Month: January 2010

My favorite things Florida

Was Tom Petty correct to think he was cursed by the critics for sounding so "normal"?  I'd rather listen to Tampa Red or Cannonball Adderly.  You can list many people who spent winters in Florida, or died there, but they don't quite count.  Ernest Hemingway had a close enough tie to Key West and I favor his short stories over his novels.  Zora Neale Hurston is still worth reading.  Carl Hiaasen is true Florida but I've never finished one of his books.  Juanes lives in Miami and he has five or so very good pop songs, maybe more.  Celia Cruz ended up there too and I suspect many other Latino musicians did as well.  In sum that list probably would be very impressive.  Purvis Young is a good "Outsider" artist.

Many excellent movies are set in Florida.  Where do I start?

Body Heat.  The underrated Wild ThingsKey LargoContactDeuce BigelowAce Ventura (a favorite).  Various space launch movies.  The superb Ulee's Gold.  Parts of Midnight Cowboy.  Didn't Elliott Gould and Robert DeNiro end up there every now and then?  I feel there are additional noir movies and parts of gangster movies.  I Dream of Jeannie was set there.

Miami has long been one of my favorite American cities and I like Tampa for its dumpiness.  Naples is boring.

Evidence from India on neighborhood diversity

Sharon Barnhardt, who is on the job market from Harvard, reports:

This paper provides experimental evidence on whether religiously diverse neighbors affect attitudes about another religious group and/or preferences for inter-religious living. I exploit a natural experiment in a large Indian city in which Hindus and Muslims were randomly assigned units in a public housing complex with physically distinct "clusters" of four units. The lottery generates exogenous variation in the degree of ethnic diversity across clusters within the complex, which is rare among adult households. I conduct an original survey of 1363 households focusing on attitudes about members of the other religion and willingness to live together. To overcome concerns about self-presentation bias, I also measure implicit attitudes via an Implicit Association Test (IAT) for a representative sub-sample. My estimates demonstrate location influences interactions in that individuals spend significant time with others in their cluster. Increased proximity and interaction, in turn, affect attitudes. Greater exposure to Muslims (the minority group) improves Hindus' explicit attitudes about Muslims by 0.25 to 0.40 standard deviations, depending on the measure, and increases their willingness to live with Muslims. Paralleling this, I observe significant reductions in implicit bias (0.20 to 0.57 standard deviations) among Hindu children. While I observe no significant effects for Muslims, the overall effect is a convergence of attitudes across religious groups. As India expands public housing for the poor to accommodate rapid urbanization, deliberate mixing of religious groups can be a way of improving attitudes toward the religious minority.

You can find the paper, along with her other work, here.

The trials of Tony Judt

This is an excellent piece, excerpt:

The standing ovation was tremendous. "I was initially shocked by the disjunction between his intellectual capacity, which is completely undiminished and in many respects unequaled, and the physical degradation," says Richard Wolin, a professor of history at the Graduate Center of the City University of New York, who was in the audience. "But after five minutes, I lost sight of any physicality and focused on his words and their importance." He adds, "It was one of the most moving scenes I have ever witnessed."

Here is my previous post on Tony Judt.

The theory of optimal fines

A Swiss court has slapped a wealthy speeder with a chalet-sized fine – a full $290,000.

Judges at the cantonal court in St. Gallen, in eastern Switzerland, based the record-breaking fine on the speeder's estimated wealth of over $20 million.

A statement on the court's Web site says the driver – a repeat offender – drove up to 35 miles an hour (57 kilometers an hour) faster than the 50-mile-an-hour (80-kilometer-an-hour) limit.

Here is the full article and I thank Daniel Lippman for the pointer.

Six bullet points on why people go to graduate school in the humanities

These reasons are ugly, but a lot of it rings true.  Note the behavioral economics implicit in the explanations:

  • They are excited by some subject and believe they have a deep, sustainable interest in it. (But ask follow-up questions and you find that it is only deep in relation to their undergraduate peers – not in relation to the kind of serious dedication you need in graduate programs.)
  • They received high grades and a lot of praise from their professors, and they are not finding similar encouragement outside of an academic environment. They want to return to a context in which they feel validated.
  • They are emerging from 16 years of institutional living: a clear, step-by-step process of advancement toward a goal, with measured outcomes, constant reinforcement and support, and clearly defined hierarchies. The world outside school seems so unstructured, ambiguous, difficult to navigate, and frightening.
  • With the prospect of an unappealing, entry-level job on the horizon, life in college becomes increasingly idealized. They think graduate school will continue that romantic experience and enable them to stay in college forever as teacher-scholars.
  • They can't find a position anywhere that uses the skills on which they most prided themselves in college. They are forced to learn about new things that don't interest them nearly as much. No one is impressed by their knowledge of Jane Austen. There are no mentors to guide and protect them, and they turn to former teachers for help.
  • They think that graduate school is a good place to hide from the recession. They'll spend a few years studying literature, preferably on a fellowship, and then, if academe doesn't seem appealing or open to them, they will simply look for a job when the market has improved. And, you know, all those baby boomers have to retire someday, and when that happens, there will be jobs available in academe.

