New thinking in real estate, China market(s) of the day

by  Tyler Cowen in

Who needs Match.com?

Jin Tai Cheng, a Beijing company, is offering a creative solution for
prospective buyers at its "Ecological Bay" Villa project. The company
encourages future homeowners to date its sales girls and promises a
wedding present of RMB 60,000 to any couple that ends up getting
married. The official story is that the company lured the sales ladies
with a commitment to pay 8% in sales commissions as well as the
opportunity to strike gold by securing a wealthy husband.

Here is the story.  Yet rarely is a market as simple as it sounds at first.  It seems they are trying to pair up "lesser" prospects without portraying them as such:

…a local Real Estate executive I spoke to pointed out that the
girls on offer are not that attractive. His theory is that the
developer is not making money on selling apartments and so it signed a
deal with a matchmaking agency to marry these "unwanted" girls to rich
husbands. In return, the developer will receive much more than RMB
60,000 for every girl they manage to "give away". This way, the girls
don't lose face by putting themselves on sale, the husbands don't lose
face by going directly to an agency to look for a bride, and the
developer makes a nice profit. In a country with too many apartments
and not enough girls, this doesn't sound like a bad idea.

I thank The Browser for the pointer.

Convexifying the choice set, an ongoing series

by  Tyler Cowen in

There is a new proposal for chess:

  • Slight Win: A player wins slightly if any of the following
    conditions hold:
    d. The opponent offers to concede a slight win and he or she agrees,
    e. He or she stalemates his or her opponent.
    f. Without making a move, a player calls the arbiter and proves that as
    a result of her opponent's last move, the same position has occurred thrice.

The player that wins slightly gets 4/6 points, and the player that loses slightly
get 2/6 points.

Why not go further and allow the players to bargain for a split sum of any magnitude?  "I offer you .5713 to stop playing now…"

From the comments, at Effect Measure

by  Tyler Cowen in

It surprises me that no one has mentioned this, so i'll end years of
quietly lurking and say it myself: a possible explanation for the
difference in clinical picture here vs Mexico lies in the sample size
here. 8 of 8 confirmed "swine flu" cases here have not involved serious
lower respiratory infection or death. But about 60 of about 1,000
generally unconfirmed cases of "swine flu" in Mexico have. If those all
confirm, that's about a 6% CFR. From what i've read, we don't have data
yet on the CFR of confirmed cases in Mexico, and we don't have a
satistically significant sample here for measuring phenomena in the
single percentage digits.

This tells me that there is no confirmed or statistically
significant difference in the clinical picture between US & Mexico.

Of course Mexico is where most of the data points lie.  That's Suzanne Bunton.  Read the other comments too.  If the Obama administration believes in competent government, it would be nice if they would meet the public health standards currently practiced by the government in Mexico.  Even a completed fence would not stop a virus and there is otherwise no reason to wait.  Should we in the meantime count on a more favorable mutation to protect us?

Markets in less than everything

by  Tyler Cowen in

But to other writers and editors, the Kindle is the ultimate bad idea whose time has come. Anne Fadiman,
the author, was relieved to learn that her essay collection, “Ex
Libris,” was not available on Kindle. “It would really be ironic if it
were,” she said of the book, which evokes her abiding passion for books
as objects.

Here is the article, interesting throughout.

The new swine flu: this is not a joke

by  Tyler Cowen in

The outbreak even hit Mexico's beloved national pastime — two sold-out
football matches Sunday — Pumas vs. Chivas and America vs. Tecos —
will be played in empty stadiums to prevent the spread of the disease.

Here is the story.  Some people are puzzled as to how human, pig, and bird strains of the flu have mixed together, but if you have spent any time in rural Mexico the answer is obvious: these creatures all live together in close quarters.

Here is my earlier study on how an economist should think about avian flu and pandemics.  You can follow the latest developments at Recombinomics and Crofsblog (the best blogroll on the topic) and Effect Measure.  Revere, an experienced professional, puts it simply:

There is ample room for serious worry. WHO is convening its expert
panel under the International Health Regulations to determine if the
pandemic threat level should be increased from phase 3 to phase 4. In
our view, this isn't even a close call. We are in phase 4 and if WHO
doesn't call it they risk being considered irrelevant and without
credibility.

