects of Free Money

Where can you get free money? My accounting lecturer, Steven Toh called ang paus free money. Riiight. Free money? At what cost? If I had gone back to Penang solely for ang paus, the cost would have been exorbitant. Toll charges, petrol costs, 10 hours at the highway waiting for the traffic jam to ease off… those are all costs. But thank goodness I didn’t go back only for red packets. Instead, to me, red packets are a positive externality, because I went back to Penang for the festivities. Heh… it’s indeed free money for me . Well.. this is proof that free lunches do exist. Unless you count greeting your aunty “新年快乐,万事如意, 恭喜发财, 红包拿来” (Translates to: Happy New Year, May Everything be Fortunate for Everything You Do, May You Prosper, Give Me A Red Packet) a cost. LOL.

Seriously, though, Ang Pau is just a token. I mean, one year’s worth of red packets wouldn’t sustain me for one month – and I’m known to my friends to be one of the more economical spenders (actually, cfgt is the most economical spender I know, but since he has more supply of money to spend, it seems he spent less economically than me. On the other hand The Princess is the most exorbitant spender I’ve known)… But there are effects of free money. People tend to spend more when there is extra money floating around (including governments), so I’d expect Princess Xingyi to spend more in the short time frame.

To any relatives of mine who might have stumbled on this site, no, it’s not a critique. It’s just a product of my extremely bored mind, and a whole set of nonsensical questions that ultimately, got to this page. I understand that red packets or ang paus are merely tokens of tradition. But that doesn’t give you reason to give me less next year as well, lol!

Ah, but I enjoy free money, LOL.

Dubner asked: why didn’t the technology move forward for an entire millennium?

One simple answer could be attributed to the Dark Ages. Mediaeval knights, dedicated to preserving their religion, destroyed “heretical” relics of importance (one wonders why the stone henge got preserved).

Imagine, a Roman officer asking a simple Greek: “What does this do?”,
and the Greek replies “To tell when the moon shall be full“,
and the Roman officer says: “Heretical! Only God determines when the moon shalt be fulleth! Off with his head!”

Okay, the “off with his head” part is an overdramatization . But the point is that the ancient people, they’d destroy anything that is not in accordance to their beliefs (it happens even today. Remember the Bamiyan Buddhas in Afghanistan?)

The Great Library of Alexandria was destroyed by conquerers, ranging from Julius Caesar to the Muslim invaders to Egypt. People think sources of knowledge are dangerous to the know-less-men. And in this day, warfare is over knowledge. What an irony.

So, what does this has gotta do with Pushing the Future? Let’s get back to Dubner’s question – why didn’t the technology move forward for a whole millenium?

Interestingly, I’ve did some look up on this, and have questioned myself similar questions before and I’ve kinda narrowed it down to a few reasons -

• Inacceptance
• Destruction
• No Marketing or No Apparent Usefulness
• Secrecy

Inacceptance of a new theory or a new technology is always common. Take for example me, in 2001. Together with cfgt and wKkay, we were finalists in this national programming competition thingy, and there about 3 entries (out of 9 finalists) that involves an online diary. They were the first blogs, in that competition, but I told cfgt that “the concept of an online diary will never take off“. Look who’s using WordPress now, lol.

As Dubner had given his example of Hippocrates and his observation on genetics, people couldn’t accept them, even Aristortle. Then again, Hippocrates’ idea didn’t appeal to the people of that time. He merely suggested “… producing an individual with the characteristics of both.” His lack of specificness has led to the general inacceptance of the idea of genetics then.

Destruction, we’ve discussed. Humans are extremely destructive creatures. Give a kid a pre-built Lego model and some Lego bricks. Chances are that he/she will destroy the model than to put on new bricks. The Cultural Revolution by Chairman Mao of China, in emulating the first Emperor of China, Shi Huangdi, had put a great deal of ancient chinese knowledge into the fire. So did Caesar, who razed down possibly the Library of Alexandria. And so did the mediaeval zealots, putting to death anyone who claimed to have extra knowledge for fear of it being heretical.

Need I say some more?

Some inventions have No Apparent Use or Lack Marketing back then. Using again, the Chinese (seeing that I myself am Chinese, lol). In the Three Kingdoms dynasty, the Wheelchair was invented. It was invented by Zhuge Liang, but of course its purpose was not to aid the ill nor aid in a person’s mobility. It was invented as a personal chair for Zhuge Liang. That’s all.

