Category: Current Affairs

Why do ticket sellers allow scalping?

It is a common economic puzzle why the prices for various events, such as Super Bowls and rock concerts, do not always clear the market. Why sell tickets cheaply, thereby allowing scalpers to buy them up and later resell them at higher prices, reaping the surplus for themselves?

Canadian Ticketmaster wondered the same, and now they are doing something about it. For many concerts they will auction off some tickets at market-clearing prices. Most groups, however, will auction off only a few of the best tickets, rather than all tickets.

One concert promoter had reservations about the scheme: “From a fan’s point of view, I don’t think this would be fair,” he said. “Obviously, everyone should have equal access to tickets, especially if you’re a fan that lines up overnight. It should be fair and equitable.” Comments of this kind show that either he or I, or perhaps both of us, do not understand this market very well.

Thanks for Eric Crampton for pointing the link out to me. And speaking of musical concerts, it is sad to report that Johnny Cash has died.

The poor love globalization

Read this piece from, on how much the poor love globalization.

Here is one money quote:

When asked if cultural imports are “good” for their respective countries, young people in particular seemed to respond favorably in the developing world. Eight-five percent of Russians, 65% of Bangladeshis, 89% of Guatemalans, 94% of Chinese, and even 60% of Egyptians aged 18-29 answered affirmatively.

Here is another:

Even when respondents in the developing world saw conditions in their own countries “getting worse,” a sizeable majority refused to blame globalization for their problems. In fact, of all the countries where a majority of respondents said conditions in their respective country were deteriorating, none showed a majority of respondents putting globalization at fault. The highest percentage blaming globalization came in Indonesia, at 44%. Most others were in the teens.

Furthermore the global poor like multinational corporations, by overwhelming margins, and don’t like anti-globalization protesters.

How many heat deaths?

“Portugal scrapped its initial estimate of 1,300 deaths and lowered it to just four,” from today’s Germany claims 40 heat-related deaths this summer.

The British claim 907 extra deaths across the span of a very hot week. Here are the Italians: “The Health Ministry said on Thursday 34,071 people over the age of 65 died between July 16 and August 15, compared with 29,896 in 2002 — a 14 percent increase.” French estimates range between 10,000 and 15,000 deaths.

How much of this was avoidable and how much was random movement in the numbers? In net terms, how many people actually died prematurely?

Consider the stability of mortality statistics. I checked the UK Office of National Statistics tables, for England and Wales, and was surprised how much death rates bounce around (at the link you need to go through some work to create the file in readable form, follow the instructions).

Take deaths over the time period 1985-2001. Rounding off the figures to the thousands, the median change in death numbers, from one year to the next, is 9,000 (the totals run from 530,000 to 590,000 deaths per year). The biggest change we see across a year is about 25,000. We shouldn’t expect those changes to be distributed perfectly evenly across the months. But if we divide by 12 “naively,” it would be very common for death tallies, on a monthly basis, to change by 700 to 800 people, when comparing one year’s August to the previous year’s August.

Now let us go back to the British figure. If the number of deaths jumps in a single week by 907, compared to an average change, this is out of the ordinary but not unthinkable. On the other hand, random noise plays a very small relative role when the monthly death rate jumps from 10,000 to 15,000.

These people all would have died anyway, the next question is when. Twelve months from now, will the yearly death rate stand above its average or will we now see fewer deaths for a while? To what extent did the heat redistribute deaths from September and October to August? (Eli Lehrer raises the further interesting question of whether some of these people died through a psychological effect, given that the media were reporting that a “heat death time” was upon us.)

Note that the richer and more technologically advanced a society, the fewer heat wave deaths we should expect, read here and here. For one thing, richer people are more likely to buy air conditioners. Everyone points the finger at negligent children, or the French hospital systems or August vacations. We can also blame the sluggish economic growth rates of the Continent. Social welfare states can be quite inhumane, once we examine secondary consequences.

The bottom line: something very bad did happen in France and Italy.
Something less bad happened in Britain. But we still have not gotten to the bottom of how bad or why.

Surprise! Fox News is Fair and Balanced!

Accusations of media bias are common but are typically based upon nothing more than subjective standards and anecdote. A brilliant new paper by Tim Groseclose (GSB Stanford, currently visiting GMU) and Jeff Milyo (U. Chicago, Harris School) pioneers a more promising approach. Since 1947, the interest group Americans for Democratic Action (ADA) has tracked how Senators and Represenatives vote on key issues and they have used these votes to rank politicians according to their liberalism. In the 2002 session, for example Ted Kennedy received an ADA score of 100 and Phil Gramm a score of 0. Political scientists are familiar with ADA scores and have come to rely on them as a measure of ideology.

