Month: March 2016

Die Aufhebung des Bezahlens

At [new D.C. restaurant] Pineapple and Pearls, Silverman says there will be no sticker shock. A $250 dinner will cost $250. When diners make a reservation, they will pay half upfront and will be billed the other half automatically on the day of their reservation. If they cancel 72 hours in advance of their reservation, diners will be refunded their initial payment.

…Pineapple and Pearls wants to “eliminate the guest from ever having to look at a bill,” Silverman says. “When you show up, you have nothing to worry about. Everything is paid for. All you have to do is sit back and have a good time. We’ll take care of the rest.”

Here is the full story, here is my earlier post “Why is it so hard to find the cash register?

What predicts (causes?) party realignments?

Richard L. McCormick discusses this question in his The Party Period and Public Policy (the quoted chapter is reproduced in jstor):

After coding and analyzing the contents of party platforms and federal statutes, Benjamin Ginsberg conclude that realigning eras were marked by high degrees of ideological difference between the parties and by significant transitions in national policy.  David W. Brady and several coworkers marshaled evidence of heightened party voting in Congress and of the adoption of “clusters of policy changes” following the realignments of the 1890s and the New Deal era.

The simple-minded amongst us might be tempted to conclude we are likely in a realignment period right now, as argued very recently by David Frum.  It should be noted that McCormick criticizes these theories for their simplicity in some regards, and their rather casual aggregation of different time periods.

Here is the Ginsberg piece from jstor.  Here is one of the cited Brady pieces, again jstor.

Insurance markets in everything — celebrity disgrace

Policies can be individually tailored to reflect a company’s confidence in a celebrity. For example, for sponsorship contracts ranging from £1m to £50m, policies can be designed to reimburse the full amount to the sponsoring company in the event of a misdemeanour by the celebrity, or pay out on a sliding scale, depending on the nature of the incident.

Premiums vary, but brokers say they tend to start at 0.25 per cent of the sum insured, or just under 1 per cent, on average, for more bespoke arrangements.

Cover can also be arranged for different types of risk. One of the main types is loss of profit, if customers stop buying certain products in the wake of a celebrity’s disgrace.

And this:

But, as with all insurance, it pays to read the small print and understand the factors that determine the success of a claim. “If someone has a squeaky clean image, the threshold for disgrace is lower than it would be for a hellraiser,” Mr Rackliffe explains.

Here is the David Oakley and Oliver Ralph FT story.

Saturday assorted links

1. Should New York City or NY state pay for CUNY?

2. The American middle class is doing fine in Utah.

3. Will German privacy law conflict with the storage of economic data for research?

4. Some of the academics who support Donald Trump and what they say.

5. “The DeafSpace philosophy rests on five basic principles.”  For instance:

Groups of signers will naturally form circles or arcs to include everyone. They avoid long, rectangular tables, which impede views. The least Deaf-supportive space Bauman could think of, when I asked him what it might be, was the traditional classroom with straight rows of desks; that layout breaks up lines of communication, except between student and teacher. Many classrooms at Gallaudet have round or horseshoe-shaped seating arrangements. Meeting rooms may have oval desks; lecture halls are raked, and ideally have multiple aisles so an audience member can easily take the stage when he or she wants to ask a question.

An excellent article, interesting throughout.

The Stigler Center at the University of Chicago now has a blog

https://promarket.org/

Here is a Luigi Zingales post, “Why this blog?”:

By gathering information on the nature and cost of this subversion of competition, by distributing this information among the public at large, and by making this information salient, media outlets can reduce the power of vested interests. By exposing the distortions created by special interests, they can create the political demand for a competitive capitalism.

This is the goal of our Pro-Market blog: to educate the public about the many ways competition can be subverted. In this exercise our only goal is to make the market system work better. In the finest University of Chicago tradition, we will do it with data. We will try to do it with the rigor of the best academic work, but without the pedantry that often accompanies it. This blog will collect opinions, summarize work, and report on relevant research by Chicago faculty and Stigler fellows. We will use every medium at our disposal, because the message is our medium.

Self-recommending…

Illiquidity does not seem to lower the quality of decision-making

There is a new AER piece by Leandro S. Carvalho, Stephan Meier, and Stephanie W. Wang, here is the abstract:

We study the effect of financial resources on decision-making. Low-income US households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about nonmonetary real-effort tasks. Nor do we find before-after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments.

