24 Rolls of Toilet Paper, a Tub of Salsa and a Plasma TV (NYTimes, 1/28/07)

January 28, 2007
Spending
24 Rolls of Toilet Paper, a Tub of Salsa and a Plasma TV
By JULIE BICK
SHOPPING at Costco often goes something like this: Customer comes to buy bulk necessities like toilet paper and dish detergent. Customer buys those items, as well as a pack of giant muffins, three cashmere sweaters and a power tool.
It’s more than impulse buying. It is a calculated part of the company’s business plan. Call it the Costco effect.
“We always come out with too much,” said Linda Curtis Schneider, who lives in Nashville. “It’s hard to get out of there for under $200.”
Even when they are on vacation, the Schneider family seeks out the nearest Costco to gas up their rental car, grab a familiar lunch and browse for local specialties to bring back home. They have bought cases of chocolate-covered macadamia nuts from a Costco in Hawaii, gallon-sized salsa in Tucson, Ariz., and a crate of ruby red grapefruits in Marina del Rey, Calif.
The Costco Wholesale Corporation, based in Issaquah, Wash., aims to offer an inviting mix of necessities and indulgences — bulk detergent and megapacks of yogurts, stocked along with giant plasma TVs and crystal stemware.
From its first Seattle warehouse in 1983, Costco has grown to more than 500 warehouse stores worldwide and finished the 2006 fiscal year with its highest-ever sales, $58.96 billion. Costco is the largest player in the warehouse market. The rival Sam’s Club, a division of Wal-Mart Stores, operates more than 670 warehouse clubs worldwide, with a sales volume of approximately $40 billion.
Richard A. Galanti, Costco’s chief financial officer, said that while a grocery store might stock 40,000 separate types of items, and a Wal-Mart might stock 100,000, Costco will stock only the 4,000 most popular items it can find. “We try to figure out what people really want,” he said.
So, along with purchases of jumbo packs of paper towels and other supplies, impulse buying can be a big part of the Costco experience, because only the most well-liked, trendy, and fast-moving items are stocked.
Those items include iPods, individually wrapped cheese sticks to put in a child’s lunch box, as well as a few of the latest fashions.
Recently, Ms. Schneider and her college-age daughter were excited to find Ugg boots, Smashbox makeup in leather cases and Seven jeans at their Costco in Nashville. “Costco seems to go for the upper crust in taste,” she said.
Some offerings rotate in and out of the warehouse based on the season, sales volume and other factors. As a result, people may go to Costco more often than necessary to see what is new, said Steve Hoch, a retail professor at the Wharton School of the University of Pennsylvania. “When they see something they want,” he added, “they’ll be likely to go ahead and buy it, because next time they return, the item may be gone.”
While most consumers become annoyed when something they expect to find at a store is out of stock, a Costco shopper is likely to think, “I should have gotten it last time,” Professor Hoch said.
Other retailers may also seek to entice shoppers by setting limits and creating scarcity. For example, Target offers limited-edition designer clothing and home furnishings that are unique to its stores, and that are often stocked for a period of only 60 to 90 days.
And at BJ’s Wholesale Club, customers may come for their everyday grocery items, “but if they spot some jewelry or the new capri pants at a great price they will be happier,” said Teleia Farrell, a company spokeswoman. BJ’s uses items like 42-inch televisions and topaz rings to turn “ho-hum shopping into an exciting environment,” she said.
It is the same at Sam’s Club, where “members enjoy looking throughout the club for unexpected deals,” said Susan Koehler, a spokeswoman for the company.
Temporarily stocked surprises are also a calculated part of the Costco shopping experience. “We try to have hundreds of items that are different each time a customer comes to the warehouse, to create a treasure-hunt atmosphere,” said Joel Benoliel, a senior vice president. “We’ll always have the same staples — the cereal, the detergent — and then we add in the ‘wow’ items.” But at the same time, there can be a comforting sameness to each cavernous location.
Psychological factors can strongly influence buying behavior, according to Pamela N. Danziger, author of “Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience” (2006). Shoppers can experience an emotional thrill when they spot a deep discount, or find a particular item before it disappears from the shelves, she said, and creating those kinds of feelings has helped Costco. “Shopping is recreational there,” she said. “People seek out this psychological reward.”
Ted Reisdorf, 43, chief executive of Paragon Custom Homes of Scottsdale, Ariz., goes to Costco once every month or two and stocks up on household supplies, to save him more frequent trips to the grocery store. Once he is there, however, he walks up and down every aisle to see “what jumps out” at him. Mr. Reisdorf usually adds some books, DVDs or baked goods to his cart. “I always buy stuff I don’t exactly need,” he said.
