Saturday, November 05, 2011

Stephen Fry on Speech and Being Offended

Since I am all excited about V for Vendetta, let me share some thoughts from Stephen Fry, who played the doomed talk show host.
Do be sure and click for a much more gloriously offensive image.

End of Abundance

KPC friend and water economics uber-mensch David Zetland has a newversion of his book out. Very cool and refreshing, if you can get it. Like clean water, actually.

ODC Food Tent

Anonyman sends this photo with the caption "food tent" from the Self-Obsessed DC protest.

Several of you have asked, "Who is Anonyman?" I can only answer by quoting from V for Vendetta: "I'm merely remarking upon the paradox of asking a masked man who he is..." But, okay, here is a picture of Anonyman, hanging with his peeps in the street at Occupy DC.

The entire V speech, if you want it. And you KNOW you want it.

Hot Chicks of OWS

Hot Chicks of Occupy Wall Street from Steven Greenstreet on Vimeo.

Thanks to the Bishop, whose interests are of course entirely anthropological.

First they came for the puppeteers.....

Man oh man oh man. Liberals are so funny. Check out this article from The Nation.

Here's the awesome beginning:

"A few years ago, Joe Therrien, a graduate of the NYC Teaching Fellows program, was working as a full-time drama teacher at a public elementary school in New York City. Frustrated by huge class sizes, sparse resources and a disorganized bureaucracy, he set off to the University of Connecticut to get an MFA in his passion—puppetry. Three years and $35,000 in student loans later, he emerged with degree in hand, and because puppeteers aren’t exactly in high demand, he went looking for work at his old school. The intervening years had been brutal to the city’s school budgets—down about 14 percent on average since 2007. A virtual hiring freeze has been in place since 2009 in most subject areas, arts included, and spending on art supplies in elementary schools crashed by 73 percent between 2006 and 2009. So even though Joe’s old principal was excited to have him back, she just couldn’t afford to hire a new full-time teacher. Instead, he’s working at his old school as a full-time “substitute”; he writes his own curriculum, holds regular classes and does everything a normal teacher does. “But sub pay is about 50 percent of a full-time salaried position,” he says, “so I’m working for half as much as I did four years ago, before grad school, and I don’t have health insurance…. It’s the best-paying job I could find.”Like a lot of the young protesters who have flocked to Occupy Wall Street, Joe had thought that hard work and education would bring, if not class mobility, at least a measure of security (indeed, a master’s degree can boost a New York City teacher’s salary by $10,000 or more). But the past decade of stagnant wages for the 99 percent and million-dollar bonuses for the 1 percent has awakened the kids of the middle class to a national nightmare: the dream that coaxed their parents to meet the demands of work, school, mortgage payments and tuition bills is shattered. Down is the new up."

Yikes! Where to begin. First of all, Joe started the story as "a full time drama teacher" in an NYC elementary school. How can that be a job that taxpayers are paying for? Jeebus help us all. Then Joe, or as I like to call him, the luckiest man in the world, turned into Joe the stupidest man in the world by SPENDING 3 YEARS AND BORROWING $35,0000 TO GET A MASTERS DEGREE IN $%#$$ PUPPETRY!!!!

Now he seems stunned to find out that he has a much much worse job than before.

And the magazine is using his case as it's opening wedge to indict the American economic system.

People, I say the system was failing when this guy was an elementary school drama teacher. Right now the system is working exactly as it should. You take 3 years out of your career path to get an MFA in puppets, you become basically unemployable.

Obviously there are real people with real problems unemployed and struggling due to no fault or error of their own. A 9% unemployment rate with our current social safety net is just not acceptable.

But I have no sympathy for the folks who borrowed a lot of money to go and earn a dumb-ass graduate degree and now find they can't make big money.

If you decide to "pursue your passion" in an un-economic area, don't be surprised when the economic system doesn't value you highly, and don't think that the problem is the system; the problem is you.

Friday, November 04, 2011

A little knowledge is....the BBC!

This is one of the best stats teachable moments I think I have seen in a long time.

An article was published, listing cancer rates of an admittedly dangerous disease.

The BooBC weighs in, noting that the variation is three times as large for some parts of this nationwide sample.

Dr. Goldacre, perhaps a trifle gleefully, points out that these are SEPARATE local samples, and they have associated variance that comes from the sample size. He writes a nice piece, with a fine funnel graph, and notes that the internet is a groovy, groovy thing, because it enables people like this to check things stated as fact by experts like the BooBC.

