Tim Harford's Blog, page 122

The big problem with small risks

It seems some of the best economics lessons can be learnt by hiring a car

Here’s a puzzle. If it costs €500 to hire a €25,000 car, how much should you expect to pay to hire a €50 child’s car seat to go with it? Arithmetic says €1; experience suggests you will pay 50 times that.

This was just one of a series of economics posers that raised their heads during my summer vacation – indeed, within a few minutes of clearing customs in Milan. One explanation is that the apparently extortionate price reflects some unexpected cost of cleaning, fitting or insuring the seat – possible but implausible. Or perhaps parents with young families are less sensitive to price than other travellers. This, again, is possible but unconvincing. In other contexts, such as package holidays and restaurants, children with families are often given discounts on the assumption that money is tight and bargains keenly sought.

The third possibility is that the car seat is an invisible cost, inflicted on poor suckers after they have already completed their search for a bargain. This is no great news: as Tom Waits once wrote, “The large print giveth and the small print taketh away.” But it is still a puzzle: how is it possible to conceal such entirely expected extra costs? Why doesn’t some company advertise “no hidden extras”, for instance?

This kind of puzzle – call it the hotel mini-bar problem – was explored a few years ago by economists Xavier Gabaix and David Laibson. The question is, is there some more transparent pricing scheme that aims for the same level of profitability as the companies which prefer to spring surprises on their customers? The answer is: no.

The difficulty for the straight-dealing company is that it must necessarily charge higher headline rates than tricksy competitors if it wants to be equally profitable. And advertising its honest pricing may not be a great strategy: the implicit slogan of the honest company is, “if you can avoid their sneaky charges, you may get a bargain by outwitting our competitors”. A firm that blows the whistle on industry pricing scams may simply educate its rivals’ customers, rather than winning their business.

After paying through the nose for the car seat we were alerted to a risk. “If your car is damaged or stolen, you are liable for the first €1,000 of any loss.” Gosh. I hadn’t really given the matter any thought but the danger suddenly felt very real. And for just €20 a day, or something like that, I could make that danger vanish.

Normally when you buy car insurance you are protecting yourself against an almost unlimited potential loss. But here, the prospective loss was quite clear: it was €1,000. And €20 a day is an actuarially fair price to make a €1,000 loss go away only for a driver who trashes his car every 50 days. I can be a little ropey driving on the opposite side of the road, but if that really was the risk I would stay well away from the wheel.

What’s happening here? Behavioural economists have long known about “loss aversion”: we’re disproportionately anxious at the prospect of small but salient risks. The car hire clerk carefully created a very clear image of a loss, even though that loss was unlikely. I haven’t paid such fees for years and have saved enough cash to write off a couple of hire cars in future.

A final trick from the car hire company is to invite you to bring back your car with an empty fuel tank: you’ll be charged the regular pump price and you don’t need to bother filling up. Quite a bargain – assuming you feel confident driving to the airport in an unfamiliar car running on empty. But as you juggle passports, foreign currency and a map at the beginning of your holiday, you may not think this scenario through until it is too late.

This is the time of year when I receive emails from students about to begin a course in economics. Good luck to all of them – but some of the best economics lessons can be learnt outside the classroom.

Also published at ft.com.

Left at the gate when it comes to Heathrow

‘The removal of Justine Greening as transport secretary and the appointment of Patrick McLoughlin as her successor has been widely interpreted as paving the way for the Conservatives to perform a U-turn on Heathrow’

Financial Times, September 5

Let me get this straight: 12 cabinet positions have been reshuffled, but this is basically about Heathrow?

You’re not imagining it. The issue on the table is a third runway at the airport. Justine Greening was implacably opposed to the idea, so she had to be moved.

Over her dead body, and all that.

Indeed. And over her constituency in west London, more to the point. The new chap is afraid of flying but since his constituency is in Derbyshire he may feel less anxious about several hundred new flights a day over west London.

But why did Ms Greening have to go? Doesn’t the government share her implacable opposition?

The Liberal Democrats are implacably opposed; Tories such as Zac Goldsmith and Boris Johnson are implacably opposed. Others are more placably opposed, or perhaps not opposed at all – the prime minister seems to be manoeuvring to support a third runway in the next Conservative manifesto.

The Labour party must be rubbing its hands at the confusion.

It is no better. The party sucked its thumbs on the subject for half a decade before finally approving a third runway. Ed Miliband, a minister at the time, bravely considered resigning and didn’t. And now Labour has changed its mind and opposes the runway.

