Friday, April 20, 2012


The Economist published my response to this article.
SIR – You suggested that the supply of Somali shillings is fairly fixed despite a number of forgeries (“Hard to kill”, March 31st). In fact, it was the introduction of forged notes that ultimately removed the incentive to increase the supply of shillings in circulation.
The 1,000 shillings note exchanged for roughly $0.13 when General Muhammad Aideed employed a printing firm to reproduce the note in 1996. As the number of notes in circulation grew, the exchange value fell to just $0.03, which is the cost of producing an additional note. Since the exchange value equals the cost of production, forgers can no longer profit by increasing the supply. Today, the Somali shilling is a commodity money. Its supply is governed by the cost of ink and paper required to produce a note.

Tuesday, April 10, 2012

Underdog betting fever: Catch it!

There's a good degree of lazy in all of us. As such, I have really enjoyed the good folks at Beyond the Bets tracking the success of our underdog wagering theory for Major League Baseball. Their latest post is here. The original academic paper is here, it came out in print at Applied Economics a few months ago.

In short, there are a number of reasons to believe that betting on underdogs early in the baseball season will generate persistent profits. It was true over the eleven seasons we looked at, it was really true last year, and seems to be going well again in 2012. Through the first 60 games this year, blanket betting underdogs would generate a profit of 10.31, a rate of a touch under 17%.

Insofar that the viability of a theory is its ability to predict, we've generated a pretty good one here.