Month: April 2008

The economics of the male pill

by  Tyler Cowen in

Might there soon be a pill for men?  Standard theories of tax incidence (borrowing from the Coase theorem) say that if so, it shouldn’t much affect the quantity of intercourse.  Either the gains from trade are there or they are not.  The initial burden of taking the pill might change the distribution of those gains across the sexes, but at the end of the night the final result should still be the same.

Only not!

If you are a man who can credibly signal he is taking such a pill, it is like paying the woman for that final result you so desired.  The woman no longer has to perform the costly pill-taking action herself.  And indeed the typical equilibrium is in fact that the man does the paying.  But with the male pill you are paying her in a way that will flatter her, not insult her.  Nice, eh?

The funny thing is, I don’t expect the male pill to be popular at all.  The key question is to figure out which assumption of the basic model is not satisfied.

One possibility is that women will infer that a man taking the pill is essentially paying other women for sex and she values him less highly.

Another possibility has to do with credibility combined with lags.  If it’s focal for the woman to be taking the pill, the woman is in any case taking her pill in advance.  The male pill would have impact, at the margin, only on women who weren’t really planning on having sex at all.  And what kind of man spends his energy targeting such women?  Yes, some men indeed do target such women, but then we’re back to the male pill not really being so popular.

A third possibility is that women in any case want the man to use a condom, if only to prevent STDs.  If the man is on the pill, it is harder to make that request without insulting him and thus a woman doesn’t want her new paramour to be on the male pill.

Addendum: Megan McArdle adds a fourth explanation.

Bittergate

by  Tyler Cowen in

You’ve probably already read or heard the remarks but here goes:

"It’s not surprising that they get bitter, they cling to guns or
religion or antipathy to people who aren’t like them or anti-immigrant
sentiment or anti-trade sentiment."

There you have it: some truth, some correct implicit moralizing, elitist scorn and condescension, some false implicit time series (guns and religion do not closely track economic decline), and some totally unpopular cosmopolitan sympathies.  The "they" is the clincher, a hypostatizing and vaguely offensive generalization, yet one which we are all prepared to make in different contexts.

By the way, here is John Lott meets Barack Obama, worth reading for the scene of the encounter.

I think increasingly that Obama is very much a rationalist, in both the good and the bad senses of that term. 

If I think about what makes me bitter, it is highway and roadway construction and bad airports and the attendant delays.  You can decide for yourself what that makes me cling to.

“Guns don’t kill people, trading guns does”

by  Tyler Cowen in

Well, that is a joke of sorts.  But here is Jim Kessler’s piece on deepening gun ownership.  He writes:

There are 280 million firearms in private hands in America, and last
year there were about 300,000 gun crimes. That means that at least
279,700,000 guns did nothing wrong. We also know that in 89 percent of
crimes, the person using the gun was not the person who originally
bought it. In 34 percent of crimes, the firearm was bought in one state
and used in a crime in another. And in 32 percent of crimes, the
firearm was less than three years old.

This indicates that the root of America’s gun crime problem is not
the number of guns in the hands of Americans, but an extensive web of
gun trafficking operations that funnel firearms to criminals.

…The first step is to make gun trafficking a federal crime, not a
term of art…Trafficking should be redefined as selling multiple guns out of a
home, car, street, or park that have two or more of the following
characteristics: obliterated serial numbers, are stolen, are new in the
box, or are sold to underage buyers or people with felony records. This
would still allow individuals to privately sell firearms to people they
know or trust, and it would put the onus on sellers to demand a
background check for those they don’t.

None of this seems quite right to me.  It seems to confuse "how things are done now" with "how things could be done if people needed substitutes."  For instance if this proposal were adopted, criminals might acquire guns at a young age and simply never give them up.  (Think of the idea as raising the liquidity premium on owning a gun.)  Or criminals might buy more guns from each other.  I can see that it makes sense to shut off some avenues of gun flow, such as gun sale shows with no buyer verification.  But once the stock of guns is high, I don’t think trying to control the flow is likely to prove an effective means of gun control.  Forcing the seller to verify the quality of the buyer is one form of a tax, and yes it will raise the price, but it is in turn hard to verify how well the seller performed this responsibility.  It seems less efficient than a simple and direct excise tax, for instance.

Addendum: Alternatively, you might pose a tax incidence question: how does taxing the stock of guns differ from taxing the flow of trade?  Both will raise price but taxing the flow limits "the velocity" of guns.  Taxing the flow should hurt "whim killers" but it won’t so much discourage regular killers.  The former get all the publicity but are they really the bigger problem?

Simple sense about discount rates

by  Tyler Cowen in

Geoffrey Heal writes:

Sterner and Persson…talk about the effect of changes in relative prices rather than consumption of produced and environmental goods, but the point is the same.  If we consume both produced goods and the services of the environment…then we can expect that with climate change environmental services will become scarce relative to produced goods and therefore their price will rise relative to that of produced goods.  Consequently, the present value of an increment of environmental services may be rising over time, and the consumption discount rate on environmental services may thus be negative…This could be the case even with a positive pure rate of time preference…

Here is the paper.  Here is an ungated version.  In the interests of fairness to both sides of this debate, I should note that while I believe the costs of climate change are higher than most people think, I also believe that the costs of fixing the problem are higher than people think.

