Month: November 2005

How to write a paper or give a seminar

At the Ph.d. level, that is.  John Cochrane has great advice throughout.  It starts as follows:

Figure out the one central and novel contribution of your paper.  Write this down in one paragraph.  As with all your writing, this must be concrete.

Here are John’s far more specific (and for most people less useful) suggestions for paper topics.

Thanks to Newmarks’ Door for the pointer, courtesy of Ngan Dinh.

Why are French Muslims rioting?

Try Jane Galt, who this morning did not play Civilization.  She starts here:

Muslim youth are rioting in France because breaking windows and setting cars on fire is fun.

Everyone who has ever taken their .22 out to the back forty and shot up a line of old bug spray cans knows this. Seeing things break, disintegrate, or explode, at absolutely no personal risk to yourself, lights up some primitive reptilian part of our brain with searing glee. I’ve often thought there would be big money for the firm that figured out how to build an adult recreation center where frustrated Americans could go to have a beer, take a sledgehammer to a used computer, and throw some glassware at the walls.

The Political Business Cycle

I am supposed to be voting for governor of Virginia today, no?  I just read the following promise from a presidential candidate in Asia:

Every Sri Lankan home will be gifted with a high milk-yielding cow from
Kerala which could be expected to yield 10 liters to 16 liters of milk
every day. Even families who live in flats, who could make suitable
arrangements to look after a cow, will receive a gift of cow.

The post from IndiaUncut also lists their "previous posts on cows."

Sex on the Margin

Sexual preferences are primarily biological in origin.  But sexual choice is about preferences and constraints.  Raise the price of sex with women and more men will choose to have sex with other men – that’s what happens in prisons.

In a remarkable paper, Andrew Francis (a graduate student at the University of Chicago) examines how AIDS has changed sexual choice.  With admirable precision, Francis lays out the price of sex:

…it is thousands of times more likely that a male would get HIV having sex with a man than having sex with a woman.  In terms of AIDS-related mortality, the expected cost of having unprotected sex once with a man is almost $2000, while the expected cost of having unprotected sex once with a woman is less than a dollar.

Thus AIDS changes the price of sex, do we observe changes in choice?  Francis wants to be careful about causality so he uses a clever instrumental variables approach.  He reasons that knowledge of AIDS and thus responsiveness to price is correlated with knowing someone who has AIDS and that knowing someone who has AIDS is exogeneous to other factors influencing sexuality.  Unfortunately, it appears that he only has information on whether a relative has AIDS and genetic factors mean exogeneity is unlikely to hold.  In fact, we would probably expect that simply knowing someone with AIDS is positively correlated with being homosexual (especially in 1992 when the survey was taken).   

Indeed, Francis finds, as expected, that women who have a relative with AIDS are more likely to be engage in homosexual acts and identify as being homosexual.  But Francis finds that men who have a relative with AIDS are significantly less likely to:

…have had sex with a man during the last sexual event…have had a male sexual partner in the last year… say they are sexually attracted to men…rate having sex with someone of the same gender as appealing…[or] think of themselves as homosexual or bisexual.

The tendency to greater homosexuality among women and less among men is exactly what the economic theory predicts given how AIDS affects the price of sex.  Genetic and social factors will have greater difficulty resolving this bifurcation so I think Francis has the upper-hand on the argument, although there may be counter-arguments based on the gay-uncle theory).

Importantly, note also that Francis finds that not only is sexual choice malleable, as the prison story I opened with suggests, but so are sexual desire and identity.  At least on the margin!  (A point that non-economists are likely to miss.)

Thanks to Emily Oster for the pointer.

Synthetic worlds

Question: You’ve proposed the creation
of an academic center for the study of synthetic worlds. What would
such a center try to accomplish?

Castronova: It would try to develop some
sense of the policy options in this space, try to parse out the
opportunities and the risks. It would develop educational applications.
It would develop the following research idea: If we built a series of
comparable synthetic worlds, couldn’t we unleash slightly different
policies in each one? It seems to me that this would be an
unprecedented opportunity to study human behavior at the social level.
No one has ever been able to study such things before, not in this way,
not using the tried-and-true experimental methods of the natural
sciences. Imagine how a few well-designed experiments about socialism
in 1870 might have affected world history. We have a lot of pressing
questions about societal behavior right now–human population response
to disease, for one example; community response to natural disaster,
for another. These things could be directly studied in synthetic
worlds; without them, all we have is pure theory, and historical data
(in which policy causality is basically impossible to untangle). The
idea would cost $20 million to $50 million, but it would also
dramatically improve business as usual in a large chunk of the

Here is the interview.  Here is the web page for the book.  Here is Castronova’s blog.  Here is the Amazon link to the book

I file this one under: Matters I am Probably Too Old to Understand.  Isn’t the ever-versatile Jane Galt addicted to Civilization?  I once tried the game and was too addled to play it, or even to figure out what playing it would mean, much less to use it for research.  I brought it on my laptop to my Mexican village, where they shrieked each time the cow went "moo." 

