Oh Noes!

Well it only took 50 games, but the Thunder now have a mascot. I guess that's good news.

The bad news is that it appears to be a Wookie, and not a very macho one at that.

Feast your eyes on some Okie folly, people:

Thundercats are Go!!!!!!!!!!!!

The Thunder have traded Chris Wilcox and Joe Smith to the Hornets for Tyson F. Chandler.

Wow.

Hornets get expiring contracts and we get an honest to God center. Fantastic! Chandler has been hurt and less effective so far this year but I'da traded Wilcox and Smith for a pack of gum!

I think this also make the locally popular idea of drafting Blake Griffin if the Thunder get the number one pick make more basketball sense (i.e. Thunder really needed a center, Griffin is not really a center but now they have Chandler).

Big ups to Sam Presti.

Teamwork: yer doin' it wrong!

another modest proposal

When I lived in Northern Virginia, the DC folks were always complaining about their lack of Federal representation. They had no Senators and only a single non-voting delegate to the House (maybe the delegate gets to vote now though?).

I actually think this set up should apply to more states rather than fewer. Take Illinois as a semi -random example. Wouldn't we all be a lot happier if they had no Senators and a single non-voting House delegate?

I have an additional suggestion for Illinois politics: just have your governors report directly to the nearest Federal penitentiary on inauguration day.

Analysis of Texas Roads: Multipliagra

This is truly remarkable.

Here you will find the "Texas 2030" report on the benefits of road-building in the "On Loan to Keynes State."

How do I know they changed the name, the old "Lone Star State"?

In the report, they make a first pass in which they do not model ANY benefits to increased capacity, at all. So the report claims that the first $70 billion spent does not reduce congestion ONE BIT....

...But the project still yields a 3.4 Benefit to Cost ratio because of (WAIT FOR IT!!!) construction spending multipliers. NO. ROAD. JUST THE CONSTRUCTION SPENDING CREATES A POSITIVE MULTIPLIER OVER THREE.

If you do account for the reduced congestion, according to these rent-seeking bandits, you get a cost of $213 billion, and an economic benefit of $1.4 trillion. That's a "multiplier" of more than *6*! Now, you should all know that "Priapobamaism," or a multiplierection lasting more than four hours, is not normal. You should stop taking Multipliagra, and seek medical attention.

No matter how you slice it: Deficit spending is its own reward! The new voodoo ecnomics....

Just as tax cuts were supposed to increase total revenue (if you are a Republican), the idea here is that deficit spending more than pays for itself, and increases tax revenues, to boot!

I am awestruck by the sheer brazen brass of it! No economist could be that stupid; it has to be a bald-faced lie. It take juevos of pure orichalcus to make this work. Brav-o!

As I believe Angus has pointed out before, by this logic Zimbabwe should have the largest GDP on earth. Robby Mugabe should get the Nobel Prize for his innovative Keynesian policies. (I shouldn't joke; the second part may happen, come October.)

(Nod to Jason Scheppers, P.E., who also posed this excellent question:

When you go to the store and buy a loaf of bread you likely pay a market price. The bread provider likely provides jobs to wheat farmers, truckers, grocers, bakers and those folks in the supply chain likely spend the money that they earn from their services. Given those factors buying a loaf of bread creates a multiplier affect just as claimed for the transportation construction activity in the 2030 report. I see no evidence presented that the multiplier on "buy a loaf of bread," or any other product, is materially different than the multiplier applied to construction activity. )

Jason continues, in his comment to the Authority:

I suggest that the optimal infrastructure improvement is when the incremental cost is equal to the incremental benefit or the incremental B/C ratio equals 1. With the report’s assumed value of economic activity for each dollar of construction there are no amounts of improvements that have a benefit cost ratio lower than 1. It is nonsensical to think that there are no levels of infrastructure spending that go too far and waste resources. I challenge the committee and their technical experts to enumerate the funding level that sets incremental cost benefit ratio equal to 1.

See!? Mugabe is CORRECT! As the deficit heads to negative infinity, GDP heads to positive infinity, FASTER, because of Mulipliagra, Daddy's Little Helper.

So let me get this straight

Suns management/ownership is tired of Mike D'Antoni's 7 seconds or less and lets him go. Brings in Terry Porter as coach. Porter wants them to walk the ball up and D up. Lots of Suns complain. Management then gets rid of multiple players that Porter doesn't like. And now, at the all-star break, the metaphorical, if not actual, midpoint of the season, Suns management FIRES Terry Porter.

Epic Fail. So now you don't have D'Antoni or Porter or the players that Porter didn't like. You do have Jason Richardson though. Sweet!

And you have Alvin Gentry who said the following at his press conference: “We are who we are and I think we have to go back to trying to establish a breakneck pace like we’ve had in the past.”

Only they are NOT what they were. Not anymore.

What a bunch of dolts. If you look up FUBAR in the dictionary I bet there will be a picture of the Suns front office.

"I'm fine with a tuition increase...."

My son Kevin, on the tuition hike at UNC-Chapel Hill:

"I'm fine with a tuition increase. I'm surprised it wasn't more."
(Link to the video) (Kevin's voice, and then picture, starts at about 1:25 on the video).

It is interesting that UNC, where taxpayers pay at least $3 for every dollar paid in tuition, for each student, gets depicted as screwing over the students, rather than the taxpayers.

There is a big difference between artificially low tuition, where taxpayers subsidize college education for an elite few with the grades and SATs to get in, and financial aid, which ensures that lack of wealth is no barrier to entry.

Still, to my son Kevin, who is "fine with a tuition increase": Your mother and I are "fine with you getting a job this summer."

UPDATE: In comments, an anonymous commenter bravely confronts my hypocrisy in sending my son to a public school. Dude! Suppose bandits broke into my house while I was away, and stole everything in it. If they offered me my television back, would I take it? YES! That doesn't mean I approve the original theft. But you takes back what youse can gets.

Confirmation: I Took More Votes From Perdue....

Interesting....more analysis of the Gov race. PPP concludes, again, that I took many more votes from Perdue than from McCrory.

The problem is.....I didn't take nearly enough.

One other interesting finding from our analysis. We pointed out several times last fall that our data showed Michael Munger was pulling more votes from Perdue than McCrory, contrary to the conventional wisdom that Libertarians take from Republican candidates. The county where he ended up doing best? Deep blue Orange, where he pulled 5% of the vote.

ATSRTWT

A modest proposal

Obama seems to patterning himself after FDR. Between the election and inauguration FDR went on a Caribbean cruise while the depression raged. Obama went Hawaii. FDR had a very active 100 days, Obama has his mega-bill.

I would like to encourage Obama to emulate one other FDR move. At the beginning of his term FDR managed to find the time to get Congress to legalize beer. So please Barack, take another page out of the FDR playbook and legalize weed!! What better way to help us look past our ruined retirement accounts and impending doom?

Legalize it!

A brutal business in Buffalo

Buffalo-area man accused of beheading his wife

Associated Press - February 13, 2009 7:15 PM ET

"ORCHARD PARK, N.Y. (AP) - A Buffalo-area man who runs an American-Islamic television station is accused of beheading his wife.

Orchard Park police say 44-year-old Muzzammil Hassan told police Thursday evening that his wife was dead at his office. That's where police found the body of 37-year-old Aasiya Hassan.

Hassan is now charged with second-degree murder and police believe the killing occurred sometime late Thursday afternoon. Authorities say his wife had recently filed for divorce and had an order of protection that had him out of the home as of February 6th.

Hassan is the founder and chief executive of Bridges TV, which he launched in 2004 in hopes of portraying Muslims in a better light.

Police didn't know Friday if Hassan had an attorney."

Wow, this is a serious and horrible story but I have two comments and they are the same as Janet's at SCSU scholars. (1) How can cutting off someone's head be only second degree murder? (2) Did Mr. Hassan think this would help the stated mission of Bridges TV?

Get ready for another serving of Hugo

From the informative blog Caracas Chronicles:

Sí wins : 54% to 45%

Quico says: With 80% of the votes tallied, reliable sources are confident, Sí will win by a wide margin.

