Neanderbill writes:
Thursday, February 28, 2008
Letter # 4
And yet another greeting from Doha,
1. Trouble in Paradise
Apparently not every expatriate is treated as well as Education City professors. As I understand it, in order to work in Qatar, you need to be sponsored by an employer. If you work for Carnegie Mellon, they take good care of you. In fact they take amazingly good care of you.
But suppose you are a construction worker from Nepal, or a housemaid from India. Depending on your employer, this may not be such a good deal. And even though you come in through the front door, so to speak, in some ways you are not as well of as, say, an undocumented Mexican in the US. Why? Because an undocumented Mexican can always quit one job and seek another. If you are in Qatar because your employer sprang for the blood tests and chest x-rays that are required, your employer has a stake in you, and may not be willing to let you take advantage of a labor market. Or you may have had to “pay” all of that plus transportation, and owe it to your employer out of your wages.
There is a website that has the following definition.
Qatar: A slave state in the Gulf where deceived, unsuspecting, and poor laborers are exploited for the benefit of Land Cruisers and late model mobile phones for unapologetic and heartless Qataris.
As the website says, the Indian government won’t send women to be domestic servants because of experiences of exploitation of all kinds. Is this website fair-minded and objective, as I have made the case for Aljazeera? Obviously not. But there is a problem here. And the Qatari government blocks this website, though it permits it at Education City. All in all, this is not a good situation.
2. On the other hand …
Qatar is the only one of 21 Arab states not to sign a “Charter of Principles” designed to rein in satellite TV talk shows that might embarrass Arab governments. (Thanks to my very knowledgeable cousin Marlene Kasting for bringing this to my attention.) And Aljazeera English, which I have praised in an earlier letter, had a documentary on such problems in the Persian Gulf, with specific mention of Qatar. It was a half hour show called “Blood, Sweat and Tears.” My colleague Silvia Pessoa, who brought many of these issues to my attention, gave me a DVD of the show.
3. Kite Runner
The Education City faculty organization sponsored a viewing of the film Kite Runner, which I had read. It is remarkably true to book in terms of specific events, but not nearly as compelling. The producer of the film, Walter Parkes, spoke afterwards. Since Afghanistan is busy with war these days, they had to film it in Kashgar, China, which is in the far west of Xinjiang province. Two Afghanis here have said that that is just what Kabul looked like in the seventies, even to the modern ranch house that Baba and Amir lived in.
I had a chance to ask Parkes what it was like filming in China, and whether the Chinese government put any restrictions on them. Except for one thing, the answer was not at all. There is a stoning scene at halftime at a football (soccer) game. When the Chinese government found out that they were going to assemble thousands of Uyghers (a Muslim minority) in one stadium, they thought that that was not a good idea. Parkes said that five or six black Suburbans rolled up with drivers talking on cell phones. Can’t be done. So the stoning / football stadium scene was filmed near Beijing, I think, with a veneer of Uyghers in front, and the rest of the crowd, whose faces you could not see, were Chinese.
I had never known how to pronounce Uygher. Was a little disappointed to find that it’s pronounced “weeger,” if only because it sounds too much like a casual deck shoe that you can order by mail from LL Bean in Freeport, ME.
By the way, in looking up Kashgar, I discovered that Afghanistan has a little panhandle that touches China. This made me think of Mad Magazine’s apocryphal Panhandle Airlines, which flew to and from panhandles in West Virginia, Oklahoma, and Alaska. Now they can be an international airline.
4. {NeanderSpouse}
While I’m thanking people, I should thank George Tsebelis for reminding us of Skype, with which you can talk from computer to computer free. Now {NeanderSpouse} and I can literally talk every day, instead of email chat. I am happy to say that she will arrive in Doha Thursday, March 7, and we won’t need any kind of electronic devices to communicate. We can hardly wait.
Neanderbill
Funny that George Tsebilis reminds Neanderbill of Skype. George T reminds me of a Greek Fred Flintstone.
Friday, February 29, 2008
Stop, Or I'll Criticize!
From the Economist:
When China's two stock exchanges were created in 1990, the chief goal was to use private savings to restructure state-owned firms. Investors received only minority stakes and limited sway over corporate governance. Equally important, both exchanges were run by bureaucrats, so there were fewer incentives to increase their value by attracting companies and punters. There was little effective competition between them.
Over the past 18 years, China has introduced rules against market manipulation, fraud and insider dealing, but enforcement remains patchy. The China Securities Regulatory Commission seems competent but overwhelmed. Sometimes it takes years to issue penalties after lengthy investigations—and along the way cases lose relevance.
In the meantime, the exchanges have quietly begun to acquire authority. The power that they wield appears flimsy—the most serious penalty they can levy is a rebuke to firms and individuals through public notices. But it is remarkably effective in a country with a long history of punishment by humiliation—think of the cangue, a rectangular slab around the neck, in pre-Communist times and dunce caps in the Cultural Revolution.
Messrs Liebman and Milhaupt write that between 2001 and 2006 the exchanges publicly criticised 205 companies and almost 1,700 people. They looked at the share prices of the targeted firms both when they disclosed the conduct for which they were being criticised and when the criticism was published. The admissions typically preceded the rebukes, and in the few weeks that followed the firms' share prices underperformed the Shanghai stockmarket by an average of up to 6% (see left-hand chart). After the criticism, there was a further lag of up to 3% on average (see right-hand chart).
(Nod to Neanderbill)
When China's two stock exchanges were created in 1990, the chief goal was to use private savings to restructure state-owned firms. Investors received only minority stakes and limited sway over corporate governance. Equally important, both exchanges were run by bureaucrats, so there were fewer incentives to increase their value by attracting companies and punters. There was little effective competition between them.
Over the past 18 years, China has introduced rules against market manipulation, fraud and insider dealing, but enforcement remains patchy. The China Securities Regulatory Commission seems competent but overwhelmed. Sometimes it takes years to issue penalties after lengthy investigations—and along the way cases lose relevance.
In the meantime, the exchanges have quietly begun to acquire authority. The power that they wield appears flimsy—the most serious penalty they can levy is a rebuke to firms and individuals through public notices. But it is remarkably effective in a country with a long history of punishment by humiliation—think of the cangue, a rectangular slab around the neck, in pre-Communist times and dunce caps in the Cultural Revolution.
Messrs Liebman and Milhaupt write that between 2001 and 2006 the exchanges publicly criticised 205 companies and almost 1,700 people. They looked at the share prices of the targeted firms both when they disclosed the conduct for which they were being criticised and when the criticism was published. The admissions typically preceded the rebukes, and in the few weeks that followed the firms' share prices underperformed the Shanghai stockmarket by an average of up to 6% (see left-hand chart). After the criticism, there was a further lag of up to 3% on average (see right-hand chart).
(Nod to Neanderbill)
I'm Glad I Don't Live in Morocco
Apparently, in Morocco you can be jailed just for being an ass.
Angus and I would both be incarcerated, pretty much forever, if this guy was arrested for "villainous practices."
In grad school, Angus and I were in an office in the CSAB, now the Weidenbaum Center. While in that office, during the day, when there were lots of very serious people there, I did the following:
1. Routinely tried to see how many syllables I could put into the word "f**k", at the top of my lungs, with door open.
2. Once wrote a poem as a means of taking a message. A prof that Angus was working for came by, looking for Angus. I wrote the following poem, and put it on Angus's chair: "BLANK came by, was looking for you. Said to call him, if you're back before two. But as usual, his brain was pure goo." BLANK came back a little later, when I was out, and found the note. Took it back to his office. Clearly, he considered me to have engaged in villainous practices.
In Morocco, they would have forgotten my name by now. Mungowitz is in jail forever.
(nod to Jason T)
UPDATE: A useful followup. For the Moroccan story, I mean.
Angus and I would both be incarcerated, pretty much forever, if this guy was arrested for "villainous practices."
In grad school, Angus and I were in an office in the CSAB, now the Weidenbaum Center. While in that office, during the day, when there were lots of very serious people there, I did the following:
1. Routinely tried to see how many syllables I could put into the word "f**k", at the top of my lungs, with door open.
2. Once wrote a poem as a means of taking a message. A prof that Angus was working for came by, looking for Angus. I wrote the following poem, and put it on Angus's chair: "BLANK came by, was looking for you. Said to call him, if you're back before two. But as usual, his brain was pure goo." BLANK came back a little later, when I was out, and found the note. Took it back to his office. Clearly, he considered me to have engaged in villainous practices.
In Morocco, they would have forgotten my name by now. Mungowitz is in jail forever.
(nod to Jason T)
UPDATE: A useful followup. For the Moroccan story, I mean.
Strike a Poseur
So, I'm walking towards Perkins Library yesterday. This kid I know, a senior, a great guy, is standing there. Clogs, capri pants, leather man purse with flower embroidered strap across opposite shoulder, a hip length bhurka coat, long scarf wrapped into a knot that exposes his neck, cigarette smoldering, sun glasses (it's a cloudy day), and one of those knit hats with the long stringy ear flaps that trail guides wear.
I stop. I stare. He pulls the cig from his mouth. "What?"
I say, "You are either the biggest hipster, or the biggest poseur, I have ever met."
He laughs, I go in.
He emails later: "I can't believe you called me a poser (sic). I'm just being real."
I respond: "You know the difference between 'poser' and 'poseur'? A poser is a difficult question, a puzzle. A poseur is someone who dresses like you, but doesn't know the difference between the words 'poser' and 'poseur.'"
Went on: "Let me use them in a sentence: 'Gosh, it's a poser to explain why {name} is such a poseur.'"
All day I had felt kind of sick. But after that, I felt much better. As Madonna said: Strike a poseur.
I stop. I stare. He pulls the cig from his mouth. "What?"
I say, "You are either the biggest hipster, or the biggest poseur, I have ever met."
He laughs, I go in.
He emails later: "I can't believe you called me a poser (sic). I'm just being real."
I respond: "You know the difference between 'poser' and 'poseur'? A poser is a difficult question, a puzzle. A poseur is someone who dresses like you, but doesn't know the difference between the words 'poser' and 'poseur.'"
Went on: "Let me use them in a sentence: 'Gosh, it's a poser to explain why {name} is such a poseur.'"
All day I had felt kind of sick. But after that, I felt much better. As Madonna said: Strike a poseur.
But, Then Why Do They Spend Money On It?
Does intraday technical analysis in the U.S. equity market have value?
Ben Marshall, Rochester Cahan & Jared Cahan
Journal of Empirical Finance, March 2008, Pages 199-210
Abstract:
This paper investigates whether intraday technical analysis is profitable in
the U.S. equity market. Surveys of market participants indicate that they
place more emphasis on technical analysis (and less on fundamental analysis)
the shorter the time horizon; however, the technical analysis literature to
date has focused on long-term technical trading rules. We find, using two
bootstrap methodologies, that none of the 7846 popular technical trading
rules we test are profitable after data snooping bias is taken into account.
There is no evidence that the market is inefficient over this time horizon.
Ben Marshall, Rochester Cahan & Jared Cahan
Journal of Empirical Finance, March 2008, Pages 199-210
Abstract:
This paper investigates whether intraday technical analysis is profitable in
the U.S. equity market. Surveys of market participants indicate that they
place more emphasis on technical analysis (and less on fundamental analysis)
the shorter the time horizon; however, the technical analysis literature to
date has focused on long-term technical trading rules. We find, using two
bootstrap methodologies, that none of the 7846 popular technical trading
rules we test are profitable after data snooping bias is taken into account.
There is no evidence that the market is inefficient over this time horizon.
Spanish for Your Nanny
You have probably seen this.
But....I laughed. Fuerte.
And, all too true. The whole nanny gig is pretty rough.
(Nod to Neanderbill)
But....I laughed. Fuerte.
And, all too true. The whole nanny gig is pretty rough.
(Nod to Neanderbill)
Thursday, February 28, 2008
Choosing, Vouching, and Chartering: Coming Soon to a School Near You
The effect of charter schools on traditional public school students in
Texas: Are children who stay behind left behind?
Kevin Booker, Scott Gilpatric, Timothy Gronberg & Dennis Jansen
Journal of Urban Economics, forthcoming
Abstract:
Texas has been an important player in the emergence of the charter school industry. We test for a competitive effect of charters by looking for changes in student achievement in traditional public schools following charter market penetration. We use an eight-year panel of data on individual student test scores for public schools students in Texas in order to evaluate the achievement impact of charter schools. We estimate a model that includes student/campus spell fixed effects to control for campus demographic and peer group characteristics, and to control directly for student and student family background characteristics. We find a positive and significant effect of charter school penetration on traditional public school student outcomes.
-------------------------
Does school choice increase the rate of youth entrepreneurship?