Is this experimental economics but with "synthetic," programmed people?  Is this experimental economics with real people playing a computer game but in a richer synthetic environment?  Is this experimental economics but cheaper because you use the "status money" of a game instead of real money?  Some mix of the above?  Comments are open…

Thanks to for the pointer.  And speaking of synthetic worlds, John Fowles has just passed away.

Independence Air Files for Bankruptcy

Last week I discussed the dilemma facing Independence Air, suggesting that a business model predicated on both regional jets and low fares was unlikely to survive.

Independence Air filed for bankruptcy today. There’s been much speculation about when this would happen, so my writing on the subject was hardly prescient.

The airline plans to hold a court-supervised auction, hoping that a buyer can be found during the next 60 days. They have $24 million in unrestricted cash which they believe will be sufficient to fund operations during this time.

I don’t have a prediction on whether or not the airline will find a buyer. Prudence would suggest not, but the old joke about how to become a millionaire quickly comes to mind…

    Start out with a billion dollars and invest in an airline.

There seems to be endless streams of capital which flow towards ill-fated airline operations. (Anyone interested might just keep an eye on eBay, entire airlines do tend to pop up there now and again.)

I may squeeze in one more post before my guest stint ends later today.  If not, my sincere thanks to Tyler and Alex for inviting me to guest blog, and to all of the Marginal Revolution readers who sent me notes and questions.  The quality and thoughtfulness of those emails was really quite astounding!

Why Americans are fatter

…Americans are not consuming more carbohydrates and trans fats because McDonald’s is super sizing our dinners.  Nor is our diet changing because Uncle Sam is subsidizing corn.  Rather, Americans are eating poorly because of a much more fundamental change in how we eat, specifically, the rise of snacking.  In fact, the amount we eat and drink between meals accounts for nearly all the growth in our consumption of carbohydrates and fats over the past thirty years.  Perhaps the biggest source of America’s recent weight gain and sugary diet is not so much the value "meal" but the simple snack.

…the free market has caught up with American food culture…With snacking, food is no longer about sustenance or even sociability: it is about amusement and self-medication.  We now eat to relieve our stress, to alleviate our boredom, or simply make ourselves feel better.  Food, in short, has become our drug of choice.  And the types of foods that are best suited for these psychological tasks are the very ones that cause us so many health problems, that is, sweets, fats, and refined carbohydrates.  In other words, the ultimate source of the changing American diet goes beyond McDonald’s, corn syrup, or the food pyramid; the ultimate source is the American way of life.

That is from J. Eric Oliver’s excellent Fat Politics: The Real Story Behind America’s Obesity Epidemic.  Here is Steve Levitt’s positive review.  Here is an LA Times review.

What about me? I am not going to exercise beyond my current levels of tennis, basketball, and walking are enough.  So I could become thinner in three ways.  First, I have recently switched from Raisin Bran to Spelts cereal in the morning.  Second, I prefer mineral water to Coke, but Szechuan restaurants do not serve the former.  I am waiting for Markets in Everything, and in the meantime I am not willing to give up Dan Dan Noodles or eat them with plain ice water or tea.  Third, in the last year I have started snacking on high-quality dark chocolate.  I have yet to decide whether I wish to fight this new source of additional calories…

Addendum: Comments are now open…

Is Religion Rational?

Is Religion Rational? The Economics of Faith is the title of a debate to be held between my colleagues Larry Iannaconne and Bryan Caplan.  The debate will be on Wed. Nov. 16, 6:30 pm in the front ballroom of Student Union Building II at George Mason University-Fairfax.  The debate is free and open to the public.  I think it is going to be a great debate (I will moderate).  Among the sorts of things to be discussed are:

Is religion rational, irrational, or distinct from rationality?  What does economics have to say about religion?  Why is religion demanded and supplied?  What effect does religion have on economic, social and political outcomes?  How does an understanding of religion affect our understanding of economics and politics?

How to ask for a hotel upgrade

I find that a fax is better than a call because when you phone your luck is dependent on who answers, whether they have time to deal with your request, and whether they even remember what you wanted once you hang up. A fax stands a better chance of going to the right person’s desk and the piece of paper can serve as a reminder. It’s not a silver bullet, but at nice properties it seems to work more often than not. And it’s one step in the process.

I’ll likely also have mentioned my upgrade request with my reservation. So combined with the fax and a conversation at check-in I have a pretty good success rate.

It happens most frequently though when you

    check in very late when all the other rooms might just be gone.

