Month: December 2006

Is procrastination rational?

Isaac Sorkin and Henry Swift give us some good reasons to procrastinate:

Though work-smoothing may sound appealing, we all know that it never happens to the ideal degree.  Part of this is certainly due to decision-making myopia.  But is it possible that there is also a rational component to our procrastination habits?  There are at least three reasons why this might be the case.  The first is that there are fixed costs to doing homework.  Suppose that in order to do homework you have to run to Kohlberg for a mocha latté…and check your favorite five media outlets as a preemptive distraction.  In that case, it makes sense to have longer homework sessions in order to reduce the total number of sessions (and number of fixed costs to pay).  Thus, putting things off in order to concentrate the work for a paper in one epic block means that you don’t have to waste time setting up to write again and again.

The second reason is that there may be decreasing marginal costs to doing homework.  Suppose that the second hour of doing homework is much easier than the first, and the third easier yet and so on.  You get in the homework zone.  Then it makes sense to make your homework sessions as long as possible in order to take advantage of these returns to scale in doing homework…

The third reason is that there might be “thick-market externalities” in doing homework.  The idea is that if everyone else is doing the same thing that you are, it gets easier and more enjoyable.  If all of your friends are procrastinating at the same time, then the opportunity cost of doing work is that you miss an excruciatingly funny episode of “Curb Your Enthusiasm”…  Similarly, when everyone is doing work, the opportunity cost of work is very low.  After all, “Curb” is far less excruciatingly funny when watched alone.  So it makes sense to do work when your friends do work, and avoid work when your friends avoid work.

Perhaps they should have been taxed for having written this.  Fortunately I am a reverse procrastinator and I have no problems with these issues.  It is procrastination which I put off, not work.

Discount rates, again

Arnold Kling discusses Dasgupta, Stern, and de Long.  Here is his bottom line:

My concern is with Stern, Dasgupta, or DeLong playing social engineer and picking a social discount rate that deviates from market interest rates.  I think you get unreliable conclusions any time you do that.

I’ll recap my views as follows:

1. For resources which will be reinvested, use the rate of return on capital, adjusting for taxes, risk, and the like.

2. For resources which will otherwise be consumed within the current generation, use the market rate of interest, again with adjustments.  That rate reflects time preference within a life.

3. If we are comparing different consumption units across the generations, there is no time preference in the economically meaningful sense.  (Prior to 1962, I was not impatiently waiting to have been born.)  Use zero, noting this is an ethical rather than economic choice.

Depending on the configuration of the variables, the correct "net" discount rate usually will be above zero but below the current market rate.

Note that the future consumption/investment ratio is not a current fact about the world, but rather a matter of choice.  That means the correct discount rate is also not a "current fact about the world," but rather will depend on other choices we make.  This is a common confusion.

Arnold also writes:

Even if the Stern report had nothing to do with global warming, its assumption for the social discount rate has radical policy implications. Implicitly, it argues for an all-out effort to reduce private-sector and public-sector consumption and to increase investment instead.

I am less worried.  Not all or even most current consumption reductions will much benefit the next generation.  (Does anyone know what percentage of a marginal increment of savings ends up in bequests?)  The prospect of current consumption is also a (the?) driving force behind innovation and technological improvement, which most definitely  benefits future generations.  We should invest more in the future, but the intergenerational zero rate view, correctly interpreted, does not require that we should limit consumption as much as possible.

Addendum: Here is commentary from The Economist.

Should libertarians side with the Democrats?

First perhaps libertarians are not very numerous and thus they are playing against immovable opponents in the relevant political game.  That is, they won’t get anything back from Democrats.  That also suggests their support is worth nothing, and the decision can be viewed in that framework.  I suspect this is the relevant case.

Alternatively, perhaps libertarians are numerous enough to get some concessions from Democrats.  They would be playing a "threat-bluff-bargain" game with the two major parties.  Isn’t a mixed strategy usually best in these settings?  It becomes a question of "how much" to lean toward a party rather than "whether."  Libertarians would not want Republicans to feel they were abandoned altogether.  In any case the key is to act strong, offer more than you really have, and be prepared to bolt.

Keep also in mind there is a nested game within the so-called "libertarian movement."  Strategies which make sense in a coordinated fashion often fail when there is discord from within.  If libertarians think that the Republicans need to worry about the libertarians bolting, well, I suspect the libertarians have more than a few potential bolters of their own. 

