Prediction Markets: NFL Football

The preseason is over, and my Browns have been decimated by injuries. The regular season starts in 7 days, so I went to TradeSports to see who should be considered the favorites for the Super Bowl. Here they are from highest probability to lowest, and I included the volume so that you can make your own inferences about market thinness for each team.

Team	Price	Volume
PATRIOTS	19.70	1734
COWBOYS	11.30	2479
CHARGERS	10.30	2564
COLTS	8.70	1342
JAGUARS	5.20	980
GIANTS	4.40	3070
SAINTS	4.10	1247
EAGLES	3.80	2889
STEELERS	3.50	1325
VIKINGS	3.50	4631
PACKERS	2.90	4506
SEAHAWKS	2.70	1689
BUCCANEERS	2.40	6400
JETS	2.00	3822
BROWNS	1.90	2656
BRONCOS	1.80	1868
PANTHERS	1.80	1755
REDSKINS	1.60	3187
TITANS	1.10	920
BENGALS	1.00	2853
BEARS	0.90	3859
CARDINALS	0.90	1210
TEXANS	0.90	2978
BILLS	0.80	1759
RAMS	0.80	1856
LIONS	0.70	2813
RAIDERS	0.70	1833
RAVENS	0.70	1479
49ERS	0.60	1893
CHIEFS	0.50	1915
DOLPHINS	0.50	2072
FALCONS	0.30	1333

Diversifying the Economy II

A very good comment from "Anonymous" to my last post deserves some attention:

I think Rebecca Blank's comment is not against specialization and the division of labor. One thing is to specialize and become more efficient. It is another thing entirely to limit your source(s) of income. The more sources of income that you have (or potentially have), the less risk you are exposed to (hence, the reason we diversify our portfolios). If Michigan had a wider variety of strong industries, then the state as a whole would probably not be suffering as much. I agree that eliminating trade barriers will help Michigan, but as long as Michigan is reliant on one industry (I assume it is), then, it will always be exposed to risk (unless it insures itself against the risk).

I appreciate this comment and think this is an excellent description of why "diversifying the economy" is so appealing to many. Michigan has many barriers to a free market (they are 26th in Economic Freedom among North American states, as of 2005) so it is hard to know what industries they would or would not have, but under their current conditions resources have already flowed to their most valuable use.

If the state government begins reallocating resources in hopes of "diversifying" they will find themselves on the path to poverty, not prosperity. The individual actors who bear the consequences of their decisions when they specialize take into account the risk involved when they employ their resources. While firms are always looking for ways to reduce their risk, greater risk is only undertaken when it comes with greater reward, and attempts by the state to reallocate those resources will only distort those decisions.

The real problem here is thinking of "Michigan's problem" and looking for ways to stabilize its "income." There is no Michigan walking around who can earn an income. What they mean to say is that politicians in Michigan would like to maximize tax revenue, and they would like to have more industries to tax. Michigan is a tract of land of arbitrary size, and there is no reason to expect any arbitrary tract of land to happen to have a "sufficiently diversified" or "balanced" economy.

Another tract of land, my household, has an incredibly undiversified economy. My household has taken into account the risk involved with this lack of diversification and decided that any other allocation of resources would have less favorable outcomes. A government that tells me to diversify my income sources so that its risk is reduced when extracting a share of my production only serves to leave us all worse off. Worse still is the government that tells me to change my occupation, because it feels it has too many households of my occupation in their tax base.

I hope that helps.

Bad Ideas: Diversifying the Economy

CNN Money reports the bad idea:

"Michigan has been talking about the need to diversify its economy for a long time, but it has not happened," Blank said.

Diversification. Sounds like a good idea, doesn't it? We all know that is the first rule of building a successful portfolio, so why not an economy?

Repeat after me: "Wealth is produced, and production arises from specialization and the division of labor, both of which are limited by the extent of the market."

Should you, personally, diversify your employment? Should you try to split your months up into different jobs over the year? Over the day? That would be diversified, but it would probably not be a good personal plan for your prosperity. Better for you to specialize at what you do well.

Can you specialize? How specialized should you become? That depends on how many trading partners exist in your "world." Can you think of a state, that more than Michigan, has had a larger fraction of its population push for public policies banning foreign trade, intentionally and artificially limiting the extent of the market?

How does your coach stack up?

As today is the first Saturday of college football season, here is a list from Forbes outlining the most overpaid and underpaid coaches in college football.

Most underpaid? Jim Tressel, from Ohio State University. Oregon State's Mike Riley is #2, Wake Forest's Jim Grobe is #3 and USC's Pete Carroll is #4.

Most overpaid? Kirk Ferentz, from the University of Iowa.

I Wouldn't Bother With This Either

A guide to being granted citizenship status for foreigners, by the Reason Foundation.

Prediction Market Analysis: The Response to the Palin Pick

So how did the prediction markets react to the announcement of Palin to the Republican Ticket? Was it really a maverick and unexpected move? Will it help or hurt McCain's chances? Here it is:

1. According to Intrade, Palin really was an unlikely pick. She was barely worth watching prior to the announcement, so a few lucky betters are cashing out a pretty good day having watched their shares rise in value 93.8 points.
2. It seems unlikely that it has made a difference to the outcome of the presidential election. Both IEM and Intrade report a 1 point decrease in the probability that the Republican candidate will win the presidential election. Both markets report a 40% chance of a Republican win in November, which doesn't look good for hopes of gridlock.

Of course, nobody can say for sure why price did or did not move in #2, but it seems like a safe inference that the new pick did not matter much.

Driving Fatalities Data

Statistics on drunken-driving fatalities were released for 2007; 32 states saw a drop, West Virginia is not included in this group. The drunk driving report is here; here's another report from the NHTSA on driving fatalities in general. The gist is that while drunken car fatalities are down, drunken motorcycle fatalities are up. I would be willing to bet that this is something that's been released year-by-year for a little while now; that's a good panel to find some fun results with.

It would be neat to analyze the variance in police effort, however you want to proxy for that, and the incidence of drunk driving fatalities. Does MADD vary its spending across states?

Do DUI laws have an impact? Here's a rundown of some of the differences across states.

There certainly are no shortage of topics.

Kudos to Hallmark

But more importantly capitalism:

Most states don't recognize gay marriage -- but now Hallmark does.
...
Hallmark says the move is a response to consumer demand, not any political pressure.

Like I need the state to tell me which marriages I recognize. Churches in the past few years have been oddly in love with the recent infringes of their constitutionally protected religious freedoms.

Talking Without Saying Anything

Ruben Navarrette has an excellent commentary on Obama's "confusing left-right economics" in last night's speech. Of course this characterization is referring to political ideology as it pertains to the role of government involving itself in the decisions of individuals. As Milton Friedman once remarked, there is only good economics and bad economics. I don't follow the election very much, but I am always amazed at how perfect of a classic politician Obama is, that he can talk for hours without saying anything. Navarrette's commentary is pushing at the contradictions, but these contradictions are really stemming from what must be the conscious and constant pursuit of meaninglessness.

Bias in Eathquake reporting?

So in seismology news, an earthquake struck off the coast of Vancouver Island; the story is still developing. When I first read the story, it was reported that a 6.1 quake had struck the area; now, the report is 5.8. The last earthquake reported-- I believe the one in Southern California not too long ago-- was similarly reported as initially being larger than later measures. Why the discrepancies? And from what I remember-- and this itself may be skewed-- I can't remember the last time an earthquake were reported as being smaller than what it was eventually adjusted to.