The BBC "stands by its story." They failed, utterly, to understand the very basic mistake they had made in looking at the information. (Of course, in journalism indoctrination school, they never had to learn any of those nasty stats stuff!)

As Dr. Goldacre put it in a tweet: "Dear sir, I have completely failed to understand a simple criticism of our work, please tell everyone, yours, BBCnews"

My own favorite bit is that in the BBC rebuttal, there are two parts:
1. We did not make a mistake.
2. Why are you picking on us? Lots of people made the same mistake!

Fantastic stuff. A Lagniappe: they are holding a "Bowel Cancer Comedy Night." No way even the Onion could get away with that.

Best Political Ads in Bizarro Terms

Which one would Angus prefer? Close call, but the content of the bald son of Nippon would win, I think....

Most humble thanks to Erik V at Monkey Cage

Grand Game: Madison Wisconsin ID Edition

I actually can't believe this is true. Which calls out for the Grand Game.

Bars are not allowed to demand valid ID in deciding whether you are of drinking age in Madision, WI.

This is not like voting rights. Even there, I'm not sure that asking for ID is wrong. But at least that is some kind of fundamental right.

There is NOT a fundamental right to drink in a private bar. And the idea that bars would try to discriminate to keep paying customers out, in WISCONSIN, is pretty nuts.

Nod to the Blonde, who at this point is desperately hoping someone will card her...

Election--Calc U Later!

Interesting little calculator. You make assumptions, it predicts results.

It may not predict results very well, but these models are surprisingly accurate.

Nod to Anonyman, who is enjoying this circus way too much.

More on the NBA lockout

After Tyler linked to our inaugural Grantland piece, many of the commenters at Tyler's site were complaining that the situation regarding losses is symmetric for each side, and thus the owners have just as much to lose as the players.

But people, it is NOT symmetric.

First, the owners are losing net revenues, the players their gross revenues. Do we really think operating profits are >= labor costs?

Second and more important, owners are sacrificing short run net revenues for long run benefits. If they can shift the cost curve, then the present value of the long run savings should get capitalized into their franchise values. The current owners can capture the long run benefits from "winning".

By contrast, the current players have no capture-able long run economic gains to motivate short run pain. They only gain what ever revenue increases they get over their playing days. They don't have a long run claim on the revenue stream they are sacrificing to try and protect.

It doesn't get much more asymmetric than that.

You're Gonna Have to Face It, You're Addicted to Coke

Coca Cola, that is.

This boy named "Sue" is suing to claim that the evil capitalist conspirators intentionally caused him to become addicted to a sugary drink.

Hey, I Know You!

Somebody versus nobody: An exploration of the role of celebrity status in an election

Lara Zwarun & Angela Torrey, Social Science Journal, forthcoming

Abstract: This study examines the role celebrity status may play in potential voters’ evaluation of a political candidate presented in a newspaper article. Participants indicated greater intention to vote for a candidate who was a recognizable Hollywood actor than an unknown candidate in a political race, regardless of how substantive the political information provided about the candidate was. This suggests that familiarity with a celebrity can act as a heuristic in peripheral processing. Younger people were more likely to vote for a celebrity candidate than older voters, but how liberal or conservative participants are was not a significant factor in the decision to vote for the celebrity. Nor did participants’ need for cognition or level of political involvement predict intention to vote for the celebrity, suggesting that celebrity status is meaningful to motivated and thoughtful voters as well as those who are less motivated and informed. The possibility is raised that this could be an indication of celebrity status being used as a component of deliberate political decision-making, and future research in this direction is suggested.

Thursday, November 03, 2011


RL in Toronto sends this article, and notes that someone should explain moral hazard to the researchers.

As KPC hero Gordon Tullock suggested, if you wanted to increase auto safety, you might do this:  

In other words, if players were safer, they would play more aggressively, and the net effect (that's a hockey goal joke!) would be close to zero. People choose their own level of risk. Safer equipment, more risk = no change injuries.

(pic credit to EconoBonus, even though he attributes the idea to Peltzman. EconoBonus's "Fact 2" is not a fact at all, I should say: deaths and injuries per mile have fallen, not risen. It's just an example, though. It's true Peltzman did good research on the subject...)

