Bodies refunds!

I saw this piece on CNN and enjoyed it for the most part-- it's on plastination and the increasing numbers of people signing up for the treatment for their remains after they pass. It's the process behind what you see at the Bodies shows, which I recommend if you get the chance-- I usually get a bit squirmy around stuff like this, but experienced nothing of the sort when I saw it a few months back.

However, about halfway through the article, I ran across this little ditty:

"In a settlement with the New York State Attorney General's Office, Premier Exhibitions admitted that the specimens used in "Bodies ... The Exhibit" might be victims of torture or execution from Chinese prisons. The settlement requires that Premier Exhibitions obtain proof of donor consent for specimens used in its shows. The company has also set up a fund to compensate...

...(wait for it)...

...visitors to its New York show."

Really? I mean...really? Those are the people that get compensated? And on what grounds? Dana, I'm going to need some law help on this one. Mind you, people voluntarily went to this exhibit, all that changed in their perspective is how the bodies were obtained. What does that change in terms of the experience each visitor expected and received? I'm not justifying how they obtained the bodies but...really? The visitors get compensated?

Should you get a refund to a magic show if you learn about how the tricks were performed after the fact? What about if a circus coerced any of its performers?

This one gets me.

One Standard Will Do Just Fine

Why do economists think of competition as being beneficial to society? For now, think only of the producer side. Firms, locked competition with each other, continuously discover ways to meet consumer needs, only to experience temporary profits and losses before their competitors match them in some dimension. The social benefits:

• Production
• Innovation (technological, product quality, etc)
  
• Greater purchasing power of consumer incomes
• Maximum efficiency gains (consumer and producer surplus is maximized

However, the term "firm" is just a linguistic shortcut used by economists. In reality, a firm is a collective of households, who may or may not know each other but interact through this collective entity that may have a purpose entirely different from their own. You cannot tax a firm. There is no entity like a Microsoft wandering around who can be taxed or punished. You can only do these things to households who are represented collectively as "Microsoft." For this reason, economists place equal weights on consumer or producer surplus and treat them as what they both really are...households.

Those who suggest a role for government in "solving" positional externalities miss this last point. They never seem to suggest that competition among producers is bad, but when some household buys a nicer car than his/her neighbor, thereby inducing their neighbor to try and buy a nicer car it is seen as some kind of social treadmill (as Robert Frank describes it). The households are locked into ever increasing workload without any real gain in relative social status. Therefore, they say, we should regulate the work week hoping to avoid this outcome.

This is a double standard. They will either have to wage a campaign against the concept of a competitive equilibrium maximizing social benefits or abandon the correcting of positional externalities altogether. What is the point of buying some cost saving technology when the competitors will just adopt it also, eliminating those gains? A grocery store that tries to compete customers away from its rival by increasing the number of hours it is open is no different from the neighbor who puts in overtime so that they can put nicer siding on their home. Even if competition eliminates their temporary gains, their production to the rest of the world leaves it a better place.

Ah, tree sitters...

I've read about the Berkeley tree protesters before; here is a particularly absurd article about them. Just to clarify--they are protecting a 1920s landscaping project, and preventing a replacement project from being assembled in another area. It could be construed that the current protesters are preventing the construction of a landscaping project that Berkeley protesters will be protesting to save 80 years from now.

Anyway, it was the lines in the article that got me chuckling, so on to it...

"They're very well-trained tree climbers."

"Protesters howled, flung excrement and shook tree branches as campus-hired arborists cut supply lines and removed gear. But by late this week, campus police were conducting delicate negotiations with tree-sitters, offering to provide food and water if protesters would lower their waste on a daily basis in the interest of hygiene. Campus officials ended up giving up the water without concessions; protesters declined to yield their urine."

Good times.

Obama and taxes, part 2

Justin brought up the issue of Obama and taxes a little while back; CNN clarifies the issue a little bit more this morning. It seems $200k single/$250k joint is now the magic dividing line, and top tier tax rates increase as well.

