Median illusions?

From Brad DeLong:

In the past couple of months I have gone pretty much every place I ever went between when I was 15 in 1975 and when I was 25 in 1985. Every place–every place–looks a lot better, richer, a lot busier now than it looked then. How can this be if it really is the case that media and living standards of stagnated since the early 1970s? They are not all 1% or even 10% places, not now and especially not then.

One answer is that between 1975 and 1985 I never went to Scranton or Detroit–but instead to places like Dupont Circle, Adams Morgan, Cambridge, Virginia Beach, greater Orlando, Park Slope, the Lower East Side, the Upper West Side, Jackson Hole, and other places some of which are top 1% places and the others of which are all urban edge Renaissance places benefiting mightily from increased congestion.

Another answer is that not just average income but density of economic activity matters–more dense places look more prosperous because there are more choices. But then shouldn’t the number of choices be factored into our estimates of the median?

But the answer I prefer right now is that our assessment of the prosperity of a place depends on the median dollar spent there rather than on the well-being of the median person there. And practically everywhere the median dollar today is being spent by somebody much richer with much richer tastes than the median dollar some 32 years ago was.

Or perhaps our estimate of economic growth are undershooting reality–even given that you see few signs of the computer and communications revolution out there on the street…

He and I share the same preferred answer.   I would add that, when walking around, we don’t “see” the higher prices for medical care and education in the same manner that we see the new plenty of electronics and espresso shops.

Where oh where are they?

Bringing the search for another Earth about as close as it will ever get, a team of European astronomers was scheduled to announce on Wednesday that it had found a planet the same mass as Earth’s in Alpha Centauri, a triple star system that is the Sun’s closest neighbor, only 4.4 light-years away.

Here is more.  Planets, planets everywhere…

Michael Pollan on Proposition 37

I am a big fan of the food writings of Michael Pollan, but his recent opinion piece on GMO labeling could be stronger.

His argument for voting “yes” on mandatory labeling is mostly mood affiliation, namely that this is part of some broader battle against “Big Food.”  He doesn’t for instance consider how the Proposition may damage many smaller farmers, or that GMOs seem to lower carbon emissions and otherwise help the environment.  Here is yet another discussion of benefits, or see this survey post.

His final and in fact main argument contains a simple error in economics, all too common among food writers:

…to date, genetically modified foods don’t offer the eater any benefits whatsoever…

He forgot to mention that they increase supply and lower price.  Quick question: how did the GMO products otherwise obtain market share?

For the pointer I thank Michael.

Do you tip more on-line?

David Popkin writes to me:

I hope all is well. I was having a heated discussion and thought of you and your blog.

Do people tip more/less/same via online delivery services compared to phone orders where they pay cash?

Possible reasons for bigger tips on seamlessweb/online services

-tip disclosed before delivery=pressure to put up or deal with cold food

-credit card money less “real”

-no excuse of rounding (i.e. if $3 is norm, can’t escape it because you only have a $20 to pay the 17.75 order total)

Possible reasons for bigger tips in cash

-looking someone in the face

-poor math skills/rounding

-more willing to tip more after the fact based on speed etc.

I would be most interested to hear what the best and brightest have to say about this.

Busan notes

Busan is the best success story I know for the Avent-Yglesias approach to urban density.  Imagine taking a city that looks like San Francisco, or more concretely Nagasaki, and letting millions of Koreans in to live there.

They served me the live, still-wriggling and squirming sea worm entree, which you are supposed to dip into sauce and push down your throat; it was neither the best nor the worst course of the meal.

White sashimi, dipped into hot bean paste, is the preferred manner of eating raw fish here; tuna, salmon, and eel are not popular.

On the beach, on a clear day, you can see Japan across the water.

In a nearby rural area, the populace would appear to go to Sunday church, dressed up in their finery, and then hang out at the museum and welcome center for the local nuclear power plant.

A day tour of Hyundai City, the special economic zone, the chemical-industrial complex (reminds me of New Jersey), and the new port is better than a day tour of Korean temples.  They are all targets for North Korean missiles.

The people I have asked predict reunification within ten to fifteen years.  They are ashamed to have such a brother in the family.

If you visit Korea you should come to Busan.

An MR reader on Proposition 37 (GMO labeling)

He wrote to me:

There’s two things about the labeling debate that really bother me:

First, we have to concede that not everything can be labeled.  If so, the burdens would almost instantly put huge swaths of businesses out of business.  My dad, a dentist, does not have to label every instrument to describe where the metal came from, which machines made it, etc.  So the question is: where do we draw the line on what should be labeled?  My view is, if there is scientific evidence suggesting a plausible connection to harm, then requiring labeling makes sense.  But the view of the food activists is that they should just know everything, regardless of evidence, irrespective of cost.  So everyone should pay high costs because of their fears, which have no basis in evidence or fact.

On related matters, here is Mark Bittman on his ideal food labels, serving up a rather ambitious proposal.

