Strange Trip
Yesterday I chaperoned a group of ten year-olds to the Smithsonian. As the bus rolled by, I pointed out the Federal Reserve to my kid and one of the other boys his eyes all aglow said "ooohh, that's where Ben Bernanke works!" Even taking into account the possible uber-nerdiness of the group, this was a surprise.
On another note, five years ago (!) I pointed to a sign at the Smithsonian warning of another ice age and recent global cooling – well the sign (or something like it) is still there only now it does have a little placard above saying that this exhibit will soon be changed to reflect more recent science.
Why is Heinz Ketchup still so popular in Pittsburgh?
From the latest issue of the JPE, Bronnenberg, Dhar and Dube write:
We document evidence of a persistent “early entry” advantage for brands
in 34 consumer packaged goods industries across the 50 largest U.S.
cities. Current market shares are higher in markets closest to a
brand’s historic city of origin than in those farthest. For six
industries, we know the order of entry among the top brands in each of
the markets. We find an early entry effect on a brand’s current market
share and perceived quality across U.S. cities. The magnitude of this
effect typically drives the rank order of market shares and perceived
quality levels across cities.
You'll find ungated versions here. The upshot is this:
Across 49 current leading national CPG brands, dating back to the late 1800s and early 1900s, we find that the current share in markets close to the city of origin, is, on average, 12 share (i.e., percentage) points higher than the national average of 22 percent.
What's amazing is how long these effects — however they are motivated — last. Miller Beer was introduced to Chicago in 1856 (a very early launch though technically not its first city) and it still has an advantage there, relative to other cities. Heinz Ketchup originated in Pittsburgh in 1876 and it still has an market share advantage there, again relative to other cities.
What is the mechanism? Is it that durable relationships with retailers persist for a very long time? Do area consumers develop the brand habit and pass it down across the generations? Or is the brand from a particular area better suited for people of that area in the first place, perhaps for reasons which are demographic or ethnic in nature and somewhat persistent through time?
Is it a good sign to see cops eating at a restaurant?
Kevin Burke, a loyal MR reader, asks me:
Are dining policemen a good sign that the restaurant/takeout place you've chosen is a good place to get quick, cheap food?
Arguments in favor:
1) cops patrol a specific beat, which means they'll eat most of their meals in one area
2) police work naturally entails lots of downtime, some of which, I imagine, cops spend discussing where to eat or what they just ate;
3) as frequent diners, cops will remember and avoid places that gave them or a patrol mate food poisoning (although I developed this theory in a "B" grade restaurant in LA)
Against:
1) Cops' dining preferences may simply mirror the public's, in which case it wouldn't be a very reliable signal.
My take: I have to vote against the cops, if only because I don't see them at the places I frequent. Maybe the problem is the least common denominator effect, namely that the cops won't go to places that disgust or turn off some members of the group. I once (asking for directions) entered a Maryland Dunkin' Donuts and lo and behold, the cliche seemed to be true as the place was full of cops. Maybe cops require sugary foods to regulate their moods.
A related problem is that, as far as I can tell, not so many Asian immigrants become cops. When it comes to the United States, apart from the wealthy, they are the people most likely to be eating good food.
What do you all think about this question?
Markets in everything
Fake TV:
If you are looking effective, affordable way to deter criminals from breaking into your home at night, the FakeTV Burglar Deterrent is the perfect solution. FakeTV is a plug-in unit about the size of a coffee cup that simulates light output equivalent to a typical 27" TV. A built-in light sensor automatically turns the device on at night and/or when lighting in a room turns black (at 0.5 lux). From outside your home, it looks like someone is home watching TV.
I thank Denis Grosz for the pointer.
Why Susan Boyle is so popular
From Mark Blankenship, here is one stab at the question:
No matter how much we mock those we consider beneath us, it's much more satisfying to be reminded that everyone has dignity.
That's because when we laugh at someone for being a freak, we're
laughing out of fear. We're laughing because we want to prove that we
are not like that loser over there. If we can shame the people who don't belong, then we can prove that we do.
When we embrace an outsider, though, we're paving the way
for our own acceptance in the future. Eventually, we'll all feel like
outcasts, and none of us wants to be laughed at. The Susan Boyle Story
suggests we won't be. Instead of fearing for our own eventual shame, we
can count on society to hear what's beautiful in us. We can trust that
if we just show our true selves, we will be embraced.
Whether or not that moral is true in the real world, it's alluringly
true in the Susan Boyle Story. By participating in the narrative that
television has constructed for her, by cheering her on and watching her
video over and over, we can not only feel good about graciously
welcoming an outsider, but also feel relief for helping create a world
that will someday welcome us.
I thank Mary Anne Sieghart, at TheBrowser, for the pointer.
Assorted links
2. There is no map of the Alps.
3. Ben Casnocha's humor tag.
The Addict
The author is Michael Stein and this is possibly the most interesting and engaging book I have read this year. The subtitle is “One Patient, One Doctor, One Year.” The ongoing dialogue between a doctor and his addicted patient defies excerpt but here is one small (non-dialogic) bit:
There is violence inside hospitals, and I am often surprised there isn’t more. In my experience it breaks out most often in the emergency room, the airport terminal of the hospital, the site of comings and goings, of transience, the stopover for travelers, the first landing for the already hurt. There is pain and fear, there is the anger and frustration that comes with bad luck’s arrival, compounded by the delays — for blood work and X-ray results — where it is clear that the staff is taking care of many people, where you aren’t the only one, just the one they are slowest to assist.