I remember being in the Loma Prieta earthquake in 1989 and having it initially reported at 7.1, whereby it's understood now to have been a 6.9 quake. The Wikipedia entry may clarify a bit of the mismatch: "...the earthquake lasted approximately 15 seconds and measured 6.9 on the moment magnitude scale (surface-wave magnitude 7.1)."

Are the surface readings what we get first, only to have the moment magnitude scale provide greater accuracy later? I was under the impression that you head right on over to the seismometer and see what it has to say, then catch some lunch.

Do reports of bigger earthquakes lead to bigger stories? Perhaps, but news sources report what the USGS tells them...if they do lead to bigger stories (and bigger audiences), it's not from their doing. Can they consistently give too large of initial readings? Why not adjust the process?

(By the way, on the Richter scale page on Wikipedia, they list a magnitude 10.0+ earthquake as "epic." I found that humerous for some reason. Probably too much dissertation work. Though also noted on the page was the fact that the China earthquake in May was initially estimated at 7.8 and later upgraded to 8.0...the only upward adjustment noted on the page.)

Making Libertarians Out of Democrats

Earlier in the day, Clinton formally released her delegates amid shouts of "no," by disappointed supporters. "She doesn't have the right to release us," said Massachusetts delegate Nancy Saboori. "We're not little kids to be told what to do in a half-hour."

That's from the AP and I agree wholeheartedly with Ms. Saboori, but would extend that to include how I spend my money, eat, exercise, and a whole host of other activities where they do seem to want to treat us like children. I converted, and surely they can too.

Peer Review Survey

CHE has a story regarding a survey of researchers' opinions on the peer review process, and what I would think is of little surprise is the belief that the reviewers are incompetent.

"Anyone who's ever received a negative review" of a journal manuscript is likely to call the reviewers incompetent—"that's just human nature," he said.

I agree and have tried to not bend to this bias too much, so that I don't wind up joining the Thin-Skinned Scholars Movement.

Addendum: On the other hand :) if a referee rejects your paper on the grounds that your Bayesian regression has omitted variable bias because you did not control for spatial autocorrelation in the error term, they actually are unqualified for reviewing the paper. If you are nerdy (and I mean really nerdy) enough you can identify the two incredible mistakes that disqualify that complaint.

Assorted thoughts on links

- The Dead Sea Scrolls will be digital here in the very near future; it's a good thing, but don't overestimate the impact. Only a handful of individuals can really benefit from these original pictures, and chances are they probably have decent access to begin with. Whether the benefits to society are great due to these few people having greater access...that's the question.

- The Tomb of the Unknown Soldier is showing cracks; the debate is what to do about it. One side says continually fix it, one side says replace it. I'm not sure that I buy the argument that a deteriorating facade diminishes the message of the tomb; I say fix until failure, then replace with something that lasts longer.

- Pizza makers in Naples are protesting high pizza prices from competitors by giving away free pizzas, hoping that stricter price controls on pizza are the result. Not one part of that makes any sense to me or my cynical side.

High school football rankings

Today, ESPN takes a stab at an interesting question: Which state has the best high school football? They rank their top 8 states-- I'm sure West Virginia is #9-- with Texas at the top, followed by Florida and California. They'll have a tourney-style vote off to determine the champion, Arrow Impossibility be damned. Personally, I'd say Florida or California probably produces the best teams, though it's certainly between the top 3. It's just a population and weather issue.

High school football, as the article notes, has become increasingly national, and I think that fact can be attributed directly to De La Salle High School in Concord, California. In the midst of their 151-game win streak, De La Salle encountered some resistance from their league. Being a private school, they were paired with other private schools in the area (I'd suspect it was entirely private schools, as that's how leagues are generally organized, but I could be wrong). Well, the variance in ability in private school leagues are generally a lot higher than in public school leagues-- again, this is a large generalization, but usually the very best and the very worst teams are private high schools, and public schools usually fall in the middle. This might not be a problem in most sports, but as a former coach of mine liked to say, football is where the big kids run over the little kids. The potential for serious injury, if you're a small private school having to line up against De La Salle, was becoming a serious worry, so some of the lower ability high schools in their league refused to take the field.

Obviously, the league doesn't want this situation to persist-- it doesn't help anyone. Usually, it would be the schools who refuse to play the game that would be punished, and I don't know exactly how the proceedings went, but after it was all said and done, De La Salle was either forced out of the league or left voluntarily-- probably a little bit of both. It wasn't hard to see that De La Salle-- at least in football-- just wasn't fit for that league anymore.

Since just about every team at every level is in a league, it might be easy to overlook the fact that leagues make it really easy to fill a schedule with games. You've always got some open dates, usually at the beginning of the season for football, to play other teams in your area outside of your league, but it's usually only a few games. And that works out fine-- both because you don't need more than a few games, and, more importantly, the teams you are trying to schedule only need a few games too. It's a pretty good equilibrium.

Well, De La Salle got thrown completely off this equilibrium. Now, they're trying to fill a schedule full of non-league games. Physical reality dictated that they would need to travel. Concord is in the East Bay, so they have a slate of Bay Area teams to play that aren't too far away, but even this didn't satisfy the demand for games.

What is important to realize is that De La Salle, at this point, was one of, if not the, best teams in the country. They were fixtures atop the USA Today Super 25 poll, the initial and still most well-respected high school football ranking. It's not quite right to consider what would have happened if they weren't-- after all, it was them being so superior in the first place that got them removed from their league in the first place. So combine the fact that they were very good, had a streak that was getting more and more publicity beyond the immediate area, the fact that California did not have a state playoff system to determine a state champion, and also a healthy rivalry between the north part of the state and the south...and presto, a large scale game of playing a traditional southern California power made sense. I believe the first games were with Mater Dei-- I could be mistaken, either them or Long Beach Poly-- but soon expanded past these two schools (De La Salle had won all of these initial games) to a whole host of southern California teams, and then to other states as well. Once it was shown that sufficiently popular teams could generate the draw needed to make this work, the frequency of games increased-- now we're seeing a number of inter-regional matchups. And ESPN has begun to show a number of these games as well, which will only support their occurrence even more.

Justified "Wining" about French Bureuacracy

From Slate, How Bureaucrats are Wrecking French Wine:

The AOC designation is the highest in French winemaking. AOCs are geographic zones within which certain types of premium wines are made. Wines produced in these areas are not automatically entitled to advertise their noble roots; in order to claim the AOC imprimatur, they must, among other things, pass a taste test meant to ensure that they conform to the standards of the appellation—that they exhibit sufficient typicité. Two of the three samples of the '07 L'Ancien that Brun submitted were rejected because they allegedly had off aromas, even though they were the exact same wine as the third, approved sample, and I'm unaware of anyone else who has tried the '07 L'Ancien and found it to be anything but delicious. Brun has thrice appealed the verdict and lost every time, and the result of a fourth and final appeal is expected next month. If the original judgment is upheld again, around 5,200 of the 7,500 cases of the '07 L'Ancien will have to be sold as vin de table. That's the lowest classification in French wine and one that permits neither the vintage nor the appellation name (in this case "Beaujolais") to appear on the label, omissions that could seriously impede sales.
...
But it isn't just the vastly increased number of appellations that has undermined the overall caliber of AOC wines; it is also the way in which the appellations are governed. The rules vary from appellation to appellation, but they cover just about everything a winemaker does in his vineyard and cellar—from planting density to harvest dates to crop yield. In theory, all these edicts promote quality; in reality, they often serve to undermine it, and that's because of how they are applied and by whom.

