Tyranny of the Majority, Tyler Cowen Edition

by  Justin Wolfers

Two different Tylers talk about the Tyranny of the Majority.

Earlier today:

I like Joel’s book but I think he is far too pessimistic about the prospects for diversity in the modern world.

But when discussing the different flavors of economics:

The very existence of heterodox economics brings benefits.  A
personal anecdote will suffice.  My first two publications were both in
heterodox journals: the Journal of Post Keynesian Economics and the (institutionalist) Review of Social Economy.
These articles lifted me into a top graduate school and financial aid
(can you imagine how confused the admissions committees were to see a
GMU undergrad with an apparently leftie publication record?).  I would
not have had comparable success at Econometrica.

This tale relates to the value of diversity more generally.  We will
miss much of the value of diversity by simply listing a bunch of
diverse elements and evaluating them one-by-one.  Diversity brings
broader benefits by allowing people to use niches as ladders to further
steps, frequently into the mainstream, or in my case into another
niche.  Diversity is also a form of insurance, and of course it doesn’t
always pay off.  Finally many excellent mainstream or sometimes even
right-wing economists started with an intense interest in social
justice, often gleaned from heterodox writings.  Vernon Smith was once
a socialist, and George Stigler was early on a trust-basher.

Yes the profession is getting better but we also are losing too much
diversity in terms of schools of thought.  The diminution of the
Austrian School, as an organized and intellectually alive phenomenon
seems to me a shame, even though I don’t believe in a unique Austrian
method.  Heterodoxies encourage the mainstream to be more philosophical
and more self-reflective.

Sometimes intellectual inefficiency is efficient, and my remarks about heterodox economics should be taken in this light.

The emphasis is mine.  As is the question: Isn’t the second Tyler describing the Tyranny of the Majority?  If so, what are the Waldfogel-ian fixed costs that are preventing all the different flavors of economics from flourishing?

Optimal insults

by  Justin Wolfers

A long story leading to an interesting question: I like to keep half an eye on heterodox economics.  A lot of this work raises interesting questions about the methodology that is my bread-and-butter.  I think of this as useful intellectual discipline: those who don’t school themselves in the limitations or ethical constraints of our frameworks, are likely to mis-use them.  And that got me thinking about a particular sub-group: The Post-Autistic Economics Movement.  Reading some (but not all) of the output of these heterodox economists can be quite illuminating.

But Post-Autistic?  Really?  What kind of insult is that? 

Two answers:

  1. A pretty darn good insult.  Some of the agents in our models would in fact rightly be called autistic.  Those two words are pretty clever, and occasionally telling.
  2. A terrible insult.  Post-Autistic" is designed to shock.  It is a statement more about the insulter than the insultee.  And as the subject of the insult changes, surely it loses its force.  Based on titles alone, which critical journal would you rather read: Feminist Economics, or the Post-Autistic Economics Review?  (Aside: Feminist Economics is, in my view, an excellent and underrated journal.)

But still, it got me thinking. What does an insult communicate?  At what point does an insult switch from being an insult to a statement about the insulter?  There must be a signaling story here, but I haven’t quite figured it out.  And if signaling yields a theory of insults, what would the characteristics of the optimal insult be?

So with some trepidation, let me say, comments are open.

Thinking about Sports and Economics

by  Justin Wolfers in

I spent last Saturday at a very interesting conference on Sports Statistics, run by the Sports Stats section of the American Statistical Association.  It was a fun day, involving academics, sports journalists, and those Moneyball-inspired quants working for various sports teams.

But at some point I asked myself: Why do economists work on sports?

  1. Sports provide unique opportunities to test economic theories.  Cribbing from a New York Times article, this is the Thaler defense:

    “‘My justification for doing this is that it’s the one really
    high-stakes activity where you get to watch all of the decisions,”
    Thaler said. ”If Bill Gates invited me to watch all of his decisions,
    I’d talk more about that.”