Can’t these clowns just make up their minds?

Well, a decision was due just before the Olympic Games but it was then postponed.

I don’t remember that.

Well, it was a while ago. I am thinking of the Beijing games. I am sure the British political classes can keep this business simmering away until Rio 2016 and beyond. They took 20 years to get Terminal 5 built, after all.

Why is this such a slippery issue?

Partly because any decision to act carries considerable short-term costs, regardless of any long-term benefits. Even a rapid decision would be too late for a construction boom to stimulate the economy, and some future government could cut the ribbon in 2020 or so.

Don’t be too sure that it would be too late to stimulate the economy. You might have said the same thing back in 2008, and if politicians had pulled their fingers out then we might have been pouring concrete by now.

You have a point. But this isn’t just about timing. It’s about sorting out competing priorities, and none of the options seem attractive.

What’s wrong with the third runway?

Heathrow is on a cramped site, so even with a third runway it could hardly compete with competitors in Europe: Frankfurt and Paris have four runways, for instance. The flight paths run over highly populated areas, meaning that out of all EU citizens suffering from airport noise pollution, almost 30 per cent have Heathrow to thank for their pains.

Then there’s this crazy plan to build an airport to the east of London.

Starting again from scratch sounds insane but actually there is a history of building big airports in unlikely places: air travel has grown so spectacularly that many older airports carry too heavy a legacy. I am fond of Osaka’s Kansai airport, built out at sea and reached by an artificial causeway. But the new airport would be expensive, probably not ready for decades, and would require huge infrastructure spending just to be convenient for London. How it might be made handy for the rest of south-east England is anyone’s guess. It might also disrupt bird life.

Can’t we just make Heathrow work better?

We could try. There’s a fundamental contradiction, though. The logic of air travel says the bigger a hub airport is, the better, because that gives the best choice of destination. But the logic of competition says London might benefit from a rivalry between two hub airports.

Perhaps we should just do nothing and let Heathrow grind to a halt.

That is a popular alternative with environmentalists, who rightly worry about the carbon emissions from air travel. But the truth is that choking Heathrow will just divert aeroplanes to Frankfurt or Paris. We need a sensible policy to contain the environmental costs of flying, but this isn’t it.

Gosh. It is a conundrum.

This is the sort of complex, multifaceted problem that exists to be solved by the, ahem, political process. Don’t hold your breath.

 

First published in the Financial Times.

One of the world’s largest ever randomised trials… the results are in

The Democratic Republic of Congo is the poorest country on earth. It suffered what was probably the deadliest war since 1945, and according to Margot Wallström, the UN’s representative on sexual violence, it is the “rape capital of the world”.

Nevertheless the worst of the conflict is over and there is hope for the future of the DRC. Development projects are under way, but in a near-landlocked country that is two-thirds the size of western Europe, such projects aren’t easy to run.

One of them is Tuungane (“Let’s Unite”), a programme funded by the UK’s Department for International Development to the tune of £90m. The first £30m, Tuungane I, funded classrooms, clinics and other investments in 1,250 villages with a total population of almost 1.8 million people.

If the project is ambitious, what’s really fascinating is that Dfid has tried to evaluate Tuungane I rigorously, using a randomised controlled trial. Villages were enrolled in Tuungane through a public lottery. With 1.8 million people in the treatment group and a large control group, such an evaluation would be challenging to conduct in a rich country. In the DRC, where enumerators risk death and must wade through water up to their necks to reach the villages they are surveying, it’s mind-blowing.

Tuungane is a community-driven development project, or CDD. CDD is fashionable in development circles these days. The idea is that communities receive cash from donor agencies on condition that they come up with appropriate institutions for deciding how to spend the money. CDD projects will often insist on standards of transparency, democracy, or gender balance. The hope is that not only will the money be spent well, but that it may also catalyse accountable local institutions.

But does CDD deliver on this? The Tuungane I evaluation has now been completed by a team from Columbia University. The evaluation was based on a second project, Rapid, which was separate from Tuungane. Rapid handed out cash with few strings attached to Tuungane and non-Tuungane villages. The evaluators observed what happened: was the money embezzled, or well spent, and how were the decisions reached? This was the acid test of whether Tuungane had helped to promote effective village institutions.

The good news is that the Tuungane project was well executed and the money typically arrived where it was supposed to. In the DRC this is no small achievement.

