Markets in everything

Awesomeness Reminders

With AwesomenessReminders, a real person will call you every day to tell you how much you rock. If you're not around, we will leave you a voicemail.

For the pointer I thank Paul Sas, who tells me they charge $10 a month.

Here is one of the owner's other sites, www.compassionpit.com: "Chat with an anonymous stranger who won't judge you."  To my mind, that claim lowers the credibility of the awesomeness reminders quite a bit.

The bad apples ruin the good

Horton's work raises many questions, not least because it contradicts other work suggesting that it is possible to improve poor workers' output by pairing them with good workers. By contrast, Horton found that "the bad apples ruined the good apples, and the good apples did nothing for the bad."

Here is much more of interest, on new developments in measuring worker productivity.  In my view this effect is a significant factor behind the stickiness of wages.  Negative signals often mean "get rid of the person" and not "renegotiate a lower wage."  I thank an MR reader for the pointer.

The culture that is Bryan Caplan

A new paper finds that your philosophic beliefs matter for your real world performance, or at least they predict it:

Do philosophic views affect job performance? The authors found that possessing a belief in free will predicted better career attitudes and actual job performance. The effect of free will beliefs on job performance indicators were over and above well-established predictors such as conscientiousness, locus of control, and Protestant work ethic.

The pointer comes from Vaughn Bell on Twitter.  One interpretation is that a "belief in free will" corresponds to private information about the likelihood of being successful, and wanting to take credit for that success.  A second interpretation is that the belief itself makes you more successful, by encouraging you to take responsibility for your choices.

Australian fiscal policy

Ivan, a loyal MR reader, requested:

Thoughts on Australian fiscal policy?  Stiglitz is a fan, but it seems to me there was much more room for monetary expansion.

http://www.project-syndicate.org/commentary/stiglitz128/English

The subtext is that Australia has not experienced a downturn comparable to that of other developed countries.  Here is a very good FT piece on the topic, maybe it is gated.  It points out a few facts:

1. Australia was running surpluses in good times and now, even after some fiscal stimulus, their debt-gdp ratio is only six percent.

2. Australia has experienced ongoing positive shocks from Chinese demand; even in the last year Chinese two-way trade went up 30 percent for them.

3. Their "initial fiscal stimulus package heavily focused on cash hand-outs to pensioners and low earners."  In other words, it possessed some aspects of a helicopter drop, being combined with expansionary monetary policy.  Note that lately they have been tightening on the monetary front.

4. Some people believe that the Australian property bubble simply has yet to burst.  Here is a related chart.  Maybe they're simply behind the times.

Their high-risk, high-return strategy of cultivating Chinese demand could blow up in their faces.  We're still in the high-return phase of that cycle.  This is exactly the sort of scenario I analyze in my earlier book Risk and Business Cycles, now in paperback.

Capitalism’s Mecca

Wow, just wow.  Brad DeLong sends us to this 2001 article in Slate on the architecture of the World Trade Center.

View of the World Trade Center PlazaYamasaki received the World Trade Center commission the year
after the Dhahran Airport was completed. Yamasaki described its plaza as "a
mecca, a great relief from the narrow streets and sidewalks of the surrounding
Wall Street area." True to his word, Yamasaki replicated the plan of Mecca's
courtyard by creating a vast delineated square, isolated from the city's bustle
by low colonnaded structures and capped by two enormous, perfectly square
towers–minarets, really. Yamasaki's courtyard mimicked Mecca's assemblage of
holy sites–the Qa'ba (a cube) containing the sacred stone, what some believe is
the burial site of Hagar and Ishmael, and the holy spring–by including several
sculptural features, including a fountain, and he anchored the composition in a
radial circular pattern, similar to Mecca's.