Groseclose and Milyo have found a way to compute ADA scores for media outlets as if they were politicians. What they did was to examine the Congressional Record for every instance in which a politician cited a think tank. They then did the same thing for newspapers, network news shows and other media outlets. By matching newspapers with politicians who had similar citation records they can impute an ADA score for the media outlet. Joe Lieberman, for example, has an ADA score of 66.3. Suppose that in his speeches he cites the Brookings Institution twice as much as the Heritage Institute. If the New York Times has a similar citation style then the New York Times is assigned an ADA score of 66.3. (The method is slightly more complicated than this but this gives the right idea.) Note that Groseclose and Milyo do not have to determine whether the Brookings Institution is more liberal than the Heritage Institute all they need to know is that the Times has a similar citation style to Lieberman.

Ok, what were the results? It turns out that all of the major media outlets, with the exception of Fox News: Special Report are considerably more liberal than the median member of the House over the 1993-1999 period. Moreover, although Fox News: Special Report was to the right of the median house member it was closer to the median member than were most of the other media outlets. (Interestingly, all of the liberal media outlets were less liberal than the average Democrat and Fox News is less conservative than the average Republican – thus there is a sense in which all media outlets are less biased than is the typical politician.) Here are the ADA scores of various media outlets along with some comparable politicians.

Joe Lieberman (D-Ct.) 66.3
New York Times 64.6
CBS Evening News 64.5
USA Today 62.6
NBC Nightly News 62.5
Los Angeles Times 58.4
Ernst Hollings (D-SC) 56.1
ABC World News Tonight 54.8
Drudge Report 44.1
Arlen Spector (R-PA) 44.0
House Median 39.0
Senate Median 36.9
Olympia Snowe (R-Me) 36.0
Charlie Stenholm (D-Tex) 29.3
Fox News Special Report 26.4

Bhagwati criticizes the WTO

Read this on how the WTO is becoming a forum to regulate the behavior of the poorer nations, rather than bring free trade. Eminent trade economist Jagdish Bhagwati of Columbia University calls WTO a “sham,” and a “legal…straitjacket of do’s and don’ts…”

Here is a money quote:

“The developing countries are scared out of their wits now,” Bhagwati says, “because they don’t understand what they’re being forced to sign. The agreements are going way outside the trade issues and involve a helluva lot of things like your access to oil, your access to intellectual property and capital controls…. When I looked through the investment agreements, it was worse than reading my insurance policy for the fine print. I couldn’t make anything out of it, and I’m a reasonably informed person, a pretty smart economist as they go.”

Who are the most partisan columnists? provides a running tab on which media writers toe a particular political line. The “winners” for the Total Partisanship Index are the following individuals, with 100 on the scale meaning pure partisanship:

Ann Coulter – 77
Paul Krugman – 74
Robert Scheer – 72
Molly Ivins – 68
Frank Rich – 61

The numbers try to measure how much the writer sides with one political party rather than the other. Click on the links for full explanations of the various indices.

Are student evaluations a good idea?

Here is Michael Huemer’s very interesting critique of student evaluations of professors, full of cites and links. Yes, student evaluations correlate positively with other measures of teaching effectiveness. Take multiple sections of the same course and give a common final exam, the correlation is in the neighborhood of 0.4 to 0.5.

On the other hand, a professor gets a much better evaluations if students think they will get good grades. The statistical correlations are strong and hard to deny. And in one study 70 percent of students admitted that their evaluation was influenced by the grade they expected to get. See this game theory article on how one-shot reciprocity can work.

In one survey, 38 percent of professors admitted to dumbing down their courses to get better evaluations.

Cosmetic factors such as appearance have a big influence on evaluations.

Huemer offers no policy conclusion. He does note that ratings by colleagues and other observers do not agree with each other very much and thus cannot stand as a serious alternative.

If you are curious, I could not find Huemer’s student evaluations through a web search.

Global warming update

Fungi under the snow may contribute significantly to CO2 levels, according to this Washington Post article (brief registration required). Here is one bit:

“We’re living in a world where global warming is a constant threat, but in fact we have relatively little knowledge of what the inputs and outputs are for CO2.” said Steven Miller, a mycologist, or fungus specialist, at the University of Wyoming.”

Here is another:

“…global warming models can no longer ignore fungi in snowy regions and seasons as they have, scientists said – especially because about 40 percent of Earth’s landmass is covered with snow for at least part of the year.”

I am not one of those economists who wishes that global warming would go away, and simply assumes that science is on my side, or reads the evidence selectively. And of course items such as this can be cause for either optimism or pessimism, what if fungi under the snow contribute to a crisis rather than easing it? Still, Bush was not crazy to refuse to go along with Kyoto.

The mind of Paul Krugman

Here is an interview with Paul Krugman, talking for the left-wing audience of LiberalOasis and thus, believe it or not, less restrained than usual. Here is one revealing bit, talking about the United States post-9/11: “I felt for a little while there like I was all alone, [that] they’re all mad but me.”

