Aaron Rothstein's review In the Wall Street Journal of the new book Rabid by Bill Wasik and Monica Murphy, provides another example of a wonderful unintended consequence example. The dreaded disease rabies has within it a peptide that through evolutionary changes has found a way to easily enter into the human brain. Researchers, according to Mr. Rothstein, are working on using that transmission facility to work as a delivery mechanism to get Alzheimer's treatments into patient's brains.
This development reminds me of the discussion in my book regarding the medication thalidomide. After proving to be a scorch on pregnant mothers using it to relieve morning sickness, the disease now turns out to have beneficial effects on certain ailments.
Expressions like "Making a silk purse out of a pigs ear," are very descriptive of the ability of scientist to make something good out of something harmful.
As I say in my book, we are hurting ourselves by keeping homes that are too clean. People clean their countertops with antibacterial sprays, they use alcohol on their hands, and they shower with antibacterial soaps. Some folks argue it's hard to prove that this over cleanliness is responsible for illnesses.
Recent research though has conducted a natural experiment on this topic. By natural experiment they mean something that just happens without a researcher having to set it up. The research concerns the impact of having a dog on the health of children in the home. Why this is a natural experiment connected to over cleanliness is that, as anybody who's ever owned a dog knows, they get dirty when they go outside. The research shows that families with dogs who spend the greatest amount of time outdoors have the fewest number of respiratory ailments. In other words, families who unconsciously bring germs into their homes (on their dogs) are more healthy than families either without dogs or whose dogs don't go outside.
What this research is saying is stop cleaning your house so much. People need to interact with bacteria, viruses and other "yucky things."
In late May the United States Preventive Services Task Force issued a recommendation that caught many men and their doctors by surprise. The panel recommended that prostate specific antigen blood test (PSA tests) should not be conducted. This topsy-turvy recommendation to not pursue information that a man might have prostate cancer flies in the face of most peoples approach to being healthy. Get tested for everything possible and be as proactive as possible.
The unintended consequence which drives this recommendation is the finding that for every 1000 men who might avoid death as a result of the screening 3000 other men would die from complications caused by follow-up exams and treatment for prostate cancer. The dilemma is particularly acute when one hears from men whose PSA test found a rapid growing cancer and whose lives were saved as a result. These people do exist. Their testimony is not being balanced by the three other people, for each person whose voices heard, whose lives were lost as a result of treatment.
Fortunately this outcome has arisen prior to the onset of Obama care. Otherwise, people would suspect that a death panel had made the decision. Of course, in our world of self-interest and media manipulation, many voices are working to overcome the panel's recommendation. Hard to believe that people won't listen to a task force comprised of some of the best minds in the field.
By now you've probably read in my book, Unintended Consequences: How to Improve our Government, our Businesses, and our Lives, about the environmental damage caused by the release of Anaconda snakes in the Everglades. A similar problem has recently surfaced when fans of the fictional character Harry Potter who have tired of their pet owls and have released them into the wild.
I don't know if these actions are willful that is people understood there would be an unintended consequence or simply ignorant. I often have the same query when I see a person throw their chewed gum on the ground. Do they expect someone else to step in it? Or are they utterly oblivious to the fact that other people walk on the sidewalk in addition to themselves.
Too bad that the abandon owls don't eat anacondas; if that were the case as in mathematics when two negatives become a positive, the two unintended consequences could cancel each other out.
In the Wall Street Journal article, "A Year Later Rebirthing Pains," we learn that the city of Joplin Missouri is a hotbed of libertarian residence. One outcome of this is a lax zoning provision enabling people to build whatever they want on their own land. The article also tells us that many people in Joplin gambled and did not purchase insurance that would protect their homes against tornadoes.
The unintended consequence of having a neighbor without insurance when you live in a town like Joplin is that they might build a home which is incompatible with the neighborhood. This is an especially distressing outcome for people who were insured and then rebuilt their homes often times even nicer than what they had been. To the chagrin of the insured, many are now living besides modular homes and the like. I don't expect that prospective neighbors will survey a street to find out how many families are insured but that would seem to be the only way to avoid this unintended consequence.
However things work out on the Facebook IPO there is no question but that the company went public with a rich valuation. The average company in the Dow Jones Industrials has a PE ratio of 13.5; in contrast, Facebook has a P/E ratio of 122. There Is little doubt but that Facebook has a greater earnings potential than does the average company in the Dow Jones Industrials. Whether that potential deserves a 10X multiple to the average company in the Dow Jones remains to be seen - I for one sincerely doubt it.
People buying Facebook shares, other than professional investors, and over 0.5 billion shares were traded on the first day, purchased them in part because they knew the company. Decades ago a famous portfolio manager at Fidelity investments, Peter Lynch by name, made famous the notion that it is good to know the companies you buy stock in and to buy lots of stock in companies that are your favorites. Facebook goes several steps beyond Mr. Lynch's advice. For many people Facebook is a way of life - it consumes several hours a day, if not more, of their time. For those people to not believe that Facebook is the greatest thing in the history of humanity would create a cognitive dissonance for them since they've invested so much of themselves into the product.
