The mass sterilization of half of humanity
Bill, a loyal MR reader, asks:
A freak solar event "sterilizes" the half of the planet (people, animals, etc) facing the sun. What happens?
Putting aside, the "which half" question, I would predict the collapse of many fiat currencies and the immediate insolvency of most financial institutions. Who could meet all those margin calls? Unemployment would exceed 20 percent and martial law would be declared, food rationing and guys with rifles on street corners. The affected countries would take in larger numbers of immigrants, especially young immigrants from poorer countries, to keep their societies going and to use and maintain the still-standing capital stock. Many of those immigrants might be better off in the longer run, especially if they could internalize the norms of the host country by the time the original inhabitants perished. If you let me "cheat," I'll postulate that genetic engineering is used to perpetuate the genes of the original inhabitants.
If a poor country were hit by this blast the eventual result probably would be mass starvation. There is a chance that social order would collapse across the entire globe, due mostly to contagion effects, multiple equilibria, and bad expectations.
To some of you these mental exercises may seem silly. Indeed they are silly. But what's wrong with silly? Such questions get at the stability of social order, the sources of that stability, and the general importance of demography and intergenerational relations. Those are all topics we don't think enough about. Because we're not silly enough.
Assorted links
Raising Rival’s Costs
Catherine Rampell at Economix is somewhat surprised that some employers have signed a petition supporting today's increase in the minimum wage. Put aside the fact that this so-called petition is coming after the law is already passed–can anyone say cheap talk–it's really not surprising that some employers support the minimum wage. Rather than a violation of Econ 101, as Rampell suggests, it's more an implication of Econ 101. Simply take a look at why the employers say they are supporting the law. Uniformly the responses go like this:
Social justice, honest day's labor, inequality…. followed by:
I have always paid above minimum wage.
I’m a small business owner but don’t have any minimum wage employees, nor would I ever.
I’ve always paid my workers, even unskilled laborers, more than minimum wage …
I’m one of those businesses that supports a so-called “living wage” and refuse to pay less than $12/hour…
Note that I don't think that these employers are being dishonest in their support for "social justice" but I do think that it's easy to be in favor of the minimum wage when it doesn't cost you anything.
Indeed, these employers will benefit from an increase in the minimum wage because it will raise the costs of their rivals. This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.
Finally, note that the opinions of employers are quite irrelevant as to the effects of the minimum wage.
When to stop reading a book
Kelly Jane Torrance has a very good article on this question. This part is quoting yours truly:
"People have this innate view – it comes from friendship and marriage –
that commitment is good. Which I agree with," he says. That view
shouldn't, he says, carry over to inanimate objects.
It's not that he's not a voracious reader – he finishes more
than a book a day, not including the "partials." He just wants to make
the most of his time.
"We should treat books a little more like we treat TV
channels," he argues. No one has trouble flipping away from a boring
series.
There is more:
"If I'm reading a truly, actively bad book, I'll throw it out," he
says. His wife will protest, but he points out that he's doing a public
service: "If I don't throw it out, someone else might read it." If that
person is one of the many committed to finishing a book once started,
he's actually doing harm.
Mr. Cowen, who says he couldn't finish Alexandre Dumas' "The
Three Musketeers" or John Dos Passos' "U.S.A.," offers a more direct
economic rationale. He notes that many up-and-coming writers complain
they can't break through in a best-seller-driven marketplace. "We're
also making markets more efficient," Mr. Cowen says. "If you can sample
more books, you're giving more people a chance."
Tall people are happy
Here is the abstract to a new paper by Angus Deaton and Raksha Arora.
According to the Gallup-Healthways Well-Being Index daily poll of the US population, taller people live better lives, at least on average. They evaluate their lives more favorably, and they are more likely to report a range of positive emotions such as enjoyment and happiness. They are also less likely to report a range of negative experiences, like sadness, and physical pain, though they are more likely to experience stress and anger, and if they are women, to worry. These findings cannot be attributed to different demographic or ethnic characteristics of taller people, but are almost entirely explained by the positive association between height and both income and education, both of which are positively linked to better lives.
Now if I were in favor of redistribution…
Paul Romer’s blog
Chartercities.org, it's just getting started. For the pointer I thank Mike Gibson.
One reader request
Tim Gray asked:
You rarely write about race, yet I can't help but wonder–as a fellow
prof and a social scientist–what your thoughts are about the Henry
Louis Gates flap in Boston and what, if anything, you think it says
about the larger questions of race relations and psychology of
authority.
My view is simple: everyone involved will come out of the "flap" looking worse. Most of all, engaging with the incident has been one of the few major tactical mistakes of the Obama Presidency. Presidents (and many others) make big mistakes when they "respond" to people with much lower status than themselves, in this case the policeman and his ilk. The net effect is to lower the status of the Presidency and this will prove especially important when Obama is trying to pass a controversial health care plan. Today he looks less "post-racial" than he did a week ago and although it was only one slip it won't be easy to reverse that.
On the substance of the altercation I do not know the details but some time ago we decided, for better or worse, to give policemen a lot of discretion in intimidating individuals, including innocent individuals and especially African-Americans. I don't think we chose an optimum but it is disingenuous to be suddenly shocked by what happened.
One reason I don't cover "race" more is because it often doesn't make for a very good discussion in the comments. It's also hard to add to the material covered on other blogs. It is a topic I read a good deal about, especially in the areas of the history of slavery, race and popular culture, race and sports, the economics of discrimination, and the history of Africa. But I don't expect to do a lot of blogging in these areas anytime soon, interesting though they may be.