To be fair, both death rates and injury rates have actually fallen sharply for cars. The effect on pedestrians is ambiguous. I think the most you can say about the Peltzman effect is that the improvements in health that result from improvements in safety may be less than you expect. They do NOT appear to wash out completely. Safer cars and safer roads really do appear to have reduced injuries, by quite a bit.

Your Eurozone deathwatch update

1. The Greek government has replaced all the heads of their military branches with officers considered more friendly to the regime.

Wow! Given Greece's history, that is a stunner. The left fears a coup? This might get even uglier that I had imagined.

2. Italian bond yields are up to 6.4% and Berlusconi is coming to the G-20 Summit empty handed.

Italy's public debt is on the cusp of explosive dynamics, where the higher interest rate on new debt combined with a low economic growth rate causes the debt to GDP ratio to continually rise even if the Italian budget is in primary balance (spending net of interest payments = revenues).

People, the Euro as we know it is over. I say it's a coin flip to last until Christmas and maybe 15% to last until spring break.

Germany and France are asking Greece, "do you want to stay in or not?" and Greece is saying "what, are you guys deaf?".

I am not sure what Germany and France are up to. If Greece goes, Italy definitely goes and that's game, set & match.
If they want to keep the Euro together they need to take on Greek debt as their own and settle in for a long hard slog dealing with Italy.

Wednesday, November 02, 2011

"They are hoping that China will want to buy Europe"

I'd do anything for love but I won't do that

KPC friend David Tufte reports that his university (Southern Utah) is looking for faculty members willing to let students stay at their house for the rest of the semester!

I am not making this up.

Are there no navigable bodies of water nearby where the kids could stay on cruise ships for the semester like they are doing at St. Mary's college in Maryland?

Academics out there: what's the weirdest thing your university has asked you to do?

Marriage Proposal

<a href=';from=en-us_msnhp&amp;rel=msn&amp;cpkey=aab32b49-f0d1-48f1-8c9a-3282321b447d%7cviral+videos%7cmsn%7c%7c&amp;src=v5:embed::' target='_new' title='Insane Marriage Proposal'>Video: Insane Marriage Proposal</a>

Note the size of the rock on the ring at the end.  The LMM's reaction:  "If you had given me a ring like that, you could jumped off the roof, too."

Tuesday, November 01, 2011

Cheap Sex as a Collective Action Failure

I had Laura Sessions Step, author of UNHOOKED, in at Duke to give a talk a few years ago.  Her question, simplifying a bit, is why do young women make themselves so available, unmarried, to young men in hopes of making themselves, the young women happy?  (This clearly makes the young men happy, but that's beside the point).

Pileus has a simpler and cleaner explanation.

This downward spiral that women have been caught in—the dwindling supply of available men induces women to make themselves even more sexually available than the next women in order to compete, thereby further dampening the supply of potential mates—seems impossible to break out of. At the heart of the problem is a classic, Olsonian collective action failure. All women would benefit if, collectively, women were to require more of men they had sex with. But every woman knows that her behavior, by itself, will not cause market prices to change, so she cheats—and by “cheats” I mean she cheats the female collective. The problem with this free riding behavior is that everyone faces the same incentives and there is not an effective punishment for cheating. The result: men get more sex and women can’t find mates. Such are the fruits of feminism.
Maybe the old (some would say sexist) adage that “good girls don’t” had something going for it after all.

Los Repartimientos

Did Media Frenzy Contribute to Stock Collapse of Fiancial Institutions?

The Role of Media in the Credit Crunch: The Case of the Banking Sector

Tomasz Piotr Wisniewski & Brendan Lambe, Journal of Economic Behavior & Organization, forthcoming

Abstract: Using a Vector Autoregression framework, this paper investigates the dynamic relationship between the intensity of negative media speculation and the market performance of financial institutions. Evidence is provided that over the sub-prime crisis period pessimistic coverage Granger-caused the returns on banking indices, while causality in the opposite direction proved weaker. These findings may imply that journalists not only report on the state of economic reality, but also play an active role in creating it. Investors acting upon sentiment implicit in media reports would have been able to improve their investment performance, as measured by Sharpe ratios and Jensen's alphas.

(Nod to Kevin Lewis)

The Golden Rule

Tyler and I wrote a piece for on the NBA labor situation. The link is here.

Bill Simmons approached Tyler and he magnanimously cut me in on the deal.

