Friday assorted links

by on May 29, 2015 at 11:28 am in Uncategorized | Permalink

1. The culture that is Wisconsin.

2. One first person account of “the wife bonus.”

3. Branko Milanovic on FIFA corruption.

4. Utah fights against homelessness.

5. Indian MIE: the “Luft-wafer.”

6. Can nostalgia boost creativity? (speculative)

7. The economics of ad blockers.  And more relevant material here.

Most indie films and documentaries don’t get to most markets. It’s hard for a theatre to know which of the many indie films audiences really want to see and without the scale of a NYC it doesn’t make sense for theatres to gamble on a screening that might not make audience.

R.J. Lehmann writes about Tugg, a new service that allows someone who wants to create an event to pull the movie to a local theatre:

With Tugg, a user chooses a film and the date, time and the theatre where he or she would like it to be shown. If the theatre approves the request, Tugg creates a personalized event page for the user through which tickets can be sold. If sales meet a set threshold goal before the set deadline, then the screening is on; if not, it’s cancelled and those who bought tickets are refunded their money. As a bonus that provides ample incentive to promote screenings, users who organize events get to keep 5 percent of the gate.

…Essentially, what Tugg offers is what is known in game theory circles as an assurance contract. (That’s ASsurance, not INsurance.) As my old colleague Alex Tabarrok, who has done some pioneering work on the subject, explains:

In an assurance contract, people pledge to fund a public good if and only if enough others pledge to fund the public good. Assurance contracts were not well-known when I began to write on this topic but have now become common due to organizations like Groupon and Kickstarter, which work on this principle (indeed, I have been credited with the ideas behind Groupon, although sadly for my bank account, I don’t think that claim would stand in a court of law). Since no money is paid unless the total pledges are high enough to fund the public good, assurance contracts remove the fear that your contribution will be wasted if other people fail to contribute.

In essence, Tugg handles the logistics of creating a movie event and the assurance contract assures that the event will be profitable.

Arrived in my email

by on May 29, 2015 at 4:31 am in Books, Economics | Permalink

The book itself has not yet come to my pile, though perhaps it still will.  This one is self-recommending, so here is the basic information, it is due out June 2:

Alvin Roth, Who Gets What — and Why: The New Economics of Matchmaking and Market Design.

If you do not know why this is self-recommending, here are previous MR posts on Alvin Roth.  And here is the book’s home page.

Nearly half of the biggest US metropolitan areas have yet to recoup all the lost jobs from the Great Recession and almost a third have failed to return to previous levels of output, according to analysis that underscores the fragmenting urban fortunes beneath the surface of America’s recovery.

Research on 100 urban areas from the Brookings think-tank, reveals an economic patchwork in which the legacy of boom and bust hangs heavily over cities in Florida and inland California, while at the other end of the spectrum, technology and bioscience-focused cities such as Austin, Texas, San Francisco, and Raleigh, North Carolina have comfortably surpassed their previous peaks.

“This may be the norm now — extreme variation,” said Mark Muro, policy director for the Metropolitan Policy Program at Washington-based Brookings.

That is from Sam Fleming and Demetri Sevastopulo.

A memorial dedicated to the 32 Basque whalers who were killed in the West Fjords in 1615 in what’s known as Iceland’s only mass murder was unveiled in Hólmavík, the West Fjords, on April 22, the last day of winter. At the occasion, West Fjords district commissioner Jónas Guðmundsson revoked the order that Basques could be killed on sight in the region.

“Of course it’s more for fun; there are laws in this country which prohibit the killing of Basques,” Jónas told When asked whether he’s noticed an increase of Basque tourists since the order was revoked, he responded, “at least it’s safe for them to come here now.”

President of Gipuzkoa Martin Garitano spoke at the ceremony, as did Icelandic Minister of Education and Culture Illugi Gunnarsson, reports. The speeches were followed by musical performances and a moment of prayer.

