Month: September 2003

Why executives should be paid more than they deserve

If workers are paid their marginal product its difficult to understand why some CEOs are paid such high wages. But think of the CEO’s wage as a prize. Valuable prizes make everyone else work hard in order to become the CEO. With this model, the tournament model (JSTOR) of Lazear and Rosen, it may even make sense that CEO wages go up as profits go down. After all, shouldn’t prizes be set highest when motivation is most required? No doubt, some will see this argument as more proof that economists are just shills for the capitalist class.

Is Larry Summers reshaping Harvard?

Yes, say many observers. His pro-science, back to the basics stance may make him one of Harvard’s most influential Presidents. And he is not backing down when faced with faculty opposition. Read this article from The Boston Globe, thanks to Instapundit for the link. Read here and here for my two previous blog posts on Larry at Harvard, with links to other commentary.

Addendum: Here is a recent (and brief) address by Summers on economics and morality, he stresses the ability of markets to conserve on altruism. Thanks to Doug Irwin for the pointer.

Sleep and Personality

Sleep research is great fun. Sleep is tied to so much in our lives, yet we know so little and there are always surprises. Consider the latest finding: the position you sleep in is highly correlated to your social personality. Being a log-sleeper (on the side, hugging the pillow) correlates with being outgoing and social, while fetal position sleepers are shy. Sleeping position is not the only correlate of personality. Your handwriting, your job satisfaction and a whole bunch of other things tend to be linked to personality.

Things I had not known about taxonomy

The Swede Carl Linnaeus, a father of modern taxonomy, “spent much of his leisure time penning long and flattering portraits of himself, declaring that there had never “been a greater botanist or zoologist…””

Today the world has about 10,000 active taxonomists. It takes eight to ten years to train a good taxonomist. It is commonly believed that the world has a severe shortage of taxonomists, although economists might challenge the use of the word “shortage” in this context.

Logging a new species costs about $2000 per species.

Each year about fifteen thousand new species are recorded. Insects alone offer possibly as many as 100 million undiscovered species.

As of 2002, there were no full-time taxonomists in Africa.

Kevin Kelly’s (Wired magazine) All Species Foundation has not made much of a dent in these problems. And taxonomy is not nearly as web-based as you might think.

I don’t think it follows, as scientist Koen Maes suggests, that “It’s not a biodiversity crisis, it’s a taxonomist crisis!” Still, we know less about species and their numbers than I had thought.

All this is taken from Bill Bryson’s recent and entertaining A Short History of Nearly Everything, chapter 23. Thanks to Yesim Yilmaz for the pointer.

What have we learned about income distribution?

I’ve been reading the new book The New Geography of Global Income Inequality, by sociologist Glenn Firebaugh. The data work is intensive, here are a few things I have learned:

1. Knowing what country an individual lives in explains about 70 percent of the observed variation in income across individuals (p.11).

2. If we could magically eliminate all income inequality within nations, the world’s total income inequality would shrink by at most one-third. Most of the relevant inequality is across different nations (p.11).

3. Global income inequality is falling, contrary to what many critics charge (pp.17-18). So the world’s poor are catching up to the world’s rich (p.18), on average.

4. Most poor countries are not catching up, most of all Africa. The world’s poor are catching up, on average, once we weight countries by population. The growth of China, and to a lesser extent, India, has driven the improved prospects of the poor and the decline in cross-nation inequality (passim).

5. If we compare the United States to Western Europe, there is considerably less inequality within the United States.

As you might surmise, I found this book to be excellent and highly instructive. It reads more like an extended article than a book, but nonetheless it delivers on the substance.

Addendum: Daniel Drezner offers some interesting remarks, with links, on Paul Krugman’s recent writings on inequality.

Subsequent addendum/clarification: Firebaugh (p.193) writes: “average income is much more unequal across nations in Western Europe than across states in the United States.” He does not (and could not) argue that “within a single nation equality” is less in Europe. Here are Gini coefficients for the various European nations and the United States.

The Eric Rasmusen controversy

Eric Rasmusen of Indiana University has long been well-known as an excellent microeconomist. I taught from his Games and Information for many years, I still have his article “Stock Banks and Mutual Banks” on my Industrial Organization reading list.

