Assorted links

by on November 28, 2012 at 12:20 pm in Uncategorized | Permalink

1. The net price myth will not save the sustainability of higher education.

2. Purely defensive technological innovation, for cows.

3. Chris Blattman’s African development exam.

4. Will the “buy a home, get a visa” idea spread?

5. Mistakes people make in buying Christmas gifts, by Cass Sunstein.  And good summary of what the Greek deal consists of.

6. Fun but somewhat off story on Krugman and Germany, too many overgeneralizations about German psychology, caveat emptor.

prior_approval November 28, 2012 at 12:45 pm

‘ they will have the choice between two candidates who hold the distinction of having been repeatedly insulted by Paul Krugman’

Wrong – they can easily vote for the Greens, the Pirates, or die Linke (‘the Left’ – and this is the real ‘left,’ with all its baggage, and clear view of how capitalism works).

And odds are that at least the Greens will again be part of the government, if not the Pirates (die Linke, much like truly ‘aussen’ (‘far’) right wing parties like the NPD, are not exactly considered acceptable partners in anything but regional coalitions).

Americans, in general, have a very hard time understanding dynamic democratic institutions – die Linke may be a bit old fashioned, but the Greens are from the last generation, while the Pirates represent, if a bit inchoately, the present.

Cliff November 28, 2012 at 1:09 pm

Let me guess, you sing along with this song when it comes on in a pub:

Sie wollen mein Herz am rechten Fleck
doch seh ich dann nach unten weg
da schlägt es links

When I was in Köln I got stuck in an anarchist protest behind a pink bus with German teens marching in all black and a sign that said “Etwas bessere als die Nation”. I had to patiently explain to the Polizei that my (normally dressed) wife and I did NOT want to participate in the protest and were just trying to get to our hotel.

Ah, Germany.

prior_approval November 28, 2012 at 1:11 pm

Nope- I’m American, meaning that people expect me to sing along to ‘Country Roads.’

Tom November 28, 2012 at 1:21 pm

Ya, in Slovakia they have many semi-formal balls, which often later include DJs and pop music. Over 90% include “Country Roads”. More surprisingly (to me), a lot also have “Greased Lightning” — I barely remember hearing that in the US.
I kinda like Country Roads now, and very much like the mixed group village dance together sort of group with more pop music. Hey Macarana (?) was quite popular a few years ago.

Cliff November 28, 2012 at 2:43 pm

But surely you do not strive to live up to German expectations of Americans ?? Unless all your previous posts have been trolling?

Wonks Anonymous November 28, 2012 at 2:27 pm

“Die Linke” is “old fashioned” in that it is a descendant of the Communist Party which ruled East Germany. That is who prior_approval believes has a “clear view of how capitalism works”. That gives you a hint of why it is not invited to join coalitions. The “choice between two candidates” does betray a Presidential system background ill fitting with the parliamentary systems found throughout europe.

So Much For Subtlety November 28, 2012 at 7:28 pm

Well in fairness, they do have a clear view of how capitalism works. Clear is not the same as right of course.

Thor November 28, 2012 at 5:06 pm

A shrinking club … those who have yet to be insulted by Krugman.

Rahul November 28, 2012 at 1:08 pm


Why don’t they just mount a methane sensor on a ankle-bracelet or a neck ring or something like that? Sounds much simpler than a stomach-submarine. Saves the trouble of developing the stomach-composition-vs-belch correlation too.

Mark Thorson November 28, 2012 at 2:24 pm

I’m not sure a shock collar would do anything to curb bovine belching or flatulence, but I suppose it’s worth trying. Burp. BZZZZT!

Rahul November 28, 2012 at 3:22 pm

If you administered a lethal shock eventually it’s bound to work. Speed up natural selection!

Andrew' November 29, 2012 at 9:07 am

Just a spark should do it.

Isn’t a lot of this from grain feeding? If global warming is really largely from cow farts what are we talking about here?

Ronald Brak November 30, 2012 at 8:43 am

Global warming mostly comes from burning fossil fuels, but cow farts also contribute. Diet has a large effect on methane production, but cows in feedlots and cows in the field both produce methane. The good news is that selective breeding looks like it can produce very large reductions in ruminant methane production and should make their digestion more efficient and so reduce their feed to meat ratios.

