Month: January 2004

John Edwards on Trial

Very good article in the NYTimes on the larger implications of John Edwards’s career as a trial attorney. In Edwards’s first big case he artfully channeled the words of an unborn baby girl to convince the jurors that an obstetrician’s decision not to perform a Caesarean section resulted in the girl being born with cerebral palsy. The smoking gun in the case, according to Edwards, was the record from the fetal hearbeart monitor. As a result of this and other similar cases doctors “have responded by changing the way they deliver babies, often seeing a relatively minor anomaly on a fetal heart monitor as justification for an immediate Caesarean.”

[But] studies have found that the electronic fetal monitors now widely used during delivery often incorrectly signal fetal distress, prompting many needless Caesarean deliveries, which carry the risks of major surgery…[Moreover] the vast majority of children who developed cerebral palsy were damaged long before labor…[and] a series of randomized trials challenged the notion that faster delivery could prevent cerebral palsy. Reviewing data from nine countries, two researchers reported last year that the rate of the disorder had remained stable despite a fivefold increase in Caesarean deliveries.

Edwards can’t be blamed for being a good attorney, even if the science rejects his claims, but his front of caring for the victims does not stand scrutiny. Edwards, along with his fellow attorneys in the North Carolina plaintiff’s bar, argued against a compensation plan that would insure everyone with a child born with cerebral palsy.

My take: A tort system should deter and insure. But our tort system does neither well, especially when it comes to product liability and medical malpractice cases. Winning claims often have little connection with true negligence so the system does not deter and instead of insurance the tort system offers those with injuries a lottery ticket, handing large payouts to some and nothing to others with equal difficulties. To top it off, the system is expensive as more dollars are spent on litigation than flow to plaintiffs.

The Economics of Orgasm

I’ve been an economist for so long that I don’t flinch when the paper abstract starts as follows:

“This paper models love-making as a signaling game. In the act of love-making, man and woman send each other possibly deceptive signals about their true state of ecstasy. Each has a prior belief about the other’s state of ecstasy. These prior beliefs are associated with the other’s sexual response capacity…”

Or if that is not enough for you: “In this paper, love is formally defined as a mixture of altruism and possessiveness. Love is shown to alter the man and the woman’s payoff functions in a way that increases the equilibrium probability of faking, but more so for the woman than for the man.”

Here is the full paper. I could go on with quotations, but why don’t we look at the empirical results, drawn from an extensive data set and questionnaire:

1. 72 percent of women admit to having faked it in their current or most recent relationship, for men the number is 26 percent.

2. You are more likely to fake an orgasm if you are in love. “It was the men I deceived the most that I loved the most,” said Marguerite Duras.

3. Being in love and faking are less positively correlated for men than for women. Perhaps men want to look like studs, regardless of the seriousness of the relationship.

4. Women mind less if their partners fake orgasm. (Might some be positively relieved to have it over?)

5. Faking is correlated with age, but in complicated ways. It depends on whether you love your partner, whether you are a man or woman, and how old you are.

6. The more education you have, the more likely you are to fake orgasm. I found this to be the most interesting result.

The author, Hugo Mialon, is on the job market right now and he has a forthcoming co-authored AER piece, plus a revise-and-resubmit at the Rand Journal. His dissertation is “Five Essays on the Economics of Law and Language.”

OK, the orgasm stuff is not his most marketable side, but Hugo seems to be a guy with both ideas and good technical skills. Hire this man. If we had a slot at GMU I would be pushing for him, even though he probably fakes his orgasms.

Thanks to Newmark’s Door for the initial pointer to the paper.

How to improve meetings

I have heard of or experienced the following ideas for improving the running of meetings:

1. Make everyone stand up until the meeting is over.

2. Make everyone talk on the phone, even if you are in adjacent offices.

3. Give everyone a chess clock to limit the number of minutes they are allowed to speak for (this is a variant of an idea from Robin Hanson. Read here for some commentary.

4. Lock the door when the meeting starts on time and do not allow latecomers to enter.

Or how about this idea, channeled through Randall Parker:

Aided by tiny sensors and transmitters called a PAL (Personal Assistance Link) your machine (with your permission) will become an anthroscope – an investigator of your up-to-the-moment vital signs, says Sandia project manager Peter Merkle. It will monitor your perspiration and heartbeat, read your facial expressions and head motions, analyze your voice tones, and correlate these to keep you informed with a running account of how you are feeling – something you may be ignoring – instead of waiting passively for your factual questions. It also will transmit this information to others in your group so that everyone can work together more effectively.

So perhaps a bunch of buzzers go off when somebody says something confusing. Or the boss knows when no one is paying attention.