Russell Sobel & Kerry King
Economics of Education Review, forthcoming
Abstract:
Because entrepreneurial activity is a key source of economic growth, promoting youth entrepreneurship has become a priority for policymakers. School choice programs force administrators and teachers to be more entrepreneurial in their jobs by encouraging innovation and by creating competition and a more business-like environment in K-12 education. Does going to school in this climate make students more likely to become
entrepreneurs? In this paper we test whether youth entrepreneurship rates are higher in counties with school choice programs. We find that voucher programs create higher rates of youth entrepreneurship, while charter schools do not, relative to traditional public schools.
-------------------------
The political economy of school choice: Support for charter schools across states and school districts
Christiana Stoddard & Sean Corcoran
Journal of Urban Economics, July 2007, Pages 27-54
Abstract:
Public charter schools are one of the fastest growing education reforms in the US, currently serving more than a million students. Though the movement for greater school choice is widespread, its implementation has been uneven. State laws differ greatly in the degree of latitude granted charter schools, and-holding constant state support-states and localities vary widely in the availability of and enrollment in these schools. In this paper, we use a panel of demographic, financial, and school performance data to examine the support for charters at the state and local levels. Results suggest that growing population heterogeneity and income inequality-in addition to persistently low student outcomes-are associated with greater support for
charter schools. Teachers unions have been particularly effective in slowing or preventing liberal state charter legislation; however, conditional on law passage and strength, local participation in charter schools rises with the share of unionized teachers.
--------------------------
Tiebout choice and universal school vouchers
Eric Brunner & Jennifer Imazeki
Journal of Urban Economics, January 2008, Pages 253-279
Abstract:
This paper examines who is likely to gain and who is likely to lose under a universal voucher program. Following Epple and Romano [D. Epple, R.E. Romano, Competition between private and public schools, vouchers, and peer group effects, American Economic Review 88 (1998) 33-62; D. Epple, R.E. Romano, Neighborhood schools, choice, and the distribution of educational benefits, in: C.M. Hoxby (Ed.), The Economics of School Choice, The Univ. of Chicago Press, Chicago, 2003, pp. 227-286], and Nechyba [T.J. Nechyba, Mobility, targeting, and private school vouchers, American Economic Review 90 (2000) 130-146; T.J. Nechyba, Introducing school choice into multidistrict public school systems, in: C.M. Hoxby (Ed.), The Economics of School Choice, The Univ. of Chicago Press, Chicago, 2003, pp. 145-194], we focus on the idea that gains and losses under a universal voucher depend on two effects: changes in peer group composition and changes in housing values. We show that the direction and magnitude of each of these effects hinge critically on market structure, i.e., the amount of school choice that already exists in the public sector. In markets with little or no Tiebout choice, potential changes in peer group composition create an incentive for
high-socioeconomic (SES) households to vote for the voucher and for low-SES households to vote against voucher. In contrast, in markets with significant Tiebout choice, potential changes in housing values create an incentive for high-SES households to vote against the voucher and for low-SES households to vote for the voucher. Using data on vote outcomes from California's 2000 voucher initiative, we find evidence consistent with those predictions.
(Nod to KL)
Texas: Are children who stay behind left behind?
Kevin Booker, Scott Gilpatric, Timothy Gronberg & Dennis Jansen
Journal of Urban Economics, forthcoming
Abstract:
Texas has been an important player in the emergence of the charter school industry. We test for a competitive effect of charters by looking for changes in student achievement in traditional public schools following charter market penetration. We use an eight-year panel of data on individual student test scores for public schools students in Texas in order to evaluate the achievement impact of charter schools. We estimate a model that includes student/campus spell fixed effects to control for campus demographic and peer group characteristics, and to control directly for student and student family background characteristics. We find a positive and significant effect of charter school penetration on traditional public school student outcomes.
-------------------------
Does school choice increase the rate of youth entrepreneurship?
Russell Sobel & Kerry King
Economics of Education Review, forthcoming
Abstract:
Because entrepreneurial activity is a key source of economic growth, promoting youth entrepreneurship has become a priority for policymakers. School choice programs force administrators and teachers to be more entrepreneurial in their jobs by encouraging innovation and by creating competition and a more business-like environment in K-12 education. Does going to school in this climate make students more likely to become
entrepreneurs? In this paper we test whether youth entrepreneurship rates are higher in counties with school choice programs. We find that voucher programs create higher rates of youth entrepreneurship, while charter schools do not, relative to traditional public schools.
-------------------------
The political economy of school choice: Support for charter schools across states and school districts
Christiana Stoddard & Sean Corcoran
Journal of Urban Economics, July 2007, Pages 27-54
Abstract:
Public charter schools are one of the fastest growing education reforms in the US, currently serving more than a million students. Though the movement for greater school choice is widespread, its implementation has been uneven. State laws differ greatly in the degree of latitude granted charter schools, and-holding constant state support-states and localities vary widely in the availability of and enrollment in these schools. In this paper, we use a panel of demographic, financial, and school performance data to examine the support for charters at the state and local levels. Results suggest that growing population heterogeneity and income inequality-in addition to persistently low student outcomes-are associated with greater support for
charter schools. Teachers unions have been particularly effective in slowing or preventing liberal state charter legislation; however, conditional on law passage and strength, local participation in charter schools rises with the share of unionized teachers.
--------------------------
Tiebout choice and universal school vouchers
Eric Brunner & Jennifer Imazeki
Journal of Urban Economics, January 2008, Pages 253-279
Abstract:
This paper examines who is likely to gain and who is likely to lose under a universal voucher program. Following Epple and Romano [D. Epple, R.E. Romano, Competition between private and public schools, vouchers, and peer group effects, American Economic Review 88 (1998) 33-62; D. Epple, R.E. Romano, Neighborhood schools, choice, and the distribution of educational benefits, in: C.M. Hoxby (Ed.), The Economics of School Choice, The Univ. of Chicago Press, Chicago, 2003, pp. 227-286], and Nechyba [T.J. Nechyba, Mobility, targeting, and private school vouchers, American Economic Review 90 (2000) 130-146; T.J. Nechyba, Introducing school choice into multidistrict public school systems, in: C.M. Hoxby (Ed.), The Economics of School Choice, The Univ. of Chicago Press, Chicago, 2003, pp. 145-194], we focus on the idea that gains and losses under a universal voucher depend on two effects: changes in peer group composition and changes in housing values. We show that the direction and magnitude of each of these effects hinge critically on market structure, i.e., the amount of school choice that already exists in the public sector. In markets with little or no Tiebout choice, potential changes in peer group composition create an incentive for
high-socioeconomic (SES) households to vote for the voucher and for low-SES households to vote against voucher. In contrast, in markets with significant Tiebout choice, potential changes in housing values create an incentive for high-SES households to vote against the voucher and for low-SES households to vote for the voucher. Using data on vote outcomes from California's 2000 voucher initiative, we find evidence consistent with those predictions.
(Nod to KL)
Wednesday, February 27, 2008
Mark Perry beat me to it!
I love to slam the inane ramblings of the WSJs editorial pages. Today though, my friend and co-author Mark Perry beat me to the punch with an excellent analysis of Ranson's Ramblings from today's Journal.
The OTHER endorsement we've all been waiting for
Greg Oden has endorsed Barack Obama for President, pretty much guaranteeing the rich giants with mohawks vote for Obama.
It was clearly a well-informed decision; here's Greg on the process:
What I got from talking to him is that he is a real sports fan and he knew about the Blazers. He said that when I come back Brandon, LaMarcus and I will be a force next year. He also asked me about my knee, and he said he wasn't feeling my mohawk - lol. I laughed and explained to him that it's just a haircut to me and he told me he liked how I handle myself as a young man - "Thanks Mom." I did not talk politics with him. He talks about that stuff all the time and I'm going to keep learning more about the issues.
It was clearly a well-informed decision; here's Greg on the process:
What I got from talking to him is that he is a real sports fan and he knew about the Blazers. He said that when I come back Brandon, LaMarcus and I will be a force next year. He also asked me about my knee, and he said he wasn't feeling my mohawk - lol. I laughed and explained to him that it's just a haircut to me and he told me he liked how I handle myself as a young man - "Thanks Mom." I did not talk politics with him. He talks about that stuff all the time and I'm going to keep learning more about the issues.
The Endorsement We Have All Been Waiting For
Words fail me.
The KKK is, for now, withholding its endorsement for Barack Obama.
Quite a web site. The music is nice, don't you think?
(Nod to KL)
The KKK is, for now, withholding its endorsement for Barack Obama.
Quite a web site. The music is nice, don't you think?
(Nod to KL)
I vant to be a Loan
Development Aid and International Politics: Does membership on the UN
Security Council influence World Bank decisions?
Axel Dreher, Jan-Egbert Sturm & James Raymond Vreeland
Journal of Development Economics, forthcoming
Abstract:
We investigate whether elected members of the UN Security Council receive
favorable treatment from the World Bank, using panel data for 157 countries
over the period 1970-2004. Our results indicate a robust positive
relationship between temporary UN Security Council membership and the number
of World Bank projects a country receives, even after accounting for
economic and political factors, as well as regional, country and year
effects. The size of World Bank loans, however, is not affected by UN
Security Council membership.
(Nod to KL)
Security Council influence World Bank decisions?
Axel Dreher, Jan-Egbert Sturm & James Raymond Vreeland
Journal of Development Economics, forthcoming
Abstract:
We investigate whether elected members of the UN Security Council receive
favorable treatment from the World Bank, using panel data for 157 countries
over the period 1970-2004. Our results indicate a robust positive
relationship between temporary UN Security Council membership and the number
of World Bank projects a country receives, even after accounting for
economic and political factors, as well as regional, country and year
effects. The size of World Bank loans, however, is not affected by UN
Security Council membership.
(Nod to KL)
Tuesday, February 26, 2008
Massive Power Outage in Central FLA
Bad times in Central Florida.
No word on cause, yet.
4 million people without AC. Even in Feb, that's a problem down there.
No word on cause, yet.
4 million people without AC. Even in Feb, that's a problem down there.
Why are the Fed and the ECB acting so differently?
Bernanke and the Fed have been cutting rates like there's no tomorrow. Frequent, large cuts. Trichet and the ECB have been standing pat. No cuts and rhetoric like there's not going to be cuts. Last month I mused that this was an interesting natural experiment about which way was the best way.
Could it be that the ECB is more independent? After all, they have an explicit inflation target and they don't face the same kind of election year pressures that the Fed faces. Or maybe they don't forecast the same looming disaster that the Fed might be forecasting, being relative rookies to the central banking game and all.
An intriguing third possibility now comes from Finnish economist Mika Widgrén via VoxEU. He argues that the unwieldy nature of the ECBs Executive Board (their analog to the FOMC) introduces inertia and status quo bias, preventing the institution from acting as "nimbly" as the FED.
"In the Governing Council, the one-national-central-bank-one-vote principle was intended to ensure that governors of national central banks would participate as independent actors, not as national stake-holders. Nothing guarantees that, though. Moreover, expanding EMU membership increases the voting share of the Central Bank Governors and makes the consequent numbers or inefficiency problem more severe. Indeed, in earlier studies (see footnote 3), co-authors and I argued that in an expanding Euroland it would become highly unlikely that Governing Council could pass optimal policies correspond to Euroland’s aggregated preferences. Moreover, there would be substantial risk of sticking to status quo when facing asymmetric shocks. In sum, Governing Council decisions might be too conservative and biased towards the status quo."
Interesting. Which policy road is rights and why are the two authorities differing so dramatically?
Could it be that the ECB is more independent? After all, they have an explicit inflation target and they don't face the same kind of election year pressures that the Fed faces. Or maybe they don't forecast the same looming disaster that the Fed might be forecasting, being relative rookies to the central banking game and all.
An intriguing third possibility now comes from Finnish economist Mika Widgrén via VoxEU. He argues that the unwieldy nature of the ECBs Executive Board (their analog to the FOMC) introduces inertia and status quo bias, preventing the institution from acting as "nimbly" as the FED.
"In the Governing Council, the one-national-central-bank-one-vote principle was intended to ensure that governors of national central banks would participate as independent actors, not as national stake-holders. Nothing guarantees that, though. Moreover, expanding EMU membership increases the voting share of the Central Bank Governors and makes the consequent numbers or inefficiency problem more severe. Indeed, in earlier studies (see footnote 3), co-authors and I argued that in an expanding Euroland it would become highly unlikely that Governing Council could pass optimal policies correspond to Euroland’s aggregated preferences. Moreover, there would be substantial risk of sticking to status quo when facing asymmetric shocks. In sum, Governing Council decisions might be too conservative and biased towards the status quo."
Interesting. Which policy road is rights and why are the two authorities differing so dramatically?
