Google Pork

Sometimes an idea comes along that is so neat you wonder why no one
thought of it before. In that vein, Sen. Tom Coburn, an Oklahoma
Republican and chair of the Homeland Security Subcommittee on Federal
Financial Management, has introduced a bipartisan bill to create a
Google-like online searchable database of all federal spending.
Currently, said Coburn, there is no way for taxpayers to find out what
the government is paying individuals, groups, localities, and
contractors. "This bill will empower citizen investigators to root out
waste, fraud, and abuse," said Coburn, a leading opponent of pork. The
bill has some heavyweight sponsors, including Republican Sens. John
McCain and Rick Santorum and Democrat Barack Obama.

From USNews.com.  Thanks to Carl Close for the pointer.

Heard in Riyadh, Teheran and Caracas

We have got to end our dependence on foreign dollars.  Their dollars are the lifeblood our economy.  Our standard of living is in the hands of the Great Satan!  This isn’t just an economic problem, it’s a political problem.  If they reduce their supply of dollars they could blackmail us.   We need to think about our future and that of our children.   We must embark immediately on a plan to increase our domestic consumption of oil.  Keep the oil at home and stop fueling our oppressors!

Random voting

In an effort to improve voter turnout the Arizona Voter Reward Act (if approved) would give every voter a chance to win a prize of $1 million.  Great.  Why not hand out a bottle of vino with every vote or some crack?   Where is Richard Titmuss when you need him?   What sort of people won’t vote if there is no lottery but will vote if they get a lottery ticket and why do we want these people to vote?

Frankly, too many people vote already.  I know, that’s heresy against the great religion of democracy – i.e. worship of the mob – but other people voting is an externality on me and in this case I will side with Pigou.

 

Thanks to Curtis Melvin for the pointer.

A Premium Puzzle

Dave Undis writes to me:

For as long as I can remember, the cost difference between different grades of gasoline has been 10 cents a gallon.  For example, when Regular was selling for $2.39, Plus was selling for $2.49 and Premium was selling for $2.59.

Earlier this year when gas prices rose significantly, I noticed this pattern changed.  The cost differences were often 8 cents or 9 cents a gallon.

…Can you explain this?

I quickly came up with several explanations for why we might expect an increase in the price differences with a increase in the price of regular but a decrease?  That was more puzzling.  Being an economist, I question the facts before I question the theory, however, so I graphed the difference in price between premium and regular gasoline against the price of regular gasoline using weekly data from the Energy Information Administration (Nov 28, 1994-July 17, 2006).   Click to enlarge.

Dave appears to be incorrect there is a slight tendency for the difference to increase with the price of regular, although the date is noisy.  Theory ahead of evidence once again.Gaspremreg

Ok, so what’s my explanation?

    When the demand for oil rises refineries are pushed to  operate at full capacity.  Producing premium requires greater effort than regular and this has a higher opportunity cost when refineries are operating at full capacity.  (In other words, it’s cheaper to produce premium when you have spare capacity on your hands.)  The increase in costs is reflected in the price increase. 

There is a countervailing factor, the demand for premium declines (i.e. the relative demand for regular increases) as the price of gas rises.  Effects like this can be neat as, for example, when a tax on cigarettes increases the demand for "discount" cigarettes thereby appearing to violate the law of demand.  It’s conceivable that the decline in demand (a shift along the supply curve) could counteract the increase in the cost of supply enough to lower the differential but in practice this appears not to occur on average.

Comments are open.

Overkill

My research on bounty hunters shows that they are more effective than the police in recapturing criminals.  I’m often asked (and sometimes told), however, about the potential for abuse and mistaken arrests.  No one ever bothers, however, to ask how bounty hunters compare on the abuse score with the police.  My suspicion is that the bounty hunters would come out better because they know that a mistake can put them out of business while the police may routinely break down the wrong door under cover of law.

Some data on the potential for abuse and mistaken arrest or worse from the police is provided in a new Cato report, Overkill: The Rise of Paramilitary Police Raids in America, by Radley Balko.  The report notes:

Over the
last 25 years, America has seen a disturbing militarization
of its civilian law enforcement, along
with a dramatic and unsettling rise in the use of
paramilitary police units (most commonly called
Special Weapons and Tactics, or SWAT) for routine
police work. The most common use of SWAT
teams today is to serve narcotics warrants, usually
with forced, unannounced entry into the
home.

These increasingly frequent raids, 40,000 per
year by one estimate, are needlessly subjecting
nonviolent drug offenders, bystanders, and
wrongly targeted civilians to the terror of having
their homes invaded while they’re sleeping, usually
by teams of heavily armed paramilitary units
dressed not as police officers but as soldiers.

Along with the paper is an interactive map showing hundreds of mistaken raids over the past several decades, a number of which lead to the deaths of innocents.