I’m all for voluntary experimentation, but let’s not forget what many meetings are about. Meetings are not always about the efficient exchange of information, or discovering a new idea. Meetings can be about displays of power, signaling that a coalition is in place, wearing down an opponent, staging “theater” to make someone feel better, giving key players the feeling of being insiders, transmitting information about status, or simply marking time until something better happens. It’s one thing to hate meetings. But before you can improve them, make sure you know what meetings are all about.

35 heroes of freedom

From Reason magazine.

Let’s not forget Evan Williams:

With a little luck and a lot of technology, Williams did as much as anyone in history to provide the once-scarce freedom of the press to millions of individuals, through his co-founding of Pyra Labs, which introduced easy-to-use Blogger technology and free-as-air Blogspot hosting to the masses.

Here is some critical commentary on the list. Thanks to for the pointer.

Signalling spam

I received an email message this morning with the not very promising heading “Not a scam”. The contents? Here goes:

Face it, you’re not getting paid enough for what you do

http://[email protected]/click.php?id=sicosyl

to get off our database follow this link
jdefdmu s vgkitbaqizknh bdqdwxpoav w brfpu gotwzykprljsywaonqk

From Nigeria I received the following:


If I were a spammer I might try “Not sure whether this is worth your time.”

The answer to bad technology is often good technology

A genetically engineered plant that detects landmines in soil by changing colour could prevent thousands of deaths and injuries by signalling where explosives are concealed.

The plant, a modified version of thale cress (Arabidopsis thaliana), is sensitive to nitrogen dioxide gas, which is released by underground landmines. The leaves of the plant change from green to red after three to five weeks of growth in the presence of this gas. “They are easy to spot,” says Carsten Meier of the University of Copenhagen, Denmark, who served as scientific adviser to Aresa, the Danish company that developed the plant.

Here is the full story. Note that the technology is not yet fully proven.

On a separate note, it appears that simply putting a tea strainer (mesh cylinder) in your neck could stop a large number of strokes.

The benefits of outsourcing

Virginia Postrel has been blogging up a storm on outsourcing, click here for a sterling post. In addition Her latest NYT column offers an excellent historical tale of outsourcing:

In the late 1980’s, Asian manufacturers began turning out basic memory chips, undercutting American chip makers’ prices and inciting a fierce policy debate. Many industry leaders argued that the United States would lose its technological edge unless the government intervened to protect chip makers.

In a famous 1988 Harvard Business Review article, Charles Ferguson, then a postdoctoral associate at the Center for Technology Policy and Industrial Development at M.I.T., summed up the conventional wisdom: “Most experts believe that without deep changes in both industry behavior and government policy, U.S. microelectronics will be reduced to permanent, decisive inferiority within 10 years.”

He denounced the “fragmented, chronically entrepreneurial industry” of Silicon Valley, which was losing market share to government-aided Asian businesses. “Only economists moved by the invisible hand,” he wrote, “have failed to apprehend the problem.”

Those optimistic economists were right. The dire predictions were wrong. American semiconductor makers shifted to higher-value microprocessors. Computer companies bought commodity memory chips and other components, from keyboards to disk drives, abroad. Businesses and consumers enjoyed cheaper and cheaper prices.

Far from an economic disaster, the result was a productivity boom. As global manufacturing helped to reduce the price of information technology sharply, all sorts of businesses, from banks to retailers, found new, more productive ways to use the technology.

“Globalized production and international trade made I.T. hardware some 10 to 30 percent less expensive than it otherwise would have been,” Dr. Mann estimates in an institute policy brief. (Her paper, “Globalization of I.T. Services and White-Collar Jobs: The Next Wave of Productivity Growth,” can be downloaded at

As a result, she estimates, gross domestic product grew about 0.3 percentage point a year faster than it would have otherwise, adding up to $230 billion over the seven years from 1995 to 2002. “That’s real money,” she said in an interview.

By building the components for new integrated software systems inexpensively, offshore programmers could make information technology affordable to business sectors that haven’t yet joined the productivity boom: small and medium-size businesses, health care and construction.

I link to Doug Irwin’s excellent outsourcing piece at The Volokh Conspiracy. Daniel Drezner covers the debate in his usual quality fashion. Arnold Kling offers good comments as well. Here’s hoping that this swell of intellectual support for free trade continues. Here is a more ambivalent Glenn Reynolds.

Classic arbitrage

A whole group of people trolls ebay looking for items that are “misplaced” because their descriptions are spelled incorrectly. If you list your “Haitian” painting as a “Hatian” painting no one will find it with a key word search. In essence this means that no one will find it at all, except of course for these noble entrepreneurs, these enforcers of spelling correctness.

