Thursday, February 24, 2011

Kansas Red Light Laws

TPS Cardinals fan Steve Miller sends along this bit about a potential new law in Kansas that allows motocycle riders to run red lights. I shook my head when I first read it, but now that I think of it, as long as the riders bear the full burden of their decision-- both legally (I hope so, not clear in the article) and physically (clearly)-- I think we'll end up with a Pareto superior outcome.

But the best part of that article?

The riders testifying in support of the bill belonged to a group known as ABATE, or A Brotherhood Against Totalitarian Enactments.

Peaceful protests and authoritarian regimes

Here's the best piece-- by a degree of magnitude-- that I've seen that gets after a question that's been nagging me during the Middle East upheaval: If dictators are capable of such atrocities to acquire power and to maintain their position, how can peaceful protests, of all things, bring all of this down?

What's Will's string of letters? ATSRTWT. That's five minutes of hunting those down that I won't get back.

Thursday, February 17, 2011

Marriage as Moral Hazard

From the Huffington Post:
Probably not the first thing you feel like doing, but you know what's really not romantic? Using marriage as an excuse to get lazy. Recent studies show that married people exercise less than singles do, and in our own survey, 56% of married people said they'd put on weight since the big day. We slack off in other ways, too: 46% said they were less affectionate with their spouses, and 54% said they wish they were having more sex--yet they don't seem to be doing anything about it. Thinking like an economist, marriage is a moral hazard, a situation that encourages people to behave irresponsibly because they know they can get away with it.
The authors have a new book, Spousonomics: Using Economics to Master Love, Marriage, and Dirty Dishes, which--as far as I can tell--is pretty much what it sounds like. I liked this:
Incentives motivate people to act. If you want your husband to listen, don't nag. If you want your wife to have sex with you, do the dishes.
Interesting. Might be worth reading the full version.

[HT: Astrid]

Wednesday, February 16, 2011

Re: Thoughts on Jeopardy! and Watson

I heard via the Scott Van Pelt Show that Watson crashed several times during the taping of the first episode--so many times, in fact, that it took 4 hours to complete the round. Wow. Not impressed. Matt is our resident Jeopardy! expert. But I imagine that the average human contestant could not delay the game for this amount of time.

I can only imagine the fatigue that comes with four hours of waiting for Watson to reboot. This could be a decisive advantage to the computer. Thoughts?

Tuesday, February 15, 2011

Quote of the Day

Courtesy of Ed Glaeser:

[T]here's nothing greener than blacktop.

Thoughts on Jeopardy! and Watson

We here at TPS are big fans of Jeopardy!, and I'm sure you've heard of the Watson vs. Ken Jennings and Brad Rutter event that took place last night and will continue today and tomorrow. A few thoughts (and just for ease of writing, I recognize that I've switched "answers" and "questions" in the framework of a Jeopardy! game):

- It's clear that Watson will do better with fact-based questions as opposed to interpretation-based questions; I'd attribute a large amount of its success last night to questions of the former type. I would guess-- unless it's been directly programmed to deal with it-- Watson would be helpless on before-and-after-type questions.

- There was a video going around a few weeks ago of a test round between the three contestants, with much the same result as last night-- Watson does well early, the remaining contestants perform better as the round progresses. One striking aspect of the practice round, however, was that when Watson felt it was confident enough to answer the question, it always rang in first. Every. Time. That's the big advantage of the machine, because Jeopardy! isn't just about knowing the answers-- it's being able to time the buzzer correctly so you actually get a chance to answer. A machine, naturally, will have a faster reaction time than a human. You've effectively eliminated the competitive portion of the game. So while it is impressive that you can design a machine to parse through mountains of data to come up with an answer in short period of time (more on that in a second), but don't look past the fact that you've basically given one player a massive advantage over the other two.

But last night, I believe only once, Ken Jennings beat Watson with the buzzer. (When Watson has a "green" answer, he's trying to buzz in.) In my eyes, that was the most surprising moment of the night. It's a risky move to try and anticipate the proper time to ring in (constestants can ring in once a light goes on; if they ring in too early, they are locked out for a few seconds), but up against a machine that's going to react faster than you, contestants don't have much of a choice.

- It's natural to think that you tell a computer to do something, and it does it in the blink of an eye. But what the computer has to do here is titanic-- seconds matter, milliseconds matter. To that end, the more time Watson has to think, the better of a chance it has. I noticed last night that Watson did distinctly worse on short questions-- I remember one particularly short question where it struggled to formulate anything of a guess. Most of the questions last night were of the longer, factual variety-- right in Watson's wheelhouse. As long as both of those margins remain, expect Watson to perform pretty well.

