Month: August 2007
Marginal Revolution is four years old today (at 3:07 pm EST precisely)! It all began with The Lunar Men and since then we posted something new every day for four years. In total we have had over 6000 posts, about 4.4 posts on average per day and we are closing in on 10 million visits. If you were to print all of MR for the last four years it would take well over thirty two thousand pages. I’d like to tell you how many pages exactly but Word can’t count beyond 32,768.
You, our readers, have made Marginal Revolution one of the most widely read blogs in the world.
Thanks! We would like to know you better. So in the comments please feel free to say happy birthday especially if you are a long time reader who has never commented before. How long have you been reading MR? What’s your favorite post? Do you live in some exotic locale? Viva la revolution!
Natural experiments have their uses. Saurabh Bargrava reports his joint work with Vikram Pathania:
…we document a 20-30% rise in cellular call volume during the time of the day– 9pm on weekdays– when cell phone providers systematically transition from "peak" to "off-peak" pricing. We then measure the resulting increase in fatal and non-fatal crashes during this period as compared to weekends and earlier periods which serve as controls. We find no evidence for a rise in crashes, and estimate small positive upper bounds for the effect size at 9pm (~1% for all crashes, and 2.4% for fatal crashes).
Here is the paper. Here is a related press release. You might wonder how this can be reconciled with all those studies showing that talking on a cell phone is as bad as driving drunk. The authors discuss the other work starting on p.8 and score some good points. Furthermore get this:
We confirm our
results with three additional empirical approaches–we compare trends in
cell phone ownership and crashes across areas of contiguous economic
activity over time, investigate whether differences in urban versus
rural crash rates mirror identified gaps in urban-rural cellular
ownership, and finally estimate the impact of legislation banning
driver cell phone use on crash rates. None of the additional analyses
produces evidence for a positive link between cellular use and vehicle
No, I am not encouraging you to talk on your cell phone while driving, if only because so many of you already talk so much, and besides, what if these guys are wrong? But science must progress, and in that spirit I report these intriguing results.
1. Be even more polite than usual.
2. Relate your points to Greg Clark’s book as much as possible. This is a forum on his book.
3. You are engaging the book, and if you end up in a running back and forth with another commentator, the odds that you are producing a public good are no more than p = 0.21.
4. Comments which "leap ahead" and focus on later parts of the book, beyond the specified pages, will be deleted, no matter how brilliant.
…there are now Chinese companies that are happy to sell you fake receipts that look just like the real thing.
But what if they sold you a "fake receipt" for buying…*fake receipts*. Would it be a fake receipt, a real receipt, or a real fake receipt? Here is the story, and thanks to Derek for the pointer.
Our results suggest that an increase in the proportion of girls [in school] leads to a significant improvement in students’ cognitive outcomes.
Here is the paper, here are non-gated versions. The estimated benefits are of similar magnitude for boys and girls. It seems that girls make the classroom a more civil place. The implication, I suppose, is that all-girl schools impose a negative externality on boys and I don’t just mean from the side of beauty or fun.
We explore the effects of listening to the music of AC/DC in a simple bargaining environment.
Here is the paper. The main result is that the songs of one lead singer, but not the other, induce efficient outcomes.
The pointer is thanks to Joshua Gans. Here is Gans’s regular blog. Here is his very interesting paper on product tying, co-authored with Dennis Carlton and Michael Waldman. Here is Gans’s good micro paper on carbon offsets.
In 2002, the STAR program (Supplemental Terrorist Activity Relief) authorized the Small Business Administration to guarantee loans to businesses that were "adversely affected" by the attacks of 9/11. At first the loans were not taken up because most businesses didn’t think they were adversely affected but in true bureaucratic fashion the SBA wanted a bigger program so they announced:
…the SBA believes that a very large percentage of small business borrowers located in areas throughout the country may be eligible for the STAR program. In guaranteeing a STAR loan, the SBA will rely on the lender’s determination that a small business was adversely affected by the terrorist actions. When performing compliance or loan purchase reviews, the SBA will be looking only to verify that the lender documented its evaluation of the small business’ eligibility for the STAR program. The SBA has not established any requirements regarding the severity or duration of the adverse impact that the small business suffered. (italics added).
Are you surprised that Office of Inspector General could not find any terrorism connection to the vast majority of the loans? More than 3 billion dollars were guaranteed including millions for Subways. Protecting public transport, right? No, protecting America’s sandwich demand. There was also $22 million for Dunkin Donut franchines in nine different states, and guarantees for a Salt Lake City "dog boutique," a South Dakota radio station, a Virgin
Islands perfume shop and much else besides.
Interviewed by the FT Ned Phelps has this to say:
Phelps feels that he is at the stage in his career “where I can afford
to be as radical as I want to be. And so I am having a lot of fun
thinking about capitalism and trying to imagine how economics would
have to be re-written to capture the heart of that kind of system.”