Thunder REPRESENT

Kevin Durant has come up about as big as you can on all-star weekend without actually being on the all star team. First in the Sophomore - Rookie game on Friday, he cut loose for 46 points and 7 rebounds. Then in the H-O-R-S-E contest on Saturday, He got behind early but then came back for the win basically by bombing in 30 footers.

I think this is the last year that KD won't be in the Sunday game. He has improved a lot over last year and is going to be a big star. We in Okie-land are happy Portland drafted Oden.

A real poem

I am not generally a big fan of poetry but I read this today and really liked it:

I am a Hittite in love with a horse I don't know what blood's in me
I feel like an African prince I am a girl walking downstairs
in a red pleated dress with heels I am a champion taking a fall
I am a jockey with a sprained ass-hole I am the light mist
in which a face appears
and it is another face of blonde I am a baboon eating a banana
I am a dictator looking at his wife I am a doctor eating a child
and the child's mother smiling I am a Chinaman climbing a mountain
I am a child smelling his father's underwear I am an Indian
sleeping on a scalp
and my pony is stamping in
the birches,
and I've just caught sight of the
Niña, the Pinta and the Santa
Maria.
What land is this, so free?

It's by Frank O'Hara courtesy of a lecture by Zadie Smith, one of my favorite young novelists (White Teeth is terrific).

Friday poetry corner

Here are two short poems I composed.

The first came out accidentally in an email to Mrs. Angus this morning:

"Me dejaste plantado sin un pinche centavo"


The second while ruminating on teaching econometrics IV:

"Thomas Bayes was no fool. He made up his very own rule. When you want the answer, don't tempt fate, derive the posterior and integrate"

India = Comedy Gold

As evidenced by previous KPC posts (here, here, and here), India is a comedy gold mine. Now LeBron points us to another classic case: Cow Urine Soda.

Here is a different article about it, from Reuters.

This the best bit:

"The Rashtriya Swayamsevak Sangh (RSS), or National Volunteer Corps, said the bovine beverage is undergoing laboratory tests for the next 2 to 3 months but did not give a specific date for its commercial release.

The flavor is not yet known, but the RSS said the liquid produced by Hinduism's revered holy cows is being mixed with products such as aloe vera and gooseberry to fight diseases such as diabetes and cancer.

Many Hindus consider cow urine to have medicinal properties and it is often drunk in religious festivals.

The organization, which aims to transform India's secular society and establish the supremacy of a Hindu majority, said it had not decided on a name or a price for the drink.

"Cow urine offers a cure for around 70 to 80 incurable diseases like diabetes. All are curable by cow urine," Om Prakash, the head of the RSS Cow Protection Department, told Reuters by phone."

Snarky observations follow:

1. "The flavor is not yet known". Really?? They don't know what cow urine soda is going to taste like?

2. Om Prakash seems to be suffering from an extremely serious misunderstanding of what the word "incurable" means.

3. Extra bonus, stolen from commenter Lars on Marginal Revolution: "Doesn't Budweiser already produce this beverage?"

Too much monkey business

Over on Freakonomics, people have discovered the dark side of the Nudge. More companies are putting extra charges as a must decline option instead of a must accept option for online transactions. The poster, Ian Ayers, while decrying these moves writes:

"In their best-selling book Nudge, Cass Sunstein and Richard Thaler show that default setting can be a powerful force for the social good.”

So I went all Don Boudreaux on him and wrote him a letter/comment, reproduced below:

Ian: what is the “social good”? Is there a representative agent? Or do you believe somehow that Sunstein and Thaler have been gifted by the gods so that they can make valid interpersonal welfare judgements? Nudge is about getting people to do what you want. Calling it “Social good” is like putting lipstick on the proverbial pig.

If you like it, it’s social good. If you don’t like it, it’s a disturbing evil trend. Give me a break.

hat tip to PR.

Breaking news: The first job created by the Stimulus Bill

Yes, that is a guy wheeling the House and Senate versions of the bill. Sweet gig.

Cuckoo for Locopops! Cuckoo for Locopops!

Hot diggety pops! Locopops has opened in Raleigh.

Locopops is one of the few places in all of the South (at least, in my experience) where you can get the real deal paletas that are sold by street vendors in Mexico, and now increasingly by street vendors in the larger U.S. cities. Paletas are made with fresh fruit, and (often) chiles or other spices that are surprising the first time you eat one. They also (sometimes) have too much salt, but Locopops doesn't do that.

The Durham location, rather unassuming....


(Nod to Anonyman, who loves Locopops. I expect he'll be out front of the Raleigh Locopops location, trying to sell his large body for enough quarters to go in and buy just one more "Mango Hibiscus Habanero." Good luck with that, bud.)

K-Ville, Game Day, Game Face, Two Ties

A picture of K-Ville, taken from the steps of the Basketball Palace.


A picture of me, in front of K-Ville. Note the neckwear: A UNC tie and a Duke tie. In other words, I have ties to both schools.

Three Questions, and My Answers.....

(This should be up at REASON later today. I'll post the link. But, for now, an exclusive to KPC readers!) (UPDATE: Link here! Warning: Don't click on the link, in comments, that Naga Sadow put up. It's an obnoxious RickRoll. On the other hand, if you have never been RickRolled, go for it. You'll have to kill your browser process to get out, though)...

1. Outside of the obvious pork and special interest goodies, what are the biggest problems you see with the stimulus package?

The creation of new bureaucratic and regulatory structures, restrictions on creation of liquidity. The genius of the American system, for all its flaws, has been that we can mobilize LOTS of liquidity quickly. Silicon Valley exists because you could sit down, make a pitch, and get $10 million that afternoon.

If we start governing finance like we govern universities, or city councils, we are going to lose that. Having committees, and a bunch of forms to sign off on, and stamps.....Hernando de Soto wrote about systems like this. They strangle business, investment, and growth.

2. Is there anything in the stimulus package that you think will work? If so, what?

Keynes said that Y=C+I+G. Borrowing money to raise "G" (government spending) will work, I suppose. But the cost to future generations is enormous. I am amazed by the hypocrisy of both sides. John McCain calls the stimulus "intergenerational theft." Well, he's right, but he came LATE to this wisdom. The Republicans have been just pouring out new deficit spending since 2002.

And then Obama says he doesn't want to do tired old ideas, and failed economics. But he is doing EXACTLY what the Republicans did: huge deficit-financed spending on largely useless or irrelevant programs designed to reward political friends. The only thing that's different is the identity of the "friends."

So, some of the spending may increase measured GDP slightly for 2009. But the price is increased inflationary pressures in 2010, and the squandering of the birthright of our children for decades.

3. Obama says that doing nothing is not an option. Do you agree with that?

This makes me furious. Doing nothing is NOT an option, anymore. Because first Pres. Bush, and now Pres. Obama, have engaged in a completely irresponsible fear campaign. "We must do something, or you should cower in helpless fear, behind locked doors, in darkened rooms!" Presidents should not use this kind of fear as a weapon to pass their pet projects. Roosevelt, for all his flaws, got it right: "The only thing we have to fear is fear itself." Well, not quite right: it turns out we need to fear fear itself, and also Pres. Obama.

The sensible thing to do at this point would be to make an offer, at 40 cents on the dollar, for the "toxic" assets, both the collaterlized debt obligations packaged by Freddy and Fannie, and also the credit default swap "insurance" derivatives sold by AIG (and some other firms, but mostly AIG). Since AIG wrote so many "naked" CDSs, even for people who don't own the underlying, or "insured" asset, they are going to keep hemorrhaging until someone puts a floor on the value of the assets.

So, a one-time, take it or leave it, offer. One big reason that credit markets are frozen is the uncertainty created by Treasury indecision and vagueness. Asset owners are holding out for a better price, and they are trying to negotiate through the Senate, not the Treasury. Obama needs to lead here, and say, "Take this partial buyout, or hang on to the asset at your peril. There is no better deal coming tomorrow."

The Mayor Updates Us on "Shovel Ready": Digging Up Roads and FIlling Them Back Up Again

The Mayor writes, after going to a meeting of state and county officials on how to suck down money from the Obama "shovel ready" gravy train.

