A Masterpiece in Every Home

Artists and intellectuals bemoan markets for ruining art in so many ways – one could write all day about all the ways markets allegedly corrupt art. But here’s a great, perhaps indisputable, fact about art and market economies – any person can have a masterpiece in their own home, or at least a decent copy.

Consider the following: For a few dollars, any person can download pictures of their favorite Picasso from the Internet at minimal cost and print out color copies at Kinko’s. For about $40, anybody can buy a book, magazine or gallery catalogue with a full color reproduction of your favorite fish tank basketballs. If you want it on the wall, for a few hundred bucks, you could easily buy a nice poster and have it framed. For a few thousand bucks, you could probably hire an artist to make you an uncanny reproduction of the original work. And of course, if you have a few hundred thousand bucks to spend, or millions, you could have Gerhard Richter come to your house and paint a nice blurry portrait of you and your family. Not a bad deal when you think about it.

Free Market Economics Done Hollywood Style

Over at Cafe Hayek, Don Boudreaux asks, “Suppose that a movie with exaggerations on a similar scale [to The Day After Tomorrow] were made by a free-market enthusiast. That movie might contain some of the following scenes:”

A ten-cent increase in the federal minimum wage casts millions of blacks and Hispanics into permanent unemployment and despair; all of the unemployed women scrape up pennies by offering themselves as prostitutes, while all of the unemployed men swarm to the suburbs to rape soccer-moms and then riot so violently in the cities that the Empire State building, the U.S. Capitol, the Sears Tower, and the Bank of America building all crash violently to the ground, killing tens of thousands of innocent civilians, including a kindly book-peddler specializing in works by and about Ayn Rand….

Cool movie. I hope Don options the rights.

Economists and sex

This paper studies the links between income, sexual behavior and reported happiness. It uses recent data on a random sample of 16,000 adult Americans. The paper finds that sexual activity enters strongly positively in happiness equations. Greater income does not buy more sex, nor more sexual partners. The typical American has sexual intercourse 2-3 times a month. Married people have more sex than those who are single, divorced, widowed or separated. Sexual activity appears to have greater effects on the happiness of highly educated people than those with low levels of education. The happiness-maximizing number of sexual partners in the previous year is calculated to be 1. Highly educated females tend to have fewer sexual partners. Homosexuality has no statistically significant effect on happiness. Our conclusions are based on pooled cross-section equations in which it is not possible to correct for the endogeneity of sexual activity. The statistical results should be treated cautiously.

Wow, read that carefully. How do you even pick a sentence to underline? 2 to 3 times a month? Greater income doesn’t buy more sex? The highly educated need sex more?

And yes, you can read more, at least if you will cough up the $5. That’s all from a recent NBER working paper.

Thanks to Karol Boudreaux for the pointer.

Shelf Pricing

Bob Michaels wrote to chide me for linking in my post on peanut butter to the “Consumers Union item that treats slotting allowances and similar store placement charges as another instance of big producers stomping on small ones.”

In my defense, linking doesn’t imply approval! (I linked only as a source for the claim that the typical supermarket has 30,000 items.) Bob, however, gives an excellent analysis of shelf pricing:

[Shelf pricing] is one of the few documented cases (compared with the parlor games in intermediate textbooks) where asymmetric information arguments may make sense. Assume that a producer of grocery items has created several products and wants stores to sell them. The producer has information from marketing surveys, etc. that most of these are non-starters, but may nevertheless be able to recover some of their costs from wholesale sales to grocers who only learn from experience that the goods are losers. Faced with far more potentially marketable items than it can possibly evaluate in detail, the grocer needs access to the market research that makers of the new products probably have but do not want to divulge. The solution: make them put up a nonsalvageable investment of the type frequently seen — force them to rent shelf space, purchase and dispose of the items whose space they are replacing, or make them commit to joint advertising efforts. The maker of the products will only place such a bet on a product that it seriously believes will sell well.

Can we hold the interest of classical music audiences?

Museum goers love to wear headphones during special art exhibitions and hear special commentary. Perhaps classical music should take a cue from this experience:

…subscribers to the orchestra’s e-mail list have been invited to try another technological advance: this time a screen small enough to fit into your hand. The device will provide a play-by-play analysis of the music as the concertgoer listens. No pictures (so far), only words: the text changes every 15 to 20 seconds. Think sports patter, only highbrow, musical and blessedly mute.

“Curious about what Charles Ives is up to in his `Three Places in New England?,’ ” the e-mail message asked, inviting subscribers on Wednesday to a performance of the Philharmonic’s Charles Ives Festival next week. “Concert Companion will tell you as the music unfolds before you.”

Viewers had already rejected large movie screens of the performers, a’ la rock concert. Many found it “distracting.”

