An insight on the Kyoto treaty

Sidelight: Why does Germany favor the Kyoto Treaty? Not so much for greenhouse reasons but so that Berlin can shut down the country’s subsidized, politically powerful coal-mining industry. German leaders have wanted for decades to cut subsidies for coal production–even the presumably pro-labor current government wants this–because coal mined in Germany costs more than twice the world price, mainly owing to featherbedded work rules. Every move to reign in the German coal industry has been greeted by public howls. But if Berlin could blame a coal shut-down on an international obligation, and polls show the Kyoto accord is very popular among Germans, the equation would change.

From Gregg Easterbrook, thanks to Michael Green for the pointer.


Of the strange beliefs that Tyler examines he finds craziest the idea that slender hands might signal artistic ability. Maybe, but you know what they say about truth and fiction. Recent research indicates that finger length relative to height and the relative length of the ring to index finger can predict a great deal about male depression and intelligence, who is most at risk for heart attacks and sexual orientation. The theory is that testosterone and other hormones like androgen are the direct causes but fingers are a particulary good marker for hormone production.

Stressed populations yield fewer males?

When a country experiences a dramatic, faltering economy, there is an equally dramatic, faltering effect on the birth rate. Specifically, there are more female births than male births, according to new research from the University of California, Berkeley. Although this phenomenon has long been observed in herd animals, this is the first time it’s been shown to happen in humans, too.

Here is the full article. Here is a press release from Berkeley. Here is Ralph Catalano’s [the researcher] home page. Here is the article itself, but the whole thing will cost you $19.00.

By the way, here is another puzzle: more boys are born in southern Europe than in northern Europe. More females are born in Mexico. Could this all correspond to stress? Here is another study, it says that stressed out parents are more likely to have girls.

My take: I can believe the result, but I haven’t much raised my priors. Note that the spike in East German female births comes in 1991, when the East German economy collapses. OK, we have found some related results elsewhere, and for other animals, that counts for a good bit in my eyes. Nonetheless I am reminded of Brad DeLong’s excellent article Are all Economic Hypotheses False?”, with Kevin Lang. If you spend enough time looking, and there is publication bias, some results will pop up, whether they are true or not. The cynical would say that behind this article, as described in the press releases, there is really only a single data point, namely 1991. N.B.: I haven’t paid the $19 to read the article itself, final judgment is reserved for those who pay and read.

Addendum: Jon Klick read the piece and sent me the following:

You’re exactly right that you’re really only focusing on one data point to identify the hypothesized effect. One wonders why he didn’t include the GDP numbers directly rather than simply including a “collapse” variable. Doing so would have allowed for more variation. If the claim is endogeneity (isn’t it always), then that’s not really solved through the collapse variable since it would be endogenous too. Also, isn’t it kind of funny how he uses a 55 year pre-period relative to an 8 year post period. If the ARIMA structure went through any significant changes around the 1991 period, you would be implicitly weighting your early data (and their ARIMA parameters) more heavily than the potentially new parameters. Thus, the 1991 change could be due to these structural parameters rather than anything GDP related; impossible to sort the effect in this design.

…[it] potentially suffers from huge omitted variable bias. That said, there are intuitive reasons to believe the thrust. Apparently, boys are more expensive in every way during the early years of life (e.g., they have more health problems which cause financial and physical drains on parents . . . this shows up in the evidence that mothers of boys die earlier and the like). Presumably then, the reproductive system has developed such that boys are spontaneously aborted when their births are likely to be most troublesome (e.g., when economic and psychological stresses are particularly acute).

Look Out for the Big, Messy Countries

Over the next 50 years, Brazil, Russia, India and China – the BRICs economies – could become a much larger force in the world economy. We map out GDP growth, income per capita and currency movements in the BRICs economies until 2050.

The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.

The list of the world’s ten largest economies may look quite different in 2050. The largest economies in the world (by GDP) may no longer be the richest (by income per capita), making strategic choices for firms more complex.

We are also told that India has the greatest long-term potential for growth over the next thirty to fifty years.

From Goldman-Sachs, click here to get the whole study.

My take: These numbers are very speculative. Don’t assign them any predictive weight, but the article does outline one possible scenario. Don’t forget, circa 1960 or so, many economists were picking Ceylon (Sri Lanka) and the Philippines as the next big winners.

Thanks to Bart Oosterveld for the pointer to the piece.

How Word of Mouth Works

Here is Virginia Postrel (NYT registration required), telling us that TV shows need dispersed word of mouth to succeed:

Another factor did, however, predict whether a show’s audience would build over time: dispersion, or “entropy.” This technical measure essentially picks up how widespread the discussion is. Are comments concentrated in a few specialized groups, or does the show interest people in many different groups? Word of mouth spreads more quickly when it begins in different places or among people with different interests.