At the base of
the towers, Yamasaki used implied pointed arches–derived from the
characteristically pointed arches of Islam–as a transition between the wide
column spacing below and the dense structural mesh above. (Europe imported
pointView of a World Trade Center Towered arches from Islam during the Middle Ages, and so non-Muslims have come
to think of them as innovations of the Gothic period.) Above soared the pure
geometry of the towers, swathed in a shimmering skin, which doubled as a
structural web–a giant truss. Here Yamasaki was following the Islamic tradition
of wrapping a powerful geometric form in a dense filigree, as in the inlaid
marble pattern work of the Taj Mahal or the ornate carvings of the courtyard and
domes of the Alhambra.

The shimmering filigree is the mark of the holy. According to Oleg Grabar,
the great American scholar of Islamic art and architecture, the dense filigree
of complex geometries alludes to a higher spiritual reality in Islam, and the
shimmering quality of Islamic patterning relates to the veil that wraps the
Qa'ba at Mecca. After the attack, Grabar spoke of how these towers related to
the architecture of Islam, where "the entire surface is meaningful" and "every
part is both construction and ornament." A number of designers from the Middle
East agreed, describing the entire façade as a giant "mashrabiya," the tracery
that fills the windows of mosques.

LA Times Ranks Teachers

The LA Times investigative report on teacher quality is groundbreaking. The teacher’s union has already started a boycott but, as the shock recedes, I think this is going to be emulated throughout the country. It should have been done decades ago.

The Times obtained seven years of math and English test scores from the Los Angeles Unified School District and used the information to estimate the effectiveness of L.A. teachers – something the district could do but has not.

The Times used a statistical approach known as value-added analysis, which rates teachers based on their students’ progress on standardized tests from year to year. Each student’s performance is compared with his or her own in past years, which largely controls for outside influences often blamed for academic failure: poverty, prior learning and other factors….

In coming months, The Times will publish a series of articles and a database analyzing individual teachers’ effectiveness in the nation’s second-largest school district – the first time, experts say, such information has been made public anywhere in the country.

Not much data is available yet but what is astounding is that the LA Times will release information on individual teachers. The graphic below, for example, is not an illustration it is real information on the real teachers named. To understand the importance of these differences note that:

After a single year with teachers who ranked in the top 10% in effectiveness, students scored an average of 17 percentile points higher in English and 25 points higher in math than students whose teachers ranked in the bottom 10%. Students often backslid significantly in the classrooms of ineffective teachers, and thousands of students in the study had two or more ineffective teachers in a row.

With better information there is a possibility that teachers will improve. Simply knowing that other teachers do better will encourage the lower performing teachers to ask why and to emulate best practices.

Unfortunately, we have little idea how to train good teachers. The best we may be able to do is to throw a bunch of people into the classroom and measure what happens but for that strategy to work it needs to be followed up with firings. Indeed, one recent study (see here for another explanation) found that the optimal system–given our current knowledge and the importance of teacher effects–is to hire a lot of teachers on probation and then fire 80% after two years, yes 80%.

I don’t blame the unions for being up in arms and I feel for the teachers, for some of them this is going to be a shock and an embarrassment. We cannot simultaneously claim, however, that teachers are vitally important for the future of our children and also that their effectiveness should not be measured.  As systems like this become more common students will benefit enormously and so will teachers.

Moreover, I see this as a turning point. Once parents have this kind of information who will allow their child to be in a class with a teacher in the bottom ranks of effectiveness? And if LA can do it why not Chicago and Fairfax?

Many people said that information technology would revolutionize teaching but few had this in mind.

Addendum: Details on methods here.

Game-theoretic allegations about branding and Snooki

Allegedly, the anxious folks at these various luxury houses are all aggressively gifting our gal Snookums with free bags. No surprise, right? But here's the shocker: They are not sending her their own bags. They are sending her each other's bags! Competitors' bags!

Call it what you will – "preemptive product placement"? "unbranding"? – either way, it's brilliant, and it makes total sense. As much as one might adore Miss Snickerdoodle, her ability to inspire dress-alikes among her fans is questionable. The bottom line? Nobody in fashion wants to co-brand with Snooki.

The full story is here and I thank Morgan Warstler for the pointer.