Month: April 2010
Which Americans are “best off”?
I know that is a tricky concept, and I wouldn't personally use those words, but if you consult human development indices the answer is Asians living in New Jersey. The standard is:
The index factors in life expectancy at birth, educational degree attainment among adults 25-years or older, school enrollment for people at least three years old and median annual gross personal earnings.
What does New Jersey do right? How much of that is selection?:
Across the 50 states and the District of Columbia, Asian Americans were worst off in Louisiana. Their New Jersey counterparts lived an average of nine years longer and earned more than twice that of Asian Americans in Louisiana.
Overall Asian-American life expectancy is 86.6 years. Here's a scary sentence:
Washington, D.C. offered the highest level of human development among whites.
African-Americans fare best in Maryland, which also may be a DC effect. There is this too:
Latinos outlive whites, on average, by over four years, and in all but four states
The full blog post is here and for the pointer I thank DavidMWessel.
Comparable risk
The yield on Greece’s benchmark 10-year bonds soared 1.4 percentage points to 11.1 percent – more than three times that of benchmark German bonds and just below those issued by Pakistan.
There is more here. The assessment seems to be this:
What a growing number of investors suggest is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail.
For better or worse, I do not expect such a figure is forthcoming. I also do not see how such a figure would do more than postpone the basic problem, which is that several European economies have been pretending to be much wealthier than they really are and to make financial plans on that basis.
*Lifecycle Investing*
That's the title of the new book by Ian Ayres and Barry Nalebuff and the subtitle is A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio. Their point is simple: if diversification across asset classes is so good, why not also seek greater diversification across time periods? In other words, you should want to hold stocks for longer periods of time and to do this when you are young you should incur additional debt to play the market.
Yikes!
They propose a fifty percent down payment on stocks when you are young, with the rest financed by leverage. At another place in the book, they mention aiming to spend a constant fraction of lifetime savings on stock.
But is this less risky? To what extent is this multiplication of risks (adding more time periods) and to what extent is it subdivision of risk (spreading a given sum of money across more stocks or across more time periods)? To what extent does early investment sidestep the price risk of later periods, if you're holding the assets through that period anyway? The authors do present various simulations where this strategy works out well. They also argue that if you are pessimistic you should invest less in stock, but still spread out your investing over time.
If I were a young man, I would not take this plunge, mostly out of fear that a historically unique equity premium configuration was doing the major work of the argument. Still, I found this to be a stimulating and well-written book with a clearly demarcated proposal for betterness.
It was published by Basic Books, which also is putting out Jeff Miron's Libertarianism: From A to Z.
How to control your impulse reading
Scott Golder reports:
Even after a merciless purge, my Google Reader still has over 90 feeds in it, which generates several hundreds of things to read every day. After a quick skimming and culling, there’s at least a dozen or two dozen articles or long blog posts a day I’d like to read. Combine that with the things my Twitter followees post (a higher signal/noise ratio than the RSS feeds) and it’s more than I can responsibly spend time on.
Today I thought of a nifty hack to control my “impulse reading” – things that I read on a whim during a bout of web surfing. It adapts a popular trick from personal finance to control impulse spending, which is to wait 30 days before making a purchase.
When I encounter an article I’d like to read, I open it in a new tab in Firefox and leave it there. Right now I have about a dozen tabs open. Some of them have been there for days. Invariably, when I make my way back through them, I read maybe 1/3 of them. Most of them just don’t seem as interesting anymore.
Here is Scott's blog. Scott also sometimes blogs at Permutations, which covers mathematical sociology.
The demand for privacy markets in everything
This story is about Abramovich's private yacht:
Infrared lasers detect the electronic light sensors in nearby cameras, known as charge-coupled devices. When the system detects such a device, it fires a focused beam of light at the camera, disrupting its ability to record a digital image.
The beams can also be activated manually by security guards if they spot a photographer loitering.
The yacht also has a missile defense system. For the pointer I thank Daniel Lippman.
Sentences to ponder
About a quarter of Indonesian boys aged 13 to 15 are already hooked on cigarettes that sell for about $1 a pack or as little as a few cents apiece, according to WHO. A video on YouTube last month prompted outrage when a 4-year-old Indonesian boy was shown blowing smoke rings and flicking a cigarette. His parents say he's been smoking up to a pack a day since he was 2.
