Month: December 2011
1. College has been oversold. It’s hard to explain which posts go viral but this post, based on material from my e-book Launching the Innovation Renaissance, was a monster generating over 500 comments, 3000 likes and 800 tweets. The follow-up on puppeteerring in a wintry economic climate was also popular although not in the top ten.
2. Teacher’s Don’t Like Creative Students. Another monster with fewer page views than #1 but over 3000 likes and nearly 4000 tweets!
4. Be Safe Break the Law, on the 55mph speed limit.
5. Possible progress in medicine, a link-post from Tyler noting a new drug that can kill many viruses.
6. What is quirky about the United States? A question from Tyler that generated many comments.
7. The Mexican Mafia another of mine that went viral with links from Time, Instapundit and Reddit.
8. World Income Equality a graph showing how poor Americans are richer than rich Indians.
9. Explaining France, a post from Tyler explaining, well you know.
10. Common mistakes of right wing and market economists, a nice meaty post from Tyler, just a little bit more popular than Common mistakes of left-wing economists.
A few other notable posts in the top 25 were my posts on cities, India’s Voluntary City and Cities as Hotels, Tyler’s post on the S&P downgrade, my post on The Fruits of Immigration, which was mostly just quotations but I worked hard on the final line which many people then linked to, and my post on The Great Male Stagnation.
Several posts from previous years continued to be popular. What Happened to M. Night Shyamalan? from 2010 was again popular this year probably because Slate expanded the idea into a feature called Hollywood’s Career-O-Matic.
The importance of writing a good title is shown by Tyler’s 2007 posts Why did the Soviet Union fall? and How many children should you have? neither of which generated many comments but both of which show up early in Google searches of precisely these questions. My 2008 post What is New Trade Theory? on Krugman’s Nobel may also continue to attract attention for this reason.
2012 here we come!
The debt sold at 3.251 percent, sharply down from 6.504 percent at a previous auction in late November. Demand was 1.7 times the amount on offer, compared with 1.47 times previously.
Of course it is the long-term debt auction, due tomorrow, which is going to matter. Here is a very good Edward Hugh essay on Italy.
You may be surprised to learn that potato chips are a health food; almost all chips (expensive or not) emphasized the healthiness of their products by using phrases like “low fat”, “healthier”, “no cholesterol”, or “lowest sodium level”. But these health-related claims occur on expensive chips 6 times as often as on inexpensive chips (6 times per bag versus once per bag). This difference in health language is not, as far as we can tell, due to actual differences in the chips. No chips in our sample contain trans fats, but only 2 out of the 6 inexpensive chips talk about it. By contrast, every one of the 6 expensive chips mentions the lack of trans fats.
Expensive chips also turn out to be much more natural. Phrases such as “natural”, “real”, or “nothing artificial” are 2.5 times more likely to be mentioned on expensive bags (7 times on each expensive bag but under 3 times on each inexpensive bag).
Another way to differentiate is to use negative markers, words like “never”, “not”, or “no” (“never fried”, “we don’t wash out the natural potato flavor”, “no wiping your greasy chip hand on your jeans”). Negation emphasizes bad qualities that a chip does not have, subtly suggesting that other brands have this bad quality. To get a more fine-grained analysis, we also regressed the number of negative words against the price. We found that a bag of potato chips costs 4 cents more per ounce for every additional negative word on the bag.
Finally, expensive chips are 5 times more likely to distinguish themselves from other chips, using comparative phrases like “less fat than other leading brands”, “best in America”, “in a class of their own”. or “a crunchy bite you won’t find in any other chip”. Where text on the inexpensive chips focuses on the chips themselves, ads for expensive chips emphasize their differences from “lesser” chips.
…Mentions of tradition occurred more than twice as often on inexpensive chips. Our linear regression showed that every time a family or an American locale is mentioned, the price per ounce of the chips drops 10 cents. The inexpensive chips thus represent a model of authenticity rooted in family traditions and family-run companies, and set in regional locations throughout America.
I liked the title of this one: “Hopping Mad: Uganda Power Cuts Hit Grasshopper Harvest,” excerpt:
“Every evening I first pray for there to be power — and then I pray that the grasshoppers will come,” Turyamugumya told AFP.
