Month: January 2008

Planes to Nowhere

by  Alex Tabarrok in
Imagine an aviation system in which planes fly
two-thirds empty, fares are as low as $46 and the government pays up to
93% of the cost of a flight….that system exists in the USA – and quietly is expanding…

That is from USA Today talking about the millions spent on the "Essential Air Service" program.  Do you think that the program protects small rural communities?  Nah, try small community airlines. 

…as Congress has escalated subsidies through the years, the program has
increasingly paid for flights between major airports and places that
are neither rural nor isolated.  [For example,] in October, the DOT agreed to one of the
program’s largest subsidies ever – $2 million a year to Atlantic
Southeast Airlines. That pays 60% of ASA’s cost to fly two round-trips
a day between Macon, Ga., and Atlanta’s Hartsfield-Jackson
International Airport, 81 miles away. The airline projects that passengers will pay an
average of $78 for a one-way ticket – and that flights, typically on
planes with fewer than 70 seats, will run 83% empty.

Need I tell you that the program was supposed to be temporary?  Here’s some more data from USA Today.

Community Destination Annual subsidy Subsidy per passenger Average pass. per flight
El Dorado, Ark. Dallas/Fort Worth $923,456 $250 3.1
Devils Lake, N.D. Minneapolis $1,329,858 $203 5.7
Worland, Wyo. Denver $797,844 $187 4.2
Bradford, Pa. Pittsburgh $1,217,414 $174 3.6
Jamestown, N.Y. Pittsburgh $1,217,414 $135 4.7
Salina, Kan. Kansas City $487,004 $131 2.1

Sources: Department of Transportation, USA TODAY analysis of DOT and airline data

Daniel Kahneman on happiness and wealth

by  Tyler Cowen in

We had thought income effects are small because we were looking within
countries. The GDP differences between countries are enormous, and
highly predictive of differences in life satisfaction. In a sample of
over 130,000 people from 126 countries, the correlation between the
life satisfaction of individuals and the GDP of the country in which
they live was over .40 – an exceptionally high value in social science.
Humans everywhere, from Norway to Sierra Leone, apparently evaluate
their life by a common standard of material prosperity, which changes
as GDP increases. The implied conclusion, that citizens of different
countries do not adapt to their level of prosperity, flies against
everything we thought we knew ten years ago. We have been wrong and now
we know it. I suppose this means that there is a science of well-being,
even if we are not doing it very well.

Here are Kahneman’s full remarks.  He also presents a more complete theory of happiness, namely that is determined by basic personality type and which activities you are able to do during the course of your day, the latter being a function of wealth.  That excerpt is from this post by Arnold Kling, on how people have changed their minds, read this one too.  Here is the core source, highly recommended, it is one of the best hour-wasters you will get this year.

Racial mortality gaps

by  Tyler Cowen in

I show
that quality of the clinics or doctors is not the underlying reason for racial differences in black and
white mortality….Differences in patient self-management trigger a racial mortality gap even
when access and treatment are equalized.

But does that paper arrive at a sensible conclusion?

Considerable reductions in medical costs could be achieved
by instructing patients about the importance of strictly following the therapy regimen.  A special
emphasis on educating minorities will have the added benefit of reducing the black-white mortality gap
by at least two-thirds.

I am more likely to think that peer effects from the early years of life are difficult to reverse by education and persuasion alone.  Here is the paper.  That’s from Emilia Simeonova, who is on the job market this year from Columbia.

Los Angeles fact of the day

by  Tyler Cowen in

With less than two weeks left in the year, Los Angeles is on track to record its lowest homicide rate since 1970.

   

That year, 394 people were killed in the city as the war in Vietnam raged on and the Beatles called it quits.

   

As
of Dec. 15, 379 people had been killed in Los Angeles this year, with
about 200 of those incidents gang-related. The overall homicide rate is
down 17 percent from last year.

One of the sharpest declines is in gang-related killings.  Here is the link, hat tip to Angus, and no, this is not a pre-timed post.