Traditional economics, he explains, sees the world as if it were a
plumbing system. “It’s basically rooted in equilibrium – things work
out as people expect them to do.” Capitalist reality, however, “is a
system of disorder. Entrepreneurs have only the murkiest picture of the
future in which they are making their bets, and also there is
ambiguity, they don’t know when they push this lever or that lever that
the outcome is going to be what they think it is going to be – there is
the law of unanticipated consequences. This is not in the economic text
books, and my mission, late in my career, is to get it into the text
Hypotheses about economic complements may not seem cause for a fight, but I have encountered what I can only call schools of thought:
4. A pinch of red chili powder
5. A quick swig of mineral water immediately afterwards
I advocate #4 and #5 only. Strawberries are too rich and too strong in flavor, if it be a fruit I nominate a few bites of a pluot or a few grapes for succulence, both in advance of the chocolate only.
You will find meditations on this topic, and others, in Clay Gordon’s inspiring Discover Chocolate: The Ultimate Guide to Buying, Tasting, and Enjoying Fine Chocolate.
Readers, will you either vote or amend this list?
As a result of Discover Your Inner Economist India, I have sent or am sending off the money to the following:
1. A Diwwali party for poor children
2. Debt relief for a maid who must repay a moneylender
3. Support for a micro-credit cooperative
4. School vouchers for Indian children
5. Educational expenses for a child
6. Support for an Indian entrepreneur seeking to make his first movie
I expected to see, at some point, an explosion of obviously fraudulent or trivial requests, but I never did. I have two hypotheses: a) good people know other good people, and b) any bad person who came across the link would want to maximize his own chances of receiving the money and thus would not send it along to other bad people.
I was amazed how many of the proposals came from either Bangalore or Singapore. Chennai was another common location.
I thank those of you who pledged additional support; I am sure the recipients appreciate it very much.
Addendum: A’la Seth Roberts, I also view the project as self-experimentation. It made giving money away more rewarding and that encouraged me to give more than I had originally planned. I expect to return to my list of emails for future transfers.
We should all think about how to make giving away money more rewarding for ourselves. More fun. If we are restricted to virtuousness as a motivation, I fear for the future of charity.
Usually an economic downturn is associated in a big increase in the
spread between corporate and Treasury yields. This spiked pretty
dramatically last week, but still has a long way to go…the current spread of 206 basis points is not much above the long-term
average or the short-term range we’ve seen over the last two years.
That’s from Jim Hamilton, here are the graphs and further discussion.
Where do most tigers live?
In the United States it turns out. There are 4,000 tigers residing in captivity in Texas alone, where private ownership of tigers is legal. The number of tigers left in the wild is perhaps no more than 5,100-7,500.
A tiger cub costs about $1,000 while the more exotic blue-eyed white tiger costs $15,000.
That is from The Book of General Ignorance, an interesting compilation of not so well known facts.
I learned also that chamelons do not change color to fit their background (the changes are determined by their emotional states), moths are disoriented by flames rather than attracted to them, and (possibly) America was named after Richard Amerike rather than Amerigo Vespucci; I still haven’t gotten to the bottom of that one. Amerike, a wealthy merchant, helped finance Cabot’s voyage, and asked that any discovered lands be named after him.
Analysts estimate that 20 percent of all luxury goods are sold in Japan and another 30 percent to Japanese traveling abroad — meaning Japanese buy half of all luxury goods. Today, approximately 40 percent of all Japanese own a Vuitton product.
That is from Dana Thomas’s really quite interesting Deluxe: How Luxury Lost its Luster. Thomas believes that the Japanese are so infatuated with luxury goods because they wish to brand themselves in what otherwise pretends to be a "classless" society.
The network maps show that economies tend to develop through closely
related products. A country such as Colombia makes products that are
well connected on the network, and so there are plenty of opportunities
for private firms to move in to, provided other parts of the business
climate allow it. But many of South Africa’s current exports–diamonds,
for example–are not very similar to anything.
If the country is to develop new products, it will mean making a big leap. The data show that such leaps are unusual.
How Equal Temperament Ruined Harmony (and Why You Should Care), by Ross W. Duffin, is a cranky but fascinating look at how music went astray:
For nearly a century, equal temperament–the practice of dividing an
octave into twelve equally proportioned half-steps–has held a virtual
monopoly on the way in which instruments are tuned and played. In his
new book, Duffin explains how we came to rely exclusively on equal
temperament by charting the fascinating evolution of tuning through the
ages. Along the way, he challenges the widely held belief that equal
temperament is a perfect, "naturally selected" musical system, and
proposes a radical reevaluation of how we play and hear music.
You can get Bach’s Well-Tempered Klavier played this way, but to my ears it is not a revelation. Of course unequal temperament (not my preferred terminology) has struck back through popular music, whether it be bent blues notes, pedal steel guitar, and the drone tunings of My Bloody Valentine or Sonic Youth. Oddly the author doesn’t mention this. Listeners want variety, and simply "pegging the scale" does not control the real sound which results, just as in um…macroeconomics.