That list (there is more at the link) is from Thomas H. Benton and the pointer is from Jessica Crispin on Twitter.

The Pamuk brothers

Kurt Schuler writes to me:

If you are not already aware of it (and I didn’t see it mentioned in a quick search of Marginal Revolution), it may interest you that Orhun Pamuk has an older brother, Sevket, an economist who shuttles between LSE and Bogaziçi (Bosphorus) University in Istanbul. Sevket is the coauthor of A History of Middle East Economies in the Twentieth Century and author of A Monetary History of the Ottoman Empire, among other works in English and Turkish…A Monetary History of the Ottoman Empire is a really good book for those interested in monetary history, by the way, because it covers a long period, a big geographical area, and a body of writing in languages that hardly any Anglophone economists read, all in a brisk 300 pages.

What’s the value of your time?

B., a loyal MR reader, asks me the following (and he also manages to send me a paragraph which for whatever reason won't indent properly):

"I've been struggling with an economics issue lately that I think is universal: How much do I value my free time? I usually estimate it at about $50 or so per hour, but what happens to that as I have less and less of it due to work? And by how much should my salary increase for this corresponding decrease in the amount of time I have to enjoy that time? I've taken a crude stab at answering this on my blog (http://meanderingwoods.blogspot.com/2009/06/how-much-is-free-time-worth.html) but I'm no economist – actually I'm a psychologist by study and a risk consultant by trade. I would imagine that there is some literature on this but I was unable to locate much through Google. I would appreciate it if you could point me toward something or maybe bleg about it."

As usual, the correct answer is "it depends," but here are a few principles:

1. Don't value your time by your implicit wage rate, no matter what your Econ 101 text says.  For most jobs you are assigned some lumpy tasks and you don't control your work hours at the margin as much as you might like to.  The key question is whether the overall pattern of your time is an enjoyable one and marginal calculations aren't always a good way to make that estimation.

2. Ask the simple question: at what valuation of my time will I maximize the amount I look forward to each day, defined over the next five years?  If your next five years are not so tolerable, reexamine what you are doing and that includes revaluing your time.  For instance you might be an irrational workaholic or a lazy bum.

3. Look to the economics literature on "golden rule" and "steady-state" path comparisons to address this problem.  If need be utter the word "Flow" and try to remember how to spell that guy's name so you can google it.  

4. What do you want time for anyway?  When is your time ever "free"?  If you choose to work more for money, isn't that time "free" too?  Only if your job is a total drudge should you frame the choice this way.

5. Focus on defining the experiences you value most, and how to get more of those experiences, and wise money/time choices will flow from that approach.

Readers, do you have better…dare I call it…advice?

My Law and Literature reading list, Spring 2010

The semester is underway!

The New English Bible, Oxford Study Edition.

In the Belly of the Beast, by Jack Henry Abbott.

Borges and the Eternal Orangutans, by Fernando Verrissimo.

Glaspell’s Trifles, available on-line.

Sherlock Holmes, The Complete Novels and Stories, Sir Arthur Conan Doyle, volume 1.

I, Robot, by Isaac Asimov.

Moby Dick, by Hermann Melville, excerpts, chapters 89 and 90, available on-line.

Year’s Best SF 9, edited by David G. Hartwell and Kathryn Cramer.

Oscar Wilde, De Profundis.

Kathryn Davis, The Walking Tour.

Nadezhda Mandelstam, Hope Against Hope: A Memoir.

Haruki Murakami, Underground: The Tokyo Gas Attack and the Japanese Psyche.

Timothy J. Gilfoyle, A Pickpocket’s Tale.

Henning Mankell, Sidetracked.

Edgar Allen Poe, The Gold-Bug, available on-line.

Walker Percy, The Thanatos Syndrome.

We also will view a small number of movies.

More on the economics of credit cards

Joshua Gans directs my attention toward this symposium, led by Geoffrey Manne.  Here is an excerpt from Manne's summary statement:

…theory and empirical evidence suggest that lowering interchange fees does nothing to help consumers, and in fact harms them by raising annual fees and thus again by limiting competition among cards at the point of sale.  Perhaps there is some policy reason why we would want to help merchants at the expense of consumers, but the issue, often framed as merchants and consumers against banks and card networks, really seems to be merchants against consumers.  At best, we have no idea what the full social implications of capping interchange fees would be–but there is still a conflict between merchant and consumer interests, and we should be wary.

