Month: April 2006

How to rebuild New Orleans: legalize shantytowns

This is me, from

Many economists have suggested it is not worth rebuilding New Orleans
at all. But they belie their own discipline by not asking, "At what
price?" Hurricanes or no hurricanes, the devastated areas in New
Orleans remain more valuable than most parts of the world, if only
because they lie in a famous U.S. city. At some price, people will want
to work and live there. City planners simply need to acknowledge that
this price is lower than it used to be…

What is the advantage of turning wrecked wards into shantytowns? The
choice is between cheap real estate or abandonment. The land will not
sustain high-rent, high-quality real estate. Given the level of risk,
much of it will not even support bland middle-income housing. Imagine
that the government took a spot suitable for a McDonald’s but mandated
that subsequent restaurants should have fancy d├ęcor and $30 steaks. The
result would not be a superb or even middling bistro but rather an
empty spot. No one would set up shop because the market could not be
made profitable at that quality and price. A similar principle applies
to New Orleans real estate. If various levels of government try to
mandate higher values than the land will support, the private sector
will simply withdraw its participation, leaving nothing behind.

Read the whole thing, as they say, and look out for further installments on Louisiana each day this week.

The Great Editors

After 18 months and repeated promises from the journal editors, I had no referee reports and reluctantly withdrew my article.  I had never withdrawn an article before but this was the second time I had been ill-treated at this journal.  I thought about venting my anger here but remembering Ayn Rand’s dictum that justice is about rewarding virtue more than punishing vice I decided to take the high road and reflect on some truly great editors.

Top of my list is Sam Peltzman at the Journal of Law and EconomicsIn my experience, JLE referees are very good but none better than Peltzman himself.  Peltzman reads submissions and usually returns his own comments.  Every paper I have ever submitted to the JLE has been improved because of Peltzman’s comments.

Aaron Edlin at the Berkeley Press Journals.  I’m a big fan of the BePress journals; referee reports in 60 days, submit once and be evaluated for four journals simultaneously, electronic submission and referee reports and an opportunity to ask the referees questions anonymously.  The technology wouldn’t work without a great editor, however, and Edlin writes very thoughtful, intelligent comments, he also has a good sense for quality and what is important.

Robert Higgs at the Independent Review.  No one helps an author improve not just the quality of argument but the quality of writing more than Bob Higgs.  Working with him is always a pleasure (note that I am assistant editor at the Review as well as a contributing author).  The Independent Review is not a top academic journal but it’s an intelligent blend of philosophy, politics and economics that is accessible to laypeople as well as to academics. 

Ed Glaeser, Robert Barro, and Lawrence Katz at the Quarterly Journal of Economics.  I’ve published several papers at the JLE, the BePress journals and the Independent Review but I have only rejections to show for my submissions to the QJE.  Nevertheless, I hold the editors in high esteem because they read submissions before they go to referees and they send back quick responses.  It’s one thing to be rejected with a stupid report after 12 months it’s quite another to be told, interesting paper but not for us, try at journal X after just 3 days (I have heard that Barro used to reject papers in hours but this made people mad so now he holds them for at least a few days).  The QJE is the most interesting journal in economics today.   

The great editors are productive and generate quick turnarounds and they share some other virtues.  The great editors have personality and verve and it shows in their journals – the journals I have mentioned are not just collections of articles they are a reflection of the editor’s vision about what economics is and where it should be going.  Finally, unlike many others, the great editors in my view don’t model themselves as bouncers whose job is to prevent the riff-raff from penetrating the sanctum sanctorum.  Instead, the great editors encourage bold ideas and work to raise the marginal product of their authors and of the profession. 

Comments are open if you want to nominate some of the other great editors.

Claims my Russian wife laughs at, a continuing series

"Even if you care more that we go to this event together, that is only choice at the margin.  Looking at the total summation of our time, I need you more than you need me.  Husbands need wives more than vice versa; the data on this are clear."

"I don’t care how tall he is.  If you can’t see the top of his [Kobe Bryant’s] head, the specifications on the TV screen are causing distortion."

"Hey, I’ m more efficient than you are!"

The best sentences I read Sunday

In an economy of stuff, the laws of property govern who owns stuff.  In an attention economy, it is the laws of intellectual property that govern who gets attention.

The center of gravity for formal inquiry changes places too.  In an economy of stuff, the disciplines that govern extracting material from the earth’s crust and making stuff out of it naturally stand at the center: the physical sciences, engineering, and economics as usuallly written.  The arts and letters, however, vital we all agree them to be, are peripheral.  But in an attention economy, the two change places.  The arts and letters now stand at the center.  They are the disciplines that study how attention is allocated, how cultural capital is created and traded.  When your children come home and tell us that they have decided to major in English or art history, no longer need we tremble for their economic future.

That is all from Richard Lanham’s excellent The Economics of Attention: Style and Substance in the Age of Information.  The truly discerning will in particular appreciate the merits of pp.39-40 in this book, but I am not going to give them away…

How will the web affect TV shows?

Shortly you will be able to see Lost episodes for free on the web, albeit with commercials (btw, my theory is that they have entered a parallel universe and are being tested by a non-omnipotent God).  I’ve bought Battlestar Galactica episodes through iTunes. 

But how will this affect the content of TV programs?  I see a few possibilities:

1. Individual episodes are more complex and less likely to be self-contained.  To watch only one show of Lost or BSG leaves you baffled.  But who can make sure he catches every episode?  What if you want to leave the country for a while?  Now if you have missed a show, you can use the Web to keep in touch with the longer and more integrated story.  You will do this even if you, like I, find web viewing distasteful and inconvenient.  Not everyone can afford TiVo, and some of us still need Yana to operate the remote and indeed the service itself.