I will repeat the general point that public health is one of the best ways to spend government money, as it is (often, not always) a true public good.

What I’ve been reading

by  Tyler Cowen in

1. Siddharth Kara, Sex Trafficking: Inside the Business of Modern Slavery.  A serious research effort and the best book so far on its topic.

2. Joseph Contreras, In the Shadow of the Giant: The Americanization of Modern Mexico.  A neglected side of recent Mexican history; one of the best books on where Mexico is headed.  Here is a recent article on related progress in Mexico's legal system.

3. Mahmood Mamdani, Saviors and Survivors: Darfur, Politics, and the War on Terror.  This revisionist account argues the conflict is political rather than racial and that the notion of "genocide" is an externally imposed category for international political reasons.  I found the arguments of this book hard to assess but it made for stimulating reading.

4. George Scialabba, What are Intellectuals Good For?, recommendation via Henry.  Fascinating essays on 20th century intellectuals, from an "ethical left" point of view.  I especially liked the piece on Pasolini (a favorite director of mine).

5. Dying Inside, by Robert Silverberg.  This 1972 classic has just been republished.  Is it science fiction or speculative fiction?  In any case it is full of social science; the basic premise is about how other people react to a man who has the ability to read peoples' minds and how psychologically destructive this power turns out to be.  If you wish to read every great science fiction book this is a must.

Debating Economics

by  Alex Tabarrok in

Intelligence Squared has held a series of debates in which they poll ayes and nayes before and after.  How should we expect opinion to change with such debates?  Let’s assume that the debate teams are evenly matched on average (since any debate resolution can be written in either the affirmative or negative this seems a weak assumption).  If so, then we ought to expect a random walk; that is, sometimes the aye team will be stronger and support for their position will grow (aye after – aye before will increase) and sometimes the nay team will be stronger and support for their position will grow.  On average, however, we ought to expect that if it’s 30% aye and 70% nay going in then it ought to be 30% aye and 70% nay going out, again, on average. Another way of saying this is that new information, by definition, should not swing your view systematically one way or the other.

Alas, the data refute this position.  The graph shown below (click to enlarge) looks at the percentage of ayes and nayes among the decided Underdogbefore and after.  The hypothesis says the data should lie around the 45 degree line.  Yet, there is a clear tendency for the minority position to gain adherents  – that is, there is an underdog advantage so positions with less than 50% of the ayes before tend to increase in adherents and positions with greater than 50% ayes tend to lose adherents.  What could explain this?

I see two plausible possibilities.

1) If the side with the larger numbers has weaker adherents they could be more likely to change their mind.

2)  The undecided are key and the undecided are lying.

For case 1, imagine that 10% of each group changes their minds; since 10% of a larger number is more switchers this could generate the data.  The problem with 1 and with the data more generally is that we don’t seem to see a tendency towards 50:50 in the world.  We focus on disputes, of course, but more often we reach some consensus (the moon is not made of blue cheese, voodoo doesn’t work and so forth).

Thus 2 is my best guess.  Note first that the number of “undecided” swing massively in these debates and in every case the number of undecided goes down a lot, itself peculiar if people are rational Bayesians.  A big swing in undecided votes is quite odd for two additional reasons.  First, when Justice Roberts said he’d never really thought about the constitutionality of abortion people were incredulous.  Similarly, could 30% of the audience (in a debate in which Tyler recently participated (pdf)) be truly undecided about whether “it is wrong to pay for sex”?  Second, and even more doubtful, could it be that 30% of the people at the debate were undecided–thus had not heard arguments in let’s say the previous 10 years that converted them one way or the other–but on that very night a majority of the undecided were at last pushed into the decided camp?  I think not, thus I think lying best explains the data.

Some questions for readers.  Can you think of another hypothesis to explain the data?  Can you think of a way of testing competing hypotheses?  And does anyone know of a larger database of debate decisions with ayes, nayes and undecided before and after?

Hat tip to Robin for suggesting that there might be a tendency to 50:50, Bryan and Tyler for discussion and Robin for collecting the data.

