What rap stars crave

1. Looking at the Billboard Top 20 for rap music, 59 brands have been mentioned 645 times in songs so far this year.

2. Very high end and very low end brands are the most popular mentions.

3. The top brand so far this year in rap songs is Hennessey, a kind of cognac. Cadillac comes in second.

4. Mercedes, a previous favorite, now has fallen behind Cadillac, Rolls-Royce, and Jaguar.

5. Autos, fashion, and beverages provide the brands most likely to be mentioned in rap songs.

6. Cristal, an extremely expensive champaigne, may be losing appeal because it is now so closely identified with hip-hop.

7. Polariod, in contrast, has benefited greatly from rap music. The product has been hurt by digital photography, but Outkast sang “Shake it like a Polaroid picture” in its hit “Hey Ya.”

That is all from the Mexican edition of the Miami Herald, August 26, sorry no link available from here. Agenda Inc., a San Francisco marketing firm, compiled the data.

Satellite radio as universal jukebox

Catching Blondie’s reunion tour broadcast at 4 in the morning wasn’t an option for XM satellite radio subscriber and single father Scott MacLean.

“I was missing concerts that were being broadcasted when I was asleep or out,” he said.

So the 35-year-old computer programmer from Ottawa, Ontario, wrote a piece of software that let him record the show directly onto his PC hard drive while he snoozed.

The software, TimeTrax, also neatly arranged the individual songs from the concert, complete with artist name and song title information, into MP3 files.

Then MacLean started selling the software, putting him in the thick of a potential legal battle pitting technically savvy fans against a company protecting its alliance – and licensing agreements – with the music industry.

MacLean says he is simply seeking to make XM Radio – the largest U.S. satellite radio service with over 2.1 million members paying $10 a month for about 120 channels – a little more user-friendly.

And get this:

XM has said it plans to launch in October a new car and home radio receiver that lets users pause and rewind live broadcasts. XM also has a deal to stream its broadcasts over next-generation TiVo recorders.

The bottom line: Who needs illegal downloads? At some point radio and other media will become “thick” enough that you can just pluck the song you want. Probably this will prove well within the reach of the law. And once storage becomes essentially free (are we so far from this right now?), you will buy or download a program to record a (near) universal music library for yourself.

Here is the full story, which includes a link to the relevant software.

Politically incorrect paper of the month, v.3

Depending on your point of view you can draw one of two conclusions from this paper: A Comparison of the Cell Phone Driver and the Drunk Driver. Here is the abstract:

We used a high-fidelity driving simulator to compare the performance of cell-phone drivers with drivers who were legally intoxicated from ethanol. When drivers were conversing on either a hand-held or hands-free cell-phone, their braking reactions were delayed and they were involved in more traffic accidents than when they were not conversing on the cell phone. By contrast, when drivers were legally intoxicated they exhibited a more aggressive driving style, following closer to the vehicle immediately in front of them and applying more force while braking. When controlling for driving conditions and time on task, cell-phone drivers exhibited greater impairment than intoxicated drivers. The results have implications for legislation addressing driver distraction caused by cell phone conversations.

The abstract is truthful, but as you can see from this quote further on in the paper, the authors spun the lede in the more politically correct direction.

When drivers were conversing on a cell-phone, they were involved in more rear-end collisions, their initial reaction to vehicles braking in front of them was slowed by 8.8%, and the variability in following distance increased by 24.5%, relative to baseline. In addition, compared to baseline it took participants who were talking on the cell phone 14.8% longer to recover the speed that was lost during braking.

By contrast, when participants were legally intoxicated, neither accident rates, nor reaction time to vehicles braking in front of the particpant, nor recovery of lost speed following braking differed significantly from baseline.

Draw away. Here is #1 and #2 in this series.

Mexico’s lost century?

Mexico is slated to grow at somewhat over four percent this year (this popped up in the Mexican edition of the Miami Herald last week, no link handy). It has responded to the Chinese challenge by retooling its export base toward higher quality and quicker response times; the maquiladoras are once again growing. Higher oil prices do not hurt either. Of course four percent is a rate that most countries in the world would envy.