Here is Joshua Gans's post on the importance of the "no surcharge rule":

The better rule to subvert would be the ‘no surcharge rule’ that prevents merchants from offering different prices to consumers based on payment instrument. That rule was abandoned in Australia and we see many instances where it bites. In that situation, the strong theoretical prediction is that what fees Visa uses to extract payments from merchants do not matter for overall efficiency; even if they do matter for prices. This is one of those cases where there are relatively simple regulatory interventions to try that could have a big effect.

I am not endorsing all of these materials but simply offering them up for evidence that a moral condemnation of Visa is an overly hasty response.

Assorted links

1. Read a book you'll hate.

2. New story on high-frequency trading.

3. 2010 book preview; oddly not one of them excites me except maybe the Per Petterson.

4. The music industry of the future?

5. "Superstar teachers had four other tendencies in common: they avidly recruited students and their families into the process; they maintained focus, ensuring that everything they did contributed to student learning; they planned exhaustively and purposefully–for the next day or the year ahead–by working backward from the desired outcome; and they worked relentlessly, refusing to surrender to the combined menaces of poverty, bureaucracy, and budgetary shortfalls." More here.

6. Why the Eurozone has a tough decade to come.

7. Ezra Klein is on Colbert tonight, early part of the show.  Today his WP blog is broken so he can't announce it.

8. What not to say when buying a car.

The Visa fees article

Everyone is blogging about it, here is the link.  Kevin Drum has one good summary, or here is Yves Smith or Felix Salmon, both of whom are upset.  The upshot is that the supermarket pays Visa a fee if you use a "sign for it" card rather than entering a PIN number for a debit card, though it's a little more complicated than that.

My practice does not match the setting of the article exactly, but here's how it goes.  As Natasha forced me to internalize years ago, when I use my Visa credit card, and sign for payment, I receive frequent flyer miles.  When I use my Visa BB&T debit card (yes, my two main payment cards are both Visa), I don't get anything back.  By using the credit card, resources are redistributed away from the store and to both Visa and me.  On net that's a better deal for me and that's why I end up signing so often.  This could be efficient too, in a constrained second best sense.  For one thing, it indicates the supermarket was earning ex ante monopoly profit; is it so tragic for some of that profit to be split by Visa and me?  One way to understand Visa is that it is supplying countervailing power by "organizing" consumers against the retail monopoly and distributing the gains from the new bilateral monopoly arrangement.

There's nothing to stop the store from offering me frequent flyer miles, or other forms of discount, if I use a means of payment which they prefer.  I've yet to see a deal good enough to make me switch.  (When Sears pushes this on me, I just say no because Visa offers me a better deal.)  And I find it easy enough to believe that the petty monopoly of the local grocer is more significant than the market power in the potentially more contestable cards and payment market.

Again, I don't know how much of the entire market works on the basis that I experience.  But it's one simple example of how "higher fees" can be good rather than bad. 

Not long ago Ronald Coase turned 99 years old and I am delighted to see he is still alive.  His ideas are still alive too.

Addendum: When issues of this sort arise, there is a common pattern in blogospheric discussion: Blogger A criticizes a market practice with tones of absolute condemnation.  Blogger C (in this case, me!) responds with a plausible scenario, and a microeconomics-consistent first-order explanation, that things aren't so bad after all.  Blogger D tries to defend Blogger A by shifting the burden of proof to Blogger C to demonstrate that markets are efficient in such a case and by leveling charges of market fundamentalism and by citing some second or third best arguments that the market can fail after all.  Don't be fooled by that polemic slide in emphasis; the burden of proof is on the critics here — those asserting the existence of an evil and asking us to move beyond a loose agnosticism – not on me.

French sales start today, by law

Trading laws stipulate that there are two periods for sales in France. Winter sales from January to February and summer sales from June to July. In each case, the sales last for five weeks. All goods on sale must have been in the shop for a minimum of thirty days prior to the sale date – nu buying in cheap stock and selling it as a sale item. Reuctions must ne visibly displayed in percentage terms. labels must also show the old pre sale price and the new sale price. Retaiers are allowed to reduce their prices three times in the sales – after the first fortnight, and again in the final week.

Outside the official sale periods, retailers are allowed two weeks in the year, to use at their discretion, for extra sales such as pre-christmas sales or spring sales.

…Tomorrow morning [today] many shops (with permission from their local trading authorities) will be opening at 7am. Needless to say that the starting date is a national one decreed by the government.

Here is more information and I thank Bill Hawshaw for the pointer.

Ben Casnocha on advice

He enumerates fourteen interesting points, here is one of them:

2. We overvalue advice on difficult decisions and undervalue advice on easy ones. So say some studies. During the college admissions process, kids get a million opinions on an admittedly important and difficult situation, but in the end receive so many contradictory thoughts that they end up confused. On the other hand, when faced with where to go for lunch, people would do better to ask around a bit for a recommendation.

Ben also tweets:

Lists of numbered points where the total number is too pat (5, 10, 15, 20, etc) usually have more fluff than a list of points w/ an odd #.