In Virginia the common law has long held that if a neighbor’s tree encroaches on your yard you may cut the branches as they fall over the property line but any damage the tree does to your property is your problem.  Your neighbor can even sue if your pruning kills the tree.  Last week the Virginia Supreme Court overruled this 70 year-old precedent so that now it’s your neighbor’s duty to prune or cut down the tree if it is a "nuisance."

Discuss.  Which rule is better the new rule or the old?  What does this ruling imply about Posner’s hypothesis about the efficiency of the common law?  What would Coase say? 

Mark Thoma points us to a new paper by Michael Greenstone that tries to evaluate the effect of the surge.  The news is not good.

This paper shows how data
from world financial markets can be used to shed light on the central question
of whether the Surge has increased or diminished the prospect of today’s Iraq
surviving into the future. In particular, I examine the price of Iraqi state
bonds, which the Iraqi government is currently servicing, on world financial
markets. After the Surge, there is a sharp decline in the price of those bonds,
relative to alternative bonds. The decline signaled a 40% increase in the
market’s expectation that Iraq will default. This finding suggests that to date
the Surge is failing to pave the way toward a stable Iraq and may in fact be
undermining it.

It’s amazing how far we have come since 2003 when Robin Hanson’s DARPA-funded Policy Analysis Market was ridiculed and canceled.

Checkers has been solved.  It’s a draw.  At least starting out in the usual configuration.

Google has put up $30 million to fund a Lunar X Prize.  "A $20 million grand prize will be awarded to the first team to soft
land its spacecraft on the moon, rove on its surface for at least 500
meters, and transmit specified images and video to earth."

The Twenty Most Bizarre Experiments of all Time.  Amazing.  Many I would not have thought possible.

In a video at Freakonomics Steve Levitt talks about the genesis of the idea for his abortion and crime paper with John Donohue.  The key sentence, "and so I spent the first couple of years of research…".

In a unrelated post he also tells us this, "back in grad school, I had carpal tunnel problems from entering too much data…"

Learn from the master, grasshopper.

Not content to kill people with CAFE standards the Federal government is now messing up our laundry.  So called "energy-efficiency" standards have severely reduced the cleaning ability of new laundry marchines.  Who says?  Here is Consumer Reports:

Not so long ago you could count on most washers to get your clothes
very clean. Not anymore. Our latest tests found huge performance
differences among machines. Some left our stain-soaked swatches nearly
as dirty as they were before washing. For best results, you’ll have to
spend $900 or more. (italics added)

What
happened? As of January, the U.S. Department of Energy has required
washers to use 21 percent less energy, a goal we wholeheartedly
support. But our tests have found that traditional top-loaders, those
with the familiar center-post agitators, are having a tough time
wringing out those savings without sacrificing cleaning ability, the
main reason you buy a washer. 

I too support the goal of having washers use 21 percent less energy.  Hell, I support the goal of having washers use no energy at all.  Let’s pass a law.

Energy efficiency sounds so nice.  Who could be against efficiency?  Tradeofs, however, cannot be avoided.  Thus, energy-efficiency really means that the government is going to choose how white your shirts are gonna be.

Ironically, the law could well reduce cleanliness and increase energy use.  If the new washers are as bad as Consumer Reports say they are people will just start to wash everything twice.

Addendum 1: Prominent members of a certain political party often promote the theory that "if we make them build it, the savings will come"
but, as we all know, ignoring tradeoffs is a sure sign of discredited crackpot economics.

Addendum 2: CEI suggests you email some virtual underwear to the Secretary of Energy in protest.   

Several months ago I noted that a virtual world, Eve Online, had hired a real economist.  Here is his first report.  What makes virtual worlds important for economics is that for the first time ever, macro-economists will be able to do experiments.  I predict that we will see some very interesting experiments in the near future.  In the meantime here is an interesting bit from the report – the laws of supply of demand work in many worlds. 

EVE consists of more than 5000 solar systems in 64 regions. The solar
systems are connected in a complex web allowing for goods to be moved
from one end in the Universe to another. Pilots have to be careful
because in low sec and zero-zero security zones there is always the
danger of being attacked by gangs of pirates looking for easy prey….

EVE is so large it is difficult for anyone to grasp what is going on
in all the regions at any given time. Yet the markets seem to be very
efficient at distributing information resulting in symmetric prices
throughout Empire space (and even further). This is clearly visible in
figure 11 which shows the price for zydrine in three different Empire
regions.

Examining these time series in more detail reveals the price
difference between regions is declining over time and price
fluctuations within regions are also decreasing. This can be seen as
evidence for increased efficiency in arbitrage trading over time
resulting in symmetric prices and an overall more efficient market.

Thanks to Ambrose for the pointer.

Addendum: Be sure to check the comments for insightful details from Mike K., solarjetman and others. 

Following Jon Chait, Matt Yglesias writes:

…the central element of the Republican Party’s tax policy — lower taxes
rates will lead to higher tax revenues — is a discredited crackpot
notion.

Fine, but a more fruitful question which I’d like to see Yglesias, Chait and others grapple with is why discredited, crackpot ideas can become central elements of a winning political party in the world’s most important democracy.   Explain the demand side and give us your policy prescriptions.

Climate Care is a carbon offset firm used in an effort to be green by the UK Conservative party leader.  One of Climate Care’s projects pays Indian farmers to substitute human powered pumps for diesel pumps.  Opponents of the conservative party are having a field day:

Climate Care points out that even children can use treadle
pumps: ‘One person – man, woman or even child – can operate the pump by
manipulating his/her body weight on two treadles and by holding a
bamboo or wooden frame for support.’  Feeling guilty about your two-week break in Barbados, when you flew
thousands of miles and lived it up with cocktails on sunlit beaches?
Well, offset that guilt by sponsoring eco-friendly child labour in the
developing world!

Ala Larry Summers, I don’t see the problem.  Westerners pay Indian farmers to produce cotton, why is producing carbon-sinks any different?  It seems that some environmentalists are more interested in producing guilt than in reducing carbon.

Addendum: I am not claiming that carbon offsets work, in some cases the offset would have happened anyway so there is no net gain.  According to some, replenishing human energy creates more carbon than pumping oil.  But these are different objections.

Thanks to Mike Makowsky for the pointer.

Yesterday, Tyler and I met with Tom Vander Ark, the president of the X-Prize Foundation, to discuss and debate the future of prizes.  One interesting bit of trivia that Tom mentioned was that the X-Prize was funded with an insurance contract.  The funders paid the premium and the insurance company agreed to pay if the prize conditions were met.

To figure out how to price the contract the insurance company called "the experts" at Boeing and McDonnell-Douglas.  According to the experts the conditions for the X-Prize to be won (carrying three people to 100 kilometers above the earth’s surface, twice within two weeks) were so unrealistic as to be basically impossible within any reasonable time frame.  Thus, the funders got lucky.  The insurance company offered the contract at a very low premium and the rest is history!

The X-Prize Foundation is doing exciting work.  They are building on the huge success of the Ansari
X-Prize to launch many more prizes.  Prizes in auto technology and
genomics have already been announced and the foundation will be funding
many more prizes in the future (You can suggest a prize here).

Systems of actual socialized medicine, like Britain’s, are actually
very good at saying no: there’s a limited budget, and the medical
professionals who run the system set priorities. That’s the reason
British health care delivers results better than ours, at only 40
percent the cost – there are long waits for elective surgery, but
that’s because doctors think that it’s not a high priority…

Krugman gets points for a mostly honest description but he is a lousy salesman. Is there any doubt that most people reading this will say "no way, not in America."?