The Data-Driven Life
Living life by the numbers

Why “Rigorous” Math Mandates are a Failure

Think about the math instruction you received in school, especially at the secondary level. If you had a typical experience, you probably studied things like algebra, geometry, trigonometry, and calculus. And, if you’re like most people, you don’t use the vast majority of that type of math very often at all.

Everyday math involving things like real-world data analysis and statistics (e.g. “Does this study really prove what it asserts?”), probability, interest rates, and personal finance usually receive very little focus in school — sometimes none at all, or perhaps just a brief mention in a separate (and sometimes optional) “life skills” class.

This should be reversed. The normal math track in high school should devote extensive time to statistics, probability, personal finance, and real-world math applications. Classes like trigonometry and calculus should be electives meant for students who plan to use those forms of math in their careers.

Andrew Hacker wrote a famous New York Times article back in 2012 arguing that algebra and advanced math should not be required of all students. In that article, he wrote:

“A definitive analysis by the Georgetown Center on Education and the Workforce forecasts that in the decade ahead a mere 5 percent of entry-level workers will need to be proficient in algebra or above.”

He went on to support the importance of a focus on statistics in our math classrooms instead:

“Being able to detect and identify ideology at work behind the numbers is of obvious use. Ours is fast becoming a statistical age, which raises the bar for informed citizenship. What is needed is not textbook formulas but greater understanding of where various numbers come from, and what they actually convey.”

(If you’d like to dig deeper into this, a 10-minute interview with Mr. Hacker from two days ago, where he expounds on this view, can be found here.)

This blog, The Data-Driven Life, aims to fill this gap — showing people real-world math and data applications they can use to their benefit in everyday life. But we would all be better off if everyone came out of school already having been taught the types of math they need to thrive as informed citizens (and savvy shoppers) in their daily lives.

Top 8 Must-Reads for the Data-Driven Life

Looking for additional reading to help you live a Data-Driven life? I highly recommend the following:

1. Factfulness (by Hans Rosling): The world is better than you think. Despite the constant bombardment of negativity in the media, things are demonstrably, measurably, and significantly improving across a wide array of measurements. This book is designed to familiarize you with those optimistic statistics while also training you to think in a more data-driven way. The TED talk below is from this same author.

2. Thinking, Fast and Slow (by Daniel Kahneman): Why do we think the way we do? This book is designed to give you insight into what drives your thinking, helping you to correct course when necessary.

3. Unscripted (by MJ Demarco): This book focuses on the invisible “scripts” we tend to believe and follow in our lives, with a particular emphasis on financially self-limiting beliefs we would do well to cast aside.

4. The Miracle Morning (by Hal Elrod): The best way to live an intentional life is to start each morning off right. Instead of waking up and immediately finding yourself overwhelmed, The Miracle Morning will show you how to start your day — and spend your time throughout the day — with intention and purpose.

5. When: The Scientific Secrets of Perfect Timing (by Daniel Pink): There’s a perfect time for everything, and Daniel Pink lays out the science behind how to optimally schedule your time. If you’re in charge of others, this book will also teach you how to manage the time of those you serve, in order to create a more successful work, school, or home environment.

6. The Power of Moments (by Chip and Dan Heath): It feels like the most powerful moments in life only happen spontaneously or by chance. In this powerful book, however, Chip and Dan Heath break down the key hallmarks of memorable moments, with a particular focus on helping the reader learn to intentionally create powerful moments for themselves and those around them. A wonderful read for business leaders, teachers, and parents alike.

7. Make It Stick (Peter Brown): Much of what we think we know about learning is simply untrue, and therefore many of the techniques we use to learn simply don’t work. Make It Stick uses a variety of stories to illustrate various ways we can help ourselves to learn more effectively. Not just for students, this book is excellent for all of us who strive to be lifelong learners.

8. Algorithms to Live By (Brian Christian): Borrowing from the wisdom of computer science, Algorithms to Live By applies programming solutions to real life. When you want to know whether to try a new restaurant or visit an old favorite, or you can’t decide where to park, this book will show you the optimal path to take.

In the comments, let me know: what other Data-Driven books would you recommend?

Customer Acquisition Opportunities

Here’s another fun area in which you can easily make a side income or stretch your existing budget: customer acquisition opportunities.

Companies will pay a premium to get new customers. You can profit from that in two ways: first, by being the new customer; or second, by referring new customers to a business. Let’s take a look at both of these options.

Method #1: Profiting from being a new customer

 This method is pretty straightforward, but effective. Think about what you already spend money on, and then look for a way to become a new customer to get that same service or product much more cheaply. Let’s take a look at some examples.