A single night stay, late check in, often means that they can give you the upgrade without tying up the room that they might otherwise sell to a higher paying guest. When the room would go empty it’s a costless perk for the hotel to deliver.

That’s when the great suites are most often given away — when the guest isn’t going to be around long enough to enjoy it!

Being entitled to an upgrade of some kind helps as well. If you travel a lot, focus your loyalty on a single chain and earn elite status. (Know the details of what the chain offers to elites when selecting a program.)

Even if you don’t travel enough to earn elite status, many hotel programs offer a low tier of recognition just for getting their co-branded credit card. The Marriott Visa comes with Silver status. The Hilton Visa and America Express come with Silver status. If you spend $20,000 on the Hilton Amex in a year you get Gold status. The Starwood American Express comes with ‘preferred plus’ status, which is basically Gold without the bonus points. The Priority Club program doesn’t offer status with their credit card, but even their top tier can be had without staying a single night — just earn 60,000 points in a year (12,000 can be earned opening a checking account, points can be purchased, bonus points count, points can be transferred in from other programs).

Taken together, these strategies won’t work 100% of the time, but they should help keep you out of the undesirable rooms and might just get you that great ocean view.

HIV detection on demand

Ms. Brown would get her results in just 20 minutes, thanks to one of
two new tests that AIDS workers say have revolutionized testing for

On Thursday, the Food and Drug Administration’s Blood Products Advisory
Committee heard testimony on whether to recommend over-the-counter
sales of the rapid test for home use. The agency approved a home
testing kit in 1996, but users have to mail a blood sample to a
laboratory and wait for results by telephone.

Proponents say
rapid testing in the home will reduce the stigma and other obstacles
that prevent many people, including one in four of the nearly one
million Americans who are infected with H.I.V., from getting tested and
starting treatment. Research shows that people who learn they are
infected are less likely to infect others.

Here are the details, note that test is an easy oral swab.  I am not much worried about immediate suicides ("The most emotional responses come from negatives," says the article).  But what are the further ramifications?

1. The test is in the hands of the individual, and the kit presumably does not issue a credible AIDS-free certificate.  So perhaps we return to a greater reliance on trusting the word of the individual — "don’t worry, I tested negative a few weeks ago."  Formal certificates of health might become less expected.

2. Will lovers-to-be ask for an on-the-site test?  There is a stigma attached to asking a partner about his or her status.  It suggests you often sleep with people whose health status you are unsure about; the alternative impression is "of course I’ve never done this before, and I bet you haven’t either.  I’m not used to asking.  HIV, what’s that?"  And how much fun is it to watch a potential partner waiting for the results?  Do you bring little consolation cards in case the test turns out badly?  The resulting unwillingness to pry may further increase the reliance on verbal assurances.  Again, the presence or lack of a certificate — however dated — may provide a clearer focal point and thus greater information and clarity.

3. How often should you test yourself?  Given the signaling point from #2, what should you tell your next partner?  That you test yourself every year?  Every month?  Every day?  Which frequency would you find most reassuring in a potential partner?  Keep in mind the probability of a lie or false result. 

You can spin this one either way.  You might assume that someone who self-tests every day has dangerous habits.  Alternatively, you might assume (at least in pure theory) that the previous partners have been monitoring the test results, and that you don’t need to.  "Hey, if two hundred people have slept with you in the last year, a few of them must have checked you out."  Don’t you usually find the presence of other "customers" reassuring?

4. Say you test yourself after every new partner.  You have a better sense of who infected you, which in turn identifies a greater number of infected agents in advance and also deters self-recognized infectors.  Therefore people will test themselves less often than is socially optimal.  The main benefits from testing may accrue to others, not to yourself.

Hmm…it’s not so simple after all.  But I still believe this test is likely a positive development.  Comments are open…

p.s. We thank Robin Hanson for his guest blogging!

Things That Go Bump in Physicists’ Night

Truth be told, physicists are terrified of quantum mechanics. Really.  The rules of quantum calculation seem so strange that anyone afraid of losing his or her mind should be scared.  (Those who love to lose their minds, on the other hand, adore it.) 

Struggling to make the quantum rules square with a reality "out there," many physicist’s position is "shut up and calculate."  Others have abandoned standard logic, probability, or decision theory for "quantum" versions of these things, or have decided that consciousness must play a fundamental role. (There is even a quantum game theory.)

In eleven days I give my first talk at a physics department, on my conservative research program that tries to have it all: the quantum rules, a reality out there with no special role for consciousness, and keeping standard logic, probability, and decision theory.  I’m not quite there yet, and I may be too close to my work to be objective, but I feel I’m very close. 

