Thomas Jefferson Continues to Surprise
Keith Ellison made history Thursday, becoming the first Muslim member
of Congress and punctuating the occasion by taking a ceremonial oath
with a Quran once owned by Thomas Jefferson.
(From the NYTimes). I wonder if Jefferson every took scissors to the Quran to cut out all the ridiculous bits, the way he did to the Bible?
Uncertainty is the Friend of Delay
Regarding global warming and what to do about it, Brad DeLong approvingly paraphrases Tyler, "uncertainty is not the friend of doing nothing." Bearing in mind the obvious dangers of contradicting both Brad and Tyler let me counter with "uncertainty is the friend of delay."
If you are faced with two environments one of which has outcomes somewhere between -10 to 10 and the other somewhere between -100 to 100 then I agree that the greater uncertainty of the latter provides no necessary reason for doing less relative to the former.
Suppose, however, that we are uncertain about which environment we are in but the uncertainty will resolve over time. In this case, there is a strong argument for delay. The argument comes from option pricing theory applied to real options. A potential decision is like an option, making the decision is like exercising the option. Uncertainty raises the value of any option which means that the more uncertainty the more we should hold on to the option, i.e. not exercise or delay our decision.
Imagine, for example, that there are 100 doors before us. We can enter any door but once we enter it will be costly to exit. If we don’t decide then over time we learn a little bit about what is behind each door. If our uncertainty to begin with is small, we know that behind each door is more or less the same thing, then learning has little value and we should decide now (assuming some modest cost to waiting). But if our uncertainty is large then learning has a lot of value and we should delay our decision until some of our uncertainty has been resolved.
Applying the theory to global warming isn’t easy because our decisions involve many options and exit costs but if we think that our knowledge of the extent, cost, cause and solutions to global warming are increasing at a faster rate than the danger of global warming then delay of any major decision is a rational policy at the present time.
The Economics of Chocolate
"You
say that 400 florins a year as an assured salary are not to be despised,
and it would be true if in addition I could work myself into a good position
and could treat these 400 florins simply as extra money. But unfortunately,
that is not the case. I would have to consider the 400 florins as my chief
income and everything else I could earn as windfall, the amount of which
would be very uncertain and consequently in all probability very meager.
You can easily understand that one cannot act as independently towards
a pupil who is a princess as towards other ladies. If a princess does not
feel inclined to take a lesson, why, you have the honor of waiting until
she does. She is living out with the Salesians, so that if you do not care
to walk, you have the honor of paying at least 20 kreuzer to drive there
and back. Thus of my pay only 304 florins would remain–that is, if I only
gave three lessons a week. And if I were obliged to wait, I would in the
meantime be neglecting my other pupils or other work (by which I could
easily make more than 400 florins). If I wanted to come into Vienna I would
have to pay double, since I would be obliged to drive out again. If I stayed
out there and were giving my lesson in the morning, as I no doubt would
be doing, I would have to go at lunchtime to some inn, take a wretched
meal and pay extravagantly for it. Moreover, by neglecting my other pupils
I might lose them altogether–for everyone considers his money as good
as that of a princess. At the same time, I would lose the time and inclination
to earn more money by composition. To serve a great lord (in whatever office)
a man should be paid a sufficient income to enable him to to serve his
patron alone, without being obliged to seek additional earnings to
avoid penury. A man must provide against want."
Marginal Revolution Goes Avant-Garde
David Morris, New York City theater artist and long-time reader of MR, is one of the creators of Routine Hearing: Exercises for the Body Politic.
Exercises for the Body Politic
moves to the beat of an original score featuring the luminaries of
political oratory. From the golden oldies of Goldwater and
McGovern to the modern sounds of Limbaugh and Moore, your headphones
will set the stage for this auditory grand ballet. Enjoy a glass
of wine, a game of cards and the company of your fellow citizens as one
of HERE’s favorite design teams–David Evans Morris & Juliet
Chia–hit shuffle on the political soundtrack of 21st century.
The lastest installment of Exercises will feature selections from Tyler’s paper Self-Deception as the Root of Political Failure. Alas, no selections from your truly but if Nixon going to China can become an opera I have high hopes for the musical, Believe in Pascal’s Wager? Have
I got a deal for you!
You can get tickets to Routine Hearing which plays Jan. 2-3 at the above link.
Addendum: Here are Tyler and I on An
Economic Theory of Avant-Garde and
Popular Art, or High and Low Culture (JSTOR link).
Posner Lectures Chipmunk
Here’s a tidbit from a Washington Post article today on property rights in online worlds.
Earlier this month, U.S. Circuit Judge Richard A. Posner visited
Second Life, appearing as a balding, bespectacled cartoon rendering of
himself, and addressed a crowd of other animated characters on a range
of legal issues, including property rights in virtual reality. Posner
stressed that it was in Linden Lab’s interest to ensure due process and
other rights."They want people to invest in Second Life, and we
know people won’t invest if their rights are not reasonably secure," he
told the audience, which included a giant chipmunk and several
supermodels. He went on to predict the eventual emergence of an
"international law of virtual worlds" similar to international maritime
law.
