Month: February 2012

Markets in everything the culture that is Sweden (England)

The odds were always going to favor the Swedes; after all, the sport originated in the small southern town of Varalov in the 1970s, and Swedes have been breeding show-jumping rabbits since the 1980s. Today, close to 1,000 active bunny jumpers can find at least one competition somewhere in the country most weekends, and there are two national championships a year. The U.K., on the other hand, hosts just a handful of competitions a year and is home to only about 10 rabbit jumpers.

In Sweden, where the fluffy competitors train for up to two hours a day, there is an established network of breeders who are always looking for talent. “Our bunnies are so used to competing, so they know what to do,” Ms. Hedlund says.

Choosing the right breed of rabbit is also important. Sweden’s 200 or so breeders are experimenting widely, and charge more—up to 1,500 kronor ($225)—for a rabbit with prizewinning parentage.

“You want mini lop for the cool and positive attitude and hare for the bigger size and long back legs,” Ms. Hedlund says. “But you don’t want too much temperament; you’d want a mix of a cool and a competitive attitude.”

Here is more, and it goes without saying, interesting throughout!  And the sport is supposed to be good for the animals.  For the pointer I thank Richard Herron.

p.s. Not all is well in Kaninland:

Despite their dominance of the sport, Swedish bunnies are bested by their Danish neighbors when it comes to world records. In 1999, a Danish rabbit called Yaboo set the world long-jump record when he flew over a three-meter, or nearly 10-feet, hurdle, while his compatriot Tösen bounced 99.5 centimeter, or about 40 inches, to nab the high-jump record in 1997.

Addendum: Photos and video here.

What would the end of football look like?

Kevin Grier and I have a new piece up on Grantland, on that topic.  It is perhaps hard to excerpt, but here is the close of the piece:

Another winner would be track and field. Future Rob Gronkowskis in the decathalon? Future Jerome Simpsons in the high jump? World records would fall at a rapid pace.

This outcome may sound ridiculous, but the collapse of football is more likely than you might think. If recent history has shown anything, it is that observers cannot easily imagine the big changes in advance. Very few people were predicting the collapse of the Soviet Union, the reunification of Germany, or the rise of China as an economic power. Once you start thinking through how the status quo might unravel, a sports universe without the NFL at its center no longer seems absurd.

So … Tennis, anyone?

The rule of law?

Greece’s largest police union has threatened to issue arrest warrants for officials from the country’s European Union and International Monetary Fund lenders for demanding deeply unpopular austerity measures.

In a letter obtained by Reuters Friday, the Federation of Greek Police accused the officials of “…blackmail, covertly abolishing or eroding democracy and national sovereignty” and said one target of its warrants would be the IMF’s top official for Greece, Poul Thomsen.

More here.  My best guess is that the deal has broken down!

Hat tip goes to the excellent @counterparties.

Rhino links

1. Fake rhino attempts zoo escape, in Japan.  Might the real rhino be more fierce?  Pointer from Ryan McCarl.

2. Killing a rhino by mistake in an anti-poaching demo.  Pointer from George Edwards.

3. South Africa sends rhino poachers to jail for twenty-five years each; a lot of the demand comes from hereAt $40,000 a kilogram, “Traffickers and gangs have been breaking into museums and auction rooms in Britain and Europe to steal rhino heads and horns.”  It is now feared that the eighty-five rhinos housed in British zoos will be the next target and so a high alert has been called.

Email from Bruce Caldwell

The Center for the History of Political Economy at Duke University will be hosting another Summer Institute on the History of Economics this June. The program is designed primarily for students in graduate programs in economics. Students will be competitively selected and successful applicants will receive a $2000 stipend for attending, plus free housing and reading materials. Our line-up of speakers is, I think you will agree, impressive. The deadline for applying is March 2. More information on the Summer Institute is available at our website,

How large is the output gap really?

Via Mark Thoma, and drawing upon James Bullard at the St. Louis Fed, MacroMania writes:

I think that Bullard makes a persuasive case that the amount of household wealth evaporated along with the crash in house prices should likely be viewed as a “permanent” (highly persistent) negative wealth shock. Standard theory (and common sense) suggests a corresponding permanent decline in consumer spending (with consumption growing along its original growth path). The implication is that the so-called “output gap” (the difference between actual and “trend” GDP) may be greatly overstated by conventional measures.

There is still not enough talk of wealth effects in current macro debates, as they are invoked only selectively.  Note by the way that if you see the output gap is somewhat smaller, you will think today’s recovery is somewhat better, not in absolute terms, but relative to potential.

Here are some interesting observations about  Bullard.

Addendum: Here is comment from Scott Sumner, and Matt Yglesias.  You’ll note my post is itself non-committal, though I certainly do not dismiss this argument.  Simplest response to Sumner and Yglesias is that we may have had a biased estimate of the previous trend, for bubble and TGS-related reasons.

Failing versus Forgetting

Bryan Caplan has a very good post on the human capital and signalling models of education. The key point is this, under the human capital model someone who forgets knowledge is no better than someone who failed to learn the same knowledge. Under the signaling model, however, failing and forgetting are very different. Bryan illustrates:

If I’d failed Spanish, I couldn’t have gone to a good college, wouldn’t have gotten into Princeton’s Ph.D. program, and probably wouldn’t be a professor.  But since I’ve merely forgotten my Spanish, I’m sitting in my professorial office, loving life.

Simple truths about Greece

From Ricardo Hausmann:

Greece will have to bring its current account deficit down to zero at some point.