Monday, February 25, 2008
Vote early Vote often
Bookseller Magazine has announced the shortlist for its annual Diagram Prize for the oddest titled book. Here are the nominees:
1. I Was Tortured By the Pygmy Love Queen
2. How to Write a How to Write Book
3. Are Women Human? And Other International Dialogues
4. Cheese Problems Solved
5. If You Want Closure in Your Relationship, Start With Your Legs
6. People who Mattered in Southend and Beyond: From King Canute to Dr Feelgood
You can read synopses here, and you can vote here. I suggest #4 for obvious reasons (PLH McSweeney is an obvious Mungowitz pseudonym, no?), but we do live in a democracy, so have at it people!! NB. polls close March 28th.
1. I Was Tortured By the Pygmy Love Queen
2. How to Write a How to Write Book
3. Are Women Human? And Other International Dialogues
4. Cheese Problems Solved
5. If You Want Closure in Your Relationship, Start With Your Legs
6. People who Mattered in Southend and Beyond: From King Canute to Dr Feelgood
You can read synopses here, and you can vote here. I suggest #4 for obvious reasons (PLH McSweeney is an obvious Mungowitz pseudonym, no?), but we do live in a democracy, so have at it people!! NB. polls close March 28th.
Rhymes with "Stitch"
Motivated to Penalize: Women's Strategic Rejection of Successful Women
Elizabeth Parks-Stamm, Madeline Heilman & Krystle Hearns
Personality and Social Psychology Bulletin, February 2008, Pages 237-247
Abstract:
Two studies tested the hypothesis that females penalize women who succeed in male gender-typed jobs to salvage their own self-views regarding competence. The authors proposed that women are motivated to penalize successful women (i.e., characterize them as unlikable and interpersonally hostile) to minimize the self-evaluative consequences of social comparison with a highly successful female target. Results supported the hypothesis. Whereas both male and female participants penalized successful women, blocking this penalization reduced female-but not male-participants' self-ratings of competence (Study 1). Moreover, positive feedback provided to female participants about their potential to succeed (Study 2) weakened negative reactions to successful women without costs to subsequent self-ratings of
competence. These results suggest that the interpersonal derogation of successful women by other women functions as a self-protective strategy against threatening upward social comparisons.
Elizabeth Parks-Stamm, Madeline Heilman & Krystle Hearns
Personality and Social Psychology Bulletin, February 2008, Pages 237-247
Abstract:
Two studies tested the hypothesis that females penalize women who succeed in male gender-typed jobs to salvage their own self-views regarding competence. The authors proposed that women are motivated to penalize successful women (i.e., characterize them as unlikable and interpersonally hostile) to minimize the self-evaluative consequences of social comparison with a highly successful female target. Results supported the hypothesis. Whereas both male and female participants penalized successful women, blocking this penalization reduced female-but not male-participants' self-ratings of competence (Study 1). Moreover, positive feedback provided to female participants about their potential to succeed (Study 2) weakened negative reactions to successful women without costs to subsequent self-ratings of
competence. These results suggest that the interpersonal derogation of successful women by other women functions as a self-protective strategy against threatening upward social comparisons.
Globalization, Yer doin' it Wrong!
It's another Japanese entry. The Michelin Guide has started giving out stars for Tokyo restaurants; many say thanks but no thanks!
"Many prominent figures of the Tokyo food world, however, are saying to Michelin, in effect, thanks for all the attention (which we deserve), but you still do not know us or our cuisine.
Food critics, magazines and even the governor of Tokyo have questioned the guide’s choice of restaurants and ratings. A handful of chefs proudly proclaimed that they had turned down chances to be listed. One, Toshiya Kadowaki, said his nouveau Japonais dishes, including a French-inspired rice with truffles, did not need a Gallic seal of approval.
“Japanese food was created here, and only Japanese know it,” Mr. Kadowaki said in an interview. “How can a bunch of foreigners show up and tell us what is good or bad?”
With all the doubts about Michelin’s understanding of Japanese tastes, some chefs say a rating in the guide has become a liability. Kunio Tokuoka, head chef at the high-end restaurant Kitcho, said the main Tokyo branch of his restaurant refused a listing in Michelin for fear of turning off customers seeking authentic Japanese cuisine."
With progress like this, I can see Japan opening up its markets and a grand Doha deal blooming any day now!!Sunday, February 24, 2008
Blowin' in the wind
Tyler Cowen has been very very good to me. We've been friends for 18 years. He convinced me to try traveling outside the USA, he was the matchmaker for my marriage to Mrs. Angus, he turned me on the genius of Antoine Oleyant, he occasionally links to KPC and quadruples our daily volume. So I pretty much try to stay on his good side.
But, in Tyler's most recent NY Times column, he announced, to blogospheric acclaim, that the upcoming US elections probably won't amount to a hill of beans: "This election is certainly important. But based on the historical record, it isn’t likely to result in a major swing in economic policy."
I beg to differ.
Our current status quo is a fairly liberal / populist-ish Democratic Majority in both houses, being held somewhat in check by a witless, right-ish, hawk-ish President whose main weapon is the veto and a large enough minority to block overrides. If Barack Obama is our next president, it seems to me we will have a President to the left of the median in either chamber of Congress and the only restraining influence would be the filibuster threat in the Senate. I am no George Tsebelis (but then again, who is?) but given that McCain would probably be kind of a more sentient and honorable Bush, a President Obama, given the current Congress (which isn't going to move to the right in the election) would make for a big change in where the veto players are located.
I would predict potentially large changes in our trade policies, in tax rates for business and higher earning individuals (isn't Obama in favor of letting Bush cuts expire and also lifting the income cap on FICA taxes?), a large increase in government "green" initiatives with our lovely ethanol policy as a guidepost. I'd also predict a potentially large change in our security policy and our methods of diplomacy, which to be fair Tyler also acknowledges.
Now you may like all or most of that. Cool. Vote for Barack. You may not. Cool. Vote for McCain. But I think saying that there isn't that much at stake here is incorrect.
Maybe I'm wrong, either in the differences in positions between Obama and McCain, or in the weakness of just the filibuster without the veto threat as a restraint on the Congress.
I guess Tyler's position must be that, on the economy, there won't be much difference in positions between McCain or Obama. Since he foresees big changes in foreign policy outcomes, he probably does agree that swinging the executive from the right of a liberal congress to the left of a liberal congress can make for big policy swings, but either thinks Obama is more conservative than I do, or that McCain is more big government than I do (or both!!).
I see real differences. I don't see McCain lifting the cap on FICA earnings. I don't see McCain going for publicly created "green jobs". I do see both of them "fixing" the AMT. I don't see McCain as so anti-trade as Obama.
I see parallels to 1992 when a much less liberal than Obama Bill Clinton came into office, hiked taxes, turned Hillary loose on health care and promptly got slapped with a Republican congress in the midterm elections.
But, in Tyler's most recent NY Times column, he announced, to blogospheric acclaim, that the upcoming US elections probably won't amount to a hill of beans: "This election is certainly important. But based on the historical record, it isn’t likely to result in a major swing in economic policy."
I beg to differ.
Our current status quo is a fairly liberal / populist-ish Democratic Majority in both houses, being held somewhat in check by a witless, right-ish, hawk-ish President whose main weapon is the veto and a large enough minority to block overrides. If Barack Obama is our next president, it seems to me we will have a President to the left of the median in either chamber of Congress and the only restraining influence would be the filibuster threat in the Senate. I am no George Tsebelis (but then again, who is?) but given that McCain would probably be kind of a more sentient and honorable Bush, a President Obama, given the current Congress (which isn't going to move to the right in the election) would make for a big change in where the veto players are located.
I would predict potentially large changes in our trade policies, in tax rates for business and higher earning individuals (isn't Obama in favor of letting Bush cuts expire and also lifting the income cap on FICA taxes?), a large increase in government "green" initiatives with our lovely ethanol policy as a guidepost. I'd also predict a potentially large change in our security policy and our methods of diplomacy, which to be fair Tyler also acknowledges.
Now you may like all or most of that. Cool. Vote for Barack. You may not. Cool. Vote for McCain. But I think saying that there isn't that much at stake here is incorrect.
Maybe I'm wrong, either in the differences in positions between Obama and McCain, or in the weakness of just the filibuster without the veto threat as a restraint on the Congress.
I guess Tyler's position must be that, on the economy, there won't be much difference in positions between McCain or Obama. Since he foresees big changes in foreign policy outcomes, he probably does agree that swinging the executive from the right of a liberal congress to the left of a liberal congress can make for big policy swings, but either thinks Obama is more conservative than I do, or that McCain is more big government than I do (or both!!).
I see real differences. I don't see McCain lifting the cap on FICA earnings. I don't see McCain going for publicly created "green jobs". I do see both of them "fixing" the AMT. I don't see McCain as so anti-trade as Obama.
I see parallels to 1992 when a much less liberal than Obama Bill Clinton came into office, hiked taxes, turned Hillary loose on health care and promptly got slapped with a Republican congress in the midterm elections.
There will be Hype
One thing we as a nation are still good at is creating mindless catchphrases:
Where's the Beef? Talk to the hand! Say hello to my leetle friend!
My personal favorite from last year was Don't taze me, bro!
But I am not groovin' on I drink your milkshake!!
In fact, I will go so far as to say (based only on reading reviews and seeing the trailer), that There will be Blood, just like Michael Clayton is getting the great reviews simply by being an anti-capitalism screed. We watched Michael Clayton last night. It's a two sentence movie. (1) Capitalism = Murder, (2) Lawyers are evil.
Where's the Beef? Talk to the hand! Say hello to my leetle friend!
My personal favorite from last year was Don't taze me, bro!
But I am not groovin' on I drink your milkshake!!
In fact, I will go so far as to say (based only on reading reviews and seeing the trailer), that There will be Blood, just like Michael Clayton is getting the great reviews simply by being an anti-capitalism screed. We watched Michael Clayton last night. It's a two sentence movie. (1) Capitalism = Murder, (2) Lawyers are evil.
Saturday, February 23, 2008
More good news for Angus
From the NY Times: Millions of Americans are giving up golf!!
As Mungowitz can tell you, Angus on a crowded, slow playing course is a heart attack waiting to happen (either my own or the one I give to someone), so maybe I will now live longer, blog stronger and have more fun on the course this coming season.
As Mungowitz can tell you, Angus on a crowded, slow playing course is a heart attack waiting to happen (either my own or the one I give to someone), so maybe I will now live longer, blog stronger and have more fun on the course this coming season.
The Big Cactus comes through
Steve Kerr has to be thrilled. He rolled the dice and they came up Diesel. In Shaq's first two games with the Suns, they have out-rebounded their opposition 46-33 and 50-32. For the season (including these two games) the Suns get out-rebounded on average by 46 to 41. You gotta control your own backboard to win championships and the Suns have never been able to do that up til now.
Plus Amare has gone nuts since the trade, playing tremendous. Shaq's presence really makes things easier for Amare, plus it seems like he was happy to get rid of The Matrix.
Sure, I know Shaq has high milage and his contract goes on for a long time and a lot of money, but hey, Nash and G. Hill aren't getting any younger. Phoenix's time is now. I think they made a great move.
Wouldn't a Suns - Lakers western conference final be incredible? So many stars, so much history, so much great ball.
Plus Amare has gone nuts since the trade, playing tremendous. Shaq's presence really makes things easier for Amare, plus it seems like he was happy to get rid of The Matrix.
Sure, I know Shaq has high milage and his contract goes on for a long time and a lot of money, but hey, Nash and G. Hill aren't getting any younger. Phoenix's time is now. I think they made a great move.
Wouldn't a Suns - Lakers western conference final be incredible? So many stars, so much history, so much great ball.
Friday, February 22, 2008
Separated at Birth???
This is a goodun, people. KPC pal Brian Roberts and NYTimes columnist David Brooks. Holy Spumoli!
For Gabriel Mihalache
KPC friend Gabriel recently ripped econ bloggers for no longer posting about economics (lol, imagine that!).
So here you go Gabe!
1. Maybe the Stimulus will work after all. The December 2007 JPE gives us "The Reaction of Consumer Spending and Debt to Tax Rebates" by Sumit Agarwal, Chunlin Liu, and Nicholas S. Souleles. Here is the abstract, an ungated version can be downloaded from here)
So here you go Gabe!
1. Maybe the Stimulus will work after all. The December 2007 JPE gives us "The Reaction of Consumer Spending and Debt to Tax Rebates" by Sumit Agarwal, Chunlin Liu, and Nicholas S. Souleles. Here is the abstract, an ungated version can be downloaded from here)
Thursday, February 21, 2008
I felt the earth....move....under my feet.
A blog entry reporting on a new seismic theory.
