by Tyler Cowen
on December 21, 2011 at 12:42 pm
1. How airplanes fly.
2. “…he knows if you’ve been bad or good…”
3. The modern holy shroud.
4. The political economy of shale gas in Poland, very good short essay.
5. Politics isn’t about policy, installment #1237.
6. Efficient gift-giving.
“A plane flies upside down. The physical view has no problem with this. The plane adjusts the angle of attack of the inverted wing to give the desired lift. The popular explanation implies that inverted flight is impossible.”
Or check out http://xkcd.com/803/ .
By far the best book out there for the general reader on the science of flying, by one of the world’s leading atmospheric scientists, is The Simple Science of Flight: From Insects to Jumbo Jets, by Henk Tennekes.
That’s a gorgeous book just for the illustrations, if nothing else.
On #5: Per Falkenblog, you can also explain the empirical weakness of the risk premium by looking at envy (status competition) as opposed to pure profit maximizing behavior: http://falkenblog.blogspot.com/2011/10/envy-solves-allais-paradox.html
Also here: http://www.portfoliowizards.com/eric-falkenstein-to-society-of-actuaries-there-is-no-risk-premium/
I conclude that a) economists want some form of money for
Christmas so there isn’t any deadweight loss, and b) Tyler wants it
in the form of Bitcoins.
Re Efficient Gift Giving:
The article misses one of the big points of the social transaction of gift giving, particularly as it applies to gifts that superiors in a family relationship (parents, godparents, grandparents, older collateral relatives, mentor) make to subordinates in family relationships or similar rich, multifaceted relationships. Yes, it is unequal and asymmetric. But, there is a strong component of communication and nudge to it; it isn’t about maximumizing “local” marginal utility.
When parents or godparents or people give a child (minor or adult, it doesn’t really matter), the sweet spot is to get something that on one hand will really be used or experienced (a gift thrown in the closet or never used really is a dead weight loss), but one that giver’s personal perspective enhances in a way that the recipient wouldn’t have in his or her usual consumption patterns for him or herself. To give the book that the recipient wouldn’t have picked but will enjoy if nudged enough to actually give it a try; to give the science lab or craft kit that will tear the recipient away from the videogames for a different kind of fun. For an older person in a “second childhood” or emotional rough spot it can work the other way too. Dad’s moved in with you and mopes around all day so you buy him a gym membership in the hope he’ll make friends there. You’ve come out of the closet and you buy her a DVD movie that helps her understand who is is that you really are.
If you think about it right, it is to some extent a non-obvious corollary to the maximize marginal utility concept within the world of behavioral economics on the assumption that the recepient has some discretionary resources. The receipient will have already bought all of the best marginal utility per cost items he or she can that involve things that he or she already knows that he or she likes, but due to having less or different life experiences in the giver, is not aware of the untapped low hanging fruit high marginal utility per cost items that he or she has never seriously considered for one reason or another.
And, in a “message” gift, of course (including the “its the thought that counts” gifts, or formal appearance of reciprocity gifts) the intrinsic economic value imparted to the receipient is irrelevant anyway. If you’ve always resisted your daughter’s pleas to have riding lessons and forced her to take piano lessons instead, a gift certificate to a riding lesson acknowledges that you accept that her feelings mean something and it really doesn’t matter if your giving a $20 gift certificate to someone who already has a dollars of money earmarked for fun in the cookie jar rather than a $10,000 grand piano in mint condition.
As usual, of course, economists are suffering from diminished emotional intelligence.
Yes, I hear the notion about excessive use of stories as a cognitive flaw in one word title books like Nudge. But, economists make the flip side of the mistake in assuming that people are deluding themselves about their real reasons when in fact, economists are really just excusing themselves for being too lazy to figure out how decisions really get made by real human beings in transactions that are unfamiliar to them. In contrast, lawyers who deal with people who have been participants in the economic world and have to pull the levers and push the buttons to make it work are acutely aware of how issues like saving face matter, for example, in deals as seemingly cut and dry and rationally business driven as decisions by banks about loan modifications (in fact, they are much less likely to modify loans their own bank underwrote than comparable loans underwritten by somebody else and acquired once they are in default).
5. Yes, I have noticed that most liberals’ eyes glaze over if you try to talk about the actual operation of government programs. But, if you explain that “good” people support government programs, and that such programs will punish “Them” and show that “They” are no better than us, even though they act like they are, then liberals nod contentedly.
A better explanation of lift, that brings in the crucial effects of the circulation around the wing, is at http://www.av8n.com.
Like the article, well written. Next time to support you, is your article more vivid! Hope that more articles appear.
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