Request for requests
But no promises are offered, of course. Comments are open!
The roots of workplace procrastination
To make their jobs bearable, people tend to talk themselves into believing they have more control over their time than they actually do. That sets them up for procrastination. They put off their biggest, most stressful tasks for later in the day, then get burned by fires that inevitably flare up.
That's me. I see the illusory quest for control as one of the most significant cognitive biases for understanding the workplace environment.
What I’ve been reading
1. Genesis, by Bernard Beckett. A dystopia by a Kiwi author who writes (broadly) in the style of Margaret Atwood. My complaint that it was too short is one of the better complaints you can have about a book.
2. Calvin, by F. Bruce Gordon. This excellent biography brings French Renaissance theology to life. Recommended.
3. Bangkok Days, by Lawrence Osborne. Books on this topic are tricky because they have a tendency to exploit cheap salaciousness but this one is quite good and also conceptual in nature. It prompted me to order more books by the author.
4. The Age of Wonder: How the Romantic Generation Discovered the Beauty and Terror of Science, by Richard Holmes. It's a well-written book with a great cover, a nice title, favorable reviews everywhere, and good information on each page. Still, I don't quite see what it all adds up to. But if you're inclined to read it, I don't see any reason not to.
5. The Generalissimo: Chiang-Kai-Shek and the Struggle for Modern China, by Jay Taylor. A new and apparently exhaustive biography, based on many new sources. The first fifty pages (all I've read so far) read very well. I am told that Chiang was "incorruptible" — who would have known? "Brutal, but underrated" seems to be the takeaway. This could well be one of the more important non-fiction books of the year.
The Soda Machine Puzzle
Many excellent comments in this thread. Nick Rowe was the first to post a correct solution. Take one bottle from the first machine, two bottles from the second, three from the third and so forth. If the weight on the scale is off from the expected total by say 6 oz then you know machine 6 is the culprit. Note that this procedure will work whether the machine is putting in 1 oz too much or 1 oz too little – but not, of course, if it randomizes. (I tried to make clear the machine was always doing one or the other but perhaps this could be worded even better.)
In one of his books on lateral thinking, de Bono talks about the student who when asked how would you use a barometer to measure the height of a building said he would take it to the top of the building, drop it off, time it till it hit the bottom and then use Newton's laws to calculate the height. The student's teacher was not amused but de Bono thought this was great. In anycase, Alex J offers a similarly clever and lateral solution this puzzle which I believe also works.
Assorted links
*In Fed We Trust*
The subtitle is Ben Bernanke's War on the Great Panic and the author is David Wessel. Here is one good excerpt:
For Ben and Anna Bernanke, excitement was jointly doing the New York Times Crossword puzzle nearly every day — although they skipped the easier beginning-of-the-week puzzles. "That's the one thing we do together," Bernanke joked. "It's shows our sexy social life. We're pretty good. We can do the Sunday puzzle in about forty minutes."
This is so far the most entertaining and most readable book on the financial crisis.
Assorted links
1. Via Chris Masse, one account of life as a fashion model.
2. Countercyclical asset of the day: building sheds.
3. Me, on the future of libraries and related matters.
4. NeighborhoodEffects, a blog.
5. How much should blog writers disclose about their personal lives?
6. Old people are less interested in health care reform: the numbers.
7. Markets in everything: de-baptism, done with a hair dryer.
Do superstition and eclipses matter for the stock market?
Gabriele Lepori has a new paper.
Psychological research documents that individuals are more likely to resort to superstitious practices when operating in environments dominated by uncertainty, high stakes, and perceived lack of control over the outcomes. Based on these findings, we suggest that the stock market represents an ideal breeding ground for superstition and then test whether superstition-induced behavior affects investment decisions. Our empirical analysis focuses on some beliefs associated with eclipses, phenomena that are typically interpreted as bad omens by the superstitious both in Asian and Western societies, and we employ a dataset containing 362 such events over the period 1928-2008. Using four broad indices of the U.S. stock market, we uncover strong evidence in support of our superstition hypothesis in four distinct ways. First, the occurrence of negative superstitious events (i.e. eclipses) is associated with below-average stock returns, which is consistent with a diminished buying pressure coming from the superstitious. Second, the size of the superstition effect is estimated to increase in times of high market uncertainty and when eclipses draw wide media coverage and public attention. Third, the negative performance of the market during the superstitious event is followed by a reversal effect of similar magnitude (10 basis points per day) on the subsequent trading days. Fourth, eclipses are accompanied by a trading volume decline. When we extend our analysis to a sample of Asian countries, we find analogous results. The patterns we document are inconsistent with the Efficient Market Theory, as eclipses are perfectly predictable events.
In other words, eclipses are bad days for buying stocks. Maybe others don't want to make a commitment during the time of a possibly bad omen or maybe they're outside watching. Trading volume is low. After the day of the eclipse, there is a one to three day window, during which the lower returns are reversed. So ideally there are buying opportunities right after the eclipse with (minor) extra-normal profits available. The final section of the paper looks at Asian stock market returns on days of eclipse and finds comparable results; I wonder if this would extend to potentially unlucky days?
So how were Indian returns today? (Check here).
Here is a John Nye and Noel Johnson piece on how Asian children do (better!) if they are born in the Year of the Dragon.