The Economics of Joab's Cancer

I'd like to point students and educators of economics alike to this paper by TPS friend Joab Corey, who will be at Florida State in the Fall:

The Economic Principles of my Cancer Treatment: How to Use Medical Experiences to Teach Economics

Abstract:
This paper uses specific examples from my cancer treatment to illuminate multiple concepts that are typically covered in economic principles classes. Economics is a method of thinking that reveals itself in all aspects of life and a good economics instructor should be able to recognize and adapt these economic concepts in even his or her most severe life experiences. The real events of my treatment serve to illustrate and further clarify basic economic concepts such as inelasticity, cost-benefit analysis, bundling, the concept of a second best world, and marginal decision making. This paper illustrates how an economics instructor can use personal medical examples to make the course material salient to students while bolstering their confidence in the economic way of thinking.

Joab tells these stories with the greatest elements of comedy, which hopefully will come across to you in the paper.

Here is Joab on Rational Ghost Game Theory.

Economists Doing it with Models: A Facebook Three-Way

If you have ever wondered how nerdy economists become when conversing over Facebook, I provide you with the following exchange with TPS friend Pavel Yakovlev, Jodi Beggs of EDIWM, and myself. The subject was from Jodi's post on a potential market for organs:



If you haven't added Jodi's blog/website to your regular reading list, do so now. As a PhD student, she may already be one of the best educators of economics in the country.

Reference Point Counterfactuals vs Observations

From SciAm:

The researchers show that people prompted to write about how a positive event may not have happened experience a greater uptick in mood than those prompted to describe the positive event. In their most persuasive study, individuals in committed relationships wrote for 15 to 20 minutes about how they might never have met and connected with their partners. Others wrote instead about the reverse – that is, how they did meet, start dating, and end up with their partners. Several control conditions, which involved writing about one’s typical day or about one’s friendships, were included as well. The biggest increase in satisfaction with the relationship occurred not in the group that pondered the sunny beginnings of their union but in the “mental subtraction” (or “How I might never have met Peter”) group.

I suspect this works in reverse as well ("...if only I hadn't bought that car..." or "...if only we had just stayed friends instead of dating...").

I am conjuring up ways to make this advice more useful than simply just substituting away from counting your blessings. I'll get back to you when I think I have something useful.

Why I Don't Read More Psychology

These were side-by-side teasers on this morning's Psychology Today homepage:

Here is the link for the first and second article, if you are so inclined.

Markets in Everything: Homeless Line-Holders Contracted by Lobbyists

From CNN, we learn what happens when quantity supplied is less than quantity demanded:

For big hearings with limited availability, line-standers may wait 20 to 30 hours. They're paid anywhere from $11 to $35 an hour.

Gomes was living in a shelter when he started line-standing. He said working in the halls of Congress gave him the motivation and money he needed to get off the streets. He now makes extra money by recruiting men for the line-standing services from the homeless shelters where he used to stay.

[...]

Many of the contracted line-standers are homeless or formerly homeless like Gomes.

Gasp! You mean there is no free lunch!?! Surely someone can stop this! Who will be our hero?

Critics see the practice as just another way lobbyists are buying influence on Capitol Hill. In 2007, Sen. Claire McCaskill of Missouri introduced legislation to ban the practice of line-standing.

"I have no problem with lobbyists being in hearings, but they shouldn't be able to buy a seat," McCaskill said. "It seems to me that if we are going to make sure lobbyists aren't buying meals for senators, and we are going to make sure lobbyists aren't buying elected officials gifts, then we ought to make sure they aren't buying seating at a public hearing."

They are going to ban standing in line? I'm not sure how people will get in the building. I would prefer we simply make it less valuable for lobbyists to get in the building in the first place.

This is where we must cue the sentiments from an activist who will reveal they care far less about outcomes, and instead demonstrate a bunch of self-serving moral indignation under the ruse of saving the homeless from being "used" or "exploited."