My personal inclination is not to worry too much about such matters.  None of the obvious arguments, even if they appear strong, get us very far toward an answer.

One problem with the Republican Party?

Matt Yglesias reports:

Sebastian Mallaby observes of conservative/libertarian splits that "It’s not just the values of the South that pose a problem. It is the region’s appetite for government."  In particular, "The most solidly red states in the nation tend also to be the most reliant on federal handouts — farm subsidies, water projects and sundry other earmarks.  It’s hard to be the party of small government when you represent the communities that benefit most from big government."


1. Megan (Non-McArdle) from Sacramento on modeling: "I am not altogether opposed to modeling, because I think it is mostly white collar welfare and it supports sexy graduate students."  That’s economic modeling, not fashion modeling.

2. Markets in everything: at-home drug tests.

3. Kramnik and the computer have drawn three more games, tomorrow is K’s last chance to tie the score with a victory.

4. Ten most viewed YouTube videos of all time; they seem OK but I prefer octopus escaping through a one-inch hole.

5. The best of free software, via Chris Masse.

When should the Christmas decorations go up?

Tim Harford asks whether it is efficient to have the Christmas decorations go up earlier each year.  Partly for traditional and aesthetic reasons, he would prefer a shorter Christmas season. 

In my basic model, suppliers with P > MC put up decorations to stimulate more buying and gift-giving.  Bringing on Christmas early is a form of associative advertising.  A shorter Christmas season would mean less overtime work, less spending (more saving), and spending spread more smoothly throughout the year.

What’s the benefit of having all that consumer spending clumped together at Christmas season?  I can think of three hypotheses:

1. It yields "thick market" externalities, such as allowing people to do most of their shopping when inventories are highest.

2. It yields a "do or die" season, in which new products can be rapidly and ruthlessly evaluated.  Don’t we already have the verdict on Zune?

3. Suppliers are inefficiently "fishing" for early "capture" of consumers as part of a common pool problem.  If a given supplier doesn’t grab that consumer’s attention now, someone else will.  Of course there can be no property rights in "the attention of consumers," so that attention is consumed inefficiently early.

I believe in #1, #2, and #3, but I suspect #3 is the operative force, leading me to side with Tim.  Christmas is fun, but perhaps we have just a little too much of it.

Markets in everything, postal edition

Have cards sent to atheists after the Rapture.  "The Postal Service of the Saved," it works like this:

Just write your letter and it will be hand-delivered immediately
following the exodus of the pure from the Earth. But you must be
thinking to yourself, "How can the letters be delivered after the
Rapture?"  The answer is simple.  The creators of this site are Atheists.  That’s right, we don’t believe in God.  How else would we be able to deliver your correspondence after the Rapture? 

What would America be without garlic farmers?

For decades, the fiercely independent fruit and vegetable growers of
California, Florida and other states have been the only farmers in
America who shunned federal subsidies, delivering produce to the tables
of millions of Americans on their own.

But now, in the face of tough new competition primarily from China,
even these proud groups are buckling.  Produce farmers, their hands
newly outstretched, have joined forces for the first time, forming a
lobby group intended to pressure politicians over the farm bill to be
debated in Congress in January.

Most of the current $15 billion in direct subsidies goes to five commodities: corn, cotton, rice, wheat and soybeans.  Now Chinese garlic sells for about half the wholesale price of American garlic.  One garlic manager commented:

“The Chinese garlic totally caught us off-guard and knocked us down,”
Mr. Mantelli said recently as he checked on newly planted garlic bulbs.
“I think our industry has hit rock bottom.  Maybe now we can figure out
how to make it a level playing field.”

Here is the full story.

What’s the secret of a successful blog?

Why not ask, um….me?  That’s what Seth Roberts did:

When I visited George Mason University recently, I asked Tyler
Cowen, “What’s the secret of a successful blog?”  Cowen and Tabarrok’s Marginal Revolution is the most successful blog I know of.

His answer: “Three elements: 1. Expertise. 2. Regularity. 3.
Recurring characters, like a TV show.”  By regularity he meant at least
5 times/week.

Here is my previous post on Seth Roberts.  Here Seth makes a cameo appearance with Alex.

Silly guessing games

I like to wonder how many of the travelers in an airport are from the local area.  And what features of a city suggest a high proportion of locals in the airport?