I'm guessing Obama lands in the "ability-to-pay" camp, as opposed to the "benefits received" camp.

Better word to describe Al Gore: Green or Red?

The good folks at the Tennessee Center for Policy Research have been keeping an eye on uber-environmentalist Al Gore. Remember when it was reported last year that Gore's Tennessee home used far more energy than the average home? The TCPR dropped that story. Anyway, they've kept an eye on the "green" improvements to his house over the last year, and guess what? He uses even more energy than he did before!

The Tennessee Center for Policy Research gets the TPS Seal of Approval.

Capital Punishment for Rapists

There is a growing debate regarding capital punishment for child rapists. This is one of those issues where anyone that takes the "no" position gets painted as sympathetic towards the most heinous of crimes. This isn't a statement for or against capital punishment, but given that it exists, people need to realize why rapists are not subject to capital punishment-- because this makes the marginal punishment for murder after rape zero. Would there be more rapes if the punishment were higher? No, that number could only fall (assuming criminals value life in prison over death), but the percentage of rapes that would become murders would rise. Rape is horrible, no doubt-- but the secondary effects of such legislation need to be realized.

What is the Profit Maximizing Level of Aisle Clarity for Big Box Stores?

I received the following question in an e-mail from a student today:

Is it the intention of "big box" stores to make it difficult for people to find there way around the store? I have noticed that only major sections are marked in these types of stores. For example the signs will just say "Bath", "Outdoor", "Electronics". Is this because they want you to spend more time in the store looking around for what you want because then you might purchase more?

Hanging signs is costly so I agree that it seems unlikely this is an accident, but I don't know the answer. It is impractical to list everything in an isle, but not particularly helpful when it is so vague, so what is the profit maximizing level of clarity for isle labels of the big box stores?

Comments are open.

Paramedics, continued

So it turns out that a student that came into the office this morning has a significant other who is a paramedic. Jackpot! I've always wondered why paramedics make so little; here's what I gleaned:

- Salary information was, on the whole, accurate. She mentioned paramedics in larger cities make more, but I'd doubt it's much more than a rough cost-of-living adjustment.

- It turns out that you don't need that much training to be a paramedic, or at least not as much as I was imagining. In order to be an EMT (the one who drives the ambulance), it takes one year of night classes, and depending on the outfit you are with, it could take more classes/tests/experience to graduate to paramedic status (the one in the back working on the patient). I don't know what I was imagining, but I think it was more than that. The supply of paramedics/EMTs is not as inelastic as I believed.

- Said significant other, at least partially, became a paramedic as a stepping stone to another job. She verified that it would be a plus on the resume for the job he was going for to have had experience working as an EMT. I (still) think this is the biggest reason to explain the seemingly low wages.

- She mentioned turnover in the paramedic industry was high; that doesn't surprise me. But it does lead to some interesting questions. Is experience not valued? Evidently not; higher wages would retain more EMTs. (On a side note, is it scary that you are likely to have an inexperienced EMT coming to get you when you're in bad shape?) Do new paramedics persistently lack information about the job they are getting into? Evidently, a lot of paramedics get out of that line of work after dealing with not-too-pleasant things day after day (I know I could never do that). Why the constant information shortcoming, i.e., why do people consistently not know what the job entails? Perhaps it's something that existing paramedics don't want to talk about. The fact that a lot of people find out that EMTing isn't for them could explain why wages were low to start with, but not why they would continue to be low.

I'm still a bit perplexed.

Dataset of the day: Required vacation days

Like any empirical economist, I love data. While trolling around today, I happened across this dataset, of legally required vacation days by country.