And this:
According to a 2008 study on tobacco revenue in Indonesia, smokers spend more than 10 percent of their household income on cigarettes; that's three times more than they spend on education-related expenses such as school fees and books.
Indonesia remains one of the last places in the world where cigarette TV commercials still run, featuring rugged men and beautiful women smoking. Billboards plastered above four-lane highways encourage motorists stuck in Jakarta's notorious traffic jams to "Go Ahead" or "Become a Man" or let Marlboro Lights "Style Your Party."
Leggy women in short skirts and strappy heels promote cigarettes at events, sometimes even giving out discounted or free samples to "taste."
The full story is here and I thank Daniel Lippman for the pointer. How many of you will bite this bullet?
On Tolerance
“Tolerance” is a feel-good buzzword in our society, but I fear people have forgotten what it means. Many folks are proud of their “tolerance” for gays, working women, Tibetan monks in cute orange outfits, or blacks sitting at the front of the bus. But what they really mean is that they consider such things to be completely appropriate parts of their society, and are not bothered by them in the slightest. That, however, isn’t “tolerance.”
“Tolerance” is where you tolerate things that actually bother you.
Robin Hanson is correct that few people are truly tolerant but peculiarly for Robin he calls for more true-tolerance anyway. I'm all for more tolerance but Robin's own examples suggests that social change is not much driven by changes in tolerance.
As I suspect Robin would acknowledge, gay rights have not advanced because of more tolerance per se, i.e. they have not advanced because more people are willing to accept behavior that bothers them. Advance has occurred because fewer people are bothered by the behavior. Note, for example, that if the former were the case we would not see more gays and lesbians on television, as we do today.
When we are required to confront things that bother us we sometimes (often?) reduce
cognitive dissonance by changing our preferences so that we are no longer
bothered. Thus libertarians and other true-tolerants may play a role in encouraging the intolerable to come forward, thereby forcing the intolerant to reduce cognitive dissonance by accepting what was formerly intolerable. In this sense, a few more true-tolerants might help to tip society towards acceptance of some variant practices.
But since few people are or ever-will-be truly-tolerant, tolerance by itself probably can't get us very far towards a society of peaceful variation. Instead, we will have to argue that variant practices are normal, not bothersome or a subject of indifference. The route to drug legalization, for example, is to encourage more normal people who "smoke pot and like it" to come out of the closet. Kudos to you, Will Wilkinson! In the case of marijuana, I think this is possible but for many of the present and future variant practices mentioned by Robin, the limitations of tolerance put a big constraint on those that will ever be "tolerated."
Ithaca assorted links
1. Ori Heffetz and Bob Frank, a survey article on status-seeking.
2. Ben Ho's apology poster.
3. Valerie Reyna's website on why teens take so much risk; here is one summary piece on reducing teen risk-taking.
4. Valerie Reyna on how people actually make medical decisions.
5. Bob Frank's column on perceptions of wage fairness.
6. Various speculations about a Greek default; I agree with 5-7.
The origins of mutton barbecue
Here is one account:
The one truth about barbecue seems to be that people use what they've got. In Texas it's beef, in the Carolinas it's pork, and in Western Kentucky it's mutton. Thanks to the tariff of 1816, wool production in the then Western United States became profitable and suddenly people found themselves with a lot of sheep on their hands.
Any story of the origin of barbecue starts with a meat that is too tough and undesirable to be sold for a profit. Mutton barbecue is no different. Aging sheep who no longer produced good wool became a virtually unlimited resource, but the meat was too tough and too strong tasting to be worth anything so people turned to the tried and true methods of low and slow cooking. In the early days a whole sheep would be cooked for long hours over a low fire. A mixture of salt water would be mopped over it and it would be served up with a dipping sauce of vinegar and hot peppers and stuck between a couple slices of bread. In Kentucky this "sauce" is called a dip, specifically Mutton Dip or Vinegar Dip.
Call it the Protectionist Theory of Barbecue, plus or minus a bit of hysteresis. I've seen or heard of mutton barbecue only in Kentucky and then only parts of Kentucky, the southwest and a bit in Lexington. I wonder if they have mutton barbecue in North Africa or the Middle East. In general it is an open question why barbecue traditions have for so long been so geographically concentrated.