Everyone seems to have an opinion about the Costco shopping experience. Some say they avoid going there because they always spend too much money. Others say they do not mind overspending at Costco because the company treats its workers well. A typical full-time cashier will earn $40,000 a year plus benefits after four years with the company.
Others, however, decry the essence of Costco. Teri Franklin, a mother of two in Seattle, said that Costco fed American consumerism and waste. “Instead of a single board game, you’re offered seven shrink-wrapped together,” she said. “You’ll probably end up playing with a couple and the rest will sit in the closet. But you really only wanted one.” She said she was not tempted to buy anything beyond bottled water and diapers at Costco. “How many things do you need 42 of, really?” she asked.
FOR those who want to minimize impulse buying, consumer experts say, it is helpful to shop as infrequently as possible, to arrive at the store with a list and a budget, and to walk down only the aisles that contain an item on the list. Conventional wisdom would also say that it is a good idea not to shop when hungry.
But those are not the types of shoppers who have made Costco successful. Professor Hoch said that increasing impulse buying or the number of items bought per visit was crucial to the company’s success.
Costco makes the bulk of its profit by charging an annual membership fee for access to its stores, he noted. A larger membership allows the company to buy items in bigger quantities and to pass along savings to customers. Customers who buy more items may feel that the membership fee is worth paying, because the cost is spread over all the products they buy.
Current annual membership rates are $50 for an individual, couple or business, and $100 for an Executive Membership, entitling the customer to other services.
“People laughed at the idea of charging someone to shop at your warehouse, but our membership fees are north of $1 billion a year,” Mr. Benoliel of Costco said. The company has more than 24 million member households in the United States and Canada.
Crucial to the company’s continued growth will be people like the Schneiders, who find shopping at Costco both utilitarian and serendipitous. “I might be going in for lettuce,” said Ms. Schneider, who on the spur of the moment once bought a $2,000 baby grand electronic piano at Costco, “but if I come out with other things, I don’t mind.”

Don’t Call. Don’t Write. Let Me Be. (NYTimes, 1/20/07)

January 20, 2007
Your Money
Don’t Call. Don’t Write. Let Me Be.
By DAMON DARLIN
The fears of the direct marketing industry came true. Once a do-not-call list was created, people did register, in droves.
The list was created in 2003, not as a way to protect privacy, but to remove a powerful irritant from the lives of Americans. The Federal Trade Commission, which administers the list, says that more than 137 million phone numbers have been placed on the list by people tired of interruptions during dinner or their favorite TV show.
The popularity of the do-not-call list unleashed a demand for other opt-out lists. A consumer can now opt out of the standard practice of their banks or loan companies selling their information to others. Other opt-outs stop credit card companies from soliciting consumers or end the flow of junk mail and catalogs.
While most of the opt-outs are intended to make life less annoying, they can also have the side effect of protecting personal information that can be misused by identity thieves or unscrupulous merchants.
“Over the years, it has gotten so much easier to opt out,” said Ari Schwartz, deputy director of the Center for Democracy and Technology, a public interest group that lobbies Congress on privacy issues. “There are still gray areas.”
While financial companies have to provide an opportunity to opt out of sharing personal information, other kinds of companies do not. Some that tell you they will share the information do not offer the option to protect personal information (other than not doing business with the company).
For those who just can’t take it anymore, here is a master list of where you can take control:
PHONE SOLICITATIONS To stop them, go to donotcall.gov. Or call toll free, (888)382-1222, from the number you are going to restrict.
Remember to register if you get a new phone number. You can register cellphone numbers as well. A listing is good for five years, after which you’ll have to repeat the process. But you need not worry about forgetting. You will know when you start receiving sales calls again.
JUNK MAIL You can try to opt out of direct mail solicitations, but it will probably not work very well. A private organization, the Direct Marketing Association, handles that list and not every merchant with pages of hot leads is a rule-abiding member.
If you want to give it a shot anyway, write the association, in care of the Mail Preference Service at P.O. Box 643, Carmel, N.Y. 10512. There is an online form at www.the-dma.org/consumers/offmailinglist.html. If you want to get more mail, there is also a place to sign up to get on the lists.
E-MAIL Whatever you do, do not respond to an unsolicited e-mail message when it gives you the option to opt out of receiving more e-mail. That is a trick used by spammers to confirm they hit a live address. Once that happens, your address goes to a prime list and is sold to other spammers. You may even find legitimate businesses eventually using addresses on that list.
So how do you prevent spam? Unfortunately, other than spam filters, there really is no good way.
You can try to make it harder for spammers to get your address in the first place by never posting your address in public forums. Spammers employ software to scrape the sites of anything with that @ symbol. Instead spell it out in a unique way like “the nameofthiscolumn at nytimes.com.”
