Should all web pages be blogs?

by  Tyler Cowen in

I’ve been thinking of turning my Ethnic Dining Guide into a blog.  It would be searchable by category and would allow for comments.  It would be updated regularly rather than every six months.  Can you give me any software advice?  Is Typepad the best choice?  I need a large number of categories and the ability to update posts without spending huge amounts of time searching.  And could readers print the whole thing out without it running into hundreds of pages?  Comments are open…

What about the budget?

by  Tyler Cowen in

Megan McArdle (what do you call her when Jane links to Megan?  And can they have an infinite regress?) and Brad DeLong seem to agree that the Bush tax cuts should not be made permanent.  My take is the following: Taxes already were raised when the government spending occurred.  In that sense the "tax cuts" never were permanent.  But when do we wish to admit this?  We could raise (nominal) tax rates sooner rather than later, and hope that the subsequent "financial calming" effect will improve the chances for better policy in the future.  Alternatively, we could play "chicken" with the marginal tax rates, and hope that holding them lower, for longer, will increase the chance of the appropriate entitlement reforms.  I don’t have any strong views as to which is the best way to proceed, at least assuming we cannot raise the gas tax instead.

But I do suspect that Megan favors a lower rate of government spending than does Brad.  So does this mean she sees the first scenario, and he sees the second, and that they agree on the big question only because they disagree on the little one?

The Great Mutiny

by  Tyler Cowen in

It started with a fire in Calcutta, circa 1857, here is one summary.  Excerpt:

The insurrection was sparked by the introduction of cartridges rumored to have been greased with pig or cow fat, which was offensive to the religious beliefs of Muslim and Hindu sepoys (soldiers). In a wider sense, the insurrection was a reaction by the indigenous population to rapid changes in the social order engineered by the British over the preceding century and an abortive attempt by the Muslims to resurrect a dying political order.

Here is a BBC summary.  Wikipedia has considerable detail.

Here is how the Arabs get all those Danish flags, thanks to several readers for the pointer.  The current price is $11 a piece.

How much is the Internet worth?

by  Tyler Cowen in

For some goods, the main cost of buying the product is not the price but rather the time it takes to use them. Only about 0.2% of consumer spending in the U.S., for example, went for Internet access in 2004 yet time use data indicates that people spend around 10% of their entire leisure time going online….we calculate that consumer surplus from the Internet may be around 2% of full-income, or several thousand dollars per user. This is an order of magnitude larger than what one obtains from a back-of-the-envelope calculation using data from expenditures.

Here is the paper.  I call it a good start, but let us not forget the Internet also brings price closer to marginal cost in many markets.  Your on-line searching has external benefits for others.  Or how about another paper: "What is the iPod worth?"  TiVo?  The more we are changing the use of our time, the less we can trust real income statistics.

Why is gastronomy better than pornography?

by  Tyler Cowen in

I posed this question (off-site, not during a session) to the bloggers (and John Nye) at the Liberty Fund conference on luxury I attended last week.  Both areas involve repetition, basic animal instincts, the quest for endless variations on something slightly but not very new, pleasures of the senses, and both fields attract a not-so-small number of obsessives.  Gastronomy has a more exalted social status, but perhaps that is just phoney-baloney.  Can you guess what the best answer to the query was?

Comments are not open; go start your own blog.

An even better sentence

by  Tyler Cowen in

"It makes no sense to tax ethanol coming in from friendly countries like Brazil when we do not tax oil imported from countries like Saudi Arabia…"

Or how about:

…Brazil’s experience shows that to successfully copy its example, the U.S. may have to make political choices that U.S. politicians have ducked in the past, including raising gasoline taxes, ending government support for crucial agricultural products such as sugar and corn, and opening protected agricultural markets.

Both are from "How Brazil Broke its Oil Habit," The Wall Street Journal, 6 February 2006, p.A9.

The best sentence I read today (so far)

by  Tyler Cowen in

While sales are down, more music is being produced and heard than ever before in history.

Here is the full story, which focuses on retailer bankruptcy.  Maybe I shouldn’t be sad that Aron’s in Los Angeles is shutting down.  Keep in mind that when consumers do not much like most of what they buy, standard metrics for measuring output do not track welfare very well.

Against brainstorming

by  Tyler Cowen in

Time and again research has shown that people think of more new ideas on their own than they do in a group. The false belief that people are more creative in groups has been dubbed by psychologists the ‘illusion of group of productivity”. But why does this illusion persist?

Bernard Nijstad and colleagues at the University of Amsterdam argue it’s because when we’re in a group, other people are talking, the pressure isn’t always on us and so we’re less aware of all the times that we fail to think of a new idea. By contrast, when we’re working alone and we can’t think of anything, there’s no avoiding the fact that we’re failing…

The researchers said “We suggest that working in a group may lead to a sense of continuous activity. This may provide group members with the idea that they are productive, because they feel that the group as a whole is making progress, even if they themselves are not contributing”.