The Political Economy of Youth Baseball

I always get a kick out of youth sports stories and the like, and this one was no exception. It turns out that nine-year-old Jericho Scott is too good of a pitcher-- evidently he threw too hard and his league, Youth Baseball League of New Haven, dictated that he could no longer toe the slab. When he refused to stop pitching, the opposition forfeited, packed up their gear and went home.

It sure seems like an awkward scenario; I've played and been around youth baseball for a good portion of my life, and I've never heard of anything that remotely resembles this scenario.

So enter in the political economy!

Jericho's coach and parents say the boy is being unfairly targeted because he turned down an invitation to join the defending league champion, which is sponsored by an employer of one of the league's administrators.

Indeed.

Bartering with bodies

Perhaps I was more surprised that CNN would write an article concerning bartering with sex than with the actual result, but I thought the statistics were interesting and raised a few questions:

- 27 percent of male and 14 percent of female University of Michigan undergrads have "offered someone favors or gifts...in exchange for sex." This seemed low to me. Though perhaps this is pointing towards the actual completed transactions-- I'd be willing to be that those transactions in which one party thought they'd get sex would be much higher.

- Statistics on repeat dealings would be of interest; clearly, there's an issue of credibility on both sides of the market. That'd make a good paper.

- The article mentions only unattached undergraduates, presumably if you're in the survey you're welcome to define "attached" as you see fit. How vastly would this change in looking at those who would define themselves as attached? If you track the transactions and could make generalizations between the attached and unattached groups, could you isolate a rough estimate of the value of a relationship?

Inflation Blame

CNN says Economists are more concerned about inflation than they were before.

Yet, the article focuses on rising oil prices followed by the actions of the Federal Reserve, which without a doubt are a part of the story.

I am baffled, however, by the fact that the government arbitrarily printed up $600 checks and sent them to virtually everyone this year receives zero attention for possibly having something to do with it. Printing money is printing money, even if it is printing it on a check.

Small Advancements in Education Policy

Slate has the story of Democrats turning against teachers' unions:

...Peter Groff, president of the Colorado State Senate, got the ball rolling by complaining that when the children's agenda meets the adult agenda, the "adult agenda wins too often." Then Cory Booker of Newark attacked teachers unions specifically--and there was applause. In a room of 500 people at the Democratic convention!

Bold emphasis is from the author, not me. The article also mentions a call for a national standard for teacher certification instead of state standards, so here is my question: Would national standards for teaching certification be a second-best policy to no standards, or would it be worse than leaving it to the state?

I think it is a second best, but of course I am willing to change if confronted with a good argument. I think the state certification standards play the role of state protectionism, and a national standard would likely be set near the lowest standards state. National certification would actually allow teachers the same mobility that other workers enjoy. Again, this is not as good as eliminating certification altogether, but I think it would represent an improvement.

Fake Economists at the EPI: Part II

One just wasn't enough. You do not have to dig very far into statistics to see that things are slowing down around here, but you are really pushing hard to oversell the trough when you start quoting "workers' median weekly earnings." From CNN:

Nationally, Americans' income has not kept pace with inflation since the last recession ended. In fact, workers' median weekly earnings slipped to $723, down 1.2% from $732 since the end of 2001, in inflation-adjusted dollars, according to Jared Bernstein, senior economist with the Economic Policy Institute.

Senior economist? Economists know where the good income data is, it is hard to study economics seriously without it, so where did Bernstein study economics? Oh, actually he got his PhD in Social Welfare, whatever that means. From the quote it does not appear to include any serious heavy lifting in statistics. He is not even listed as an economist at the EPI, so how does CNN keep getting the impression that they are quoting economists at the EPI? Before I gave it even odds CNN had goofed, but I find it very unlikely that two different writers at CNN have made this error. Why does the EPI just not have their actual economists drudge out there and quote the same thing? Probably because it would give them a sick feeling in their stomach.

Note: Before you accuse me of requiring a PhD in economics to be considered an economist, read this or this.

A Business Cycle Theory of Business Cycle Theories

Is it me, or has there been an unusual increase in the number of good business cycle papers as of late? Consider:

1. Market rigidities caused by firms' unwillingness to reveal information by changing prices. Hat Tip: KPC
2. The resurgence of Real Business Cycle Theory. Hat tip: Tyler Cowen
3. The application of Bayes Theorem seems to have helped in a number of areas. See 1 and 2.

Macro is not my general area so when I hear of a new business cycle paper, it is usually through the blogosphere, which is why they are well cited here. I put forward two possibilities:

1. The frequency of new good BC theories is unchanged, but the current business cycle has increased their frequency of mentions on the blogosphere because of all the business cycle "trough" talk.
2. The trough talk has more economists talking about the business cycle, producing more and better papers on it.

Is there research that shows business cycle theory papers are countercyclical? Anybody more familiar with the BCT literature and think either 1 or 2 are true?

Tullock for President!

Following up on Justin's post about Tullock's retirement, I was amused to receive a note from the American Economics Association that was particularly non-Tullockian:

"PLEASE VOTE! AEA election voting rates were once better than other social science associations but have declined in recent years. Elections for Vice-presidents and members of the Executive Committee are important. Your participation helps to ensure that the Executive Committee represents the membership."

No Second Chance for a Tullock Insult?

Rumor has it Gordon Tullock is retiring. Everyone is sharing favorite memory of being insulted by him, which is considered a right of passage among many economists.

I had my chance at the last SEA meetings, where I presented my paper comparing elected and appointed property tax assessors while he watched front and center. He never said a word, which implies I had nothing worthy of insulting. My only saving grace is that I never heard him say anything in any of the sessions. This leads me to two possibilities:

1. I had nothing worth insulting, but I had a lot of company.
2. He was unwilling to speak for whatever reason, and I will never know if my work is worthy of a Tullock insult.

I can live with #1, but #2 would be very unfortunate.

The Rush To Reregulate

This article by Robert Hahn and Peter Passell in the most recent issue of The Economists' Voice should be required reading for journalists and politicians today. If they insist on comparing the current financial crisis to the Great Depression's financial crisis, then they would do well to compare the current efforts to regulate the economy to those same efforts during that period.

Do Economists Unfairly Ignore Our "Outlier" Peers?

Here is a silly piece on "Thought Control in Economics," thanks to Tyler Cowen at MR for the link. In teaching a economics principles course, we are not correspondents for Fox News, we are a science. We wouldn't expect medical schools to give a fair and balanced approach to the research from tobacco companies on why cigarettes don't cause cancer, but instead we would expect them to treat it like it doesn't exist.

Actually, I have always viewed the field of economics as being at the opposite end of this extreme. If it appears that there is too much conformity in the field, it is because what it good science gets incorporated into the mainstream within a few years.

Take for instance Austrian Economics, which from my understanding received a less than warmhearted welcome from the mainstream field for its more general principles. That did not stop the mainstream from adopting what is now arguably the most important concept in economics, marginal analysis.

Gary Becker was largely ignored for his work on the economics of crime and family initially, but ultimately it won him a Nobel Prize.

If memory serves me correctly (please correct me if you know I'm wrong), the AEA was originally a socialist organization, which is the historical reason they today maintains a progressive fee structure. I also think you would be much more likely to be able to publish something unlikely and outlandish than something everybody already accepts as true, especially in the highest journals like the AER.

Easement revisited

I posted a few days ago about about Metallica lead singer James Hetfield and his desire to enclose his property for the purpose of building a house and a studio on it. TPS law consultant Dana Johnson initially mentioned that there may be an "issue of implied easement" with regards to the trails to which Hetfield has now restricted access. As the story spread and other people commented, many other people felt the same way.

