Month: June 2012
Highly speculative, but fun to think about:
Four separate experiments, along with real-world data, all say yes. Our findings consistently supported the lipstick effect, as college-age women, when primed with news of economic instability, reported an increased desire to buy attractiveness-enhancing goods, along with a decreased desire to purchase goods that do not enhance one’s physical appearance. Our experiments also found that this increased desire for beauty products, clothing and accessories was fully mediated by a heightened preference for mates with resources.
While many journalists who have written about the lipstick effect have theorized that it represents women’s therapeutic spending on cheap indulgences, we found that the lipstick effect applies specifically to products that enhance beauty, even when those products are more expensive. Recession cues increased women’s desire to buy high-end cosmetics and designer clothing, but not to buy budget-line beauty products, which were rated less effective at improving one’s appearance.
Furthermore, we discovered that the lipstick effect and a woman’s desire to attract a mate with resources are unrelated to her independent resource access. Women of both higher and lower socioeconomic status expressed an increased desire to buy luxury beauty products when primed with recession cues. This suggests that an uncertain economic climate leads women to heighten mate attraction effort irrespective of their own resource need.
The story is here, and I thank VS for the pointer.
French Socialist President François Hollande is set to increase the minimum wage by more than inflation, betting consumers will help revive the country’s stalling economy, while his government levies more taxes on the wealthy and large corporations in a bid to reduce the budget deficit.
…The government also is preparing to unveil tax increases to make good on its pledge to reduce the budget deficit to 4.5% of yearly output this year and 3% in 2013. The list includes a new tax on dividends, a new top income-tax bracket of 75% for people earning more than €1 million a year, and increases in the wealth and inheritance taxes.
The government is hoping to achieve a nominal freeze in spending next year, but wants its citizens first to see that taxes have been raised on the rich. As for the minimum wage increase, the unions are complaining that it is no more than “equivalent to an extra baguette per week.”
Here is more, “France to Lift Minimum Wage in Bid to Rev Up Economy.”
Energy production is one of the few bright spots in the American economy. A back of the envelope cost-benefit calculation from a Yale-associated group estimates that recent increases in shale gas production have been worth just over $100 billion annually to US consumers. In comparison, the authors estimates that groundwater contamination costs $250 million per year, a 400 to 1 benefit to cost ratio. The calculation is crude and the authors do not take into account environmental benefits from using natural gas over coal but the ratios are of interest.
Hat tip: Carpe Diem.
As mentioned, women make up about 5 percent of an average trading floor. But these numbers change dramatically when we leave the banks and visit their clients, the asset-management companies. Here we find a much higher percentage of women. The absolute numbers are not large, because asset managers employ far fewer risk taker than banks, but at some of the big asset-management companies in the United Kingdom women make up as much as 60 percent of the risk takers. This fact is, I believe, crucial to understanding the differences in risk taking between men and women. Asset management is risk taking, so it is not the case that women do not take risks; it is just a different style of risk taking from the high-frequency variety so prevalent at the banks. In asset management one can take time to analyze a security and then hold the resulting trade for days, weeks or years. So the difference between men’s and women’s risk taking may be not so much the level of risk-aversion as it is the period of time over which they prefer to make their decisions.
Perhaps men have dominated the trading floors of banks because most of the trading done on them has traditionally been of the high-frequency variety. Men love this quick decision-making, and the physical side of trading.
That is from The Hour Between Dog and Wolf. The author is John Coates and you can buy the book here. I would consider that hypothesis speculative, but nonetheless I found the passage of interest.
Scott Sumner on the eurozone, wise throughout:
The eurozone excludes Norway, Iceland, Sweden, Denmark, Britain and Switzerland. That’s a fairly affluent group of countries. The eurozone is shaped roughly like a pyramid, with Finland on top, and a wide base stretching from Portugal to Cyprus on the bottom. Most of the weight if a pyramid lies in the bottom half, which in the case of the eurozone is mostly lower income countries like Italy, Spain, Greece, Portugal, Cyprus, and Malta…
The pyramid structure I referred to earlier is likely to get much worse as the eurozone grows over time. And it seems to me that here you have a massive adverse selection problem. Because of Abraham Lincoln, affluent states like Massachusetts can’t suddenly decide they want no part of our fiscal union, and would rather just reap the benefits of our large single market. But Switzerland, Norway can and did make that choice. Britain almost certainly would, and both Sweden and Denmark might as well. In contrast, Bulgaria, Romania and Croatia would like nothing more than to join such a union. And all the likely future expansion of the EU is into areas further east, and much poorer than even Greece and Portugal. Places like Armenia, Georgia, Ukraine (a country nearly the size of France) Belarus, Serbia, Macedonia, Bosnia, Moldova (the saddest place on Earth—even the name is depressing.) And did I mention Turkey? Indeed why not Russia at some distant point in the future?