The program included Xabier Irujo, descendant of one of the murdered Basque whale hunters, and Magnús Rafnsson, descendant of one of the murderers, taking part in a symbolic reconciliation, as it says on

There is more here, via Peter Kobulnicky.

The Essential Hayek, by Don Boudreaux.  I cannot (yet?) find an Amazon listing.

Adrian Wooldridge, The Great Disruption: How Business is Coping with Turbulent Times.

Dirk Philipsen, The Little Big Number: How GDP Came to Rule the World and What to Do About It.

Steven J. Levitt and Stephen J. Dubner, When to Rob a Bank…and 131 More Warped Suggestions and Well-Intended Rants.

Dan Ariely, Irrationally Yours: On Missing Socks, Pickup Lines, and Other Existential Puzzles.

Brendan O’Flaherty, The Economics of Race in the United States.

Right now there is lots in the pile, but I thought I should let you know about those right away.

Assorted links

by on May 28, 2015 at 12:47 pm in Uncategorized | Permalink

1. The limits of self-driving trucks?

2. Indian public announcements.

3. United had men-only flights until 1970.

4. Profile of Hélène Rey (pdf).

5. Canada is the world’s biggest exporter of lentils.

Joel Shurkin reports:

Ants — most are teeny creatures with brains smaller than pinheads — engineer traffic better than humans do. Ants never run into stop-and-go-traffic or gridlock on the trail. In fact, the more ants of one species there are on the road, the faster they go, according to new research.

Researchers from two German institutions — the University of Potsdam and the Martin Luther University of Halle-Wittenberg — found a nest of black meadow ants (Formica pratensis) in the woods of Saxony. The nest had four trunk trails leading to foraging areas, some of them 60 feet long. The researchers set up a camera that took time-lapse photography, and recorded the ants’ comings and goings.

…Oddly, the heavier the traffic, the faster the ants marched. Unlike humans driving cars, their velocity increased as their numbers did, and the trail widened as the ants spread out.

In essence ants vary the number of open lanes, but they have another trick as well:

“Ant vision is not that great, so I suspect that most of the information comes from tactile senses (antennas, legs). This means they are actually aware of not only the ant in front, but the ant behind as well,” he wrote in an e-mail. “That reduces the instability found in automobile highways, where drivers only know about the car in front.”

Driverless vehicles can of course in this regard be more like ants than humans.

Enough said

by on May 28, 2015 at 2:35 am in Current Affairs, Economics, Law | Permalink

Labor leaders, who were among the strongest supporters of the citywide minimum wage increase approved last week by the Los Angeles City Council, are advocating last-minute changes to the law that could create an exemption for companies with unionized workforces.

The push to include an exception to the mandated wage increase for companies that let their employees collectively bargain was the latest unexpected detour as the city nears approval of its landmark legislation to raise the minimum wage to $15 an hour by 2020.

The story is here.  And here is a mood-affiliated Jared Bernstein piece on the L.A. minimum wage hike; it would have been stronger if all he had written were the simple eleven words: “I’m sorry, but I don’t think this is a good idea.”  In a way, the labor unions have just said the same.

Hat tip goes to Modeled Behavior.

I suggest two plans, each of which I have been able to implement in a partial way only:

1. Take the train around to random first, second, and third tier Chinese cities.  Many of them will have their own cuisines, or they will represent a nearby regional cuisine.  It’s like discovering the food of a new country.  Imagine if Shandong province were a separate country!  How compelled you would feel to visit it for the food, often considered China’s foundational cuisine, plus it uses the finest vinegars.  And yet, because it is part of “China” (Gavagai!), you feel you already know something about Chinese food and thus the need to sample it is not so pressing.  Redo your framing, and rush to some of the lesser visited parts of China.

By the way, you can stay in the second or third best hotel in most Chinese cities for only slightly more than $100 a night, and yet receive five star treatment and quality.

2. How many provinces does China actually have?  I don’t wish to litigate that dispute, but most of them have restaurants devoted to their regional dishes in Beijing.  These are state-owned restaurants, and most of them are excellent.  Furthermore they are scattered around town, so if you visit them all you will see many parts of Beijing.