Cell service: Switch to Sprint (there’s the customer acquisition part) and receive one year of free service on their unlimited plan.

Books: Join Kindle Unlimited by July 31, 2018, and get 3 months of all-you-can-read ebooks for just 99 cents! I recommend that you immediately cancel the recurring subscription so you don’t accidentally end up continuing to pay $9.99 a month for this.

Music: Try Spotify free for 60 days or get 4 months of Amazon Music Unlimited for just 99 cents.

Banking: Becoming a new customer at a bank can make you hundreds of dollars. Chase is especially generous in that regard; you can view their current free offers here.

And so on. Companies trust that inertia will keep newly-acquired customers from jumping ship once their promotional offer expires. As we discussed previously in this post about credit cards, we can use other customers’ sub-optimal behavior as a way to subsidize our own, more optimal behavior. This is another one of those opportunities. Switch companies frequently and take advantage of promotional offers to stretch your budget dramatically.

Method #2: Profiting by referring new customers to businesses

As we’ve discussed, businesses will pay a pretty penny to acquire a new customer. If you can refer a new customer to them, many businesses will pay you a sizable customer acquisition bonus. Here are three great examples of places to do just that.

CJ Affiliate (formerly known as Commission Junction): CJ Affiliate has several thousand different companies, all willing to offer you cash for referring business to them. You can look through all of the options and apply to become an affiliate at any of the businesses that look best to you!

Amazon Affiliate: Amazon’s Affiliate program will pay you a 4-10% commission (depending on the product) to refer customers to their website. You even get paid for any purchases a customer makes once being referred to Amazon from your link.

As an aside, it’s important to note that this is a far better rate of return than Amazon’s famous Amazon Smile program, where just a 0.5% donation is made to charity. So please, don’t use Amazon Smile. Instead, bookmark a referral link of a friend or company you’d like to support (such as this referral link to keep the lights on here at The Data-Driven Life) before purchasing anything on Amazon.

EBates: We’ve been wanting to write about EBates anyway, so here’s a good place to mention it. EBates is a great way to save additional money when you purchase things online. Best of all, they’ve got both kinds of customer acquisition deals we’ve described here. First, you can sign up here to get a free $10 bonus when you spend $25 virtually anywhere online (such as at Amazon). Next, once you’re registered, you can get your own personal referral link by clicking through the “Refer and Earn $25+” link on their page. From there, you can refer an unlimited number of new customers to EBates, and if they purchase something for $25+ from an online retailer, they’ll get $10 and you’ll get $25. You can see that the math is very advantageous on both ends of this customer acquisition offer.

When it comes to customer acquisition, here’s the two-part Data-Driven Mindset to have:

  1. It pays to be a new customer, so for things you plan to purchase anyway, you should strive to be a new customer as often as possible.
  2. It pays to refer new customers to businesses, so find businesses others legitimately would want to connect with, and then help them to make that connection through your affiliate link.

In the comments, please let us know of your other favorite customer acquisition opportunities out there!

Caloric Density: The Ultimate Hunger-Free Weight Loss Plan

In a previous post, I wrote about how the secret to maintaining a healthy weight was to eat like the person you want to become, and consistently eat foods with a low caloric density. Let’s unpack that in a little more detail today.

When it comes to weight loss, dieting is not a long-term solution. Although a diet can result in a temporary weight reduction, it’s often water weight and even muscle that is lost, and the fat that is lost is often regained shortly thereafter. Diets are unsustainable. The secret to weight loss that lasts is to make a permanent lifestyle change.

The problem is that the world tells us that we should eat less and exercise more to lose weight. There’s a better way.

In his book The 4-Hour Body, Tim Ferriss succinctly lays out the problem with using exercise as your weight loss plan:

“Did you eat half an Oreo cookie? No problem. If you’re a 220-pound male, you just need to climb 27 flights of stairs to burn it off.” -Tim Ferriss

Runners have another way of saying the same thing: “You can’t outrun a bad diet.”

Which brings us to the other solution the world offers: eating “healthier.” This is so vague as to be unhelpful, which is why we see completely contradictory weight loss plans. One focuses on having the dieter eat less fat, while another suggests that more fat (but fewer carbs!) is the answer. The average person feels helpless amid this sea of contradictory advice.

In my previous post, I included a link to this calorie expenditure calculator. I recommend that you plug in your desired weight and activity level, find out how many calories that person would burn off every day, and then begin to consume no more than that many calories each day.

Unfortunately, accomplishing that is easier said than done. If you’re the kind of person who can simply count calories and stop at your target number, go for it. I personally know very few people who are like that.

For most of us, having the will power to stick to a caloric goal is an ongoing challenge. For me, personally, I can have great resolve toward a diet plan one moment, and a few hours later, as the hunger pangs kick in, that resolve is gone.