Stripped of their wings and fried with onions, grasshoppers are a delicacy in Uganda’s central region — gobbled up by the handful and washed down with beer in bars around Kampala.
This time of year should be peak season for the insect catchers but Turyamugumya — who uses bright lights to attract the flying insects before disorientating them with smoke and trapping them in disused oil drums — says that business is tough.
“The problem has been power, it is on and off. Like last night, the whole night it was off,” Turyamugumya, 33, says.
From bakeries to beauticians to building firms, small businesses across Uganda have been struggling to cope with worsening power cuts in recent months.
…Power problems mean that the price he pays for grasshoppers at the market has gone up — and that means insect-loving bar-goers are having to pay more for the snacks. The price for the smallest bag has doubled to around $0.45 (34 euro cents).
For the pointer I thank Daniel Lippman.
A global study of learning standards in 74 countries has ranked India all but at the bottom, sounding a wake-up call for the country’s education system. China came out on top.
On this question, you can read a short Steve Sailer post, with comments attached. Here are my (contrasting) observations:
1. A big chunk of India is still at the margin where malnutrition and malaria and other negatives matter for IQ. Indian poverty is the most brutal I have seen, anywhere, including my two trips to sub-Saharan Africa or in my five trips to Haiti. I don’t know if Pisa is testing those particular individuals, but it still doesn’t bode well for the broader distribution, if only through parental effects.
2. Significant swathes of Indian culture do not do a good job educating women or protecting their rights, even relative to some other very poor countries. On educational tests the female students are at a marked disadvantage and that will drag down the average.
3. Countries taking the test for the first time may face a disadvantage in manipulating the results to their advantage; admittedly this cannot account for most of the poor performance.
4. Indian agricultural productivity is abysmal, in large part due to legal restrictions. I discuss this in more detail in my next book An Economist Gets Lunch, due out in April. That hurts the quality of life and opportunities for hundreds of millions of Indians, including of course children.
Overall, India has a lot of low-hanging fruit, but the country has further to go than many observers realize. A quadrupling of per capita income would put them at what, the level of Thailand?
I don’t (yet?) believe this as written, but the view looks like this:
The world is changing more rapidly, so automatic pilot isn’t good enough any more. “Good governance” and most of all adaptability have become more important. This will benefit the Nordic countries, the UK, Germany, Switzerland, Canada, and Singapore. It is mostly bad for India, Russia, and the Mediterranean countries, plus other countries with lots of corruption. It remains to be seen which category the United States and China will fall into.
This paper provides three perspectives on long-run growth rates of labor productivity (LP) and of multi-factor productivity (MFP) for the U. S. economy. It extracts statistical growth trends for labor productivity from quarterly data for the total economy going back to 1952, provides new estimates of MFP growth extending back to 1891, and tackles the problem of forecasting LP and MFP twenty years into the future.
The statistical trend for growth in total economy LP ranged from 2.75 percent in early 1962 down to 1.25 percent in late 1979 and recovered to 2.45 percent in 2002. Our results on productivity trends identify a problem in the interpretation of the 2008-09 recession and conclude that at present statistical trends cannot be extended past 2007. For the longer stretch of history back to 1891, the paper provides numerous corrections to the growth of labor quality and to capital quantity and quality, leading to significant rearrangements of the growth pattern of MFP, generally lowering the unadjusted MFP growth rates during 1928-50 and raising them after 1950. Nevertheless, by far the most rapid MFP growth in U. S. history occurred in 1928-50, a phenomenon that I have previously dubbed the “one big wave.”
The paper approaches the task of forecasting 20 years into the future by extracting relevant precedents from the growth in labor productivity and in MFP over the last seven years, the last 20 years, and the last 116 years. Its conclusion is that over the next 20 years (2007-2027) growth in real potential GDP will be 2.4 percent (the same as in 2000-07), growth in total economy labor productivity will be 1.7 percent, and growth in the more familiar concept of NFPB sector labor productivity will be 2.05 percent. The implied forecast 1.50 percent growth rate of per-capita real GDP falls far short of the historical achievement of 2.17 percent between 1929 and 2007 and represents the slowest growth of the measured American standard of living over any two-decade interval recorded since the inauguration of George Washington.