In the twentieth century Mexico grew at a rate above what the U.S. did (sorry, my exact figures are at home!). Mexican performance would be even better if we take out the disastrous 1980s. And in early colonial times, at least once Mexico recovered from various plagues, Mexico was arguably richer than the British colonies to the north. As late as 1820, Mexican GDP per-capita was in the same ballpark as that of the United States ($1287 U.S., $893 Canada, $760 Mexico, in 1990 dollars as estimated by Angus Maddison). So what went wrong?

The nineteenth century was an absolute, complete disaster for Mexico. By 1870, US per-capita had just about doubled but Mexican per-capita GDP had fallen to $710. Crime was rampant and the so-called infrastructure was a disaster. Many goods were carried on foot across rocky paths, not fit to be called roads. At the same time North Americans were building railroads, canals, and factories. Only late in the nineteenth century, under the regime of Portfirio Diaz, did Mexico start constructing a usable transportation network.

I can think of a few ways of interpreting these facts:

1. Mexico had one very unlucky century. In reality Mexico is better suited to grow than is the U.S.. Mexican government is low in quality, but in many ways it is very small. And perhaps you need big government more in some centuries than others.

2. The superior Mexican performance of the twentieth century represents “catching up,” sometimes called “growth convergence.” This sounds the most intuitive, although it implies that one bad century has kept Mexico captive in poverty for a long, long time. How long did it take Germany and Japan to recover from Allied bombing and losing the War? You can claim that these countries had superior institutions, but Mexican institutions have allowed for rapid growth for a long time. Note also that the evidence in general does not favor growth convergence, although you can come up with something if you leave Africa out of the growth equation.

3. Something about the Mexican economy is not robust to very bad times. Mexico has a higher variance economy than does the U.S., and the distribution of these growth rates is not normal. The Mexicans (implicitly) accept this high variance to enjoy a higher mean growth rate. But every now and then they pay a very steep price for this tradeoff.

4. We do not understand something fundamental about growth. We like to think of growth rates and income levels as conceptually separate to a greater degree than they are. The Solow model in particular shows us how to decompose changes into “once-and-for-all” and “growth-affecting” perturbations in growth. Perhaps this distinction can mislead us into looking for separate “causes of growth,” as distinct from our analyses of levels.

Am I allowed to vote for all four hypotheses? Even if they contradict each other to some extent?

How much will Slate sell for?

Online commentary journal Slate Magazine – which was put up for sale two weeks ago by Microsoft – could fetch $10 millon to $12 million, or twice its $6 million annual revenue, say analysts.

Whereas magazines generally sell for an amount equal to or just above their annual revenue, the “prestige value” of Slate will probably warrant a significantly higher price tag, said investment banker Jeff Dearth.

“It might go for much higher,” said Mr. Dearth, a Washington-based partner of DeSilva & Phillips, a New York investment-banking boutique specializing in publishing industry transactions. “There is an intangible ego value to owning Slate.There is a lot of cachet to owning a ‘thought leader’ publication in intellectual or political circles.”

The business model is based around ad revenue, given the high spending value of Slate’s readers:

Slate’s demographics, according to Neilsen/Netratings, include an audience that is overwhelmingly male – 63.4% to 36.6% – and older, with more than 38% of its audience between 35 and 49 and 44.6% over 45. The company said 29% of Slate’s audience reports earning more than $100,000 annually, with 45.3% reporting incomes between $50,000 and $100,000.

Here is the full story.

How to bet on physics experiments?

Betting on the greatest unsolved problems in the universe is no longer the preserve of academic superstars such as Stephen Hawking. From Thursday anyone will be able to place bets on whether the biggest physics experiments in the world will come good before 2010.

For two weeks, British-based bookmaker Ladbrokes is opening a book on five separate discoveries: life on Titan, gravitational waves, the Higgs boson, cosmic ray origins and nuclear fusion.

Here is the full story. The origin of cosmic rays is the big problem most likely to be solved soon, and bettors are more optimistic about nuclear fusion than are physicists.

Our colleague, Robin Hanson, has long argued that gambling could save science by encouraging scientists to more honestly reveal their true estimates of the likelihood of various theories. Here is some refreshing evidence that he may be right:

“I’d be tempted to take a bet on the Higgs [particle] at 6-1,” says Brian Foster who heads the particle physics group at the University of Oxford in the UK. “I’ve been quite instrumental in betting the taxpayers’ money on us finding it, so I’d better put my money where my mouth is.”