CREDIT CARD OFFERS Almost as annoying as the direct marketing call is the mailbox stuffed with credit card solicitations. The more you ignore their offers, the more you will receive.
One way to stop the offers is to sign up for so many cards and run up such high levels of debt that you become a credit untouchable. That is not a good plan. Instead, call (888) 567-8688, but be ready to give out some personal information like your Social Security number.
The major credit bureaus, like Experian, Equifax and TransUnion, that collect information on your borrowing habits let you opt out of what they call prescreened offers of credit at https://www.optoutprescreen.com. You can do it for a period of five years or permanently.
Opting out of prescreened offers of credit might also be useful when you apply for a mortgage. When you seek a loan, the credit bureaus notice and they put you on a “trigger list.” The information that you are a ripe prospect is then sold to other lenders in as little time as 24 hours. Suddenly, other lenders are calling.
“It hurts the image of our members,” said Harry Dinham, president of the National Association of Mortgage Brokers. His group also objects because it could be “an avenue to identity theft.” He said, “We actually don’t know who they sell it to.”
Still, some callers may actually have better deals than the one your mortgage broker or bank is offering. “Do you want to opt out and never learn how to save money,” asked Stuart Pratt, president of the Consumer Data Industry Association, a trade group.
Will opting out protect your identity from thieves? Mr. Pratt said that “lender data tells us that prescreened offers of credit result in lower levels of fraud.” Nonetheless, he did recommend using a paper shredder on the offers you do reject.
CREDIT FREEZE The ultimate opt-out for your credit is a credit freeze. You’ll sometimes hear it recommended as a way to protect yourself from fraud because once you sign up to have your credit report frozen, no company can get access to your credit report without your expressed permission. That means no one can open up a credit card or take out a loan in your name.
Think long and hard before you do this. It sounds great at first, but doing so can backfire. You might be buying an expensive flat-screen TV at a warehouse store and want to get the instant credit card to score another 5 percent discount. You will not be able to. But about half the states have passed laws making credit reporting companies quickly unfreeze a report, some in as little as five minutes.
Not that preventing the opening of one more store account is a bad thing. Remember that everyone of those cards can hurt your credit score, which determines what your interest rate is when you borrow money.
Use the credit freeze only if you are a true victim of identity theft, which means that some criminal has your personal information and is opening up credit card accounts, borrowing money or buying property with your credit history.
If you suspect you may be a target, but have not been harmed yet, a better form of protection is asking the credit bureaus to flag your report with a fraud alert, which is supposed to make lenders take extra precautions.
OTHER OPT-OUTS Your personal information is accessible in less obvious ways. For instance, your computer tracks where you have visited online. DoubleClick, a company that collects data for online advertisers, offers a way to prevent your computer from giving it information at http://www.doubleclick.com/us/about-doubleclick/privacy/dart-adserving.asp.
But again, it is only a piecemeal solution. Other online advertising companies will still put “cookies” on your computer to collect the same data. So the next-best solution is to frequently run software that cleans out cookies. You can get Spyware Blaster, Spybot, or Ad-Aware at www.download.com free.
Your personal information, including parts of your Social security number, are available in publicly available data bases that you may never see. The most common ones offer a way to opt out of a listing. Nexis, one of the biggest, says you can opt out of its people-finding lists by going to www.lexisnexis.com/terms/privacy/data/remove.asp. Nexis does not make it easy because it requires that you prove you are a victim of identity theft before it will consider your application.
The Center for Democracy and Technology provides addresses and forms for other companies, like ChoicePoint, that do not let you opt out online (http://opt-out.cdt.org).
REAL ESTATE FILINGS You have to file deeds with the local government office and once you do, companies swoop in to compile lists of new homeowners from the public records. That’s why you get the discount coupons from Home Depot and other merchants right after you buy. Birth certificates and marriage licenses are also scraped for data.
There is little you can do about it because the records are intended to be public. Any good lawyer can show you how to make it a little harder for personal information to be listed on a deed. But it will cost money, which is probably not worth it if all you are trying to do is stop solicitations from Swifty’s Mortgage Lending and Used Car Sales.

Don’t Like the Dancing Cowboys? Results Say You Do (NYTimes, 1/18/07)

January 18, 2007
Advertising
Don’t Like the Dancing Cowboys? Results Say You Do
By BRAD STONE
Most online advertisements are becoming less obtrusive and more tailored to the interests of individual Web users. Among the stubborn holdouts are the two-stepping cowboys, frisky rooftop dancers and weird tattoos in ubiquitous Web banners from LowerMyBills.com.