And that is the unintended consequence. Every good investor knows you need to evaluate the future cash flows of the company and its management before making an investment. Most of these new nonprofessional Facebook investors haven't done that. Instead, they are assuming that things will work out - and that is the unintended consequence - because Facebook for them is so important. . Long-term investing is more than about liking and loving it's about cash. If the investment pays off for them in huge profits because Facebook generates enormous cash flow then the strategy of investing in what you love made sense but not because they loved it but because of its cash making abilities.
Research has shown that some head injury patients and some people with Asperger's are good investors because they have an unnatural ability to do away with emotions and to focus instead on facts. The unintended consequence of being in love may be being a bad investor.
It seems that product designers have decided that everything we use needs to be small enough to fit into our pockets and run on batteries, whether rechargeable or not. In order to accomplish both goals and to maximize the power output, many products have gone away from traditional AA and AAA batteries to small circular batteries with codes that start with the letters CR.
The unintended consequence of small circular batteries was documented in a recent study in the journal Pediatrics which reported that young children generally five or younger in large numbers have been brought to hospital emergency rooms because they have either swallowed batteries or have gotten them lodged in their nose or ears. Anyone who has ever had small children knows that simply saying "no" is not sufficient to keep them from doing something possibly dangerous in fact it may be an inducement for them to go ahead and do it.
One strategy for reducing this problem would be to in case batteries within the device so that they were not changeable. The unintended consequence of this approach, however, would be to raise the cost of devices to consumers who would then need to replace them whenever the batteries ran out. Perhaps Manufacturers need to replicate what was done with medicine and childproof caps; that is, make it difficult for children to remove batteries from devices.
The Wall Street Journal on Saturday interviewed the CEO of Spirit Airlines, the notorious low-fare charge you for everything airline. Spirit is known for charging for just about everything: boarding passes, checked baggage, carry-on baggage, to use the Internet to book tickets, and the CEO even joked about charging for armrests.
The Interesting unintended consequence that emerged from the interview was the revelation that Spirit airplanes burn less fuel than their competitors because passengers riding on Spirit bring fewer bags as a result of the high fees. This observation brings to mind many other user fees that should probably be imposed because of their unintended consequences: kids could be charged a dollar per hour for watching TV ( with the expected unintended consequence that they would watch less television), smokers could be charged a fee to cover their additional medical care ( with the expected unintended consequence that they would smoke less), and consumers of high calorie carbonated beverages could be charged a per bottle fee ( with the expected unintended consequence of reduced obesity).
The problem with most of the fees suggested above Is that they would be imposed by the government which in and of itself would create other unintended consequences. The point of the observation though is that people respond to price signals and they can be used to redirect behavior. Notice there is a difference between banning smoking of cigarettes and charging users for the costs they impose.
Be careful when you walk down the street: the young person walking towards you no doubt has their head down and is busily texting, playing a game, or using the Internet. The same is true when statistics on book reading and other intellectual pursuits are compared over the past ten years: young people today are too busy with their toys to engage in rigorous learning activities.
A chapter in my new book Unintended Consequences: How to Improve our Government, our Businesses, and our Lives talks about how young people have acquired special skills that their elders do not possess - that is they traded off activities that require multitasking and short attention spans for other activities. The unintended consequence of this change is that kids today are failing when it comes to education.
The 2011 National Assessment of Educational progress recently released by the US Department of Education contained some frightening statistics. Just 32% of students had strong science skills. Some people are blaming the school systems and the educational process. There's probably some truth to this. However, I think the unintended consequence of parents allowing their kids to buy every new itoy and to spend a majority of their waking hours, only because they can't use them while they're asleep, is also responsible.
You have probably seen the ads about drugs and alcohol which tells parents not to have a double standard: tell kids not to use them and then turn around and have a drink. There is probably some degree of this problem taking place with itoys as well. That is, parents are spending too little time with their children and too much time playing with itoys. The responsibility of schools is expanded in this case in that they must both teach and replace the guidance parents should be providing. On that measure, the school systems are failing.
Most people remember the inconstant behavior of the pigs in George Orwell's Animal Farm. As they gain control over the farm they soon take on characteristics and behaviors of the humans whom they expelled. According to Dominic Holden in his New York Times editorial today “Smokeless in Seattle,” legal medical marijuana merchants in the State of Washington have worked to check the full marijuana legalization movement which is on the November ballot. How odd that this unintended consequence should arise between current sellers and prospective sellers of marijuana in Washington.
This unintended consequence is similar to the mutation that took place on the farm in Orwell's book. Power and profit lead to greed and suppression of opposition. Like the pigs in the book, purveyors of medical marijuana in Washington perceive full legalization as a threat to their economic well-being. To protect those profits they have worked diligently to persuade the public to vote against the full legalization proposal. Economic interests create strange bedfellows. In Washington State, they have induced medical marijuana advocates to align themselves with more reactionary interests.
Unintended consequences are a powerful force that surface everywhere affecting everyone. The most damaging unintended consequences are those involving government or legislative decisions since those affect the most people. But decisions made by people and companies also have unintended consequences. Everything you do today may lead to something that you don't expect - that would be an unintended consequence.