Month: April 2010

Sperm and egg donors

Via Eric Barker, we learn this:

Donor recruitment at the egg agencies and sperm banks appeared to reinforce these stereotypes, Almeling found. Egg agency advertisements tend to appeal to women’s altruism, while men are informed of a job opportunity. The application process for donors also favors what Almeling called “gendered stereotypes of selfless motherhood and distant fatherhood.” Although egg donors stood to be handsomely compensated, women who indicated there was a financial motive behind their participation were routinely rejected in favor of applicants who expressed more altruistic motives, such as the desire to “help” infertile couples. Sperm banks, meanwhile, were much less explicit about the need to appear altruistic.

The entire post is interesting.

The economics of fashion

One of my two talks today is on this topic.

Obviously fashion is a signal and maybe it is also a relatively efficient signal.  To the extent signals are wasteful (debatable of course, given sorting considerations), you want a signal which does not have much free entry —  to limit rent-seeking costs – and a signal whose price is greater than marginal cost, to limit total costs of production.  High couture satisfies these requirements to some degree.

Here is a short essay on the economics of fashion.  Here is McClure, Coelho, and others on the economics of fashion.

Kevin Drum’s ten reasons to be pessimistic about the economy

I'm just glad he didn't decide to list twenty:

  1. This is a balance sheet recession, not a Fed-induced recession. Paul Volcker caused the 1981 recession by jacking up interest rates and he ended it by lowering them. That's not going to happen this time.
  2. In fact, there won't be any further stimulus from lower interest rates. They're already at zero, and Ben Bernanke has made it clear that he doesn't plan to effectively lower them further by setting a higher inflation target.
  3. Consumer debt is still way too high. There's more deleveraging on the horizon, and that's going to make consumer-led growth difficult.
  4. The financial sector remains fragile and there could still be another serious shock somewhere in the world.
  5. There are strong political pressures to reduce the budget deficit. That makes further fiscal stimulus unlikely.
  6. Housing prices are still too high. They're bound to fall further, especially given rising interest rates combined with the end of government support programs.
  7. Our current account balance remains pretty far out of whack. Fixing this in the short term will hinder growth, while leaving it to the long term just kicks the can down the road.
  8. The Fed still has to unwind its balance sheet. That has the potential to stall growth.
  9. Oil prices are rising. This not only causes problems of its own, but also makes #7 worse.
  10. Unemployment and long-term unemployment continue to look terrible. Yes, these are lagging indicators, but still.

*Stumbling on Wins*

The subtitle is Two Economists Expose the Pitfalls on the Road to Victory in Professional Sports and the authors are David Berri and Martin Schmidt.  I liked this bit (p.21) about the factors which do not explain free agents' salaries in the NBA:

Free Throw Shooting Efficiency



Size of Market Where Player Signs

Playing the Center, Power Forward, or Point Guard position

Race of Player

Here is previous coverage on their earlier book, The Wages of Wins.

The Greek rescue package

Peter Boone and Simon Johnson serve up the bottom line.  Here is one good excerpt of many:

Often assistance packages of this nature just help “smart money” to get out ahead of a default.  This could be the case here; 40-45 billion euros total money could last roughly one year.  Both Russia and Argentina got large packages in the late 1990s but never regained access to private markets, so eventually everything fell apart.

The best paragraph I read yesterday (the culture that is Japan)

The daughter of a policeman and a dance instructor, Rebecca is thought to be popular because she has big eyes, a small face and slender limbs – similar to the cartoon characters.

There is much more at the link, including videos.  The upshot is this:

Rebecca, from the Isle of Man, first came to attention on YouTube where millions watched her dance to J-Pop (Japanese pop music) and the theme tunes of anime cartoons.

She appears in hundreds of clips dressed as Japanese cartoon characters.

Her new album is expected to go straight to number one in Japan.  For the pointer I thank LongTermGuy.

Assorted links

1. Rauch on Frum.

2. Is there too much drinking in the UK?

3. Hooters comes to China: "With unemployment among graduates at 13%, more young women are applying to Hooters. In addition to good looks and the ability to speak English, they need a few other skills. Jiang coaches them in yelping, dancing in a line and, so they're not embarrassed when an English-speaking customer asks, the real meaning of "Hooters.""

4. Sea lion vs. octopus (video).

5. Adjusting the unemployment rate for demographics.

Department of Isn’t (Robin Hanson, Gnostic)

Food isn’t about Nutrition
Clothes aren’t about Comfort
Bedrooms aren’t about Sleep
Marriage isn’t about Romance
Talk isn’t about Info
Laughter isn’t about Jokes
Charity isn’t about Helping
Church isn’t about God
Art isn’t about Insight
Medicine isn’t about Health
Consulting isn’t about Advice
School isn’t about Learning
Research isn’t about Progress
Politics isn’t about Policy

That's from him.  No sex?  Can that somehow be signaling to get more sex?