In order to meet the "shovel ready in 90 days" rule, the only projects that can be considered are those for which the environmental assessments and the engineering are done. Almost all of those will already have some or most of their funding in place. Today, for example, our metropolitan planning organization met because we had until 5:00 p.m. to get a project on the Obama list. We chose one that has a combination of federal, county, and local funding. One of the rules is that the new money cannot replace existing federal money. But local money can be replaced. In our case, the county was going to bond for about $4.5 million in order to take a $13 million project to bid. The bond would be paid for over time from a 1/4 cent sales tax the voters approved--it is bringing in about $1 million a year. If we get the Obama money, the county will not bond. Thus, the stimulus money produces no new jobs in our county. It just saves the County Council from having to borrow. The county will not bond, federal cash will replace the county money, and we can count the project as contributing to the stimulus.

At the state level expect to see lots of lane miles of road improved--that is, the asphalt chewed up by a big machine and laid back down as road base. New asphalt is then put on top of the base. No environmental work needs to be done for existing roads so we should see states improving miles of road that do not need to be replaced because those projects are shovel ready--they can go out for bid in a few weeks. Sounds like digging holes and filling them back up--the perfect Keynesian solution.

An epiphany

You are all familiar with Andy Warhol's famous prediction.

It just struck me that the Obama promise is an extension. No one should go bankrupt, and bad business decisions should be paid for by taxpayers, with government guaranteeing against "risk." No one should have to bear the responsibility for bad choices, stupid investments, or lack of planning. But, everyone should live beyond their means, and spend more than they make.

In short:

IN THE FUTURE, EVERYONE WILL BE BANKRUPT FOR FIFTEEN MINUTES....

Gary Marcus ups the ante

Recently I wrote about the arrogance of how the Nudge movement assumes that humans need help but that they, despite themselves being humans, not only don't need help but instead are somehow qualified to engineer choices for other humans.

Now in today's WSJ, one Gary Marcus, goes even further. His basic argument is that (A) evolution is not perfect so (B) neoclassical economics is completely invalid. Really, that is pretty much it. Check it out for your own self here.

Then he gets down to bidness:

"All this matters because endeavors like economics and social policy are all built around theories about what human beings are and how they function. We allow consumers access to credit cards, for example, because we assume (despite ample evidence to the contrary) that they will be smart enough to balance their short-term needs as consumers with their long-term capacity to maintain a fiscally sensible reality."

Yikes! People, what is up with "We allow consumers access to credit cards"? Is Mr. Marcus somehow immune to the imperfection of evolution in a way that entitles him to run other people's lives?

I guess his actual thesis is (A) evolution is imperfect for everyone but me and people who agree with me so (B) we have a clear duty to shape the world for the regular imperfect dolts that inhabit it.

Welcome Rush Limbaugh Listeners!

Dear Friends:

Those of you coming to this site because of the discussion on Rush Limbaugh today....welcome!

The web site for the interview Mr. Limbaugh quoted from can be found here...

And feel free to browse around. My blogging partner, Dr. Kevin Grier, and I, have written quite a bit about the bailout, and we welcome your thoughts.

For those who missed the Limbaugh show, here is the transcript, in section #2....

Mike Munger, email me
Political Science Department
Economics Department
Duke University

Putting the "Cuss" back in "Homo Economicus "

The Maximization Paradox: The costs of seeking alternatives

Ilan Dar-Nimrod, Catherine Rawn, Darrin Lehman & Barry Schwartz
Personality and Individual Differences, forthcoming

Abstract:
Contrary to the common belief that more options lead to better decisions, recent research has demonstrated that choosing from a large number of options can have detrimental psychological effects. We investigated whether people were willing to sacrifice resources for more options, and whether choice-making orientation moderated such willingness. As predicted, people who were motivated to make the best choice possible—“maximizers”—were more willing to sacrifice resources such as time to attain a larger choice array than were people who tend to search for a satisfactory choice (i.e., “satisficers”). Additionally, maximizers who sacrificed to attain more options were ultimately less satisfied with their choice relative to maximizers who chose from a small assortment, and to satisficers (Studies 2 and 3). We term the pattern in which maximizers tend to sacrifice resources to attain more options that ultimately reduce their satisfaction, the “Maximization Paradox”.

----------------------

Beware of Venturing into Private Equity

Ludovic Phalippou
Journal of Economic Perspectives, Winter 2009, Pages 147–166

Abstract:
As a step towards understanding whether a private equity governance structure reduces overall agency conflicts relative to a public equity governance structure (as is often argued), this paper describes the contracts between private equity funds and investors, and the returns earned by investors. The paper sets the stage with a puzzle: the average performance of private equity funds is above that of the Standard and Poor's 500 - the main public stock market index - before fees are charged, but
below that benchmark after fees are charged. Why are the payments to private equity buyout funds so large? Why does the marginal investor invest in buyout funds? I explore one potential answer (and probably the most controversial): that some investors are fooled. I show that the fee contracts for these funds are opaque. Considering this and the way that compensation contracts bury, in details, costly provisions that are difficult to justify on the basis of proper incentive alignment, it would be premature to assert that the agency conflicts are lower in private equity
than in public equity.

----------------------

----------------------

In Search of Homo Economicus: Cognitive Noise and the Role of Emotion in
Preference Consistency

Leonard Lee, On Amir & Dan Ariely
Journal of Consumer Research, forthcoming

Abstract:
Understanding the role of emotion in forming preferences is critical in helping firms choose effective marketing strategies and consumers make appropriate consumption decisions. In five experiments, participants made a set of binary product choices under conditions designed to induce different degrees of emotional decision processing. The results consistently indicate that greater reliance on emotional reactions during decision making is associated with greater preference consistency and less cognitive noise. Additionally, the results of a meta-analytical study based on data from all five experiments further show that products that elicit a stronger emotional response are more likely to yield consistent preferences.

----------------------

Driven to Distraction: Extraneous Events and Underreaction to Earnings News

David Hirshleifer, Sonya Seongyeon Lim & Siew Hong Teoh
Journal of Finance, forthcoming

Abstract:
Recent studies propose that limited investor attention causes market underreactions. This paper directly tests this explanation by measuring the information load faced by investors. The investor distraction hypothesis holds that extraneous news inhibits market reactions to relevant news. We find that the immediate price and volume reaction to a firm's earnings surprise is much weaker, and post-announcement drift much stronger, when a greater number of same-day earnings announcements are made by other firms. We evaluate the economic importance of distraction effects through a trading strategy, which yields substantial alphas. Industry-unrelated news and large
earnings surprises have a stronger distracting effect.

----------------------

Carrots, Sticks, and the Multiplication Effect

Giuseppe Dari-Mattiacci & Gerrit De Geest
Journal of Law, Economics, and Organization, forthcoming

Abstract:
Although a punishment can be applied only once, the threat to punish can be repeated several times. This is possible because when parties comply, the punishment is not applied and can thus be used to support a new threat. We refer to this feature of sticks as the "multiplication effect." The same is not possible with promises to reward since carrots are used up every time a party complies; hence, at each round a new reward is needed. We show that the multiplication effect of sticks has pervasive consequences in economics and law and provides a unified explanation for seemingly unrelated phenomena such as comparative negligence, legal aid, the dynamics of riots and revolutions, the use of property rules, the commons problem, and the
most-favored-nation clause in settlement negotiations.
----------------------

Motivating Loan Officers: An Analysis of Salaries and Piece Rates
Compensation

Sumit Agarwal & Hefei Wang
Federal Reserve Bank Working Paper, December 2008

Abstract:
Whether incentive contracts provide the right incentives to individuals in organizations is a central question in modern economic theory. We study loan officers' incentives for loan origination and their choice of effort to assess loan quality under fixed-wage salary and a piece-rate contract based on loan origination. We find that whether piece-rate contracts distort loan officers' incentive to search for bad credit depends crucially on the strength of the monetary incentive and the information asymmetry between the bank and the loan officers. We further examine the relationship between loan origination decisions, loan size and other loan characteristics under the two compensation schemes, and derive a number of predictions regarding these two types of pays. Using a unique dataset on loan officer compensation from a major commercial bank, we test these implications and find results that generally support the predictions of our model.