Other possible reasons for why people think they work better in groups include ‘memory confusion’, the idea that after working in groups people subsequently mistake other people’s ideas for the own, and ‘social comparison’, the idea that in groups people are able to see how difficult everyone else has found it to come up with ideas too.

Here is more, including a link to the paper.  Deep in my bones I know this to be true.  Unless, of course, brainstorming helps you self-acculturate into a group…

Interview with Milton Friedman

by  Tyler Cowen in

Here it is.  Excerpt:

Germany’s problem, in part, is that it went into the euro at the
wrong exchange rate that overvalued the deutsche mark. So you have a
situation in the eurozone where Ireland has inflation and rapid
expansion while Germany and France have stalled and had the
difficulties of adjusting.

The euro is going to be a
big source of problems, not a source of help. The euro has no
precedent. To the best of my knowledge, there has never been a monetary
union, putting out a fiat currency, composed of independent states.      

Thanks to www.2blowhards.com for the pointer.

Addendum: Here is an interview with Gary Becker, who talks about Friedman, John Nash, Dostoyevsky, and Brokeback Mountain.  Thanks to Freakonomics blog for the pointer.

Facts about Mexican Mennonites

by  Tyler Cowen in

2. Many of them came from rural Western Canada in the 1920s.

3. They left Western Canada, as they had left Holland, Prussia, and Russia before that, for fear they would be forcibly assimilated, in this case through public education.  Mexico offered them a special (Spanish-language) contract.

4. Most of them are blond.

5. Each village has a number, not a name.

6. Unlike many of the American Amish, they use cars and electricity without hesitation.  They are quite prosperous, in a Mennonite sort of way.

7. They still make cheese using methods from centuries ago.

8. Their best cheeses, which are non-pasteurized, are illegal in the United States.

9. Many of their road signs and advertisements are written in hochdeutsch, but they speak eighteenth century plattdeutsch.  Their Spanish is sing-song and halting all at once.

10. They bake little cookies called "Galletas Menonitas," and they eat borscht and tacos.

11. The adjacent Tarahumaras make for a striking contrast.

Legal abortion lowers the gains to marriage

by  Tyler Cowen in

There were many social changes between 1970 and 1980 that could have affected the gains to marriage over the decade. A major change was the national legalization of abortion in 1973. Legal abortions were partially available in some states by 1970. If the partial legalization of abortions in a state reduced the gains to marriage in that state, we would expect to see lower gains to marriage in the early legalizing states relative to later legalizing states in 1970 but not in 1980. Moreover, this difference in difference in the gains to marriage should be concentrated among women of childbearing age. Using marriage rate regressions, Angrist and Evans (1999) showed that the marriage rates of young men and women were lower in early legalizing states relative to later legalizing states in the early 1970s.  We show that the stimates of the number of marriages affected are sensitive to whether we use male or female marriage rate regressions. We extend the benchmark model to include whether an individual resided in a state that allowed legal   abortions or not as part of the definition of the type of an individual. Methodologically, we extend the standard difference in differences estimator to estimate the effect of a policy change on bivariate distributions. Estimating this  extended model, we show that the partial legalization of abortion in some states can explain up to 20 percent of the drop in the gains to marriage among young adults in the 1970s. 

That is from "Who Marries Whom and Why," by Eugene Choo and Aloysius Chow, in the January 2006 Journal of Political Economy. Here is an earlier version of the paper.   

 

Is the Veterans’ Administration a good health care model?

by  Tyler Cowen in

Last week Paul Krugman defended the VHA as a model for national health care policy; Brad DeLong has some critical excerpts.  I am skeptical for a few reasons:

1. It is widely acknowledged that this system did not work well for a long time.  If we are going to cite examples, should we judge them by lifetime performance, or by performance-right-now?  In this case I view the relative efficiency of the now-moment as the exception, and not as a readily available constellation that national policy will replicate.

2. VHA saves a great deal by bargaining down prices of prescription drugs.  If done on a national level, this will cause the supply of such drugs to contract, perhaps significantly. NB: Supply elasticity can be high even with (especially with?) evil, scheming, profit-soaked monopolists.  And don’t forget "current cash-flow" models of investment, which are eagerly invoked by the left in other contexts, such as tax policy.

3. For a variety of reasons (see the excellent comments on Brad’s post), VHA pays doctors much less than usual.  I am more than willing to consider the hypothesis that doctors at the national level earn too much.  But I cannot imagine a healthy process by which a federal single-payer or nationalization plan will bargain down this sum significantly without all hell breaking loose.  Do not forget what neo-Keynesians tell us about the morale effects of nominal wage cuts, much less large real and nominal cuts bundled together.

4. In general, local or restricted health care plans can bargain down prices with less loss of quality and innovation than if that same bargaining were done at the national level.  That follows from the economic theory of high fixed costs and segregated markets.

I do think the VHA warrants further study.  But I would like to see these questions answered before regarding it as a positive model for reform.  Comments are open…