Month: December 2009


In February, a music professor at Stanford, Jonathan Berger, revealed that he has found evidence that younger listeners have come to prefer lo-fi versions of rock songs to hi-fi ones. For six years, Berger played different versions of the same rock songs to his students and asked them to say which ones they liked best. Each year, more students said that they liked what they heard from MP3s better than what came from CDs. To a new generation of iPod listeners, rock music is supposed to sound lo-fi.

Here is more.  The whole series — notable new ideas picked out by the NYT — starts here and as usual it is worth perusing the entire list.

Ben Casnocha’s rules of thumb wiki

You'll find it here.  In theory they are for business but what is business but another form of human action?  Here are a few from the list:

Email is a communications medium, not a collaboration medium. When confused as a collaboration tool, efficiency plummets. – Ben Casnocha

A bad reference is as hard to find as a good employee. – Robert Half

Rather than telling an associate, "You look good in that suit," tell the person, "That suit looks good on you." – Dale Carneigie

The new html edition of Tyler Cowen’s Ethnic Dining Guide

You'll find it here, namely on my home page (you may need to scroll down).  This version of the guide has more revisions than any other new edition, mostly because there has been a lot of quality turnover.  More than half of the "Top 20" list has changed in the course of a year.  Currently my two favorite places are Sichuan Pavilion and Abay Market (you now can and indeed have to order vegetables in advance), with Thai X-ing a perennial.  Komi is the "finest" dining and Bourbon Steak is the place most likely to be better than you think.

I should note that if you've been following the blog version of my dining guide, the html version is simply a print-it-all-out-at-once compendium, rather than a source of new information.

99 10 Red Balloons

Earlier this week DARPA, the Defense Advanced Research Projects Agency, moored ten, 8 ft red, weather balloons in undisclosed locations across the United States.Balloon7

The DARPA Network Challenge offered a prize of $40,000 to the person or group who first identified all the locations.

The MIT Group which won the challenge used a clever pyramid  incentive scheme.  Each balloon was worth $4000.  The person to identify the location earned $2000.  The person who invited that person to join the MIT group got $1000, the person who invited the person who invited the person who located the balloon got $500 and so forth (any money not distributed in this way was given to charity.)

The incentive scheme meant that contestants not only had an incentive to find balloons they had an incentive to find someone who could find balloons (or find someone who could find someone who could find balloons and so forth).

Incredibly, the MIT team located all ten balloons in just under 9 hours!  The challenge may seem frivolous but in fact is a great example
of how prizes and network technologies can combine to collect and use
highly dispersed information–a problem of very general interest and relevance.

Markets in everything: randomized pizza prices

S├ębastian Turben writes to me:

It's about a restaurant where at the end of your meal, you roll 3 dice, and if you get the combination 4-3-1 you don't have to pay…I guess what makes it work is that people will tend to eat more/more expensive that what they usually do, thinking that the proba[bility] of not paying is not that small…

The link, in French, is here.  I take this as evidence against the view that people systematically miscalculate expected utility in repeated, real market settings.  If they did, you would expect to see commercial lures like this much more often.  Maybe in mortgage markets, or credit card markets, people are overoptimistic about the bad (too many floating rate mortgages or too many people accepting the risk of high default fees), but I don't think in pizza markets they are overoptimistic about the good.  A restaurant which makes this kind of offer, of course, has to charge systematically higher prices, the greater the customer's chance of winning the lottery,

Addendum: Jeff Ely considers a related example.

Are the naughties the best decade ever?

Some people are saying they're the worst decade ever, but that's more true for the global relations of the United States than for the level of human well-being in the world as a whole.  Even in the U.S., a lot of social indicators improved.  Elsewhere Chinese growth continued, Indian growth moved into the big time (in the gross reckoning we're already at well over two billion people), a lot of Eastern Europe was successfully absorbed into the EU,  Indonesia made slow but steady progress.  Brazil may have turned a corner, and Africa had a better-than-lately decade in terms of economic growth.  Communism didn't really come back.  Admittedly the Middle East is a tougher call.  Canada did strikingly well, as did Australia.  There was lots of progress on public health, including in the war against AIDS.  The internet truly blossomed and human creativity continued.