Lately Rasmusen has been the center of much controversy. Usually I like to summarize the links I use, however briefly. But in this case I am not sure how to explain events without offending anybody, I know Rasmusen a bit plus I have numerous gay friends. So just read here on the episode. Here is Rasmusen’s frequently interesting blog. Here are Rasmusen’s views on religion. Thanks to Eugene Volokh for the Chicago Tribune link.

Reagan Letters Published

Time magazine has an article on Ronald Reagan’s recently published letters, in which the former president expresses a taste for Ayn Rand. What is striking about the letters is their sheer volume (about 5,000) and directness. Avoiding convoluted phrasing, Reagan’s authorial persona is almost classical. Arguments and thoughts are presented in a plain language that puts the reader and the writer on an equal level, a powerful element of Reagan’s style of communication.

Never miss a day of the revolution!

You can now see all the posts from a specific day by clicking on that day in the calendar. Also, did you know that an easy way to see all the posts in a category is to click on the category link at the bottom of each post? The opening page of Marginal Revolution contains the last 7 days of posts. Google search and links to monthly and weekly archives are available in the left hand column.

Tragedy of the tragedy of the commons

Garrett Hardin and his wife recently passed away, it is rumored to have been a double suicide. Hardin was a well-known environmentalist, most prominently he coined the phrase “tragedy of the commons”. He spent the latter part of his career opposing immigration and favoring population control, he was even embraced by some eugenecists.

Addendum: The Hardins were survived by their four children, thanks to Nicky Tynan for the pointer.

Elephants all the way down

I just learned that there is a blog concerned solely with news about blogging,

Of course that is just the beginning. Blogdex tracks popular links, see also Technorati tells you who is linking to the URL of your choice. lists the most influential and widely-read blogs. Number one is Scripting News, Instapundit is number three, the rankings are based on the metric of how often a blog is blogrolled by others. If you weight blogrolling by the influence of who is blogrolling, Instapundit is number one and Andrew Sullivan is number two.

Amateur reviewers are conformists

Let’s say you just saw a movie and now you review it for a web site. Many reviewers will be influenced, albeit subconsciously in many cases, by the ratings already available for viewing. If a movie has many high ratings, you will be less likely to pan it, and vice versa. This occurs even when you see only the number of stars assigned by other people, and have no access to concrete information about the opinions of others, as you might get from a written review. Overall people end up losing trust in peer-driven reviewing systems, and it is plausible to assume that this applies to reviews as well. Thanks to Randall Parker for the original pointer to the research. Cass Sunstein’s new Why Societies Need Dissent explores the pressures for conformity in more detail. Here is a link to the relevant economics research.

Will those annoying calls go away?

Perhaps you have put your name on the “do not call” list. Don’t think that your troubles are over. One estimate suggests that unsolicited calls will go down by no more than 25 percent. The wording is ambiguous but from the context the figure seems to be for people who have put their name on the list, obviously it will be worse for the population as a whole. One loophole is that anyone with a “previously existing commercial relationship” can call you, so can non-profits, pollers, and radio and TV providers, not to mention politicians. The group Private Citizen is leading the fight against such cold calls, and is the original source of the estimate. Thanks to TechiePundit for the original pointers to the links.

Where do people marry close relatives?

Check out this map, which is dominated by the Muslim world.

Stanley Kurtz of the Hoover Institution has argued that such intermarriage patterns make liberal democracy harder:

In the modern Middle East, networks of kin are still the foundation of wealth, security, and personal happiness. That, in a sense, is the problem. As we’ve seen in Afghanistan, loyalty to kin and tribe cuts against the authority of the state. And the corrupt dictatorships that rule much of the Muslim Middle East often function themselves more like self-interested kin groups than as rulers who take the interests of the nation as a whole as their own. That, in turn, gives the populace little reason to turn from the proven support of kin and tribe, and trust instead in the state.

An intriguing idea, but I find it very hard to establish the appropriate causal connections. Still, better that we ponder the question than stick our heads in the sand. Parapundit offers a very useful overview of the debate, sympathetic to Kurtz’s point of view. Please note, as always, that use of a link does not constitute endorsement of all of that link’s contents or subsequent links.