Markets in everything, photographs only edition

by  Tyler Cowen in

Most folks never realize how cute microbes can be when expanded
1,000,000 times and then fashioned into cuddly plush. Until now, that
is. Keep one on your desktop to remind yourself that there is an
"invisible" universe out there filled with very small things that can
do incredible damage to much bigger things. Then go and wash your
hands. Lather, rinse, repeat.

Here is the web site.  The options include human sperm, toxic mold, and, best of all, gangrene.  If you read closely it seems you only get a picture, not the real thing.

I thank TheBrowser for the pointer.

False Economy, by Alan Beattie

by  Tyler Cowen in

I enjoyed the book, most of all the chapter comparing Argentina and the United States.  I was struck by this bit:

New York is the only one out of the sixteen largest cities in the northeastern or midwestern states whose population is larger than it was fifty years ago.

Over that same time period our national population has roughly doubled. The subtitle of the book is A Surprising Economic History of the World.

Gerry Gunderson and the battle at Trinity College

by  Tyler Cowen in

In one previously undisclosed fight, Trinity College in Connecticut
is facing government scrutiny for its plan to spend part of a $9
million endowment from Wall Street investing legend Shelby Cullom Davis.

Trinity's Davis professor of business, Gerald Gunderson, says he
believed the plan, which would have funded scholarships for
international students, violated the wishes of the late Mr. Davis. He
alerted the Connecticut attorney general's office. Then, Mr. Gunderson
said in notes submitted to the agency, Trinity's president summoned him
to the school's cavernous Gothic conference room, where he called the
professor a "scoundrel" and threatened not to reappoint him.

Gunderson is a market-oriented economist; here is the full story.

Handicappling the Clark medal

by  Tyler Cowen in

Justin Lahart reports:

Friday, the American Economic Association will present the John Bates Clark medal, awarded to the nation’s most promising economist under the age of 40.

The Clark is often a harbinger of things to come. Of the 30 economists who have won it, 12 have gone on to win the Nobel, including last year’s Nobel winner, Paul Krugman. Other past winners include White House National Economic Council director Lawrence Summers and Steve Levitt, of Freakonomics fame. Since it was first awarded in 1947, the Clark has been given out every two years, but beginning next year it will be given out annually.

With a deep pool of young talent to draw from, there’s no sure winner. But among economists, the clear favorite is Esther Duflo, 36, who leads the Massachusetts Institute of Technology‘s Jameel Poverty Action Lab with MIT colleague Abhijit Banerjee.

Ms. Duflo has been at the forefront of the use of randomized experiments to analyze the effectiveness of development programs. If teacher attendance is a problem in rural India, for example, what happens if teachers are given cameras with date and time stamps and told to take a picture of themselves and their students each morning and afternoon? Ms. Duflo and economist Rema Hanna tried it out and found that in the “camera schools,” teacher absences fell sharply and student test scores improved. Does giving poor mothers 60 cents worth of dried beans as an incentive to immunize their children work? It works astoundingly well. By answering these kinds of problems, Ms. Duflo, her colleagues, and the many economists around the world she has helped inspire, are uncovering ways to make sure that money spent on helping poor people in developing countries is used effectively.

Harvard University‘s Sendhil Mullainathan, who founded the Poverty Action Lab with Ms. Duflo and Mr. Banerjee, is also likely on the Clark short list. He’s a leading light in the fast-growing field of behavioral economics, studying ways that psychology influences economic decisions. For one paper, he and frequent co-author Marianne Bertrand sent out fictitious resumes in response to want ads, randomly assigning each resume with very African American sounding or very white sounding names. The resumes with the very white names got far more call backs. Mr. Mullainathan, 36, is also applying behavioral economics insights to development problems. One insight: The behavioral weaknesses of the very poor are no different than the weaknesses of people in all walks of life, but because the poor have less margin for error, their behavioral weaknesses can be much more costly.

Emanuel Saez at the University of Calif.-Berkeley, another Clark candidate, has been tenaciously researching the causes of wealth and income inequality around the world, with a focus on the what’s happening at the very tip of the wealth pyramid. But because there is very little data on the very rich, Mr. Saez, 36, and his frequent co-author Thomas Piketty have combed through income tax figures to come up with historic estimates. Among their findings: That before the onset of the financial crisis, the income share of the top 1% of families by income accounted for nearly a quarter of U.S. income – the largest share since the late 1920s.