Month: August 2007

Prediction tools

Predict How Long You’ll Live (Northwest Mutual)

Predict Your Child’s Due Date (Ayres)

Predict Your Child’s Adult Height (University of

Predict Justice Kennedy’s Vote (Ayres)

Predict Your Next Move in Rock-Paper-Scissors (Chappie)

There are many other prediction tools here (do click), from Ian Ayres.  Ayres requests that you email him other prediction applets, which he will add to the page.  Ayres also has a new book out, Super Crunchers: Why Thinking by Numbers is the New Way to be Smart; it is highly readable and also endorsed by Steve Levitt.

I thank Ian Ayres for the pointer.

The economy of airports

Maria says:

Here are the things most people would happily pay for at an international transit airport: – a shower – clean underwear (for those of us who habitually forget to pack it) – daylight – an exercise facility to help with the jetlag and minimise DVT – nutritious but not too heavy food – a nap, lying flat, somewhere quiet.

And here’s what is generally available: – Gucci – Chanel – l’Occitane – Bodyshop – Lacoste – Nike – a few plastic seats – McDonalds, dougnuts, and the local variety of fried, sugary dross to add a sugar hangover to your jetlag.

Megan says:

…in an airport, foot traffic is very high, and space is at a premium.  So you should expect to see things that go at a very high volume (McDonalds) or things that are very expensive per-inch-of-display-space, such as Gucci.  Showers and napping capsules do not meet either criteria.

Tyler says:

Think of airports as temporary prisons for the wealthy, and the luxury good offerings as reflecting the extreme value of their attention.  Airports will sell goods which are complements to that attention, which is otherwise so hard to get. 

Compare the Brooks Brothers outlet at Reagan National Airport with the Brooks Brothers outlet at Tysons Corner Mall.  I’ll predict the former devotes a greater percentage of floor space to eye-catching, easy-to-buy, easy to try on items, such as ties.

Another prediction is this: in countries (cities) where the wealthy people are not hurried (relative to shop hours), there should be fewer luxury goods in the airports.  What are examples?  Monaco?  Nice?  Spain?  London would seem to be an example of extreme hurry.

And what does Air Genius Gary Leff say?

Addendum: The genius weighs in.


Here is the latest, by Emmanuel Saez and co-authors; note I linked to this paper yesterday but now I have looked at it.  Here is one key sentence:

…we find that short-term and long-term mobility among all workers has been quite stable since the 1950s.

To disaggregate, note that mobility among males is down but mobility among females is up.  (It is an interesting question whether there is a causal relationship here.)

Here is a much earlier MR post on mobility.  Keep these links in mind next time you hear claims about mobility, and I believe you will hear many such claims in September.  See also our earlier posts on Dalton Conley, who shows just how much inequality is generated within the same family.

It should be noted that Saez is the leading measurer of income inequality and also a critic of such inequality.  In his view a constant level of mobility means that no force is offsetting ongoing inequality.  I believe he would likely read his own paper as support for a left-wing view of the world and as support for concern with income inequality.  He would not read his work as reason to dismiss the mobility issue.  My view differs, as I worry about mobility — can a hard-working person get ahead? — but I do not worry about inequality per se, nor do I require of mobility that it overturn a particular level of inequality. 

Simone Dinnerstein

Is her Goldberg Variations as good as The New York Times (and other reviews) claims?  In a word, yes.

No, it doesn’t displace Gould for me, but it comes closer than I thought any recording ever would.  I’m a Gould-obsessive who resold his Murray Perahia recording of the Goldbergs in disgust and never cottoned to the Goldbergs on harpischord (Egarr and Hantai being truly splendid, however).  Schepkin, Hewitt, Tipo, and Peter Serkin were fine, Pi-hsien Chen was surprisingly good, Schiff wasn’t so hot, and then there was Gould, Gould, Gould.  After Gould, I was just as happy to hear the transcribed version for guitar.

Now there is another.

