Saturday, September 15, 2012

Group Decision Making

Groups Make Better Self-Interested Decisions

Gary Charness & Matthias Sutter
Journal of Economic Perspectives, Summer 2012, Pages 157–176

Abstract: In this paper, we describe what economists have learned about differences between group and individual decision-making. This literature is still young, and in this paper, we will mostly draw on experimental work (mainly in the laboratory) that has compared individual decision-making to group decision-making, and to individual decision-making in situations with salient group membership. The bottom line emerging from economic research on group decision-making is that groups are more likely to make choices that follow standard game-theoretic predictions, while individuals are more likely to be influenced by biases, cognitive limitations, and social considerations. In this sense, groups are generally less "behavioral" than individuals. An immediate implication of this result is that individual decisions in isolation cannot necessarily be assumed to be good predictors of the decisions made by groups. More broadly, the evidence casts doubts on traditional approaches that model economic behavior as if individuals were making decisions in isolation.


Nod to Kevin Lewis

Sam Bacile

So I was thinking of writing something about contemptible Sam Bacile, the "persona" who may (or may not) have made a movie, the trailer of which appears to have driven a whole bunch of people to become very angry at a person who doesn't exist because he made a movie that doesn't exist.

But, no need.  Ken took care of it, over at Popehat.  What he said.

The reign in Spain

Awesome long read / rant / public choice analysis of how Spain got to where it is today. Casts doubt on the widely held idea that Spain's real estate bubble was mainly a private sector creation.

Hat tip to Martin Varsavsky




Nerdfest: WeinerSmith!

Zach Weiner sends along this podcast, which even he describes as being exremely nerdweiler-ish.

But very cool, on the science.

Friday, September 14, 2012

The Button Down Mind of Matt Yglesias

Matt has an amazing ability to compartmentalize. He doesn't seem to notice or care that this tweet, awesome though it is, completely conflicts with his beliefs about how monetary policy can work:

"Given that nobody in congress wants to do the sequester, why not just not do it? Don't let the stupid debt deal force our hand!"

Here Matt recognizes that future laws can just be repealed if, when the time comes, they are no longer in the best interest of Congress.

However, he absolutely refuses to acknowledge that this exact same idea holds equally well for the Fed and monetary policy.

Suppose it's February of 2014, and unemployment has fallen to 6.2% (through reductions in the numerator, not the denominator). Suppose core inflation is now running around 4.5%. Then consider the following Fed scenario.

"Given that none of us on the FOMC want to still keep the policy rate at zero, why not just not do it? Don't let the stupid previous forward guidance force our hand!"

Works just as well, if not better, because the Fed's process for "just not doing it" is much simpler than is Congress's process.

No policymaker who enjoys discretion can credibly commit to undertaking a future action that will likely not be in their best interest to undertake when the time comes!

Why do you think the Super-committee failed? Part of the reason was they didn't fully believe the doomsday cuts that accompanied failure would actually happen.

Monetary policy is no different. To the extent that policy effects depend on people believing the Fed will act against its own interest in the future, the policy just won't be very effective.

Now this new package of monetary policy actions may help. I'm in favor of trying more stuff like buying MBS. But if you think the Fed will not tighten when the economy recovers, there's an upcoming sequester I'd like to bet you about.




Words of wisdom

"Alternative energy is expensive. Insulation is cheap." ~ Sam Hagerman, president of Passive House Alliance US

More good stuff here.

Mrs. A and I are working toward building a passive house in the Santa Fe NM area.


Thursday, September 13, 2012

Faculty photo in Romania

So, our group picture, at the Craiasa Muntilor near Brasov.


That's Virgil Storr, Dave Schmidtz, me with the hat, and Jerry Gaus in back, threatening to hold Mihai Titienar hostage for more of that great bread.
 