Maria Foscarinis, an advocate for the homeless, thinks it's ironic that some of the most powerful people in the country are using some of the most vulnerable to hold a place in line for them.

Hat Tip: TC @ MR for the Markets in Everything Theme

In Pursuit of Materialism Happiness

(For those in Google Reader, "Materialism" in the above title actually has a strike through it.)

To be honest, I'm passing this along because it fits my world view pretty precisely, which is that people buy things that meet their preferences. From Slate's Gretchen Rubin on the Happiness Project:

So I’ve always been interested in this topic. But it seems to me that a lot of behavior that people consider “materialistic” is actually motivated not by a wish to boost self-esteem through stuff or to show off possessions to other people – in a “Keep up with the Joneses” kind of way – but by other reasons.

For example, take the guy who always buys the latest tech gadget – not from a desire to show that he can afford the most expensive new device, but to feed his fascination with technology, and perhaps also to maintain his reputation as a maven, the person to whom everyone can go for advice.

Take the couple who constantly renovate their house by adding a deck, adding a garden, putting in a new kitchen – not to show off to the neighbors, but as a way to get an atmosphere of growth in their lives. They see their house getting nicer, and that gives them satisfaction.

Take the person who buys beautiful furniture. My mother, who has a tremendous appreciation for objects and a huge amount of expertise on what gives objects quality, would appreciate and acquire beautiful furniture even if she were the last person on earth.

Clothes are puzzle. Some people appreciate beautiful clothes for their own sake; it’s not all about making a display for other people, though that’s part of it, too. Virginia Woolf wrote in her diary: “I must remember to write about my clothes next time I have an impulse to write. My love of clothes interests me profoundly; only it is not love; and what it is I must discover.” Is this materialistic?

For better or worse, buying things is a way to engage with them and with the world. If you’re interested in a certain kind of object, you often express that interest by researching, shopping, and buying it. People who can’t afford art go to museums, but when people who like art can afford it, they usually want to buy art, too. People who love to cook want to buy elaborate tools and ingredients. People who love music want to buy music.

Juicing The Mitchell

Reason Magazine asks "Do we really need federal laws governing carry-on luggage, college football, and switchblades?"

Yes we do, now more than ever.

Why Has the Proportion of Children Born to Unmarried Mothers Increased?

According to the NCHS, about 40 percent of births in 2007 were to unmarried mothers. A quick Google search reveals that the conservative family values crowd is jumping on this as the next sign of the apocalypse brought on by promiscuity.

I greatly enjoyed and recommend Robin Hanson's posts on the subject. He discusses a new equilibrium for male characteristics in a world where fatherly responsibilities disappear for child rearing.

My suspicion though is that we are seeing a lagged effect from an increase in cohabitation, or a progression in cohabitation as a social phenomenon. In other words, either people who started cohabiting before are now having children, or people view cohabitation as a permanent relationship rather than a "trial run" of marriage. In which case, men will continue to play a fatherly role, and we can spend less time in the gym.

By all accounts cohabitation has been increasing considerably, particularly from 1990 to 2000. The best data on the subject seems to be this page from the U.S. Census, where Table C-3 in 2008 and 2007 gives us the living arrangements for children and the marital status when both parents living with them. The percentage of children living with unmarried parents increased from 2.92 to 3.18 percent in those two years, so we don't learn much.

If we look at data from the NCHS report, while there is nothing even remotely definitive, I think it is more supportive of my suspicion. Notice that while unmarried teenagers are not getting pregnant at any higher rates, compared to 1995 there is a notable increase in unmarried births for the groups that would have been cohabiting in the 1990's to early 2000's:

Indian Taco Inflation

TPS friend Jason Oberle has a funny post at the American Indian Policy Blog on the rising price of Indian Tacos, and gives TPS a shout out in the process.

I love price riddles (see here and here for others), and I hope JO gets to the bottom of Indian Tacos. Inflation? Coordination Game? Price Follower-Leader Model? Higher Costs? The world may never know.