Airmail, I would think. Hurry.
I also have received William L. Silber’s Volcker: The Triumph of Persistence, which looks quite interesting.
Now dubbed the “Lying Dutchman” by the German press Robin van Helsum could face a bill of at least for his nine-month stay at the hands of Berlin’s social services. During his time in Germany he got free bed and board, clothing, German lessons and £200 a month in pocket money.
“We will file a suit for fraudulent appropriation of youth benefits during the course of the week,” Ed Koch, spokesman for the district youth welfare office, said. “We’re going to demand this money back. Whether we ever see it again, we don’t know.”
Mr Van Helsum, 20, had lived at Berlin’s expense while he maintained the fiction that he was a 17-year-old called Ray who had spent years living in the forests. His cover was only blown when old classmates in his hometown of Hengelo recognised his picture on the news. It emerged later that he had travelled to Berlin just days before he re-cast himself as Ray.
Social services also complained since his real identity became known he has failed to apologise or even say thank you.
The link is here (offers nothing extra) and for the pointer I thank Suzy Khimm.
Brazilian prisoners are now able to shorten their sentences by reading books and writing essays about them.
…four days less for every book they read. Inmates in four federal prisons holding some of Brazil’s most notorious criminals will be able to read up to 12 works of literature, philosophy, science or classics to trim a maximum 48 days off their sentence each year, the government announced.
Prisoners will have up to four weeks to read each book and write an essay which must “make correct use of paragraphs, be free of corrections, use margins and legible joined-up writing,” said the notice published on Monday in the official gazette.
1. Markets in everything: condoms to get you pregnant. Bonus prize for those who can guess the context without reading the article.
3. Employment at Apple stores, a good piece.
5. Jerry Brito on Stuxnet, though it is stopping nukes that could encourage bioweapons.
What would we do if it turned out there were more black swans than we had thought? What should we do?
You can view the talk here, given at the Legatum Institute in London not too long ago.
First, thanks for many years of enjoyment from marginal revolution!
Second, I thought you would find it interesting that Safeway’s new “club” program (called Just for U) apparently uses shoppers’ purchase histories to offer household-specific prices. From the FAQ (italics added):
Why don’t I automatically get these offers?
Our systems use your purchase history to sort through and organize personal price offers, hundreds of coupons, and all of our weekly Card Specials. But only you can determine if our systems got it right.
That’s why we ask that you select offers by loading them to your Club Card. As you provide feedback based on what you select, our systems will improve their ability to sort through and personalize your offers. This will make the program even more valuable to you over time!
Why don’t you just give me these prices in the store?
If every shopper were exactly like you, we could! But the reality is every Safeway customer is different. This program is personalized just for U!
TC again: And via Justin Wolfers, Orbitz steers Mac users toward pricier hotels.
…if the Affordable Care Act falls apart, the next time Democrats get a crack at passing universal health insurance, they’re going to want to do it in a way that avoids Republican obstruction and can’t be questioned by the Supreme Court. The most obvious policy path that achieves both goals is to expand public programs like Medicare and Medicaid, as that can be done through the filibuster-proof budget reconciliation process and it can’t be touched by the Supreme Court.
At the link he asks for alternative predictions. I am not sure the Democrats would have enough support — from other Democrats that is — to push through such a change. Note by the way that Ezra is not endorsing his prediction, relative to ACA.
What are your predictions?
There is also The Kipper und Wipper Inflation, 1619-23, An Economic History with Contemporary German Broadsheets, by Martha White Paas, John Roger Paas, and translations by George Schoolfield. The origins of German monetary thought turn out to be more important than might have been expected…