Urso November 28, 2012 at 1:14 pm

Of all the imaginary “war on Christmases” that the Fox News crowd is always complaining about, the only one which might conceivably have merit is economists’ borderline autistic insistence that no one should ever give anyone else a gift.

Thor November 28, 2012 at 5:11 pm

As interesting as behavioural econ. can be, that was the most tone-deaf thing by Cass Sunstein I’ve ever read. Talk about liberal social engineering and meddling: a person can’t even give a crappy Xmas present anymore!

The great thing about Xmas gifts is the uncertainty of not knowing whether you’ll get a horrendous tie (at one extreme) or, say, the coolest book (gadget, etc). In fact, is is precisely because there’s the possibility of getting utter crap that you are so pleased when you get something good / different / useful / interesting.

JFA November 28, 2012 at 1:15 pm

The first sentence is very ironic given that it is written by the author of “Nudge”.

prior_approval November 28, 2012 at 1:20 pm

And just another point from the Krugman ‘review’ –

‘The flip side of this obsession with rules was a distaste for the sorts of pragmatic responses to crises preferred by American economists. ‘

This is just ignorant – Kurzarbeit is more than a century old, well tested, and is an exceptionally pragmatic response designed to keep an industrial economy functional through periods of lessened demand. And this pragmatic concept demonstrated its value again during the ‘Finanzkrise,’ as it is called in Germany. ‘Finanzkrise’ or ‘financial crisis’ also being a much more accurate term than any found in the English speaking world – which has pretty thoroughly de-industrialized over the last generation, unlike Germany (or for that matter, the non-EU Swiss).

dearieme November 28, 2012 at 3:24 pm

Hayek complained that one of Keynes’ weaknesses was that he couldn’t read German (a sign of intellectual laziness in those days). Can Krugman?

Tom November 28, 2012 at 1:38 pm

At a median taxable income of around $50k per year, the US should allow all foreigners willing to buy any house with at least $25,000 downpayment, deposited with the US gov’t in return for the Green Card. Ready to be used as a downpayment on any house for which they get a mortgage.

This would most rapidly increase the demand for houses, and thus bottom out the housing market, with a return to increasing prices — especially where there are new jobs.

Illegal aliens in the US could apply for amnesty for $50,000 (twice the normal) — or go back to their own country and apply, from the US embassy in their home, for the $25k downpayment visa.

The amounts should be based on formulas: 50% of prior year’s median taxpayer amount (or 100% for illegals), or $50 000, whichever is higher (to protect from inflation). But also, we need more gov’t by formula, and arguments about what is the most long-term beneficial formula (including Social Security/ fertility/ consumption & production analyses).

bob November 28, 2012 at 3:36 pm

There are already hundreds of thousands of temporary immigrants that have already sunk over 25K on home downpayments, but will have to wait many years before they get a green card: The green card cap gets hit every single year. It’s even worse for countries that have an individual cap, like India.

The first thing the US would have to do to make home purchases make a dent on prices would be to raise said cap a good 40%. Only then you’d start seeing benefits, as every H1-B that rents and apartment would go buy a house immediately.

Still, you’d see the market improve mostly on areas with good job prospects, which were not the ones that were hit the hardest by the housing crisis.

The Anti-Gnostic November 28, 2012 at 9:43 pm

But also, we need more gov’t by formula, and arguments about what is the most long-term beneficial formula (including Social Security/ fertility/ consumption & production analyses).

Indeed. A central committee of geniuses could run the whole place.

JWatts November 28, 2012 at 2:24 pm

“As for the broader German public, Storbeck tells me that they simply see Krugman as a tragic celebrity. “He is an exhibit from a cabinet of curiosities,” he says. “It is a freak show.””

That seems a tad harsh.

JasonL November 28, 2012 at 2:41 pm

I read the Net Price Myth and didn’t find a myth. I found a fact of dramatic price discrimination that the author deems unlikely to provide additional revenue in the future. Does that mean the OWS and media got the story wrong? Yes, they got it wrong because those cats didn’t pay at rates of inflation anything like what they were suggesting unless they were in the super venti mocha latte made from hawaiian beans end of the price discrimination spectrum, in which case they still have no argument because they are among the most privileged people on the planet if that’s the case.

