Assorted links

1. Why are gamblers hard to study?

2. Islamic derivatives.

3. "In defense of much, but not all, financial innovation"; a very good new paper by Bob Litan.  See pp.3-4 for a summary or here is the executive summary.

4. What does it cost to create a new job?

5. Markets in everything: cremation that looks good.  This is one of my favorite recent articles.

6. Cartoons from the financial crisis of 1720.

Comments

1. I wish I'd thought of that trick in school. "I've done a great deal of research on this and my conclusion is that the subject is very, very difficult to study."

I suspect these "experts" spent a lot of time at the fruit machines themselves.

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Spencer,

If the infamous "Road to Nowhere" were built, what would its value be?

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The "financial innovation" is filled with statements which basically mean "I feel X was good for GDP". For most of them the opposite could be as easily "felt".

There's another point - let's say the analysis shows that a particular "financial innovations" might actually be quite good if properly regulated and used only in proper context - but they weren't and ended up being highly damaging. Do you score them as positive or negative in such case?

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"First, gamblers become engrossed in gambling. "We have observed that many gamblers will often miss meals and even utilise devices (such as catheters) so that they do not have to take toilet breaks. Given these observations, there is sometimes little chance that we as researchers can persuade them to participate in research studies."

There's a large literature on this problem in research which goes by the name of "The Catheter Limit". Common remedies for the researcher are surreptitiously gumming up the catheter, slipping a urinary laxative into the subject's means of hydration that causes to catheter to fill up more quickly, and, as a last resort, actually removing it surreptitiously. Unfortunately, the subject is often too pissed-off to speak with the researcher.

Feel free to remove this silly post.

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Still not quite right

Cost of a job equals:
1. Total amount spent
2. minus the value of the road or hospital or whatever that is produced.
2b. plus the value of what would have been produced by the forgotten man.
3. This difference divided by the number of jobs created.

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While it doesn't allow the opportunity to view the players themselves, internet gambling should provide an easy way to gather a massive amount of data on betting habits and how they fluctuate with respect to results over different time scales.

Many online poker sites already have a clause that says they hold the right to monitor your play (ostensibly to catch cheats, but i wouldn't be surprised if they used it for marketing research). A lot of sites also allow players to download histories of their play. Data could be voluntarily gathered from contributors if the gambling sites don't cooperate.

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Spencer,

If Uncle Sam spends $2 billion on something that has a value of $1 billion, is that a good thing? Does it matter how many people are employed in the process?

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Thomas Davenport and Jeanne Harris spend a whole chapter of "Competing on Analytics" on Harrah's loyalty card program. I heard Davenport talk about this a couple of years ago.

Studying gamblers who have loyalty cards seemed reasonably easy, relative to studying lots of other things.

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Yes, it matters and the point was to measure the waste.

In your example where the government spends $2 million on something that has a value $1 million the waste is $1 million, not $2 million.

This is suppose to be an economics blog and I'm seeing you advocate bad economic analysis.

Do your really believe that the ends justifies the means so strongly that you favor dishonest analysis?

I began my career in the CIA back in the old cold war days, and you guys are acting more and more like the communist did every day that passes.

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