From The New Yorker, here is another account:
How come this is the only area where mutton is barbecued?" I asked an Owensboro merchant who had been kind enough to give me change for a nickel parking meter.
"I expect because there are so many Catholics here," he said.
I didn't want to appear ignorant. "Yeah," I said. "I suppose that'd do it."
As I was searching my mind for some connection between the Roman rite and mutton consumption, the merchant told me that the large Catholic churches in town have always staged huge picnics that feature barbecue and burgoo–burgoo, another staple of Owensboro barbecue restaurants, being a soupy stew that I, for some reason, had always associated with southern Illinois. In the early days, the church picnics apparently served barbecued goat. In fact, Owensboro might have arrived at barbecued mutton by a process of elimination, since people in the area seem willing to barbecue just about any extant mammal. In western Kentucky, barbecue restaurants normally do "custom cooking" for patrons who have the meat but not the pit, and among the animals that Posh & Pat's offers to barbecue is raccoon. The Shady Rest, one of the most distinguished barbecue joints in Owensboro, has a sign that says "If It Will Fit on the Pit, We Will Barbecue It. It is probably fortunate that the people of the area settled on barbecued mutton as the local delicacy before they had a go at beaver or polecat
In other words, they don't know either. What would Robin Hanson say?: Something like: "Food isn't about eating!"
I thank Brandon Sheridan for the pointers.
Uncle Liu’s Hot Pot
The old Sichuan restaurant a few doors down from Great Wall–I think it was called Peking Village–which used to be there has been replaced by a place called "Uncle Liu's Hotpot." It's owned by HK Palace and, as the name implies (and, unlike HK Palace, it's Chinese name is the same as the English name, though it's really Old Liu's Hotpot City), it specializes in hotpot. We were very excited before even going in, because, while a few Sichuan places offer hotpot (the defunct place up in Gaithersburg that was a Hui-Sichuan restaurant; China Canteen; Great Wall Szechwan if you let them know in advance), none even comes close to being the real thing. The good news is that this place is as close as I think you're going to get to real Sichuan hotpot in the US. They have a special hotpot menu, which, though only in Chinese when it comes to ordering which type of base you want (it's on the front of the menu; they have a variety of choices–classic all spicy, classic half spicy half non-spicy, and then they have a mushroom broth one, one with fish head, and one or two others), has in both English and Chinese a list of all the things to order to go into the hotpot. That list is very good–has all the classic ingredients (though some are a little different from what you'd get in Sichuan, e.g., the doufu pi) and is maybe about 1/2 the number of ingredients you'd have on offer at an average hotpot restaurant in Chengdu, so it's really pretty good. The prices are very reasonable, and, even better, it's open until midnight every day (again, a very good sign of authenticity, as hotpot restaurants in Chengdu are packed until very late at night). We had the classic all spicy base ($6 for the table; it's the cheapest option)–for our taste, it could have been a bit more oily-lardy and could have had more seasonings in it, especially chilis and Sichuan peppercorns, but it was still very, very good (and hotpot restaurants in Chengdu have been moving away from the lard as well for health reasons in the last few years; also, outside of Sichuan itself, hotpot restaurants in China tend to go lighter on the peppercorns because they know non-Sichuanese aren't as used to it). Also extremely positive is that they have a dipping sauce station (the dipping sauce, which is essential, is another $1 per person, again, it's only in Chinese on the front of the hotpot menu where the bases are listed) that is self-serve, something you don't get even in China. You can do the classic version (which I did last night)–sesame oil, soy sauce, black vinegar, garlic, salt, msg (yes, a pinch can't hurt), scallions, and cilantro–but they have a lot more there as well if you want (though, for my mind, stuff like oyster sauce and hoisin sauce is an abomination with hotpot).