----------------------

Painful Regret and Elation at the Track

Adi Schnytzer & Barbara Luppi
Journal of Gambling Business and Economics, December 2008, Pages 85-99

Abstract:
We present an empirical study of loss aversion in the Hong Kong horse betting market. We provide evidence of the presence of loss aversion in a context of complete absence of the favourite-longshot bias. This would suggest that, since loss aversion is a psychological bias, the favourite-longshot bias may not necessarily be caused by psychological issues and may be due, for instance, to informational asymmetry. We investigate different types of bettors and their attitude towards loss aversion. Our data set enables us to distinguish approximately among insiders, unsophisticated outsiders and sophisticated outsiders. The results show clearly that even sophisticated bettors are beset by loss aversion, while even unsophisticated outsiders display no favourite-longshot bias. Thus, our paper provides evidence that loss aversion may be an attitude innate rather than learned, regardless of the level of sophistication in designing economic behaviour or the extent of information asymmetry. Chen et al (2006) show that capuchin monkeys display biases when faced with gambles, including loss aversion, and provide evidence that loss aversion extends beyond humans. The present work supports the idea that loss aversion may be a more universal bias, arising regardless of experience and culture and demonstrates that loss aversion is displayed even by those bettors regarded in the market as “smart money”. Further, we find that more sophisticated and experienced bettors display a higher level of loss aversion. This result is consistent with the findings of Haigh and List (2005), who show that professional traders in financial markets exhibit more loss aversion than do students.

(Nod to Kevin L.)

Did tax cuts cause the current crisis?

Obama sez yes:

"But as we've learned very clearly and conclusively over the last eight years," Obama said, "tax cuts alone can't solve all of our economic problems, especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it's only helped lead us to the crisis we face right now."

With all due respect, I don't think tax cuts had much to do with the housing boom (unless you mean things like the deductibility of mortgage interest and the elimination of capital gains on housing appreciation but those weren't Bush's). I don't think tax cuts gave us years of overly loose monetary policy. I don't think tax cuts caused the incredible decline in standards for getting a mortgage. I don't think tax cuts caused the failure of ratings agencies to recognize the risk in repackaged mortgages. In sum, I don't think tax cuts had anything to do with us getting to the crisis point where we currently sit.

Timmy We Hardly Knew Ye II

Maybe it's just because I predicted, back in December, that Geithner would be the pick for Treas Sec (I'm huge in Brazil, HUGE I tell you!)....

But it bugs me that he did such a remarkably craven and illegal thing, and then got rewarded for it. Check this out.

Excerpt:

Tim Geithner must be wondering where he fits in now that principles have triumphed over personality. Geithner played by the prominent-people’s rules, cut corners on his taxes, found religion, said he was sorry, said he was sorry again, and won Senate confirmation as Treasury secretary by a vote of 60-34. It was the narrowest margin for a Treasury secretary in more than half a century.

If Obama screwed up in nominating and backing Daschle, the former Senate majority leader who ponied up $140,000 in back taxes and interest, what does that say about his support for Geithner?

Geithner (B.A., Dartmouth College, 1983; M.A. in economics, Johns Hopkins, 1985) was in arrears to the Internal Revenue Service, an agency he now heads, for $50,000. Somehow he “missed” the part in the annual hand-outs from the International Monetary Fund, his former employer, where he was told about his obligation to pay Social Security and Medicare taxes -- a document he signed annually in order to get reimbursed.

Timmy, We Hardly Knew Ye.....

Lots, and I mean LOTS, of IRS employees have been fired or reprimanded for doing 1/100 the wrong things that Tim Geithner freely admits to having done (or failed to do!)

Interestingly, Geithner didn't even have to pay penalties, which CLEARLY would have been the fate of the rest of us.

There are two sets of rules: One set of rules (loose and soft) for those in power, and I mean Dems OR Repubs. And another set (tight and hard, to give bureaucratic psychopaths something to do) for the rest of us, those of us who are just trying to get by.

And the bureaucratic psychopaths will even prey on their own. The people who have suffered most from this "I'm just following orders" thing are IRS employees themselves.....Check the following excerpt, written by the Tax Reporter for the New York Times:

Timothy Geithner is one lucky man. Not because he had Robert Rubin as a mentor and not because he was head of the Federal Reserve Bank in New York when investment and commercial bankers ran wild, but because when he cheated the government on his payroll taxes, he wasn't working for the IRS.

Had Geithner been working at the IRS, here is what he could have expected for being suspected of shorting the government tens of thousands of dollars in payroll taxes: He might have been rousted from bed before dawn in a commotion that terrified his children and embarrassed his wife when it awoke the neighbors. He would have been treated like a scheming criminal and, while not subjected to what the Bush administration euphemistically called "enhanced interrogation techniques," he would have been scared enough to suffer a stroke or heart attack, like some of those grilled by the agents from the Treasury Inspector General for Tax Administration.

Had he told them that he failed to pay his Social Security, Medicare, and unemployment taxes in full because TurboTax did not alert him to the problem, TIGTA agents almost certainly would have called him a liar and warned him about criminal prosecution.

The TIGTA agents would have thrust in his face the documents that he was given when he worked at the IMF, telling him that while those taxes were not withheld from his pay, his salary was grossed up to cover them. They would have waved his own signed statements acknowledging that he had to pay the levies and had been given step-by-step instructions on how to calculate the amount due.

Any suggestion by Geithner that it was just a mistake, that the law is too complicated, or that the software made him do it would have drawn derisive laughter and worse, based on what IRS clerks whom TIGTA went after have told me and have testified about in proceedings aimed at saving their jobs.

Section 1203 of the Internal Revenue Service Restructuring and Reform Act of 1998 provides that "in general . . . the Commissioner of Internal Revenue shall terminate the employment of any employee of the Internal Revenue Service if there is a final administrative or judicial determination that such employee committed any act or omission," including "willful understatement of Federal tax liability, unless such understatement is due to reasonable cause and not to willful neglect."

The Treasury inspector general has interpreted that law as a license to go after people who made, the record later showed, minor or innocent mistakes, including some mistakes caused by the government.

ATSRTWT

I actually agreed with Krugman before I disagreed with him

Krugs is right (see here and here ) that many of the things being cut in the Senate's version of Porkulus are those more likely to give a short term stimulus (or avoid a further short term de-stimulus). He is also right that tax rebates and transfers disguised as tax cuts will not do much stimulating.

Where I think he is wrong is in his stubborn insistence in viewing the bill as a stimulus bill. I just don't see how you can look at it and the way it was constructed and keep arguing that the sole or even primary intent of the bill is to produce a fast acting economic stimulus.

It seems to me there are three major components to the bill: Shoveling dough to Congressional Democrat's pals, implementing Obama's rebuild America vision, and the stimulus.

Now all these can be seen as interlinked; as Obama pointed out stimulus = spending, but philosophically I think they are different.

#1 is business as usual and probably would have increased anyway just given the new political power alignment. It's just pretty convenient for the Dems to lump it into a "save the world" bill and be done with it. Plus once it's in the budget, it's the new baseline. #2 should be done carefully and slowly on a cost benefit basis, not on a which is ready to go sooner basis. The rush will cause a lot of money to be wasted. And even shovel ready projects take a fair amount of time to complete. #3 should be done in a serious way. Tax rate cuts, not rebates. No further subsidies for housing, in the short term the best thing is for the Government to buy stuff they can take immediate delivery of (and possibly even somehow use).

Note that I am not advocating a stimulus be done, I am just saying if we were going to do it seriously we'd get input from experts and do it technocratically, Bryan Caplan style.

Finally, I think it's a tactical mistake by the Republicans to insist on cuts/modifications to the bill. If it works, they aren't going to get any credit at all. If it doesn't they could well get blamed for having been too stingy.

Media Matters

A test of the representativeness bias effect on stock prices: A study of
Super Bowl commercial likeability

Charles Chang, Jing Jiang & Kenneth Kim
Economics Letters, forthcoming

Abstract:
We test 17 years of Super Bowl commercials, finding that "liked" commercials coincide with higher stock returns, despite controls for firm size and changes in sales. This is consistent with representativeness bias, the irrational relation of firm characteristics to returns.