There's two issues here, positive and normative. On the positive end of things, that's what the law reads. From what I gather, people have been using these trails for years, and the law allows for continued use. Seems pretty cut and dry; I'm guess if enough people force the issue, he'll have to allow access. I don't know the caveats of the law, nor the case...Dana could provide more legal insight if needed, as always.

But on the normative end of things...what?! Property rights are only property rights under certain circumstances? The only saving grace on the economic end of things is that most (all?) easement cases should be pretty easy to anticipate, so uncertainty isn't rampant. But there will still be borderline cases where there is some element of the unknown-- property values fall, investment falls, time horizons shrink, and all the goodies that come with these effects.

I'm thinking-- again, Dana knows more than me-- that this law is rooted somewhere in common law. I'm curious where it evolved from. Note also that the issue of implied easement can only exist under a system of land allowed for public use.

90% of Shark Attacks Happen in Less than 6 Feet of Water

CNN has the story of a website that allows comparisons by death rate in the cases of pneumonia, heart attack, and heart failure. Currently the CNN online poll shows 60% saying they would not be interested in this information, which is consistent with other research that says people are unwilling to compare hospitals.

However, I think that people would be quite right to heavily discount information about hospital death rates because there is a clear difficulty in separating causality and correlation. What does a high death rate mean? For a similar reason, Economists studying housing markets have long noticed that crime rates are not always big negatives for housing prices. Well, does the crime rate reflect a very good police force that people trust to report crimes to, or does it actually reflect higher crime? Does a high death rate mean that people with difficult cases disproportionately seek out that hospital for their treatment, or is it that they are not good at handling basic cases?

Unintended Consequences of Bike Paths

Bicycles will reduce emissions, right?

Mr. Anderson disagrees. Cars always will vastly outnumber bikes, he reasons, so allotting more street space to cyclists could cause more traffic jams, more idling and more pollution. Mr. Anderson says the city has been blinded by political correctness. It's an "attempt by the anti-car fanatics to screw up our traffic on behalf of the bicycle fantasy," he wrote in his blog this month.

The city in question is San Francisco. Whether or not he is right is an empirical question, requiring cost-benefit analysis to find the appropriate margin.* My guess? Individual choice already leads to the correct marginal trade-off, or is very close to it.

* Not to mention the disutility I get from running over bikers who abuse their right-of-way privileges.

Protecting the Competition, California-Style

From CHE:

The California Assembly approved a bill on Tuesday that would renew oversight of the state’s 1,700 for-profit colleges, the latest attempt to settle a long-running battle over how strictly the colleges should be regulated.
...
Consumer groups have argued that students need better protection and colleges need to report more-accurate data about their performance. Companies that own for-profit colleges have argued that bureaucratic red tape has prevented them from offering new programs.

It so happens I've been looking at the organization of Higher Education by the states, and California's University system was designed in a manner whose purpose was to explicitly eliminate competition among the various Universities, which I believe because the researchers on these topics (not just the ones linked to here) seem to believe this was a great thing. Sounds like this new bill is just the next step in that process.

DMV Problems Continued

As you may recall, I've had some issues with 4 DMV's around the country. The most recent events has required me to send this letter to the Kansas DMV:

Dear XX,

This is a reply to your response for my request to be issued a clearance letter from the state of Kansas (your original letter is attached). Your letter indicated that a Justin Michael Ross with birth date 04/24/1979 has a suspended license in Kansas. As you will no doubt discover from the birth certificate, social security card, and drivers license I have photocopied and attached with this letter, we are not the same person. The Justin Ross of Kansas differs from myself in two important respects:

1. Driving ability
2. Birth date.

#1 is proven by his license suspension in Kansas, while #2 requires a mathematical proof:

Proof 1: 1979 – 1981 = -2
Proof 2: 1981 – 1979 = 2

Because of the age discrepancy, I have denied your request for a police report of ID theft, for the Indiana State Patrol have assured me that arithmetic mistakes by the Kansas Department of Revenue does not constitute the theft of my identity by Justin Ross of Kansas.

I will be expecting my clearance letter soon, you may keep the $6 fee.

Sincerely,

Justin M. Ross of Indiana, formerly West Virginia

Should The Fed Be Nudged?

John Taylor, of Taylor Rule fame, is the guest of this week's EconTalk. I gather the Taylor Rule can be summarized as:

For every 1 percent increase in inflation, the Fed should increase the interest rate by 1.5 percent.
For every 1 percentage point below long-run GDP growth rate, the interest rate should be cut by 0.5 percent.

Taylor makes several points regarding the general effectiveness of this rule, and argues several of the recent (last 20 or so years) recessions can be seen as the Fed falling off the rule. He says he is not opposed to more mechanization of Fed behavior but also thinks it is important to have a group of experts customizing those parameters to the times and events.

I wonder if Fed behavior would turn out differently if the "default" was the strict application of the Taylor Rule, and the Fed would then play the role of deciding if it should be overridden and augmented? Would this libertarian paternalism applied to the Fed make any difference? I have no idea, comments are open.

On Certified Economists

The Economic Logician asks "Should Economists be Certified?"

I can't imagine butchers advocating vegetarianism any more than I can see economists advocating certification standards on a large scale. I see the temptation here, but it would be the same dead end as most labor certification standards. Consider that certification standards for economists may very well have meant no Gordon Tullock.

Regulation, California-style

So, it's regulation fun-time here at TPS, courtesy today of the deliciously linkable California Legislature. Now we all need hybrid cars, you'll incur another week of purgatory if you resist...but they can't be too quiet.

The measure would establish a committee to study the issue and recommend ways the vehicles could make more noise.

I eagerly await not the results-- they'll take extreme steps to make sure absolutely no one could take even the slightest issue with the result-- but the margins by which they determine at what level a hybrid car must make noise. Number of birds scared at 30 meters? Loud enough to out-noise a teenager blasting a stock stereo from their parents' 1998 Acura CL? Though the results will be great, too-- at whatever level they determine to be loud enough, there's still a blind person whose hearing just isn't good enough to avoid getting steamrolled by an oncoming Prius.

My solution? If I owned a hybrid in California, I'd put a gas-powered noise make on the hood.

TPS stats

So today, TPS received it's 20,000 visitor. At around the time Justin joined up-- his first post was on April 11th of this year-- we had about 10,000 visitors since inception. So I present the following data:

Time elapsed for 10,000 visitors, Matt E. Ryan and David Skarbek: ~28 months
Time elapsed for 10,000 visitors, Matt E. Ryan, David Skarbek and Justin Ross: ~4 months

Coincidence? I think not.

Yes, I would like to report a crime!

In response to Tropical Storm Fay:

Residents can call the Collier County Sheriff's Office if they suspect extreme increases in prices for food, tools, equipment and other goods during Tropical Storm Fay.

Residents are encouraged to report price gouging, insurance fraud and exploitation to the Sheriff Office's Economic Crimes Unit at 252-8796.

Economic crimes investigators will work closely with the state's Division of Insurance Fraud and the Florida Attorney General's Office.

The "Economic Crimes Unit?" I shudder at the Orwellian nature of this. The economic crime here is price controls, and as such we should report them to themselves. Remind me to temper my sorrow for the residents of Collier County when they are on the news crying for help from FEMA.

One of the best EconTalk's ever on price gouging here.

Hat tip: Roberts at Cafe Hayek

Metalli-rights

I guess defending property rights doesn't make you a popular rocker. Best take the Bono keep-the-poor-right-where-they-are approach for truly global adoration.