  2. Sports shapes broader national debates.  Sports is a microcosm of our broader society and our national narrative on the important issues, from drugs, to race, to cheating, to sexual harrassment often play out on our sports pages.  In honor of a particularly compelling example, let’s
    call this the Jackie Robinson defense.
  3. Professional sports are an important part of the economy.  I call this the Dog defense, not as a dyslexo-religious statement, but simply because dogs raise an important question: aren’t pets a bigger part of the economy than professional athletics?  If so, why are there so many papers on professional sports and so few on the economics of dogs?
  4. Sports participation is an important activity.  It seems important to learn whether sports make us happier, healthier or more productive.  For instance, it is important to learn, say, what the broader effects of Title IX were.  Under this view, research on sports is part of the human capital agenda, leading me to call this the Gary Becker defense.
  5. Sports provides a useful teaching metaphor.  Many of those teaching Sabermetrics-inspired courses argue that sports provides a useful vehicle for teaching something far more important – basic quantitative reasoning.  When I teach my class on behavioral economics, I do so by analyzing anomalies in sports betting markets.
  6. Doing research on sports is fun.  It was no mistake that the conference I attended was on a Saturday.  Many of the academics in attendance were giving up leisure, not more important work. But for some, sports provides a chance to mix work with leisure; of course, if non of the above arguments holds, then it is just a chance to mix leisure with leisure.

Let me now translate this into advice, because I often hear from students wanting to write a thesis on sports.   My first response is always: Don’t.  Too often, we find our sporting heroes more interesting than other people do.  (Yes, I have been guilty of breaking this rule.)

But if you must work on sports, make sure you have a defense to this charge. I find the Thaler and Becker defenses most compelling, because they speak to the broader economic issues or yield policy implications.  The Jackie Robinson defense is also important, but not applicable often enough.  The Dog defense is often raised, but rarely compelling; neither pets, nor professional sports, are really a big part of the economy (estimates to the contrary usually turn out to be more applicable to the Becker defense).

Markets in everything, American Indian edition

by  Tyler Cowen in

I’m mystified by Joel Waldfogel’s claim — and Nike’s claim — that, until now, there have been no markets in shoes just for American Indians.

American Indian shoes have been produced and traded for centuries.  Most of all they have been produced by American Indians.  Some of them are called moccasins.  Here is a bibliography of writings on American Indian footware.  Here are native American clothing stores, which also sell shoes.  Here is a craft manual for how to make American Indian footwear.

And of course plenty of companies make extra-wide and extra-large shoes, though of course not for American Indians exclusively.  There is the Mexican market as well, which caters to many "indigenous shapes," although admittedly on the shorter side. 

I like Joel’s book but I think he is far too pessimistic about the prospects for diversity in the modern world.  It’s also worth noting that if any group has been victimized and robbed by government, and driven into partial isolation, it is the American Indian.

The Tyranny of the Market

by  Justin Wolfers

A new book by my friend and Wharton colleague, Joel Waldfogel.  I’ve not read it yet, but based on our lunchtime conversations, I’m looking forward to it. (Hint: what does it take to get a free copy?)  Plus you’ve got to admire any book invoking the Rolling Stones in the title.

Joel has summarized the main arguments in his latest column at Slate.  Certainly a subtle and fascinating hypothesis about
how and when markets can fail us.  More commentary (from the Wharton writers) here.

George Will on Austan Goolsbee

by  Tyler Cowen in

It is rare that an Op-Ed is written praising an economist.  It makes many good points but there is one unjustified slap:

Goolsbee no doubt has lots of dubious ideas — he is, after all, a Democrat — about how government can creatively fiddle with the market’s allocation of wealth and opportunity.

Does the use of "no doubt" mean Will actually knows this?  But the next sentence comes and the piece closes on a different note altogether:

…he seems to be the sort of person — amiable, empirical and reasonable — you would want at the elbow of a Democratic president, if such there must be.

Markets in everything

by  Tyler Cowen in

There’s a hot market for demilitarized ICBM silos. There are three of
them on offer at eBay right now, with the asking price of $500,000 per
silo, which includes underground and above ground support facilities.
Hundreds of ICBM silos have been sold off in the last twenty years, as
new missile forces were reduced with the end of the Cold War, and the
enactment of arms reduction treaties.  Most of these are located in
remote areas.  For example, the three silo complex being offered on eBay
sits on 57 acres in central Washington State.

Here is further information. 

And while we are on the markets in everything topic, here is what Indians will do for you (if you pay them).

And here is a New Zealand market: lingerie for men (TC: clicking on this site is a mistake, please don’t do it, if only to avoid the music), who said small population and fixed costs limit product diversity (though they do ship by mail, how much of their business is Kiwi)? 

Thanks to several loyal MR readers for the pointers, at least one of them may wish to remain anonymous.