--------------------
Queerness, the Quality Audience, and Comedy Central's Reno 911!

Hollis Griffin
Television & New Media, September 2008, Pages 355-370

Abstract:
Comedy Central currently attracts the same kind of quality audience that broadcast television networks courted in the 1990s, one that resulted in the sharp increase in gay-themed content on the networks at that time. Yet the parodic mode of address that so permeates the cable network's content makes the different levels of gay cultural competency a heterogeneous viewership brings to a program like Reno 911! an issue of considerable import. A parodic situation-comedy based on reality crime programming, Reno 911! narrativizes an ambiguously gay police detective who, in turn, provides
different viewing pleasures for differently situated viewers. As such, the character foregrounds questions about the political consequences of television's use of queer cultural signifiers and the pleasures that viewers take in a parodic representation of queerness on television.

----------------------

The Impact of Editorial Slant: Evidence from the Hearst Media Empire

Siona Listokin & Jason Snyder
GMU Working Paper, November 2008

Abstract:
We examine whether editorial slant influences electoral outcomes in the context of one of the most powerful media conglomerates in US history. In the early 1900s, the Hearst newspaper empire was politically charged and considered influential. We test if the Hearst newspapers affected elections. Using a difference-in-differences and matching methodology, we find that the introduction of a Hearst newspaper into a county did not change electoral outcomes compared to similar counties - in contrast to other studies of media effects. We consider explanations for the results, and offer historical perspective to an issue that remains both salient and ambiguous.

--------------------

Politicized Places: How Local Reactions to the Post-Katrina Migrants Were
Shaped by the Media

Daniel Hopkins
Harvard Working Paper, December 2008

Abstract:
This paper uses the post-Katrina migration as an exogenous shock to confront concerns of selection bias that have long plagued research on contextual effects. Drawing on a new phone survey of 3,879 respondents, it demonstrates that despite the national concern about issues of race and poverty following Hurricane Katrina, people in some communities that took in evacuees actually became less supportive of spending to help the poor and African Americans. In other communities, residents became more supportive of anti-crime spending during the same time period. These observations accord with a new "politicized places" theory of contextual effects emphasizing the interaction of local conditions and the media environment. Under this theory, sudden changes in local demographics make demographics salient to local residents. Media coverage can convey information about these shifts and can also frame people's thinking on issues related to them. Observed variations in local media coverage provide further evidence for this approach.

--------------------

Taking Late Night Comedy Seriously: How Candidate Appearances on Late Night
Television Can Engage Viewers

Michael Parkin
Political Research Quarterly, forthcoming

Abstract:
Candidate appearances on entertainment television have become a staple of recent presidential campaigns, yet little is known about their effect on voters. Many assume that they leave viewers uninformed and focused on the candidate's personal image. In this article, the author investigates this idea with an experiment using John Kerry's 2004 appearance on the Late Show with David Letterman. He finds that - contrary to popular expectations - late night interviews have particular features that can, at times, engage otherwise politically disinterested viewers, causing them to process and recall substantive policy information.

--------------------

It's the Media, Stupid - How Media Activity Shapes Public Spending

Christian Bruns & Oliver Himmler
University of Goettingen Working Paper, December 2008

Abstract:
Politicians seeking reelection need voters to know what they have done for them. Thus, incentives may arise to spend more money where media coverage is higher. We present a simple model to explain the allocation of public spending across jurisdictions contingent on media activity. An incumbent seeking to maximize the probability of reelection will shift more money to jurisdictions where an extra dollar gains more votes because a larger share of the electorate is informed about his policy. This prediction is tested using US data on county-level public spending, Designated Market Areas (DMAs) and location of licensed television stations. Instrumenting for the possible endogeneity of media activity to public spending, 2SLS results confirm a positive effect of media coverage on county-level public spending. Spatial regression rules out the possibility of confounding media effects with spatial autocorrelation.

(Nod to Kevin L., who knows stuff)

They Report

Pitchers and Catchers report in 5 days and 13 hours.

Not that I'm counting.

The unbearable arrogance of the "Nudge-ers"

Behavioral economics has never been my favorite type of economics (for now neuronomics remains my absolute least favorite) but I couldn't describe succinctly exactly what bothered me so much.

Now I can.

It's the incredible arrogance of some of its practitioners. Really. Check out this NY Times story about the "Nudge" movement:

Let's begin with this:

"Mr. Thaler has found that people often don’t act rationally and in their own best interests, as is assumed by traditional economic models. He calls such idealized people “Econs,” as distinguished from “Humans.” Econs are walking computers, and behave according to the laws of classical economics; Humans are quirky, like the people you meet on the street. Humans may know that they should eat less and exercise more, but they often miss the mark. They may know that they should save more, but often don’t. And so, Mr. Thaler says, most of us would benefit from a nudge."

Ah yes, pity us poor, weak, misguided, humans. Lucky for us we have benevolent demi-gods like Sunstein and Thaler to shove us onto the path of enlightenment via their "libertarian paternalism".

Yes people, that's what they call it; libertarian paternalism:

"Nudging people for their own benefit in unobtrusive ways is part of what the co-authors call “libertarian paternalism,” a seeming oxymoron that links the notions of freedom from constraint and firm, well-intentioned guidance."

"Mr. Sunstein and Mr. Thaler say that this apparent contradiction is reconciled through what they call “choice architecture.” This is the deliberate imposition of structure in an environment — etching flies in a urinal — to induce people to make better choices. Consider a cafeteria where healthy foods like fruit and yogurt are placed in a prominent location, while junk foods are relegated to an out-of-the way spot. People are free to choose, but they are being nudged toward healthier decisions. "

So I would ask the nudge-ers: if people are quirky humans who don't know what's best for themselves, how in the world can you know what is best for them and exactly where to nudge them? After all, you are human too, aren't you?

This stuff is pretty much just trying to enforce a particular view of the world or pattern of behavior on others via implicit taxation. Paternalistic, yes, but libertarian? No.

Almost any economist, if asked how to curb some behavior or increase some other behavior will tell you they'd alter the incentives on the margin. This is not a new insight. What is new I think is the glee with which the Nudge-ers propose to use economics for social engineering. I can't see any way how it's not saying "We are better than you so we will make the rules of the game for you".

Will Comes Up Big

Will W is en fuego*, in quite a number of recent posts. I liked this find, but they are all good. (The comments in this thread are entertaining....)

(*Yeah, I know. Sue Dan Patrick)

Dog Bites Man

A-rod, to the surprise of exactly no one, apparently took performance-enhancing drugs.

To date, on the other hand, even the most sensitive tests for traces of a personality have all been negative.

Tofe? You still want to defend A-rod, your ten year man-crush? I have always disliked the guy. Let's hear it.

Joe the Plumber Goes to Washington

Joe the Plumber (hereafter, always, JtP) is going to advise the Republican Senate brain trust. I feel SO much better.

Anonyman writes in an email: "Although senate staffers may not know who ayn rand is, they believe that JtP has genuine wisdom to impart..."

Well, the problem is that Ayn Rand, and John Maynard Keynes, and all those silly intellectuals, wrote books and used big words. JtP is a little easier to follow, so his "Tent of followers" is more commodious.*

(*Absolutely, yes, that was a potty joke. You bet it was. Commodious. I've got a MILLION of them.)

Angus Deaton goes Nuclear

"I shall argue that in ideal circumstances, randomized evaluations of projects are useful for obtaining a convincing estimate of the average effect of a program or project. The price for this success is a focus that is too narrow to tell us “what works” in development, to design policy, or to advance scientific knowledge about development processes. Project evaluation using randomized controlled trials is unlikely to discover the elusive keys to development, nor to be the basis for a cumulative research program that might progressively lead to a better understanding of development."

"This argument applies a fortiori to instrumental variables strategies that are aimed at
generating quasi-experiments; the value of econometric methods cannot be assessed by
how closely they approximate randomized controlled trials. Following Cartwright (2007a, b), I argue that evidence from randomized controlled trials has no special priority. Randomization is not a gold standard because “there is no gold standard,” Cartwright (2007a.) Randomized controlled trials cannot automatically trump other evidence, they do not occupy any special place in some hierarchy of evidence, nor does it make sense to refer to them as “hard” while other methods are “soft”. These rhetorical devices are just that; a metaphor is not an argument."