Money quote: "A cost-effective way of averting earthquake damage," said (Member of the Knesset) Benizri, "would be to stop passing legislation on how to encourage homosexual activity in the State of Israel, which anyways causes earthquakes."
Oh, my. Seems that MK Benizri could probably win in the 10th District HR seat in NC.
(Nod to El Zorno, who spins MY world)
Money quote: "A cost-effective way of averting earthquake damage," said (Member of the Knesset) Benizri, "would be to stop passing legislation on how to encourage homosexual activity in the State of Israel, which anyways causes earthquakes."
Oh, my. Seems that MK Benizri could probably win in the 10th District HR seat in NC.
(Nod to El Zorno, who spins MY world)
Gotta Love the NY Post.....
because they run stuff like this:
To illustrate graphically how important Texas is to Hill's hopes. What do you guys think, will Texas be Alamo for Billary? or instead of Davy Crockett will she end up playing the role of Santa Anna?
To illustrate graphically how important Texas is to Hill's hopes. What do you guys think, will Texas be Alamo for Billary? or instead of Davy Crockett will she end up playing the role of Santa Anna?
Instant NBA Overanalysis
Wow the J-Kidd trade by Dallas was HORRIBLE (note that this has a chance of actually being true). Kidd looked like the middle aged wife-beater that he is last night as Chris Paul ran rings abound him and the Hornets beat the Mavs.
Here are the details.
Kidd: 8 points, 6 rebounds, 5 assists to 6 turnovers and 3 steals. His team was -14 points with him on the floor.
Paul: 31 points, 5 rebounds, 11 assists to 1 turnover and 9 steals. His team was +20 points with him on the floor.
Note that CP3 played 4 more minutes than did Kidd.
Meanwhile, it has become imperative that the league step in and take over the operations of the New York Knickerbockers (note that this actually might be a good idea). Last night, the team simply didn't show up for their game in Philadelphia. the 76ers scored 100 points in three quarters, the Knicks trailed by 45 at one point in the third quarter, they committed 23 turnovers (to 12 for the 76ers) and were outrebounded 43-31. Philly shot 57% from the floor agains the Knick "defense". It's probably good to remember that the 76ers stink and shouldn't be able to beat anyone this badly.
Here are the details.
Kidd: 8 points, 6 rebounds, 5 assists to 6 turnovers and 3 steals. His team was -14 points with him on the floor.
Paul: 31 points, 5 rebounds, 11 assists to 1 turnover and 9 steals. His team was +20 points with him on the floor.
Note that CP3 played 4 more minutes than did Kidd.
Meanwhile, it has become imperative that the league step in and take over the operations of the New York Knickerbockers (note that this actually might be a good idea). Last night, the team simply didn't show up for their game in Philadelphia. the 76ers scored 100 points in three quarters, the Knicks trailed by 45 at one point in the third quarter, they committed 23 turnovers (to 12 for the 76ers) and were outrebounded 43-31. Philly shot 57% from the floor agains the Knick "defense". It's probably good to remember that the 76ers stink and shouldn't be able to beat anyone this badly.
Wednesday, February 20, 2008
Madagascar, baby!!
After reading Tyler on travel, we got ourselves busy and.....
It's official, the Angus family summer vacation has been set. We goin' to Madagascar! Lemurs, Sifakas, Chameleons, Fossas, Baobobs, Spiny Forest, and Tsingy!
Specifically, we plan to visit Perinet, Berenty, Kirindy, the grand tsingy du Bemeraha, and Ampijoroa (note that the Malagasy people have helpfully renamed a lot of these places, along with their currency). Time to brush up my French and learn a little Malagasy. It was amazing how happy people were in Tanzania to hear us speaking a little tiny bit of Swahili. It's great to learn a few basics in the local language whenever possible.
Here is a story about a trip to Mad, written by a cool guy we met and made friends with last year on our trip to Tanzania, Andrew Solomon.
If any readers have further or alternative suggestions for what to do in Mad, we'd love to hear from you (note that we don't travel this far to go to the beach though).
Some anticipatory pics:
It's official, the Angus family summer vacation has been set. We goin' to Madagascar! Lemurs, Sifakas, Chameleons, Fossas, Baobobs, Spiny Forest, and Tsingy!
Specifically, we plan to visit Perinet, Berenty, Kirindy, the grand tsingy du Bemeraha, and Ampijoroa (note that the Malagasy people have helpfully renamed a lot of these places, along with their currency). Time to brush up my French and learn a little Malagasy. It was amazing how happy people were in Tanzania to hear us speaking a little tiny bit of Swahili. It's great to learn a few basics in the local language whenever possible.
Here is a story about a trip to Mad, written by a cool guy we met and made friends with last year on our trip to Tanzania, Andrew Solomon.
If any readers have further or alternative suggestions for what to do in Mad, we'd love to hear from you (note that we don't travel this far to go to the beach though).
Some anticipatory pics:
What Gives Me the Right?
Interesting. Do I get to carry a portable device that blocks cell phone reception in an area?
This jobbie works, if I read the description right, on an area of radius 10 meters, out from the unit in my pocket. So, I could keep you from making or receiving cell phone calls in a car, or in a conference room.
So, if this device is legal, at one point would it become illegal? At a power/radius of 100 meters? How about 10 miles? Can I block all cell phone use in a circle of 10 mile radius?
At some point, it is clearly illegal, or should be. Yes?
UPDATE: Yes. Clearly illegal.
But then why the hecking heck does it pop up on Facebook?
This jobbie works, if I read the description right, on an area of radius 10 meters, out from the unit in my pocket. So, I could keep you from making or receiving cell phone calls in a car, or in a conference room.
So, if this device is legal, at one point would it become illegal? At a power/radius of 100 meters? How about 10 miles? Can I block all cell phone use in a circle of 10 mile radius?
At some point, it is clearly illegal, or should be. Yes?
UPDATE: Yes. Clearly illegal.
But then why the hecking heck does it pop up on Facebook?
Tuesday, February 19, 2008
Das Car Boot
Strange ideas about property.
You can't trespass on private property, just to park
your overpriced Nipponese Urban Assault Vehicle.
But then you REALLY can't take the parking boot, and try
to sell it on Ebay.
Unless you are a lawyer. In which case you think that "Property"
means "mine."
You can't trespass on private property, just to park
your overpriced Nipponese Urban Assault Vehicle.
But then you REALLY can't take the parking boot, and try
to sell it on Ebay.
Unless you are a lawyer. In which case you think that "Property"
means "mine."
Hizzoner! Feature Creep....
Hizzoner the Mayor speaks, on feature creep.
The context is an actual newsletter, in an actual town, where the Mayor is an actual Mayor.
Online video games have something to teach us about the flesh and blood world. Actually, they have many things to teach us but I want to focus on just one, the notion of “feature creep.” Feature creep is a tendency for programmers to add more and more features to the game than were originally planned. More features are good, right? They mean the game can do more things. They also increase complexity, increasing the probability that the game will be so overburdened with features it cannot do its original purpose very well and crashes easily.
The same thing happens in government as people try to add more things for government to do. I often hear people say, “Wouldn’t it be great if the city …” fill in your favorite phrase here—gave scholarships, showed free movies, paid the utilities bill for those below a certain income level, stepped into disputes between neighbors, built trails, and on and on. Each new feature is a good idea. Everyone has the best of intentions.
The problem with feature creep in government is that the new features get in the way of doing the things that actually need to be done. Plowing snow, fixing and maintaining roads, running effective water and sewer systems, fire protection, and providing a police and court system are things that need and ought to be done. When we start adding other features beyond those, we stretch tax dollars and staff ever thinner. Like a feature-laden video game, we become slower and consume more resources. We start asking government to do more than it can, making it difficult to do what it should.
In a recent meeting with city staff where a new feature concerning fences was being considered, I responded that city government has enough to do without adding new features. Doing our core mission well is my purpose as mayor. Please let us know how well you think we are doing.
The context is an actual newsletter, in an actual town, where the Mayor is an actual Mayor.
Online video games have something to teach us about the flesh and blood world. Actually, they have many things to teach us but I want to focus on just one, the notion of “feature creep.” Feature creep is a tendency for programmers to add more and more features to the game than were originally planned. More features are good, right? They mean the game can do more things. They also increase complexity, increasing the probability that the game will be so overburdened with features it cannot do its original purpose very well and crashes easily.
The same thing happens in government as people try to add more things for government to do. I often hear people say, “Wouldn’t it be great if the city …” fill in your favorite phrase here—gave scholarships, showed free movies, paid the utilities bill for those below a certain income level, stepped into disputes between neighbors, built trails, and on and on. Each new feature is a good idea. Everyone has the best of intentions.
The problem with feature creep in government is that the new features get in the way of doing the things that actually need to be done. Plowing snow, fixing and maintaining roads, running effective water and sewer systems, fire protection, and providing a police and court system are things that need and ought to be done. When we start adding other features beyond those, we stretch tax dollars and staff ever thinner. Like a feature-laden video game, we become slower and consume more resources. We start asking government to do more than it can, making it difficult to do what it should.
In a recent meeting with city staff where a new feature concerning fences was being considered, I responded that city government has enough to do without adding new features. Doing our core mission well is my purpose as mayor. Please let us know how well you think we are doing.
Sovereign Debt and the Siren's Song
Anything I can do.....
....Roger Myerson can do better.
The Autocrat's Credibility Problem and Foundations of the Constitutional
State
Roger Myerson
American Political Science Review, February 2008, Pages 125-139
Abstract:
A political leader's temptation to deny costly debts to past supporters is a central moral-hazard problem in politics. This paper develops a game-theoretic model to probe the consequences of this moral-hazard problem for leaders who compete to establish political regimes. In contests for power, absolute leaders who are not subject to third-party judgments can credibly recruit only limited support. A leader can do better by organizing supporters into a court which could cause his downfall. In global negotiation-proof equilibria, leaders cannot recruit any supporters without such constitutional checks. Egalitarian norms make recruiting costlier in oligarchies, which become weaker than monarchies. The ruler's power and limitations on entry of new leaders are derived from focal-point effects in games with multiple equilibria. The relationships of trust between leaders and their supporters are personal constitutions which underlie all other political constitutions.
(PDF, if your university or library subscribes)
(nod to KL)
....Roger Myerson can do better.
The Autocrat's Credibility Problem and Foundations of the Constitutional
State
Roger Myerson
American Political Science Review, February 2008, Pages 125-139
Abstract:
A political leader's temptation to deny costly debts to past supporters is a central moral-hazard problem in politics. This paper develops a game-theoretic model to probe the consequences of this moral-hazard problem for leaders who compete to establish political regimes. In contests for power, absolute leaders who are not subject to third-party judgments can credibly recruit only limited support. A leader can do better by organizing supporters into a court which could cause his downfall. In global negotiation-proof equilibria, leaders cannot recruit any supporters without such constitutional checks. Egalitarian norms make recruiting costlier in oligarchies, which become weaker than monarchies. The ruler's power and limitations on entry of new leaders are derived from focal-point effects in games with multiple equilibria. The relationships of trust between leaders and their supporters are personal constitutions which underlie all other political constitutions.
(PDF, if your university or library subscribes)
(nod to KL)
(Mu)Sharraf don't like it, Rock the Casbah!
Opposition parties together appear to have won a majority of seats in Pakistan's parliamentary elections. Musharraf's party is in third place, and many key figures in it lost their seats.
According to a (questionable) source (Joe Biden), Musharraf was accepting the defeat:
Pakistani President Pervez Musharraf, apparently handed a huge defeat in elections for his country’s national assembly, accepts the results and may be willing to assume a largely ceremonial role, Sen. Joseph Biden, D-Del., said Tuesday.
According to a (questionable) source (Joe Biden), Musharraf was accepting the defeat:
Pakistani President Pervez Musharraf, apparently handed a huge defeat in elections for his country’s national assembly, accepts the results and may be willing to assume a largely ceremonial role, Sen. Joseph Biden, D-Del., said Tuesday.
“ ”The results are clear, we lost. The outcome isn’t going to change,’ ” Biden quoted Musharraf as telling a delegation of three American senators that included Sen. Chuck Hagel, R-Neb., and Sen. John Kerry, D-Mass. “I’ve known him for a long time . . . He seemed like reality had set in.”
Biden told McClatchy that he believed that Musharraf, who assumed power in a military coup in 1999, would ask one of his opponents to form a new government. Whether he would then step into the background “will depend on how the coalition government is formed and how he is treated personally.”
Musharraf made no public statement about the elections, whose final results were not expected till Tuesday night or Wednesday. But unofficial tallies by Pakistani newspapers and television channels and partial official returns showed the party that has backed Musharraf, the Pakistan Muslim League-Q, heading for massive defeat.