Here is the full story. Many American orchestras are experiencing fiscal troubles, and London’s low cost, commercial Savoy Opera just closed. So perhaps some innovation is in order.

What would I want?: I’d like to check my email during the concert; I’d also like to discuss the proceedings with my companions, perhaps through silent Instant Messaging of some kind. But I won’t predict any of these will happen. In the time of Beethoven people ate and drank during classical concerts. They played cards and sometimes brought their animals. A contemporary non-profit, dependent on donations and government grants, is unlikely to take such steps. For another solution, read this article on classical crossover. Until classical music makes a comeback in the home, it won’t be self-financing in the outside world. Perhaps the future of the genre lies in Korea.

Christians discover Tiebout

Would you like to live in a Christian nation with government similar to the early United States?

No, it’s not Colonial House (much inferior to Victorian House, by the way) but Christian Exodus

ChristianExodus.org has been established to coordinate the move of 50,000 or more Christians to a single conservative state in the U.S. for the express purpose of reestablishing constitutional governance….ChristianExodus.org is orchestrating the move of 50,000 or more Christians to one of three States for the express purpose of dissolving that State’s bond with the union. The three States under consideration are Alabama, Mississippi and South Carolina. The exact destination will be chosen by vote of our membership. Our move will commence when the federal government forces sodomite marriages on our local communities or once we reach the 50,000-member mark, whichever comes first.

If this sounds kinda familiar you may recall the libertarian Free State Project “an effort to recruit 20,000 liberty-loving people to move to New Hampshire.”

Eyeballs are scarce

When you are in your hotel room what do you look at but…well…the items in your hotel room.

Given how hard it is to command consumer attention, it is only natural that hotels start selling these goods. At the Regency in Manhattan, you can now get the following:

1. A bath mat for $45

2. Down pillows for $28 each

3. A bathrobe for $69

And of course you get to test the items before you buy. Some hotels also believe that buyers will think back positively on their hotel experience, boosting repeat business.

Next in line may be the “swiveling, floor-to-ceiling TV cabinet,” priced at $3,000. Hotels are now selling beds and $4000 tubs as well. Of course if you really like the hotel merchandise you could just move in permanently.

The data are from Forbes, June 7 issue, p.124. “Markets in Everything,” as they have been known to say.

Obama and The Limits of Black Politics in America

The New Republic’s Noam Scheiber has an insightful article on Barack Obama, an Illinois state senator who has just won the Democratic senatorial primary. Leading in the polls, the election is now his to lose. Scheiber’s question is the one many have had about Obama’s victory: how did Obama avoid the pitfalls that have ensnared so many African-American politicians?

The challenge African-American politicians must overcome is this: if you appeal too much the African-American base, you’ll alienate moderate whites; if you appeal too much to moderate whites, your opponent will claim that you aren’t “black enough.” Witness Cory Booker’s difficult campaign for mayor of Newark, when the Yale educated councilman was tarred by the incumbent.

Scheiber appeals to research showing that white Americans routinely make distinctions between “good” and “bad” blacks. Once advertising showed to voters he was of Kenyan ancestry, as opposed to African-American, Schebier believes, the voters reframed Obama as different than traditional black politicians. Scheiber concludes that Obama’s act is tough to follow – how many self-deprecating half-Kenyan Harvard Law Review editors are there?

On the contrary, if successful, Obama could be in the position to establish a new brand name in national politics. It’s easy to imagine Obama establishing a sort of “DLC” for the African-American community, much in the same way Clinton tried pulling his party towards more moderate positions on trade and social programs. A congressional caucus under such a banner would powerfully reshape debates over race relations in this country.

Buying Collaboration II

On Monday, I described a controversial auction by William Tozier of Ann Arbor, Michigan. The highest bidder would win the chance to collaborate and write an academic article with him.

A number of readers sent interesting comments. Some, like Davis King, pointed out that collaboration for pay already exists and is quite common in some fields like computer science. He also pointed out a lot of de facto collaboration for pay, such as when undergraduates pay tuition and get the opportunity to co-author papers with professors.

Two readers noted that at least one scientist, Miriam Rothschild – a noted bug scientist, was independently wealthy and funded a long string of collaborations in fields that weren’t receiving much attention. The resulting work is well accepted in biology and her self-funding didn’t seem to raise suspicions about her work.

One reader noted that pay for collaboration might be hard to distinguish from research assistance. This is a good point, but I think there is a simple response – research assistants merely carry out the instructions of the researchers while paid collaborators are compensated for original, creative work.

Mr. Tozier himself wrote to me and told me about his current project, an online forum that would facilitate collaboration among non-academic researchers. I think the future probably holds a continuum of possibilities – universities will probably sponsor only “altruistic” research while scientists outside the academy will probably work together in more varied contexts.