Required vacation days, along with minimum wages, maternity leave and workplace safety laws, are often mistakenly identified as the causes of wealth. After all, it is rich countries that have these labor laws, so the path to prosperity must be through workplace regulation, right? (Policy recommendations have actually been framed in this manner; sub-Saharan Africa has been advised to offer more maternity leave along similar lines.) But don't confuse wealth producing policies with the wealth reducing policies that already wealthy economies can withstand. The same could be same for increasing the welfare state; all of these policies do not enhance the well being of an economy, but can be withstood by an already vibrant economy.

Revealed Preferences for Relative Status

Naked Self-Promotion:
As promised, here is a new working paper by Susane Daniels and myself. Titled "Revealed Preference for Relative Status: Evidence from the U.S. Housing Market."

This paper investigates the value individuals place on their relative status in consumption, as opposed to absolute status. Using housing data from five Ohio MSAs, we employ a spatial Durbin hedonic price model to estimate willingness to pay for both relative and absolute status. Using this revealed-preference approach, we find individuals, on average, are willing to pay $7,332 per 100 square feet for an increase in absolute house size, compared with $2,257 for an equivalent increase in relative house size. This strongly suggests that while individuals do desire relative status, they value absolute status significantly more.

Susane Daniels is entering her 4th year of the Econ Ph.D. program here at WVU, and is extremely promising. This is the lead essay of her excellent dissertation on Revealed Preferences for Relative Status. In the other essays, she examines the "relative to who" question, as well as breaking the results down by quintile to tease out the "who cares?"

What if burden equaled incidence?

In writing this week's column, I want to offer the following question:

Would there be any value in assigning the incidence of the tax to match the burden of the tax?

Obviously, tax burden will be different for each individual and for each good at every point in time, so you can't ever get it exactly right but it could be estimated closer-- let's say the sales tax become 50% you pay it at the register/50% the company pays after the fact. Would there be any effects from this? Clearly, theory dictates that incidence is independent of burden...but it is in actuality? Could we see some "irrational" response to this? My mind is spinning all over this possibility; I'm curious to see what anyone else has to say.

Favorite Things West Virginia: State Slogans

Millions of dollars, heavy debate, reminds me of this Simpson's episode. From what I can tell, the previous state slogans have been:

Wild, Wonderful West Virginia (1975-1991)
Almost Heaven (1991 - 2005)
Wild and Wonderful (2005 - 2006)
Open for Business (2006-2007)
Wild and Wonderful (2008-present)

Favorite Things West Virginia: Bonker Politics

Governor: Let's start with Phillip Frye, 2003 West Virginia Gubernatorial Candidate. Why did Fry run? Because incumbent Bob Wise had slept with his wife, and he wanted to be a nuisance to him.

Most surprising special interest group: West Virginia University Rifle Team
I did not know schools had rifle teams before I came to WVU, or that it is actually an NCAA sport. However, when the school tried to 86 around the time of my arrival, the state legislature stepped in with line-item appropriations. Since then they have been a political force and even though they don't make explicit endorsements, they have an audience around the state that takes a great deal of pride in them and want to know if they are unhappy.

Favorite Conspiracy Theory: My favorite conspiracy theory from the townies is the belief that Manchin (governor), Rockefeller (senator), and David Hardesty (former WVU President) have a standing agreement to ensure that they get to take turns as leaders of the most prestigious public positions in the state (governor, senator, WVU president). The names of the conspirators change depending on who you talk to, but I love the fact that a university president is near the same plane of power as the governor in the minds of the locals.

Favorite Act of Legislature: "The Friends of Coal Bowl." What do they get if they win? The Governor's Cup.

Favorite Things West Virginia: Country Roads

"Take Me Home, Country Roads" is of course a great song, but I bother mentioning it because of the debate among West Virginians over its worthiness. Take the following from WikiAnswers:

1. The song refers to the Shenandoah River, of which only a small fraction flows thru (sic) WV, the rest of it is in Virginia

2. Also referenced is the Blue Ridge Mountains, virtually none of which are in West Virginia

3. Rumor has it the song was originally entitled "Old Virginia"

#3 explains the confusion created by #1 and #2. I first learned of this from Joab Corey, who learned this from his High School Civics Teacher. Like many songs, the inspiration has a lot of folklore to it, so it is unclear, but very amusing.