“It’s not enough to say that we got 10 mentions for our product or 10 people are talking about my research,” Professor Godes says. “To understand the impact that word of mouth is going to have, you have to understand how different those 10 people are.”

To take an academic example, he says: “Ten people sitting at Harvard talking about my research all talk to each other. I’d rather have one person at Harvard, one person at M.I.T. and one person at U.C.L.A. talking about my research. That’s really how the word will spread.”

Here is an interview with the original authors of the research. Here is a link to the working paper. The authors should be pleased to know that their hypothesis is making its way around the blogosphere.

Do We Need Government Science Advisors?

Chris Mooney says yes. Here is his bottom line:

In 1995, a budget-cutting Republican Congress fired its science advisers for being too politicized and too slow. In an age of bioterror, climate change, and high-tech weaponry, we need them back.

I’d like to return to this topic in the future, and the general question of whether pure science deserves government subsidy, but here is the link while it is hot.

Russian bonds now investment grade

Baa3, that is. Here is the Financial Times story.

Russia’s debt to gdp ratio is 28 percent, Japan’s is 140 percent, but obviously Japan has more accumulated trust.

How much do these ratings make sense?

On May 31 the U.S. credit-rating agency Moody’s Investors Service lowered by two notches Japan’s credit rating on yen-denominated bonds issued by the government. Japan’s previous credit rating was Aa3, the fourth highest grade and already the lowest among developed nations. This was downgraded to A2, placing Japan below such nations as Chile and Botswana and on par with Israel, Poland, and the Republic of South Africa. As a reason for the downgrade, Moody’s stated, “There exists nothing within present financial policy that can put the brakes on the worsening debt situation.” The outlook for the credit rating is “stable,” so the series of downgrades appears to have ended for the time being. In addition, Japan’s government bonds issued overseas maintained their Aa1 rating with a “stable” outlook. Moody’s had announced in February that it was considering downgrading Japanese bonds and continued considering the matter based on the state of the Japanese economy and government finances.

Here is the link for the Japanese comparison. You might note that Botswana, although it received a higher rating than Japan, has Japan as its largest creditor.

Dollars for Donors

The shortage of human organs for transplant grows worse every year. Better immuno-suppressive drugs and surgical techniques have raised the demand at the same time that better emergency medicine, reduced crime and safer roads have reduced organ supply. As a result, the waiting list for organ transplants is now 82,000 and rising and more than 6000 people will die this year while waiting for a transplant.

The economics of the shortage are so obvious that one popular textbook, Pindyck and Rubinfeld’s Microeconomics, uses the organ shortage to explain the effect of price controls more generally!

Perhaps because the shortage is growing, opposition to financial compensation for cadaveric donation (compensation for live donors is a distinct issue) appears to be lessening. The AMA, the American Society of Transplant Surgeons and the United Network for Organ Sharing have agreed that tests of the idea would be desirable. (A group of clerics, doctors, economists (I am a member) and others has formed to lobby for the idea – see our letter to Congress.) Currently, even tests are illegal but Representative James Greenwood (R, Pa.) has introduced a bill (H.R. 2856) that would create an exception.

Aside from the obvious benefits of saving lives, financial compensation for organ donation would likely save money. Here is a back-of-the-envelope calculation. There are some 285,000 people on dialysis in the US. Transplants are cheaper than dialysis by something like $10-$25,000 per year. About a quarter of those on dialysis are on the waiting list but perhaps as many as half could benefit from a transplant (fewer people are put on the list because of the shortage.) Let’s take the lower numbers. Assume that a quarter of the patients on dialysis could benefit from a transplant and that cost savings are $10,000 a year for five years. Then ending the shortage would save 3.5 billion dollars. Note again that this is a lower estimate. How much would it cost to end the shortage? No one knows for certain but I think a $5000 gift to the estates of organ donors would increase supply enough to greatly alleviate the shortage – that would involve doubling the supply to 12,000 for a paltry cost of $60 million. If this is not enough – raise the gift – anyway you cut it, the savings from dialysis exceed the costs of compensating donors by a large margin.

We should in fact count the value of the lives saved. If we can save 6000 lives and value each life at 3 million dollars (a lower value than what the US government typically uses in its calculations) then that is a further gain of 18 billion dollars.

A Tragedy of the Commons?
Economics provides another way of looking at the crisis. Currently we have organ socialism – anyone who needs an organ is allowed access to the organ pool regardless of whether or not they contributed to the upkeep. As with other resources owned in common we get over-exploitation and under-investment. Consider, instead a “no-give, no-take policy” – only those who have previously signed their organ donor cards are allowed access to the pool. Not only is this more moral than the current policy it creates an incentive to sign your organ donor card. Signing your card becomes the ticket to joining a club – the club of people who have agreed to share their organs should they no longer need them. Equivalently signing your organ donor card becomes analogous to buying insurance. I discuss the idea further in Entrepreneurial Economics.

