Many economists like to dump on their fellow social scientists, and personally I find that reading anthropology is often quite uninspiring.  That said, I would like to say a small bit on the superiority of anthropologists.  I view the “products” of anthropology as the experiences, world views, and conversations of the anthropologists themselves.  Those products translate poorly into the medium of print, and so from a distance the anthropologists appear to be inferior and lackluster (I wonder to what extent the anthropologists realize this themselves?).

Yet anthropologists have some of the most profound understandings of the human condition.  They have witnessed, absorbed, and processed some of the most interesting data, especially those anthropologists who do fieldwork of the traditional kind.

The rest of us are simply (usually) too blind to see this.  It even can be argued that anthropology is the queen and most general of the social sciences, and that economics, as a social science, is simply playing around in one of the larger anthropologically-motivated sandboxes, namely the economy.

We so often confuse “what can be translated into print well” with “what is important and interesting.”  In classical music there have been performers, such as Jorge Bolet, who are incredible but whose genius didn’t translate well in the recording studio.  That does mean anthropology is very often not a highly leveraged means of status and influence.

I believe that travel — when done intelligently — is the most fundamental method of learning.  And yet most travel books are a crashing bore.  Don’t confuse what you — as an outsider — can consume well with what is good and important from an inside perspective.

The economics of Uber

by on November 28, 2014 at 7:16 am in Data Source, Economics, Travel | Permalink

We were talking about this at lunch the other day, and now Josh Barro steps forward with the numbers:

The average price of an individual New York City taxi medallion fell to $872,000 in October, down 17 percent from a peak reached in the spring of 2013, according to an analysis of sales data. Previous figures published by the city’s Taxi and Limousine Commission — showing flat prices — appear to have been incorrect, and the commission removed them from its website after an inquiry from The New York Times.

In other big cities, medallion prices are also falling, often in conjunction with a sharp decline in sales volume. In Chicago, prices are down 17 percent. In Boston, they’re down at least 20 percent, though it’s hard to establish an exact market price because there have been only five trades since July. In Philadelphia, the taxi authority recently scrapped a planned medallion auction.

There is more here.  I learn also that Nevada just banned Uber.

The best-laid plans…

by on November 27, 2014 at 11:32 am in History, Philosophy, Science, Travel | Permalink

Circa 1985:

Merkel, in her early thirties, was looking forward to 2014—when she would turn sixty, collect her state pension, and be allowed to travel to California.

That is from the George Packer profile of Angela Merkel, which I will recommend to you all once again, do note it starts a bit slowly but picks up.

That is borrowing a phrase from Arthur Marget, of course I do not mean mph:

A San Francisco-based company is putting yet another spin on the Washington area’s sharing economy, giving travelers flying out of Dulles International Airport free parking and a car wash in exchange for permission to rent their cars to other drivers.

FlightCar launches Wednesday at Dulles and two other U.S. airports. Participating travelers can drop off their cars at a designated lot near Dulles. In exchange for letting FlightCar offer a vehicle for rent, the travelers receive free parking, a Town Car ride to the airport, a car wash and per-mile payment if the vehicle is rented — to a pre-screened driver — while they’re away.

There is more here.

For all the chatter about that recent video where the woman walks through New York City and is repeatedly harassed, I thought it worth mentioning there is a systematic study of this question going on at MIT economics (and elsewhere), conducted in part by job market candidate Sara Hernández, with numerous co-authors.  The paper isn’t ready yet, but here is the abstract:

This study seeks to document the frequency of street harassment and preventive measures women take to avoid it. It explores the association between experiences of street harassment and perceptions of social cohesion among women currently presenting for health care at public health clinics. The study was conducted in Mexico City, the most populous city in North America, which has a high documented prevalence of gender-based violence against women, ranging from 20-30% in a woman’s lifetime. Despite the pervasiveness of gender-based violence in the city, little is known about experiences related to street harassment. Data were drawn from a baseline survey among women currently participating in a randomized controlled trial in Mexico City (N=952). Current findings underscore the needs for programs and policies to promote the safety and well being of women and addressing community and structural-level forms of gender discrimination and violence.

I believe this issue will continue to receive more attention in the future.  The “flexibility” of the behavior of men — depending on social expectations for one thing — remains an underexplored topic in economics.

Ten years ago when Burt Rutan was predicting 100,000 space tourists in ten years I wrote a widely debated article, Is Space Tourism Ready for Takeoff? My answer then, and my answer now, is no:

The vision is enticing but the facts suggest that space tourism is not ready for market. The problem is not the monetary expense, there are enough millionaires with a yearning for adventure to support an industry. The problem is safety. Simply put, rockets remain among the least safe means of transportation ever invented. Since 1980 the United States has launched some 440 orbital launch rockets (not including the Space Shuttle). Nearly five percent of those rockets have experienced total failure, either blowing up or wandering so far from course as to be useless. The space shuttle has a slightly better record of safety — it was destroyed in two of 113 flights. There are lots of millionaires willing to spend one or two million dollars for a flight into space but how many will risk a two to five percent chance of death?