The company, one of the Internet’s biggest advertisers, routinely festoons Web sites large and small with its ads, spending $74.6 million on them in the first 11 months of 2006, according to TNS Media Intelligence. The surprising success of the ads led LowerMyBills to a significant payday: the credit agency Experian bought the eight-year-old company for $400 million in 2005.
But on the path to prosperity, LowerMyBills has run into a lot of people who say the undulating characters in the ads are highly distracting and have so little to do with low-interest loans that they border on the surreal.
The most memorable LowerMyBills banners feature silhouetted dancers like the prancing cowboys, or the couple doing a jig on their roof under a full moon. In another ad, a suited man wildly pumps his fists under the headline “$510,000 Mortgage for under $1,698/month.”
In variations of these ads that are ever stranger, the same figures are tattooed onto arms or shaved into hair.
“The ads are like a Monty Python sketch,” said Dev Ravindran, a software developer from Jersey City who created a blog to track and humorously critique the ads (lowermybillswatch.blogspot.com). “Some of them are so out of the blue they make no sense.”
Rogers Cadenhead, an author and blogger, resorted to tinkering with his computer to block all ads from the company. “I was trying to read a news article and realized the dancing mortgage people were eliminating all rational thought from my brain,” he said.
There may be few online ads less aimed at a specific audience than the LowerMyBills dancers, who are equally likely to perform their fanciful boogie on a bulletin board for hockey enthusiasts as next to an article related to home finance or on a mortgage-related site. (They also appear on the Web site of The New York Times.)
Matt R. Coffin, the co-founder and chief executive of LowerMyBills, said the company’s ad campaign represented a return to traditional advertising principles rather than an embrace of the latest conventional wisdom.
“Building a brand is often about being different, and we are always looking for new and innovative ways to attract the attention of consumers interested in lowering their bills,” he said.
Mr. Coffin said that the company closely tracks the performance of its ads, removing the ones that do not attract clicks, and that the banners are highly effective at getting Internet users to fill out loan applications. “If you keep seeing the same ads, that means they are working,” he said.
Internet companies like LowerMyBills are called lead generators because they take loan applications filled out by customers who click the ads and give them to actual lenders like Citibank, which pay them for the referrals. The company’s success hinges on buying lots of low-cost ad space on Web sites and then persuading users to click.
But on Web bulletin boards, the ads are drawing a lot of criticism. In one discussion of the company, a user calling herself Jane Dough wrote, “Even if they had the best interest rate around, I would still find myself thinking, ‘But aren’t they the cheesy company with the stupid dancing people?’ ”
In another discussion last week on the site of the band the Beastie Boys, fans of the group pondered the prevalence of the ads and in particular the woman on the rooftop, who appears to have cornrows in her hair and an unusual body shape for a model.
Others wonder what the dancers have to do with home equity loans or debt consolidation. Mr. Coffin said by way of explanation: “Our view is that people are crazy about saving money, and when they do save money they are very happy.”
But that does not explain other LowerMyBills ads, like the ones featuring a dog wearing goggles and a scampering duck.
One person who can shed some light on the LowerMyBills mystique is Jennifer Uhll, a 35-year-old graphic artist from Los Angeles who joined LowerMyBills in 2002 and became creative director in 2005. She left the company last summer to start her own firm, Juhll Inc.
Ms. Uhll said the company has included maps of the United States in its ads for years, ever since executives read a brochure about online advertising that said people responded to the chance to specify their home states. Most LowerMyBills ads include this feature, though it seems to have little effect on the loan application that people are asked to fill out.
Ms. Uhll said she first used the silhouettes in January 2005, in an ad featuring a woman blowing colorful bubbles that represented the 50 states. Four months later, another LowerMyBills ad with three prancing, high-kicking sheep under the headline “Mortgage Rates Hit Record Lows!” also performed well.
So Ms. Uhll combined the two concepts, animating her silhouetted, pony-tailed woman with a swaying modern dance. Ms. Uhll said she is a dancer and took a variety of dancing classes for more than a decade. She is also a fan of the pet sequences in “America’s Funniest Home Videos,” which relates to the animal ads.
“I usually put into my creative work what I love and what makes me happy and gets my attention,” she said.
Ms. Uhll said her online advertisements for financial companies, including ones she created before and after she worked for LowerMyBills, typically earned around $4 in lender referral fees for each dollar spent on the ad. The average for most lead-generation companies is less than $2 earned for each dollar spent on Web ads.
LowerMyBills, which is based in Santa Monica, Calif., declined to say exactly how effective its ads are, and it seemed eager to prevent that information from becoming public. After Ms. Uhll spoke to a reporter, she said, the company sent her two e-mail messages and a formal legal letter, warning of her continued obligations and saying it was “extremely sensitive to the disclosure of confidential information.”