Yet the results fall short of the CDD hype. The evaluators found that the Rapid cash grants were reasonably well spent whether or not a village had previously been exposed to three years of community building through Tuungane. Local institutions were more accountable than one might expect, but there was no sign that Tuungane could take any credit for this. Neither did Tuungane projects display any economic returns – although arguably there was too little time between spending the cash and evaluating the results for such returns to become apparent.

It’s a shame that the results haven’t matched the expectations of the CDD optimists, but it’s hardly a surprise. Tuungane is large in absolute terms, but it’s just a few pounds per person. It would be odd to expect miracles. The safe arrival of cash in the hands of very poor people is surely worth celebrating.

Still, because Tuungane was rigorously evaluated, even an unmitigated failure would have produced valuable information about what works and what does not. It is far too common for development projects simply to list their inputs: how much money was spent, and on what. To see a discussion of what happened is rarer; to see rigorous causal evidence assembled is rarer still. It should be applauded.

First published in FT Magazine.

EDIT: This should be implicitly obvious but I should make it explicit: randomisation took place on a village by village level, so although there were almost 2 million people in the treatment group there were only 280 distinct areas evaluated in the treatment group, and 320 in the control group.

Home workers or home shirkers?

Where do you imagine I might be writing these words? Am I at the FT? Or crunched up on a train? Perhaps I’m at the kitchen table or by a swimming pool. I may be wearing a suit, swimming trunks or pyjamas. Once you start to imagine some of the possibilities, you may find them difficult to banish from your mind.

For most occupations – from chef, to surgeon, to security guard – telecommuting is impossible. But an increasing number of jobs are becoming feasible to do from home. Perhaps it’s not surprising, then, that telecommuting is catching on. In the US, 10 per cent of people sometimes work from home, and more than 4 per cent of people do so predominantly. The curious thing is, we know very little about whether home working is effective – and within specific industries, different companies sometimes have very different practices. Swathes of management thinking are still akin to medieval medicine: there are lots of ideas floating around, but nobody really knows what’s effective and what’s superstitious nonsense.

My eye was caught, then, by a new study conducted by Nicholas Bloom, James Liang, John Roberts and Zhichun Jenny Ying, all economists at Stanford University. Liang also happens to be the founder and chairman of Ctrip, a Chinese travel agency, listed on the Nasdaq and currently valued at about $2bn.

This confluence of interests created a remarkable opportunity. Ctrip employs a lot of call-centre staff, and call-centre jobs – just like columnist jobs – turn out to be perfectly amenable in theory to working from home. Staff can be monitored through digital means, and all they need is a computer, a phone and a quiet space. But Liang simply didn’t know whether introducing telecommuting would work well. So, with Bloom and colleagues monitoring the results, Ctrip introduced a carefully designed randomised trial. From a pool of 255 qualified volunteers, Ctrip used birthdays – odd or even – to assign about half to nine months of home working and half to continuing to work from the office.

The telecommuting was a big success. Home workers on the same shifts as their office-bound colleagues were online and available for more minutes because they took fewer breaks and fewer sick days. They also took slightly more calls per hour logged in because, in the quiet home environment, they could hear customers more clearly. Each call was just as productive. Meanwhile, the home workers reported more job satisfaction and a better mood in general, and they were less likely to quit their jobs.

Totting up the results, Ctrip reckoned that each home worker, on average, produced better performance worth $375, saved $1,250 in office rental costs, and also saved $400 because of reduced turnover and training. That saving of more than $2,000 looks particularly impressive given that the average salary was $3,000 over the course of the same nine months. Telecommuting works, at least for Ctrip – and quite possibly for call centres all over the world.

It’s worth pausing, too, to contemplate the importance of running a proper randomised controlled trial. After the experiment was finished, some people who had not enjoyed working from home came back to the office; while eager would-be home workers replaced them. Because it was the less productive workers who tended to give up home working, this self-selection promptly made home working look twice as productive. We should conclude that home working is likely to be more effective when self-selection is allowed – but also that evaluations based on self-selection instead of randomisation are likely to deceive us.

Now, if you’ll excuse me, it’s time to get a coffee from the staff canteen. Or do I mean a cold beer from the poolside bar?

First published in the FT Magazine.

Hey! You! Get off of my cloud…

I received an interesting email recently. I use a computer at the BBC when working on Radio 4’s More or Less, and a BBC colleague got in touch to inform me that his computer was automatically downloading all my personal documents: tax returns; letters to my wife; photographs; the manuscript of a book I’m working on – everything. He hadn’t perpetrated some clever hack. His computer was being force-fed my files like a fattened goose.