For a lot of you it feels bad, but it's not obvious that the naughties have been such a terrible decade overall.  By the way, that home prices fell was overall a good thing; the roofs on those homes still keep out the rain.

I thank Bryan Caplan for a discussion related to this post.

The endgame?

…the exchanges will get much bigger over time. Part of what’s going on in the United States is that the employer-based health insurance system is slowly unraveling. Both the House and Senate versions of reform consist not only of using exchanges to cover the currently uninsured, but also using exchanges to construct a kind of safety net so that as employer-based insurance continues to unravel, people will land softly in exchangeland rather than crashing into the rough ground of the current individual insurance market. The Senate bill will slightly accelerate the decline of employer-based insurance by slowly phasing out the tax subsidy for such insurance.

That is Matt Yglesias, here is more.  Of course if this is true — and it may well be — the composition and nature of the exchanges means everything.

Another reason not to be a Civil War revisionist

As if you needed one:

Although southerners rebelled against growing centralization of the federal government, they had no qualms about establishing a strong national state of their own.  Scholars have classified the Confederate central government as a form of "war socialism."  The Confederacy owned key industries, regulated prices and wages, and instituted the most far-reaching draft in North American history.  The Confederacy employed some 70,000 civilians in a massive (if poorly coordinated) bureaucracy that included thousands of tax assessors, tax collectors, and conscription agents.  The police power of the Confederate state was sometimes staggering.  To ride a train, for example, every passenger needed a special government pass…Political scientist Richard Franklin Bensel writes that "a central state as well organized and powerful as the Confederacy did not emerge until the New Deal and subsequent mobilization for World War II."

That is from John Majewski's excellent Modernizing a Slave Economy: The Economic Vision of the Confederate Nation.

One implication is that the United States kept "small government" for an artificially long period of time, due to North-South splits and the resulting inability to agree on what a larger government should be doing.

The Federal Employee Health Benefits Plan

Walton Francis has a new and very substantive book on health care policy, with the exciting title: Putting Medicare Consumers in Charge: Lessons from the FEHBP.  It starts with a simple premise:

During the last half-century, the United States has operated a half-dozen major health-care financing systems in parallel, each operating in its own world, and with only minimal attempts to observe and learn lessons in program A that could be useful in program B. 

Francis studies one of these programs, namely FEHBP, in detail.  He portrays FEHBP as "premium support" in contrast to the "defined benefit" approach of Medicare.  On top of it all are competing private insurance plans and the details of the plan you end up with are decided by competition, combined with some regulation.  I now think of FEHBP as a somewhat indirect voucher scheme, albeit with complications.  Francis argues that FEHBP is a better model for health care reform than is Medicare and that FEHBP is better for both offering diverse programs and inducing cost control.  The employee pays about a quarter of the price and FEHBP also covers many retirees, apparently with reasonable success.  Here is Wikipedia on FEHBP.  Here is the program's own home page and it does I should add touch the Cowen family.

One question I have is what FEHBP would look like when scaled up to an entire country, including to people who have never had enough human capital to work for the U.S. government.  (Here is one critique of a scaled-up FEHBP but I don't find it so convincing, at least not compared to the problems with other approaches.)  Still, this book is essential reading for anyone interested in health care policy.  I can't call it exciting, but it is a model of clarity and substance throughout.

Here is one report, from last night, that a modified version of the FEHBP idea will be substituted in for the public option.  I don't yet have reliable details on what this might mean, or who it might cover (just the people on the exchanges?) but that is why I am accelerating this post even though I do not have fully formed thoughts on FEHBP as a model for broader reform.

Addendum: Michael Tanner offers related comments.

Assorted links

1. Why do aphorisms and cynicism go together?

2. When did bank executives cash out?

3. In defense of managed care, with a pointer on median wage stagnation.

4. Chinese vs. Russian reforms.

5. Monkey language has syntax.

6. The final paragraph of the article: "But the big winner is the rabbi, a recent arrival from Brooklyn who is
working hard (against tough odds) to bring his Lubavitch movement to
Montana. He has been scouring the state for anyone who can speak
Hebrew, and is elated to have found a German shepherd he can talk to."

7. The encyclopedia of counterintuitive thought.