Month: July 2006

More Police, Less Crime

After more than two weeks of unusual killings and robberies in Washington DC, Police Chief Charles H. Ramsey has called a crime emergency.  During a crime emergency the Chief can increase shifts and get more police on the street.  This is exactly the right thing to do.  My research with Jon Klick shows that crime in Washington DC falls significantly during high terror-alert periods when the police double up on shifts much as they do during a crime emergency. 

More generally, when one combines estimates of police effectiveness that come from myself and Klick, Steve Levitt, Bill Evans and Emily Owens and others with data on the costs of hiring police, it’s clear that police are a bargain.  We could double the number of police in the United States and the costs of crime would fall by substantially more than the cost of police.  (Reallocating police and prison space from drug users to violent criminals would also help.)

Mexico fact of the day

Number of Mexicans in the USA who voted in the recent (Mexican) Presidental election: 28,000.

I find this to be remarkably low.  58 percent of those voted for Calderon, although presumably the small number of voters corresponds to a strong selection effect rather than a representative sample.

Here is one account, although it does not look into the reasons for non-voting very deeply.  Thanks to Sergio Hernandez for the pointer.

Why is the top one percent earning more?

Brad DeLong writes:

The big rise in inequality in the U.S. since 1980 has been
overwhelmingly concentrated among the top 1% of income earners: their
share has risen from 8% in 1980 to 16% in 2004. By contrast, the share
of the next 4% of income earners has only risen from 13% to 15%, and
the share of the next 5% of income earners has stuck at 12%. The top 1%
have gone from 8 to 16 times average income, the next 4% have gone from
3.2 to 3.7 times average income, and the next 5% have been stuck at 3
times average income.

It’s hard to attribute this pattern to a rise in the premium salary
earned by the well-educated by virtue of the skills their formal
education taught them. Such a rise in the education premium would
produce a much smoother rise in relative incomes among the whole top
tenth of the income distribution. The cross-percentile pattern doesn’t

It is especially hard because most theories of the rising education
premium attribute it to skill-biased technological change generated by
the high-tech computer industrial revolution. But the high-tech boom’s
effects on overall productivity became large only in the second half of
the 1990s, well after the biggest increases in inequality. The timing
doesn’t fit either.

Something else is going on.

Leisure time improvements, opportunities like the Internet, and CPI quality mismeasurement have made the lot of the bottom tiers somewhat better than these statistics indicate.  (The absorption of would-have-been real wage gains into more expensive health benefits is another relevant factor.)  Still the relative pattern is undeniable.

My intuition is that there has been an increase in the ability of very smart and very wealthy people to buy up undervalued assets and turn them into greater value.  Improvements in capital markets and market liquidity are behind this trend, as well as the mere demonstration effect that many people have tried this and succeeded.  Julio Rotemberg remains an underappreciated economist.  American entrepreneurs were building up capabilities which exploded in value once the economy stabilized in the early 1980s.  Michael Milken-as-we-knew-him could not have existed in 1973.

Note two features of this hypothesis: First, it is correlated with but not coincident to productivity improvements, which will follow with some lag, thus fitting the data.  The capital gains come before the improvements.  Second, it might explain the non-linearity of the spike in incomes.  A modest multi-millionaire is not wealthy enough to play at T. Boone Pickens or Warren Buffett.  He can "go along for the ride" in a hedge fund, but won’t reap most of the value from the major arbitrage opportunities.  Those end up concentrated in a relatively small group of people and of course this tendency may be self-reinforcing with the accumulation of wealth and arbitrage expertise.

It might also help explain why the Bush changes in marginal tax rates seem to have produced more revenue than had been expected (yes I know about the weird baselines and projections and the like, but still it was a surprise and a welcome one).  It is not a classic supply-side substitution labor supply effect, but rather a wealth effect.  The very wealthy can put their assets to especially productive uses, or at least especially high capital-gains-producing uses.  That puts high capital gains revenue, high productivity, and growing disparity of incomes all together in the same pot.  Sound familiar?

Addendum: Here is Brad DeLong on press coverage of the revenue boost, and also on the small size of the self-financing effect; we also thank him for the endorsement (though note I’ve never been a member of any political party).

Can macromodels and simulations be trusted?

The Economist runs a good article.  Excerpt:

But how plausible were the numbers? Twelve years on, economists have
shown little inclination to go back and check. One exception is Timothy
Kehoe, an economist at the University of Minnesota. In a paper
published last year, he argued that the models “drastically
underestimated” NAFTA‘s impact on trade
flows (if not on jobs). The modellers assumed the trade pact would
allow people to buy more of the goods for which they had already shown
some appetite. In fact, the agreement set off an explosion in the
exports of many products Mexico had scarcely traded before. Cars, for
example, amounted to less than 1% of Mexico’s exports to Canada before
the agreement. By 1999, however, they accounted for more than 15%. The
only comfort economists can draw from their efforts, Mr Kehoe writes,
is that their predictions fared better than Mr Perot’s. A low bar

Here is Kehoe’s paper.

Suite Francaise, part II

They were alone — they felt they were alone — in the great sleeping house.  Not a word of their true feelings was spoken; they didn’t kiss.  There was simply silence.  Silence followed by feverish, passionate conversation about their own countries, their families, music, books…They felt a strange happiness, an urgent need to reveal their hearts to each other — the urgency of lovers, which is already a gift, the very first one, the gift of the soul before the body surrenders  "Know me, look at me.  This is who I am.  This is how I have lived, this is what I have loved.  And you?  What about you my darling?"  But up until now, not a single word of love.  What was the point?

