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I Forge Iron

Interesting concept "Survivorship bias"


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During WWII there was a statistician named Abraham Wald who took part in an analysis of bomber planes that had returned from combat.   The military thinking to that point was to add armor to the parts that were getting hit since it seemed fairly obvious that was where the bullets were landing.

Wald's group told the military to add armor to the parts of the bomber that were not hit. They reasoned that the damaged parts were obviously not critical because the only examples to inspect post combat had survived.  This suggested that the difference between the planes that were shot down, and those that survived was that the survivors were not hit in critical areas.

I read this and immediately recognized the utility of this thinking in business, specifically starting a businesses.  Lots of new businesses fail despite having many of the same characteristics as ventures that were successful.  In fact, the entrepreneurs tend to use successful businesses as a model for what their operation.  Business schools spend a lot of time on case studies where they go over the surviving wreckage and make recommendations.  We see a lot of emphasis placed on adding risk mitigating "armor" wherever the entrepreneur felt they took damage.  

I know a guy who's a perfect example of this.  When he started, his entire business plan was  mostly two slogans;  "The first thing a business needs is a client" and  "Pigs get fat, hogs get slaughtered".  He spent his first six years in business painfully chasing one profitless job after another.  He couldn't bring himself to admit that some clients are very bad for business, so he focused on constantly seeking a level of graft that was high enough to compensate, without attracting so much attention that he was kicked off the bid lists.

Raising change order pricing was just adding armor where his "wings" were getting hit.  The jobs weren't profitable in their own right, so the higher change order prices only brought it back to break-even.  

Meanwhile, the true key to his success was in the areas he paid the least attention to.  His positive attitude, and excellent communication skills made him less stressful to work with than his competitors.  Building trust with better clients never occurred to him, because his history of earning the trust of bad clients had no observable effect.

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Interesting, is there any statistical analysis of Wald's method and effects? The logic is elegant and hard to dispute on it's face. 

The parallel to business and clients makes sense but I'll have to do some thinking on how to apply it before I opine further. 

I have a number of deep cogitations working right now, An expedition to Shambala, Humeral morphology and neolithic well shoring is loaded with jargon that's keeping me looking up words and phrases more than reading articles. 

It's fun but every time I take a sip of iced tea I get a head ache.

Frosty The Lucky.

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I first thought this might be an offshoot of "Preservation Bias" as seen in archaeology.  People think that what is dug up must be a good cross section of what existed; where in reality types of items that are prone to decay may have been very common but almost never show up in the digs.  One example is that the acidic soils of northern Europe tend to destroy bast fibers while preserving protein, (animal), fibers.  However we know from other types of evidence that bast fibers were extensively used. They just didn't make it to be found nowadays without "special preservation conditions".

Trying to figure out what is necessary vs what is helpful vs doesn't really have much effect one way or the other for businesses would be difficult as it's so hard to juggle so many possibilities to see what works.

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T. P.,

You bring up an interesting "factoid".

Here is another.

Have you noticed that clothes in a museum are always small.

For example dresses from the 1800's?

For decades historians thought that people were smaller in those days. And that might be so in certain cases.

Many ascribed our taller stature to better nutrition, medical care, etc.

.But some historians, who study styles of clothing,  had a clever thought,  and explanation.

The small sized dresses survived better because fewer ladies were of smaller stature. Clothes were generally handed down to younger folks, in the past. They were discarded when they wore out. those garments,  (rags?)  were not donated to museums. The little used smaller sized clothes hung around gathered dust and were eventually donated to museums.

Is the above observation an example of Dr. Abraham Wald's  "inverted" type  thinking?

Regards,

SLAG.

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Skeletal analysis has shown variations in height over time/place; but it seems that it was factory work with poor food that really shrunk folks in the 19th century. Some medieval groups would average "tall" today!

Another "preservation bias" example is that good tools tend to be used till they wear out.  Bad tools may be used once and discarded.  I have run across great looking tools at the scrapyard that didn't live up to their appearance as well as heavily worn tools that were a joy to work with.

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I read somewhere (David Pye's The Nature and Art of Workmanship, maybe?) that people assume that everything was made to last in "the good old days" because things that are well-made tend to last.

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Yup; the 100+ year old Sears Roebuck catalogs show that they tended to sell a range of "quality levels"; for example in blacksmithing they sold cast iron ASO's and also re-branded HB's.  Harbor Fright is not a new retail concept!