Ms. Uhll said she is aware of Internet users who hate the LowerMyBills ads and she does question whether the ads pollute the Internet, as some assert. But she said she decided that “there are lots of people who are glad they saw the ad and ended up paying a lot less money.”
Many online advertising experts express a grudging respect for the work of Ms. Uhll and her successors at LowerMyBills. “I do have a bit of admiration for the company,” said James Gardner of the online ad archive Adverlicio.us, which maintains a collection of LowerMyBills ads. “They are very comfortable flying in the face of scorn and ridicule.”
Timothy Hanlon, a senior vice president at the Starcom MediaVest Group, a media communications firm, called the company a “bottom feeder,” but he added: “The last time I checked, advertising was designed to draw people’s attention. On that level, LowerMyBills succeeds with a gold star.”
Mr. Coffin was not apologetic about his company’s methods. “One thing we will probably expand to the nth degree are the dancing silhouette ads,” he said. “It’s a great opportunity to double down on a proven winner.”

A Surprising Secret to a Long Life: Stay in School (NYTimes, 01/03/07)

January 3, 2007
The New Age
A Surprising Secret to a Long Life: Stay in School
By GINA KOLATA
James Smith, a health economist at the RAND Corporation, has heard a variety of hypotheses about what it takes to live a long life — money, lack of stress, a loving family, lots of friends. But he has been a skeptic.
Yes, he says, it is clear that on average some groups in every society live longer than others. The rich live longer than the poor, whites live longer than blacks in the United States. Longevity, in general, is not evenly distributed in the population. But what, he asks, is cause and what is effect? And how can they be disentangled?
He is venturing, of course, into one of the prevailing mysteries of aging, the persistent differences seen in the life spans of large groups. In every country, there is an average life span for the nation as a whole and there are average life spans for different subsets, based on race, geography, education and even churchgoing.
But the questions for researchers like Dr. Smith are why? And what really matters?
The answers, he and others say, have been a surprise. The one social factor that researchers agree is consistently linked to longer lives in every country where it has been studied is education. It is more important than race; it obliterates any effects of income.
Year after year, in study after study, says Richard Hodes, director of the National Institute on Aging, education “keeps coming up.”
And, health economists say, those factors that are popularly believed to be crucial — money and health insurance, for example, pale in comparison.
Dr. Smith explains: “Giving people more Social Security income, or less for that matter, will not really affect people’s health. It is a good thing to do for other reasons but not for health.”
Health insurance, too, he says, “is vastly overrated in the policy debate.”
Instead, Dr. Smith and others say, what may make the biggest difference is keeping young people in school. A few extra years of school is associated with extra years of life and vastly improved health decades later, in old age.
It is not the only factor, of course.
There is smoking, which sharply curtails life span. There is a connection between having a network of friends and family and living a long and healthy life. And there is evidence that people with more powerful jobs and, presumably, with more control over their work lives, are healthier and longer lived.
But there is little dispute about the primacy of education.
“If you were to ask me what affects health and longevity,” says Michael Grossman, a health economist at the City University of New York, “I would put education at the top of my list.”
Graduate Student Finds Answer
The first rigorous effort to decide whether education really changes people so they live longer began in a most inauspicious way.
It was 1999 and a Columbia University graduate student, Adriana Lleras-Muney, was casting about for a topic for her doctoral dissertation in economics. She found an idea in a paper published in 1969. Three economists noted the correlation between education and health and gave some advice: If you want to improve health, you will get more return by investing in education than by investing in medical care.
It had been an inflammatory statement, Dr. Lleras-Muney says. And for good reason. It could only be true if education in and of itself caused good health.
But there were at least two other possibilities.
Maybe sick children did not go to school, or dropped out early because they were ill. Or maybe education was a proxy for wealth, and it was wealth that led to health. It could be that richer parents who gave their children everything, including better nutrition, better medical care and a better education, had children who, by virtue of being wealthy, lived longer.
How, she asked herself, could she sort out causes and effects? It was the chicken-and-egg problem that plagues such research.
The answer came one day when Dr. Lleras-Muney was reading another economics paper. It indicated that about 100 years ago, different states started passing laws forcing children to go to school for longer periods. She knew what to do.
“The idea was, when a state changed compulsory schooling from, say, six years to seven years, would the people who were forced to go to school for six years live as long as the people the next year who had to go for seven years,” Dr. Lleras-Muney asked.
All she would have to do was to go back and find the laws in the different states and then use data from the census to find out how long people lived before and after the law in each state was changed.
“I was very excited for about three seconds,” she says. Then she realized how onerous it could be to comb through the state archives.
