There’s been another accident and data leak from Home Depot, and some people are claiming the company was negligent, so I was thinking what kind of market failure might be present.
One problem is this. They store your credit card number whether you buy one thing at the store or make fifty trips over the course of two years. So, if you don’t trust a store, at the margin you only get one chance to make a decision whether to give them your credit card number by shopping there or not. You are comparing the total expected consumer surplus from having a relationship with the store at all against the data privacy risk. Such blunt, once-and-for-all trade-offs are not always conducive to good marginal incentives.
If I made one purchase at Home Depot a year ago, I don’t seem to obtain more safety by refusing to make more purchases now, at least provided I am using the same credit card. So many consumers have little incentive to turn against the lax retailer and so excess laxity persists.
The data protection market might work better if, in case you would make more shopping trips to the more trustworthy stores, that in turn would lead to your data being marginally better protected. A bit like eating more of your meals in safer restaurants to minimize the chance of getting sick. But the logic of storage, based on a one-time receipt of the critical information, means these marginal choices don’t matter so much (they should matter more for people who lose their credit cards a lot and get new reissued cards with new numbers, or matter more to the extent the company sequentially constructs separate databases; bravo to you if you lose your credit cards a lot, you are conferring a social external benefit on others by inducing companies to care more about data protection at the margin).
Ideally we would like a system where the intermediary would reissue a new credit card number to you each time you buy something.
In the meantime, the incentive is to concentrate all of your retail purchases on one card, and use that card somewhat indiscriminately at the margin. At the same time you should concentrate all of your auto-renewals on a different card. You would then hold one or two other cards in reserve, as back-ups for when these first-tier cards fail you.
I sometimes think that all of my credit card information is stolen, all of the time, for practical purposes. My only protection is then the ubiquity of theft, the large number of competing credit cards available for use, and the incentives of the stationary bandit not to reap too high a harvest from the stolen information too quickly. What is then the size of the “tax” I pay each year and how does it compare to standard yearly credit card fees? After all, the credit card companies, they have my credit card number too.
Just hours after Scotland voted “no” to independence from the United Kingdom, Catalonia’s regional parliament announced on Friday that it had passed a law, which Catalan leaders say authorizes them to hold a non-binding “consultation” on independence from Spain in November.
The law was passed with a vote of 106 to 28.
Spain’s central government and Spanish Prime Minister Mariano Rajoy, however, categorically oppose Catalonia’s campaign for a referendum, as the Spanish constitution doesn’t allow referendums that don’t include all Spaniards.
There is more here, and much more here. My view is that we’ve been getting lucky on these European political events — in relative though not absolute terms — and sooner or later that streak of good fortune is bound to end.
The excellent Kevin Lewis points us to a new paper in Science by Patrick Gerland, et.al.:
The United Nations recently released population projections based on data until 2012 and a Bayesian probabilistic methodology. Analysis of these data reveals that, contrary to previous literature, world population is unlikely to stop growing this century. There is an 80% probability that world population, now 7.2 billion, will increase to between 9.6 and 12.3 billion in 2100. This uncertainty is much smaller than the range from the traditional UN high and low variants. Much of the increase is expected to happen in Africa, in part due to higher fertility and a recent slowdown in the pace of fertility decline. Also, the ratio of working age people to older people is likely to decline substantially in all countries, even those that currently have young populations.
The paper is here, gated for some of you. A variety of summaries and forms of coverage can be found here. That is good news for those who buy into Julian Simon, bad news for those worried about environmental sustainability.
The median household income in the city of New York is a few hundred dollars a year more than the median household income in the state of Texas, but in practical terms the average New York City household is much worse off.The most obvious issue is the cost of housing, which for New Yorkers is about four times what it is for Texans.
That is from Kevin Williamson, who stresses that New York City is actually a relatively poor place.
By the way, New York and DC have Ginis reflecting more inequality than what we find in Mexico or Nigeria. Manhattan and Putnam County, Tennessee have Ginis almost as high as that of South Africa.