Better grades of tools often expected the user to take care of and maintain them and were often designed for repair and maintenance----how many times do you think some of these power hammer have had their bearings re-done?   We are tending towards a throw-away society in that respect for some items. OTOH for other items we have gone the other way---when was the last time you heard someone bragging that they had 100000 miles on their car's original engine?

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Thomas,  Your comment about "throw-away society" reminded me of something.  If you peruse a typical survival manual, you'll likely find all sorts of information on how to convert resources into useful products for survival.  A great example is how to make cordage which has a lot of survival applications.  

However, it's pretty rare for a survival manual to address preserving, maintaining, and and re-using cordage.  This despite the fact that it's actually a lot of work to convert vegetation into viable cordage in most environments.  

As for the high mileage brag, I think there's an industrial movement playing a bigger role than social trends.  Cars are significantly more difficult to repair with basic tools than they ever were before.  

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The question being what drives what?   Cars are harder to work on; yet last for a much longer time with little work.  Reliability became a driver. I remember folks bragging that they had a hundred thousand miles on an engine; nowadays I sometimes don't even buy a car till it has that much and expect it to last a lot longer. Two hundred+ is not rare now.

I remember the changeover taking place: our 66 Volkswagon had a little metal tool that just about did everything but an engine rebuild. To do a tune up you put it on the flywheel and adjusted the flywheel until the notch on the flywheel aligned with the line cast into the engine block. Done  Then in the early 1970's we traded in the VW for a Fiat.  First time I went out to work on it I got the manual out and it said "to do a tune up, adjust the idle speed until the carbon monoxide output of the exhaust equals XYZ ppm"  It was a car not suitable for home repair and not reliable enough to not need much repair.

 

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Now with the new car's and pick-ups you can't even check the transmission fluid. They have gone to sealed systems, that you have to take it to the dealer to have it checked. At least the engine still has a dipstick and oil filler cap. On the new Ford Escape SE Eco-Boost, we just got, I can't even find the spark plugs and the owners manual is the thickness of volume 1 of the encyclopedia Britannica.:o

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Irondragon, I have a 2004 Pontiac Vibe GT I bought last May with 114,400 miles on it. Today it has over 172,000.  When i pulled the head.(burned 4 of the 8 exhaust valves) on a 98 Saturn SW2 wagon I had, we found zero ridge, and crosshatching was still seen in the cylinders. This on a car with 293,000 miles. I just rolled 340,000 on an 06 Dodge 1500 with the Hemi, and it still runs great.

I for one am glad they do not build engines like they used to, as I have driven over 600,000 miles since 05.

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Remember doing a tune up every 2,000 miles? In cold country you time them for spring and fall so it'll start in the cold and get better mileage in summer. I believe our Dodge Journey recommends it's first tuneup around 150,000 miles. 10,000 miles between oil changes. 

I loved my 59 Chevy 4 x 4 pickup with the 235 straight 6 but don't miss it, I was always turning a wrench on it. It was nice to work on, I could sit on an inner fender or sit up under it. I got so I could have the pistons on the table in about 30 minutes with an impact wrench. Hand wrenches to assemble it of course. I had that thing apart 5 times IIRC and never could figure out why the wrist pin was slapping or even which one. I miked everything, replaced bearings even connecting rods and wrist pins but fire it up and clickety clack it went. 

Learned how to time an engine without starting it on that old rig. A buddy dubbed it the Blue Goose. 

Frosty The Lucky.

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Thomas, 

I think your question has a few layers to it which can be addressed via the original point of this post.

You're basing the longevity expectation of modern vehicles on the survivors which raises the question or whether or not the barrier to self repair is a good thing.

This completely overlooks the fact that the barrier to self repair raises the cost of the repairs at a shop.  That in turn, makes it less economically viable for owners to risk the expense of doing a costly repair, knowing that the vehicle may soon suffer more problems.

I've owned eight vehicles in my life, and I've been provided with three company vehicles in my career.  Out of that eleven, only two made it above 100K miles before encountering a "death spiral" of repair costs.  I don't think I'm the only one who sees spending 50% of the vehicles current worth three to four times a year as a bad investment, especially when working a job that really requires a car.

I will concede that those two vehicles could have been repaired, and it's theoretically possible that their pattern of breakdowns would have ceased for a while.  I will also conceded that the annual cost of repairs on the worst of years was still lower than a year of new(er) car payments.  That being said, it can be difficult to maintain your cashflow when the daily driver is randomly racking up huge bills.  Timing alone can make these costs far more significant to a person who's barely getting by financially.  This goes double when the breakdowns cost your working hours.

