The career of a paper mill writer (MIE)
From one of those people who writes other peoples' term papers for a living:
I do a lot of work for seminary students. I like seminary students. They seem so blissfully unaware of the inherent contradiction in paying somebody to help them cheat in courses that are largely about walking in the light of God and providing an ethical model for others to follow. I have been commissioned to write many a passionate condemnation of America's moral decay as exemplified by abortion, gay marriage, or the teaching of evolution. All in all, we may presume that clerical authorities see these as a greater threat than the plagiarism committed by the future frocked.
The article is interesting throughout. The fellow can write a 75-page paper in two days, has never visited a library for his work, and earns far more — $66k last year — than most ostensibly professional writers.
For the pointer I thank David B.
Insurance markets in everything
This is why a growing number of companies are buying so-called "disgrace insurance" to cover themselves in case a brand ambassador turns into a persona non grata.
The full story is here and for the pointer I thank Jeremy Davis.
Assorted links
1. The missing equation (cartoon).
2. Very bad science fiction and fantasy covers.
3. What will happen, and here is the book to come.
4. On the Fed's new monetary policy, and the surrounding political debates, it's worth rereading…me.
Why Ireland fears a bailout
Ireland fears the punitive terms of a bailout as it would have to give up partial sovereignty over its finances and could be forced to raise corporation tax.
The story is here. Note that casting your financial lot with the EU is especially problematic if you don't expect the EU to be so influential five or ten years down the road. Obviously the Irish are betting against the idea of a major step toward EU fiscal union and correctly so.
Addendum: Finland weighs in.
No, No Trade Theorem
One of my favorite scenes from Michael Lewis's The Big Short is a great illustration of how adverse selection or fear of adverse selection can prevent a market from operating and how noise traders open the market.
Steve Eisman wants to bet against subprime. Greg Lippmann wants to sell him that bet. But Eisman and his partners hold back. They keep asking what does this guy know that we don't? Why is he selling us this great deal? Could it really be this obvious? Could it really be this simple? Over and over again they questions Lippmann and themselves. "Greg," says Eisman's partner, "Don't take this the wrong way. But I'm just trying to figure out how you're going to fuck me."
Everything is telling Eisman that this is the bet of the century but fear that he is missing something, that the other guy is smarter than he is, still holds him back. Finally, Lippmann hits on an unusual idea, he invites Eisman, who wants to short subprime, to meet with the buyers of subprime.
The teppanyaki room inside the Okada restaurant consisted of four islands, each with a large, cast-iron hibachi and dedicated chef. Around each island Lippmann seated a single hedge fund manager whom he had persuaded to short subprime bonds, along with investors who were long those same bonds. The hedge fund people, he hoped, would see just how stupid the investors on the other side of those bets were and cease to worry that the investors knew something they did not.
Lippmann's plan works. Eisman meets the buyers and for the first time groks the stupidity that is ruling the market and he makes the trades that will make him and his partners rich.
Books of the year, 2010
Here is a meta-list of "best books of the year" lists; the selections I looked at did not thrill me, so here's my own list, in no particular order. First tier:
Ernest Gellner: An Intellectual Biography, by John A. Hall.
Emperor of All Maladies: A Biography of Cancer, by Siddhartha Mukherjee.
Charles Emmerson, The Future History of the Arctic.
Christianity: The First Three Thousand Years, by Diarmaid MacCulloch.
David Grossman, To the End of the Land.
State of Emergency: The Way We Were: Britain, 1970-1974, by Dominic Sandbrook.
The Penguin Book of Irish Poetry, edited by Patrick Crotty.
Winston's War: Churchill 1940-1945, by Max Hastings.
Kai Bird, Crossing Mandelbaum Gate: Coming of Age Between the Arabs and Israelis, 1956-1978.
Peter Hessler, Country Driving: A Journey Through China from Farm to Factory.
Joel Mokyr, The Enlightened Economy: An Economic History of Britain 1700-1850.
As toss-ins, from the second tier, there are Understanding the Book of Mormon, Philippson's Adam Smith: An Enlightened Life, The Tenth Parallel: Dispatches from the Fault Line Between Christianity and Islam, Peter Watson's The German Genius, Mark Schatzger's Steak, Lydia Davis's Madame Bovary translation, Vietnam: Rising Dragon, Daniel Okrent's Last Call, Gary Gorton's The Panic of 2007, Baba Yaga Laid an Egg, W. John Kress, The Weeping Goldsmith: Discoveries in the Land of Myanmar, a few more good books here, and last but not least Cowen and Tabarrok Modern Principles.
Brought to you by The Age of the Infovore.
*The Emperor of all Maladies*
The author is Siddhartha Mukherjee and the subtitle is A Biography of Cancer. This is not a typical excerpt, but it works as an excerpt for this blog:
In 1942, when Merck had shipped out its first batch of penicillin — a mere five and a half grams of the drug — that amount had represented half of the entire stock of the antibiotic in America. A decade later, penicillin was being mass-produced so effectively that its price had sunk to four cents for a dose, one-eighth the cost of a half gallon of milk.
This book deserves its rave reviews; it is one of the best non-fiction works of the year.
Related to this topic, here is an update on Christopher Hitchens.
Assorted links
1. The influence of Richard Florida in Great Britain. And here is his Canadian urban trick-or-treat index.
2. Ed Glaeser on entrepreneurship in NYC history; he should write a book on this.
4. Direct link to precognition draft. I'm still a skeptic, to say the least.
5. Why Ireland matters for everyone.
6. Science-related tattoos; how about MV = PT?
How a financial collapse starts
As I've been saying, with a bank run:
Corporate clients have pulled deposits from lenders including the country’s biggest, Bank of Ireland Plc.