The Ethics of Book Abuse

"Every reader has a personal ethic for how to treat a book, a morality for what can and can’t be done to the physical object."  Is dog-earing a page a violation of the sanctity of the volume, or an easy way to hold your place?  What about highlighting key passages, or writing notes in the margins?  Or even (gasp!) throwing out an old book you don’t want anymore?

Here is the link.  I do not believe that books have rights, Nozickian or otherwise.  I am most likely to rip up travel books if only to minimize my carry burden.  But I don’t write in books because I wish to discover new ideas — and not just my old ideas — each time I open them up.  Dog-earing pages is useful because you can go back to old books and see how far in them you read and then decide you really shouldn’t give it another chance after all.

Here is a story about book left behind in hotel rooms, including a list of the top 10 most abandoned titles (UK).

Hopeless ideas to which I retain an irrational attachment

Historic India, before Partition, is an idea which appeals greatly to me.  Not the colonial version, but the idea of an independent and tolerant India of larger scope.

I don’t pretend to have any good arguments for this idea, and I understand (to some degree) how and why it fell apart.  I also understand that historic India was itself not very unified.  That is in part what makes my attachment irrational, and perhaps the irrationality is part of the attachment itself.

What is your hopeless idea to which you retain an irrational attachment?

Funding the X-Prize

Yesterday, Tyler and I met with Tom Vander Ark, the president of the X-Prize Foundation, to discuss and debate the future of prizes.  One interesting bit of trivia that Tom mentioned was that the X-Prize was funded with an insurance contract.  The funders paid the premium and the insurance company agreed to pay if the prize conditions were met.

To figure out how to price the contract the insurance company called "the experts" at Boeing and McDonnell-Douglas.  According to the experts the conditions for the X-Prize to be won (carrying three people to 100 kilometers above the earth’s surface, twice within two weeks) were so unrealistic as to be basically impossible within any reasonable time frame.  Thus, the funders got lucky.  The insurance company offered the contract at a very low premium and the rest is history!

The X-Prize Foundation is doing exciting work.  They are building on the huge success of the Ansari
X-Prize to launch many more prizes.  Prizes in auto technology and
genomics have already been announced and the foundation will be funding
many more prizes in the future (You can suggest a prize here).

How much inequality growth is due to cross-firm productivity dispersion?

This paper surprised me, but I believe this (while not the last word) is a promising path to explore:

There has been a remarkable increase in wage inequality in the US, UK and many other countries over the past three decades.  A significant part of this appears to be within observable groups (such as age-gender-skill cells).  A generally untested implication of many theories rationalizing the growth of within-group inequality is that firm-level productivity dispersion should also have increased.  The relevant data for the US is problematic, so we utilize a UK panel dataset covering the manufacturing and non-manufacturing sectors since the early 1980s.  We find evidence that productivity inequality has increased. Existing studies have underestimated this increased dispersion because they use data from the manufacturing sector which has been in rapid decline. Most of the increase in individual wage inequality has occurred because of an increase in inequality between firms (and within industries). [emphasis added by TC]  Increased productivity dispersion appears to be linked with new technologies as suggested by models such as Caselli (1999) and is not primarily due to an increase in transitory shocks, greater sorting or entry/exit dynamics.

Here is the link.  Here are non-gated versions.  Does this mean that firm-linked inequality will smooth out over time as the loser firms (or their replacements) mimic the technologies and methods of the winner firms?  Of course some sectors may have permanently become more "winner take all."

The paper has two further results of note.  First, much of the increase in wage inequality has come from changes in productivity dispersion in the service sector, not manufacturing.  Second, Norway and France haven’t had big boosts in wage inequality, and they also have not had comparable boosts in the inequality of productivity across firms.

Speaking of inequality, here is an interesting paper on the evolution of mobility and the American dream.

What I’ve been reading

1. Open Secrets of American Foreign Policy, by Gordon Tullock.  A history of the bloopers and stupidities of American foreign policy, from virtually day one.  If you think Gordon embraces a narrow, reductionist rational choice view of the world, here is the antidote.  Gordon tells me that foreign policy has long been his number one interest, although he has written on the topic only now.

