Month: October 2010

Expecting too much

Sometimes people hold an attitude which I call "expecting too much," even if they do not always articulate this view as such.  Here are a few possible examples:

Some Germans: "Yes we know that the eurozone is problematic for some of the poorer countries.  We expect that they get their fiscal house in order, and produce some major productivity gains, as we have done in the past.  We expect this even if we don't quite tell them this."

Some Americans: "I expect my government to solve Problem X (fill in the blank, the list is a long one) without raising my taxes, and in the meantime I will refuse to countenance a tax increase.  To support this attitude I am willing to sound fiscally unreasonable, if necessary."

Some economists: "It is a tough labor market, to be sure.  Yet it is expected that you be willing to move around to get a job, as many immigrants do, or that you find a way to make a lower wage work for your life and for an employer.  My grandparents managed that, why can't you?"

There are numerous other examples.  Is "expecting too much" ever a reasonable attitude?  A reasonable tool of motivation?  A reasonable bargaining stance?  A reasonable defensive strategy against institutions which will otherwise treat you unfairly or perhaps even rapaciously?

I find that expressions of "expecting too much," whether they are articulated as such or not, often send intellectual opponents, on the respective issues, into a fury.

"Expecting too much" is a frequent attitude among the American public today and it is rooted in common sense morality.  To the extent "expecting too much" is a reasonable point of view, the public is wiser than its critics will admit.

I am still debating how much reasonable force there is behind this kind of argument.

Icelandic markets in everything

A new line of perfume is about to explode onto the Icelandic market, made of melt water from a glacier sitting on top of the Eyjafjoell volcano that erupted in April, spreading ash and flight chaos across Europe.

"When Eyjafjoell started erupting I suddenly got the idea to bring the power of Icelandic nature into people's homes," Icelandic designer Sigrun Lilja Gudjonsdottir, head of company Gydja Collection, explained Tuesday.


The citrus-smelling perfume, which will be produced in Grasse in southern France and will be sold in square bottles with a lava rock attached, has been named EFJ Eyjafjallajoekull.

The letters EFJ are there "so that non-Icelanders can pronounce the name of their perfume," Gudjonsdottir explained, adding however that the full name of the glacier on top of Eyjafjoell also needed to be on the bottle since "I wanted the perfume to represent the strength of Icelandic nature."

The article is here and I thank Daniel Lippman for the pointer.

Insider Trading is Legal for Congressional Insiders

Bloomberg: Your senator learns that a much- maligned weapons system now has enough votes for funding. Before the news gets to a reporter, he buys shares in the arms manufacturer for a quick, handsome profit.

What’s wrong with this picture? Nothing, according to the law…

U.S. senators, representatives and congressional staffers routinely attend high level, closed briefings or engage in conversations where secrets are disclosed that might send shares climbing or slumping if widely known.

That access lets them buy low and sell high based on material, non-public information, and they can do it without concern that their remarkable prescience will alert federal investigators of possible wrong doing.

Insider trading in Congress is not new.  In 2004, I wrote about a study showing that the portfolios of US Senators "outperformed the market by an average of 12 per cent a year in the five years to 1998."

Hat tip: The Browser.

Why Has TV Replaced Movies as Elite Entertainment?

Edward Jay Epstein, The Hollywood Economist, has a good post on the economics of movies and television and how this has contributed to a role reversal:

TV-MicroeconomicsOnce upon a time, over a generation ago, The television set was commonly called the “boob tube” and looked down on by elites as a purveyors of mind-numbing entertainment. Movie theaters, on the other hand, were con sidered a venue for, if not art, more sophisticated dramas and comedies. Not any more. The multiplexes are now primarily a venue for comic-book inspired action and fantasy movies, whereas television, especially the pay and cable channels, is increasingly becoming a venue for character-driven adult programs, such as The Wire, Mad Men, and Boardwalk Empire.

Why?  Epstein’s explanation is the rise of Pay-TV.  You can understand what has happened with some microeconomics.  Advertising supported television wants to maximize the number of eyeballs but that often means appealing to the lowest common denominator (this is especially true when there are just three television stations).  The programming that maximizes eyeballs does not necessarily maximize consumer surplus.