Simmons also asked us to write an introductory paragraph about ourselves and our connection to basketball. This is what we wrote:

Tyler and Kevin are academic economists who share a love of basketball. For years they held Washington Bullets season tickets, trekking from suburban Virginia to the Cap Centre. Their all-time favorite Bullet is Rex Chapman. Now cruelly separated by geography, Kevin is an OKC Thunder ticket-holder, while Tyler anxiously awaits the return of a professional basketball franchise to the DC area.

Sadly, what ended up appearing in the article was this:

Tyler Cowen and Kevin Grier are both economists. They are also both basketball fans. Here's their take on the NBA lockout.

Sorry Rex!!!!

Monday, October 31, 2011

World Series Thoughts

A video I took before the game started, in Dallas. Back when Texas had a team in the world series. Before they lost to the Cardinals, I mean. My team. We won.

The trip back last Monday was a little tough. (I had to give, and grade, 180 midterms for two different classes. Just now getting caught up...) Fine to Atlanta. Upgraded to first class, on time. Had a scotch, finished reading BOOMERANG. Nice.

But Flight ATL to RDU delayed, after boarding, because of mechanical difficulties involving wing. No complaints, I want the wings to work. But we sat for 55 mins at gate. I was in middle seat in coach (let me say again: MIDDLE seat in COACH). Guy on my right weighed 450 pounds, at least. His giant ass was almost parted down the middle when he tried to sit down and the armrest was down. Of course he wanted to raise the armrest, which I resisted. If you give a giant fat guy Sudetenland, he always wants the rest of Czechoslovakia.

But the stewardess said we had to raise the armrest. They got him an extender for the seatbelt, a good 12 inches, but the seatbelt still wouldn't buckle. (Seriously, the man was big). They got him an 18 inch extender, and it buckled.

So did I: got to sit under this guy's left butt cheek for 55 mins at the gate, and then for an hour flight. Guy on my left let me scoot over onto his seat a little, but my own ass is none too small (though it does fit between the armrests, and inside a standard seatbelt, without any problem). Pretty miserable.

Lose a house, lose a pet?

This is a sad little consequence of the housing bubble, one I had not considered.

Was pet relinquishment related to foreclosure?: A spatial research note from California during the height of foreclosure

Gregory Morris & Jennifer Steffler, Social Science Journal, forthcoming

Abstract: Media reports asserted that the 2008 foreclosure crisis unleashed a rash of pet relinquishments, especially in California's central valley, an area that had the highest U.S. foreclosure rates that year. However, reports on the foreclosure/ relinquishment association relied on anecdotal evidence provided by animal shelters, which is known to be flawed since many people do not give a reason for relinquishment, or give a false reason. This study compares separate data sources for the central valley city of Turlock, 2008: foreclosure data from the Stanislaus County Recorder's Office (N = 235) and relinquishment data from the Turlock Animal Shelter (N = 248). Contrary to shelter driven data, these separate data sources reported only one shared address. However, spatial analyses show that foreclosures and relinquishments were concentrated in similar areas. Analyses also show that unaltered (non-spayed/neutered) dogs are more likely to be concentrated in lower socioeconomic (SES) areas. While our initial finding contradicts recent media reports, spatial analyses verify other research on the social problems associated with concentrated foreclosures, and lend support for policies designed to reduce breeding during heighted periods of foreclosure and other economic crises.

Are Markets Better Than Altruism?

One of the cool parts of the Radford's 1945 article, "The Economics of a POW Camp," is this observation:

Our supplies consisted of rations provided by the detaining power and (principally) the contents of Red Cross food parcels – tinned milk, jam, butter, biscuits, bully, chocolate, sugar, etc., and cigarettes. So far the supplies to each person were equal and regular. Private parcels of clothing, toilet requisites and cigarettes were also received, and here equality ceased owing to the different numbers despatched and the vagaries of the post. All these articles were the subject of trade and exchange.

Very soon after capture people realised that it was both undesirable and unnecessary, in view of the limited size and the equality of supplies, to give away or to accept gifts of cigarettes or food. “Goodwill” developed into trading as a more equitable means of maximising individual satisfaction.

Trading is more equitable than goodwill? Think about it. I notice you don't eat your beef ration, and I ask for it. You give it to me, because it will be wasted else. But then next month, and the next, and... at some point, the fact that the beef has value means that I should pay you something. YOU may not value the beef, but it has value in the market. I am taking value, and you get nothing. Altruism, if systematized and made permanent, is inequitable. If the state FORCES us to act as if we were altruistic, then it isn't altruism at all.