Heads in the Sand

by  Tyler Cowen in

That’s by Matt Yglesias (son of Rafael Yglesias) and the subtitle is How the Republicans Screw Up Foreign Policy and Foreign Policy Screws Up the Democrats.  Anyone who reads books on foreign policy should buy this book.  Most of all it is a critique of recent practice and a defense of liberal internationalism.  He calls for negotiating with Iran, not digging in deeper in Iraq, and more generally accepting multilateral frameworks for the use of American military power.  I agree with the policy recommendations though I would package them differently.  I view liberal internationalism as a kind of noble lie which will in any case be superseded by American exceptionalism, most of all because of differing European and American experiences in WWII and differing degrees of religiosity.  Rightly or wrongly, Americans are more likely to see menaces abroad and of course America is the only country that can even try to do much about them.  Of course we’ve shown we’re not up to the job, noting that Afghanistan (a just war, I might add, and do note it commanded international support for a while but that turned out not to matter) is probably going even worse than Iraq by standards of long-run viability.  If our interventions are counterproductive then constraints on those interventions are beneficial and in that regard we can embrace internationalism for practical reasons. 

But I can’t have a high opinion of internationalism per se, perhaps because I’ve spent too much time actually working in multilateral institutions.  The incentive is to negotiate at the margin, and eke out a somewhat better deal for one’s nation and carry victories to diplomatic superiors back home, rather than to actually solve the international problem in cooperative fashion.  If there is any good solution to be had, the large number of negotiating parties usually requires America to play von Stackelberg leader (remember Yugoslavia?), noting that our ability to do this has broken down for reasons that go beyond the failures of Bush.  The EU now precommits to a greater role in global decisions and many more countries are wealthy and have global interests.  Media spin means that no one wants to take too many sacrifices.  I think once a Democrat assumes the Presidency it will become clear just how much the old order has broken down, probably forever.  European diplomats were cynical in the first place and don’t forget that the Security Council still has two members whose influence is more or less pure poison.  I can’t imagine what liberal internationalism means, for instance, when it comes to allocating the thawing bits of the Arctic and the associated oil wealth.  What will happen if/when the Russians simply try to grab more than international conventions allow them? 

Note, by the way, that Saddam and Chirac really were gift-giving friends; that’s not just a right-wing fantasy.  At some level American voters understand much of this, albeit in excessively provincial terms, and they simply won’t, in the electoral sense, allow the Democrats to inhabit the old space of internationalism.

In game-theoretic terms I would say the key question is what is the "threat point" America adopts when it offers to join international coalitions.  Whatever Matt’s answer might be (his book is not written in that sort of lingo) that is now the key question, noting that whatever threat point you specify you have to be willing to live with.  One paradox is that the more internationalist your default threat point is, the less effective a country actually will be in leading an international coalition.

In short, I’m all for talk of liberal internationalism as long as we don’t take it too seriously on its own terms.  My prediction is that, doctrinally, Matt will eventually end up somewhere else, even though his practical advice is very sound and very well articulated and doesn’t much need to be changed.  I hereby sentence him to one full month spent working at the United Nations.

Wacky Patents

by  Alex Tabarrok in

A satellite missed its orbit.  The problem can be fixed but, believe it or not, Boeing has a patent on using the moon, i.e. gravity, to change a satellite’s orbit!  The patent probably wouldn’t hold up in court but because of a different lawsuit Boeing is threatening to sue anyway if the firm uses the procedure.  Since the costs of a lawsuit are high and the satellite is insured, down it may come.

More here including interesting material on space salvage.  Hat tip to Boing Boing.  Tabarrok on patent reform here.

Why are there so few eligible bachelors?

by  Tyler Cowen in

…game theory predicts, and empirical studies of auctions bear out, that auctions will often be won by "weak" bidders, who know that they can be outbid and so bid more aggressively, while the "strong" bidders will hold out for a really great deal. You can find a technical discussion of this here. (Be warned: "Bidding Behavior in Asymmetric Auctions" is not for everyone, and I certainly won’t claim to have a handle on all the math.) But you can also see how this works intuitively if you just consider that with a lot at stake in getting it right in one shot, it’s the women who are confident that they are holding a strong hand who are likely to hold out and wait for the perfect prospect.

This is how you come to the Eligible-Bachelor Paradox, which is no longer so paradoxical. The pool of appealing men shrinks as many are married off and taken out of the game, leaving a disproportionate number of men who are notably imperfect (perhaps they are short, socially awkward, underemployed). And at the same time, you get a pool of women weighted toward the attractive, desirable "strong bidders."

Where have all the most appealing men gone? Married young, most of them–and sometimes to women whose most salient characteristic was not their beauty, or passion, or intellect, but their decisiveness.