Talent and Reward

Brad DeLong writes:

…the lucky or talented or workaholic today can, thanks to revolutions
in computer and communications technology, leverage their
symbolic-analyst skills over a much larger base of routine
manufacturing, marketing, and distribution workers than they could have
a generation ago. In this model, we have become much more of a "winner take all" economy than we used to be. Much more income is distributed in the form of winner-take-all tournaments than used to be the case.

My first reaction is that this is possible, but unproven. My second
reaction depends on whether victory in the winner-take-all tournaments
is due to luck, talent, or industriousness.

I would add this, it’s going to be very difficult to tell.  In a winner take all economy where talents are leveraged over a much larger base, small differences in talent are worth much more.  A 1% improvement in a firm with revenues of 1 million is worth a lot less than a 1% improvement in a firm with revenues of 1 billion.  Even more, if 1% greater talent is what separates Amazon from SuperBookDeals then the rewards to the founder of the former will be higher than that of the latter by much more than 1%.

More Police, Less Crime

After more than two weeks of unusual killings and robberies in Washington DC, Police Chief Charles H. Ramsey has called a crime emergency.  During a crime emergency the Chief can increase shifts and get more police on the street.  This is exactly the right thing to do.  My research with Jon Klick shows that crime in Washington DC falls significantly during high terror-alert periods when the police double up on shifts much as they do during a crime emergency. 

More generally, when one combines estimates of police effectiveness that come from myself and Klick, Steve Levitt, Bill Evans and Emily Owens and others with data on the costs of hiring police, it’s clear that police are a bargain.  We could double the number of police in the United States and the costs of crime would fall by substantially more than the cost of police.  (Reallocating police and prison space from drug users to violent criminals would also help.)

The Tragedy of Beirut

Richard Engel, Middle East bureau chief for NBC news, writes about how much can change in a matter of weeks.Beirut

A few weeks ago, I was here and working on just that story – it was even called “Beirut is back.”

It
was supposed to be about how the economy has revived, the restaurants
are full, the nightclubs are hopping, and the beaches are full of women
in bikinis.

Today I’m standing here wearing a flak jacket, watching the airport burning, and there are more strikes expected.

Thanks to Amanda Agan for the pointer.

PJ O’Rourke on Moral Sentiments

PJ O’Rourke is so funny you sometimes forget how smart he is.  I learned more about economic growth from Eat the Rich: A Treatise on Economics than from many a mathematical treatise.  In particular, in Eat the Rich O’Rourke pounded home the point that absence of government led to very different outcomes in 19th century America than in post-communist Albania.  Economists have only just begun to try to explain why.

Here is a recent review from O’Rourke of Adam Smith’s Theory of Moral Sentiments.

Smith claimed that what we do,
when we develop morality, is shape our natural sympathies into the
thoughts and actions that we would expect from an Impartial Spectator
who is sympathetic, but objective and all-knowing, yet still
sympathetic anyway.

"When our passive feelings are almost always so sordid and so
selfish, how comes it," Smith asked, "that our active principles should
often be so generous and so noble?" The answer is "the inhabitant of
the breast . . . the great judge and arbiter of our conduct." Looking
at things from the Impartial Spectator’s point of view instructs us in
the self-discipline that we need to behave well in our condition of
natural liberty. Consider how toddlers or drunks behave, who haven’t
yet received, or who have temporarily forgotten, their instructions.

If, Smith wrote, the Impartial Spectator did not teach us "to
protect the weak, to curb the violent, and to chastise the guilty,"
then "a man would enter an assembly of men as he enters a den of
lions." Or toddlers. Or drunks. Or Jack Abramoff’s office.

Harry Was Correct

Addendum: Restored with the help of Ted Frank and others.

Harry: You realize of course that we could never be friends.
Sally: Why not?
Harry: What I’m saying is – and this is not a come-on in any
way, shape or form – is that men and women can’t be friends because the sex
part always gets in the way.
Sally: That’s not true. I have a number of men friends and
there is no sex involved.
Harry: No you don’t.
Sally: Yes I do.
Harry: No you don’t.
Sally: Yes I do.
Harry: You only think you do.
Sally: You say I’m having sex with these men without my
knowledge?
Harry: No, what I’m saying is they all WANT to have sex with
you.
Sally: They do not.
Harry: Do too.
Sally: They do not.
Harry: Do too.
Sally: How do you know?
Harry: Because no man can be friends with a woman that he
finds attractive. He always wants to have sex with her.
Sally: So, you’re saying that a man can be friends with a
woman he finds unattractive?
Harry: No. You pretty much want to nail ’em too.
Sally: What if THEY don’t want to have sex with YOU?
Harry: Doesn’t matter because the sex thing is already out
there so the friendship is ultimately doomed and that is the end of the story.
Sally: Well, I guess we’re not going to be friends then.
Harry: I guess not.
Sally: That’s too bad. You were the only person I knew in
New York.

