Month: May 2010
Modern Principles: Italian Edition
This is the cover to the Italian edition of Modern Principles of Economics which will appear early in the new year. Vedere la mano invisibile. Capire il vostro mondo!
By the way, if you are in Italy this summer Tyler will be speaking at the Festival Economia 2010 in Trento, June 3-6. Vernon Smith, Diego Gambetta, Robert Putnam, and Alberto Alesina are also among the speakers and with concerts and movies it truly is a festival of economics! Bravo!
Of course, you can find out more about the english editions of Modern Principles of Economics here (micro, macro and combined).
Nevada fact of the day
Read the graph and weep. There's negative equity in about 70 percent of Nevada homes. All the states are ranked and Oklahoma seems to have the smallest problem in this regard.
Hat tip goes to Matt Yglesias.
Markets in Everything: Itching for Revenge
True sentences
Re-reading is much underrated. I've read The Spy Who Came in from the Cold once every five years since I was 15. I only started to understand it the third time.
That's from Malcolm Gladwell.
Are you an asker or a guesser?
Austin Frakt forwards me the following intriguing article. Here is one excerpt:
This terminology comes from a brilliant web posting by Andrea Donderi that's achieved minor cult status online. We are raised, the theory runs, in one of two cultures. In Ask culture, people grow up believing they can ask for anything – a favour, a pay rise– fully realising the answer may be no. In Guess culture, by contrast, you avoid "putting a request into words unless you're pretty sure the answer will be yes… A key skill is putting out delicate feelers. If you do this with enough subtlety, you won't have to make the request directly; you'll get an offer. Even then, the offer may be genuine or pro forma; it takes yet more skill and delicacy to discern whether you should accept."
Neither's "wrong", but when an Asker meets a Guesser, unpleasantness results. An Asker won't think it's rude to request two weeks in your spare room, but a Guess culture person will hear it as presumptuous and resent the agony involved in saying no. Your boss, asking for a project to be finished early, may be an overdemanding boor – or just an Asker, who's assuming you might decline. If you're a Guesser, you'll hear it as an expectation. This is a spectrum, not a dichotomy, and it explains cross-cultural awkwardnesses, too: Brits and Americans get discombobulated doing business in Japan, because it's a Guess culture, yet experience Russians as rude, because they're diehard Askers.
As for myself, I am an asker when it comes to information, but a guesser when it comes to making demands.
Where is economics headed?
Andrew Oswald has a new and interesting paper on what kinds of articles now get published. The piece starts off as follows:
When I was a PhD student, in Oxford in the late 1970s, I was taught nothing about the experimental method or how to weigh evidence, and indeed comparatively little about data. Consciously or subconsciously, we were encouraged to think of economics as a branch of (not very applied) mathematics. My first published paper relied on a fixed-point theorem; it contained no numbers. We were not exposed to, for example, any empirical findings from the psychology literature or the intellectual approach of researchers like epidemiologists.
Amazing, is it not? Turn to p.5 to see one of his basic counts, which puts experimental papers in the lead.
My podcast with Jerry Brito
You will find it here, Jerry summarizes it like this:
The conversation broadly centers on how the web allows us to find, distill, and sort information as never before, which has profoundly affected people’s consumption of culture and creation of their own economies. During the podcast Cowen touches on Lost and Battlestar Gallactica, the iPad, books, the future of the publishing industry, old and new media, Facebook, Twitter, ChatRoulette, and his favorite things on the internet.
Jerry's entire podcast series is here. Jerry's more professional blog is here. Jerry on music is here; he has the good sense to like M.I.A.
Avatar in China
Home owners in Hubei China protest the demolition of their homes. I raise my appreciation of Avatar a notch.
Hat tip Helen Yang.
Assorted links
1. The productivity of Robert Tollison.
4. In Italy, they run a "divorce trade fair."
5. Markets in everything (via Yana): refrigerator especially designed for storing kimchee. Korean version here.
6. Which Metro areas have been the big winners and losers lately? (NB: Michael Mandel is one of the most important economists writing today.)
Megan McArdle asks
But I still don't see what the rest of the eurozone is getting out of it.
The Greek bailout, that is. I view it as a bit like the U.S. in Afghanistan. Whether it will yield anything useful from here on in can be debated for a long time. But if we pull out precipitously, and the Taliban take over, it will be seen as a big U.S. loss (whether that's worth the cost is not the question of concern here, only that it is a gross cost, whether or not it is a net cost, all things considered). Since Afghanistan once attacked us (sort of), our entire deterrent would be much less credible.
Going back to Europe, without the bailout no German or French commitment to another European nation, or another European collective project, would be worth very much for a very long time. Boo hoo you may say, but in the European world that is perceived as a very high cost indeed. It would mean writing off the major narrative of European collective progress since the end of World War II.
A second factor is that the choice is either bail out Greece or bail out some German banks. The smaller European nations are more likely to pitch in to pay for part of the former than for part of the latter. Given the size of German banks relative to German gdp, it's not even clear how much the latter is an option. The Germans have to try to keep their fingers in the proverbial dike or else all hell breaks loose. They just can't afford a run on their shadow banking system.
I view the entire bailout announcement, and its scope, as a signaling issue. The Germans loathe such semi-inflationary commitments and basically they just signaled that their banks are a good deal more precarious than the rest of us would like to believe.
So there you have it. Europe is stuck and in response to a crisis they basically raised the stakes. Arguably they had no choice, but they haven't actually eliminated the potential negative outcomes from the gamble.
Africa fact of the day
For every 100 people put on treatment, 250 are newly infected, according to the United Nations‘ AIDS-fighting agency, Unaids.
There is more here and the article is interesting throughout. Victories in the war against AIDS in Africa are being reversed and fairly quickly at that.
Assorted links
1. The role of on-line experiments in the social sciences.
2. El Ataneo bookstore in Buenos Aires.
3. Create Your Own Economy, the audiobook is now on iTunes (via Chris Masse, the link is here).
4. New and better stadiums raise the price of concessions.
5. When should you bench a basketball player for foul trouble?
Not Scott Sumner
In its statement, the E.C.B. said that the liquidity that the bond purchases will pump into the European financial system will be “sterilized,” or offset with other monetary operations to drain liquidity from the system. In doing so, the bank seemed to be trying to answer criticism that buying bonds is the same as printing money and could lead to inflation.
Here is more detail. Kid Dynamite has a skeptical take on the new plan.
Felix Salmon on Hollywood’s Future(s)
IN the 1950s, onion growers were often shocked at the low prices they were getting. Casting around for a villain to blame, they alighted on derivatives traders, and they persuaded Congress to ban any futures trading in onions
Today onions are the only commodity for which futures trading is banned. Not coincidentally, onion prices remain extremely volatile: they doubled in 2008, and then fell by 25 percent in 2009.
Today, no one is silly enough to ask a member of Congress to simply outlaw futures trading in a certain type of contract – no one, that is, except Hollywood film producers.
As Felix notes, the ban is likely to harm Hollywood more than anyone else who with futures markets would get improved hedging, prediction and promotion.
Hat tip to Daniel Lippman.
(Whoops + yikes) x five
Kevin Drum has sharp eyes. He cites this passage:
The €440 billion pledged by euro-zone governments isn't immediately available cash in hand. Instead, a specially created off-balance-sheet entity will borrow the money, as needed, and then lend it out to the country or countries in trouble. The special entity's borrowings will be guaranteed by euro-zone countries – excluding the country asking for aid. This construction helps skirt the EU treaties' prohibition on one state's assuming the debt of another….This portion would need approval by the parliaments of contributing countries, something that could delay a rapid payout of funds.