The Dead Zone

I’ve now entered the vacation part of my trip, which of course means that I am slightly bored. On the bright side, I’ve just discovered Stephen King’s Dark Tower series. I admire his ability to think in epic terms and grab the reader at the same time; I’ve long thought that his best material will still be read one hundred years from now. My previous favorites have been Stand and The Dead Zone, among others. And the food in Acapulco is of course amazing. I’m back at the beginning of the week to come, and my apologies for being slow in email responses.

Beyond the chains

Interesting piece (subscription required) earlier this week in the Wall Street Journal on how independent bookstores are competing successfully against Barnes & Noble and Borders by actually getting bigger.

The 46-year-old bookseller [Neil Van Uum] has managed to prevail thanks to an unusual retailing strategy: combat the giants by being even more giant. His Joseph-Beth Booksellers in Cleveland is bigger than the Borders, sells merchandise ranging from toys to quilted handbags and boasts a restaurant where flank-steak salad goes for $9.95.

He’s one of a hardy group of survivors that has emerged from the independent bookstore shakeout by supersizing. In Michigan, Schuler Books & Music boasts a 35,000-square-foot flagship in Grand Rapids. In West Chester, Pa., Chester County Book & Music Co. owns a 49,000-square-foot store that includes a New Orleans-style restaurant.

The six stores owned by Joseph-Beth average 30,000-square-feet — or 5,000 square feet more than a typical Barnes & Noble.

It isn’t size alone, though. What the really successful independent stores do is combine consumer friendliness in terms of design, space, and amenities with the kind of knowledgeable and dedicated staff that’s traditionally thought of as characteristic of independents. I think there’s a plausible argument that independent stores underestimated initially how important the experience of shopping was to customers. But that’s no longer the case at the stores the Journal’s talking about, a list to which you’d want to add stores like Powell’s in Portland, Tattered Cover in Denver, and Stacey’s in San Francisco.

These stores are also taking advantage of a genuine market opportunity by being active intermediaries between their customers and book publishers. (Amazon does it via collaborative filtering, while brick-and-mortar rely on staff members.) The real challenge for readers today is figuring out which of the tens of thousands (or more) of books published every year is worth their time. Stores that customers can count on for reliable recommendations should be able to build reputational capital and profit from it. It’s a hard business, though: net profit margins rarely get above 3-4%.

New items in my Mexican village

As many of my readers know, I visit a small Mexican village, San Agustin Oapan, one or twice every year. This pueblo in Guerrero has about 1500 people, most of whom farm corn and paint for a living. You’ll hear more when my book on the place comes out next year, from University of Michigan Press. In the meantime, here are the new items I have noticed in the village this year:

1. Apples

2. Green beans

3. A much improved road. A four hour trip now takes less than an hour and a half, at least if the rains permit. This makes an especially big difference if you have to take your kid to the doctor.

4. Stoves. They were once a rarity, now they are commonplace. It takes the fun out of watching people cook for you, but hey that is progress.

5. Small shops with wrapped items from the larger city of Iguala. Shampoo and band-aids, for instance, are now easy to find.

6. The number of “retail” (and I use that word cautiously) watermelon sellers has gone from one to at least three.

7. The number of pigs has doubled over the last five years, though not always to the benefit of the town streets.

As far as I can tell, most of this does not show up in the growth statistics for Mexico. No one (except for yours truly) comes to the place to count anything. Most of the transactions occur in black or grey markets. And even if the data were recorded, using market prices to measure underestimates the benefits from a sudden introduction of new commodities (in essence the price is falling from infinity to a market level, and the first consumers at the new price might value the item at more than a small amount above the observed price).

It is commonly the case that consumption statistics, when we have them, measure changes in income better than do income statistics.

Globalization does not make everyone better off, but its beneficial effects are commonly underestimated, and undermeasured by available statistics.

Does the European Parliament favor free trade?

Of 384 studied members of the European Parliament, only 12 appear to favor free trade for Europe on a consistent basis. The Swedish representatives appear to be the most free market, the French appear to be the most protectionist. There is one Spanish woman who has voted for free trade every time.