SMBC illustrates the same problem: Altruism is at best an emergency solution, because it quickly devastates those it is intended to help. If you love something, set it free to find a way to support itself by producing something someone else wants to buy.

(A nod to David D)

UPDATE: From the intrepid Pels-min: PJ O'Rourke nailed it in 1994, "All the Trouble in the World," when he was baffled by Somalia's fields filled with (unharvested) crops. "Somalia was being flooded with food aid… Rice was selling for ten cents a pound in Somalia, the cheapest rice in the world. But what, we thought, did that mean to the people with the fields of corn and sorghum and the herds of goats and cattle? Are those now worth nothing, too? Had we come to a Somalia where some people some- times starved only to leave a Somalia where everybody always would?"

Housing Prices, Gay/Lesbian Homeowners, and Political Views

The Influence of Gay and Lesbian Coupled Households on House Prices in Conservative and Liberal Neighborhoods

David Christafore & Susane Leguizamon, Journal of Urban Economics, forthcoming

Abstract: Gays and lesbians perceive themselves to be targets of discrimination in the housing market. Previous research has found that the presence of gays and lesbians is associated with increased  ousing values. We reconcile the perceived discrimination and research results by classifying neighborhoods as more conservative or liberal according to voting outcomes of the ”Defense of Marriage Act”. Using a data set comprised of over 20,000 house sale observations, we show that an increase in the number of same-sex coupled households is associated with an increase in house prices in more liberal neighborhoods and a decrease in house prices in more conservative neighborhoods. This suggests that gay and lesbian coupled households do experience prejudice in conservative neighborhoods. 

Nod to Kevin Lewis

Private investment is irrelevant for growth....who knew?

Grand Game time, folks! James Livingston, "economic historian" at Rutgers, goes off in the Obama Admin Daily Newsletter:

As an economic historian who has been studying American capitalism for 35 years, I'm going to let you in on the best-kept secret of the last century: private investment - that is, using business profits to increase productivity and output - doesn't actually drive economic growth. Consumer debt and government spending do. Private investment isn't even necessary to promote growth...A big part of the problem is that we doubt the moral worth of consumer culture...Consumer spending is not only the key to economic recovery in the short term; it's also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture - and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending.

I wonder if he wrote that on his government-invented iPad? F*****g idiot. He apparently thinks that if you write about stuff you don't understand, that makes you an "economic" historian. Yes, sure, I'm a snob. But the guy has a PhD in History from Northern Illinois U. A two-time loser.*

Please do share your thoughts....

(Nod to Kevin Lewis, who as always is in no way complicit with my surly "analysis"; he just sent the link)

*A clarification:  Northern Illinois has a number of quite good departments, including econ.  But the history department is a doctrinaire marxist ideological chop shop.

Sunday, October 30, 2011

Phone call for Dr. Bernanke

In the 1970s, in response to a real shock (the oil crisis), the Fed poured money into the economy.

What did we get? Stagflation. No growth and high inflation.

Paul Volcker (with support from President Reagan and the newly Republican controlled Senate) dramatically reduced money growth, ratcheting interest rates skyward, and creating a sharp recession.

But inflation fell and has stayed under control ever since.

Now, in response to a real shock, the Fed has been pouring money into the economy and we are not getting any growth. At least this time we are not getting inflation either.

What is Christina Romer's takeaway from the historical episode I describe above? That Bernanke needs to "steal a page from the Volcker playbook" and ....... pour even more money into the economy!


Look, the Fed did a great job as lender of last resort in the 2008 crisis. Without their actions, I believe things would have been very much worse.

But beyond the financial panic, we have had a very adverse real shock to the economy (housing price collapse). People are not as wealthy as they thought they were by a long shot. Households are trying to de-leverage and rebuild their balance sheets. The Federal government is making it hard for them to do that by taking on ever more debt on their behalf. This isn't a nominal shock, it's a real shock.

We have no evidence that monetary policy can or should be used to attempt to offset real shocks. The Fed absolutely did their job in the crisis. They should stand ready to guard against potential deflation. But the Fed simply does not have a magic wand to "heal the economy". It's not a patient, Bernanke is not a doctor, and monetary expansion is not medicine.