Usain Bolt should be running in the 2040 Olympics

Originally I was going to put this under "Assorted Links" but I decided it deserved its own spotlight.  Here is one very good excerpt of many:

During the drive phase, Bolt and the rest of the runners are all leaning forward at an unsustainable tilt, their torsos out ahead of where their feet impact the ground. They are basically in the act of falling down, face-first, but their legs, racing against gravity, are preventing that from happening, propelling them forward so hard and so fast that their bodies, instead of face-planting, begin to slowly rise up into a full upright position. Sprinters often describe this phase, when everything happens correctly, as being analogous to liftoff in an airplane.

Here is another good bit:

His top speed is such a spectacle, so phenomenal, so searing that many who witness this race, who see Bolt cross the line in 9.69 seconds, breaking his own three-month-old world record by three hundredths of a second, don't notice, until they see the replay, what is perhaps the most salient and frightening thing about his performance: Approximately eighty meters into the race, twenty meters from the finish line, Bolt stops trying.

Read the whole thing.  For the pointer I thank The Browser.

How to insult Russia

The boy, who was adopted in September from the town of Partizansk in eastern Russia, arrived in Moscow on a United Airlines flight on Thursday from Washington, with a written note from Hansen.

The note said: "This child is mentally unstable. He is violent and has severe psychopathic issues. I was lied to and misled by the Russian orphanage workers and director regarding his mental stability and other issues … After giving my best to this child, I am sorry to say that for the safety of my family, friends, and myself, I no longer wish to parent this child."

The story is here.  Russia has announced a desire to freeze adoptions to the United States.  About 1600 Russian babies are adopted to the United States each year, most of them with success; if there is one area where countries do not maximize expected value, it is adoption policy.

Is there a flypaper effect for public health-based foreign aid?

If you give people, or a government, money to do one thing, they might reallocate some of those funds to their preferred marginal expenditures.  A recent study published in Lancet, co-authored by Christopher Murray and Chunling Lu, suggests this is what happens with many instances of foreign aid:

"For every $1 of DAH [development assistance for health] given to government, the ministry of finance reduces the amount of government expenditures allocated to the ministry of health and other government agencies that engage in health spending by about $0.43 to $1.14," they write. "From the global health community's perspective, this means that to increase government health spending by $1, global health funders need to provide at least $1.75 of DAH."

Furthermore debt relief does not increase domestic government health care spending but grants to NGOs, unlike direct foreign aid to governments, do increase such spending.  A summary of the study is here.  Here is an abstract and a gated link.

Austro-Greek business cycle theory

Peter Boone and Simon Johnson explain:

This may not be obvious, but, creating money in a currency union is no simple task.  In any single country, central banks usually restrict themselves to buying government bonds, and making loans to regulated commercial banks.  Net purchases of these securities by central banks creates what is called “high-powered money”; this feeds into the financial system and results in the creation of what we all use to make payments and store value, i.e., money, plain and simple.

However in the European Monetary Union there are now 17 nations and a plethora of banks.  So, to put it crudely, there is sure to be a fight to decide who gets the newly printed funds.  The ECB resolved this by what seemed like a fair rule:  All commercial banks can borrow from the ECB if they provide collateral, in the form of highly rated government and other securities, to the ECB.  So, for example, a Greek bank can gain liquidity by depositing Greek government bonds with the ECB – as long as those bonds are “investment grade”, i.e., highly rated.

This simple and seemingly reasonable rule created great dangers for the eurozone, which have come back to haunt Mr. Trichet. The commercial banks in the zone are able to buy government bonds, which “paid” 3-6% long term interest rates (for all the sovereign bonds of members) over the last decade, and then deposit them at the ECB.  They could then borrow from the ECB at the ECB financing rate, which today is 1%, against this collateral so pocketing a profit – and then buy more sovereign bonds with the funds.  Mr. Trichet recognized this system had inherent dangers of turning into a new Ponzi game:  if nations spent too much, and built up too much debt, eventually the system would collapse. So at the foundation of the eurozone, Mr. Trichet led a contingent within the EU that demanded all nations live by a “Growth and Stability Pact”, whereby each nation could only run deficits of 3% of GDP, and they had to keep their debt/GDP ratio below 60% of GDP.

Of course, politics trumped Mr. Trichet – as it always must – and the Greeks, along with the Portuguese, used their new found cheap lending system to run large deficits and build up debt.  The cheap access to money also helped feed the real estate booms in Ireland and Spain. 

There is much more of interest in their post, none of it good news for Greece or the ECB.