See the diagram.

Pay-TV changes the economics by encouraging the production of high consumer-surplus television because with Pay-TV there is at least some potential for trading off eyeballs for greater revenue.  In addition, as more channels become available, lowest common denominator television is eaten away by targetted skimming.  Thus, in one way or another, Pay-TV has come to dominate television.

The movies, however, have become more reliant on large audiences–at least relative to television.  Note that even though the movies are not free, a large chunk of the revenue is generated by concessions–thus the movie model is actually closer to a maximizing mouths model than it might first appear (see also my brother’s comments on how flat movie pricing makes it difficult for indie films to compete).  Finally, the rise of international audiences for movies has fed a lowest common denominator strategy (everyone appreciates when stuffs blows up real good). As a result, the movies have moved down the quality chain and television has moved up.

Hat tip: Tyler.


I'll go back to my sourdough after all:

The popular image may be of Stone Age people gnawing on a chunk of woolly mammoth, but new research indicates their diet may have been more balanced after all.

Many researchers had assumed people living in Europe thousands of years ago ate mainly meat because of bones left behind, and little evidence of plant food.

Now, new findings indicate grains were part of the diet at ancient sites in Italy, Russia and the Czech Republic, researchers report in Tuesday's edition of Proceedings of the National Academy of Sciences.

Which countries do economists study?

Check out Stefan Dercon's excellent visuals, via Chris Blattman.  I wonder sometimes why Latin America is overstudied in development economics and similarly, why World Bank employees are often keen to work in that region.  How much is a) absence of jet lag from the U.S., b) relative ease of learning Spanish and Portuguese, and c) lower population densities than Asia, which in some ways make visits more pleasant, or d) income inequality, which means that life is quite good for visitors?  Are there other factors?

Haitian rents

Some fell. The prices on those that survived defy belief. One senator put up his three-bedroom with panoramic views for $15,000 a month. (Its nine Rottweiler guard dogs are free.) Finding anything similar for less than $5,000 is a steal. Want to buy? A three-bedroom with guest apartment lists for $900,000.

Here is more.  The supply curve did shift back:

"I find it more expensive to rent a place in Haiti than in Brooklyn, and it's not just housing. The entire cost of living is very, very high now," said the group's head, Mario Augustaze.

In Haiti there still may be up to two million homeless people since the earthquake.

The culture that is Washington

Business is the most common academic major in the nation, representing one-fifth of all college degrees. And business ranks second among academic majors in the Washington area, but it's a distant second, representing 11 percent of the college-educated population.

Literature and languages rank third. Liberal arts and history rank fourth.

The data show "that D.C. is less business-focused than the country as a whole," said William Frey, a demographer at the Brookings Institution.

The full story is here.

Futile (yet worthy) markets in everything

If someone doesn't like a band or artist, they would usually just ignore their music, but James Burns hates Weezer so much he's willing to raise millions to get them to hang it up for good. Seattle native Burns launched an online fundraiser to collect $10 million in hopes of sending Weezer to early retirement, The Stranger reports.

Despite only raising $12 to this point, Burns' plea to Weezer isn't so much about his own feelings for the band but rather the anguish the group causes his friends who keep waiting for the band to produce a monumental album like 'Pinkerton' and their debut, the so-called 'Blue Album.'

"This isn't about me. This is about Weezer fans," Burns wrote on the website. "This is an abusive relationship, and it needs to stop now. I am tired of my friends being disappointed year after year."

Patrick Wilson, drummer for Weezer, played along and responded on Twitter asking Burns to raise the stakes.

"If they can make it to 20, we'll do the 'deluxe breakup!'" Wilson tweeted.

The Stranger then interviewed Burns, and he says he's willing to stick out for the long haul until he raises the money. As for the angry fans attacking Burns, he doesn't mind them so much.

"I am not afraid of Weezer fans," Burns said. "I can take it. Besides, I'm doing this mostly for them."

For the pointer I thank Michael Greenspan.