For instance do small cities have high percentages of locals in their airports?  There are fewer locals to fill the place with, but not many New Yorkers fly to Greensboro, North Carolina.

At a given airport, it should matter whether the people of that area like to travel, whether no one else wants to visit that area, and whether that airport is a hub for switching flights.

It is easy to pick Chicago, Atlanta, and Denver as airports with many non-locals.  But which airports have high percentages of locals?  That means travel-hungry people from a boring, non-touristy, non-hub city.  Minneapolis anyone?

How to get started with opera

First I assume we are talking about recorded opera (most opera on DVD bores me, too static, though many swear by it), but of course go live when you can.  My core view is that people "do well" with culture when they feel they are in control, and tune out otherwise.  So pick one area and master it, or at least get intrigued, rather than trying to survey all of opera.  Those "introductory" books are probably counterproductive, if only because they let you know how much ground there is to cover.  Who could possibly master five different recordings of Parsifal?

Here are a few areas to start with:

1. Mozart: Get Abbado’s Magic Flute (a new recording, truly splendid, one of the best of 2006 or any year), the Rene Jacobs Figaro, and the Colin Davis Don Giovanni.  If you love those, move on to Cosi Fan Tutte and then Beethoven’s Fidelio.

The Ingmar Bergman film of Magic Flute is perhaps the single most inspiring introduction to opera, even if they are singing in Swedish.  It is cinematic in conception, rather than a mere film of a performance, thus avoiding the DVD problem.

2. Italian opera: Start with Rossini’s Barber of Seville, Gobbi/Callas, then either Verdi or Puccini, in the former case La Traviata (many good versions) or Aida (Karajan), in the latter case start with La Boheme (Beecham).  Move out into Donizetti (The Elixir of Love, bubbling and playful erotic fun) and the rest of Verdi, culminating in Otello and Falstaff, his greatest and deepest works, no organ grinder music there.

3. Wagner: Go for some extended excerpts, most notably Kempe’s one-disc condensation of Das Rheingold (better than the full-length version), this four-disc set of scenes, or Act One of Tristan und Isolde, by either Karl Boehm or James Levine.  Work up to Parsifal or Valkyries, but in my view Act One of Tristan was his peak and this remains music’s greatest erotic/death-wish experience, so good it is dangerous, maybe you should just stop reading this blog.

If you are putting on four discs of Flying Dutchman, Tannhaeuser, or Goetterdaemmerung, and hoping to make sense of it, your planning has gone badly wrong.

4. Twentieth century: Start with the fun, accessible works, like Glass’s Einstein on the Beach, Robert Ashley’s Improvement, or Michael Nyman’s The Man Who Mistook His Wife for a Hat.  Over time head to Stravinsky, Schoenberg, Ligeti, Messiaen, Lachenmann, Mercury/May and many others.

If you want to leap into the unique and the complex, consider Monteverdi’s Orfeo, Tchaikosvky’s Queen of Spades, Strauss’s Capriccio, or Debussy’s Pelleas and Melisande.  Liszt fantasies and transcriptions are a good entry point into opera, that is how I got my start, his Robert de Diable Meyerbeer transcription (played by Earl Wild, among others) has to be heard to be believed, same with his Norma fantasy, after Bellini.

Arguably Bach’s St. Matthew’s Passion is the greatest opera of them all, but that is another story.

By the way, few of the libretti are worth knowing beyond a plot overview; Don Giovanni is a notable exception, Der Rosenkavalier is another.  Keep in mind that a lot of opera simply isn’t very good.  The biggest problem is too much filler, even in the true classics.  Don’t let these boredom traps keep you away from some of music’s highest peaks.

The free lunch

Ours and yours, forget about the theory of tax incidence.  Just type in /marginalrevol-20 after any Amazon link, and we get a small chunk of the proceeds.  Alternatively, go to the Amazon box on the right side of this blog, just above the site meter.  It costs you nothing, and we thank you in advance. 

We do get some review copies, but most of the books we cover we buy with our own money.  The small extra income we get from Amazon referrals allows us to buy many more and give you a better sense of what is going on in the world of ideas.  I do collect CDs, but not books, which I treat as a burden.  If you are wondering, most of the books reviewed end up donated to the Harper Library at The Institute for Humane Studies, itself a worthy cause.