It is true that we have been “learning by doing” or in this case by learning by exploding. In the 1960s the risk of failure was a stunning 12%. As in other industries, learning by doing reduced the failure rate dramatically over the first units but more slowly thereafter. In the 1970s the failure rate dropped to 5.2% but nearly thirty years later the failure rate for rockets still hovers between four and five percent. We can expect similar slow and steady improvements in the future but there is little reason to expect dramatic improvements in rocket technology

Unfortunately with two disasters this week, one of them sadly involving the loss of life, the safety of rockets continues to be far too low to support significant tourism. Virgin Galactic’s VSS Enterprise, which crashed yesterday, was just on its 23rd powered flight suggesting a failure rate of perhaps 5%, in line with expected values. An earlier tragedy involving tests of the rocket motor killed 3 people.

As I said ten years ago, even a failure rate of 1 in 10,000 is far too high to support space tourism of the “fat guys with camera” variety and we are not yet close to a failure rate of 1 in 10,000.

India fact of the day

by on October 14, 2014 at 2:38 pm in Current Affairs, Travel | Permalink

$74 million: That’s the amount India spent on its Mars program. Modi described it best when he said the Sandra Bullock-starrer Gravity cost more to make than India’s Mars mission. NASA’s Maven mission, admittedly more complex, cost $671 million in comparison. European Space Agency’s 2003 Mars Express Orbiter mission cost $386 million. Japan’s failed mars mission cost $189 million.

Rs 7 per kilometre: That is how much the journey to mars cost India. That is cheaper than an auto ride in Delhi, which will cost you, if you are lucky, Rs8 per km.

From Saptarishi Dutta, there is more here.

I Quant NY reports:

…there on the map lies the farthest residential building from a subway entrance in Manhattan according to my analysis: 10 Gracie Square, located at the end of 84th street at the FDR Drive.  It is 0.7 miles from the subway station as the crow flies, or 0.8 miles using the grid.  My favorite part about the finding is that the Penthouse, which I guess is literally the farthest place you can live from the subway due to the longer ride down in the elevator, is currently on the market for $18.9 million, down from $23 million last year. That’s right, you can pay $18.9 million dollars to have the longest walk to the subway in all of Manhattan!  But fear not power walkers, there is also a two bedroom with a the same walk but a slightly shorter elevator ride… for $3.75 million.

For the pointer I thank Craig Richardson.

David wrote:

the point about unnecessarily fancy infrastructure with weak maintenance is endemic to all the corrupt east asian economies, really

if you want to quickly assess a city’s transport infrastructure, look to see if all the roads have good sidewalks and all the streetlights have a number. the head honcho is only driven past, he doesn’t walk on the pavement – if the project exists only to impress him, then the pavement will be subpar and cracking. if the streetlights are not numbered, then nobody is tracking failures and replacing parts.

Tyler [not this Tyler] wrote:

A week in China often leaves Westerners impressed. So shiny! So new! So big!

Live there a year and you yearn for the Newark Airport…

Douglas Levene wrote:

I live and work in Shenzhen and can add a few observations. First, the food in Shenzhen is generally not very good, and does not compare to Hong Kong or Taipei. Second, a lot of the infrastructure (the subway, the parks) is new and shiny (and there is excellent cell service on the subway), but construction quality being what it is on the mainland, you can expect much of it to look terrible in a short time. Third, although Shenzhen is much cleaner than it was four years ago, it’s still very dirty compared to Hong Kong and Taipei. Fourth, you can’t get decent internet service to foreign (English) language websites anywhere in Shenzhen, even with a VPN. This is probably due to the Great Chinese Firewall. Fifth, it’s very hard to find housing built to Western standards of comfort, size, and cleanliness. Sixth, western style toilets are still a rarity in Shenzhen. That all said, Shenzhen remains the beating heart of the capitalist South and is the best hope for China.

Google’s driverless car may still be a work in progress, but the potential for semiautonomous vehicles on American roads is no longer the stuff of science fiction.

By the end of the decade, a growing number of automakers aim to offer some form of hands-off-the-wheel, feet-off-the-pedals highway driving where a driver can sit back and let the car take control.

The very nature of driving, experts say, will be radically reshaped — and the biggest players in the auto industry are now vying to capture a slice of the revolutionary market they see coming within a matter of years.

From Aaron M. Kessler, there is more here.