This can happen in two ways: either Greece exports more or spends less. Adjusting the current account by spending less would require an additional fall in GDP of 25 per cent, given that in Greece only one in four US dollars of spending cuts goes abroad. This is clearly not a pretty picture. But adjusting by raising exports would require they increase by 50 per cent, not an easy feat. Achieving it through tourism alone would require the industry to triple in size – an unlikely prospect.

And this:

Here’s the bad news for Greece: in our sample of 128 countries, it had the biggest gap between its current recorded level of income and the knowledge content of its exports. Greece owes its income to borrowed foreign spending it cannot pay back. It produces no machines, no electronics and no chemicals. Of every 10 US dollars of worldwide trade in information technology, it accounts for one cent.

This problem cannot be addressed by fiscal Keynesian stimulus, by bland trade facilitation or by paying lip-service to structural adjustment as the November International Monetary Fund agreement implicitly assumes.

Assorted links

1. There is no great stagnation: the horizontal shower.

2. What if Star Trek had social networks?

3. The culture that is Iceland.

4. New economics blog from Phillips Exeter Academy.

5. TGS for musical instruments?

6. Profile of Scott Stern’s work on the economics of science.

7. Kristof has quite a reasonable review of Murray; by the way if you think dysfunctional social mores all boil down to economics, how are those Albertan tribes with the oil revenues doing?  Ex football players in bankruptcy?  etc.  Here is more Krugman on Murray, now totally on the mark.  Matt nails it too.

The Secret Agreement that Revolutionized China

In our principles textbook, Modern Principles: Macroeconomics, Tyler and I illustrate the importance of property rights with the incentive effects of collective farming and the secret agreement of Xiaogang village. We write:
Farmers from 18 households in Xiaogang signed a secret life-and-death agreement ending collective farming with their thumbprints. (From Cowen and Tabarrok, Modern Principles: Macroeconomics)

The Great Leap Forward was a great leap backward – agricultural land was less productive in 1978 than it had been in 1949 when the communists took over.  In 1978, however, farmers in the village of Xiaogang held a secret meeting.  The farmers agreed to divide the communal land and assign it to individuals – each farmer had to produce a quota for the government but anything he or she produced in excess of the quota they would keep.  The agreement violated government policy and as a result the farmers also pledged that if any of them were to be killed or jailed the others would raise his or her children until the age of 18. [The actual agreement is shown at right.]

The change from collective property rights to something closer to private property rights had an immediate effect, investment, work effort and productivity increased.  “You can’t be lazy when you work for your family and yourself,” said one of the farmers.

Word of the secret agreement leaked out and local bureaucrats cut off Xiaogang from fertilizer, seeds and pesticides.  But amazingly, before Xiaogang could be stopped, farmers in other villages also began to abandon collective property. In Beijing, Mao Zedong was dead and a new set of rulers, seeing the productivity improvements, decided to let the experiment proceed.

For more background, NPR’s Planet Money has a great story on this secret agreement including this:

“Back then, even one straw belonged to the group,” says Yen Jingchang, who was a farmer in Xiaogang in 1978. “No one owned anything.”

At one meeting with communist party officials, a farmer asked: “What about the teeth in my head? Do I own those?” Answer: No. Your teeth belong to the collective.

In theory, the government would take what the collective grew, and would also distribute food to each family. There was no incentive to work hard — to go out to the fields early, to put in extra effort, Yen Jingchang says.

“Work hard, don’t work hard — everyone gets the same,” he says. “So people don’t want to work.”

…Before the contract, the farmers would drag themselves out into the field only when the village whistle blew, marking the start of the work day. After the contract, the families went out before dawn.

“We all secretly competed,” says Yen Jingchang. “Everyone wanted to produce more than the next person.”

It was the same land, the same tools and the same people. Yet just by changing the economic rules — by saying, you get to keep some of what you grow — everything changed.

(Crossposted at

What else predicts mobility?

Jim Manzi makes some good points:

But what about all the other potential reasons, beyond what their Gini Coefficient was in 1985, for varying levels of social mobility between countries as diverse as Japan, France, and New Zealand?

The most obvious example is just the size of the countries. It’s at least plausible that much bigger countries contain more variety. In fact, if you do something as simple as recreate the Great Gatsby Curve, but use the population of each country as the X-axis, you get a very strong a statistical relationship (log-linear R2 = .64). Big countries have higher IGE. Call it the Moby Dick Curve.

Alternatively, we might see that some countries tend to specialize more than others.  As a practical example, part of the reason that a country like Finland can have so much equality and social mobility versus America might be that many more of the relatively poorer farmers who trade food for Finnish mobile phones live and reproduce in other countries.  If so, then we might see that if we replace the X-axis with exports as a % of GDP, there could be another statistically significant relationship with IGE. Check (R2 = .48).

Falling (rising) incomes and personal irresponsibility, on recent Charles Murray debates

Let’s turn the mike over to Alex, our Alex, the Alex, etc., the one who writes for MarginalRevolution:

The rags to riches to rags story of a poor, unemployed fellow who wins the lottery, blows the cash, and ends up just as poor and unemployed as he began is a common trope.  (Here is a classic in the genre). In a paper just published in the Review of Economics and Statistics (gated, free version here), Hankins, Hoekstra and Skiba argue that the rags to riches to rags story has a systematic component.

The authors link records of lottery winners to bankruptcy records. The use of the lottery is a great randomization device, although obviously it restricts the sample to people who play the lottery.

The central finding is this: people who win large amounts are just as likely to end up bankrupt as people who win small amounts…

Here is more, hat tip goes to Slocum.

Addendum: Floccina writes in the comments: “Former professional athletes are also an interesting case.”  Are the economic variables really driving the dysfunctional social norms, or vice versa, or most likely quite a bit of both?