This mechanism will raise the intellectual quality of TV.

2. Perhaps the time lengths of programs will vary more.  Has The Sopranos gone on a nearly two-year hiatus?  How about a fifteen-minute web shortie to keep us interested?

3. (Some) webcasts will be reproducible on iPods.  You will show the highlights of episodes to your friends.  Perhaps many producers will make episodes to stress "the best two minute stretch or skit" rather than the show as a whole.  Just as the song is outliving the album, perhaps the skit will outlive the show.

4. Might it, as Mark Cuban suggests, support soap operas in real time?  What better to watch on your work computer, during work hours?  In the longer run, the more entertaining your computer becomes, the more people will be paid by commission; blame blogs for that too.

5. TV on the web, in essence, shortens the release window for ancillary products.  How big a deal is the DVD in six months’ time if a web version exists now?  And what does shortening the release window do?  It will be harder to figure out what is a hit.  It will lower movie budgets.  It will increase the relative advantage that low-cost drama has over special effects spectaculars.  Surely you can think of more effects on this count.

Comments are open…

The Gender Imbalance Disequilibrium

China’s gender imbalance is now 117 boys for every 100 girls and for second and third children (when allowed) the imbalance can be as high as 151 boys for every 100 girls.  Millions of men, perhaps 15% of the population, may not be able to find wives.

"The world has never before seen the likes of the
bride shortage that will be unfolding in China in the decades ahead," says AEI demographer Nicholas Eberstadt.

The Chinese government has responded by making selective abortion illegal and by giving significant bonuses to parents of girls.  Yet blackmarket ultrasound is available and, according to 60 Minutes, in demand.  Some reports suggest that the gender imbalance is increasing.

Yet from the perspective of evolutionary fitness having a girl in China is now much better than having a boy.  Boys who can’t find mates won’t be giving their parents any grandchildren.  Will it take a generation of parents without grandchildren for evolutionary incentives to kick in?  Why hasn’t this happened already?  How hard is it to figure out that having a boy, especially if you are poor, means the end of your lineage?

Hat tip to Paul Rubin for pointing out this puzzle to me.

Markets in everything — Scriabin rising

Screenings of Colin Farrell’s latest film will be accompanied by a series of smells at a cinema in Japan.

Seven fragrances will waft from machines under back row seats during historical adventure The New World [TC: much underrated, but you need the big screen].

A floral smell will accompany love scenes, with a mixture of peppermint and rosemary for tear-jerking moments.

Cinemas across the country will be able to download
programmes to control various sequences of fragrances for other
upcoming films.

Illegal downloading and competition from the small screen will encourage further moves into live experiences which cannot be replicated at home.  Anyone up for a live voodoo ceremony?  Note, however, that a programmable home version provides "aromatheraphy" for work or horoscope readings.  Here is the story.

Department of Uh-Oh, a continuing series

Reading web sites raises my estimate of the benefits of being already married:

Half of all women make their minds up within 30 seconds of meeting a man
about whether he is potential boyfriend material, according to a study
on speed-dating.

The women were on average far quicker at making a decision than the
[emphasis added] during some 500 speed dates at an event organised as part of
Edinburgh Science Festival.

The scientists behind the research said this showed just how
important chat-up lines were in dating. They found that those who were
"highly skilled in seduction" used chat-up lines that encouraged their
dates to talk about themselves in "an unusual, quirky way".

The top-rated male’s best line was [TC: yikes, and what kind of British abomination is this?] "If you were on Stars In Their
Eyes, who would you be?", while the top-rated female asked bizarrely:
"What’s your favourite pizza topping?"

Failed Casanovas were those who offered up hackneyed comments like "Do
you come here often?", or clumsy attempts to impress, such as "I have a
PhD in computing".

Here is the link, and yes sadly I prefer my pizza plain.  Perhaps some of you must now, over longer periods of time, simply blog your potential conquests into submission.  By the way, the researchers also suggest that "travel" is the best topic of conversation for spurring a connection and future dates.

The Neapolitan Enlightenment

No, it has nothing to do with debt-collecting strategies of the Sopranos.  Rather it refers to the kind of book I dream ofThe Case for Enlightenment: Scotland and Naples 1680-1760, by John Robertson, compares the Neapolitan and Scottish Enlightenments.

There is Ferdinando Galiani, the brilliant midget who understood supply and demand, outlined subjective value theory, formulated an early version of the price-specie flow mechanism, and yet opposed freedom of the grain trade.

Antonio Genovesi held the first European chair of political economy.  He believed economic growth was the path to happiness.  No clergy were allowed in the post.

Giambattista Vico — well, where does one start?  History is cyclic, rhetoric is all-important, poetry is a primary source of knowledge, and the Cartesian method does not apply to the public sphere.  He believed, correctly, that the true wisdom of mankind could be received through a sufficiently deep reading of Homer.  The history of ideas is never quite the same after reading Vico. 

If you want to know how these people relate to Hume and Bayle, this is your book.  It does not go far enough or deep enough — why so little talk of Plato and the Gnostics? — but it is about time we can hold something like this in our hands.  In the meantime we should get this guy to publish his stuff.

The best idea I heard today

…in a wonderful but still unpublished paper titled "Should Taxes Be Independent of Age?" my Harvard colleague Michael Kremer suggests that younger workers should face lower income tax rates than older workers.

Quite simply the elasticities of the young are larger; Greg Mankiw has more.  Get this:

Kremer estimates that young workers are about four times more responsive to work incentives than the middle aged.