Monday, February 14, 2011

Conservatives Ask Libertarians for Divorce

Kevin McCullough at Fox News is not happy about this year's CPAC. It seems Republicans were content with picking up a percent or so in the general polls. But now that these "disrespectful libertarians" are speaking up, they are probably more trouble than they are worth. McCullough explains:
Libertarians and Conservatives are as different as Libertarians and Liberals. The truth is libertarians are the worst form of political affiliation in the nation. Combining the desire of economic greed, with the amoral desire to promote any behavior regardless of its cost to our culture is a stark departure from the intent of the Founding Fathers.
I hope this means conservatives will drop the pro-market (read: economic greed) rhetoric. Good riddance, I say.

[HT: Steve]

State Tax Competition Among Neighbors

This would make for a nice bit of anecdotal evidence for someone wanting to write a paper on the subject:
The state of Indiana and the Northwest Indiana Forum are partnering on an increased effort to convince more Illinois businesses to move across the state line. An advertising campaign aimed at Illinois businesses, featuring slogans including "Feeling Squeezed by Taxes?," has been launched on the heels of the "Illinnoyed" initiative rolled out last month after lawmakers in Illinois approved massive tax hikes.

The Fragility of Estimated Effects of Unilateral Divorce Laws on Divorce Rates

And here's another! I've seen four papers today, Valentine's Day, and two of them focus on divorce. Good times! Here's the abstract:

Following an influential article by Friedberg (1998), Wolfers (2006) explored the sensitivity of Friedberg’s results to allowing for dynamics in the response of divorce rates to the adoption of unilateral divorce laws. We in turn explore the sensitivity of Wolfers’s results to variations in estimation method and functional form, and we find that the results are extremely fragile. We conclude first that the impact of unilateral divorce laws remains unclear. Second, extending Wolfers’s methodological insight about sensitivity of differences-in-differences estimation to allowance for dynamic response, we suggest that identification in differences-in-differences research becomes weaker in the presence of dynamics, especially in the presence of unit-specific time trends.

No-Fault Divorce and Rent-Seeking

That's the title, and what better topic for Valentine's Day? Here it is, and the abstract is below:

Couples filing for divorce in Belgium have the option to either opt for a no-fault divorce trajectory or a consensual trajectory. We analyse the determinants of divorce trajectory choice and of the resulting post-divorce transfers. The no-fault trajectory is more likely, if spouses are more specialised in either domestic or labour market production. This is consistent with a theory of divorce as rent extraction. Child support payments depend neither on the divorce trajectory nor on alimony transfers or relative incomes, but are driven by the payer's wage and the child(ren)'s residence. Partner alimony transfers are higher for no-fault unilateral divorces with pronounced self sacrifice.

Saturday, February 12, 2011

Who is John Galt?

(Note: The size isn't quite right. Double-click the video to view in fullscreen.)

Friday, February 11, 2011

Behavioral Public Choice

Robin Hanson writes:
When folks expect to be able to evade a norm, they don’t mind making that norm stronger. This lets them sound more pro-social, while actually giving themselves an advantage over folks who can’t evade as easily.
I think this is a very attractive argument for those interested in behavioral public choice. Anecdotal evidence abounds. And it provides a mechanism for the Baptists and Bootleggers claim (i.e., asymmetric evasion costs). What do you think?

How Big is the U.S. Debt?

Here is a short clip from a colleague of mine, Antony Davies, putting debt into perspective.

Thursday, February 10, 2011

AER Recognizes Hayek (1945)

An AER committee consisting of Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow has selected the top 20 papers ever published in the AER. Hayek (1945) made the cut. In the comments over at the Coordination Problem, an interesting back and forth is going on concerning the brief summary provided by the committee Here's the summary:
The author addresses the fundamental question of the nature of the economic system and, in particular, its role in dealing with resource allocation when a fundamental knowledge base is distributed in small bits among a large population. The knowledge needed includes consumer valuations, production relations, and resource availabilities. In particular, general scientific principles, where expert opinion might be best, are only a small part of the knowledge base. The author argues for the importance of a price system in achieving coordination and efficiency in resource use without implying an impossible aggregation of information in a central place.
What's the dispute? Well, some are saying it just illustrates that the committee doesn't understand Hayek. Others are saying a charitable reading of the summary is warranted. You can read the comments and decide for yourself.

Here's my challenge. The original summary was 97 words long. If you find the committee's summary wanting, provide your own summary (< 100 words) in the comments.

Monday, February 07, 2011

Made in the USA

That is the title of a recent Boston Globe article. Here's the take-away:
There’s just one problem with all the gloom and doom about American manufacturing. It’s wrong.

Americans make more “stuff’’ than any other nation on earth, and by a wide margin. According to the United Nations’ comprehensive database of international economic data, America’s manufacturing output in 2009 (expressed in constant 2005 dollars) was $2.15 trillion. That surpassed China’s output of $1.48 trillion by nearly 46 percent. China’s industries may be booming, but the United States still accounted for 20 percent of the world’s manufacturing output in 2009 — only a hair below its 1990 share of 21 percent.
Stupid argument (They took err jeerrrbbbs!). Bunk stats. It's a double doozie!