Why Government Should Not Produce Goods or Services

With very rare exception. From CNN:

"Remember, at the time in Chicago, the wards were really politically motivated," said the Rev. Alvin Love, Pastor at Lilydale First Baptist Church. "If you weren't onboard with the political process and people in leadership, then your garbage didn't get picked up on time and your street didn't get fixed."

And if health care, oil, food, etc become nationalized, they won't get those either.

College Presidents Try to Destroy 3 Years of Fun

I remember April 24th, 2002 quite well. It was the day drinking alcohol stopped being fun, or at least lost a great deal of its appeal. I never thought it would feel that way, in fact I thought it would be great to replace a fake ID with a real one.

According to CNN, a group of college presidents are looking to take away those 3 years of extra fun where college students can derive the cheap thrill of disobeying a stupid and pointless law. At 18 you are trusted to vote, trusted to defend the country in a time of war, and trusted to make a long term commitment like marriage (paradoxically, this can occur before 18 if you are in the exact circumstances that would lead you to make a rash decision, like teen pregnancy). Holding alcohol out until age 21 lets us be children for 3 extra years of life, and I'm hesitant to take that away from them.

Drinking Age discussion

I can't say that I'm completely surprised to see a push to lower the drinking age; on the whole, it's embarrassingly ineffective and all sides know this. But I am a bit surprised to see who's making the push: College and University presidents.

Comments:

- MADD is in this piece saying that lowering the drinking age would lead to more drunk driving accidents. Clearly, this is speculation (though I believe it would be necessarily true if the law were followed with 100% efficacy). If we're going to assume that laws are followed perfectly, then increasing the driving age beyond the drinking age would have a similar (directional, not magnitude) effect, yet you don't see them arguing for that...

- I started to write that the college presidents are implicitly describing the unintended consequences of a higher drinking age, but they came right out and said it:

Duke President Richard Brodhead declined an interview request. But he wrote in a statement on the Amethyst Initiative's Web site that the 21-year-old drinking age "pushes drinking into hiding, heightening its risks." It also prevents school officials "from addressing drinking with students as an issue of responsible choice."

...

But the statement makes clear the signers think the current law isn't working, citing a "culture of dangerous, clandestine binge-drinking..."

If you've got a fixed amount of drunkenness to be had in a semester, fewer, more intense drinking episodes is risk-minimizing with respect to getting caught. It's not risk-minimizing for the short-term health of the student. So that's the tradeoff.

Implications for Negativity Bias in Dreams

Check out the abstract of this paper, by way of Mungowitz. If dreams carry a negativity bias, as the authors says it does, how should we apply this to our life? Does the advice to "sleep on it" become better or worse, presuming that the reason you sleep on it is that you will better pull together the relevant information in a way that is analytically useful? Is the negativity bias cumulative, so that the more nights I sleep on a topic the more negative my bias becomes?

What Brings You Here?

Since my arrival at TPS, I have scrolled through our sitemeter statistics on a pretty regular basis to see what refers people to our blog. Here, in no particular order, is my unscientific analysis of the four most common web searches that seem to draw people to TPS:

1. Something pertaining to "tipping prostitutes" or "how to tip prostitutes." They find this.
2. For anything baseball, especially pertaining to images or getting thrown out. They likely are looking for this. These searches for baseball posts by Matt are by far and away our most common referral.
   
3. Something along the lines of "what is a perfect substitute." This is probably econ students looking for homework help.
4. Searches for "why are gas prices so high" or "depression era gas prices" bring us a lot of draws. As does searches for "2.99 gas deals."
   

WDITS?

What Does Intrade Say? I know, I know, thin markets. But for what it's worth here is a link that depicts the outcome of the electoral map based on Intrade. As of Aug 17th:

Intrade has Obama winning 293-227
Real Clear Politics has Obama winning 275-263 without toss-ups.

Americanization

Here is a piece about Rome looking to build a Euro-Disney type amusement park. Personally, I can't see why you'd travel all the way to Rome to go to a Disneyland clone; maybe the locals will flock there. Maybe traveling with kids is just that taxing that'd you'd forego a day in Rome to hang out at Euro-Disney Rome.

But the line of interest is on the second page: "I say no to Americanization."

This always gets me-- whenever McDonald's or Starbucks or (insert American company here) set up shop, people get upset about the spread of "Americanism," whatever that means. My thoughts:

1) Usually it's Americans that are saying this about other cultures (though this quote is from a member of the council). Anyone is free to an opinion, but what say should one have about the characteristics of their own culture, much less someone else's?

2) These comments are usually levied to say that we need to stop the spread of America NOW. (Again, not a phrase that I'm agreeing with in the least, but just for ease of conversation.) Why now? Why not 10 years ago? Why not 10 years from now? 100 years from now? 1830? I'm curious what it is about 2008 that is optimal. Or any other time frame given.

3) Shock! Euro-Disney and McDonald's and Starbucks and every other company is voluntary; their success denotes a demand for such "Americanization." So we're to forcefully deny citizens what they freely demand under the shadowy guise of "culture?"

There's a real easy way to let citizens of any country say no to unwanted Americanization-- let anyone open their business and see if people show up.

The Only Post Ever Comparing Libertarians to Evangelical Chirstians (I Promise)

Don Boudreaux's post on Libertarian Paternalism inspired me to go back and listen to the old EconTalk with Richard Thaler. The back and forth between Thaler and Roberts reveals an interesting behavior I have observed in other instances, which is that the difference in how disgruntled you get with someone you disagree with a lot is not much more than someone you disagree with just a little.

An example of this was an Evangelical Christian friend of mine who found herself dating an Atheist. Eventually this just failed to work out and she broke up with him. However, her next boyfriend was another Evangelical Christian, and by all accounts she liked him more than the Atheist, yet she broke up with him too because of a slight disagreement they had over a non-significant passage in the Bible.

This feud between Libertarians and Libertarian Paternalists reminds me a lot of that example.

Bigfoot update

Now, I don't know if I'm proud of this, but I've spent a good amount of time-- think tens of hours over numerous sittings-- talking about the possibility of Bigfoot actually existing with my dissertation advisors. (For the record, it's two for and two against.) So when stories about Bigfoot come across the wire, it's always interesting to see what the Bigfoot hunters are up to.

I don't think Bigfoot is a reality. Usually the argument comes down to:

1) People have been looking for this creature(s) for quite a while now, and there hasn't been anything beyond shady evidence to show for it.

2) The scientists that look for Bigfoot-- they're not exactly at the top of their field. As such, any argument and evidence for Bigfoot's existence has to be taken with a grain of salt since it's probably not done in any sort of rigorous scientific manner.

3) Related to #2, it also stands to reason that if the possibility of Bigfoot existing were sufficiently large enough-- and p probably doesn't have to be too large-- then it would attract more academic effort. Maybe everyone is vastly underestimating p.

If we had any zoologists that read this blog, it'd be interesting to hear their take on the possibility of Bigfoot existing.

What Rules Would You Use to Pick a VP?

A lot of press speculation lately as to who will or should be the VP picks for each of the presidential candidates. What would be the most important determinant for you if you were running for president and had to pick a VP? Mine are (in order of importance).

For me, a VP who would be unlikely to conspire a plot to have me assassinated. Perhaps someone who doesn't even really want the job, or is only willing to do it part time while they sell Mary Kay. A popular conspiracy theory implicates LBJ in in the assassination of JFK, so I don't think I'm without reason here.