A possible cause was Dropbox, a cloud computing service that copies designated folders on your computer and stores them remotely, so that you can access the files from anywhere. You can have copies of these folders on other computers, and if you save or change a file on one of them, all your computers will synchronise. It’s an utterly brilliant idea – provided that some computer somewhere doesn’t decide that not only does it need to keep your office computer in sync with your laptop, but it should also keep your colleagues in sync too.

I called Dropbox, and they protested that it was not their fault – apparently the files had somehow migrated across the BBC’s internal network, and my colleague’s Dropbox account was simply reacting to the fact that my files had arrived on his network drive. It transpires that my colleague had logged on to a computer where I had been sitting; it appears this act of hot-desking gave his Dropbox account access to my files.

It would seem odd for the BBC to set up hot desks that way. And if Dropbox seems to have a decent excuse in my case, the company has suffered two publicised security lapses, one recent and one last summer. But whatever the cause, the sudden appearance of my personal files on my colleague’s iPad and iPhone is hardly reassuring. The whole point of Dropbox, and similar systems, such as iCloud, SkyDrive and SugarSync, is to keep several computers in sync, and many people will – as I do – want to synchronise their computer at home with the computer in their office. Discovering that office IT systems and cloud computing may have an allergic reaction to each other is not entirely a surprise, but it’s a bit of a blow.

This is just one front in a battle that has been intensifying of late – the war between corporate and personal computing. Ten years ago, I was using a decent laptop supplied by my employer and was simply grateful for the free hardware. I think this was common enough. Now I am desperate to avoid the clunky corporate offerings, which are heavy, ugly and slow compared with my smartphone, my tablet and my ultrabook. I want to do my day job on my beautiful toys. Collectively, the Samsung phones, the iPads and the MacBooks of all the other silicon narcissists like me must be a corporate IT nightmare.

But it takes two to make a dysfunctional relationship. I may have been fussily wanting to use my personal technology to do my job, but my employer has joined me in this bungled embrace, elbowing its way into my home. The FT subsidised my purchase of an iPad – which is great for understanding the digital future of journalism, but just wait until you try to log the thing on to the office network. The FT has also embraced the Gmail interface for its email system. This would be terrific if it didn’t cause a conflict with the personal Google account I already rely upon.

I’m spoiled, I know. I am old enough to remember working in offices where there was no wireless, where laptops were prohibitively expensive, and where if you wanted to carry a file around, you saved the little blighter on to a floppy disk. Life was a lot less convenient.

Still, when the man on the other side of the open-plan office can peruse my tax returns and my family photographs, I confess to feeling a little nostalgia for the way things used to be.

First published in FT Magazine.

I think to myself, what a complex world

John Maynard Keynes once wrote – in an obituary of Alfred Marshall, although I suspect with a hint of self-congratulation – that a master economist needed to be “mathematician, historian, statesman, philosopher – in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.”

I had Keynes’s unachievable wish-list in mind when reading Complex New World: Translating new economic thinking into public policy, a new collection of essays published by the Institute for Public Policy Research. Here’s the challenge for policy makers: real economic policy problems are defined by networks in which each agent influences other agents, by imperfect rationality, and by a constant turmoil in which there is never a settled equilibrium. But the methods of economics – and perhaps more seriously, the basic tenets of the subject – are designed to analyse equilibrium, not disequilibrium, and to model non-networked, rational agents.

The IPPR essays set out to address this gap, and they ask the right questions. But the ghost of Keynes is not far away: there are few answers, despite an impressive roster of contributors, including Eric Beinhocker, Paul Ormerod and John Kay. No wonder: it is almost impossible to do this stuff well.

The main message for public policy of taking complexity seriously is, “it’s complicated”. Environmental taxes have unpredictable effects once networks of social influence are taken into account. Financial regulations can backfire. Political revolutions, such as the Arab Spring, can flare up. This is all true, but a little unsatisfying. Is there anything we can do other than throw up our hands?

A few things suggest themselves. The first is that policy makers need a dose of humility. If the world is complicated, better to acknowledge that there is much we don’t know than to march confidently in the wrong direction. Alas, few people in positions of power got there because of their humility. The second lesson is that in a complex world, it is often worth trying different policy options and evaluating them rigorously – using randomised trials if possible in schools, policing and road safety. Randomised trials are catching on, and many objections boil down to a single point: how can we justify trials when we already know the answer? But we often know less than we realise. In a complex world, it’s rare that we can figure out answers by sitting in an armchair and thinking hard.