Favorite Things West Virginia: Homeland Security

This is my last week in West Virginia, and as a result I keep going over the interesting things I experienced here that have made a long lasting impression. My previous post inspired my leading dissertation essay on Tax Assessor Incentives.

The above picture is the Ruby Memorial Hospital in Morgantown, where both of my sons were born. One thing I will never forget about Ruby though, is the day I learned that it was the #1 target for a terrorist attack within West Virginia.

How did I learn this? As my wife (Lisa) and I were being discharged from Ruby after my first son's birth (8/5/2006), my Mother-in-Law filmed Lisa and I load him into the car for the first time, directly in front of the hospital under the awning. A security guard approached the new grandmother and told her to shut off the video camera and that filming in front of the hospital was banned because Ruby was listed as the #1 possible terrorist attack sight in West Virginia.

I would love to know if this guard was just overzealous about his responsibilities, or if a list was actually generated and Ruby was #1. Another hospital of equal size was just across the street, why not them? Was this the result of successful rent-seeking for homeland security funds?

Capture Theory and Morgantown Tax Assessment

Capture Theory suggests that when a government regulatory commission exists, the parties with the most vested interest in the outcomes of those regulations will devote the most resources to seize control of it, using it for its own anti-competitive purposes. Consider this story:

MORGANTOWN, W.Va. (AP) -- The Monongalia County Commission says they've found nothing wrong with a property owner's 1,531 percent tax increase.

Morgantown property owner Jim Jones filed a complaint with the commission because his property taxes increased from $285.90 to $4,663.44 after he refused to sell his property to Chief Deputy Assessor Bill Perry.

County Assessor Rodney Pyles says the property was reclassified as part of a routine audit, resulting in a tax hike. But Jones says it was retaliation.

Bill Perry is one of the largest property owners and landlords in the county. For your convenience, here is an Excel spreadsheet of his property in the county, which is publicly available through the county assessor website.

WWJD? Burn A Cross into an 8th Grader's Arm!

Story from CNN. Yeah, I'm sure Jesus would approve of this.

Ode to a Rent Seeker

From Public Choice 48:271-272, by Charles K. Rowley:

I aim to seek out every rent
be it honest or be it bent
I seek out rent on every margin
let fools engage in wealth enlarging
Some may shirk whilst others toil
I spend my time on fertile soil
Government transfers I endorse
as a highly fruitful income source
Receipts in excess of gains foregone
mean others lose what I have won
With outlays less than Tullock cost
no-one can argue that I have lost
Stigler and Peltzman tell the truth
I make more than Babe(y) Ruth
Rectangles win, trapezoids lose
No wonder Harberger sings the blues
I spend upfront with great delight
To seize a durable monopoly right
Give me monarchs, divine right kings
for then the monopoly market sings
Congress I accept, even Tip O'Neill
though there rent margins tend to reel
Wealth is still transferred for all to see
but at a much greater cost to G.N.P.
God protect me from the final blow
when all the margins of rent are low
Let the margins be many and always high
so that I shall thrive 'till the day I die.

The State Against Blacks

An oldie but goodie from my professor Walter E. Williams:

Race to the moon, Google style

Since the Anasari X Prize went over well, I'm thrilled to see Google jump into the mix and offer $20 million to whomever can get a rover to the moon, have it move around, and send back some info by the end of 2012. Even better:

"One of the main requirements is to have as little government involvement in the project as possible."

Someone pinch me.

There are 13 teams currently going after the prize, but they expect the number to grow to 25. Would you rather have 25 companies trying to get there or one government?

Great news. In the coming years, expect outrageous statistics about how much more cheaply, efficiently, and just downright better the private sector can put a vehicle on the moon compared to the public sector.