And no, I am not going to tell you what happens…

In praise of stupid sales help

In Lyon most of the sales assistants are quite smart.  Unlike many American sales clerks, they can actually help you, at least when they choose to.  There is not much unskilled labor walking around the typical FNAC store.

But this is a mixed blessing.  A clerk will spend half an hour "helping" a customer.  I wait and wait.  (It is worse than the Falls Church Public Library.)  I do not understand their conversations.  Did in fact Sartre grasp Heidegger’s critique of phenomenology, and what does that mean for the purchase of a cell phone?  The question has not been resolved.

Customers cannot talk for so long to a stupid person.  So if you know what you are doing, you might prefer that the sales people be stupider.  Stupid people will spend more time, in percentage terms, helping the already informed.

"Batteries are over there."  Even a stupid person can manage that.

Theories of urban renewal

If you could change one thing about NYC/Russia, what would it be?

New York: End the mall-ification of the city. Throw out many rich
people and replace with adorable starving artists. Make Manhattan much

Petersburg: Start the mall-ification of the city. Throw out the
nationalist punks and replace with normal middle class folks. Make the
city much more prosperous.

That is Gary Shteyngart, via Bookslut.

The Tragedy of Beirut

Richard Engel, Middle East bureau chief for NBC news, writes about how much can change in a matter of weeks.Beirut

A few weeks ago, I was here and working on just that story – it was even called “Beirut is back.”

was supposed to be about how the economy has revived, the restaurants
are full, the nightclubs are hopping, and the beaches are full of women
in bikinis.

Today I’m standing here wearing a flak jacket, watching the airport burning, and there are more strikes expected.

Thanks to Amanda Agan for the pointer.

PJ O’Rourke on Moral Sentiments

PJ O’Rourke is so funny you sometimes forget how smart he is.  I learned more about economic growth from Eat the Rich: A Treatise on Economics than from many a mathematical treatise.  In particular, in Eat the Rich O’Rourke pounded home the point that absence of government led to very different outcomes in 19th century America than in post-communist Albania.  Economists have only just begun to try to explain why.

Here is a recent review from O’Rourke of Adam Smith’s Theory of Moral Sentiments.

Smith claimed that what we do,
when we develop morality, is shape our natural sympathies into the
thoughts and actions that we would expect from an Impartial Spectator
who is sympathetic, but objective and all-knowing, yet still
sympathetic anyway.

"When our passive feelings are almost always so sordid and so
selfish, how comes it," Smith asked, "that our active principles should
often be so generous and so noble?" The answer is "the inhabitant of
the breast . . . the great judge and arbiter of our conduct." Looking
at things from the Impartial Spectator’s point of view instructs us in
the self-discipline that we need to behave well in our condition of
natural liberty. Consider how toddlers or drunks behave, who haven’t
yet received, or who have temporarily forgotten, their instructions.

If, Smith wrote, the Impartial Spectator did not teach us "to
protect the weak, to curb the violent, and to chastise the guilty,"
then "a man would enter an assembly of men as he enters a den of
lions." Or toddlers. Or drunks. Or Jack Abramoff’s office.

How to write a personal ad

Here is her reasoning for what she has done, see here too.

My take: The goal is to induce many high-quality men into responding.  That means finding the relevant "bottleneck" for those men and getting them over it.

For instance if you don’t mind lying (or writing lots), promise
that you will respond to all messages, one way or the other.  More
people will write in.  Otherwise men fear they are wasting their time by responding.

What else?  Photos, or at least links to photos,
are key.  (Even better: a link to one’s vlogging.)  The man will judge the woman — as "wife material" — by the
photo.  Of course the woman has to pass "the
looks hurdle" in any case, so this won’t rule out many true eligibles.  If a man doesn’t see a photo, the odds are he thinks the woman doesn’t pass his test.  This is not just adverse selection; the default is that any given woman doesn’t pass the test.

Note: not every man is
looking for a supermodel.  But every man wants a wife who doesn’t look a certain way or set of ways
(When I was single I didn’t want women who wore Prada.)  Posting the photo signals to some men that "you look
right" to them, and again increases the chance they will write.

After that, the rest of the ad should be accurate, signal high intelligence in fairly straightforward fashion, but otherwise be bland.
You can say one or two idiosyncratic things, perhaps to attract a few
ardent admirers, but they should not be too edgy or scare anyone off. 

Don’t let men
rule themselves out because of fears which may or may not be valid.  If a smart searching man likes
how you look, and sees you are smart, he will write to you.

Note that the
male audience is error-prone and self-deceiving, so the self-description
should involve some ambiguity rather than a perfect description of
self.  The woman cannot trust the men to do the proper ex ante sorting.  Had I known I wanted a
Russian Jewish-Armenian lawyer and former linguist with not exactly my political views?

BUT: What if the advertising woman self-deceives about a good partner more than the eligible men do?  In that case the woman might want to be very specific about what she is like.  The number of respondees goes down and the woman hopes that the right man will see through her character and choose her. 

Does that sound like Megan Non-McArdle?  Are highly specific ads an attempt to abdicate responsibility for choice?  A pre-emptive move to avoid rejection?  Or are they a demand for the near-impossible, to seek the most romantic story imaginable, and to request only a man who is infinitely perceptive and full of love from the get go? 

Stay tuned…

Addendum: If a woman writes a blog, and in part uses the blog as an extended (and thus detailed) personal ad, does this mean she is especially difficult to please?  Especially romantic?