Gifts the starter motor of civilization?
Seth Roberts argues that gifts furthered civilization by deepening the division of labor and increasing skills even when such skills were not at a first practical, i.e. today’s gift is tomorrow’s technology.
In Honor of Newton’s Birthday
Snow Crashed
Somedays I feel like I have woken up in a Neal Stephenson novel. The following is not science fiction:
The poster child for profitable Second Life businesses is Ailin Graef–better known by her avatar’s name, Anshe Chung–and
Anshe Chung Studios, the business she
runs with her husband, Guntram Graef.Originally, the two ran the company from Germany, but at the beginning of
this year, they set up shop in Wuhan, a large city in China, and are now
employing more than 30 people full-time at, she says, better than local average
wages.Last month, Ailin Graef issued a press release announcing that the company’s
total holdings, comprised mainly of virtual land in Second Life, were
worth more than a million real-life dollars. For those who aren’t familiar with
the complex economies of virtual worlds, such a claim may seem incomprehensible.But for anyone who has spent significant time in Second Life, the
number seems all too possible, given Chung’s dominance of the land market there.On Monday, Graef visited Second Life for a
discussion about her business, how best to set up businesses in Second
Life and the nature of competition there.Unfortunately, as the interview was commencing, the event was attacked by a
"griefer," someone intent on disrupting the proceedings. The griefer managed to
assault the CNET theater for 15 minutes with–well, there’s no way to say this
delicately–animated flying penises.It’s not clear why the griefer attacked, but Anshe Chung is controversial to
some Second Life residents for reasons such as inflexibility on land
pricing, the signs she has placed in many areas of the virtual world that are
visible to anyone flying overhead, and her ability to get many residents to sell
their land to her.
Global Orgasm Day
Today is global orgasm day. Why? Well, why not? But the organizers do have a larger goal: "To effect positive change in the energy field of the Earth through input of the largest possible surge of human energy, a synchronized Global Orgasm."
Lest you think this is purely prurient, do note that there is an interesting scientific component. The Global Consciousness Project is a peculiar project run out of Princeton University that has for many years been running experiments correlating random output devices with human consciousness. Results from 12 years of experiments show small but highly statistically significant results.
Beginning in 1998 the group started to record data from "eggs" (non-deterministic random number generators) located around the world. The data show or seem to show higher than random correlations with "global events" such as the funeral of Princess Diana (the events are designated in advance or before examining the data). The eggs will record whether today’s global orgasm is associated with a perturbation in the global consciousness field.
Do I believe any of this? No. Will I participate in the experiment? Anything for science.
How Not to Get Into Grad School
The law of below averages also applies to students trying to hire hackers to change their GPA.
Hat tip to MetaFilter.
Giving to my Wild Self
The economist in me says the best gift is cash. The rest of me rebels. Some people argue that the reason we don’t give cash is because that is too easy – to show that we know the person well we must signal by shopping for something "special."
Yet this can’t be quite right, either. Imagine the following thought experiment. Someone gives you $100 cash. You go out to the store and buy a set of car tires. Purchasing the tires clearly maximizes your utility. Now imagine that instead of $100 the gift giver gave you a set of car tires. Would you be happy that they know you so well that they purchased for you just what you would have purchased for yourself? I don’t think so.
The example illustrates that we want the gift giver to buy something for us that we would not have bought for ourselves. Or more precisely one of our selves wants this – the self that is usually restrained, squashed, and limited, the wild self, the passionate self, the romantic self.
Gift giving, therefore, is about reaching out and giving to the wild self in someone else. Why would we want to do this? Because we want the wild self in someone else to be wild about us.
The bottom line? If you want to please the economist in me, send me cash. If you want to please my wild self (I know, not many of you, but you know who you are!) use your imagination.
(Big) Markets in Everything: Marijuana
Marijuana is probably America’s biggest cash crop exceeding that of corn and soybeans. And heh, no government subsidies you gotta like that!
Markets in Everything: Power Flower
Carnivorous Plant of the Month Club. Question: Is someone who eats carnivorous plants a vegetarian?
Draw Your Own Conclusions
From the list of overrated books that Tyler links to we have this nomination from economist Diane Coyle:
Freakonomics, Steven D Levitt and Stephen J Dubner (Penguin). Economics as freak show. Depressingly, this seems to be the only way to gain a wider audience for the empress of the social sciences, other than multinational bashing.
The only way to get attention? Not at all. You could always title your book, Sex, Drugs and Economics: An Unconventional Intro to Economics.
Scrooge is out Early This Year
Robin Hanson has his Scrooge hat on:
A student told me the other day he wanted to be a doctor, so he could help
people. I thought, "What, as opposed to the rest of us who hurt people?"
Contrary to the smug self-righteousness assumptions of those in "helping"
professions, like child care, teaching, counseling, or emergency services, it is
far from obvious that these professions are any more helpful than the rest…
Read the whole thing if you are not already convinced. I agree with Robin. Let me add that I am an equal opportunity Scrooge, I also really dislike those TIAA-CREF ads which make professors out to be saints.