A month in Beijing should allow you to visit them all, plus the air pollution really is better these days.

I should add that western China has by far the best raisins I have sampled in my life, most of all the big red raisins.  Until my trip to Xi’an, I had never actually tried a real raisin with the real raisin flavor.  Forget the Terra Cotta Warriors, discover what a raisin is!

Assorted links

by on May 27, 2015 at 2:15 pm in Uncategorized | Permalink

1. Critical review of the Alice Goffman book.  Like Alex, I thought the felony made the whole thing more interesting, though of course I do not approve.

2. Fertility is rising for educated women.

3. Has there been a supercapacitor breakthrough?

4. The Future Library.  Will anyone care?

5. The Chinese strategic tradition.  Will anyone care? (yes)

6. John Nash on encryption.

7. New Politico site on ideas and policy.

Some people are calling Steven Lubet’s new review of Alice Goffman’s On the Run “troubling” and even “devastating” but I am non-plussed. Lubet questions the plausibility of some of Goffman’s accounts:

She describes in great detail the arrest at a Philadelphia hospital of one of the 6th Street Boys who was there with his girlfriend for the birth of their child.  In horror, Goffman watched as two police officers entered the room to place the young man in handcuffs, while the new mother screamed and cried, “Please don’t take him away. Please, I’ll take him down there myself tomorrow, I swear – just let him stay with me tonight.” (p. 34). The officers were unmoved; they arrested not only Goffman’s friend, but also two other new fathers who were caught in their sweep.

How did the policemen know to look for fugitives on the maternity floor?  Goffman explains:

According to the officers I interviewed, it is standard practice in the hospitals serving the Black community for police to run the names of visitors or patients while they are waiting around, and to take into custody those with warrants . . . .

The officers told me they had come into the hospital with a shooting victim who was in custody, and as was their custom, they ran the names of the men on the visitors’ list.

This account raises many questions.  Even if police officers had the time and patience to run the names of every patient and visitor in a hospital, it would violate the federal Health Insurance Portability and Accountability Act (HIPAA) for the hospital simply to provide an across-the-board list….

In addition, Lubet contacted a source in the Philadelphia police department and asked if there was any such policy.

When I asked if her account was possible, he said, “No way. There was never any such policy or standard practice.”  In addition, he told me that all of the trauma centers in Philadelphia – where police are most likely to be “waiting around,” as Goffman put it, for prisoners or shooting victims – have always been extremely protective of their patient logs.  He flatly dismissed the idea that such lists ever could have been available upon routine request as Goffman claims.  “That’s outlandish,” he said.

It would also be outlandish for police to beat and kill people without cause but since Goffman’s book has appeared we have plenty of video evidence that the type of actions she claims to have witnessed do in fact happen.

Moreover, HIPAA does not provide privacy against the police. HIPAA was written specifically so that the police can request information from hospitals. Here is the ACLU on HIPAA:

Q: Can the police get my medical information without a warrant?

A: Yes. The HIPAA rules provide a wide variety of circumstances under which medical information can be disclosed for law enforcement-related purposes without explicitly requiring a warrant.[iii] These circumstances include (1) law enforcement requests for information to identify or locate a suspect, fugitive, witness, or missing person (2) instances where there has been a crime committed on the premises of the covered entity, and (3) in a medical emergency in connection with a crime.[iv]

In other words, law enforcement is entitled to your records simply by asserting that you are a suspect or the victim of a crime.

Finally, the records in question in this case were not even patient records but visitor records. Whether or not there is an official policy on what to do while waiting at a hospital for other reasons (say to speak to a suspect) it’s plausible to me that the police in Philadelphia can and do sneak a peek at visitor records when the opportunity arises. It’s certainly the case that people who have warrants against them avoid hospitals and other institutions that keep such records for fear of arrest (and here).