Amid the excitement about complex networked systems, it’s possible to lose sight of the fact that boring old mainstream economics has some useful tricks up its sleeve. Jim Watson, an energy expert at the University of Sussex, worries that economists put too much emphasis on carbon pricing when dealing with the problem of climate change. When consumers are influenced by what others do, and when there are bottlenecks in the innovation system, there’s no reason to expect carbon pricing to be a panacea – but it’s a little soon to write off carbon pricing when it has been so patchily implemented. Social networks and innovation bottlenecks don’t alter the fact that people respond to incentives, and a high carbon price would be a good incentive.

I hope economists continue to take complexity more seriously. But economic problems won’t yield to complexity analysis alone, any more than they will yield to any other methodological problem. Keynes was right: good economics requires a rare combination of skills.

First published in the FT Magazine.

Don’t judge a book by its cover price

A book tagged at $23m is a long way from the dream that the internet would usher in an era of price transparency

Last spring, a young biologist tried to buy a copy of a common but out-of-print reference work, Peter Lawrence’s The Making of a Fly. Amazon offered 15 used copies at reasonable prices – and two new copies, the cheapest of which was $1,730,045.91, plus $3.99 shipping.

Michael Eisen, an evolutionary biologist at UC Berkeley, heard the tale and tried to figure out what was going on. It can’t have been a prank – there were two sellers involved, both with thousands of satisfied customers. Eisen heard that many prices on Amazon were set by computers, and suspected this might be the reason.

The next day, both prices had risen to around $2.8m. By the end of the day, the higher-priced copy was on offer for $3,536,675.57. Eisen began to figure out what was happening. One seller, profnath, would set its price to fractionally undercut the best price available, once per day. The other seller, bordeebook, would discover this after a few hours and reset its price to be 1.270589 times higher than profnath’s price. Over time bordeebook would keep raising its price and profnath would shadow the price rises, always undercutting them. Eventually, the spiral stopped – presumably a human intervened – but not before bordeebook was offering The Making of a Fly for a mere $23,698,655.93, plus $3.99 shipping.

Profnath presumably had a copy of the book and was trying to offer the highest price it could, consistent with undercutting everyone else. Bordeebook is more puzzling, but Eisen has an ingenious theory. He thinks bordeebook didn’t have the book at all. Instead, it was trying to generate interest from buyers who didn’t mind paying a bit more for dealing with a reputable seller (bordeebook had more than 100,000 satisfied customers on record).

The only trouble was, if somebody ordered the book, bordeebook had to get hold of it – hence the reason for charging the prevailing market price plus mark-up.

Of course $23,698,655.93, plus shipping, is a lot to pay for a book – a long way from the dream that the internet would usher in an era of perfect price transparency, in which consumers would discover the cheapest products and prices would inevitably fall to the cost of production. (Not everyone making this case in the dotcom-bubble era realised that it was inconsistent with the other touchstone principle of the time, that internet companies would be insanely profitable.)

In fact, it’s far from obvious why price transparency would lead to lower prices. The problem was studied by the 19th-century French mathematician J.L.F. Bertrand. Bertrand realised that with two competitors offering identical goods with transparent prices, all customers would flock to the cheaper offering. Each company could capture the entire market by undercutting by a penny, and the process of undercutting would only stop when prices fell to the cost of production.

Like any economic model, Bertrand’s is an oversimplification. And a small tweak turns his prediction on its head: simply repeat the process indefinitely. The competitors will benefit hugely if they can find a way to raise prices; not to $23m, perhaps – but to the level a monopolist would charge. And price transparency, which seemed to be the customer’s best friend, becomes her worst enemy.

Here’s why: with two competitors charging monopoly prices as part of an understanding, there is no incentive for either to cut prices. None. The price cut will be instantly observed and matched by the competitor. Far from inexorably lowering prices, transparency can ensure they stay high.

The only thing that will bring prices down is a new entrant. And in many industries breaking into an established market is not easy. Transparency can be excellent for lowering prices – but it is not wise to take that for granted.

Also published at ft.com.