If it stands, this is good news. Pakistan tops my list of scariest countries in the world and to see the election go through with secular opposition parties forming a government is a great outcome.Hot Links!
No, not that. But the folks at Long or Short Capital and Fire Joe Morgan have each put out comedic gems. Note that there is more than a fair amount of profanity in the FJM link.
Long or Short Capital: Bloomberg Writers are Boobs! Here's an excerpt:
"Recommendation: Terrible reporters, please stop looking at the stock price and then writing a story to fit it. Also, please stop being so terrible, at least until I establish a large short position in you."
Fire Joe Morgan: This is what we're up against. Here's an excerpt:
"Using a complex statistical method,
for nerds with calculators and pocket protectors and Daily News subscriptions,
researchers concluded that Alex Rodriguez was one of the best shortstops in the game when he played for the Texas Rangers.
This is an interesting finding. I wish I knew more about how the study worked. Just kidding: give me what Mike Birch has to say on the matter. Mike Birch works at Lids, the hat store.
"I don't know what they're smoking down at Penn," said Yankees fan Mike Birch, 32.
Take that, complex statistical study. Birch is insightful and funny. One time he sold me a sweet lid with the Under Armor logo on it. "I don't know what they're smoking"! Classic. Classic Birch.
"That's preposterous. I completely disagree. Jeter's a clutch player."
In one corner: "The method involved looking at every ball put in play in major league baseball from 2002 through 2005 and recorded where the shots went. Researchers then developed a probability model for the average fielder in each position and compared that with the performance of individual players to see who was better or worse than average."
In the other corner: Mike Birch. Watches three innings a week, occasionally while sober. Listens to Mike and the Mad Dog "except when they talk too smart and shit." Watches "Rome Is Burning" with the sound off. I.Q. of 175. Graduated from Cambridge University. Fields Medal winner.
I know who I'm taking."
Long or Short Capital: Bloomberg Writers are Boobs! Here's an excerpt:
"Recommendation: Terrible reporters, please stop looking at the stock price and then writing a story to fit it. Also, please stop being so terrible, at least until I establish a large short position in you."
Fire Joe Morgan: This is what we're up against. Here's an excerpt:
"Using a complex statistical method,
for nerds with calculators and pocket protectors and Daily News subscriptions,
researchers concluded that Alex Rodriguez was one of the best shortstops in the game when he played for the Texas Rangers.
This is an interesting finding. I wish I knew more about how the study worked. Just kidding: give me what Mike Birch has to say on the matter. Mike Birch works at Lids, the hat store.
"I don't know what they're smoking down at Penn," said Yankees fan Mike Birch, 32.
Take that, complex statistical study. Birch is insightful and funny. One time he sold me a sweet lid with the Under Armor logo on it. "I don't know what they're smoking"! Classic. Classic Birch.
"That's preposterous. I completely disagree. Jeter's a clutch player."
In one corner: "The method involved looking at every ball put in play in major league baseball from 2002 through 2005 and recorded where the shots went. Researchers then developed a probability model for the average fielder in each position and compared that with the performance of individual players to see who was better or worse than average."
In the other corner: Mike Birch. Watches three innings a week, occasionally while sober. Listens to Mike and the Mad Dog "except when they talk too smart and shit." Watches "Rome Is Burning" with the sound off. I.Q. of 175. Graduated from Cambridge University. Fields Medal winner.
I know who I'm taking."
Monday, February 18, 2008
The Grand Game: Video Edition
An excellent candidate for KPC's "Grand Game"!
Remember, the way we play the grand game is to invite readers to investigate an article or video on another site, and write in comments about their favorite absurdity.
Here's the video. It's a doozy. An extremely target-rich environment.
I'll go first:
1. The sockpuppets use GOOGLE constantly. GOOGLE is one of the companies that has led the way in making employees feel like owners. Thousands of people make very large salaries at GOOGLE, and produce something useful, something so useful that even sarcastic sock puppets in some sort of Marxist claptrap find it useful. But according to the sock puppets, GOOGLE must be one of the worst offenders, because its workers, who think they are happy and part of a team, are wrong, wrong, WRONG.
2. Ditto Apple. Everything I just said, except about Apple.
3. Is the whole thing intended as irony? I mean, not even a sock puppet could be so stupid as to believe the one guy's dad would really be better off as a union worker in some textile mill, at $4.50 an hour, with lint-filled lungs, compared to GOOGLE, right? Am I just missing the subtlety? (At first, I thought I was. But looking at the list of authors for that blog, themselves sock puppets for a wide variety of liberal fellow travellers, bedwetters, and handwringers, I decided that they must be playing it Old Mutual.)
(Nod to El Zorno)
Remember, the way we play the grand game is to invite readers to investigate an article or video on another site, and write in comments about their favorite absurdity.
Here's the video. It's a doozy. An extremely target-rich environment.
I'll go first:
1. The sockpuppets use GOOGLE constantly. GOOGLE is one of the companies that has led the way in making employees feel like owners. Thousands of people make very large salaries at GOOGLE, and produce something useful, something so useful that even sarcastic sock puppets in some sort of Marxist claptrap find it useful. But according to the sock puppets, GOOGLE must be one of the worst offenders, because its workers, who think they are happy and part of a team, are wrong, wrong, WRONG.
2. Ditto Apple. Everything I just said, except about Apple.
3. Is the whole thing intended as irony? I mean, not even a sock puppet could be so stupid as to believe the one guy's dad would really be better off as a union worker in some textile mill, at $4.50 an hour, with lint-filled lungs, compared to GOOGLE, right? Am I just missing the subtlety? (At first, I thought I was. But looking at the list of authors for that blog, themselves sock puppets for a wide variety of liberal fellow travellers, bedwetters, and handwringers, I decided that they must be playing it Old Mutual.)
(Nod to El Zorno)
MR Book Club: Special Okie Edition! Chapter 7 of "The Logic of Life"
Today we are discussing Tim Harford's chapter on cities, called "The World is Spiky". Special thanks to MR readers for swinging over to this dusty corner of the interwebs. Let me start by saying that Tim must be right, because the opposite position is “The World is Flat” and Thomas Friedman is always wrong! Secondly, this is a very fun book, highly recommended for the intelligent layperson (yes we economists are ordained in a secret ritual) or student of economics.
Here is my summary of Tim’s argument. Cities are expensive, and that expense is above and beyond paying the necessary rents to gain access to their unique amenities. Cities are marked by knowledge spillovers, a positive externality (don’t get mad Bryan) where human capital grows faster when one is around more humans. And the internet, rather than reducing the positive effects of cities on productivity, actually enhances them. Thus, rather than subsidizing rural areas, perhaps we should consider subsidizing cities.
Luckily for Tim and his prospective book sales, he tells this story in a much more entertaining way than I just did. But I still have some questions, suggestions, and quibbles.
The claim is made that salary differences don’t match up with cost of living differences and the reason for this is knowledge spillovers, but it is not spelled out exactly how that would work. An alternative seems to me that zoning restrictions create these big rents and pre-existing property owners are sucking a lot of the consumer surplus out of people with high valuations on cool experiences. There are a lot of experiences that are simply unavailable outside of a big wealthy city.
Tim discusses “failing cities” and describes (correctly I think) why people still live there, but gives no explanation for why they failed if indeed cities produce these positive externalities. There is no discussion of some of the very biggest cities in the world; Mexico City, Lagos, Jakarta. It would be nice to know where the argument works, where it doesn’t and how to know which is which.
In discussing the advantages large cities have in producing quality services (another reason why mechanical cost of living comparisons are not very accurate), I would suggest that Tim consider work like Murphy Shleifer & Vishny’s “The Allocation of Talent” which shows how the most able entrepreneurs will run the largest firms (which for services would be located where the largest populations are concentrated).
I don’t think the case of how the internet affects the advantages of cities is open and shut either. In my own profession, isolated researchers have benefitted greatly from technological advances and our journals show an increasing flow of work from outside the traditional East Coast Bastions.
Anyway, thanks to Tim for writing such a fun book and to Tyler for subcontracting this chapter out to me. What do you guys think of cities, prices, and spillovers?
Here is my summary of Tim’s argument. Cities are expensive, and that expense is above and beyond paying the necessary rents to gain access to their unique amenities. Cities are marked by knowledge spillovers, a positive externality (don’t get mad Bryan) where human capital grows faster when one is around more humans. And the internet, rather than reducing the positive effects of cities on productivity, actually enhances them. Thus, rather than subsidizing rural areas, perhaps we should consider subsidizing cities.
Luckily for Tim and his prospective book sales, he tells this story in a much more entertaining way than I just did. But I still have some questions, suggestions, and quibbles.
The claim is made that salary differences don’t match up with cost of living differences and the reason for this is knowledge spillovers, but it is not spelled out exactly how that would work. An alternative seems to me that zoning restrictions create these big rents and pre-existing property owners are sucking a lot of the consumer surplus out of people with high valuations on cool experiences. There are a lot of experiences that are simply unavailable outside of a big wealthy city.
Tim discusses “failing cities” and describes (correctly I think) why people still live there, but gives no explanation for why they failed if indeed cities produce these positive externalities. There is no discussion of some of the very biggest cities in the world; Mexico City, Lagos, Jakarta. It would be nice to know where the argument works, where it doesn’t and how to know which is which.
In discussing the advantages large cities have in producing quality services (another reason why mechanical cost of living comparisons are not very accurate), I would suggest that Tim consider work like Murphy Shleifer & Vishny’s “The Allocation of Talent” which shows how the most able entrepreneurs will run the largest firms (which for services would be located where the largest populations are concentrated).
I don’t think the case of how the internet affects the advantages of cities is open and shut either. In my own profession, isolated researchers have benefitted greatly from technological advances and our journals show an increasing flow of work from outside the traditional East Coast Bastions.
Anyway, thanks to Tim for writing such a fun book and to Tyler for subcontracting this chapter out to me. What do you guys think of cities, prices, and spillovers?
Sunday, February 17, 2008
Hoop Dreams
I am an NBA fan from way back. From Walt Bellamy and Cazzie Russell and Bob Lanier. I love basketball and the NBA allstar weekend, especially the dunk contest. And I have always thought that Vince Carter (as much as I disrespect his overall game) gave the greatest dunk contest performance ever back in 2000. You can see that show here (the last dunk is the best).
Then I watched the 2008 contest (not live last night but this morning courtesy of TIVO) and WOW!! I now say Dwight Howard's performance was the greatest dunk contest performance ever. All the dunks were mindbogglingly hard, creative, and executed with real style. His Superman throw-down (be sure to watch long enough to see the slo-mo replays) was to my mind the best of his three.
Vince still has the best dunk ever done in a game though, you can see it here.
Then I watched the 2008 contest (not live last night but this morning courtesy of TIVO) and WOW!! I now say Dwight Howard's performance was the greatest dunk contest performance ever. All the dunks were mindbogglingly hard, creative, and executed with real style. His Superman throw-down (be sure to watch long enough to see the slo-mo replays) was to my mind the best of his three.
Vince still has the best dunk ever done in a game though, you can see it here.
Nick Kristof gets his Angus on!!!
In today's NYT, Kristof (kind of) loves him some John McCain:
"Even for those of us who shudder at many of John McCain’s positions, there is something refreshing about a man who wins so many votes despite a major political shortcoming: he is abysmal at pandering."
That sums up what I've been trying to say about McCain around here lately. Sure I don't agree with a lot of his positions. For me at least, that is true of all the candidates, fringe or otherwise. Yet McCain's willingness to buck his party on torture and immigration, his willingness to give potential voters bad news, his steadfast opposition to earmarks, endears him to me in a very real way.
Kristof goes even further and claims to see a trend:
"Even for those of us who shudder at many of John McCain’s positions, there is something refreshing about a man who wins so many votes despite a major political shortcoming: he is abysmal at pandering."
That sums up what I've been trying to say about McCain around here lately. Sure I don't agree with a lot of his positions. For me at least, that is true of all the candidates, fringe or otherwise. Yet McCain's willingness to buck his party on torture and immigration, his willingness to give potential voters bad news, his steadfast opposition to earmarks, endears him to me in a very real way.
Kristof goes even further and claims to see a trend:
"It’s also striking that Barack Obama is leading a Democratic field in which he has been the candidate who is least-scripted and most willing to annoy primary voters, whether in speaking about Reagan’s impact on history or on the suffering of Palestinians.
All of this is puzzlingly mature on the part of the electorate. A common complaint about President Bush is that he walls himself off from alternative points of view, but the American public has the same management flaw: it normally fires politicians who tell them bad news."
Sigh. Just, Sigh.
A question: If this had been a for-profit hospital, would this have happened?
Answer: no. Sigh.
Excerpt:
Unused hospital razed in Nigeria
A fully-equipped hospital that lay unused for two years has burned to the ground in northern Nigeria.