On one specific point, he wants to levy a black mark against companies which treat their workers poorly.  On the contrary, that is a sign the product likely comes from a poor country and probably you are doing the world more good in buying it and, in the longer run, bidding up wages and working conditions in that country.  It helps other people more to buy from China than Portland, even though workers fare much better in the latter locale.  This difference in perspective is a simple illustration of how “ideal” food labeling can rather rapidly go wrong, especially when it is tangled up with the desire to make expressive statements about what one wishes to affiliate with or not.

A further question: at which margin do consumers stop paying attention?  When was the last time you read your new iTunes “I agree” contract before clicking?  Attention is scarce, so we need to pick and choose priorities.

What about the cost of producing such complicated labels and the enforcement of their veracity?  Food supply chains these days are often quite complicated.  Do you need to monitor how the fish sauce or oyster sauce in your composite food product was produced?  Bittman writes:

These are not simple calculations, but neither can one honestly say that they’re impossible to perform.

That is setting a rather low bar, and vaguely at that.  Most bad economic policies would meet that standard.  I would rephrase it: first figure out how many small and poor and foreign farmers this labeling proposal would put under — and then get back to us with a proposal.

Here is my earlier survey post on Bittman and evidence relating to GMOs.  And here Jonathan Adler offers an excellent analysis, including freedom of speech issues.

2012 Nobel Laureates in economics

Alvin Roth and Lloyd Shapley!

Great picks.  Both have done work on matching theory, bargaining theory, allocation theory, and market design. Here is Roth’s blog, he often reads MR by the way and sometimes sends us links.  I now need to repack and travel, my apologies, but Alex is likely to have more to say.  Alex in particular has many excellent past posts on Roth.  Here is an excellent overview of the contributions of Shapley.  Here is Wikipedia on Shapley.  Here is a Forbes profile of Roth.  Here is the Swedish information.

I think of this as a prize about how theory can be turned into usable results, how trade and matching can be made more efficient in concrete ways, how trade is a coordination game, and the intimate connection between issues of trade and issues of distribution.

Richly deserved by both men.

Zhang Weiying on Austro-Chinese business cycle theory

Chinese officials no longer treat Mr. Zhang as a pariah. He reports that Ministry of Agriculture officials tell him they enjoy reading his articles. Other ministries and local governments, including in Henan and Liaoning provinces, invite him to speak. He says that when he recently wrote an article praising the late Austrian economist Murray Rothbard, the Communist Party secretary of Shanghai—a fairly high-level apparatchik—told him he liked it.

Here is much more, and for the pointer I thank Mark Skousen.

How to think about makers and takers

Here is my latest NYT column, on how we ought to be thinking about the issue of makers vs. takers.  Excerpt:

EVERYONE FEELS ENTITLED People tend to think that they have justice on their side, whether it comes to making or taking.

For example, millions of homeowners have spent hundreds of thousands of dollars on the premise that the tax deduction for mortgages will be continued. If they support a continuation of that deduction they hardly feel like brigands, even though a bipartisan consensus of economists doubts the efficiency of this tax break.

As years and decades pass, recipients of this deduction and other benefits start to see them as deeply and richly deserved. Furthermore, almost all of us reap one or more of these benefits, so few individuals are consistently opposed to all government transfers.

It becomes difficult for a politician to articulate exactly what is wrong with this arrangement when the audience itself is in on the game and perhaps does not want to hear about its own takings.

Mark Thoma comments.

You also should read the new (short) book out by Nicholas Eberstadt, A Nation of Takers: America’s Entitlement Epidemic, which came to my attention quite recently.

Long profile of Glenn Hubbard

From the NYT, you can read it here.  Excerpt:

 “Did you know, for instance, that he has a brother who is a country music star?” asked Kevin A. Hassett, a friend and scholar at the conservative American Enterprise Institute.

Hubbard’s younger brother, Gregg — known to fans as Hobie — is a member of Sawyer Brown, a country rock band that gained fame via “Star Search,” a sort of precursor to “American Idol.”

“He’s always had a great sense of humor,” says Gregg Hubbard, speaking by telephone before a flight to a concert. He recounts celebrating his 40th birthday in New York City and sharing a gift he had just been given, a Razor scooter, with his brother. “We were with my older nephew,” he says, “and we took turns, the three of us, riding up and down Broadway on a scooter.”

Stock bubbles, Gangnam style?

Matt Yglesias reports:

Why is South Korean semiconductor manufacturer DI seeing its share prices surge? Is it a key supplier for the forthcoming iPad Mini? An integral element of Samsung’s next great smartphone? Nope. It’s surging because its chairman and main shareholder is Park Won-ho, father of Park Jae-sang, a.k.a. PSY, a.k.a. the “Gangnam Style” guy.

Why a family link to a viral video sensation should help this company is difficult to say, but apparently this kind of theme stock surge is a not-uncommon phenomenon in the Korean equity markets. South Korea, I would note, is one of the most recently affluent countries around so it’s simply possible that the Koreans markets haven’t had enough “learning” to avoid fast-rising momentum bubbles.