I would describe that one as a victory for Gary Becker…

Here are ungated versions.

The problem with ECB corporate bond buying

Yes, it is on the agenda, and those bond prices are up sharply, but there are more eligible bonds in some places than others:

Still  BofAML sees €554 billion of debt ultimately eligible for ECB buying out of a European investment-grade universe that they put at €1.6 trillion. Of that €554 billion the vast majority has been issued by French and German credits, a fact which may disappoint some who were hoping for targeted stimulus of the eurozone’s weaker nations.

Deutsche Bank AG Credit Analysts led by Nick Burns see similar figures, estimating around €418 billion of eurozone corporate debt could be eligible for ECB purchases, with the bulk of that coming from German and French issuers.

bonds

The more economically integrated United States would not have this problem to the same degree.

Friday assorted links

Why Merkel’s deal with Turkey won’t work

First, the envisioned mass group deportation of irregular migrants from Greece back to Turkey is probably illegal under Europe’s commitments to the Geneva Conventions, which calls for individual evaluation of asylum cases and not mass deportations. Judicial review of this deal may well strike it down.

Second, the 1-1 swap model with Turkey is a nonscalable fantasy. EU leaders acknowledge that it does “not establish any new commitments on Member States as far as relocation and resettlement is concerned.” In other words, European leaders assume that any refugees accepted directly from Turkey will come out of the already agreed 160,000 quota slated for relocation from inside the European Union. While EU leaders should be applauded for trying to replace illegal migration through Turkey with a new regularized and legal route for refugees to enter Europe, it defies belief that EU member states will be more willing to accept refugees directly from Turkey than they have been willing to accept relocations from fellow EU members Greece and Italy. To date only a ludicrously low 885 refugees have been relocated, a fact certain to dampen Ankara’s willingness to accept returned irregular migrants from Greece. Rather than a 1-1 swap arrangement, this deal actually appears only to be a 0.00001–0.00001 arrangement.

That is from Jacob Funk Kirkegaard, the piece has other good points too.

What women want and what men get

Family structure in the United States has shifted substantially over the last three decades, yet the causes and implications of these changes for the well-being of family members remains unclear. This paper exploits task-based shifts in demand as an exogenous shock to sex-speci fic wages to demonstrate the role of the relative female to male wage in the family and labor market outcomes of women. I show that increases in the relative wage lead to a decline in the likelihood of marriage for those on the margin of a fi rst marriage, and present suggestive evidence that these eff ects are concentrated among less-desirable matches. A higher relative wage also causes women to increase their hours of work, reduce their dependence on a male earner, and increase the likelihood of taking guardianship over their children. These findings indicate that improvements in the relative wage have facilitated women’s independence by reducing the monetary incentive for marriage, and can account for 20% of the decline in marriage between 1980 and 2010.

That is the job market paper (pdf) of Na’ama Shenhav from UC Davis.

For the pointer I thank Ben Southwood.

Why is labor mobility in India so low?

From Kaivan Munshi and Mark Rosenzweig, here is the puzzle:

It follows that the real wage gap [rural to urban] in India is at least 16 percentage points larger than it is in China and Indonesia. There is evidently some friction that prevents rural Indian workers from taking advantage of more remunerative job opportunities in the city.

Indian migration to the cities is much lower than for China or Indonesia.  Here is part of the answer:

The explanation that we propose for India’s low mobility is based on a combination of well-functioning rural insurance networks and the absence of formal insurance, which includes government safety nets and private credit.

…In rural India, informal insurance networks are organized along caste lines. The basic marriage rule in India (which recent genetic evidence indicates has been binding for nearly two thousand years) is that no individual is permitted to marry outside the sub-caste or jati (for expositional convenience, we use the term caste interchangeably with sub-caste). Frequent social interactions and close ties within the caste, which consists of thousands of households clustered in widely dispersed villages, support very connected and exceptionally extensive insurance networks.

Households with members who have migrated to the city will have reduced access to rural caste networks…

I believe “deficient infrastructure” and “lack of good manufacturing jobs” should be a bigger part of that answer, but nonetheless an interesting question and discussion.  Might the multiplicity of languages in India be a factor too?  Here is my earlier argument that Indian cities may be undercrowded.

For the pointer I thank the excellent Samir Varma.