Soft Ball

Proprioception and Person Perception: Politicians and Professors

Michael Slepian, Nicholas Rule & Nalini Ambady
Personality and Social Psychology Bulletin, forthcoming

Abstract: Social-categorical knowledge is partially grounded in proprioception. In Study 1, participants describing "hard" and "soft" politicians, and "hard" and "soft" scientists used different "hard" and "soft" traits for the two groups, suggesting that the meaning of these traits is context specific. Studies 2 to 4 showed that both meanings were supported by hard and soft proprioception. Consistent with political stereotypes, perceivers viewing faces while handling a hard ball were more likely to categorize them as Republicans rather than as Democrats, compared to perceivers viewing the same faces while handling a soft ball (Study 2). Similarly, consistent with stereotypes of "hard" and "soft" academic disciplines, perceivers were more likely to categorize photographs of professors as physicists than historians when handling a hard versus soft ball (Study 3). Finally, thinking about Republicans and Democrats led participants to perceive a ball as harder or softer, respectively, suggesting that simulating proprioception might aid social-categorical thinking (Study 4).


With thanks to Kevin Lewis.

For some reason, that article reminds me of "The Caine Mutiny"....  (after the jump)

Regulation is AlwaysTurned into Cartelization

"[The California Environmental Quality Act] passed in 1970 has also been increasingly abused, opening the door to lawsuits — sometimes brought by business competitors or for reasons unrelated to the environment — that, regardless of their merit, can delay even green development projects for years or sometimes kill them completely...In San Francisco, the city’s plan to paint bicycle lanes, one of the main goals of environmentalists, was delayed for four years by a lawsuit filed by a local resident who claimed that the lanes could cause pollution. And it is not only big projects that are litigation targets. In San Jose, a gas station has been indefinitely prevented from adding another pump because of a lawsuit filed by the owner of a competing gas station across the street...But in the 42 years since Gov. Ronald Reagan signed the Environmental Quality Act into law, attacks against the measure have largely failed" [NYT article]

Nod to Kevin Lewis
Amitai Etzioni:  "You don't need to buy this"  The "curse" of consumerism.


He's right about one thing:   I don't buy it.  Tell it to poor people anywhere...hey, guy, you don't need that car, that bicycle, that refrigerator.

Typical rich guy view of "consumerism."  What a santimonious goofball.

Just So Stories....

A lot of stuff that "makes sense" about the origins of human behavior either isn't true, or is hard to prove.

An interesting piece in the New Yorker.

Wednesday, September 12, 2012

Always look for the union label

So, the great Chicago teacher strike is apparently a big deal?  I'm not sure I get it. The strike is legal, right? I can't see it lasting too long if the teachers are not getting paid. Do they have a big strike fund?

Sure, we can debate whether public employees should be unionized at all. Whether taxpayers get left out of the negotiations when "management" feels more kinship to the teachers than to those paying the bill. And it's true that unfunded pension liabilities are a real problem in many states.

But the Chicago teachers are playing by the rules as far as I can tell, so what exactly is the problem?

This piece by Freddie DeBoer got me thinking about the strike (thanks to @modeledbehavior). I highly recommend reading it, not because I agree with him, but because it is extremely entertaining.

Among many other things, Freddie rails about people who want the best and brightest to go into teaching but then think teachers get paid too much.

But here's the thing. It doesn't make sense for society to have the best and brightest go into teaching. We don't need geniuses teaching in elementary school! The opportunity cost is just too high (and yes I know the studies showing a good kindergarten teacher affects lifetime earnings).

Nor does it make sense to (as Freddie does) compare Ezra Klein's salary with the average Chicago teacher salary. Ezra is a blogger. A very good blogger. He has risen up to his current position based on his skill at entertaining and informing people. Certainly the average (or at least the median) salary of a blogger is quite a bit below the average (or at least the median) salary for a Chicago school teacher.

But Ezra is a super-star and is compensated accordingly. Would Freddie and the teachers unions accept this kind of pay-scheme? Big money for superstar teachers, peanuts for the crappy ones.