This Looks Bad for the Georgia Story

I will refrain from actually holding an opinion on something I know very little about, in this case the Russia-Georgia conflict. I direct you to better informed opinions here and here. But this seems pretty damning to the story of a democratic Georgia:

In an interview with a Dutch magazine, Sandra Roelofs, the Dutch wife of the new Georgian president and hence the new first lady of Georgia, explained that her husband aspires to follow in the long tradition of strong Georgian leaders "like Stalin and Beria". Saakashvili started his march on Tbilisi last November with a rally in front of the statue of Stalin in his birthplace, Gori. Unfazed, the western media continue to chatter about Saakashvili's democratic credentials, even though his seizure of power was consolidated with more than 95% of the vote in a poll in January, and even though he said last week that he did not see the point of having any opposition deputies in the national parliament.

In Sunday's vote - for which final results are mysteriously still unavailable - the government appears to have won nearly every seat. Georgia is now effectively a one-party state, and Saakashvili has even adopted his party flag as the national flag.

The author is John Laughland, a trustee of the British Helsinki Human Rights Group. I still reserve judgment because there seem to be many contradictory stories about what is and has occurred there. Also, having a large proportion of the population voting for you does not mean that you "seized" power, but it is suspicious to those accustomed to seeing Western election results.

The Power of Now? Maybe Later.

I've been reading A New Earth by Eckhart Tolle on my Mom's recommendation. It is the sequel to The Power of Now, which inspires the post title. A few thoughts at the half-way point, which seem unlikely to change by the end:

1. This guy is 2 parts on to something 1 part full of it.
2. For fans of Stargate like myself, this book is basically intended to be a guide to Ascension.
3. Outside the world of religious zealots who hold tightly to the literal interpretations of their preferred religious literature, the book is written in a way that makes it virtually impossible to disagree with its points. It is as if every statement is written to apply to everyone and yet accompanied with a way out for everyone. For example, you should not identify yourself with what you consume because it feeds the ego. It's not that consuming goods is itself bad, but identification with it as a part of who you are is. At the same time, those who redefine themselves as part of the anti-consumer movement are just substituting the consumption of actual goods for their identity for a movement that they make part of their identity, and this is equally bad.
   
4. His points on economics are unsurprisingly off. He takes economists to task for referring to recessions as "periods of negative growth." I know this sounds like an oxymoron, but it is not. Also he refers to the nature of firms to exploit and destroy everything in its presence (employees, nature, etc) for the purpose of profit growth. Simply not true.
   

City Tobacco Bans...in the 17th Century

Alexis de Tocqueville, writing in Democracy in America on the Code of 1650 in New Haven (p. 44):

In their ardor to regulate, legislators sometimes stooped to consider matters unworthy of their august function. For instance, the previously mentioned code included a law prohibiting the use of tobacco. However, we must not lose sight of the fact that these bizarre and even tyrannical laws were not imposed from above but freely approved by the votes of all affected by them, or that their mores were even more austere and puritanical than their laws. In 1649, an association was formed in Boston for the solemn purpose of stamping out the worldy luxury of long hair.

If you like the theme of "we have no new problems, just our problems" then you'll want to read the Craig Depken archives on the Division of labour.

On the subject of smoking bans, Bloomington has one, Morgantown did not. I would render a guess that a regression of the effect of the smoking ban on the incidence of my inconveniences from smokers would reveal a negative correlation coefficient with a t-statistic of 0.12. For the non-nerds I'll restate this as: I rarely experienced anything more than a smidgeon of discomfort from nearby smokers in Morgantown, and the reduced prevelence in Bloomington cannot be distinguished from the random differences in experiences between the two cities.

Remember WMDs in Iraq

In the Oil Econ 101 post at Econlog, the issue of foreign oil revenues sponsoring terrorism arises as it often does (though it is not the subject of the post). National security, be it sugar or oil, is the always the last resort for protectionists. Unlike sugar, oil seems to hold more traction because people know where the 9/11 terrorists came from and where the oil comes from. I have two questions for those energy protectionists:

1. Is there any evidence oil revenues are a major source of funding? What is the terrorist funding elasticity of oil revenues at the current margins?
   A fellow economist who has expertise on this issue tells me no, but I can't get ahold of him to obtain permission to cite him here. Before you dismiss or laugh off absence of evidence, as is usually the response I get when I bring this up, refer to the title of this blog post.
   
   
2. Even if #1 is true, does it make sense that we would be better off in terms of national secuirty if we were energy independent?
   Dependence works both ways, we depend on them for supply, they depend on us for demand. It seems to me that the political elite in much of the Middle East have a very strong incentive to see our continued survival.
   

Then Again, Maybe Celebrities Wouldn't Be So Bad

From the Kansas Star:

A professor at a Kansas university who dropped his pants and mooned a room full of students and teachers is under investigation after video of the incident was posted on YouTube, school officials said.

Bill Shanahan, a professor at Fort Hays State University, was at a debate with the Fort Hays State debate team last March when the incident occurred.School officials said they believe things got out of control when the team got low scores from two of the judges.

Shanahan is seen on the video jumping up and down, ranting and then mooning the crowd in the room.

Here is the YouTube link. If you are like me, you want to know more about Bill Shanahan in hopes of providing more context to the story by understanding its main character. This is cut and pasted from his webpage (includes picture):

B.S. - Speech Communication: Suffolk University (Boston, MA) 1984
M.A. - Communication (Rhetoric); Wake Forest University 1989
Ph.D. - Speech Communication (Rhetoric); University of Texas at Austin 1996

Persuasion and semantics are two classes "Bill" Shanahan loves to teach. These student-directed discussion classes are among the many classes Bill has taught over the last two years at FHSU. He has also served the role of debate coach at several other universities.

Publications:
Contributed two chapters to a book on Orwell's Animal Farm, and a quantitative communication piece which got published in a mainstream communication periodical. He has also published a dissertation on Nietzche's rhetorical nihilism and is currently writing a book on Nietzsche's reception in Communist Germany.

I wonder what enrollment will be like for his next class on persuasion.

Celebrity Professors

No, not Greg Mankiw/Mick Jaggar.

The Chronicle of Higher Ed has an article discussing the various benefits and costs of having actual celebrities teach university classes. The example used is Kal Penn (of "Harold and Kumar Go To White Castle") teaching a class on the image of Asian Americans in the media for the University of Pennsylvania.

My first thought...if a university wants to experiment to find something that works, let them. They bare the consequences of their decisions.

My second thought...Shit! Everybody in the world thinks they know economics and offer up loud vociferous opinions, especially celebrities. Economic ignoramus extraordinaire Michael Moore and protectionist Lou Dobbs could wind up teaching micro principles under this trend!

I'm on the fence, but leaning towards putting more weight on the first thought.

Prescribe us a solution!

I like rankings. Maybe it's because I'm a college sports fan and it always leads to good natured bitching, but even non-sports fans like rankings. I love those top-50 lists at the end of every year. I don't like the shows much, but anytime I run across those VH1 lists I always find it intriguing. Rankings are fun. So I'm making a category called Rankings, and now I've got a reason to share just about any ranking I come across.

TPS officemate extraordinaire Joab Corey sends along this list showing the top ten states in terms of retail prescriptions filled per capita. (Click the left arrow to go back and see #2, #3, etc.) And who's #1? Country roads, take me home. West Virginia is the "most medicated state." I have to admit, sight unseen, I thought Florida would take it, being the popular retirement locale and all, but the denominator (population) is pretty large...I think that hurt them. (They didn't make the top 10.) A brief glance at the list reveals, for the most part, the low end of the income per capita rankings populating the top 10 retail prescription per capita list. Explanations?