WSJ on Regulations

The WSJ today has an article on occupational licensing, you can find it here. You can never have enough examples of stuff like this, so give it a quick read and add your favorites to the arsenal. The following, though, has to be the best part of the article-- you can't make this stuff up:

In Kentucky, the Board of Hairdressers and Cosmetologists has eight full-time inspectors who spend much of their time responding to anonymous tips about unlicensed manicurists. The inspectors rarely catch the alleged offenders, says Charles Lykins, the board's administrator, because "they take off running."

Mr. Lykins says it's in the public's interest to insist manicurists are well-trained. "Have you ever had a nail fungus? It's terrible," he says. "That's why we're there."

Super Bowl Impacts

Fresh off my victory in Propapalooza IV, I thought I'd send along this paper concerning the economic impact of the Super Bowl. Here's the abstract:

The Super Bowl is America’s premier sporting event. This paper details basic economic facts about the game and examines the controversy surrounding the purported economic impact of the game on host communities. While the league and sports boosters claim that the game brings up to a $500 million economic impact to host cities, a review of the literature suggests that the true economic impact is a fraction of this amount.
I've always thought that the appropriate question should be "How much better off are we because we make a large deal about the Super Bowl?", not drawing arbitrary lines and estimating accounting benefits for cities and/or states.

Thursday, February 03, 2011

The NFL On Welfare Incentives & Credible Threats

A lot of good economic intuition coming out of the Super Bowl coverage in the shadow of the lockout:
Steelers veteran safety Ryan Clark also was critical of this week's special masters ruling not to stop millions in guaranteed money from television networks going to the owners if there is a lockout.

"If no football is played next year, the networks will have no games to show but are going to pay [the NFL] still," Clark said. "You don't put a contingency plan like that into place if you don't plan on using it. If someone told you this week, 'I will pay you a million dollars to not go to work, what incentive do you have to go to work?'"
Well said.

Tuesday, February 01, 2011

Propapalooza IV

Yes, it's time for this year's Super Bowl prop battle. See Propapaloozas I, II, and III for more information.

Here are this year's props, all 22 pages of them. Props are bets not directly concerned with the outcome of the game itself-- basically anything beyond "Team X will win" or "Team X will win by Z points." Every year, TPS stalwart Rob Holub goes toe to toe with yours truly and every year, realizes he's vastly over matched. Ok, that's not exactly true, but I'm feeling good about capturing my first victory this year.

The contest: Pick 5 props that are priced at roughly even money, i.e., anything in the -120 range and above. Most number right takes Propapalooza IV.

Feel free to add your own in the comments and join in the fun!

Some favorites:

What color will the Gatorade by that is dumped on the head coach of the winning team? Lime Green (11-2), Yellow (5-6), Orange (5-1), Red (12-1), Blue (12-1), Clear/Water (3-2). I think Orange has good value there. What if it's Powerade?

Who will the Super Bowl MVP of the game thank first? God (1-1), Family (4-1), Teammates (2-1), Coach (9-1), Does not thank anyone (3-1). I think God is mispriced here; that trend seems to have fallen off a bit. I see it like this-- odds on favorites to win the MVP are QBs, and they generally thank the teammates first, though I still don't feel that 2-1 is paying off well enough.

How long will Christina Aguilera hold the note BRAVE at the end of the Star Spangled Banner? Over/Under 6 seconds. Isn't the general trend to belt out "Free" and then finish with a crisp "Brave?" I'm going under.

How many times will FOX mention Brett Favre on TV during the Game (Live commentary only/anything taped does not count): Over/under 2.5. Boy that's low, but what counts as the live commentary only? What about halftime? You gotta figure once when Rodgers starts playing, mentioning how he succeeded Brett Favre, and then as the game goes along if he's nearing any Super Bowl team passing records-- I think the over is the sound bet but watch the technicalities.

Who will Barack Obama pick to win Super Bowl XLV? Steelers (-140) vs. Packers (+100). Pennsylvania has twice the electoral votes that Wisconsin does. Further, Obama won Wisconsin by almost 14% yet won Pennsylvania by about 10%. Pennsylvania is traditionally viewed being being "more battleground," though recent presidential elections have been closer in Wisconsin (2000 and 2004, thought not 2008). I think the Steelers are the good bet here, though they are slight favorites.

If Barack Obama picks a team to win Super Bowl XLV, will the President's pick be correct? Yes (-115) vs. No (-125). Independent of the political factors above-- and this line reflects that-- it's humorous to see a line that says the President is more likely to pick the wrong team to win the game...and he hasn't picked a team yet.

My selections:

Total Net Yards by both teams: 666.5, Over -115

Most Receiving Yards: Mike Wallace (+15.5) v. Greg Jennings, -115

Packers - Total Rushing Yards: 78.5, Under -115

Heath Miller - Total Receptions: 3.5, Over -135

Heath Miller - Will he score a touchdown? Yes +200

The Miller total receptions bet is a bit above the -120 cutoff, so I'll offset that with the Miller touchdown bet.