Do please leave your requests for topics, questions, and the like in the comments. I will try to cover some of them in the year to come or who knows maybe even tomorrow.
GiveWell, by far the best charity evaluator working today, has a new top ranked charity, the Against Malaria Foundation. Why is VillageReach, their best ranked charity for several years, no longer at the top? First, GiveWell is ranking more charities and charities are now more willing to provide GiveWell the kind of detailed information on outcomes that GiveWell demands. Thus, more charities are vying for the top spot. Even more important is this:
VillageReach was our top-rated organization for 2009, 2010 and much of 2011 and it has now received over $2 million due to GiveWell’s recommendation. We do not believe that VillageReach has short-term funding needs…
When was the last time that a charity or evaluator told you that due to successful fund-raising there are now more urgent needs elsewhere? Impressive. As I have for several years, I will be following GiveWell’s advice and donating to the Against Malaria Foundation and several of GiveWell’s other top charities.
I confess that I have met Alford briefly and have found him polite, though not extraordinarily so. However, he reports that he volunteers as a New York City tour guide for visiting foreigners, always tries to strike up conversations with people standing alone at parties and considers himself responsible for the cleanliness of the toilet seat in any “single-stall facility” he emerges from, whether or not he splashed it himself. Such behavior does indeed seem above and beyond the ordinary call of manners and sets a standard worthy of a role model.
Yet all these points for gallantry are nearly wiped out in my book by Alford’s account of a game he is fond of playing in restaurants, called “Touch the Waiter.” The goal is to “see who at your table can touch the waiter the greatest number of times without the waiter’s figuring out you’re doing so.” Although he stipulates that this touching should never be lecherous or “directed at the sullen or the insecure” (the preferred target is an overly attentive or effusive waiter) it is nevertheless a creepy activity, a prank aimed at people whose livelihood depends on making themselves agreeable to patrons. Would it kill him to stop doing that?
3. The man who liquidates Dutch churches; the organs are hard to sell and “demolition” is sometimes an option.
The paper and abstract are here:
The recent financial crisis has generated many distinct perspectives from various quarters. In this article, I review a diverse set of 21 books on the crisis, 11 written by academics, and 10 written by journalists and one former Treasury Secretary. No single narrative emerges from this broad and often contradictory collection of interpretations, but the sheer variety of conclusions is informative, and underscores the desperate need for the economics profession to establish a single set of facts from which more accurate inferences and narratives can be constructed.
It is an instructive look at how bad we are at discovering the truth and talking about it. Here is part of his beginning:
To illustrate just how complicated it can get, consider the following “facts” that have become part of the folk wisdom of the crisis:
1. The devotion to the Efficient Markets Hypothesis led investors astray, causing them to ignore the possibility that securitized debt2 was mispriced and that the real-estate bubble could burst.
2. Wall Street compensation contracts were too focused on short-term trading profits rather than longer-term incentives. Also, there was excessive risk-taking because these CEOs were betting with other people’s money, not their own.
3. Investment banks greatly increased their leverage in the years leading up to the crisis, thanks to a rule change by the U.S. Securities and Exchange Commission (SEC).
While each of these claims seems perfectly plausible, especially in light of the events of 2007–2009, the empirical evidence isn’t as clear.
Starting on p.35, you can find a new take on the myth of the 2004 SEC change to Rule 15c3–1 (though see the first comment), relating to the supposed increase in leverage requirements from 12-1 to 33-1:
…it turns out that the 2004 SEC amendment to Rule 15c3–1 did nothing to change the leverage restrictions of these financial institutions. In a speech given by the SEC’s director of the Division of Markets and Trading on April 9, 2009 (Sirri, 2009), Dr. Erik Sirri stated clearly and unequivocally that “First, and most importantly, the Commission did not undo any leverage restrictions in 2004”. He cites several documented and verifiable facts to support this surprising conclusion, and this correction was reiterated in a letter from Michael Macchiaroli, Associate Director of the SEC’s Division of Markets and Trading to the General Accountability Office (GAO) on July 17, 2009, and reproduced in the GAO Report GAO–09–739 (2009, p. 117).
It is also shown that the higher leverage was common in the late 1990s. There is more to the discussion, but it is time to reconsider this point.