If these cars weren't built to prevent owners from doing the work themselves, more people would be able to afford the repairs.  

I think the way to measure this would be to look at the salvage and trade-in inventory.  It wouldn't surprise me if the repair costs became unmanageable for the majority of owners at around 150K miles.

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As I buy used vehicles I tend to pay cash for them and budget US$50 a month for repairs; still cheaper than a car payment and I'm ok with that amount.  When the cost of a repair gets to be greater than the "value" of the vehicle I tend to think more about getting another one as usually the bathtub curve is coming into increasing number of issues around then.

Now the cost of working on vehicles has gone up as they get fancier, computerized ignition, fuel injection; but also the bearings are better and mufflers seem to last a lot longer too these days.  Fancier systems require fancier maintenance equipment; combine that with the spreading out of needing to use it can make it not cost effective to pay for it and let it sit on a shelf in the garage for a couple of years. Whereupon a massive hail storm might have destroyed your vehicle anyway and you've replaced it with a different brand that the equipment doesn't support anyway...

I do factor in reliability when looking for a replacement vehicle, Consumer Reports helps with that and if nothing else lets me know what to have checked before I buy a vehicle.  

Funny I just went over the vehicles I remember and came up with 11 myself---not counting my wife's vehicles which would push us over 20.

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Interesting discussion as my 2004 Nissan 4 cyl, automatic, pickup just recently seemed to be having some issues (Check engine light), Took it to my mechanic and they basically said; "drive it around town while you find the next one".   So it was donated with 179483 miles on it and I'm driving a 2004 4 cyl, stick, Toyota pickup with 93000 miles on it.   I was amused at how much I loved a lot of the "old fashioned standard features" in it. Crank windows, both doors have keyed entry, the rear side windows open.   I guess the simpler trim package suits me better than the fancier ones do.  (Does have working AC & Cruise control---I may be a Luddite; but I do have my standards!)

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I primarily drive a 2008 Toyota 4-Runner SUV with 218k miles on it.  I got it in 2010 with about 50k on it.  I am just coming up on having to pay for some repairs (rather than maintenance like tires and oil).  I am told that I need new brakes (pads and rotors), new CV joints, and new shocks (struts).  Probably looking at $1500-2k.  I'll probably go for it since there have been no signs of other, more major, problems.  I'm hoping to get 300k+ out of it.

Yes, it's harder to work on modern vehicles but the trade off with longer mileage is worth it IMO.

"By hammer and hand all arts do stand."  

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On 8/25/2020 at 7:58 PM, George N. M. said:

Yes, it's harder to work on modern vehicles but the trade off with longer mileage is worth it IMO.

George,  I see this as a good example of surivorship bias. The difficulty of repair vs longer mileage comparison is still working from the assumption that all vehicles will last that long.  It's also framing the vehicle's value in only two dimensions; repair difficulty versus longevity.  This thread also seems to be steering towards the assumption that there's a correlation between vehicle longevity, and the difficulty to repair. 

I recently bought a used car and shopping around revealed some important points.  First, it's absolutely incredible how coordinated the price-pointing is on used vehicles.   There isn't even 5% of difference between dealer lots spanning a 200 mile radius for comparable vehicles.  Seriously, if you pick a make model, year, and mileage threshold in Colorado, the only significant price difference is either warranty or tax.  "Certified pre-owned" vehicles that come with warranties were 10% more than those without.  Otherwise, the car will be the same price wherever you go.  Dealers won't reduce their online price by more than $200 on the nicer (under 30K miles, one owner, no damage) cars.

That price-pointing was a huge factor as the average mileage goes up.  At the $9-7K price point, nearly all the available inventory I found needed repairs that cost at least 20% of the purchase price.  Mileage at that level was between 90K and 200K.    Once we got down to the $5K price point, the repair costs were anywhere from 30% to 100% of the purchase price.  We found a lot of cars with salvage titles at this level.  Mileage at this level was almost always above 150K, often going 200K for economy cars.  $2K and down vehicles were all either above 250K miles, or they were being sold as "parts cars".  As I shopped around, it was really remarkable how frequently the cost to repair negated the "discount" for higher mileage. 

All of that experience taught me that the "true" cost of a properly working used vehicle is artificially increased by two things that have no causal relationship to longevity. 

The first is that overpriced repairs are obviously creating a source of revenue for dealers who take used cars in trade, repair whatever is broken, then sell them as "certified pre-owned".  10% is a significant price hike, but it's also equivalent to the total costs for three average repairs in the first year.