But when her analysis was finished, Dr. Lleras-Muney says, “I was surprised, I was really surprised.” It turned out that life expectancy at age 35 was extended by as much as one and a half years simply by going to school for one extra year.
Her prize-winning paper appeared in Review of Economic Studies. And she ended up with a job as an assistant professor at Princeton. Now, others papers have appeared, examining the effects of changed laws on compulsory education in Sweden, Denmark, England and Wales. In every country, compelling children to spend a longer time in school led to better health.
“You might think that forcing someone to go to school who does not want to be there may not be the same thing as going to school because you want to,” Dr. Lleras-Muney said. “That did not seem to be the case.”
Not everyone was convinced.
Victor Fuchs, a health economist at Stanford, points out that it is not clear how or why education would lead to a longer life.
And, he said, there are other mysteries. For example, women increased their years of schooling more than men have in recent decades. But men are catching up with women in their life spans.
And it might be expected that after a certain point, more years of school would not add to a person’s life span. That, however, is not what the data shows. The education effect never wanes. But most researchers say they are swayed by Dr. Lleras-Muney’s work and the studies in other countries. That, though, leaves the question of why the education effect occurs.
Dr. Lleras-Muney and others point to one plausible explanation — as a group, less educated people are less able to plan for the future and to delay gratification. If true, that may, for example, explain the differences in smoking rates between more educated people and less educated ones.
Smokers are at least twice as likely to die at any age as people who never smoked, says Samuel Preston, a demographer at the University of Pennsylvania. And not only are poorly educated people more likely to smoke but, he says, “everybody knows that smoking can be deadly,” and that includes the poorly educated.
But education, Dr. Smith at RAND finds, may somehow teach people to delay gratification. For example, he reported that in one large federal study of middle-aged people, those with less education were less able to think ahead.
“Most of adherence is unpleasant,” Dr. Smith says. “You have to be willing to do something that is not pleasant now and you have to stay with it and think about the future.”
He deplores the dictums to live in the moment or to live for today. That advice, Dr. Smith says, is “the worst thing for your health.”
An Observation on the Street
In the late 1970’s, Lisa Berkman, now a professor of public policy at the Harvard School of Public Health, took a part-time job at a San Francisco health care center. It drew people from Chinatown and the city’s Italian neighborhood, North Beach, as well as from the Tenderloin district, a poor area where homeless people lived on the streets and mentally ill people roamed. And she noticed something striking.
“In Chinatown and North Beach, there were these tightly bound social networks,” Dr. Berkman recalls. “You saw old people with young people. In the Tenderloin, people were just sort of dumped. People were really isolated and did not have ways of figuring out how to make things work.”
A few years later, she was haunted by that observation. She had entered graduate school and was studying Seventh-day Adventists when she began to wonder whether the standard explanation for their longer lives — a healthy, vegetarian diet — was enough.
“They were at decreased risk from many, many diseases, even ones where diet was not implicated,” Dr. Berkman says. And, she adds, “it seemed they simply had a slower rate of aging.”
Seventh-day Adventists, like the people in Chinatown and North Beach, had “incredibly cohesive social networks,” Dr. Berkman notes. Could that be the clue?
Thirty years later, studies have borne out her hunch.
The risks of being socially isolated are “phenomenal,” Dr. Berkman says, associated with twofold to fivefold increases in mortality rates. And the correlations emerged in study after study and in country after country.
Yet, Dr. Berkman adds, there was that perennial question: Did social isolation shorten lives or were people isolated because they were sick and frail and at great risk of death?
She knows that sometimes ill health leads to social isolation. But, Dr. Berkman says, the more she investigated, the more evidence she found that social isolation might also lead to poor health and a shorter life by, for example, increasing stress and making it harder to get assistance when ill.
But researchers also warn that their findings that education and, to a lesser degree, social networks, may directly affect health do not necessarily mean that other hypotheses would also hold up. The cautionary tale, health economists say, is the story of the link between health and wealth.
Over and over again, studies show that health is linked to wealth. It even matters where a person lives.
For example, in a new analysis of Medicare beneficiaries, Stephanie Raymond and Kristen Bronner of Dartmouth College find that the lowest death rates are in the wealthiest places. So in San Francisco, with a per capita income of $57,496, just 4.16 percent of Medicare beneficiaries die each year. But in Tuscaloosa, Ala, whose per capita income is $24,257, the annual death rate was 5.97 percent.
Race was not a large factor.
“If you control for where people live, the disparities between black and white mortality rates become much smaller,” said Jonathan Skinner, a Dartmouth health economist.
An obvious explanation is that wealth buys health. And it seems plausible. Poorer people, at least in the United States, are less likely to have health insurance or access to medications.