The random side of riots

We talk as if we understand why civil disorder happens, rather than recognising the unpredictable processes at play

Around this time last year, I stood at the threshold of my home in Hackney, with a week-old baby asleep inside and two helicopters overhead tracking the looters outside. As far as I could figure out there was trouble about 100m to the south, and more trouble about 300m to the north. I didn’t venture far, I’m afraid; my paternal instincts were stronger than my journalistic ones.

A neighbour, holidaying in Scotland, called to advise me to get my family out of London. He was concerned that civilisation was about to collapse. I wasn’t, but I admit that during those bizarre few days it didn’t seem absurd to entertain the possibility.

Why did the riots happen? Every pundit had an explanation, from government cuts to soft policing. But there’s a very different way to look at last summer.

Consider the following simple model of a potential riot, based on an idea published in 1978 by the sociologist Mark Granovetter. There are 1,000 people in a crowd of protesters, and all of them have some underlying tendency to embark on a looting spree. We might reckon that an outbreak of rioting might be triggered by insensitive policing, or by the poverty of the crowd, or the opportunities for theft or for violent protest. But for simplicity let’s assume that the only thing everyone in the crowd cares about is what everyone else in the crowd is doing. Some people will start looting without much company. Others will hang back until the riot is well under way.

Let’s put a number on this riotous tendency. One anarchic lunatic has a threshold of zero: he requires nobody else’s encouragement to start throwing bricks at the police. Another person has a threshold of one: he needs someone else to get things kicked off, but then he’s happy to join in. Then there’s a person with a threshold of two and another with a threshold of three, all the way up to the wallflower of the crowd who has a threshold of 999 – he’ll join in only when there’s literally nobody else standing back.

As you no doubt appreciate, this crowd will display a domino-like tendency to riot: the first person encourages the second; that pair draws in a third; then a fourth and a fifth, until everyone is on the tear.

An interesting lesson quickly emerges from this simplistic model. Imagine that, say, the fourth person in an otherwise identical crowd doesn’t have a threshold of three but of four. This second crowd will behave itself: after the first two troublemakers start acting up, there is no third person willing to join them. The outcomes could hardly be more different – and certainly there would have been no national and indeed international media frenzy if the 2011 riots had consisted of two yobs causing trouble on the fringes of a protest in Tottenham, and nobody else joining in.

Yet we know, because we constructed the examples, that these utterly different results emerged from all but indistinguishable initial conditions. One person out of 1,000 had a fractionally different inclination to riot (by one-tenth of 1 per cent of the observed range). As Duncan Watts points out in his book Everything Is Obvious Once You Know the Answer, the two crowds would seem identical to any survey or statistical test you might care to deploy. The same tendency for apparently identical conditions to produce utterly different outcomes also appears in field experiments carried out by Duncan Watts, and in recent models based on more realistic networks of influence.

Nevertheless, we persist in talking as though we understand why riots happen, rather than recognising the random self-reinforcing processes at play. Social influence can work that way. Last year it was arson and assault across English cities. This year it is buying Fifty Shades of Grey.

Also published at ft.com.

“The Undercover Economist” – a free chapter

The second edition of The Undercover Economist was published last year in the UK, and recently as an eBook in the US.

The biggest change from the first edition was a new chapter about the financial crisis. Lots of people have written to ask whether they can get this chapter without buying the entire book again. That seems only reasonable, and you can now download it here. Enjoy.

Three PowerPoint tips you really need to know

Microsoft bought PowerPoint 25 years ago. Happy anniversary.

PowerPoint has a curious status these days – it’s ubiquitous and yet widely loathed. Both the ubiquity and the loathing are overdone.

Here are three tips I’ve found very useful as a speaker.

1) There are three things you can do with PowerPoint (or most of its rivals). You can put visual aids on a screen; you can create bullet-point speaker’s notes; and you can produce handouts for people to take home. All of these uses are perfectly legitimate, but you can’t do them all at once. Your speaker’s notes should be on small cards in your hand; your handouts can have contact details, sources, a bibliography, or dense data; your visuals should be simple and look awesome. If you feel you need to do all three, fine: you will need to create three completely different presentations.

2) If you don’t have anything useful to display for a particular section of your talk, display nothing. During slideshow mode, press B to show a black slide, or W for a white one. Or if you don’t have direct access to the computer while presenting, insert blank slides as necessary. There’s nothing wrong with giving a talk during which you only show one or two slides – but don’t leave them up as wallpaper.

3) You don’t have to use any visual aids at all. You might be surprised at how much people focus on you when you stop competing with yourself for attention.