The second thing that doesn't cause longevity, is the fact that a very significant amount of the available inventory at the 100K mile level was salvaged.  Those aren't incredibly built cars that stood the test of time, they're cars that were caught in a flood, a horrible crash, or something equally devastating to the integrity of the car.  For the most part, it's not possible to get insurance or a title to legally drive these things on the road.  Yet these vehicles are helping to set the price point for the used market because online advertisements don't typically put that information in the lede.  That increases the suvivorship bias assumption that "newer" cars last longer. 

I think it's important to recognize that there's actually a market for people who would rather illegally drive a fatally damaged vehicle with less miles on it, than an older one.  My best guess is that they figure there is less risk since they know what's wrong with the salvage car, but they're more afraid of the price to fix what they don't know about in the older one.  If I'm right, that would suggest that the real barrier to vehicle longevity isn't the mileage or the resale value, but the cost of repairing it.

Finally, I think it's really important to dispel the notion that longevity comes from design decisions to exclude the do-it-yourself owner.  There are tons of manufacturers of electrical parts.  All of them adhere to the same manufacturers standards which allows interchangeability, without preventing innovation or durability.  Comparatively speaking, commercial fire alarm systems are heinously expensive because they're all proprietary.  There's no reason that the auto manufacturers couldn't standardize even the most advanced systems and provide technical bulletins to allow owners to repair their own stuff.

There's a huge legal fight between farmers and John Deere over this.  I sincerely believe that "Right to Repair" is becoming a borderline civil rights issue.  We are fast approaching the point where owners will need a subscription to use their own property.  I recently read that BMW was proposing a subscription service for luxury functions like Air Conditioning.  That way they can continue to collect revenue for the entire lifespan of the car.  Tesla is already doing similar things with their vehicles.  During the California wildfires last year, Tesla "unlocked" extra range in all the California Teslas to permit people to escape.  Sure, that was a kind thing to do, but what if they decided not to be kind?  What would you pay to escape in such a situation?

This is the true cost of artificial price inflation, which is only possible when all the other options for consumers are traded away.

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Well, whether you can drive on a salvage title depends on what state you are in.  Texas for one allows it. New Mexico is fairly easy to get a salvage title converted into a rebuilt title.

I generally don't go through dealerships and instead have vehicles inspected by my mechanic when they get that far along the hunt process.  (Of course I live in a small town and so my Mechanic knows who will be calling him at 3 am if it's on the side of the road...) I also make use of "special circumstances". One truck I bought was being driven by a person in their 80's who had to surrender their license when they failed the vision check.  Lots of years; but low mileage and exquisite maintenance.   My current truck also had low mileage due to the fact that the previous owner worked out of the country a lot for a large construction company---he told me it spent most of 6 years in the garage when he was in Dubai, his wife would drive it on weekends to keep it in good running order---also exquisite maintenance---records came with the vehicle.

Now it is more legwork finding such deals and once again TPAAAT actually works for items not anviloid as well.

As I was recently in the hunting mode I was rather astonished at vehicles with extremely high mileage being offered at high prices. Ones that should be approaching the major replacements all over and selling at prices where when added with the replacement costs you would be better off buying new.

(One of the reasons I am not very dealer focused is the time I visited a dealer looking for a used truck and the salesman told me to take one out on a test drive. Unfortunately on my walk around inspection I noticed that the rear differential cover was missing and the gears were exposed.  Salesman couldn't understand why I didn't want to take it out on the interstate for a high speed test drive; and then possibly buy it...)

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My experience is that many auto dealerships are no longer in the automobile business where they sell cars at a profit but in the finance business where they make their money with payment packages.  Two experiences that I've had in recent years:  a)  I went to an "event" at a local dealership where all the used vehicles were marked with how many dollars you would pay per month.  When I asked the sales person the cash price they couldn't/wouldn't tell me.  When I asked the supervisor he started to give me a song an dance.  At that point I walked away. b)  When I bought a vehicle at a Denver dealership (it was advertised for a good price) they had a very hard time understanding that I wasn't going to finance the purchase through them or a bank, I was paying cash.  It took me several hours to get through their process with multiple people trying to convince me it was a better deal to finance it.  I had to repeat a lecture about interest you pay versus interest you are paid several times.

"By hammer and hand all arts do stand."

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More then likely there will be cars from Louisiana and Texas available and hit the market with some or slight water damage after hurricane Laura and that 12 to 20 foot storm surge goes through. Wash it out, dry it out, and it may or may not get reported.  Who car shopping in the upper midwest knows to ask.

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