Month: June 2006

Selling Alastair Cooke

In December 2005, Cooke’s family learned that his body had been surgically plundered and the pieces sold to different bidders. A body brokerage company had harvested his bones, falsified his medical records–claiming he had died at 85 of a heart attack–to make them more marketable, and then sold them to at least two tissue banks.

Cooke’s was one of more than 1,000 bodies allegedly stolen by the company, New Jersey–based Biomedical Tissue Services. Prosecutors say the company and the funeral home, Daniel George & Son, made millions of dollars harvesting pieces of the cadavers, instead stuffing bodies for burial with broomsticks and piping. An investigation is ongoing.

Here is the full story, and thanks to Bookman for the pointer.

Economics and the arts — roundup

1. I hate inspiring films.  This AFI list of the most inspiring films is yuck.  How about Audition, or Ichi the Killer?

2. Over at Slate, Meghan O’Rourke and James Surowiecki make the case for Buenos Aires in a wonderful multi-part series.  Here is their piece on "Argentina’s Woody Allen," whom I recommend.

3. Google does Shakespeare, the site is here.

4. Are European art museums falling behind?

5. Britney Spears admits to being "an emotional wreck."

John List and the economics of charity

Here is my New York Times column today.  The focus is on how we often make bad charitable decisions.  Excerpt:

…before we can improve our charity, we must first understand it. John A. List, an economist at the University of Chicago,
is studying fund-raising campaigns toward this end. Professor List,
combining his career as a researcher with a role as part-time
consultant, introduces variations into real world fund-raising
campaigns and studies the results. This reflects his core method of the
"field experiment," which he has applied to topics as diverse as
competition between the genders, how contestants cooperate on
television game shows and how markets work in baseball card trading.
Steven D. Levitt, co-author of "Freakonomics" and a colleague at the
University of Chicago, refers to Professor List as the young economist
most likely to win a Nobel Prize.

Here is another bit:

For purposes of contrast, Professor List and his team then increased
the attractiveness of the woman who asked for the money. The more
attractive women (a "one standard deviation increase in
attractiveness," in statistical terms) had as big a positive impact on
giving – in the range of 50 to 100 percent – as moving from the least
successful fund-raising method to the most successful.

A tale of two pueblos

San Agustin Oapan and Ameyaltepec both lie in the Mexican state of Guerrero.  They share a language (Nahuatl), a common agricultural heritage, and essentially the same gene pool.  Ameyaltepec split off from Oapan in the late eighteenth century; since then interbreeding has continued.  The villages are close together; "forty minutes by foot, or an hour by car," a villager once told me.  Oapan is roughly twice as large: 3000 inhabitants to about 1500 in Ameyaltepec.  Both feel remote.

San Agustin is filthy.  The streets are full of pig **** and drunks.  Ameyaltepec is not quite Geneva, but it is clean.  The pigs are kept off the street.  Drunks are nowhere to be found.  Homes are much better maintained.  Families are at least twice as rich as in Oapan.  Residents of Ameyaltepec work together to construct trade networks (for artisan works) spanning the entire range of Mexico.  They were "colonizing" Cancun while Oapan residents were still cultivating the nearby Cuernavaca.  Ameyaltepec is much more interested in charismatic religion.  Oapan residents criticize them for "saving all their money."  Town politics are much more fractious in Oapan.

I don’t know why the two pueblos are so different.  I do know that many people see some of the worst features of Oapan in Mexican migration to America.  Much of this is rooted in fact; problems with gangs for instance are very real.

When I look at Ameyaltepec I see contingency, culture, and incentives at work.  I don’t see why most parts of the United States cannot manage a comparable success with regard to Mexican-Americans.  Obviously we have greater institutional capabilities. 

In Mexico there are many Ameyaltepecs, albeit with differing details.  There are also large parts of Mexico with virtually zero crime. 

Latino immigration has gone better in Virginia than almost any other part of the United States.  I again see variation and contingency, of course without guarantees of success.

The tale of two pueblos is one reason – but not the only one — why I think large numbers of Mexican-Americans in the United States will work out well.

Comments are open but please make your points without attacking the other commentators.

Risk Analysis using Roulette Wheels

A PSA test can reveal the presence of prostate cancer.  But not all such cancers are fatal and treatment involves the risk of impotence.  Do you really want the test?  It’s difficult for patients to evaluate these kinds of risks.  Mahalanobis points us to an article advocating visual tools such as roulette wheels to help patients understand relative risks and chance.  Even better than the diagrams is this impressive video; the video may be of independent interest to the older men in the audience.

Markets in everything, alas no more

The Chinese government has banned restaurants from serving food on the bodies of naked women.  The practice was condemned as a violation of common decency by the commerce department.  …The practice of eating sushi off naked or nearly-naked women has long been popular with a certain clientele in Japan.