Tokyo and the Bullet Train

by on October 3, 2014 at 11:50 am in Travel | Permalink

Lots of interesting material in this piece on Japan’s bullet trains and how they have shaped the economic geography of Japan:

Meanwhile, the bullet train has sucked the country’s workforce into Tokyo, rendering an increasingly huge part of the country little more than a bedroom community for the capital. One reason for this is a quirk of Japan’s famously paternalistic corporations: namely, employers pay their workers’ commuting costs. Tax authorities don’t consider it income if it’s less than ¥100,000 a month – so Shinkansen commutes of up to two hours don’t sound so bad. New housing subdivisions filled with Tokyo salarymen subsequently sprang up along the Nagano Shinkansen route and established Shinkansen lines, bringing more people from further away into the capital.

The Shinkansen’s focus on Tokyo, and the subsequent emphasis on profitability over service, has also accelerated flight from the countryside. It’s often easier to get from a regional capital to Tokyo than to the nearest neighbouring city. Except for sections of the Tohoku Shinkansen, which serves northeastern Japan, local train lines don’t always accommodate Shinkansen rolling stock, so there are often no direct transfer points between local lines and Shinkansen lines. The Tokaido Shinkansen alone now operates 323 trains a day, taking 140 million fares a year, dwarfing local lines. This has had a crucial effect on the physical shape of the city. As a result of this funnelling, Tokyo is becoming even denser and more vertical – not just upward, but downward. With more Shinkansen passengers coming into the capital, JR East has to dig ever deeper under Tokyo Station to create more platforms.

Hat tip: John Welborn.

Christopher Buccafusco and Chris Sprigman report:

…we ran an experiment to measure how much people value the ability to recline compared to extra knee and laptop room.

In an online survey, we asked people to imagine that they were about to take a six-hour flight from New York to Los Angeles. We told them that the airline had created a new policy that would allow people to pay those seated in front of them to not recline their seats. We asked one group of subjects to tell us the least amount of money that they would be willing to accept to not recline during the flight. And we asked another group of subjects to tell us the most amount of money that they would pay to prevent the person in front of them from not reclining.

It turns out that Barro was right: Recliners wanted on average $41 to refrain from reclining, while reclinees were willing to pay only $18 on average. Only about 21 percent of the time would ownership of the 4 inches change hands.

But it also turns out that Barro was wrong and Marron was right. When we flipped the default—that is, when we made the rule that people did not have an automatic right to recline, but would have to negotiate to get it—then people’s values suddenly reversed. Now, recliners were only willing to pay about $12 to recline while reclinees were unwilling to sell their knee room for less than $39. Recliners would have ended up purchasing the right to recline only about 28 percent of the time—the same right that they valued so highly in the other condition.

Wait … what? How is it possible that people’s valuation of reclining vs. not being reclined upon depended so completely on which party (recliner or reclinee) held initial ownership of the property right? Shouldn’t the right to recline be worth the same to you whether you initially have it or not?

It is fair to call this an endowment effect, but I also view it as evidence for my earlier view that people do not want to bargain over this right.

For the pointer I thank Tim Harford.

Hong Kong bleg

by on September 27, 2014 at 6:38 am in Food and Drink, Travel | Permalink

You know the drill, I have been there before but not in a long time.  Your assistance is much appreciated and I thank you all in advance…

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, 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.

The full story is here, and for the pointer I thank Michael Rosenwald.

I believe Josh Barro started this mess of a debate.

I would emphasize the endogeneity of transaction costs.  The airlines could do a lot to encourage Coasean bargaining between fliers, but they don’t.  How about handing out little cards?: “Have a friendly haggle with the person behind you.  Last year the average price for a non-reclined seat was $16.50.”  They could print up standardized contracts, like how they distribute customs forms, including contracts for trading seat assignments or distance from the bathrooms or how you shush your child, or not.  Imagine being nudged toward a deal through the in-flight internet system, so you don’t have to turn around to face the other party in the bargain.  They could take a cue from Alvin Roth and his matching algorithms or help you set up complex multi-party deals, like how the Denver Nuggets used to construct (and then dismantle) their rosters.


The disutility of bargaining in this environment is high relative to the value at stake.  The chance of irritation or hurt feelings is non-negligible, and perhaps people on a flight are crankier anyway.  So the airlines deliberately keep the transactions costs high, as the gains from the potential bargain are low relative to the ickiness of the process.  The airlines wish to keep a lot of people away from the process altogether, if only out of fear of having to arrest people, divert flights, and so on.

That implies the more we debate this problem, the worse it becomes.  It also gives us the true Coasean answer to what is best.  Relative to current norms, who does more to make the whole question “an issue” — the seat recliner or the purchaser of the recliner-blocker?  Clearly it is the purchaser of the blocker and thus Josh Barro is broadly in the right, the norm should continue to allow people to recline their seats as that minimizes fuss, which is more important than getting the right outcome with the seat itself.

If you don’t like that, United does sell coach seats with extra space, which makes the recline of the person in front of you less bad.