But Dr. Fuchs says, then why don’t differences between rich and poor shrink in countries where everyone has health care?
“All you have to do is look at the experience of countries like England that have had health insurance for more than 40 years,” he says. “There is no diminution in the class differentials. It’s been the same in Sweden. It’s true everywhere.”
In fact, Dr. Smith says, the wealth-health connection, at least among adults, goes in the wrong direction. It is not that lower incomes lead to poor health so much as that poor health leads to lower incomes, he found.
A Skewing of the Numbers
Sick people tend to have modest out-of-pocket medical expenses, but often are unable to work or unable to work full time.
The result can be a drastic and precipitous and long-lasting drop in income. As the ranks of middle- and upper-income populations become depleted of people who are ill, there is a skewing of the data so healthy people are disproportionately richer.
That effect emerged when Dr. Smith analyzed data from the National Institute on Aging’s National Health and Retirement Survey, a national sample of 7,600 American households with at least one person aged 51 to 61.
If someone developed cancer, heart disease or lung disease — which will affect about a fifth of people aged 51 to 61 over the next eight years — the household’s income declined by an average of more than $37,000. And its assets — its wealth — fell by $49,000 over the ensuing eight years, even though out-of-pocket medical expenses were just $4,000.
Dr. Smith also asked whether getting richer made people healthier, an effect that could translate into a longer life. It does not, he concluded after studying the large increases in income during the stock market surge of the 1990s.
“I find almost no role of financial anything in the onset of disease,” Dr. Smith says. “That’s an almost throw-you-out-of-the-room thing,” he confesses, but the data, he and other economists insist, is consistent.
Income, says Dr. Preston, “is so heavily influenced by health itself.”
Much More Than Genes and Luck
As director of the National Institute on Aging, Dr. Hodes often speaks to policy makers, giving briefings on the latest scientific findings. But, he and others say, all too often there is a disconnect.
There are some important findings: Health and nutrition early in life, even prenatally, can affect health in middle and old age and can affect how long people live.
For the most part, genes have little effect on life spans. Controlling heart disease risk factors, like smoking, cholesterol, blood pressure and diabetes, pays off in a more vigorous old age and a longer life. And it seems increasingly likely that education plays a major role in health and life spans.
And then there is the question of what to do. It might seem logical to act now, pouring money into education or child health, for example.
But scientists often say they would like good evidence beforehand that a program that sounds like it would make a difference, like keeping students in school longer, really works. And if the goal is longer and healthier lives, is that the most cost-effective way to spend public money?
There are just so many questions remaining, says Richard Suzman, a program director at the National Institute on Aging. Even studies showing that, for many people, the die may be cast early in life, do not reveal how best to make changes.
“We have only a vague idea of when and where early experience links to old age or when and where to intervene,” Dr. Suzman says.
“When it comes to changing things,” says Dr. Skinner, the Dartmouth economist, “we are in uncharted territory.”

Google Answer to Filling Jobs Is an Algorithm (NYTimes, 01/03/07)

January 3, 2007
Google Answer to Filling Jobs Is an Algorithm
By SAUL HANSELL
MOUNTAIN VIEW, Calif. — Have you ever made a profit from a catering business or dog walking? Do you prefer to work alone or in groups? Have you ever set a world record in anything?
The right answers could help get you a job at Google.
Google has always wanted to hire people with straight-A report cards and double 800s on their SATs. Now, like an Ivy League school, it is starting to look for more well-rounded candidates, like those who have published books or started their own clubs.
Desperate to hire more engineers and sales representatives to staff its rapidly growing search and advertising business, Google — in typical eccentric fashion — has created an automated way to search for talent among the more than 100,000 job applications it receives each month. It is starting to ask job applicants to fill out an elaborate online survey that explores their attitudes, behavior, personality and biographical details going back to high school.
The questions range from the age when applicants first got excited about computers to whether they have ever tutored or ever established a nonprofit organization.
The answers are fed into a series of formulas created by Google’s mathematicians that calculate a score — from zero to 100 — meant to predict how well a person will fit into its chaotic and competitive culture.
“As we get bigger, we find it harder and harder to find enough people,” said Laszlo Bock, Google’s vice president for people operations. “With traditional hiring methods, we were worried we will overlook some of the best candidates.”
Google is certainly not alone in the search for quantitative ways to find good employees. Employers use a wide range of tests meant to assess skills, intelligence, personality and honesty. And the use of biographical surveys similar to Google’s new system is on the rise.
Such tools, however, have mainly been the trademark of large corporations recruiting armies of similar workers, like telephone service representatives or insurance sales agents. They are rarely used in Silicon Valley, which is built on a belief in idiosyncratic talent.