Have I mentioned that a Gini coefficient isn’t a very good measure of inequality for most purposes? It does not command much loyalty from people who actually work in that area (generalized entropy measures are much more popular), yet it has become a staple of discussion in popular economics.
6. How people have tried to stop lava, with a little more success than I would have thought, though not a lot.
The Obama administration on Thursday announced measures to tackle the growing threat of antibiotic resistance, outlining a national strategy that includes incentives to spur the development of new drugs, tighter stewardship of existing ones and a national tracking system for antibiotic-resistant illness. The actions are part of the first major federal effort to confront a public health crisis that takes at least 23,000 lives a year.
The full story is here.
The Hill has more detail. It is an executive order:
The president’s directive creates the Task Force for Combating Antibiotic-Resistant Bacteria, co-chaired by the secretaries of Defense, Agriculture and Health and Human Services.
The group is charged with implementing a plan to track and prevent the spread of antibiotic-resistant bacteria, promote better practices for the use of current drugs and push for a new generation of antibiotic medications.
To that end, the White House on Thursday announced a $20 million prize “to facilitate the development of rapid, point-of-care diagnostic tests for healthcare providers to identify highly resistant bacterial infections.”
The added incentive and the timeframe given to the task force indicate the urgency with which the administration is acting, said Dr. Eric Lander, who co-chairs the President’s Council of Advisors on Science and Technology.
“This is a pretty tight timeline to now come up with a national game plan,” Lander said.
There is also this:
In December, the Food and Drug Administration (FDA) unveiled a plan to phase out the use of antimicrobials for the purpose of fattening chickens, pigs or other animals destined for human consumption. But the plan relies in part on voluntary industry cooperation, and advocates argue the government’s efforts are lagging behind even some industry players.
This initiative — or its failure — is potentially a more important health issue than Obamacare, yet it will not receive 1/1000th of the attention. Without reliable antibiotics, a lot of now-routine operations would become a kind of lottery.
Here are previous MR posts on antibiotic resistance. I would note it is difficult to judge such a plan at the current level of detail. It is better than nothing, but any initial plan is going to be not nearly enough, relative to an ideal. By the way, Alex tells me there is also a British prize, discussed here.
Breath control is the essential skill for success in kabaddi, a game with ancient roots in which teams take turns sending a raider across midcourt who, on a single breath, tries to tag a member of the opposing team and return safely to his team’s half of the court before taking another breath. To prove to officials that he or she is not inhaling, the raider must chant “kabaddi, kabaddi” throughout the attack. The best players can do it for several minutes.
Kabaddi’s rules would seem irredeemably arcane until one learns that 435 million Indian television viewers watched the Star Sports Pro Kabaddi League during its inaugural five-week run this year. Or that the league’s final attracted, for however brief a duration, 86 million Indian viewers, surpassing the tallies for the 2014 World Cup and the Wimbledon finals.
Ireland’s economy is now growing at its fastest rate in seven years, according to the latest Quarterly National Accounts.
The figures, published this morning by the Central Statistics Office, show the economy expanded by 7.7 per cent in GDP terms in the year to the end of June.
This is the strongest rate of annualised growth recorded in the economy since early 2007.
In case you don’t like Wiener Schnitzel and doner kebab:
Now Germany’s Air Food One is a subscription service that lets anyone get airline meals delivered to their home once a week.
Offered by online grocery Allyouneed.com, members can choose between two options — classic or vegetarian — just like on a real flight. The service has teamed up with LSG Sky Chefs, which provides airline food for Lufthansa, to prepare a different meal each week that matches the business class menu on airplanes. For example, this week it’s serving Arabic seafood or panserotti with porcini mushrooms. The meals are delivered every Wednesday evening and are suitable for freezing. When it comes time to cook, members can simply place the meal in the oven. The idea is that the healthy subscription meals can be ordered by busy professionals who would otherwise be ordering a takeaway. Additionally, the service lets LSG Sky Chefs get rid of the excess meals not needed by its flying customers, avoiding waste and acting as an advertisement for its food quality.