Of course we can’t make all the quantum strangeness go away.  For example, reality seems to be intrinsically non-local, and it seems to be far larger than we ever imagined.  But the universe we are all familiar with now is far larger than our ancestors ever imagined, and even Newton gave up on locality. 

Fear not the quantum night – it really will all make sense someday. 

$3 room nights at the Hilton Tokyo

I just booked an executive room at the Hilton Tokyo for $3 a night on Expedia. The rate includes breakfast.  (The rate on Hilton’s website appears to be ~ US$300 per night.)

Mistake fares and hotel rates happen all the time. The easiest way to learn about them is to sign up for emails from FareAlert.

Usually there’s a keystroke error somewhere and boom… One of my favorites a few years ago was a $55 refundable/changeable business class ticket to Puerta Vallarta. While I was laying on the beach at the Westin there I missed British Airways’ $20 fares from the U.S. to anywhere in Europe. Many of the fares show up at in the "Mileage Run" forum, and are then sent out by mass email on FareAlert. It’s been covered extensively in the media, though, and there are thousands of subscribers — so once you get an email you have to act quickly.

This Hilton rate won’t last long. This is what fare alert had to say a few minutes ago:

    The Hilton Tokyo is offering rooms for only $2/night (and $3/night for executive level rooms which include breakfast). This offer appears to be valid at least through August 2006, and should work for all dates where the hotel is not sold out.

There’s always some chance that the rate won’t be honored by the hotel, so wait a few days before buying airline tickets…

Update 9:41 am: A quick call to United Mileage Plus and I have 2 first class award tickets to Tokyo (flying ANA) on hold, the plan is to stay a week and then go on to Bangkok (using Thai Airways on the same award ticket) for a few days.  It’s just on hold – I haven’t ticketed yet – I’ll wait to be sure the hotel in Tokyo honors the $3 rate.  And I’ll still check out award availability on a bunch of other airlines before settling on a plan.

Update 10:08 am: The Hilton Osaka is also available on the same rate glitch over at Expedia.

Update 11:29 am: The deal is no longer available at the Hilton Tokyo, Expedia shows no availability for any date.  However it does seem to still be bookable at the Hilton Osaka.

Lockhart, Texas

Lockhart, a town of about 11,000, has a hollowed out core, perhaps due to the local Wal-Mart.  The architecture dates from the 1890s.  The large County Courthouse is in the style of the French Second Empire.  German names such as Vogel are stencilled on the buildings, although mostly Mexicans hang around downtown these days.  In both look and feel, it reminds me of the more obscure German parts of southern Brazil.  Yet it is only half an hour from Austin.

The best barbecue places in Lockhart open between 7 and 10 a.m..  The pitmasters tell me they have to be there anyway, to look after the meats.  They can close as early as 4 p.m.

The ingredients are simple: salt and pepper rub and meat to die for.  Slow cooking in open pits.  Schmitty’s lets its pit spill over onto the restaurant floor; be careful not to step or fall into the fire when you walk in the door.  Did I mention that town fire and safety regulations are lax and they have a friendly insurance agent with a taste for barbecue?

Barbecue came from the Caribbean to the Carolinas and then to Tennessee; Tennessee migrants brought it to Texas, where it mixed with the indigenous Mexican barbecue tradition.  Germans set up meat markets in Lockhart (drawing supplies from the Chisholm trail cattle drives) and shortly thereafter attached barbecue pits, circa 1900.  The food owes as much to German sausage-making and the Schlachtplatte [slaughter plate] tradition as to traditional barbecue.  Sauce is frowned upon.  In Kreuz Market the food comes on plain paper and you eat with your fingers.  Sauerkraut and German potatoes are the two most prominent side dishes.

All other barbecue will now taste worse.  At what discount rate, or at what implied rate of memory deterioration, am I better off for having been there?  Or do seek something other than happiness through food?

Growth and Stocks Seem Unrelated

In the latest issue of Pacific-Basin Finance Journal, Jay Ritter looks at long-term changes in sixteen countires; he finds that

the cross-country correlation of real stock returns and per capita GDP growth over 1900–2002 is negative,

specifically -0.37, with a p-value of 0.16.  For 19 nations from 1970 to 2002 the correlation is -0.08, and for 13 other nations from 1988 to 2002 the correlation is 0.02.  These confirm previous similar results.  He expains these results saying,

If increases in capital and labor inputs go into new corporations, these do not boost the present value of dividends on existing corporations. Technological change does not increase profits unless firms have lasting monopolies, a condition that rarely occurs. Countries with high growth potential do not offer good equity investment opportunities unless valuations are low.

During the dotcom boom, I had doubts about the relation between the clear (if modest) longterm economic benefits of the web and the less clear profits to be gained by web first movers.  (So I was mostly divested of stocks then.)