Month: June 2009

Auctions and Politicians

David Warsh has an excellent column on economists, auctions and the politicians who oppose them: 

…the US Department of Transportation earlier this month canceled plans to auction landing slots for New York’s three busiest airports. The Bush administration had sought the measure, hoping to cut delays at the chronically congested airports (and, of course, raise some much-needed cash). The airline industry lined up against the proposal, so did Democratic congressmen. Incumbent airlines will continue to profit; frequent travelers will continue to suffer delays.

Similarly, the banking lobby, among the nation’s strongest interest groups, has so far successfully opposed Treasury Department attempts to put up for bid banks’ questionable (now “legacy”) assets. The reason is simple: when the asking price is, say, 90 cents on the dollar and the bid is closer to 40 cents, no manager will willingly take part in an auction that seems certain to lower book values.

[Similarly]…President Obama campaigned on a promise to auction the [carbon] permits. But a coalition of Midwestern and Southern Democrats teamed up to alter the bill, and when its language was released last week it turned out that fully 80 percent of the permits would be given away at first to electricity utilities and their big industrial customers…

Nevertheless, Warsh is optimistic about the ability of economic engineers to create value with more sophisticated and widespread auctions.  Read the whole thing for developments on the academic front.

Divorce and Crime Victimization

While paging through the statistical tables of Criminal Victimization in the United States I found some interesting data on victimization, marriage and divorce.  The rate of victimization for violent crimes (per 1,000 persons aged 12 and over) for never married and married males is as follows:

  • Never Married Males: 45.0
  • Married Males: 12.3
Clearly, married males are older and they have settled down, usually in places away from crime hot spots.  Thus the fact that the rate of victimization for married males is much lower than for never married males is no surprise.  What did surprise me is that divorced males have rates of victimization about as high as for never married males:
  • Divorced or Separated Males: 44.2
The same pattern is even stronger for females:
  • Never Married Females: 38.4
  • Married Females: 10.3
  • Divorced or Separated Females: 49.4

The patterns are suggestive of how large a difference one’s choices can make for criminal victimization.  That is, one hypothesis to explain the data is that singles congregate in urban, high crime areas and they go out at night to bars and other high crime locations.  Married individuals move to low crime suburbs and stay home with popcorn and Netflix.  The divorced, however, move back to the cities where the singles are and they head out at night to try to mate again.

An alternative hypothesis is that the individuals who tend to get divorced have personalities or behaviors which make them more likely to get divorced and more likely to be victims of crime: a drug user, for example, is likely to have a higher probability of divorce and a higher probability of being a victim of crime than a non drug-user.

How many other hypotheses can you think of to explain the data?  What tests would you suggest to distinguish hypotheses?

“A movie lover’s movie…”

When I see this phrase in an ad, as I did for the new film Bloom Brothers, I respond negatively (although I still will see it).  But exactly why?  After all, I am a movie lover by virtually any objective standard.  Shouldn't I read this description and jump for joy?

But no.

1. Perhaps this description signals pretension and, ultimately, stupidity.  Truly good restaurants don't advertise that they appeal to "gourmets"; rather the relevance of that quality is taken for granted.  See my discussion of counter-signaling in Discover Your Inner Economist.

2. Perhaps it is a sign they have nothing better to say about the movie.

3. Perhaps it is a sign that the movie is full of insider jokes about the movie business.  Movies of that kind do not generally excite me.

4. They are using the phrase because they think it will appeal to relatively large numbers of people.  Perhaps I am slightly insulted, as I feel that my love for movies deserves a more exclusive designation.

Update: I was conned.  The datum provides evidence for #1.