The General Hospital in Maiduguri was built in 2006 but the state government refused to open it until the president came to cut the ribbon.
Several surgical theatres, the intensive care ward, and the clinical section which held millions of dollars of equipment were all destroyed.
The president was due to visit the hospital next month to open it.
Borno State Governor Ali Modu Sheriff blamed the fire on arsonists who wanted to damage his political reputation.
"There is not one hospital owned by a state government that has the type of world class equipment we had in there." Ali Modu Sheriff, Governor of Borno state
The governor had refused to open the hospital, which was ready for patients in June 2006, until former President Olusegun Obasanjo came to the state.
His visit was postponed several times, the last being just two months before the election in 2007.
His successor Umaru Yar'adua was due to visit later next month.
Answer: no. Sigh.
Excerpt:
Unused hospital razed in Nigeria
A fully-equipped hospital that lay unused for two years has burned to the ground in northern Nigeria.
The General Hospital in Maiduguri was built in 2006 but the state government refused to open it until the president came to cut the ribbon.
Several surgical theatres, the intensive care ward, and the clinical section which held millions of dollars of equipment were all destroyed.
The president was due to visit the hospital next month to open it.
Borno State Governor Ali Modu Sheriff blamed the fire on arsonists who wanted to damage his political reputation.
"There is not one hospital owned by a state government that has the type of world class equipment we had in there." Ali Modu Sheriff, Governor of Borno state
The governor had refused to open the hospital, which was ready for patients in June 2006, until former President Olusegun Obasanjo came to the state.
His visit was postponed several times, the last being just two months before the election in 2007.
His successor Umaru Yar'adua was due to visit later next month.
Saturday, February 16, 2008
Too clever by half
I've always been in favor of compulsory education financed by general taxation. I know, what a doofus. I'm cool with choice and vouchers and all that, but I always thought that the education revolution in the USA was an example of a very good thing that was facilitated, speeded up, or at least not completely screwed up by government.
But now I think the end is near, at least in France:
President Nicolas Sarkozy dropped an intellectual bombshell this week, surprising the nation and touching off waves of protest with his revision of the school curriculum: beginning next fall, he said, every fifth grader will have to learn the life story of one of the 11,000 French children killed by the Nazis in the Holocaust.
The article goes on to quote people saying it will be too traumatic for the kids and contains a big discussion of Sarkozy's religiousity, but to me that misses the point, which is:
How in the world can one guy unilaterally impose something like this for every family in France?
The article doesn't say he is asking for a public debate or endorsing pending legislation (though that wouldn't really make me any happier on Mungowitzian grounds).
Overall, the scope of what government through the school system has taken on has enlarged so much, and opportunities for arbitrary, freedom stealing, pernicious impositions have become so large, that I am not even sure if I still support the entire enterprise (and yes, I know that I teach at a state university).
As for Sarkozy, wow. It seems to me that he is well on his way down the Saparmurat Niyazov highway.
But now I think the end is near, at least in France:
President Nicolas Sarkozy dropped an intellectual bombshell this week, surprising the nation and touching off waves of protest with his revision of the school curriculum: beginning next fall, he said, every fifth grader will have to learn the life story of one of the 11,000 French children killed by the Nazis in the Holocaust.
The article goes on to quote people saying it will be too traumatic for the kids and contains a big discussion of Sarkozy's religiousity, but to me that misses the point, which is:
How in the world can one guy unilaterally impose something like this for every family in France?
The article doesn't say he is asking for a public debate or endorsing pending legislation (though that wouldn't really make me any happier on Mungowitzian grounds).
Overall, the scope of what government through the school system has taken on has enlarged so much, and opportunities for arbitrary, freedom stealing, pernicious impositions have become so large, that I am not even sure if I still support the entire enterprise (and yes, I know that I teach at a state university).
As for Sarkozy, wow. It seems to me that he is well on his way down the Saparmurat Niyazov highway.
Friday, February 15, 2008
Cato Unbound Essay
Here is an issue of CATO UNBOUND, on "Is Limited Government Possible?"
My contribution, which actually turned out quite well, IMHO. Thanks to Will Wilkinson for making some really key suggestions. Always good to have an editor who is fast and smart.
And, Will being such excellent eye candy is certainly a bonus.
My contribution, which actually turned out quite well, IMHO. Thanks to Will Wilkinson for making some really key suggestions. Always good to have an editor who is fast and smart.
And, Will being such excellent eye candy is certainly a bonus.
I guess it was a trick question
On Economist's View, I saw a headline "What makes Sugar Explode?" with a link to a Slate article.
I assumed that the answer was foreign competition, but it turns out they are talking about an actual fire at a sugar refinery in Georgia.
I assumed that the answer was foreign competition, but it turns out they are talking about an actual fire at a sugar refinery in Georgia.
How long can this go on?
Bobby Mugabe has been drowning his country in a sea of worthless currency for quite some time now. In March of 2006 the official inflation rate hit 900%. It turns out that those were the good old days. By the summer of 07, the inflation rate was had at least tripled from that level, and the IMF was forecasting that it would reach 100,000% in 2008.
It looks like that's at least one forecast the IMF will nail, as inflation surged from over 25,000% in December of 07 to over 66,000% in January of 08 (these are annualized rates).
From the AP report:
Zimbabwe's economy has been on a downturn for the past eight years characterised by galloping inflation and shortages of basic foodstuffs such as sugar and cooking oil.
It's also amazing how South Africa still seems to be propping up Mugabe. Who do they think they are, us??
It looks like that's at least one forecast the IMF will nail, as inflation surged from over 25,000% in December of 07 to over 66,000% in January of 08 (these are annualized rates).
From the AP report:
Zimbabwe's economy has been on a downturn for the past eight years characterised by galloping inflation and shortages of basic foodstuffs such as sugar and cooking oil.
At least 80 percent of the population is living below the poverty threshold, often skipping meals to stretch their income, which frequently fails to cover basic needs.
The government has introduced several measures to rein in inflation including imposing a ceiling on prices of some goods and services and knocking off three zeros from the country's currency.
The CSO last released the monthly inflation statistics to the media in September last year and the November figure was only released by the central bank chief in a statement last month.
It's amazing how they make it sound like an exogenous event the government is doing its best to fight rather than calling it the deliberate policy of the government, i.e. Mugabe-omics.It's also amazing how South Africa still seems to be propping up Mugabe. Who do they think they are, us??
Thursday, February 14, 2008
I am not stimulated by the stimulus
First, Greg Mankiw fills me in on the cost per job allegedly to be created by the package: $336,000
Then Art Laffer (and you know he's never wrong) tells me the stimulus will be a net negative for the economy: "any rebate will reduce output because it reduces incentives to produce output. The larger the rebate, the greater the reduction in the incentives to work and the greater the reduction in output. It's as simple as that. This $170 billion rebate camouflaged as economic stimulus will deal a serious blow to the economic health of the country."
Finally, online financial advice columns are advising people to save, not spend, their rebate checks!! People, I give you the wisdom of Suze Orman: "The rebate you're about to get should be saved, not spent. It should be used to pay down debt and build up an emergency savings account. What you need to focus on is not what your government wants you to do for the national economy, but what you can do for your personal financial security. Help yourself first."
How 'bout y'all? Feel stimulated yet?
Then Art Laffer (and you know he's never wrong) tells me the stimulus will be a net negative for the economy: "any rebate will reduce output because it reduces incentives to produce output. The larger the rebate, the greater the reduction in the incentives to work and the greater the reduction in output. It's as simple as that. This $170 billion rebate camouflaged as economic stimulus will deal a serious blow to the economic health of the country."
Finally, online financial advice columns are advising people to save, not spend, their rebate checks!! People, I give you the wisdom of Suze Orman: "The rebate you're about to get should be saved, not spent. It should be used to pay down debt and build up an emergency savings account. What you need to focus on is not what your government wants you to do for the national economy, but what you can do for your personal financial security. Help yourself first."
How 'bout y'all? Feel stimulated yet?
Dog Bites Man!
Mitt Romney will endorse John McCain as the GOP nominee for president, CNN has learned.
Munger Goes Negative!
I probably should have avoided criticizing someone else' haircuts. Since, I mean, NO ONE knows more about bad haircuts than I do.
Still, a story in the News and Observer today discusses my candidacy. And I establish myself, unfortunately, as someone who just calls other people names. (BTW: I was not misquoted, in any way).
My older son, Kevin, is delighted, however. Yelling "Munger goes negative" in the house. Thanks, kid, for your sympathy.
Still, a story in the News and Observer today discusses my candidacy. And I establish myself, unfortunately, as someone who just calls other people names. (BTW: I was not misquoted, in any way).
My older son, Kevin, is delighted, however. Yelling "Munger goes negative" in the house. Thanks, kid, for your sympathy.
Obama is some kind of housecat?
Mark Halperin said that Edwards thinks that Obama is "kind of a pussy."
Then Halperin apologized for using a naughty word.
As Dutch Boy notes, in his email alerting me to this, "Not the Onion."
Then Halperin apologized for using a naughty word.
As Dutch Boy notes, in his email alerting me to this, "Not the Onion."
Wednesday, February 13, 2008
Was 1993 just a bad dream??
Responding to a recent post, one of our more pointed commentators excoriated me for claiming that I feared for my wallet under an all Democratic Party Federal Government saying in part:
"The last time a Democratic president and congress combined to significantly raise taxes, they were doing it to pay for the Vietnam War."
Now, I am probably always deserving of a good scolding but I have to ask: What about 1993? It didn't happen? Or it wasn't "significant"? WJ Clinton's first term, all Dem Congress, big tax increase. Ring any bells for anybody?
Republicans called it "the biggest tax increase in history". Here the factcheck.org website debunks that myth saying: "the Clinton tax increase was indeed large, but not the largest."
Heck, according to them it was only the second largest.
The last chopper left Saigon in 1975 right??
"The last time a Democratic president and congress combined to significantly raise taxes, they were doing it to pay for the Vietnam War."
Now, I am probably always deserving of a good scolding but I have to ask: What about 1993? It didn't happen? Or it wasn't "significant"? WJ Clinton's first term, all Dem Congress, big tax increase. Ring any bells for anybody?
Republicans called it "the biggest tax increase in history". Here the factcheck.org website debunks that myth saying: "the Clinton tax increase was indeed large, but not the largest."
Heck, according to them it was only the second largest.
The last chopper left Saigon in 1975 right??
What do Barack Obama and Nigel Tufnel have in common?
No, not that. They're both BIG IN JAPAN.
In Barack's case, in a specific town, Obama Japan (not making this up).
Obama (the town) is known for its chopsticks and Obama (the man) was born on August 4th, the day the city conducts its annual "Chopsticks Day" festivities. Karma.
Pictures don't lie people:
The citizens of Obama are some serious front runners too. Check out the Mayor:
In Barack's case, in a specific town, Obama Japan (not making this up).
Obama (the town) is known for its chopsticks and Obama (the man) was born on August 4th, the day the city conducts its annual "Chopsticks Day" festivities. Karma.
Pictures don't lie people:
The citizens of Obama are some serious front runners too. Check out the Mayor:
"At first we were more low-key as Hillary Clinton looked to be ahead, but now we see he is getting more popular," Obama Mayor Toshio Murakami said.
"I give him an 80 percent chance of becoming president," the 75-year-old said with a proud grin.
Ladies and Gentlemen I implore you: Is there no McCain China out there to even things up a bit??
It Feels Like the Third Time; It Feels Like the Third or Fourth Time
Article on economics of Valentine's Day in Oz.
Consumer advocate group Choice says the price hike [dozen roses for $150!!] is a case of textbook economics.
“To sound very economically rational about it, Valentine’s day is the perfect illustration of supply and demand, which at its most naked is not very romantic,” spokesperson Christopher Zinn said.
He suggested prospective romantics substitute roses for other flowers, which presumably wouldn’t cost as much – if they are available.
“These kinds of events like Valentines day and Easter, they are a bit of a marketing goldmine,” he said.
It’s not just florists that are making the most of the day. Most restaurants offer Valentine’s Day specials when more often than not, you’re not actually saving.
Sydney’s Aria Restaurant usually has a seven-course tasting menu, including wine, for $250. On Valentine's Day, that price becomes $295.
It may seem like a rort, but some restaurants say it’s the worst day of the year.
“People have too high an expectation of what's going to happen; it creates a really strange atmosphere with all those couples, and if something's going to go wrong it always goes wrong on those nights,” an industry veteran told the Sunday Telegraph.
A rort? I feel old.
Consumer advocate group Choice says the price hike [dozen roses for $150!!] is a case of textbook economics.