He also uses the phrase “My finest hour” is a non-ironic way, when speaking of the California energy crisis.

He talks about his new book The Great Unraveling: Losing Our Way in the New Century as well. I will offer some comments once my copy arrives.

Blogging for profit?

Companies used to fire their employee bloggers. Now some of them are discovering that blogging is the “ultimate customer intimacy tool.” Imagine chatting with your customers on a regular basis, telling them what the product means for their lives, informing them of new developments, and having them visit you [your site] every day. Who knows, it might even supplant some telemarketing. Here is the link. And see this recent discussion of how blog names matter and signal the nature of content.

Induced innovation in prisons

This fascinating article from Wired illustrates how prisoners make the best of their environments by inventing new contraptions.

“Locked in a California prison, Angelo needs a cup of coffee. Bad. But electric heaters used to make instant joe are contraband in jail. So his cellmate combines the metal tabs from a notebook binder with a couple of melted toothbrushes and some rubber bands.

Soon, Angelo is sipping Folgers.

The jury-rigged heater is one of nearly 80 improvised items Angelo meticulously diagrams in a new book, Prisoners’ Inventions [check out this fascinating link, which offers diagrams of the inventions and further description]. Working with the Chicago-based art group Temporary Services, Angelo (not his real name) shows how inmates fashion dice from sugar water and toilet paper, dry bologna jerky on jail-house light fixtures, turn hot sauce bottles into shower heads and make grilled cheese sandwiches on prison desks.”

One individual from Temporary Services notes that in the movies, “prisoners only create things to escape, get high or kill each other.”

The whole thing reminds me of Soviet engineers.

Will Vouchers Split the Democratic Party?

The debate so far Tyler 1, Alex 1, Tyler 2.

Let me take Tyler’s weakest point first. He writes, “Imagine politicians upping the voucher amount and coverage to win votes each election cycle…” What like education spending is not a political issue today? In fact, over the past several decades we have doubled real per-capita spending on schooling with zero increase in productivity. It’s possible that government would set an education voucher at too high an amount (but let’s get it above zero before we worry about this!) but at least we will get something for our money.

Defining an acceptable school is a legitimate issue but one that we already face today with private schools, charter schools, and home schooling. I see no reason why private schools under a voucher system could not be regulated as private schools are today. Private schools do face some minimal regulations including hours and some content requirements but I don’t think these have been a significant constraint. Some private schools will undoubtedly teach nonsense but Tyler seems to forget that Ebonics, to give just one example, was a creature of the public schools not the private schools.

I will agree, however, that current voucher plans are typically terrible. Existing vouchers are often limited to poor students and sometimes just to poor students in “failing” schools, the voucher amounts are typically low and to add insult to injury it is often illegal to add-on to the voucher amount (a type of price control). Finally, nowhere near enough students are suported. The DC plan, for example, is aimed at some 2,000 students in a school system of 66,000.

I recommend John Merrifield’s School Choices: True and False as an antidote to this kind of limited thinking. Merrifield’s bottom line is that we need a system under which the government in no way discriminate against parents who send their children to private schools.

Can you find a Republican on the MIT faculty?

I am not a Republican, but the results from articles of this kind, from David Horowitz’s Center for the Study of Popular Culture, disturb me. In America the number of registered Democrats and Republicans, over time, is roughly equal. The same cannot be said for university faculty. The most Republican school these researchers had in their sample was Northwestern, which still had a 4-1 ratio in favor of Democrats. The aggregate ratio was about 10-1, with the school sample included the entire Ivy League and Berkeley. Brown had a 30-1 ratio in favor of the Democrats. They couldn’t find a registered Republican at MIT, Williams, Oberlin, or Haverford. They found 3 registered Republicans among the administrators of the Ivy League.

Kiwi watch: Can New Zealand fly again?

Read this interview with Roger Douglass, former New Zealand finance minister and the initiator of New Zealand’s market reforms, which now have stalled for a decade.

Douglass tells us: “Government spending on welfare, retirement income, health and education has now reached $8,000 per New Zealander and $24,000 per household per year [that is Kiwi dollars, take 55 American cents as a ballpark figure for the time period in question]”. At the same time the quality of these services has not been rising. Douglass proposes tax credits for these services instead, combined with market provision on the supply side.

Unlike with vouchers (see Alex’s previous post on vouchers), the state would not have to define what constitutes an acceptable education or social service. This is a significant advantage of Douglass’s notion of tax credit. On the other hand, the reform institutes the equivalent of a negative income tax or guaranteed annual income. A welfare payment that is automatic and easy to collect has bad incentive effects and runs the risk of becoming a new middle class entitlement, increased before every election.

Douglass describes “believability” as the biggest obstacle to reform. Given that a large change would be in the offing, most New Zealanders simply would not believe that they would receive equal or greater quality services for the same or lower net price.