Sigivald November 28, 2012 at 3:16 pm

On #5, re. “Typically the value of a gift, to the recipient, is about 20 percent lower than its cost. He describes the holiday season as “an orgy of value destruction.””

Doesn’t that discount the value of giving the gift to the giver, and the notionally/presumably increased or maintained relationship-value of the fact of the gift?

The value might not be maximized, but to claim it’s destroyed because the value (presumably an asserted bid value?) of the gift is lower than its cost to the giver is to ignore half the reason we give gifts, no?

(That said, all his list of cautions, individually, seem apt enough.

Though the idea of a charitable donation? Maybe economists like that idea [because boy, howdy does it avoid those problems!] but I think it’s a cheap tactic, almost entirely beneficial to the giver rather than the (pseudo-)recipient.

What if they’d rather have a thing that you chose for them rather than a donation of dubious value to Some Charity Or Other? Well, it doesn’t matter, because you’re going to cow them into going along with it out of guilt at seeming “greedy”.

If you want to go that route, just go all the way and give cash.)

Thor November 28, 2012 at 8:35 pm

“Doesn’t that discount the value of giving the gift to the giver, and the notionally/presumably increased or maintained relationship-value of the fact of the gift?”


Barkley Rosser November 28, 2012 at 3:30 pm

The net price article would have been more useful if it had said anything about what is driving this spending growth above inflation. It is certainly correct that offsets to tuition increases have played themselves out pretty much.

While there are many articles dumping on faculty, they are not the main driver of this ongoing surge, if they are at all even in a minor way. In the last 45 years faculty-student ratios have not changed, and faculty salaries have risen only barely above inflation, nowhere near to the level that overall higher ed spending has. The main culprits in this unsustainable rise in spending are pretty obvious, given these facts.

JWatts November 28, 2012 at 4:30 pm

“and faculty salaries have risen only barely above inflation”

What about non-salaried benefits?

” The main culprits in this unsustainable rise in spending are pretty obvious, given these facts.”

And those are?

Scott November 28, 2012 at 4:46 pm

From what I understand of the current status of higher education, it is still economically favorable to invest the money to get a college degree; better for some majors than others, but overall still economically with a positive return. Is it not possible that higher education in the past was simply underpriced?

I would think that any college that is a rational market player would try to squeeze every last penny out of the equation that they can, meaning that individuals should expect college prices to increase above inflation until the college has captured almost all of the “return on investment” that a college degree gives you. Am I thinking about this wrong, or do we as a society somehow expect colleges to act more charitably than a profit-driven institution and are therefore shocked by the increase in college costs?

msgkings November 29, 2012 at 12:24 pm

Yes they are expected to act more charitably than a profit-driven insitution. They are NONprofits, with tax exemptions and huge endowments. If they want to go that route they can give up their tax-favored status.

So Much For Subtlety November 28, 2012 at 7:31 pm

JWatts: What about non-salaried benefits?

Well in the Seventies you could sleep with your students. Now you can’t even suggest her shoes look nice.

Non-salaried benefits haven’t gone up.

KLO November 29, 2012 at 12:04 am

Don’t all schools maximize some combination of prestige plus revenue? If you are not a prestigious school — and most are not — you primarily are maximizing revenue. What difference does your cost actually make to this equation? Based on my experience, it makes no difference at all. When the conversation turns to setting tuition and aid levels, the question is always how much the students are willing to pay, mostly through some combination of parental support, pell grants and borrowing. I have never heard anyone say, “Well, our total budget for the year is $W out of which we need to get $X out of our students, so let’s charge $Y and not some larger number $Z even though we could get it.” Even in the short term, non-prestigious colleges and universities are not leaving lots of money on the table.

Barkley Rosser November 28, 2012 at 4:54 pm



Administrative and staff to student ratios have substantially risen over the same period, and administrative salaries have risen at well above the rate of inflation. Faculty benefits have not risen any more particularly than in other sectors of the economy. It is too many staff and administrators, with some of those being way overpaid, think presidents, provosts, eeans, and sports coaches particularly.

Andrew' November 29, 2012 at 9:04 am

Well, not sports coaches.

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