“To sound very economically rational about it, Valentine’s day is the perfect illustration of supply and demand, which at its most naked is not very romantic,” spokesperson Christopher Zinn said.
He suggested prospective romantics substitute roses for other flowers, which presumably wouldn’t cost as much – if they are available.
“These kinds of events like Valentines day and Easter, they are a bit of a marketing goldmine,” he said.
It’s not just florists that are making the most of the day. Most restaurants offer Valentine’s Day specials when more often than not, you’re not actually saving.
Sydney’s Aria Restaurant usually has a seven-course tasting menu, including wine, for $250. On Valentine's Day, that price becomes $295.
It may seem like a rort, but some restaurants say it’s the worst day of the year.
“People have too high an expectation of what's going to happen; it creates a really strange atmosphere with all those couples, and if something's going to go wrong it always goes wrong on those nights,” an industry veteran told the Sunday Telegraph.
A rort? I feel old.
Tuesday, February 12, 2008
In Mexico, Calderón rises and AMLO sinks
Calderón's popularity in Mexico currently sits at 66%, up from 57% in November and this is the highest it's been during his Presidency so far. At the other extreme Lopez-Obrador (aka AMLO or el peje) has pretty much hit rock bottom. In another poll, 63% of PRD (AMLO's party) members say the next party leader should recognize Calderón as the legitimate president (which AMLO refuses to do) and 77% say the PRD should cooperate with Calderón in the legislature (which AMLO refuses to do). Here is an article in English about the trials of the Mexican Left.
Hat Tip to Boz.
Hat Tip to Boz.
Friedman > Krugman
And then HE said, get this, he said, "Oh, yeah? Well, YO mama is so fat, her blood type is RAGU!"
The impact of Milton Friedman on modern monetary economics: Setting the
record straight on Paul Krugman's "who was Milton Friedman?"
Edward Nelson & Anna Schwartz
Journal of Monetary Economics, forthcoming
Abstract:
Paul Krugman's essay "Who Was Milton Friedman?" seriously mischaracterizes Friedman's economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman's impact on modern monetary economics and on today's central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.
(Nod to KL)
The impact of Milton Friedman on modern monetary economics: Setting the
record straight on Paul Krugman's "who was Milton Friedman?"
Edward Nelson & Anna Schwartz
Journal of Monetary Economics, forthcoming
Abstract:
Paul Krugman's essay "Who Was Milton Friedman?" seriously mischaracterizes Friedman's economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman's impact on modern monetary economics and on today's central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.
(Nod to KL)
Bad news comes in Bunches
Great, just great. Not only are my stock portfolio and retirement portfolio totally in the tank, but now I find out I'm likely to need the money for a very long time!! Turns out it's EZ to live to 100 these days (Phone message for Robin Hanson: sell your freezer space!!!).
A larger study of men in their 70s found that those who avoided smoking, obesity, inactivity, diabetes and high blood pressure greatly improved their chances of living into their 90s. In fact, they had a 54 percent chance of living that long.
Their survival decreased with each risk factor, and those with all five had only a 4 percent chance of living into their 90s, according to Harvard University researchers.
Those who managed to avoid lifestyle-related ailments also increased their chances of functioning well physically and mentally two decades later.
The study followed 2,357 men for about 25 years or until death, starting in their early 70s. About 40 percent survived to at least age 90. Among survivors, 24 percent had none of the five risk factors.
Monday, February 11, 2008
The best paragraph I've read today.
"What's great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it."
Andy Warhol
hat tip to machiavelli999
Andy Warhol
hat tip to machiavelli999
The WORST Thing That Could Happen
Angus, as usual, is TOTALLY insensitive to the plight of the working writer. The END of the nightmare? No, more like the beginning.
Hollywood is FULL of writers, working as waitrons, or bartenders, or hookers.
Last week? Last week, they are not working because they were ON STRIKE! Stand up for the working man, don't cross the line on principle, that sort of thing.
This week? This week they are not working because they don't actually have JOBS as writers. They are just unemployed.
Oh, the humanity.
Hollywood is FULL of writers, working as waitrons, or bartenders, or hookers.
Last week? Last week, they are not working because they were ON STRIKE! Stand up for the working man, don't cross the line on principle, that sort of thing.
This week? This week they are not working because they don't actually have JOBS as writers. They are just unemployed.
Oh, the humanity.
Revise and Resubmit
The essence of the "revise and resubmit" process of journal
authoring, caught live in a documentary.
Well, not THAT, exactly, but yes.
(Nod to Zorro)
authoring, caught live in a documentary.
Well, not THAT, exactly, but yes.
(Nod to Zorro)
Behold the Power of Facebook!
Last week's anti-FARC protest in Colombia and around the world was impressive for two reasons. First, the magnitude of the demonstration. Via KPC friend Greg Weeks, here are a couple photos from Colombia:
Estimates are that more than 2 million Colombians participated and maybe close to a million others in various locations around the world.
The second reason to be impressed is that it all started on Facebook. While I am on there attacking Zombies with my undead Slayer (thanks SO MUCH for that Mungowitz), The youth of Colombia is gettin' 'er done bigtime. Kudos to them and to the small but spirited group of demonstrators that turned up at OU.
Estimates are that more than 2 million Colombians participated and maybe close to a million others in various locations around the world.
The second reason to be impressed is that it all started on Facebook. While I am on there attacking Zombies with my undead Slayer (thanks SO MUCH for that Mungowitz), The youth of Colombia is gettin' 'er done bigtime. Kudos to them and to the small but spirited group of demonstrators that turned up at OU.
Sunday, February 10, 2008
The Grand Game: Find the MOST Appalling Passage
Sometimes here at KPC, we play The Grand Game. TGG involves readers picking out the most appalling passage of something someone has written.
This is a fine one. It comes from a "blog" the TSA has established (I'm not making this up) to give travellers a chance to vent about the....TSA!
Check this inspired entry.
HOORAY BLOGGERS!
A Win for the Blogesphere
Posters on this blog have had their first official impact on our operations. That’s right, less than one week since we began the blog and already you’re affecting security in a very positive way.
On Monday afternoon we began receiving questions about airports that were requiring ALL electronics to be removed from carry-on bags (everything, including blackberrys, iPods and even cords). This practice was also mentioned on several other blogs and left us scratching our heads.
So…we checked with our security operations team to figure out what was going on. After some calls to our airports, we learned that this exercise was set up by local TSA offices and was not part of any grand plan across the country. These practices were stopped on Monday afternoon and blackberrys, cords and iPods began to flow through checkpoints like the booze was flowing on Bourbon Street Tuesday night. (Fat Tuesday of course).
So thanks to everyone for asking about this and for giving us a chance to make it right. Our hope is that examples like this validate our forum and show the solid partnerships we can form with our customers - the traveling public - in not only increasing security but in making all of our lives just a little easier.
Thanks again and keep those comments and questions coming.
Now, let's play the game!
My favorite appallinghoods:
1. They misspelled "blogosphere." Misspellings are common in blogs, Angus and I do it all the time. But...if you are trying to convince me you are paying close attention to the blogosphere, please don't spell it "blogesphere."
2. The title of the post is, "Hooray, bloggers!" I'm no hipster, but even I know that the word "hooray" should NEVER be used except ironically. (I note the possibility exists that the entire "TSA blogs" gig is a giant ironic deception. If it is, it will make me so happy that I will touch myself. Hell, I'll be so happy that I'll touch ANGUS. But I detect no irony anywhere on their blog. They are playing it horribly, apocalyptically, straight.)
3. "blackberrys, cords and iPods began to flow through checkpoints like the booze was flowing on Bourbon Street." Um. I can't think of any way that that analogy makes sense. More importantly, the fact that these items had NOT been flowing through checkpoints reflects the REAL problem with TSA: small kings.
(Nod to Anonyman, who is being ironic when he says, "hello.")
(Update: "is" changed to "exists" in 2 above, to make it English, rather than Mungerish)
This is a fine one. It comes from a "blog" the TSA has established (I'm not making this up) to give travellers a chance to vent about the....TSA!
Check this inspired entry.
HOORAY BLOGGERS!
A Win for the Blogesphere
Posters on this blog have had their first official impact on our operations. That’s right, less than one week since we began the blog and already you’re affecting security in a very positive way.
On Monday afternoon we began receiving questions about airports that were requiring ALL electronics to be removed from carry-on bags (everything, including blackberrys, iPods and even cords). This practice was also mentioned on several other blogs and left us scratching our heads.
So…we checked with our security operations team to figure out what was going on. After some calls to our airports, we learned that this exercise was set up by local TSA offices and was not part of any grand plan across the country. These practices were stopped on Monday afternoon and blackberrys, cords and iPods began to flow through checkpoints like the booze was flowing on Bourbon Street Tuesday night. (Fat Tuesday of course).
So thanks to everyone for asking about this and for giving us a chance to make it right. Our hope is that examples like this validate our forum and show the solid partnerships we can form with our customers - the traveling public - in not only increasing security but in making all of our lives just a little easier.
Thanks again and keep those comments and questions coming.
Now, let's play the game!
My favorite appallinghoods:
1. They misspelled "blogosphere." Misspellings are common in blogs, Angus and I do it all the time. But...if you are trying to convince me you are paying close attention to the blogosphere, please don't spell it "blogesphere."
2. The title of the post is, "Hooray, bloggers!" I'm no hipster, but even I know that the word "hooray" should NEVER be used except ironically. (I note the possibility exists that the entire "TSA blogs" gig is a giant ironic deception. If it is, it will make me so happy that I will touch myself. Hell, I'll be so happy that I'll touch ANGUS. But I detect no irony anywhere on their blog. They are playing it horribly, apocalyptically, straight.)
3. "blackberrys, cords and iPods began to flow through checkpoints like the booze was flowing on Bourbon Street." Um. I can't think of any way that that analogy makes sense. More importantly, the fact that these items had NOT been flowing through checkpoints reflects the REAL problem with TSA: small kings.
(Nod to Anonyman, who is being ironic when he says, "hello.")
(Update: "is" changed to "exists" in 2 above, to make it English, rather than Mungerish)
At least one of us doesn't understand how markets work
Either me or Hugo has it wrong, and given his infatuation with price controls as a way of dealing with high prices, I think it may be him. Anyway he's not happy with the British court ruling in favor of Exxon and freezing billions of Veneulan assets.
President Hugo Chavez on Sunday threatened to cut off oil sales to the United States in an "economic war" if Exxon Mobil Corp. wins court judgments to seize billions of dollars in Venezuelan assets. Exxon Mobil has gone after the assets of state oil company Petroleos de Venezuela SA in U.S., British and Dutch courts as it challenges the nationalization of a multibillion dollar oil project by Chavez's government. A British court has issued an injunction "freezing" as much as $12 billion in assets. "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said during his weekly radio and television program, "Hello, President." "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."
So this would be inconvenient but not really harmful, right? Oil is oil, it doesn't matter where we buy it from. Holding quality constant, price is determined by world supply and demand and who ships what where isn't crucial, is it? Unless there is some kind of situation where US refineries are designed to use oil with the specific physical attributes of Venezuelan oil or something weird like that.
I have found an article claiming that it IS hard for the US to replace Venezuelan crude (its heavy and sour, you know) but the analysis deals with a case when Venezuelan production was cut off resulting in a short term drop in available world supplies. Good stuff in there about types of crude oil though.
President Hugo Chavez on Sunday threatened to cut off oil sales to the United States in an "economic war" if Exxon Mobil Corp. wins court judgments to seize billions of dollars in Venezuelan assets. Exxon Mobil has gone after the assets of state oil company Petroleos de Venezuela SA in U.S., British and Dutch courts as it challenges the nationalization of a multibillion dollar oil project by Chavez's government. A British court has issued an injunction "freezing" as much as $12 billion in assets. "If you end up freezing (Venezuelan assets) and it harms us, we're going to harm you," Chavez said during his weekly radio and television program, "Hello, President." "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."
So this would be inconvenient but not really harmful, right? Oil is oil, it doesn't matter where we buy it from. Holding quality constant, price is determined by world supply and demand and who ships what where isn't crucial, is it? Unless there is some kind of situation where US refineries are designed to use oil with the specific physical attributes of Venezuelan oil or something weird like that.
I have found an article claiming that it IS hard for the US to replace Venezuelan crude (its heavy and sour, you know) but the analysis deals with a case when Venezuelan production was cut off resulting in a short term drop in available world supplies. Good stuff in there about types of crude oil though.
The Best Sentence I Read this Morning
Ross Douthat writing in the NY Times (the whole article is worth reading):
"Precisely because the right has won so many battles — on taxes, welfare, crime and the cold war — in the decades since it squared off against Gerald Ford and Jacob Javits, the greatest danger facing the contemporary Republican Party is ideological sclerosis, rather than insufficient orthodoxy."