1) Lower income leads to worse health outcomes. This is a result usually used to compare first and third world countries, but perhaps discrepancies even in high income countries have tangible effects.

2) States with more prescriptions have more generous public health care provision, and larger public sectors make for poorer states.

3) Most of these states are low population as well; a lot of prescriptions OR a low population will get you to the top of the list. Of course, population could well be a function of income as well; the Laffer study I linked to last week speaks of states being winners and losers in the migration battle.

Causality gets tangled pretty quickly; I'd say #2 is probably closest. I'm not convinced that #1 can be drawn out within the U.S., or at least not that simple and definite of a link between the two.

Olympic Update

- Turns out that the Olympic organizers added in some computer animation to enhance the opening ceremony.

Media gets their panties in a bunch because: It lessens the originality of the experience.
I don't care because: It was still awesome to watch in HD. I was exhausted from a 10 hour flight and watched the whole recording without getting tired, it was riveting in my opinion and one of the finest performances I've ever seen.

(Over two years, consistently, I keep forgetting how badly I need to make it into one of these opening ceremonies. Then another one happens and they rarely are less than amazing. I'd read somewhere that someone was able to get a ticket the morning of the ceremony for $400. That is an absolute steal in my book; I'd easily pay that to go.)

- Turns out that little girl that sang in the ceremony wasn't singing; she was lip-synching the words sung by a less-cute girl.

Media gets their panties in a bunch because: Thou shalt never call any child cuter, less cute, more cute, or anything other than "everyone is just perfect in their own way."
I don't care because: It still sounded awesome. Singers sing songs written by less cute people all the time. As far as I'm concerned, it's a great example of division of labor. One sings it, one performs it. China could use all of the market improvements they can get.

A Comment on Revenue to GDP: Size Doesn't Matter

Katy G makes a very common mistake in her attacks on Wal-Mart:

Why Wal-Mart? For one thing, Wal-Mart is huge. It is America's, and the world's, biggest company (in terms of revenues), and also America's, and the world's, largest private sector employer. Using the figure listed here on Walmart's 2007 revenues, and the figures for the U.S. GDP in 2007 listed here and here (which all give slightly different estimates for the GDP), I calculate that Wal-Mart's revenues are equal to approximately 2.7% of the gross domestic product of the United States.

Yeah, I suppose large successful employers deserve to be attacked for hiring so many people. The only reason I bring this post up is because it makes a very common mistake by comparing revenue to GDP. You most often see this with comments like "Wal-Mart is larger than the economy of (insert 3rd world country here)."

Arguments based on comparing GDP to revenue is about as useful as gauging the nutritional value of a fruit based on its relative size. You cannot say the pineapple is more nutritious than the potato simply because it is bigger, you have to compare potatoes-to-potatoes and pineapples-to-pineapples if you want to talk about size and nutritional content.

The principle reason is that GDP is a measure of value-added, whereas revenue is not. The sale-price of a good includes not just the input of Wal-Mart, but the input of all those in the supply-chain, for which Wal-Mart is almost certainly a very small portion of (See I, Pencil by Leonard Read). It would be more (but not entirely) accurate to compare firm profits to GDP, but this is not done by Wal-Mart detractors because it would reduce their estimates to the point where it would not even be considered a rounding error.

Hat Tip: Marginal Revolution

Why Russia is Attacking Georgia (The Country)

I asked our good friend Pavel Yakovlev, Assistant Professor of Economics at Duquesne University, why the Russians have launched what is apparently an attack on Democracy, according to CNN and President Bush. The Siberian native, gives his take (printed with his permission):

Stalin (a Georgian) in his awfully twisted wisdom redrew the map of the Soviet Union when he was in charge, and gave the Georgians some of Ossetian and Abhasian land (called South Ossetia and Abhasia). After the break-up of the Soviet Union, Ossetians and Abhasians who technically lived in Georgia because of Stalin's map wanted to break away from Georgia just like the Georgians broke away from Russia. For some reason, Georgians felt like attacking the Osetians and Abhasians for it in 1991, but these break away regions put up such a resistance that Georgia began actually losing its land to these different ethnic groups. The Russians stepped in as the peace keepers and maintained more or less a peaceful truce untill now. On August 7th Georgia, emboldened by U.S. military and political support and training (did you know your tax money was paying for it?) launched a surprise all out attack (Blitzkrieg style) on South Ossetia, completely obliterating its capital and killing by some estimates about 1600 civilian Ossetians. Russians are now simply retaliating against the Georgians, and since Saakashvilli is losing militarily, he is portrayed by the American media as champian of democracy being crushed by Russia's invasion. Somehow i am not surprised about this propaganda. I lost all faith in the U.S. media and government after Bush came to power and invaded Iraq on false pretenses.

Pavel also sends this link from the Guardian and this blog post.

Addendum: Bob Lawson, Economist at Auburn University, offers what he thinks is probably something akin to the Georgian point of view in response to Pavel's comments.

Airport thoughts

Alright, I'm back in Morgantown for a decent stretch now.

Two things that got me with this round of traveling:

1) Luggage stores in airports: Good business idea or bad business idea? I'd like to hear TPS business guru Thomas Johnson's take on this. On the one hand, you're probably most likely to be thinking about baggage when you're traveling...but that could also be the time that you're least likely to buy. I suppose if you arrive at the airport with broken baggage that this could be convenient...but how often does that happen? And why would you show up with broken luggage? Further, if it's a bag you have to check, you'd have to bring your broken bag in through security, buy the new one, repack it in the airport, go back outside of security to check it, then go back through security once more to catch your flight. And receiving a broken checked bag doesn't work either-- you can't get back in past security without a boarding pass, and you just used it to get to where you're at.

I'm thinking these stores might have been more feasible prior to the security increases-- back when you could wait at the gate for an arriving passenger. I might do luggage shopping if I were waiting in the airport for a delayed friend...not these days, though.

Nonetheless, these stores still exist.

2) Boarding order on planes. This has been discussed plenty of times elsewhere, though I don't think we've touched on it here at TPS. I'm not purely interested in how to get everyone on the plane the quickest-- some combination of back to front, outside seats to inside seats-- but rather why it is that those that need the most time to get on the plane get to board first. If you board these people first, then you spread this additional time cost on to everyone waiting to get on the plane. If they get on last, it's like internalizing the externality, which is definitely in the direction of better functioning markets.

It could be that they can board the plane a lot better if there isn't anyone on the plane, too. I don't think this is the case. Suppose they have an aisle seat and two people have to get up-- that could conceivably take longer. But this tends to increase boarding time because of the line that forms behind this maneuver-- and remember, if slow boarders are boarding last, then there is either no line or not much of one.

Incentives, too. If you have to travel a lot and don't like waiting, then you want to get yourself into the fast group-- and this is not only better for you, but better for everyone.

I suppose you need to wait for everyone to get on the plane before you leave anyway, but if you value sitting in your seat as opposed to waiting to get on the plane-- irrational, perhaps, but I'd say this is generally true-- then I think it's welfare increasing to have the slow boarders get on last, yes?

And, of course, the disclaimer for everyone who thinks I want to send people who board planes slowly to internment camps: No, I don't hate them. No, I don't want them to die slow deaths. The question here is simply that we've got two types of plane users and how to get them onto the plane the quickest. (Though I get the "Matt-is-a-child-hater" when I put forth my idea for a kids-free airline-- which, by the way, would absolutely clean up.)

Biggest Loser Families

Yes, Russia is out to topple the Georgian government, gas prices have fallen for 24 straight days, but I'm going to discuss a TV show.