You can read the whole thing here. Hat tip to The B(l)at(t)man

Kevin Durant just keeps getting better

The Thunder got its 12th win last night, beating Greg Oden and the Blazers. KD had 31. Here are his month by month shooting percentages and scoring averages:

November: 22.9 points on 46% shooting
December: 25.1 points on 47% shooting
January: 27.8 points on 49% shooting
February: 31.7 points on 52% shooting

OK, February is based on 3 games and may not be sustainable, but Wow!

The biggest thing hindering further Thunder progress is taking care of the ball. They commit more turnovers than any other team in the Association (16) and offset that with only 20 assists.

For comparison, consider elite teams like the Lakers (23.2 assists vs. 13.4 turnovers) or the Spurs (21.9 assists to 11.8 turnovers).

Rookie PG Russell Westbrook has yet to demonstrate that he can play the point with an acceptable assist to turnover ratio. Last night he had 3 assists and 6 turnovers in 25 minutes!

My Chance to Share My Wisdom

Or, maybe not wisdom. But my views, in any case.

The good folk at JLF, and particularly George Leef, hooked me up with this interview.

Excerpt:

Leef: President Obama and his circle of advisers are all well-educated people, yet they support economic policies that seem to be deeply flawed. Would you say that they simply haven’t read the right books and taken the right courses to comprehend what’s going on, or is the problem that politicians sometimes pursue objectives other than long-run prosperity for the general public?

Munger: President Obama is no worse than George Bush, and he actually may be quite a bit better. George Bush is the one who ran the huge deficits, and who allowed enormous discretionary spending increases and increases in domestic regulation.

The problem is this: It’s hard to claim credit for the vitality of the market. Politicians claim credit for DOING things.

Imagine you had a six-year-old daughter, and that she has a high fever. It’s 1820, and we don’t understand germs or fevers very well. You call the doctor, and the doctor comes to the house. “Please, do something. DO SOMETHING, and help my daughter,” you say.

The doctor takes out a lancet, and makes a small incision in your daughter’s wrist. The theory was that the fever was in the blood itself, and “bleeding” was the only treatment that people in 1820 knew.

It doesn’t work. Your daughter’s fever is still very high. So, you tell the doctor, “DO SOMETHING! You are the doctor.”

The doctor bleeds her some more. And she dies.

And the next day you blame the doctor for not bleeding her MORE and SOONER. But bleeding was the wrong thing to do.

This stimulus is the wrong thing to do. The fact that the first round didn’t work leads me to think we need to stop! But all the desperate economic parents out there say, DO IT MORE! DO IT LONGER! DO IT FAST!

I don’t blame the President. I blame voters, who have the naïve idea that government is responsible for the economy.

Maybe "dumb jocks" aren't really dumb....

....but rather they are haunted by the fact that you might think they are dumb. No, really! It says pretty much that in a new NBER working paper (ungated version here) by Thomas Dee.

The paper employs the concept of a stereotype threat:

"Stereotype threat refers to the perceived risk of confi…rming, through one's behav-
ior or outcomes, negative stereotypes that are held about one's social identity.
More specifi…cally, its key conjecture is that the threat of being viewed through
the lens of a negative stereotype can create an anxiety that disrupts cognitive
performance and influences outcomes and behaviors"

Yes, I believe this can happen especially with respect to race and gender, but with football players??

However, Dee presents experimental results where student athletes who were reminded that they are indeed student athletes before taking a test do worse than those who were not so reminded:

"The key results from estimating this model are reported in Table 4. The full-
sample results indicate that the unique effect of the treatment on athletes (i.e.,
the estimate of ) on athletes was uniformly negative and implied reductions
in test performance ranging from 7.3 to 9.5 percentage points."

Yikes!

Obama's Secret Plan

I am a regular Thursday guest on the Bill LuMaye show, on WPTF. Every Thursday, 5-6 pm.

Yesterday we had a caller who pointed out that Barack Obama apparently has a secret, but highly effective, plan to balance the federal budget, and to finance even the huge Porkulus bill, all without increasing the deficit.

The plan?

Appoint, one after another, all the rich liberals in the country who think spending tax dollars is cool, but that actually PAYING taxes is for chumps.

It's a beauty solution. Consider.

1. None of the people Obama hangs with appear to have paid taxes in decades. They make tons of money, though.
2. Appointing them forces these tax cheats to come out and admit their wicked ways, and to pay their back taxes.
3. Then, they don't actually get appointed, b/c they are too embarrassed. The office stays vacant.
4. So, Obama can appoint ANOTHER tax cheat to the same office, and the cycle begins again.
5. The revenue rolls in, so Nancy Pelosi can use the money to finance birth control conselling for pet hamsters, digitizing veterinary records, and other important things.

I humbly thank that caller. A fundamental insight into the mind of Obama.

My Dinner with Robby

I got my picture taken with radio magnate, and power talk show host, Robby Kendall. This was at the John Locke shindig for Bobby Jindall.

Ummmmm.......porkulus

A fine little video on the nice snuggly porkulus.

(nod to TtWBE)

Obama goes Nuclear

Wow, just wow.

"President Barack Obama warned on Thursday that failure to pass an economic recovery package could plunge the nation into an even longer, perhaps irreversible recession, as senators searched for compromises to whittle down the enormous bill.

Senate moderates gathered behind closed doors in an effort to find at least $50 billion in spending reductions that might make the $900 billion-plus package more palatable to centrists. Democratic leaders hoped to pass the legislation by Friday at the latest.

Obama painted a bleak picture if lawmakers do nothing.

In an op-ed piece in The Washington Post, the president argued that each day without his stimulus package, Americans lose more jobs, savings and homes. His message came as congressional leaders struggle to control the huge stimulus bill that's been growing larger by the day in the Senate. The addition of a new tax break for homebuyers Wednesday evening sent the price tag well past $900 billion.

"This recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse," Obama wrote in the newspaper piece."

People, an irreversible recession means that GDP will shrink to zero and the USA will cease to exist. Can it really be that Porkulus is the only thing standing between us and extinction?

If we keep the financial system afloat and the Fed keeps up "quantitative easing" then I think the recession will be reversed absent any fiscal stimulus. Now it might be a long time and a good timely stimulus might well help reduce that time which would be excellent if it's long run effects were not worse than the short run benefit. But, this bill is an ugly mixed up mess of stimulus, Obama initiatives, and political pandering. It's not the only thing between us and the abyss.

Oh, and the pandering is not only on the Democratic side. The Republican idea of tax breaks for new home buyers and interest rate subsidies for homeowners as a way of trying to raise housing prices is borderline insane as Ed Glaeser eloquently argues in today's WSJ.

This recession is going to hurt no matter what because of the collapse in housing wealth and the necessary reallocation of people and capital to other sectors.

Bobby Jindal

Locke Foundation 19th Anniv dinner

Speaker is Bobby Jindal

Pretty impressive guy. Energy and charisma.

The new Republican party? He is VERY conservative.

Interesting that he focuses on the importance of culture. Very fine speaker. Likeable.

Persistence pays

When I was a young assistant prof. at George Mason, we were considering making an offer to someone and the faculty voted not to extend it. Apparently some people were not happy with this result as a couple days later we had another faculty meeting to vote on exactly the same issue. I asked Bob Tollison (the second ball hogging-est social scientist ever) what was up and he told me "we are going to keep voting until we get it right!"

That appears now to be the case in Venezuela. Voters have already rejected a comprehensive constitutional reform that allowed unlimited reelection of the President. Now they are voting again on the 15th in a referendum that is only about unlimited reelection (of the President and also other politicians this time). Even before this vote has been taken though, Chavez has warned the world that another "no" won't necessarily mean "no" to him. That is to say, he plans to put the issue to another vote if this one fails!

According to the AP: Chavez says "there's no limit in the constitution regarding the number of times that an amendment can be attempted."

In other words, keep voting til you get it right!

Hat tip to Boz

Mo Peet!