The Australian Labo(u)r Market

by  Justin Wolfers

An interesting (and emphatic) broadside from Richard Freeman.  And this is no Country Doctor making it up on the fly: Richard has long understood the Australian labour market better than just about any other economist, and certainly better anyone outside Australia.  (Dan Hamermesh is a close runner-up.)

My $0.02: This is what happens when conservative governments confuse decentralization and deregulation.

In the shower with Robert Frank

by  Justin Wolfers in

I tend to listen to NPR while showering, and really enjoyed this morning’s interview with Robert Frank.  The interview draws heavily from his book, The Economic Naturalist – previous blogged about by Tyler, here and here.

Robert Frank’s observations on economics teaching will fundamentally change what I do in the classroom.  What he has to say is important.  Read it.  Here.

Yes, this was previously covered on MR (here and here).  But I am intrigued by Frank’s ambition in arguing that we need to emphasize the "deep" concepts of economics in a way that transforms how our students see the world.  We econ profs probably fail, and it is hard to see how to do better.  But it is worth doing.

Perhaps blogs like Marginal Revolution help one better see the world through an economists lens.  But most econ profs teach in the classroom, not the blogosphere, and so I want to ask: How can we do a better job teaching what is important, true and beautiful in economics? Comments open.  But a request: Please only comment if you have taken the time to read the Frank piece (this one).

How to sound smart around the water cooler

by  Justin Wolfers in

The baseball playoffs begin today. (Go Red Sox!)  But if you haven’t been following the 162-game season, you may risk sounding foolish around the water cooler.

Here’s how to sound like an expert: Research tells us that prediction markets yield accurate forecasts.  Indeed, a prediction market forecast is likely smarter than any expert.  Simply point your browser to your favorite prediction market, and make the following observations confidently around the water cooler:

  1. Note that the American League looks much stronger than the National League.  (HT: Mike Giberson at Midas Oracle.)
  2. Sigh, while you say that "Once again the American League race looks like being the Red Sox or the Yankees."
  3. State emphatically that "the National League is anyone’s race.  Heck, even the come-from-behind Phillies are a chance."  (Say this as though you didn’t already know they were the betting favorites)

That’s it.  You are now an expert.  (How else do you think an Aussie can keep up a conversation about U.S. sports? I’ve been faking it for years… but shhh, don’t tell David Stern.)

The Real Significance of Changes in the Gender Happiness Gap

by  Justin Wolfers in

A qualifier: None of these comparisons are entirely satisfactory.  For instance, if you believe that there is very little variation in happiness across people, time, or states of the economy, then you would interpret the above comparisons as suggesting that the change in the female happiness gap is big, only when compared with small things.

Another qualifier: We only document changes in the measured gender happiness gap.

Any other ideas on how to describe the "oomph" (or economic significance) of changes in qualitative variables like happiness?

[Thanks to Betsey Stevenson for coauthoring this post.]

UPDATE 1: Steve Levitt chimes in.

UPDATE 2: Jezebel adds some perspective.

Honestly, it’s embarrassing

by  Justin Wolfers

I love my Nintendo Wii… And while I already look like a dork swinging imaginary tennis rackets you can be assured of a whole new level of dorkiness now that Dance Dance Revolution is available for the Wii.

But I won’t be alone.  I was visiting the San Francisco Fed two weeks ago, and a Wii was hooked up to a movie screen in the cafeteria.  This time it was Wii tennis, but think about the possibilities: next time dancing economists?

Two remaining questions:

Tyler Cowen gets mean and mad

by  Tyler Cowen in

I’ve now done a full review of Naomi Klein:

Most of the book is a
button-pressing, emotionally laden, whirlwind tour of global events
over the last 30 years: Katrina, the invasion of Iraq, torture in Chile,
the massacre in Tiananmen Square, the collapse of the Soviet Union, and
the September 11, 2001, terrorist attacks. The book offers not so much
an argument but rather a Dadaesque juxtaposition of themes and
supposedly parallel developments in the global market. Above the
excited recitation stands Milton Friedman as the überdemon of the march
toward global tyranny and squalor…

Often Ms. Klein’s proffered
connections are so impressionistic and so reliant on a smarmy wink to
the knowing that it is impossible to present them, much less critique
them, in the short space of a book review…

Ms. Klein also tellingly remarked, "I believe people believe their own bullshit. Ideology can be a great enabler for greed."

When it comes to the best-selling "Shock Doctrine," that is perhaps the bottom line on what Klein herself has been up to.

Here is the full review; just imagine if I hadn’t liked the book!