"Precisely because the right has won so many battles — on taxes, welfare, crime and the cold war — in the decades since it squared off against Gerald Ford and Jacob Javits, the greatest danger facing the contemporary Republican Party is ideological sclerosis, rather than insufficient orthodoxy."
History in the making
Yes, our national nightmare is over. The TV writers are going back to work. As you might expect, they have some comments about the epic nature of their struggle:
Pretty sure they were asking for a percentage from day one. They got a delayed percentage that starts in the third year. That three week delay seems like a big concession, doesn't it?
Finally while "According to Jim" (yes there are writers on that show) will be back in production soon, it's not all good news on the entertainment front:
"It's a historic moment for labor in this country," said Oscar-nominated WGA member Michael Moore, who attended the New York meeting.
Carmen Culver, a film and TV writer, lauded the guild "for hanging tough."
"It's a great day for the labor movement. We have suffered a lot of privation in order to achieve what we've achieved," Culver said.
And what, you ask, did they achieve? Well, I am no longer a trade unionist, but I'd have to say not very much:
The writers deal (includes) a provision that compensation for ad-supported streaming doesn't kick in until after a window of between 17 to 24 days deemed "promotional" by the studios. Writers would get a maximum $1,200 flat fee for streamed programs in the deal's first two years and then get a percentage of a distributor's gross in year three.Pretty sure they were asking for a percentage from day one. They got a delayed percentage that starts in the third year. That three week delay seems like a big concession, doesn't it?
Finally while "According to Jim" (yes there are writers on that show) will be back in production soon, it's not all good news on the entertainment front:
The Grammy Awards, set for Sunday night, were not affected because they received a waiver allowing writers to work on them. But an end to the strike could permit resumption of work for the Feb. 24 Academy Awards show.
Yikes!!!Saturday, February 09, 2008
Saturday Night Politics Roundup
1. Obama wins a primary and two caucii. Louisiana, Nebraska & Washington.
2. Ron Paul rules out a third party Presidential run.
3. Frank Rich on the strange decline of Hillary Clinton
4. Can McCain win California?
2. Ron Paul rules out a third party Presidential run.
3. Frank Rich on the strange decline of Hillary Clinton
4. Can McCain win California?
Your Hugo Chávez Update
1. From the NYTimes, an article on anti-Chávez backlash within Argentina.
2. From Slate, a fascinating set of posts on traveling in "Hugo Chávez's Bolivarian Paradise".
3. Exxon wins in court on their attempt to get compensation from Chávez's semi-nationalization of a joint project.
4. Finally 2 articles about ties between drug cartels and the Venezuelan Miliary here and here (the second one is in Spanish (sorry) but is quite good).
2. From Slate, a fascinating set of posts on traveling in "Hugo Chávez's Bolivarian Paradise".
3. Exxon wins in court on their attempt to get compensation from Chávez's semi-nationalization of a joint project.
4. Finally 2 articles about ties between drug cartels and the Venezuelan Miliary here and here (the second one is in Spanish (sorry) but is quite good).
Friday, February 08, 2008
He's a McCainiac, McCainiac on the Floor. And he's dancin' like he's never danced before.
Why can't unca Johnny get no love?
Is he really worse than the alternatives?
Mungowitz, are you prepared for the 4 year all out assault on your wallet that an all Dem federal government would provide?
I just don't get it. Sure McCain-Feingold was bad legislation ex ante and even worse ex post. Stipulated. Asked and answered. Does that then imply he'd be a worse president than the Democratic alternative?
As for Judges, I don't get that either. Are you guys saying he'd appoint overly conservative Judges? I believe that must be Mungowitz's position. I guess my answer would be that I'd rely on the Democrat Congress to Bork them (thank you gridlock!!). In the comments though, some are saying he'd appoint not conservative enough judges. But would they be more liberal than the Democratic President's alternatives?
My bottom line opinon is this: of all the existing candidates, he gets immigration right, he gets trade right, he's seriously anti-earmarks, he claims to want to cut spending, and he has shown an amazing proclivity to tell people things they don't want to hear even when it does not appear to be expedient for him to do so.
He crushes everyone but Obama on character.
On Iraq. At this point in time, given that we invaded and then made a bollix of the "peace" / occupation, if you ask me to choose between immediate withdrawal and staying the course, God help me, I think I'd probably choose staying the course. Go easy on me people, the invasion was wrong, the occupation pathetically inept; but starting from where we are now, I don't see how immediate withdrawal is in our national interest.
Is he really worse than the alternatives?
Mungowitz, are you prepared for the 4 year all out assault on your wallet that an all Dem federal government would provide?
I just don't get it. Sure McCain-Feingold was bad legislation ex ante and even worse ex post. Stipulated. Asked and answered. Does that then imply he'd be a worse president than the Democratic alternative?
As for Judges, I don't get that either. Are you guys saying he'd appoint overly conservative Judges? I believe that must be Mungowitz's position. I guess my answer would be that I'd rely on the Democrat Congress to Bork them (thank you gridlock!!). In the comments though, some are saying he'd appoint not conservative enough judges. But would they be more liberal than the Democratic President's alternatives?
My bottom line opinon is this: of all the existing candidates, he gets immigration right, he gets trade right, he's seriously anti-earmarks, he claims to want to cut spending, and he has shown an amazing proclivity to tell people things they don't want to hear even when it does not appear to be expedient for him to do so.
He crushes everyone but Obama on character.
On Iraq. At this point in time, given that we invaded and then made a bollix of the "peace" / occupation, if you ask me to choose between immediate withdrawal and staying the course, God help me, I think I'd probably choose staying the course. Go easy on me people, the invasion was wrong, the occupation pathetically inept; but starting from where we are now, I don't see how immediate withdrawal is in our national interest.
Accomodate THIS!
An accommodating little discussion, in the comic stylings of Janet Yellin.
And, a nice example of the most opaque language known to man: Feddish.
"...economic prospects are unusually uncertain. And downside risks to economic growth remain."
More excerpts.
And, a nice example of the most opaque language known to man: Feddish.
"...economic prospects are unusually uncertain. And downside risks to economic growth remain."
More excerpts.
Sense in South Africa
All too often, physicists dabbling in economics just embarrass themselves, and infuriate me.
But here is a fine South African fellow, a PhD physicist, who recognizes that there are laws of economics, different from but no less constraining than, the laws of physics. Further, he draws the right lessons: be humble in what you think economists can accomplish, and keep the communists away from the money supply.
An excerpt:
...there are basic laws of economics, such as the relationship between supply and demand. These laws are extremely important, and it is a mistake to try to fiddle with them too much.
...a shiver went down my spine when I saw newspaper reports stating that South African Communist Party (SACP) deputy general secretary Jeremy Cronin was advocating that the Reserve Bank should consider fiddling with inflation targeting.
I gather that what this actually means is that inflation should be allowed to rise so that goods are artificially cheap. You do this by just paying people more and more devalued money. In other words, kid the poor folks until the spark eventually hits the gunpowder.
Imagining the SACP having a real input into economic policy gives me a bad feeling – like imagining a remake of the movie Basic Instinct, but starring Julie Andrews.
A capital fellow. May his "amber liquid" be tasty and frosty always.
(ATSRTWT)
But here is a fine South African fellow, a PhD physicist, who recognizes that there are laws of economics, different from but no less constraining than, the laws of physics. Further, he draws the right lessons: be humble in what you think economists can accomplish, and keep the communists away from the money supply.
An excerpt:
...there are basic laws of economics, such as the relationship between supply and demand. These laws are extremely important, and it is a mistake to try to fiddle with them too much.
...a shiver went down my spine when I saw newspaper reports stating that South African Communist Party (SACP) deputy general secretary Jeremy Cronin was advocating that the Reserve Bank should consider fiddling with inflation targeting.
I gather that what this actually means is that inflation should be allowed to rise so that goods are artificially cheap. You do this by just paying people more and more devalued money. In other words, kid the poor folks until the spark eventually hits the gunpowder.
Imagining the SACP having a real input into economic policy gives me a bad feeling – like imagining a remake of the movie Basic Instinct, but starring Julie Andrews.
A capital fellow. May his "amber liquid" be tasty and frosty always.
(ATSRTWT)
Thursday, February 07, 2008
McCain and the Death of Small Government Conservatism
Angus and I agree on many things. But not McCain. He terrifies me.
The BCRA (that is, the MCCAIN-Feingold bill against political speech for challengers, also called "The Incumbent Protection Act")
The "Let's Attack, Attack Iraq!" thing
The whole "Let's do more to help ______!", where
the fill in the blank is basically anyone with a pulse.
The national LP mourns the death of conservatism, and the rise of the McCain revolution.
(Nod to SG)
The BCRA (that is, the MCCAIN-Feingold bill against political speech for challengers, also called "The Incumbent Protection Act")
The "Let's Attack, Attack Iraq!" thing
The whole "Let's do more to help ______!", where
the fill in the blank is basically anyone with a pulse.
The national LP mourns the death of conservatism, and the rise of the McCain revolution.
(Nod to SG)
Why has CEO pay increased so much?
A paper forthcoming in the QJE by Gabaix & Landier provides a straightforward answer:
"This paper develops a simple equilibrium model of CEO pay. CEOs have different talents and are matched to firms in a competitive assignment model. In market equilibrium, a CEO’s pay depends on both the size of his firm, and the aggregate firm size. The model determines the level of CEO pay across firms and over time, offering a benchmark for calibratable corporate finance.
We find a very small dispersion in CEO talent, which nonetheless justifies large pay differences. In recent decades at least, the size of large firms explains many of the patterns in CEO pay, across firms, over time, and between countries.
In particular, in the baseline specification of the model’s parameters, the six-fold increase of U.S. CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization of large companies during that period."
The paper is a very nice application / extension of Rosen's Economics of Superstars paper in the AER.
"This paper develops a simple equilibrium model of CEO pay. CEOs have different talents and are matched to firms in a competitive assignment model. In market equilibrium, a CEO’s pay depends on both the size of his firm, and the aggregate firm size. The model determines the level of CEO pay across firms and over time, offering a benchmark for calibratable corporate finance.
We find a very small dispersion in CEO talent, which nonetheless justifies large pay differences. In recent decades at least, the size of large firms explains many of the patterns in CEO pay, across firms, over time, and between countries.
In particular, in the baseline specification of the model’s parameters, the six-fold increase of U.S. CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization of large companies during that period."
The paper is a very nice application / extension of Rosen's Economics of Superstars paper in the AER.
Wednesday, February 06, 2008
A simple explanation of three Financial Economics Puzzles
Martin Weitzman has an excellent piece in the Sept. 07 American Economic Review that provides exactly that. He argues that papers using a Rational Expectations Equilibrium (REE) approach generate the equity premium puzzle (it's too big), the risk free rate puzzle (it's too low) and the equity volatility puzzle (it's too volatile compared to fundamentals), by incorrectly assuming that the underlying density generating growth shocks is known to agents. Simply replacing the known variance with an estimated variance (changing the normal density to a student-t density) can actually REVERSE the puzzles.
Maybe I should let him tell it:
"Intuitively, a normal density “becomes” a Student-t from a tail-thickening spreading-apart of probabilities caused by the variance of the normal having itself a (inverted gamma) probability distribution. There is then no surprise from expected utility theory that people are more averse qualitatively to a relatively thick-tailed Student-t child distribution than they are to the relatively thin-tailed normal parent which begets it. A much more surprising consequence of expected utility theory is the quantitative strength of this endogenously-derived aversion to the effects of unknown variance-structure. The story behind this quantitative strength is that thickened posterior left tails represent structural uncertainty about rare disasters that terrify people. This fear-factor effect holds for any utility function having everywhere-positive relative risk aversion."
So fear of rare events whose generating distributions are not known can cause the puzzles we see without any excessive amount of risk aversion by agents. I think this is a very nice and important paper.
Maybe I should let him tell it:
"Intuitively, a normal density “becomes” a Student-t from a tail-thickening spreading-apart of probabilities caused by the variance of the normal having itself a (inverted gamma) probability distribution. There is then no surprise from expected utility theory that people are more averse qualitatively to a relatively thick-tailed Student-t child distribution than they are to the relatively thin-tailed normal parent which begets it. A much more surprising consequence of expected utility theory is the quantitative strength of this endogenously-derived aversion to the effects of unknown variance-structure. The story behind this quantitative strength is that thickened posterior left tails represent structural uncertainty about rare disasters that terrify people. This fear-factor effect holds for any utility function having everywhere-positive relative risk aversion."
So fear of rare events whose generating distributions are not known can cause the puzzles we see without any excessive amount of risk aversion by agents. I think this is a very nice and important paper.
Subscribe to:
Posts (Atom)