Ladies and Gentlemen, for a limited time only, appearing below the KPC baby is Morris P. Fiorina, the ball hogging-est social scientist ever!

The Senate says "yes" to "Dr. No"

Wow. Porkulus as we know it may be in trouble.

One particularly surprising development is that Oklahoma's own Sen. Tom Coburn actually got a hunk of lard stripped out of the thing yesterday on the floor of the Senate:

"Then, on a 52 to 45 vote, the chamber stripped $246 million in tax breaks for Hollywood production companies, a measure offered by Sen. Tom Coburn (R-Okla.), the Senate's self-appointed watchdog on federal spending. Coburn, who almost always loses his quixotic efforts to cut funding, appeared jubilant -- if somewhat surprised -- by his unexpected victory."

"This is a gift," he said of the Hollywood provision. "It's not going to stimulate the economy at all."

Last week the WSJ railed against this provision in an editorial.

My Evil Sister

So, my sister Kathy is evil.

Oh, sure, she seems nice. She is a veterinarian, took a MA in biology before vet school, interested in research.

Now, she sails and spends a lot of time outside near her home in Portland, Oregon. She and her husband Mark have two kids.

But it turns out she is pure evil. I don't mean like Hillary Clinton professional level pure evil. But on an amateur scale.....pretty darned evil.

She sends our Christmas present a bit late (we received it February 2). It comes in a nice box, a collection of homemade stuff, including some jam and some really great Japanese tea.

And, the following two items, wrapped carefully in Saran wrap and then wrapped in tissue paper.
Now...I could have read the card, or the Year-in-Review summary letter, in the box.

But I was feeling a bit peckish. And since this was clearly a nice piece of hard goat cheese (on the left) and some kind of lemon bar (on the right) I decided to have a big taste. (In my defense, I have two teenage sons. Food tends not to last on our counter. In fact, food tends not even to TOUCH our counter for more than three or four seconds without being engulfed.)

I took a bite out of the goat cheese (you can see the bite marks on the front edge). And thought, "Wow, that's really strong. Smoky and bitter and....OMIGOD! That's soap!"

To be fair, Kathy did confirm in the card that she was including two pieces of olive oil-based soap, and she hoped we enjoyed it.

Thanks, Kath.

UPDATE: As I was writing this just now, I heard the door slam. The younger younger Munger had come in, and had picked up the soap and was about to take a bite. But I warned him not to. It's mine. I'm going to put it on crackers later.

Nano, Nano

Article from a Duke alum, a kid I had in class.

Don't think Josh learned much from me, though. He was always pretty advanced.

Excerpt:

The modern Internet bears little resemblance to the Internet you experimented with in cycles past. Change is happening so quickly that half of what a four- year technical student learns their freshman year is outdated by their junior year. There were as many Google searches in the last two months of the 2008 cycle as there were in the entire two years of the 2006 cycle.

In 2008, both Harris and Pew reported that more than 80 percent of adults are regular Internet users, and according to an IDC report, the average Internet user spends nearly twice as much time online as they do watching television. Digital advertising will not replace television any time soon, but the huge chunk of us who are exposed to digital ads are the same people who have TiVo, so it’s time to take this inventory seriously. Some have. This cycle the savviest campaigns used search, context and display advertising for acquisition, by putting donation and e-mail sign-up appeals in front of people interested in their race. Unfortunately, this acquisition model is limited because it only grabs the “low- hanging fruit.”

Thanks to Democrat Al Franken’s Senate campaign, we now have a proven model to move beyond these strategies. We do it by tapping into the concept of the “long tail,” an Internet marketing theory popular in the corporate world. It’s based on the idea that the Internet audience is extremely fractured. So, instead of identifying the most universally persuasive messages and broadcasting them to a wide audience, in the long-tail model you take the most persuasive messages and nanotarget each one to the right niche.

And it comes with little tiny latex gloves....

A toy to remember W by.....

(nod to Anonyman)

The Age of Shovelry: How Stimulating

What does it take to be "shovel ready?"

The Mayor follows up his earlier description with more details. This was something the state sent out to the municipalities in his state.

While still very much a moving target, it looks clear that the [area] will be allocated some federal funds as part of the 2009 stimulus bill. I’ve heard a wide range of numbers. If the present language of the bill holds, it would be 100% federal share (no match required).

The first round looks to have a requirement that the funds are put under contract within 90 days of the bill being signed into law. Failure to put the funds under contract in 90 days would result in giving the funds back. This means only mature projects that either have or are very near environmental clearance and have the design mostly done (or perhaps a candidate for a design/build approach). The following projects from the [area] are the only ones that have any chance of meeting this criteria: [List]

The purpose of this meeting will be to discuss options and possibly decide on a conceptual approach for the [area] in anticipation of the bill. This meeting will invite representatives from jurisdictions with possible eligible projects. Ultimately, the full [area] board would need to amend the TIP, most likely at a early March Executive Council Meeting. However, with the accelerated schedule that comes with these funds, we cannot wait until then to decide on an approach. I’ve public noticed all the projects listed above as possibilities for a TIP amendment for additional federal funds. We have a 30 day public comment period.

The bill might end up including a second round of stimulus funds. Remaining funds from states that are unable to spend their funds will be reallocated to states and MPO’s that have eligible projects. The time-frame for spending those funds will be longer. We should have more time to gear up for the second round.

Reminds of the country song: "Let's Do Someting, Baby, Even If It's Wrong"

Why I love John Darnielle; Reason #43

From his blog, Last Plane to Jakarta:

"You knew when you were eight years old and you saw say for example that there was a villain named Skeletor: you said to yourself, "I bet that is a badass villain because how is he not going to be with a name like Skeletor," and even though he could not quite serve up the whoop-ass to some chump named He-Man like you might have expected given the severe disparity on the Coolness of Names scale, you had a definite hunch that really the game was rigged: and that if the writers of the show had actually described reality instead of some good-guys-rule universe, there would only have been one battle between the two, one which ended quickly and bloodily, after which a barely-winded Skeletor might be seen chewing the gristle from one of He-Man's detached legs while a still-breathing He-Man looked up in horror from the burnt ground on which he lay. You can't judge a book by its cover but judging it by its name is a little different."

"So it is that when I heard there's a band called Vulture Whale I said to myself "self-fulfilling prophecies be damned, a band called Vulture Whale has gotta kick ass." And indeed my brethren the shit is live. They sound like Silkworm. Then after a while they sound kind of like the 3Ds a little. Mainly though there is a heavy Silkworm injection here. That is 100% OK by me. There should be more bands who sound like Silkworm and less who sound like they think they have something original to contribute to the field of Rocking Dionysiac Abandon. That shit is straight played out, man. Vulture Whale is not played out. They groove like Silkworm and I, for one, will take it.

Retro: yer doin' it wrong!

The retro jersey marketing opportunity craze has hit Canada and people, they are just plain doin' it wrong. Check this out:

Why the word "Jeremiad" was invented

Why for Willem Buiter, of course. This is a fantastic read. Here is the lovely conclusion:

"We can go down in history as the generation that created the Great Depression of the Noughties. Just keep on beating the protectionist drums. Keep on the footdragging that prevents effective qualitative and quantitative monetary policy easing in the Eurozone and the UK. And go ahead with unsustainable fiscal stimuli in the US, the UK and elsewhere that will spook markets, push up long-term interest rates and raise the spectre of sovereign default by countries not belonging to the group of usual suspects. Yes we can! I hope we won’t."

Interestingly, the only institution Buiter thinks is kind of doing its job is the Federal Reserve.

Great Game. Too bad about the halftime show

Man, Bruce really stunk it up. In his defense I guess consider how bad must it suck to have to play "Born to Run" 34 years after recording it.

Yahoo has a great list: "The 10 Unforgivable Sins of Bruce Springsteen's Halftime Performance".

Here's an excerpt:

"3) Bruce has apparently joined "Up With People." Everything else aside, Bruce was simply too corny for his own good. It was embarrassing. It was the sight of a guy trying too hard and overcompensating for his ill-ease. It's always been said that Bruce shows more restraint than Billy Joel or Meat Loaf but here he's just killing us with show biz overkill. Rock 'n' Roll, as antiquated a notion as it is these days, is supposed to stay apart from Show Biz. This was pure Cheeze-Whiz."