Here is some information about our nation’s literacy or lack thereof:

David Scroggins…searches for misspellings…He has bought Hubbell electrical cords for a 10th of their usual cost by searching for Hubell and Hubbel. And he now operates his entire business by laptop computers, having bought three Compaqs for a pittance simply by asking for Compacts instead.

No one knows how much misspelling is out there in eBay land, where more than $23 billion worth of goods was sold last year. The company does flag common misspellings, but wrong spellings can also turn up similar misspellings, so that buyers and sellers frequently read past the Web site’s slightly bashful line asking, by any chance, “Did you mean . . . chandelier?”

One unofficial survey – an hour’s search for creative spellings – turned up dozens of items, including bycicles, telefones, dimonds, mother of perl, cuttlery, bedroom suits and loads of antiks.

Contacted, the sellers were often surprised to hear that they had misspelled their wares.

Ms. Marshall, who lives in Dallas, said she knew she was on shaky ground when she set out to spell chandelier. But instead of flipping through a dictionary, she did an Internet search for chandaleer and came up with 85 or so listings.

She never guessed, she said, that results like that meant she was groping in the spelling wilderness. Chandelier, spelled right, turns up 715,000 times.

Well, at least these people are paying a price for their egregious mistakes. Here is the full story. Thanks to Lucas Wiman for the pointer.

Iraqi oil industry to remain socialized

The U.S. is no longer pushing privatization of the Iraqi oil industry primarily because the Iraqi’s presently in control don’t want it privatized for “nationalistic” reasons. This is bad news for the Iraqi people. Even putting aside bold plans for returning the oil to the people it’s an important check on government that they must tax to spend. It’s hard enough to make the State respect the rights of the people even when it relies on them for its funding but when the people rely on the State for their funding its even worse. Call this the “no representation without taxation” principle.

Mall facts

1. At last count there were 1,175 large regional enclosed malls in the United States. Such malls account for about 14 percent of all U.S. retailing, or about $308 billion in sales.

2. The average mall customer spends 22 seconds looking at a mall map, and often leaves the map baffled.

3. The spaces near mall entrances typically yield lower rents and lower valued items. The shopper, upon entering the mall, is still disoriented and is not yet ready to buy something. That is why hair cutteries are so commonly found near mall entrances.

4. Men are more interested in people watching at malls, whereas women are more interested in shopping. Men also like the non-retail parts of malls, such as food courts, which do not require them to price shop or try on anything.

5. Bookstores have much higher “conversion rates” when they are outside of malls. Bookshops in malls are thought of as places to browse while waiting or marking time, but not places to buy books. Plus it is harder to bundle a mall bookshop with a cafe, which is often the most profitable place in the bookshop. For these reasons, bookshops are leaving malls in droves.

These assessments are from Paco Underhill’s new Call of the Mall. Underhill is arguably the leading expert in the anthropology of shopping, also read his views on selling real estate. This interview presents his views on web retailing.

How it is for me: To enjoy a mall trip, I need one fixed destination, combined with a firm plan to buy something. Add on a free hour to spare, and the desire to eat somewhere in the area or in the mall. The new Chipotle at Tysons Corner Mall is a big draw for me, since they have the freshest Mexican food in my rather sorry neighborhood. I would love a movie theatre at my mall but civilization in Northern Virginia is not yet so advanced. Beyond that, I want enough space in the mall to stretch my legs freely when walking. Given those preconditions, I will buy something for sure, once I have gone. Unlike Alex, I don’t treat sunk costs as sunk. Once I decide to do something I follow through, if only to discipline my choice of original commitments. That is how I make my highly rational, economically calculated, expected utility-maximizing shopping decisions.

The Illusions of Egalitarianism

Here is a consequence of egalitarianism. According to the Statistical Abstract of the United States, men’s life expectancy is on the average about 7 years less than women’s. There is thus an inequality between men and women….Egalitarians, thus must see it as a requirement of justice to equalize the life expectancy of men and women. This can be done, for instance, by men having more and better health care than women; by employing fewer men and more women in stressful or hazardous jobs; and by men having shorter work days and longer vacations than women…There remains the question of how to compensate the present generation of men for the injustice of having shorter lives than women. No compensation can undo the damage, but it may make it easier to bear. The obvious policy is to set up preferential treatment programs designed to provide for men at least some of the benefits they would have enjoyed had their life expectancy been equal to women’s. There is a lot of pleasure that could be had in those 7 years that men are not going to have. And since those years would have come at the end of their lives, when they are more likely to know their minds, their loss affects not only the quantity but also the quality of their not-to-be-had pleasures. One efficient way of compensating them for their loss is to set up government sponsored pleasure centers in which men may spend the hours and days gained from having shorter working days and longer vacations.