1. Very unlikely markets in everything (not even sure I should believe it, though perhaps some of you have extreme faith in signaling and adverse selection models).
3. Attach your iPad directly to your face (department of why not?).
Here are my suggestions:
1. There is always time to do more, most people, even the productive, have a day that is at least forty percent slack.
2. Do the most important things first in the day and don’t let anybody stop you. Estimate “most important” using a zero discount rate. Don’t make exceptions. The hours from 7 to 12 are your time to build for the future before the world descends on you.
3. Some tasks (drawing up outlines?) expand or contract to fill the time you give them. Shove all these into times when you are pressed to do something else very soon.
4. Each day stop writing just a bit before you have said everything you want to. Better to approach your next writing day “hungry” than to feel “written out.” Your biggest enemy is a day spent not writing, not a day spent writing too little.
5. Blogging builds up good work habits; the deadline is always “now.”
Rahul R. asks me if I would like to revise the list. I’ll add these:
6. Don’t drink alcohol. Don’t take drugs.
7. At any point in your life, do not be watching more than one television show on a regular basis.
8. Don’t feel you have to finish a book or movie if you don’t want to. I cover that point at length in my book Discover Your Inner Economist.
I think I would take back my old #5, since I observe some bloggers who have gone years, ten years in fact, without being so productive.
That is the recently published (QJE) paper by Douglas Gollin, David Lagakos, and Michael E. Waugh, the abstract is here:
According to national accounts data, value added per worker is much higher in the nonagricultural sector than in agriculture in the typical country, particularly in developing countries. Taken at face value, this “agricultural productivity gap” suggests that labor is greatly misallocated across sectors. In this article, we draw on new micro evidence to ask to what extent the gap is still present when better measures of sector labor inputs and value added are taken into consideration. We find that even after considering sector differences in hours worked and human capital per worker, as well as alternative measures of sector output constructed from household survey data, a puzzlingly large gap remains.
There are ungated copies here.
I believe there is something “funny” about agriculture. Productivity convergence is also slowest in that sector, especially compared to manufactures. I see a few possible factors at work:
1. Status quo bias keeps a lot of workers living in rural areas and employed in agriculture, lowering productivity in that sector and also hindering the transfer of new ideas and technologies. Wages stay low and approaches remain hidebound and old-fashioned.
2. The influence of “non-rational” culture — in the Weberian sense — is usually stronger in rural and agricultural areas.
4. Liquidity constraints limit movement into urban areas.
5. Fear of loss of status and local friendships also limit the movement into urban areas and prevent an equalization of returns as defined in terms of pecuniary variables only.
Or put agriculture aside, and let’s pose the same question about wage equalization in Puerto Rico and the mainland United States, given that free migration is allowed and wages in the U.S. are considerably higher. In a lot of different settings, factor price equalization isn’t as strong as you might think. Maybe this is just showing that agriculture is in fact a remarkably human activity.
In a study of more than a million Yelp restaurant reviews, Mr. Jurafsky and the Carnegie Mellon team found that four-star reviews tended to use a narrower range of vague positive words, while one-star reviews had a more varied vocabulary. One-star reviews also had higher incidence of past tense, pronouns (especially plural pronouns) and other subtle markers that linguists have previously found in chat room discussions about the death of Princess Diana and blog posts written in the months after the Sept. 11 attacks.
In short, Mr. Jurafsky said, authors of one-star reviews unconsciously use language much as people do in the wake of collective trauma. “They use the word ‘we’ much more than ‘I,’ as if taking solace in the fact that this bad thing happened, but it happened to us together,” he said.
Another finding: Reviews of expensive restaurants are more likely to use sexual metaphors, while the food at cheaper restaurants tends to be compared to drugs.
Previous MR posts on Jurafsky are here.
Friday, 1:15, EST. The LiveStream is here. I commend the Center for Equitable Growth for sponsoring this event.