Here is the full story, and thanks to Yan Li for the pointer.  And if you wish to read about a truly unusual Chinese market, try this one.

What are the top economics journals?

Here is one recent ranking, courtesy of Newmark’s Door.  My view is simple.  The American Economic Review and Journal of Political Economy are the two most important journals.  The former will have more pieces with careful testing and design, but the latter has more conceptually important articles.  I find the JPE more enjoyable.  The Quarterly Journal of Economics has brilliant pieces which can tend toward the unsound or have imperfect execution.  Econometrica, while it remains a clear third or fourth in rank, is less important than it used to be, perhaps because pure theory has declined in influence.  For this same reason, the Rand Journal and Review of Economic Studies, while both still very good journals, have lost their previous luster.  Journal of Economic Theory mattered in the 1970s, but it has fallen off a cliff.  After that you have the top field journals, which of course vary by field.  Journal of Economic Perspectives and Journal of Economic Literature serve important functions, and are both fun and instructive to read, but they are rarely venues for presenting new ideas.  They report how new ideas have been interpreted and digested.

Science journals, especially Nature, are starting to become more important for economics.  My favorite field journal is the Journal of Law and EconomicsJournal of Finance is of very high quality, though finance is a world unto itself.  The relative returns to the top few journals have risen greatly in the last fifteen years; many more schools require publications in those journals for tenure than before.

How Economists and Journalists Can Get Along

Brad De Long and Susan Rasky have a list of Twelve
Things Journalists Need to Remember to Be Good Economic Reporters
and Twelve
Things Economists Need to Remember to Be Helpful Journalistic Sources
.  Lots of good stuff.  Here are two favorites, the first nominally for journalists, the second for economists.

Never write "economists disagree." No matter how limited
your space or time, never write "economists disagree." Write WHY economists
disagree. An expert who cannot explain why other experts think differently isn’t
much of an expert. A reporter who can’t fit an explanation of where the
disagreement lies into the assigned space isn’t much of a journalist. A
journalist who cannot figure out the source of the disagreement is a journalist
who is working for whoever has the best-funded public-relations firm–and is
working for them for free.

Get over your snobbery about local television news. This is a genuine
opportunity to reach the public. Learn to use it. Remember that the local TV
reporter’s gasoline-price story this evening will be seen by 300,000 people.
Your op-ed will be read by 20,000, if you are lucky. Your journal articles will
be seriously read by 12.

Should we legalize insider trading?

Henry Manne says yes:

The implications of what we already know of this “wisdom of crowds”
approach to price formation, as against the traditional marginal
pricing/arbitrage approach, are apt to be startling. We should rethink
any current policies based on a view of pricing in which we exclude the
best-informed traders and discard the wisdom of the many. For instance,
we now have a new and more powerful argument than we had in the past
for legalizing most insider or informed trading.

Since such trading clearly makes the market process work more
efficiently, it aids capital allocation decisions and informs business
executives through market-price feedback of the best predictions about
the value of new plans. Furthermore, the Supreme Court’s “fraud on the
market” theory of civil liability under the federal securities laws and
Congress’s ideas of correct civil damage claims for insider trading no
longer have any intellectual merit. The same is true of any other part
of our securities laws implicitly based on the notion of the marginal
trader as a rational arbitrageur of price.

The new approach would suggest that it is undesirable to have laws
discouraging stock trading by anyone who has any knowledge relevant to
the valuation of a security.

Here is one summary; here is the (gated) WSJ piece.  I find it hard to believe that legalized insider trading would boost the level of equity prices in the United States; I would be willing to bet against that view.  Some new developments would be reflected in stock prices more quickly but, given that most marginal investment decisions are financed by a) retained earnings, and b) debt, I doubt if this would improve resource allocation very much.  Also keep in mind that another function of equity markets is to share risk and help people save for their retirement.  Even if it is only an issue of perception, legalized insider trading won’t serve either of those ends.

For the pointer, I am grateful to Chris F. Masse.

Insurance markets in everything

Earlier this spring…Burgess agreed to
indemnify England fan Paul Hucker for more than 1 million pounds
in case he suffers “mental trauma” resulting from the team’s
first-round games against Paraguay, Trinidad and Tobago, and
Sweden. The premium costs about $195 and is one of hundreds of
similar shelter-from-the-Sven policies his Essex-based firm has
established for England fans.

For about the same price, Burgess says he’s insured the
virginity of three women in Inverness, Scotland, who believe they
will immaculately conceive the second coming of Christ.         

“I have Scottish fans taking out mental-health policies
that pay for treatment if England wins the World Cup,” says
Burgess, who has also sold 30,000 policies to California
residents fearful of being abducted by aliens.

Here is the full story.  Thanks to John de Palma for the pointer.