(More) ideas that won’t work

Take 250 reasonably well-known artists and put their work together in a trust. Later the works will be sold. The payoff to each artist comes half from his paintings, half from the other paintings in the lot. The intermediary takes a mere twenty percent, plus it charges the artists half the costs of storage.

It is a retirement program for artists; supposedly it will minimize their risk and encourage creativity.

I can think of at least five reasons why it won’t work. To see just one, decompose the transaction. Half of your income stream remains tied up in your own art and thus risky, minus the twenty percent of course. With the other half of your pension you decide to invest in not-yet-totally-famous artists. Would anyone recommend such purchases on their own merits? Is that your idea of insurance?

Here is their web site. Here is the home page of the founder, Dan Galai; he has a prolific publication record in economics journals. For more information, see the May 29 issue of The Economist, p.75.

Paying for Open Access

Ideas are public goods so open access publishing is theoretically ideal but how to pay for it? The Proceedings of the National Academy of Sciences (PNAS), the flagship journal of the National Academy of Sciences is trying an experiment. If you can’t charge the readers how about charging the authors? PNAS authors may now opt to pay $1000 to make their articles available for free immediately upon publication.

It’s an interesting idea – authors do receive benefits from publishing papers but in truth it’s more important that the paper be published than read. At $1000, I think the benefits are overpriced especially since some readers do pay for the journal and can read the articles from day one. Also PNAS opens access after 6 months in anycase.

Authors might pay $1000 if a combination of charity, peer-pressure and noblesse-oblige establishes a norm of payment. But therein lies a dilemma. The more authors that are willing to pay for open-access the less readers will be willing to pay for selective access. If every author pays who will buy the journal?

Can $1000 per author support a publication with no paying readers? The American Economic Review publishes about 100 articles a year and has costs in excess of one million dollars – so the economics don’t look good. True, those costs support a print journal and open-access would be electronic online so that makes the equation somewhat easier to balance but it’s still touch and go at best.

Even though I am somewhat skeptical I applaud the Academy for this experiment and I hope that other journals will be equally creative.

Thanks to Monique van Hoek for the pointer.

Haitian fact of the day

In Haiti’s slums, round swirls of dough can be found baking in the sun. They look almost appetizing until you learn the ingredients: butter, salt, water and dirt…

And the dirt biscuits of Haiti – called “argile,” meaning clay, or “terre,” meaning earth – are not exactly a final cri de coeur against starvation.

Like the mice in Malawi, they are a staple of the very poor, somewhere between a snack and a desperation measure. Making them has been a regular business for years. The clay is trucked in plastic sacks from Hinche, on the central plateau. Blended with margarine or butter, they are flavored with salt, pepper and bouillon cubes and spooned out by the thousands on cotton sheets in sunny courtyards that are kept swept as “bakeries.” They cost about a penny apiece.

“They’re not food, really,” said David Gonzalez, a reporter at The Times who has visited Haiti many times. “People with hunger pangs eat them just to fill up their stomachs.”

Here is the full story (NYT); it is sad to even use the “food and drink” category for this entry. Here is a previous installment of “Haitian Fact of the Day.”

Update: I wrote this post a few days ago, before the horrific flood. Flooding is such a severe problem in Haiti because of deforestation, brought on by poorly defined property rights to trees and forest.

Death to the Hackers!

Steven Landsburg has a clever column (click here) pointing out that the economic damage prevented by executing a murderer is less than damage caused by the author of a wildly successful computer virus. If we’re willing to fry Jack the Ripper, why not send Urkel to the chair?

Landsburg notes that governments provide goods markets won’t, such as crime prevention. The implication is that cost-benefit analysis would dictate that people would be more willing to pay for prevention of property crime rather than personal safety.

For me, Landsburg misses a simple point: human beings are probably hard wired to care about concentrated damages (like murder of a person) rather than diffuse damages (like screwing up everybody’s email for an hour). No cost-benefit analysis will likely persuade people to go against this intuition.

Jean-Jacques Rousseau’s public opinion theory

It’s pretty well known that Rousseau thought that the public was always right. But while reading On the Social Contract translated by Donald A. Cress, I came upon this less frequently discussed quote:

“The former [‘will of all’] considers private interest and is merely the sum of private wills. But remove from these [private] wills the pluses and minuses that cancel each other out, and what remains as the sum of differences is the general will,” which Rousseau claims in the previous paragraph is “always right” and tends towards the “public utility.”

This is an interesting public opinion theory. It assumes that aggregate public opinion has two components – a selfish and biased component and a component that produces the “right” public policy. The difference between the optimal policy and the median voter’s policy is due not to ignorance or systemic error, but to selfish desires that undermine the provision of public goods. If readers know of a published formal model of this theory, or applications of this theory, feel free to email me.