Here is the full argument.  I don’t, however, quite buy this as the explanation of the phenomenon.  I view the real world auction as being held — at least if you wish — continuously rather than at discrete times.  So the "strong bidding women" can always cave and settle for a "lesser man" after an optimal amount of waiting, yet many don’t.  The distinction between period-by-period happiness and overall lifetime happiness also shapes the market.  As smart single women mature, their lives get better and better.  "Settling" becomes psychologically harder, even if it would make some of the "settlers" happy in the longer run.  So settling doesn’t happen; decisiveness become harder to conjure up at the same time that its long-run value is increasing, or in other words behavioral economics is very much at work here.

Iraq update

by  Tyler Cowen in

A loyal MR reader sent me the following from Reuters:

Bombings and strife
apart, Iraq is proving an oasis for investors battered by global financial turmoil, Citi argued in a research note on Thursday.

The cost of insuring country-region Iraq’s
bonds against default has fallen so sharply that they now costs less to insure
than Venezuelan debt, said Citi economist David Lubin.  "Judging from
the performance of spreads in the market for sovereign credit risk, one could
argue that Iraq has become something of a safe haven in recent months," he said.

Oil-exporter Iraq has
benefited from an improvement in its foreign-exchange reserves. Iraqi five-year
credit default swaps — instruments which protect against debt default —
tightened to 520 basis points from around 635 bps at the start of the year. Similar
instruments for Venezuela,
whose President Hugo Chavez is leading a wave of takeovers to wrest companies
from private and foreign ownership, are currently trading at 611 bps. Like
their developed counterparts, emerging markets have been hit by a deepening in
risk aversion in the wake of the credit crunch sparked by U.S. subprime
mortgage defaults.

Lubin said chances of a further decline in Iraq risk premium were strong given
the country’s fiscal discipline but warned that the central government could
face challenges from the rising influence of provincial rulers.

As I interpret the email from my source, he is not personally so bullish on Iraqi reconstruction; rather some people are rushing out of other assets and preferring Iraq for its (relative) safety.  So you needn’t read this in an optimistic light.  Alternatively, you might view this as a bet on the U.S. Presidential race and the rising prospects of the Republicans.

Whatever happened to markets in everything?

by  Tyler Cowen in

I posted this on northern Virginia Craigslist and haven’t heard a peep:

I am looking to learn how to use Second Life.  I would like a series of lessons from a tutor with extensive experience in Second Life.  I don’t need anything very complicated, just an introduction to the basics. Please email me your rates.

Why is this market failing me?  And what should I do next?

The infinitely bad sneeze

by  Tyler Cowen in

Zack writes to me:

You’re in an airport, about to go through the security line. You sneeze, which delays you by two seconds. It doesn’t just delay you by two seconds, though; it also delays everyone waiting in line behind you. And everyone who will show up while the people currently in line haven’t gone through yet. In fact, if you assume that the queue is never empty, which even at 3 in the morning is true for the major airlines, we’re talking about arbitrarily large quantities of wasted time.

I believe that airport queues do eventually empty out, if only at 4 a.m., so is there any setting where this result might hold?  And if so, what is your obligation to produce infinitely good outcomes, say by cutting off your nose?  On the philosophical side, you might find this debate relevant.  By the way, here is Zack on ranking the babies.

Incentives are everywhere

by  Alex Tabarrok in

The introduction of automated cameras that ticket people who run a red light has given some cities a "clever" idea – let’s reduce the yellow-light period and increase ticket revenue.  Here’s one example from Dallas. 

An investigation by KDFW-TV, a local TV station, found that of the ten
cameras that issued the greatest number of tickets in the city, seven
were located at intersections where the yellow duration is shorter than
the bare minimum recommended by the Texas Department of Transportation
(TxDOT).

The city’s second highest revenue producing camera, for example, was
located at the intersection of Greenville Avenue and Mockingbird Lane.
It issued 9407 tickets worth $705,525 between January 1 and August 31,
2007. At the intersections on Greenville Avenue leading up to the
camera intersection, however, yellows are at least 3.5 or 4.0 seconds
in duration, but the ticket-producing intersection’s yellow stands at
just 3.15 seconds. That is 0.35 seconds shorter than TxDOT’s
recommended bare minimum.

More examples here and a hat tip to J-Walk Blog.

What I’ve Been Reading

by  Tyler Cowen in

1. Steven Teles, The Rise of the Conservative Legal Movement.  It covers the Federalist Society, GMU School of Law, Institute for Justice, among other institutions.  The material rang true to what I know; Orin Kerr comments.

2. Ted Hughes, Birthday Letters.  This one blew me away; you don’t even have to like poetry, it is more like reading letters.  You do need to know a little about his life with Sylvia Plath to appreciate it.  A modern masterpiece, highly recommended.

3. 2666: A Novel, by Roberto Bolaño, you can pre-order it here.  So far I’m only reading the Amazon site every few days or so, thinking about when the book will come.

4. Francisco Goldman, The Art of Political Murder: Who Killed the Bishop?.  Maybe the best book on why Guatemala is such a mess but also on why there is hope.  Make sure you read the dissenting reviews on Amazon.

5. Hubble: The Mirror on the Universe, revised and updated, by Robin Kerrod and Carole Stott.  Stunning.  Most smart people make the mistake of not reading enough picture books.  It’s not just that the pictures are good; the text must concentrate on what is truly essential.