Read the whole post, taken from John Kekes’s new book The Illusions of Egalitarianism. I have long felt that egalitarianism makes no sense. I can understand assigning a priority to the interests of the poor. Donate a dollar to an orphan, not to Bill Gates. But the plight of the orphan is not worse because Gates exists (in practical terms quite the contrary). Nor do we worry about the “inequality” between the millionaires and the billionaires in Beverly Hills. Let’s not confuse egalitarianism with benevolence toward the needy.

Wikis: The private production of public goods

Sometime in the next few days or weeks, one of the world’s most comprehensive online reference sites will publish its 200,000th article. More accurately, one of the site’s contributors will publish the article.

Wikipedia, an encyclopedia created and operated by volunteers, is one of the most fascinating developments of the Digital Age. In just over three years of existence, it has become a valuable resource and an example of how the grass roots in today’s interconnected world can do extraordinary things.

Almost anyone can be a contributor to the Wikipedia. Almost anyone can edit almost any page. (Only serious misbehavior gets people banned.) Thousands of people around the world have added their expertise, and new volunteers show up every day.

It defies first-glance assumptions. After all, one might imagine, if anyone can edit anything, surely cyber-vandals will wreck it. Surely flame wars over article content will stymie good intentions. And, of course, the articles will all be amateurish nonsense. Right?

Well, no.

Wikipedia does have its flaws — including recent hardware problems that have made the site hard to use pending the installation of new server computers. But its very nature protects it from some of those other woes, and it has emerged as a credible resource.

Wikipedia is based on a kind of software called Wiki. A Wiki allows any user to edit any page. It keeps track of every change. Anyone can follow the changes in detail.

A Wiki engenders a community when it works correctly. And a community that has the right tools can take care of itself.

The Wikipedia articles tend to be neutral in tone, and when the topic is controversial, they will explain the varying viewpoints in addition to offering the basic facts. When anyone can edit what you’ve just posted, such fairness becomes essential.

“The only way you can write something that survives is that someone who’s your diametrical opposite can agree with it,” says Jimmy Wales, a founder of Wikipedia…

Wikipedia has about 200 truly hard-core users who show up daily, or almost daily, to work on the site, Wales says. He estimates that an additional 1,000 or so are regular contributors. Tens of thousands more are occasional or one-time contributors.

Read the whole story. Note also that the Wikipedia is only the beginning:

The Wikipedia is the biggest public Wiki, but far from the only one. There are Wikis covering travel, food and a variety of other topics. You can find a Wiki category page on Cunningham’s site.

Wikis are going private, too. They’re increasingly being used behind corporate firewalls as planning and collaboration tools.

Entrepreneurs are even starting to form companies around the technology, extending it for wider uses. One is SocialText in Palo Alto, which has been selling its software and services to some major companies, says Ross Mayfield, the company’s founder and chief executive.

My take: We’re just seeing the beginning of this innovation. Thanks to the ever-interesting for the link.

Taking expected utility theory seriously, or, A story about Tyler

In the post immediately below, Tyler writes that Robert Rubin sounds like a brilliant person whom he would like to meet. He especially likes the description of how Rubin thinks probabilistically. Readers may like this story:

I once had to choose between two different career paths and I was torn about what to do. I asked Tyler for his advice and he turned to me and said “calculate the expected utility of both choices.” At first, I was flabbergasted. Was he joking? I’d always thought of expected utility theory as a descriptive theory of how people behave not as a normative theory of how they should behave. Certainly, I’d never tried to use the theory to guide my own choices. Tyler remarked that even most economists don’t take expected utility theory seriously but most people could nevertheless benefit by quantifying their choices. So I took his advice and sat down to think hard about the probabilities and utilities. Surprisingly, I found this very helpful. Once I had some numbers on paper it became clear which was the better choice and I made that choice confidently and without feeling conflicted. As it turned out, the choice was good ex-post as well as ex-ante. Thanks Tyler!

Addendum: As you may recall, I now take sunk costs seriously too.

Robert Rubin

Brad DeLong reviews the new Robert Rubin book In An Uncertain World. Rubin sounds like a brilliant guy, and I am sorry never to have met him. I like this description:

I have never seen anyone else able to guide a meeting to the consensus he wanted by occasionally raising his eyebrows and saying little other than, “That’s very interesting, very important. Now I think we should hear what X has to say.”

Rubin himself emphasizes his habit of “probabilistic thinking,” always asking such questions as, “What else might happen?” and, “What if we’re wrong?”; looking at the full range of possible outcomes rather than the most likely or the most comfortable; and recognizing that just because things came out well in one case, you didn’t necessarily make a good decision, or that just because things turned out badly, you didn’t necessarily make a bad one.