In higher education, salaries generally differ according to field and accomplishments. Assistant professors of economics generally make more than assistant professors in philosophy even inside the same institution. Holding field constant, better published and better cited professors generally make more than lesser published and cited professors.

Would the teachers unions allow science teachers to be paid more than english teachers?

Higher pay for all teachers is an answer in search of a relevant public policy question. In other words, it's great for (some of) the teachers, and they are certainly playing by the rules to seek it, but it doesn't really solve any of the issues we may have with education in this country.


Desperation is the Worst Cologne

Nick T. writes about his car-buying experience...

Nick, I have to point out:  If they were better people, they would have better jobs.  There are PLENTY of good people working in sale, but selling new cars these days is pretty tough.
 

RIP, Thomas Szasz

Thomas Szasz, 1920-2012--NYTimes Obit

Reason article.  Very interesting.

As the Reason article points out, Dr. Szasz never denied that there are physical and neurological causes for some brain "illnesses."  What he objected to were the "diseases" that were fabricated, for the purpose of (1) enriching the pharm-industrial complex, and/or (2) treating personal quirks as pathologies, as a means of social control and repression.

We'll miss him.

With a nod to Angry Alex, who a lot of folks would like to put in the nuthouse.

Tuesday, September 11, 2012

Why do Socialists hate mountains?




Hat tip to Azizonomics


Ultimate Thinspos: Auschwitz

An Estonian newspaper ran an ad for diet pills, accompanied by a photo of Holocaust victims. Here is the AP story

Money quote: "Sulev Vedler, deputy editor of Eesti Ekspress, says the mock ad, which ran in the paper's humor section, was poking fun at an Estonian gas company that recently used an image of Auschwitz to promote its services."
 
The Israeli newspaper Haretz ran the story, and ran the picture (in Hebrew), which US papers have been (not too surprisingly) unwilling to do. Here at KPC, of course, we are rarely unwilling.

Lagniappe: Don't know "thinspo"? Let me google that for you...

With a nod to Emek B.

Monday, September 10, 2012

They're not even making it up on volume

When I lasted visited the Chevy Volt, January 2012 sales were 603 units (against a 46,000 target for annual sales).

Since then, the company has taken bold action: $199/month leases!

So it's around $5k to lease a Volt, which has a base retail price of $40,000, for two years. This has help to vault sales up to 2800 in August, making 13,500 sold for the year to date. If you include prorated development costs, each Volt is costing Chevy around $75,000!

Know how many Prius Toyota has sold so far this year? Over 160,000.

You may wonder what GM has to say about all this. Well here's Doug Parks, VP of "global product programs":

"It wasn't conceived as a way to make tons of money,"

Maybe Obama could borrow George Bush's banner and hang it on the factory wall?

What's that, the factory is closing next week for a month?

How about $99 / month leases?

Hat tip to the mighty Mark Perry.






Marginal Revolution University


LeBron's plan for (voluntary) world dominion proceed apace.

With MRU

Also on facebook...
 

Sunday, September 09, 2012

12 great hours

Big fun, people. Last night Mrs. A and I saw Bob Mould play the 930 club. Tremendous show full of great songs and great energy. He played the old Sugar album "Copper Blue" straight through, then several excellent songs from his new album "Silver Age". Even played from the Husker Du catalog.



(sorry for the poor picture. a stock iPhone 4 is a crap camera).

Then this morning we took a hike in that strange and glorious place that is Rock Creek Park:


Now it's nap, work, and watching the US Open women's final.

If Mr. Mould is coming to your town, you should definitely check it out.




Should Democracy Decide Everything?

My first video at LearnLiberty.  They did a good job with it, very nice.  But it was the last video we filmed, and I was really tired (it was a 10 hour day!).  Reading a bit mechanically....ick!  Still, they did a really good job with the graphics, and making me look better than I am.