Here’s an abstract from a recent meeting of the Human Behavior and Evolution Society (no online paper that I could find):

Getting Both Sides of the Story: Sexual Attraction and Sexual Events
Between Opposite-Sex Friends

Matteson, Lindsay K. (University of Wisconsin-Eau Claire,
[email protected]); Gragg, Brittany I.; Stocco, Corey S.; Bleske-Rechek, April

Debate exists on whether opposite-sex friends experience sexual
attraction to one another and, if so, whether that attraction adds
spice or strife to the friendship. Little systematic research,
however, has evaluated these questions; and existing studies have not
asked for both friends’ perspectives. In the current study, 89 pairs
of young adult opposite-sex friends (mean friendship duration = 2
years) reported on their friendship. Men reported more sexual
attraction to their friends than did women, and this sex difference
endured after controlling for men’s greater sexual unrestrictedness.
Approximately 25% of friendship pairs had romantically kissed, and
over 10% had "fooled around." Attraction to friend was not related to
friendship duration, and sexual events occurred at various time
points in the friendship, suggesting that attraction to friends isn’t
something that is "overcome" with time. We discuss our findings in
the context of mainstream literature suggesting that opposite-sex
friendships are inherently platonic.

Harry was Correct

Harry: You realize of course that we could never be friends.
Sally: Why not?
Harry: What I’m saying is – and this is not a come-on in any
way, shape or form – is that men and women can’t be friends because the sex
part always gets in the way.
Sally: That’s not true. I have a number of men friends and
there is no sex involved.
Harry: No you don’t.
Sally: Yes I do.
Harry: No you don’t.
Sally: Yes I do.
Harry: You only think you do.
Sally: You say I’m having sex with these men without my
knowledge?
Harry: No, what I’m saying is they all WANT to have sex with
you.
Sally: They do not.
Harry: Do too.
Sally: They do not.
Harry: Do too.
Sally: How do you know?
Harry: Because no man can be friends with a woman that he
finds attractive. He always wants to have sex with her.
Sally: So, you’re saying that a man can be friends with a
woman he finds unattractive?
Harry: No. You pretty much want to nail ’em too.
Sally: What if THEY don’t want to have sex with YOU?
Harry: Doesn’t matter because the sex thing is already out
there so the friendship is ultimately doomed and that is the end of the story.
Sally: Well, I guess we’re not going to be friends then.
Harry: I guess not.
Sally: That’s too bad. You were the only person I knew in New York.

Here’s an abstract from a recent meeting of the Human Behavior and Evolution Society (no online paper that I could find):

Getting Both Sides of the Story: Sexual Attraction and Sexual Events
Between Opposite-Sex Friends

Matteson, Lindsay K. (University of Wisconsin-Eau Claire,
[email protected]); Gragg, Brittany I.; Stocco, Corey S.; Bleske-Rechek, April

Debate exists on whether opposite-sex friends experience sexual
attraction to one another and, if so, whether that attraction adds
spice or strife to the friendship. Little systematic research,
however, has evaluated these questions; and existing studies have not
asked for both friends’ perspectives. In the current study, 89 pairs
of young adult opposite-sex friends (mean friendship duration = 2
years) reported on their friendship. Men reported more sexual
attraction to their friends than did women, and this sex difference
endured after controlling for men’s greater sexual unrestrictedness.
Approximately 25% of friendship pairs had romantically kissed, and
over 10% had "fooled around." Attraction to friend was not related to
friendship duration, and sexual events occurred at various time
points in the friendship, suggesting that attraction to friends isn’t
something that is "overcome" with time. We discuss our findings in
the context of mainstream literature suggesting that opposite-sex
friendships are inherently platonic.

Private Foreign Aid

The LATimes has a superb set of articles on remittances, it focuses not just on remittances from the U.S. to Mexico but also from Japan to the Phillipines, Italy to Kenya and  Florida to Haiti. 

Migrants have been sending money home, in one form or another, for
centuries. But only recently have economists recognized its
significance. Today, remittances are the largest, fastest-growing and
most reliable source of income for developing countries. Poor nations
reported $167 billion in receipts from overseas workers last year,
according to the World Bank, more than all foreign aid. Including
unrecorded transactions, the bank estimates that the total exceeded
$250 billion.

…Mexico’s annual remittance inflow has doubled since 2002 and reached
$20 billion last year, second only to petroleum as a generator of
wealth for the country.

Other developing nations also depend
heavily on their migrants’ money. Brazilian laborers in Japan send home
more than $2 billion a year, out-earning their country’s coffee
exports. Remittances bring in more than tea exports do in Sri Lanka and
tourism does in Morocco. In Jordan, Lesotho, Nicaragua, Tonga and
Tajikistan, they provide more than a quarter of the gross national
product.

Remittances_1

Thanks to Carl Close for the pointer.