Failed States Index

Foreign Policy and The Fund for Peace have put out the 2009 Failed States Index. Here's the top (bottom?) 10.

1. Somalia
2. Zimbabwe
3. Sudan
4. Chad
5. Democratic Republic of Congo
6. Iraq
7. Afghanistan
8. Central African Republic
9. Guinea
10. Pakistan

Here's the fancy map. Click a country to see how they rank.

Personally, I think Zimbabwe is worse than Somalia. Peter Leeson suggests Somalia isn't (or at least wasn't) as bad as people say. Ben Powell has a paper with Ryan Ford and Alex Nowrasteh titled “Somalia After State Collapse: Chaos or Improvement?” forthcoming in the Journal of Economic Behavior & Organization.

HT: Astrid Arca

San Pedro Prison

In Bolivia, the San Pedro Prison is governed completely by the inmates; guards simply ensure that no prisoners leave the facility. Despite this lack of government presence, the prison is safer than other Bolivian prisons and other self-governed prisons, like Andersonville prison camp. I argue in my paper on San Pedro, that the relative order is the result of inmates ability to operate businesses and own their own cells, which provide the resources necessary to invest in capital for protection and raise the cost of predatory behavior.

News reports indicate that Bolivian officials have begun cracking down on the prison. Inmate businesses are being shut down (including the inmate-run tours), ownership of cells is forbidden, and entrance to and exit from the prison is now tightly monitored (which will greatly reduce the extent of the market). The result will likely be greater violence and degradation.

One More Thing We Can Learn From Sliced Bread

A common criticism of capitalism is that we "waste" time and resources on trivial innovations like seedless watermelon and razor blades that vibrate. These things are nice, critics charge, but people should be focusing on things these elites deem to be more important.

Don Boudreaux celebrates to the chagrin of some the 81st anniversary of sliced bread as another marvel of entrepreneurship. Here is his critic of choice:

You cannot be serious that sliced bread is a noteworthy achievement. The saying 'Best thing since sliced bread' is meant to be ironic.... Sliced bread is one step away from totally insignificant.

The sliced bread example is another illustration of the flaw with this "wasteful innovation" thinking. Socialist societies might not specifically devote resources to developing bread slicing machines, but that does not make it "wasteful" for capitalist entrepreneurs to do so. Why?

Both socialist and capitalist societies are going to make bread. One major difference is that the people baking bread in capitalist societies have the incentive to think of new ways to make bread better, more plentiful, and less expensive. The socialist society does not incentivize their own bakers in any similar manner, and as a result, they don't get these tiny innovations that taken altogether make life incredibly more pleasant.

Joke of the Day

Columbia Business School's Dean Glenn Hubbard sings about wanting Alan Greenspan's job.

How Good Economics Can Save Lives From Bad Policy

I've been tapped by IU to do a 40 minute lecture to about 150-200 incoming SPEA students next week. The title of my presentation is Why We Need Economics to Make Policy: An Introduction on How Not To Kill People. You can find it here.

After some demo critical thinking problems, I provide pretty famous examples of policies with tragic unintended consequences. However, I could always use more, so if you have any other good examples I might want to consider, please do share!

Thanks in advance!

California Lawmakers Might Need Weed

From the AP:

A pro-marijuana group is launching another television bid to legalize pot in California - this time with the pitch that legalizing and taxing the drug could help solve the state's massive budget deficit.
...
State lawmakers are bitterly debating how to close a $26.3 billion budget deficit that likely means cuts to state services.

In February, Assemblyman Tom Ammiano, D-San Francisco, introduced a bill to tax and regulate marijuana like alcohol. Bill supporters estimate the state's pot industry could bring in more than $1 billion in taxes.

I'm going to provide you with the official, secret, "for your eyes only" battle plan that free market advocates have in mind for marijuana:

Step 1: Convince the government to legalize mj, with potential tax revenues being a major selling point.

Step 2: (To be initiated upon completion of Step 1) Convince the government to remove the tax on mj.