The regular menu of the restaurant combines the usual Chinese-American standards with maybe about half to 2/3 of HK Palace's Sichuan dishes (though no specials on the wall that I noticed). We didn't order from that–hotpot is definitely the way to go in the evening, and that's what every table was getting–the place was basically full around 8 but had mostly emptied out by 9. What we're also excited about, however, is that they offer a daily lunch buffet from 11-3 and, judging from the labels on the buffet setup, they include in the buffet (at least on the weekends–maybe they pare it down during the week) a lot of their very good Sichuan cold dishes and a good selection of main dishes (though less heavy on the Sichuan stuff). The buffet includes pho and bubble tea. We're now conflicted–do we try the buffet for our next trip or stick to the hotpot? Probably the latter, especially as we're definitely going to try the mushroom base.
Having eaten there, I can vouch for this report and also for the Chinese menu, which you must ask for explicitly. This place is a knockout.
Assorted links
1. Complexity isn't going away; a critique of Clay Shirky.
3. Rent-seeking hypothesis about the Israeli iPad ban.
4. The forthcoming David Cronenberg movie.
5. Hernando de Soto on the financial crisis.
7. The agenda.
The wisdom of Garett Jones, a continuing series
'Politicians' are composite entities, more like firms than individuals.
You can follow Garett on Twitter here.
The Art of Taxation
In Mexico, visual artists can pay their taxes with art works.
That's the deal Mexico has offered to artists since 1957, quietly amassing a modern art collection that would make most museum curators swoon. As the 2009 tax deadline approaches, tax collectors are getting ready to receive a whole new crop of masterworks…
There's a sliding scale: If you sell five artworks in a year, you must give the government one. Sell 21 pieces, the government gets six. A 10-member jury of artists ensures that no one tries to unload junk.
Under the program, the Ministry of Finance and Public Credit now owns 4,248 paintings, sculptures, engravings and photographs by Diego Rivera, Rufino Tamayo, Leonora Carrington and other masters.
Click on "Colecciones Pago en Especie" at apartados.hacienda.gob.mx/cultura/index.html to see the art works which have been used to pay taxes since the program began.
The Mexican government accepts all styles of painting for the program so, unlike in America, in Mexico you can have taxation without representation.
Should the SEC self-finance?
I haven't seen this issue receive much attention on the usual blogs (Yves Smith is one exception). Here is one argument for self-finance:
The Obama administration has requested long overdue increases in both budget and staff for the S.E.C., and has plans to add as many as 374 employees. Those increases are vital, but because they’re dependent on Congress, there is no guarantee that they will be sustained.
Instead, the commission should finance itself – much as the Federal Reserve and the Federal Deposit Insurance Corporation do today through fees on banks. These two pivotal financial regulatory agencies thus have the flexibility to adjust their own staff.
And it appears easy:
Such a self-financing system would not mean higher fees; the commission collects far more in fees from corporate filings and stock market trading than it gets from Congress. But those fees go back into the federal coffers. In 2007, the S.E.C. brought in $1.5 billion, almost twice its 2007 budget.
This seems like a short-run improvement, but the idea nonetheless makes me a bit nervous. What will it look like in practice, ten or fifteen years from now? Was reliance on fees in every way beneficial for the FDA? Admittedly, self-finance is one pathway to higher levels of finance, but the two issues are conceptually distinct and we might prefer to implement the appropriate level of finance directly through Congress. I fear that in the longer run self-finance means that the SEC never wishes to see the financial sector shrink. (Of course maybe it's not going to shrink anyway.) A related question is what kind of internal controls the SEC would need to maintain its own fiscal discipline and prevent overspending, backed by an excess raising of funds and fees. So whether self-finance is a good idea probably depends on what you are comparing it to. A final question, and not a small one, is whether you think the SEC should be more independent from Congress.
Here is the SEC's own case for self-finance. Here is a 2002 GAO study of the idea, very useful and it also discusses other cases of self-finance among regulatory authorities.
I don't have any strong conclusion here other than "maybe."
Advertising markets in everything
A Springfield man with colon cancer who has been told he has just months to live is selling advertising space on his urn. Aaron Jamison told KVAL-TV he hopes to raise $800 to help his wife Kristin pay for the cost of his cremation.
One friend, restaurant owner Dustin Remington, has already paid $100 for an ad. Jamison plans to hand-paint the ad on his urn.
The story is here and I thank Daniel Lippman for the pointer. In the meantime, also from Daniel, a town in Washington state sells on eBay for $360,000.