This book covers the notion of rational addiction, how and why people kick addiction, whether addicts are different in the first place, self-deception, the motivations of doctors, what doctors really do, how platonic yet romantic bonds develop, and many related issues. It is a memoir rather than formal science and it reads as well as masterful fiction, while being thought-provoking on many levels. Here is one very good review.
The bottom line: I just bought his other non-fiction book.
Markets in everything yes this is real
Each time pets move anywhere, from the Pet Lounge to the pet limo or
from the pet limo to the plane, we track and record their progress,
which means you can monitor your pet’s journey every step of the way
online at Pet Airways Pet Tracker.
Our Pet Airways Promise is that your pet will never be left alone. A pet attendant will always be within a cat's meow.
The airline is for pets only and they are called "Pawsengers." Here are some price comparisons. Here is something akin to a frequent flyer club. The crew aside, humans are not even allowed to fly in the cargo hold. Here is their blog, which includes a clip from FoxNews. I was convinced this was not real but the brilliant John dePalma, the original source of the reference, sends along this BBC story:
The airline has scheduled its first flight for cats and dogs for 14
July and will serve five US cities – New York, Washington DC, Chicago,
Denver and Los Angeles(…)The flights will be made in 19-seat turbo-prop planes operated by
Suburban Air Freight, which have their seats removed to make space for
the pet carriers.
Tyler hitting hard
That's how Dan Klein described this piece to me. The end of the piece runs as follows:
One has to wonder if anyone who has read [Henry] George
could lend a hand to the production of the screed of mistruths and
error that is The End of Poverty. I prefer to be subtler, but this movie does not allow it.
I guess I did not signal magnanimity with that one. I believe the movie is coming out soon.
Addendum: David Henderson adds comment.
Are you losing money with your Netflix subscription?
Via Andrew Sullivan, calculate the answer here. I find, however, that this service does not capture the value of Netflix to me. What I like about Netflix is that I can put a movie directly into my queue and then forget about it. It's more a way of organizing information than a means of economizing on movie rental expenses. But why not just set up a tagging system? With Netflix, I feel some financial pressure –or should I say the desire to avoid feeling like a non-maximizing idiot? — to work through my queue at a positive rate. It keeps me watching, or at least trying, more movies than otherwise would be the case.
Sentences to ponder
If you don’t give a bank any more money, it doesn’t have any more money.
Here is much more, worth a read on the latest banking plan. At the end of the post the author asks:
Is there another way to explain this even more simply?
I believe the answer is no.
Addendum: Paul Krugman says the same.
Negative interest rates
Greg Mankiw has a very good post (and column) on the idea of negative interest rates. I have long found this a good conundrum to tease (these sad days I dare not use the word "torture") graduate students with. Here is one explanatory passage:
If r is the real interest rate, then the relative price of consumption
tomorrow in terms of consumption today is 1/(1+r). Is there anything in
economic theory that requires this relative price to be less than one?
Unless consumption goods are costlessly storable, which they aren't, I
do not think so. Just as the price of apples can be more or less than
the price of pears, the price of consumption tomorrow can be more or
less than the price of consumption today. If people are eager to defer
consumption, then consumption tomorrow could well be more expensive
than consumption today–that is, the equilibrium real interest rate
could well be negative.
Of course there is more than one good in today's economy and no one holds the consumption basket per se. I've been trying to think through the implications of a negative real rate, combined with zero or near-zero storage costs for some goods, and positive or very high storage costs for other goods. What happens to relative prices and relative inventory holdings? Does this situation serve as a tax on the strawberry industry? If there is one good, with zero storage costs, and roughly flat marginal utility across the indicated range, can intertemporal arbitrage, using that good, force us back to a near-zero rate of return? In what way do the falling MU curves for easy-to-store goods enforce limits on the effectiveness of monetary policy in this setting?
These questions make me dizzy.
Your ears make identifiable noise
I was intrigued to read this:
You are the victim of identity theft and the fraudster calls your bank to transfer money into their own account. But instead of asking them for your personal details, the bank assistant simply presses a button that causes the phone to produce a brief series of clicks in the fraudster's ear. A message immediately alerts the bank that the person is not who they are claiming to be, and the call is ended.
Such a safeguard could one day be commonplace, if a new biometric technique designed to identify the person on the other end of a phone line proves successful. The concept relies on the fact that the ear not only senses sound but also makes noises of its own, albeit at a level only detectable by supersensitive microphones.
If those noises prove unique to each individual, it could boost the security of call-centre and telephone-banking transactions and reduce the need for people to remember numerous identification codes. Stolen cellphones could also be rendered useless by programming them to disable themselves if they detect that the user of the phone is not the legitimate owner.
Assorted links
1. Rhabarberbarbara, via Michael Martin.
2. Least Valuable Player, by Bill Simmons.
4. The Infinite Loan Machine; reminds me of Fischer Black.
Not from the Onion
President Obama, whose healthcare and economic stimulus initiatives threaten to dramatically inflate the federal budget deficit, heralded a new push Saturday to cut wasteful spending in Washington…
The president singled out a move by Homeland Security Secretary Janet Napolitano to end consulting contracts to create seals and logos that he said had cost the department $3 million since 2003.
From the LA Times.