This is why the caloric density approach is so beneficial. It allows you to lose weight and then maintain a healthy weight without ever needing to feel hungry. This is where the world’s advice goes wrong: You aren’t going to lose weight from eating “healthier” food — you’re going to lose weight from eating food that has a lower caloric density.

Let’s look at two extreme options: 100 grams worth of carrots vs. 100 grams worth of peanuts. Both of these two snacks weigh the same and thus will make you feel equally “full.” The carrots have approximately 0.4 calories per gram of weight, so that 100-gram snack would have about 40 calories in it. The peanuts, on the other hand, have 6 calories per gram of weight, so that 100-gram snack has a whopping 600 calories in it.

The caloric density of the peanuts is fifteen times greater than the caloric density of the carrots! You would have to eat 1,500 grams (about 3.3 pounds!) of carrots to get the same number of calories as you would in 100 grams of peanuts.

“But Mark,” you’ll say, “isn’t this just the same as all other diets? Eat healthy stuff and you’ll lose weight?”

Not exactly. Eating foods that are low in caloric density can be different from eating foods that are generally considered healthy. (Many people, for example, would consider nuts a relatively healthy snack; as we’ve just seen, they are actually one of the worst things imaginable for people trying to lose weight.)

As you start to read nutrition labels and you begin to divide out the number of calories per gram of different foods you eat, some of what you find will surprise you.

I was happily surprised to find that shrimp, which I had always thought of as a special treat, had just 70 calories in an 85-gram serving (0.82 calories per gram). My favorite tortillas, which I had always thought were a healthy part of a veggie fajita meal I regularly made, had 140 calories in a 45-gram serving (3.11 calories per gram). Until I embarked upon the Data-Driven Life, I never imagined that these certain tortilla shells had almost four times the caloric density of shrimp.

Now that I know this, I eat more shrimp and fewer tortilla shells (and I also switched to a different brand of tortilla shells with a caloric density of just over 2 calories per gram).

So yes, focusing on caloric density can definitely give you a different result than simply trying to “eat healthy food.”

So what is a good amount of calories per gram? And what is an unacceptable caloric density? Let’s do the math.

The average person tends to eat between 3-5 pounds of food per day, depending on their height, activity level, and gender. Let’s take the example of an overweight, 35-year-old, 5’11” man who weighs 220 pounds and is used to eating about 4.5 pounds of food per day. Let’s also say that he wants to get down to a healthy weight of 170 pounds. If we go to the caloric expenditure calculator and enter his desired info (170 pounds, 5’11”, light exercise), we can see that he should be eating no more than about 2,300 calories per day.

With about 450 grams in a pound, this man will generally feel full if he eats about 2,025 grams of food each day. 2,300 calories divided among 2,025 grams of food equal about 1.14 calories per gram. If this man can eat foods that, on average, have just 1.14 calories per gram in them, he can get to his healthy weight without ever feeling hungry.

That rate of calories per gram is incredibly consistent. Take the example of a 40-year-old, 5’5″ woman who weighs 160 pounds, is used to eating 3.5 pounds of food per day, and wants to get down to a healthy weight of 130 pounds. If we enter her desired info (130 pounds, 5’5″, moderate exercise) into the same calculator, we can see that she should be eating no more than about 1,900 calories per day. Since she’s currently used to eating 1,575 grams of food per day, she needs to eat food with an average of no more than 1.20 calories per gram to lose weight without ever feeling hungry.

So there’s the small difference you do get when you add in more exercise: our hypothetical man who only wanted to do light exercise needs to keep the caloric density of his food down to 1.14 calories per gram, whereas the woman willing to do moderate exercise can go up to 1.2 calories per gram.

Try running the numbers for yourself if you wish, but I think you’ll come up with something similar: you can lose all the weight you want without ever getting hungry if the average caloric density of your food remains at or below 1.1-1.2 calories per gram.

How can we make that happen? Let’s break the foods we eat down into four categories.

Category #1: Foods with up to 1 calorie per gram (less than 30 calories per ounce):

Foods with less than one calorie per gram (or 30 calories per ounce) are outstanding. You may eat as many of these as you wish. In fact, the more of these you eat, the more likely you are to lose weight. Your goal should be to have 70%+ of your calories come from food with this level of caloric density.

Category #2: Foods with 1-2 calories per gram (30-55 calories per ounce)

Foods with between one to two calories per gram (30-55 calories per ounce) are still reasonably good. Your goal should be to have no more than 20% of your calories come from food with this level of caloric density.