I was confused by Lubet’s other big reveal, “Goffman appears to have participated in a serious felony in the course of her field work – a circumstance that seems to have escaped the notice of her teachers, her mentors, her publishers, her admirers, and even her critics.” But this didn’t escape my notice. How could it? Goffman’s crime is the climax of the book! Lubet is talking about Goffman’s action after her friend, Chuck, is murdered:

…This time, Goffman did not merely take notes – on several nights, she volunteered to do the driving.  Here is how she described it:

We started out around 3:00 a.m., with Mike in the passenger seat, his hand on his Glock as he directed me around the area.  We peered into dark houses and looked at license plates and car models as Mike spoke on the phone with others who had information about [the suspected killer’s] whereabouts.

One night, Mike thought he saw his target:

He tucked his gun in his jeans, got out of the car, and hid in the adjacent alleyway.  I waited in the car with the engine running, ready to speed off as soon as Mike ran back and got inside (p. 262).

Fortunately, Mike decided that he had the wrong man, and nobody was shot that night.

The fact that Goffman had become one of the gang is the point. A demonstration that environment trumps upbringing. She only narrowly escaped becoming trapped by the luck of the victim’s absence. The sociology professor and the thug, entirely different lives, separated by the thinnest of margins.

Sentences to tremble by

by on May 27, 2015 at 2:58 am in Current Affairs, Economics | Permalink

It is far from clear whether Europe can act as an engine of world recovery.

You will find more pessimism here, by Ambrose Evans-Pritchard.

I have been hearing this question more and more lately, even in China.  Overall I think it has gone from an underrated effect to an overrated effect.  Tim Worstall offers an introduction to this debate.

Let’s not forget that you do in fact pay for Facebook access, indirectly, when you pay for your cable connection, your iPad, and your smart phone. including the monthly bill, all of which are part of measured gdp.  The more value Facebook brings you, the more you would be willing to pay for these goods and services.  The same is true for Google and the like.  So Facebook and other internet services are part of a bundled package of market value, but that is very different from claiming they are not measured in gdp at all.

There is of course consumer surplus from the internet and Facebook, just as there is from Dunkin’ Donuts.  Might that consumer surplus be especially high?  Well, we don’t know, but don’t assume it will be.  I did some casual googling, and found a number of estimates suggesting that smart phone demand is relatively price elastic, with the iPhone a possible exception to that regularity.  That implies consumer surplus isn’t especially high, because many people aren’t willing to buy at the higher price.  I thus think Brad DeLong is far too optimistic in his estimates of ratio consumer surplus to market price.

You also could look at the literature on the demand for cable internet services.  The results are mixed, but again I don’t see a strong case for a disproportionately high consumer surplus from these services, if anything the contrary.

Now maybe these estimates are wrong, or looking at the wrong margin in some way, but the fact that I hear them mentioned so rarely gives me pause.  Cowen’s Third Law.

There is also advertising over the internet.  Let’s say Facebook is a profit maximizer.  Insofar as Facebook is of value to consumers, the company can get away with putting a lot of ads on the site.  These will spur additional market purchases, and so part of the value of the site is again captured in gdp.  Obviously some of these ad effects are simply expenditure-switching, and so there is no full capture of value, but still Facebook shows up in gdp statistics in yet another way.

Here are some previous posts on this topic.

Roughly 50% of Chinese savings – amounting to as much as half of GDP – lie in real estate alone, with 20% in deposits, 11% in stocks, and 12% in bonds. To compare, in the United States, real estate, insurance, and pensions each account for about 20% of total savings, with 7.4% in deposits, 21% in stocks, and 33% in bonds.

Rising stock-market capitalization also helps to reduce the real economy’s exposure to bank financing. The US is much more “financialized” than China, with stocks and bonds amounting to 133% and 205% of GDP, respectively, at the end of 2013. Those ratios were only 35% and 43%, respectively, in China. Meanwhile, China’s bank assets amounted to 215% of GDP – more than double America’s 95%.

That is from Sheng and Geng.