The premise of the show "Biggest Loser" and its special edition version focusing on an entire family, is to follow a group of overweight individuals as they struggle to lose weight. The individual/family that loses the most weight wins. I don't watch these shows, but when the commercial shows I find myself wondering how much time is in the period where the contestants discover they will be on the show and the beginning of the competition.

Assuming weight loss is a concave function of diet and exercise, a rational strategy for a contestant who wanted to win the competition would be to gain as much weight as possible in that period before the competition starts. The result would be that the true net weight loss of the show would be less than the weight lost in competition. For contestants who may have pursued this strategy and were eliminated early, the net effect may actually be a weight gain.

Thoughts?

I'm Rooting For Shut-Down

"Are [Democrats] really prepared to close the government in order to stop drilling?" Gingrich asked. "Because I think the country will find that to be a suicidal strategy."

That's from CNN. Let's see, it appears we'll either get lower gas prices or government shut down for the fall. As nice as lower gas prices would be...

Addendum: The Intrade probability of the lift on the oil drilling ban rose significantly with this, and as of 1:07 p.m. on 8/8/2008 is trading at 49 cents on the dollar. It stands to reason there is roughly a 50/50 shot of a government shut down.

The Fastest Way To Multiple Degrees

The student has literally become the teacher. From CHE:

An instructor who was fired for enrolling in his own classes at Bishop State Community College, in Mobile, Ala., should be reinstated and given back pay, an arbitrator has ruled, according to a report in the Press Register, a local newspaper.

Henry Douglas, an instructor in Bishop State’s culinary department, was terminated by the college when a state audit revealed that he had enrolled in 10 courses that he himself was teaching, and was listed as taking six other courses at times when he was scheduled to teach. The Press Register reported in 2007 that he received six A grades and one B in seven courses.

I have joked to my students on the review days before an exam that "the test is so hard I only got a B when I took it, and I wrote the thing!" However, it seems this may actually be the case for some teachers.

File This Under....Capitalism Always Wins

The Che Store: For All Your Revolutionary Needs!

They are currently offering a $5 blowout sale, 50% off clearance items, and you can get shirts with The 'eco' label (I'm not sure why they put the 'eco' in parentheses).

They also accept Paypal, Visa, and Mastercard.

My favorite part though is in the welcoming text on the homepage:

theCHEstore.com welcomes you to the largest collection of Ernesto Che Guevara merchandise found anywhere in the world. theCHEstore.com works closely with more than 15 companies worldwide to put this collection together for you and to keep it current with the latest styles, trends and fashions while maintaining an appreciation for classic and retro designs.

Just a beautiful demonstration of entrepreneurship and why markets work!

Obama's Hit List

I would love to be able to sort this list of industries ranked by profit margin against a list of regulated/protected industries. Anyone know where I can find something like that?

Hat Tip: Carpe Diem

Don't Plagiari Thy Syllabi

Since I am preparing a syllabus for a course I never taught before this article from the Chronicle of Higher Education caught my attention. Apparently there is gray area as to whether or not a syllabus can be plagiarized. I personally do not feel my syllabuses are intellectual or literary contributions to society, and thus do not personally care if someone copied my syllabus, but I think the topic is an interesting nugget of copyright law and would not begrudge someone who would find it distasteful. However, the author of the article (an English professor), does take syllabus plagiarism very seriously and considers the possibility that such a lax view of the the absent intellectual protection as a symptom of something bigger:

To decide that a syllabus is not a made thing, not worthy of protection without regard to market value or aesthetic value, erodes the terrain of the classroom, a terrain with a history of siege. I remember in graduate school being mocked by other doctoral students for caring about the classroom. Most tried to "get out" of teaching through grants and fellowships. The real work, I was meant to understand, lay in scholarship. In a culture where teaching is feminized, I see direct connections between the lack of protection surrounding the materials produced for the classroom and the fact that female faculty members tend to have higher teaching loads than their male counterparts, devote more hours to teaching, spend less time on research and therefore publish less, and dominate the adjunct ranks while lagging behind in the numbers of full professors. My syllabus participates in larger questions in academe about what, and who, is valued.

Help Me Pick a New Name for "Income Distribution"

I've been trying to think of a way to accurately refer to the income distribution without using the word "distribution." When economists think of income distribution, they are thinking about statistics and pdfs. I believe when others hear of it, the statistical noun "distribution" is transformed in their mind to the verb "distribute" (as in "we shall distribute the income accordingly") or perhaps the adjective "distributed" (as in "the income was distributed in this fashion"). Since income and wealth are created, not distributed, how can I rephrase income distribution into something that is accurate and remains accurate in the mind of the listener? My own ideas are too long, bulky, and academicy, like "...the proportionality of income creation...".

Any suggestions would be a public good.

The Inspiring Tale of Joab

Here is a very nice article about my former office mate and current WVU econ PhD student, Joab Corey, and how he uses his cancer treatment to teach economic principles. Surprisingly, it is not a set of depressing or grim lessons, but instead he puts them in a way that come across as very funny. My favorite story is when he, in order to receive financial assistance from the hospital, needed a rejection letter for financial support from the state. When he went to the state office to apply for the aid, the office worker simply asked if he just needed the rejection letter, which they then just pulled out and handed to him without bothering him with filling out the forms.

One thing that can't be missed is how good of a teacher Joab is, on the days he hands out teaching evaluations the students give him standing ovations (seriously). These kind of rave reviews has led the WVU econ department to allow him to develop an undergraduate behavioral economics course. He's working on his dissertation under Russ Sobel on the topic of economic freedom and the resource curse. Additionally, he and I have been crunching data to determine the effect of cost-of-living adjustments on measures of income inequality.

One day in the near future, I will post a blog outlining his arguments for why economists are too dismissive of sunk costs and why it is irrational to fear ghosts (assuming they exist).

Starbuck's Clever New Price Discrimmination Deal

CNN Story Here:

Looking to bring more value-seeking consumers through its doors for a late afternoon caffeine fix, Starbucks Corp. said it will now offer its morning customers any iced grande beverage for $2 after 2 p.m.

The price is a big cut from the normal price of most grande-sized iced drinks. A grande iced latte, for example, costs about $4. To get the discount, customers must present a receipt from their morning Starbucks visit.

In economics, we call this 2nd degree price discrimination, where you pay a lower per unit price as your consumption increases. For example, your local electric company knows those first 100 kilowatt hours are very important to you (keeps your fridge cool, alarm clock powered, etc), but after that you become more flexible in your energy consumption. So your willingness to pay for those first 100 kwh is very high, but diminishes rapidly after that.

Starbucks is looking to do the same thing. They know that those who typically get their caffeine fix in the morning have a lower willingness to pay in the evening (like me). Recreational or social coffee drinkers are more prevalent in the evening (like my wife) and have a higher willingness to pay. Setting one price for both groups mean you miss some customers from the morning, and you give up charging a higher price to the evening customers. By offering evening discounts to morning drinkers, they have a means of effectively separating the two groups, and with any luck they might eventually be able to set higher prices for the recreational drinkers than they otherwise would.

Now comes the part where I start selling my morning Starbucks receipts to my evening coffee drinking friends ;)

P.S. My customized Starbucks card states "I Heart Capitalism."

Thanks Nancy!

For admitting the social benefits of Starbucks while simultaneously demonstrating extreme elitist paternalism:

“These people can’t just walk out of Starbucks and get a job at a grocery store or a factory,” said House Majority Leader Nancy Pelosi, D-CA. “They would need ESL classes and cultural training to learn how to relate to ordinary Americans and function in society.”...

HT: Greg Mankiw