Category #3: Foods with 2-3 calories per gram (55-85 calories per ounce)

Foods with between two to three calories per gram (55-85 calories per ounce) should be limited. Your goal should be to have no more than 10% of your calories come from food with this level of caloric density.

Category #4: Foods with more than 3 calories per gram (over 85 calories per ounce)

Foods with between more than 3 calories per gram (over 85 calories per ounce) should be eaten in rare and limited situations, such as at a special event. On a typical day, none of your calories should come from food with this level of caloric density.

If you follow this 70%/20%/10% plan for the food you eat, and you avoid drinking any calories, you will lose weight without ever feeling hungry.

To be proactive and take the first step, I urge you to begin calculating the calories per gram of the various foods you typically eat.

You might be surprised (like I was with the shrimp vs. the tortillas) by which foods have unknowingly been sabotaging you and keeping you from a healthy weight all this time. You might also be pleasantly surprised by certain foods which you thought were treats but which are actually not very calorically dense at all.

Building a Side Income: Arbitrage Opportunities

Arbitrage: the practice of taking advantage of a price difference between two or more markets

Value is largely relative.

On October 30th, a frazzled parent might gladly pay $50 for a cheap Halloween costume with guaranteed overnight delivery. That parent isn’t paying $50 for the quality of the design and the actual materials in the costume; she’s paying $50 to salvage her family’s Halloween at the last minute.

Similarly, a new winter coat is worth more in November than it is in April.

In addition to seasons and holidays changing the perceived value of an item, geography can do so as well. Here in my home state of Michigan, you can buy a brand of ginger ale soda called Vernors. Vernors has a reasonably small-but-dedicated collection of fans here in Michigan, and some of those Vernors-loving Michiganders have moved to regions where you can’t find Vernors in the grocery store.

As a result, Vernors 12-packs, which sell for $4 or less here in Michigan, are currently selling for a ridiculous $18 on Amazon.

If you’re looking to use The Data-Driven Life to build a side income for yourself, arbitrage opportunities such as these could be a great way to get started. Let’s look at how:

High-Demand Items

The first and most straightforward way to profit from value arbitrage is to find items in high demand and sell them for a premium. This can occur when a company sets a fixed retail price on something and the item frequently goes out of stock (think the Christmas rush on Tickle Me Elmo dolls, for example).

At the time of this writing, you can buy a Nintendo Classic Edition for $59.99 from Best Buy (of course, you should be getting at least 2% cash back on that purchase as well as using other rewards like EBates, so your effective price should be even less). Also as of the time of this writing, the cheapest new version of that item is currently selling (as of the time of this post) on Amazon for $90.73.

Boom — there’s one arbitrage opportunity you could exploit right this minute.

 

But how can you consistently be one of the lucky people to get to purchase a high-demand item at the fixed retail price? That’s where NowInStock.net comes in. From that site, you can sign up to be contacted immediately when an item of your choosing is in stock at any one of a number of different online retailers. When you get the notification, you can purchase the item (or multiple items) as quickly as possible, then list it on Amazon for a tidy profit.

The next time you see massive demand building for a new product set to become this year’s Furby, Cabbage Patch Doll, or Beanie Babies, don’t just roll your eyes. Set up a notification alert from NowInStock, purchase a few items when they become available, and enjoy your easy profits.

Exploiting Regional Arbitrage

Selling Vernors soda on Amazon is one form of regional arbitrage, but my all-time favorite example of regional arbitrage has to be one couple in Utah who began selling tumbleweeds (which were free, abundant, and worthless in their area) and had so much success that, as the article states, “The Rigbys eventually quit their previous jobs to work full time in the tumbleweed industry.”

Who knew tumbleweeds were an industry?

To take advantage of regional arbitrage opportunities, consider them in both directions: What items, common to your area, could be scarce or unavailable (and thus more valuable) somewhere else? Conversely, what items are freely or cheaply available in another area that you could bring to your location and sell for a higher price?

If you’re struggling to come up with ideas, check out Alibaba.com. Alibaba is designed to link manufacturers (typically from low-cost areas) with sellers in other parts of the world. I’m not advising you to purchase huge amounts of items off of Alibaba to try to resell them — many others do that, and the market is fairly saturated and competitive — but it’s a great website to examine while trying to brainstorm your own niche product to sell.

The Mindset of Arbitrage

A major purpose of this blog is to help you to benefit from approaching life mathematically. Arbitrage opportunities can sometimes be short-lived, but if you train yourself to look for opportunities where the value of an item could be different in two different markets, you’ll find these opportunities fairly frequently.

Best of all, you’ll develop an entrepreneurial mindset of being able to identify value imbalances and profit opportunities, something that could eventually lead to a full-fledged business of your own.