“ Yahoo does not use tests, puzzles or tricks, etc., when interviewing candidates,” Jessie Wixon, a spokeswoman for Yahoo, said. (Google is known for hazing prospects in interviews with intractable brain teasers. And it once tried to attract candidates by placing some particularly difficult problems on billboards.)
Google’s growth is staggering even by Silicon Valley standards. It is constantly leasing new buildings for its overflowing campus here and opening offices around the world.
Google has doubled the number of employees in each of the last three years. Even though the company now has about 10,000 employees, Mr. Bock says he sees no reason the company will not double again in size this year. That would increase the number of hires to about 200 a week.
As a result, Mr. Bock, who joined Google from General Electric last spring, has been trying to make the company’s rigorous screening process more efficient. Until now, head hunters said, Google largely turned up its nose at engineers who had less than a 3.7 grade-point average. (Those who wanted to sell ads could get by with a 3.0 average, head hunters said.) And it often would take two months to consider candidates, submitting them to more than half a dozen interviews.
Unfortunately, most of the academic research suggests that the factors Google has put the most weight on — grades and interviews — are not an especially reliable way of hiring good people.
“Interviews are a terrible predictor of performance,” Mr. Bock said.
Mr. Bock said that he wanted the company’s human resources department to bring the iconoclastic style as its Web site developers to the normally routine function of interviewing job candidates. “The level of questioning assumptions is uniquely Googly,” Mr. Bock said.
So Google set out to find out if there were any bits of life experience or personality it could use to spot future stars.
Last summer, Google asked every employee who had been working at the company for at least five months to fill out a 300-question survey.
Some questions were factual: What programming languages are you familiar with? What Internet mailing lists do you subscribe to?
Some looked for behavior: Is your work space messy or neat?
And some looked at personality: Are you an extrovert or an introvert?
And some fell into no traditional category in the human resources world: What magazines do you subscribe to? What pets do you have?
“We wanted to cast a very wide net,” Mr. Bock said. “It is not unusual to walk the halls here and bump into dogs. Maybe people who own dogs have some personality trait that is useful.”
The data from this initial survey was then compared with 25 separate measures of each employee’s performance. Again there were traditional yardsticks — the employee’s reviews, both by supervisors and peers, and their compensation — and some oddball ones.
One score was what the company called “organizational citizenship,” said Todd Carlisle, an analyst with a doctorate in organizational psychology, who designed the survey. That is, “things you do that aren’t technically part of your job but make Google a better place to work,” Dr. Carlisle said, such as helping interview job candidates.
When all this was completed, Dr. Carlisle set about analyzing the two million data points the survey collected. Among the first results was confirmation that Google’s obsession with academic performance was not always correlated with success at the company.
“Sometimes too much schooling will be a detriment to you in your job,” Dr. Carlisle said, adding that not all of the more than 600 people with doctorates at Google are equally well suited to their current assignments.
Indeed, there was no single factor that seemed to find the top workers for every single job title. (And pet ownership did not seem to be a useful predictor of anything.) But Dr. Carlisle was able to create several surveys that he believed would help find candidates in several areas — engineering, sales, finance, and human resources. Currently about 15 percent of applicants take the survey; it will be used for all applicants starting this month.
Even as Google tries to hire more people faster, it wants to make sure that its employees will fit into its freewheeling culture. The company boasts that only 4 percent of its work force leaves each year, less than other Silicon Valley companies. And it works hard to retain people, with copious free food, time to work on personal projects and other goodies. Stock options and grants certainly encourage employees to stay long enough to take advantage of the company’s surging share price.
Google’s hiring approach is backed by academic research showing that quantitative information on a person’s background — called “biodata” among testing experts — is indeed a valid way to look for good workers.
Michael Mumford, a psychology professor at the University of Oklahoma who specializes in talent assessment, said that this sort of test was effective, but he cautioned that companies should not rely on oddball factors, even if they seemed to correlate to good performance.
“You have to know or at least have a hypothesis why having a dog makes a good computer programmer,” Professor Mumford said. “If you ask whether someone started a club in high school, it is a clear indicator of leadership.”
At Google, it is too early to tell if the system is working. The surveys have been in use in about a dozen areas for several months.
Indeed, there is some resistance even at Google to the idea that a machine can pick talent better than a human.
“It’s like telling someone that you have the perfect data about who they should marry,” Dr. Carlisle said.
But even before the results are in on the new survey, Mr. Bock says he is already seeing success in easing the company past its obsession with grades.
“More and more in the time I’ve been here, we hire people based on experience as a proxy for what they can accomplish,” he said. “Last week we hired six people who had below a 3.0 G.P.A.”