With its lenders frozen out of Europe’s money markets and with their deposits shrinking, the Irish government may be forced to seek the bailout ministers have so far resisted.
The EU is pressuring Ireland to accept a bailout and Ireland does not (yet) want it; this should give pause to those who think that "no bailout" policies are time consistent. More generally, the simplest model is that the EU could take care of Ireland and Greece fairly easily, but the spectre of Spanish default lurks in the background. Spain is a much larger economy and the Germans cannot simply pay up to save it. All pronouncements and policies about Ireland (or for that matter Portugal) should be viewed in light of this larger "game." If Spain were fixed essentially the trouble could be paid off to go away, for now at least. But Spain is not fixed.
The longer-run question is why there should be any Irish or Greek banks at all.
Antonio Trujillo’s diabetes nudge bleg
I am a junior faculty at Hopkins and my area of interest is to understand the low level of compliance with prevention among diabetics and hypertensive. Low compliance with medical treatment happens in several health domains. My aim is to develop preventive guidelines that incorporate individual differences. In particular, I am doing some work to measure how non-cognitive skills (eg., self-discipline, persistence, self-control) influence compliance. I have also done research relating cognitive skills and prevention. Most of my work is on low and middle-income countries. However, I think that some of my findings may be generalized.
I am not very familiar with tools from behavioral economics; instead my analysis is heavily based on health economics, labor economics and health policy. Given your knowledge in behavioral economics, I wonder how you would approach this problem.
Here is one article on the topic, and here are a few more, and here. One intuition is that compliance is so weak because people are afraid of bad news, and so they shut the topic out of their minds altogether. Complying reminds them of the topic. Being less worried might help them comply.
A common economic intuition, which I usually disagree with, is to make people post expensive bonds and confiscate the bond if they do not comply. In my view this works only once and afterwards the person wants nothing to do with the game.
An additional method is to make compliance daily, whether or not the technology of compliance requires that. Most people develop a routine for brushing their teeth, even though it is not an intrinsically fun activity.
That many providers have moved from the word "non-compliance" to "non-adherence" is not a good sign; it suggests the actual programs are not working.
This problem is acute in Mexico. One method for that country would be to encourage religious conversions to more extreme points of view, which would limit drinking.
Even for the United States, this is one of our most significant national problems, although it receives very little press. As the rate of diabetes rises, it will continue to grow in import.
What other ideas do you all have?
How does the President order flowers?
I don't post much about the President, so this puzzle caught my eye:
Asked if he has a hard time ordering flowers – as the Michael Douglas character did in "The American President" – Obama said, "The truth is, actually, I get to keep my credit cards, and if I want to go to the florist, I could order some flowers and pay for it." (He did add that if he tried to order the flowers by phone, "they might not believe me.")
What could you say to prove, over the phone, that you are the President of the United States? If you assume the florist is at a working computer terminal and can access Google, you could promise to answer questions about your life, and to answer them so quickly the florist would not think you are googling to those answers. Plus you are dialing from a 202 area code and you sound like President Obama (because you are President Obama), whose voice is well-known and distinct. I would think he would have an especially easy time establishing his identity over the phone. Furthermore the audience, wondering that maybe you are the President of the United States, would fall into the deference mode, even if some residual doubt remained.
Impersonating the President of the United States might draw interest from the law, or at least an inquiry, and that would discourage potential pranksters and make your claim more credible.
Who would have a tougher time establishing a credible identity over the telephone? How about Lady Gaga? Her speaking voice is not well known, fans will know the details of her life on the web and thus pass the Google test, she does not command deference from many florists, and if you impersonate her the Secret Service won't come knocking on your door.
Somewhere in here is a lesson for evolutionary biology…
Kilkenomics
As Martin Lousteau, Argentina’s youngest-ever finance minister, told one audience: “It’s a very bad thing when economists start to be interesting.”
That was said at the recent Irish four-day comedy and economics festival, namely Kilkenomics. Here are other reports from the festival. One bit:
"Ireland needs a new credit rating agency. Moody & Poor," says Colm O'Regan, an IT consultant turned comedian.
And:
The economics festival features more than 20 events, with sessions including “The Best Way to Rob a Bank is to Own It,” and “What the Hell Just Happened.”
Here are some YouTube videos from the festival; I have not culled through them.
Assorted links
Systemic financial risk
One of the largest of Haiti’s microcredit groups, Finca Haiti, wrote off almost a third of its portfolio after many clients died in the earthquake or lost their homes and businesses. A staggering 53 percent of its borrowers were late on their payments.
Here is much more, about the difficulties of running a micro-credit system in an economy with a negative real rate of return.
Elsewhere, Ireland expands aid to Haiti. The cholera epidemic is getting much worse rapidly.
Profile of Morgan Kelly
He is the Irish economist and sage who predicted the decline in property prices and also predicts future political chaos in Ireland. The profile, unnecessarily snarky at points, is here. We again see that economists who have studied economic history are proving especially wise during difficult times:
He was described by the Herald Tribune as "a specialist in medieval demographics"… "whose eyes burn with the passionate intensity of his prophesy".
Here is Kelly on TV. His current prediction?:
Now he is forecasting mass mortgage defaults and an ugly popular uprising. The first stirrings are already visible, he says, with "anxiety giving way to the first upwellings of an inchoate rage and despair that will transform Irish politics along the lines of the Tea Party in America", giving rise to a new "hard-right, anti-Europe, anti-traveller party".
I've already linked to this first-rate Kelly piece on the coming collapse in the Irish housing market. He does not follow every current academic fashion, but here are his (consistently interesting) academic papers. I find this one, about the Industrial Revolution, to be of special import. Here is his potentially important but hard for me to assess paper on the economic impact of the Little Ice Age in European history (or ungated here).
File under "Underappreciated and indeed Hated Economist!"