2. One Economics, Many Recipes, by Dani Rodrik.  I agree with much of the substance of this book, namely that we know a lot less about the causes of economic growth than we like to think.  I am less happy with the implied rhetorical choices; in particular I wish Rodrik were more consistently agnostic.  For instance Rodrik defends industrial policy, but at times this just translates into lower (or no) taxes for export zones.  So why frame it as a larger rather than a smaller claim? 

3. The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by CrackpotEconomics , by Jonathan Chait.  I’ve taught Ph.d. macroeconomics to some of the people referred to, either directly or indirectly, in this book.  They didn’t all get A pluses.  So I see the talk of conspiracy as way, way overblown.  This book catalogs many good criticisms of the Bush administration, and in that sense is valuable, but it does not raise the level of debate.

4. Do Economists Make Markets?, an edited collection of essays.  How could they not cite Alex’s Entrepreneurial Economics?  Or pay homage to Robin Hanson and prediction markets?  Still, this is a useful introduction to how economists have tried to shape real world markets, from spectrum auctions to options pricing.

Krugman on socialized medicine

Systems of actual socialized medicine, like Britain’s, are actually
very good at saying no: there’s a limited budget, and the medical
professionals who run the system set priorities. That’s the reason
British health care delivers results better than ours, at only 40
percent the cost – there are long waits for elective surgery, but
that’s because doctors think that it’s not a high priority…

Krugman gets points for a mostly honest description but he is a lousy salesman. Is there any doubt that most people reading this will say "no way, not in America."?

The theology of popular economics

Once I pick up a popular economics book, I ask myself: what is this book’s implicit theology?  (How would you in this regard classify FreakonomicsUndercover Economist?  Steve Landsburg?)

That is one of the best first questions to ask about any non-fiction book. 

I view Discover Your Inner Economist as largely Thomist and more Catholic than anything else.

It is suggested that people are capable of simply doing the right thing, although we should not necessarily expect them to do the right thing.

It is suggested that a unified perspective of faith and reason, applied in voluntarist fashion, can indeed give people better and more complete lives.

It is suggested that not everything can be bought and sold, yet markets have a very important role in human life.

The chapters on food, or the seven deadly sins, are too obvious to require explanation.

The book is highly cosmopolitan, and it is suggested that acts of will and understanding can open up the sacraments to us.  The possibility of those sacraments lies right before our very eyes, and they are literally available for free.  Except the relevant sacraments are those of culture, and not of the Roman Church.

I am not a Catholic or for that matter a believer, but as I tried to solve various problems in the exposition, the argument fell naturally into religious ideas.  Religion has so much power over the human mind, in part, because its basic teachings about life are largely true.  Furthermore classical liberalism is far more of an intellectual offshoot of Christianity than most non-Christians are keen to admit.  (Muslims and Chinese often see this more clearly.)

So when I realized that Inner Economist had this strongly Thomist philosophic flavor, I was greatly comforted.

In this post the Episcopalians ponder their Inner Economists.

I hope to write more soon on political philosophy in Discover Your Inner Economist.

Scary thoughts

When we look at ourselves in the mirror, in any given session we
tend to anchor on the time slice image that makes us look our best.
That, we decide, is the "real" us.

Photographs, however, are a random sample of the various
arrangements of light, angle, and facial expression that we can be
found in. The median photograph of you is probably the best
approximation of your physical attractiveness. But that wars with your
self image, which is anchored on other, better combinations.

You’re also biased by the fact that no one ever tells you you’re
ugly. It’s not merely that people inflate what they tell you (they
almost certainly do); it’s also that people who think you’re ugly tend
to drop out of the sample. They may not cultivate an acquaintance with
you, and those that do will probably not spontaneously let you know
that they find you kind of repulsive.

You’re stuck in a web of congitive biases and a positive feedback loop.  It’s a wonder anyone does get married.

Here is the link.  This next part made me feel much, much better, though I can’t quite agree:

…the best gauge of how attractive you are; how attractive are the
hottest people who want to go out with you? They’re probably only
slightly more attractive than you are.

The final deflation then comes:

If you’re married, of course, this is not useful.