Here is the study.

Thanks to Mit dem Kopf voran (an excellent German-language blog) for the pointer.

Whatever happened to disintermediation?

From the Rocky Mountain News:

Former Nebraska star [running back] Lawrence Phillips was seen in Las Vegas recently pawning one of his Big Eight championship rings — reportedly for $20. “He said he was stuck in Las Vegas,” pawn shop owner Steve Gibson told the Las Vegas Review-Journal. “He said, ‘I need to get out of town.’ Gibson then sold the ring on eBay for a reported $1,700.

Perhaps that’s the definition of desperate: accepting a price that represents a 99% discount to market value. The inevitable next question is: Has Phillips learned from experience and put his other rings up for auction? (As of now, no.)

Framing effects and the airlines

The New York Times reports that as of Friday, Northwest Airlines will charge customers an extra ten dollars when they buy a ticket at a check-in counter and an extra five dollars when they buy a ticket over the phone. (If you buy the ticket from Northwest on the Web, you’ll pay the same price you do today.) The difference undoubtedly reflects the real difference in cost to Northwest of paying a human being to do ticketing, but if the Times’ headline — “Will This Idea Fly? Charge Some Travelers $10 for Showing Up” — is any indication, the strategy looks like a public-relations disaster in the making.

Asked about the idea, Northwest executives reasonably responded that JetBlue and Independence Air charge more for tickets not bought on the Web. But as the Times says:

That is not how JetBlue and Indepdence Air would put it. Rather, their Web sites offer discounts for travelers who buy tickets electronically . . . Tickets bought at the airport or from airline reservation lines are simply sold at the advertised fare with no extra charge or discount.

From a consumer’s perspective, of course, it should be six of one, half a dozen of the other — if you buy your tickets on the Web, you pay less. But if framing effects are as real as they seem to be, then selling price discrimination as a way of offering some consumers a bargain, rather than as a way of charging some consumers a premium, will keep customers happier. That’s why restaurants advertise early-bird specials and movie theaters say they offer discount matinees (rather than saying they charge more at night). Perhaps Northwest should have quietly raised its prices last week and then announced a discount for its Web customers this week.

Addendum: No wonder the airlines can’t make money – earlier Alex noted a similarly dumb idea from Delta.

Back to the Future of Iraq

In the weeks after the Iraq war “concluded” there was lots of discussion about reforming the economy. But the opening of the second front pushed those plans into remission. I hope that it is not yet too late to leave Iraq with better economic institutions. Yet as we seek a way out, our influence diminishes and the chance that the war was fought for nought increases. I was pleased, therefore, to see Nancy Birdsall of the Center for Global Development and Arvind Subramanian, a division chief at the International Monetary Fund try to push reform back onto the agenda.

As the United States, the United Nations, and the Iraqi Governing Council struggle to determine what form Iraq’s next government should take, there is one question that, more than any other, may prove critical to the country’s future: how to handle its vast oil wealth. Oil riches are far from the blessing they are often assumed to be. In fact, countries often end up poor precisely because they are oil rich. Oil and mineral wealth can be bad for growth and bad for democracy, since they tend to impede the development of institutions and values critical to open, market-based economies and political freedom: civil liberties, the rule of law, protection of property rights, and political participation.

Can Iraq avoid the pitfalls that other oil-rich countries have fallen into? The answer is yes, but only if it is willing to implement a novel arrangement for managing its oil wealth with the help of the international community…. the Iraqi people should embed in their new constitution an arrangement for the direct distribution of oil revenues to all Iraqi households — an arrangement that would be supervised by the international community.

The article is in the latest edition of Foreign Affairs, it is well worth reading but if you don’t have a subscription you can find a more succint version of the argument here.

Thanks to Dave Meleney for the pointer.

Maurice Allais is even smarter than you think

Remember Maurice Allais, one of the lesser-heralded Nobel Laureates? He is best known for his work on expected utility theory, more specifically the Allais Paradox. He also made significant though neglected contributions to macroeconomics, monetary theory, welfare economics, capital theory, and the economic history of civilizations. It now turns out he may have made a breakthrough in observational physics and general relativity, read more here.