Who knew that Bruce had Tom Petty envy?

I'm Your Middleman, I'm Your Middleman; Turn me ON!*

The new economics article on EconLib.

Thanks to David Henderson and Lauren Landsburg for translating it from garbage to English!

(*with apologies to everyone, and props to KC and the Sunshine Band)

U of Maine: Not Warm

I have received a warm greeting, so long as I stay inside, here in Orono, Maine. Here is a picture taken from my hotel room balcony (Penobscot river, looking toward Veazie, ME)

The lecture is part of the Western Civilization and American Liberty series, run by the formidable Michael Palmer.

A Waste of Talent

The Obama administration is chock full of good economists. Larry Summers, Christina Romer, Peter Orzag, and many more. But yet the stimulus bill seems to be largely written by the House Democrats and, as I have noted, is perhaps more porkulus than stimulus. Money is going to favored groups/causes, money is not being disbursed rapidly, and protectionist clauses seem to be multiplying.

Now before Dirty Davey writes in to tell me that, in the US, it's Congress that makes the laws, let me say that of course it's Congress writes legislation. But Obama has the honeymoon and the sky high approval ratings while Congress as an institution is still held in fairly low repute by the public.

So I see this (so far at least) as an Obama abdication on the first big thing coming out of Washington since his election, and a sobering portent of what government by Pelosi might look like.

People, what do you think? Does Obama have no real influence on his party in Congress? Or is this the bill he wants? Do you think Summers or Romer (or both) are happy with this bill?

I'll be sleeping on the couch tonight!

My boy Rafa, beat Mrs. Angus' favorite Roger Federer in a tense 5 set battle to win the Australian Open. This clearly cements Rafa as the best player in the world and it kept Federer from tying Pete Sampras' record of 14 slams.

No matter who you root for people, this is as good as it gets. This is Borg- McEnroe type stuff. Repeated epic matches on the biggest stages of the sport.

Way cuter than Diana Ross

A Williams sweep

Serena Williams won the Australian Open this morning, crushing Little Marat in less than an hour, love and three. This is her 10th major singles title. The day before, she and Venus won the doubles, their 8th major doubles title together.

Let's see, am I forgetting anything? Oh, yeah, Serena, at 27, is once again the number one player in the world and halfway to another "Serena Slam".

The CATO 200

I got an email today, suggesting that I should be embarrassed to be one of the "CATO 200." (Link to ad)

In fact, according to this emailer, I should be MUCH more embarrassed to be one of the CATO 200 than ANY of the "Duke Lacrosse 88."

I guess I see the point....both were paid ads. But the CATO 200 ad is an existence proof that the claim of professional ecnomists' unanimity on the need for a bailout is not true. Everyone listed in the ad is a professional economist, from many different universities. (5 from Duke, interestingly).

The Duke 88 ad was....something else, IMHO. I have several friends (friends then, and friends now) who signed it. They were, and are, welcome to express their view.

But the ads have pretty different objectives. I don't think the analogy is very insightful.

And the real message, as in this very nice piece at CBS News, is that the unanimusts should just try to get out a little more, and broaden their social circle.

Neo-Logisms and Keeping Gitmo Open

Random Friday thoughts, based on the perils of Blago.

1. Political neo-logisms are important, but hard to predict. Calling something BLANKgate, for example....it's a key party of journalistic argot.

What will it be for Blagojevich? In the car: "Oh, jeez. Everybody check their shoes. Somebody must have stepped in Blagojevich back there."

Or, when someone keeps griping about something that is entirely their own fault: "Will you knock off the Blagojeviching? Just shut up!"

Oops, Letterman, and some other folks, are way ahead of me. Carry on, then.

2. I have changed my mind about Gitmo. I had thought it should be closed, as a prison anyway, as soon as possible. But I was wrong. We are clearly going to need it.... to house all these Democratic governors (Bill Richardson, Elliott Spitzer, Rod Blagojevich, who knows who is next). There is no other way to shut them up.

Okay, Now I've Switched

I have to admit....I've switched sides. All of my sympathies are with ex-gov Blago now.

On the plus side, consider this: After the impeachment vote (59 Y -- 00 N)....

He vowed to, "keep fighting to clear my name," and added: "Give me a chance to show you that I haven't let you down."

"I love the people of Illinois today more than I ever have before," he said. And in a joking reference to Chicago's history of crooked politics, he reached down to a boy in the crowd of well-wishers and said: "I love you, man. You know, this is Chicago. You can vote for me. You're old enough."

That's juevos. Juevos Chicageros. The media claimed that he was showing his sense of humor. I submit: NO. He was totally serious.

On the sympathy side, consider this:

"He...is beneath the dignity of the state of Illinois. He is no longer worthy to be our governor," said Sen. Matt Murphy, a Republican from suburban Chicago.

You want to impeach the guy, okay. But...."beneath the dignity of the state of Illinois"? Holy cow. That's really an ugly thing to say. Kerner.....Rostenkowski ....Ryan? Dude! Blago is a housecat compared to thos tiges. And that's just in the last 40 years.

The best paper I read this month

It's by Jesús Fernández-Villaverde and it's titled "The Econometrics of DSGE Models" ( ungated version here).

It lays out the evolution of DSGE models, gives an excellent and readable account of Bayesian estimation, and discusses some of the major challenges facing the field. It's also witty and a pleasure to read.

Here is a sample:

"the likelihood of DSGE models is, as I have just mentioned,a highly dimensional object, with a dozen or so parameters in the simplest cases to close to a hundred in some of the richest models in the literature. Any search in a high dimensional function is fraught with peril. More pointedly, likelihoods of DSGE models are full of local maxima and minima and of nearly flat surfaces. This is due both to the sparsity of the data (quarterly data do not give us the luxury of many observations that micro panels provide) and to the flexibility of DSGE models in generating similar behavior with relatively different combination of parameter values (every time you see a sensitivity analysis claiming that the results of the paper are robust to changes in parameter values, think about flat likelihoods)."

and another:

"A compelling proof of how unnatural it is to think in frequentist terms is to teach introductory statistics. Nearly all students will interpret con…fidence intervals at …first as a probability interval. Only the repeated insistence of the instructor will make a disappointingly small minority of students understand the difference between the two and provide the right interpretation. The rest of the students, of course, would simply memorize the answer for the test in the same way they would memorize a sentence in Aramaic if such a worthless accomplishment were useful to get a passing grade. Neither policy makers nor undergraduate students are silly (they are ignorant, but that is a very different sin); they just think in ways that are more natural to humans. Frequentist statements are beautiful but inconsequential."

People, I am gonna have to go with BOTH "Yikes" AND "Amen". It's well worth reading in its entirety.

PS. The second best paper I read this month is here (forthcoming in the JME but been around for a while).

A breakfast treat

We woke up this morning and the Nadal - Verdasco semifinal was still going, so we took breakfast upstairs and I chomped on my Gorilla Munch while Rafa finished off the 5th set. The match was 5 hours and 14 minutes, the longest in the history of the Australian Open, and it set up the dream final of Federer - Nadal, though Federer will be much fresher with an extra day off and an easy straight set victory over Roddick in his semifinal.

Nadal beat Federer last year on his surface (Roland Garros) and on Roger's surface (Wimbledon) so it will be very interesting to see if he can recover enough to give Fed a match on this hardcourt surface. This will be Rafa's first grand slam final on hardcourts. If he wins, I'd put the probability of him winning the grand slam at maybe .3 or so.

Tensions will be high at Chez Angus 'cause Mrs. A will be rooting for Federer and I'll be rooting for Rafa!

No good deed goes unpunished

Just ask this good Samaritan:

"A Kalama police officer reached into a tank of sewage to rescue a dog that had jumped inside. The officer, Jeff Skeie, was able to grab the sinking dog by the ear Tuesday and pull it out by the scruff of its neck. He had waste only on the sleeves of his uniform until the dog gave itself a vigorous shake, spraying him head-to-toe with sewage."

Hey! It's kind of like the Illinois legislature and Rod Blagojevich, innit?