Granted, it’s not scientific breakthrough that will significantly change the world, but think of how many inventions have passed on thusly because it was invented for the wrong thing. Only in recent years with the advent of Post-It Notes and masking tape, that people realise that things needn’t always be invented for a purpose. Some inventions come from accidents. And of course, one such regretable invention was Gunpowder (invented by the Chinese )

Heron of Alexandria (You’d expect the Greeks to be smart enough to invent surnames for goodness sake) for example, created a steam engine, but he didn’t consider the invention to be practical, and the invention had to wait for another 1500 years before it would be popularized for use.

Oh, did you know that Heron of Alexandria also invented the world’s first coin operated vending machine? It vended Holy Water (yes, folks, in ancient times, Holy Water can be bought from a vending machine)

All these supposedly pointless inventions, some which are extremely great ideas (like Leo da Vinci’s plastic) have whiled away in the mists of history. I mean, what do the ancient Chinese need parachutes for?

Secrecy is also another reason why some inventions never lived to push forth technology through its times. Again, let’s take the Chinese as an example. As a Chinese, I can tell you that we are a secret lot. Thtere is this Sith-like concept that is deeply ingrained within the Chinese culture. A Master/Teacher would always fear that the student will be more powerful/knowledgable than he/she, so he/she will only teach 90% of what he/she knows, keeping the last 10% as a back up, in case of anything that might happen. As such, Chinese inventions rarely go past 2 Generations.

Take for example, during the Three Kingdoms period, Zhuge Liang (previously mentioned as the inventor of the Wheelchair) invented a device called “木牛流马” (literally – Wooden Cow, Flowing Horse), and it was described to be a device to help soldiers carry their goods. It was shaped like a cow or a horse, and will supposedly move by its own. To get it started, a twist on the device’s tongue is suffice. To stop it, twist the tail. Unfortunately, Mr. Zhuge Liang was a very secretive guy. The secrets to his device died with him, and only little remnants were found. From the remnants, to this day, debates are still held to debate as to what the device really was. I’ve watched heated debates on TV, suggesting it to be a mere wheelbarrow, while the other party was suggesting it to be an automotive robot of some kind. Who will ever know?

The Chinese buried many of their inventions with them, sadly, and also have caused many others to literally bury their secrets.

In a recent excavation in Tibet, archeologists made an interesting find. It seemed that the ancient Tibetans had pretty modern surgical knowledge since the 3rd Century B.C! What’s more interesting is that in the stone tablets excavated, there were even drawings of sperms and eggs in action. (I saw this on Discovery Channel or one of Phoenix TV’s documentary progams)

To answer Dubner’s question – why this medical knowledge didn’t push technology ahead of its time? It’s a no brainer. These medical knowledge were underground, literally. They were hidden from some invaders (was it the Mongols?) to prevent the knowledge from being destroyed.

It would be interesting to see that 1000 years from now, stuff like Velcro and Teflon (both are accidental inventions) would be hailed as the greatest inventions of the 21st Century, and the people would be like: WTF?! Why didn’t we think of this? How could the people 1000 years ago be so smart?

Because we can always count on humans being barbaric and destroying everything, we can count on humans forever being secretive (check your blogs, how many of you have private posts. I do. Many too, more in my dead old blog) , or worse.. maybe in the future, things get so litigative that people are scared to invent new things for the fear of being sued. Note, in history, that every technological rise is followed by a sudden darkness (the dark ages, the Qing Dynasty and the Cultural Revolution, and so on and so forth)

We can count on humans to push the future, only to bring it back to the stone age by their own ignorance and their own ego. For now, we can only wonder: Why in the world the Baghdad Battery exists? Why did the Ancient Chinese needed up to 7 digits of Pi (3.141592654… I can do 9, with the calculator )? Or do they even need drilling technologies that allowed them to drill down 4800 feet in the first place? (I’m sure the ancient Chinese didn’t drill for oil)

Perhaps in asking the reasons for the existence of these inventions and discovery, rather than only knowing the functions will help us discover why these things didn’t push the future.

Till then, I’d still be using plastic Credit Cards, wearing Teflon-coated pants (Dockers FTW!) and listening to The Inquisition Song by Mel Brooks. Have a nice day!

Meanwhile, if you want to look up medical information ranging from basic things like first aid to life-changing topics such as pregnancy information then you can go online and find plenty of health info if you visit a medical search engine available on the Internet.