An organ club has in fact been started – I am not just an adviser, I’m also a member! You can join too at

Canadian loopholes for file-sharing?

Is it legal to download music from Canada? Maybe. Read this update on the debate. The author, Jay Currie, also offers an excellent update on file-sharing and the RIAA suits, plus some analysis, consider this:

The record companies could use the P2P networks to publicize their clubs. They could flood Kazaa with current tunes, branded with their label, with a five to ten second promo at the beginning and end of the file. If you want to download Trick Daddy you can get a clean copy with the Trickster himself shilling for his record company’s club.

Adapting to the new digital, P2P reality may be painful. But in this case it is adapt or die. There will, no doubt, be deaths. I would not want to be in the retail record store business at the moment. But the creative destruction unleashed by new technology is already creating new alternatives for artists to reach their audiences.

As Terry O’Reilly pointed out in his 2002 article on P2P “Obscurity is a far greater threat to authors and creative artists than piracy.” And, as 32 time Grammy Award nominee John Snyder suggests in his Salon article, P2P file sharing represents the greatest marketing tool the music industry has ever come upon.

My take: I agree, but let’s get ready for a music industry with far lower marketing expenditures. This will not be pleasant or convenient in every way, as middlemen are not mere parasites, and property rights are not easily disposable. Our best hope is that Internet marketing can replace costly marketing campaigns, which will become increasingly unprofitable.

Addendum: Today’s Wall Street Journal, Money and Investing section, had some interesting figures on Apple’s iTunes service. You are charged 99 cents per song. It costs about 65 cents to license the song. Credit card fees are about 25 cents a transaction (which can include several songs), minus the two or three percent. Right now the service, extrapolated across a year, would bring in only $25 million in annual revenue. When the service is extended to Windows users, this could boost revenues to the store by as much as $600 million, profit by about a tenth as much.

Forbes poll on the best blogs

Here is the link for a Forbes article, listing well-known blogs in a number of areas, including food, medicine, politics, and media. The economics selection is very small but includes some of our favorites. It is, however, about time to allow for write-in voting, or at least list more voting options. Brad DeLong, probably the most widely read economics blog, isn’t listed at all, and that isn’t the only economics blog missing from the list….

Addendum: One knowledgeable correspondent told me that the economics blog selections were done in March, before MR was started I might add, and that some blogs were ruled out for being too political, not strictly economics.

Ghetto version of Monopoly causes outrage

That’s Monopoly the game, not the (related) economic concept.

Black leaders are outraged over a new board game called “Ghettopoly” that has “playas” acting like pimps and game cards reading, “You got yo whole neighborhood addicted to crack. Collect $50.”

The creator of Ghettopoly, David Chang, did not immediately answer e-mails or phone calls seeking comment about the game. On his Web site, Chang is unapologetic, and promises that more games — Hoodopoly, Hiphopopoly, Thugopoly and Redneckopoly — are coming soon.

[Note that I have added the link, it is not in the original article.]

I am surprised to hear it is being sold at Urban Outfitters, for the whole story click here. I give it the half-life of terrorism futures at the Pentagon. Here are some outraged people, scheming how to stop Chang.

Changes in Strange Beliefs

Here are some views that declined in popularity from 1925 to 1950. The first number is the percentage of people who believed the claim in 1925, the second number is the percentage from 1950:

1. Long, slender hands show an artistic nature: 42.0, 6.4

2. Adults can become feeble-minded from overstudy: 56.0, 10.9

3. You can closely judge a person’s IQ from his face: 50.0, 3.6

4. Women are by nature purer and better than men: 38.0, 1.8

5. The position of planets affects your character 15.0, 6.4

6. Expectant mothers can affect the character of unborn children by thought: 38.0, 2.7

From Robert Ehrlich’s Eight Preposterous Propositions: From the Genetics of Homosexuality to the Benefits of Global Warming. I’ll be blogging more about this interesting book soon.

Those six views are, of course, all preposterous. But if I had to defend one of these in a debate, I would opt for number three. Number six would come next, then number four. Number five is totally stupid, but in a way we have grown to expect. So number one seems the craziest to me.

How Easy is it to Evaluate a Lawyer?

Trying to learn whether a lawyer is a bad apple can be an exercise in futility. The ABA keeps a database of known ethics violators and makes the information available if you call 312-988-5321, but it relies on voluntary reports from state bar counsels. You could call the bar counsel in the appropriate state directly listed at but that can also be a dead end unless the attorney has been suspended or disbarred. Many states just say he’s “in good standing” even if he has had lots of complaints or worse.

So is it written on one of the leading medical blogs, he is trying to tell you that doctors are not the worst. Rangel offers this further link to make you more suspicious of lawyers.

Here is an interesting fact, though it is to me not so obviously nefarious as the author would make it out to be:

Some 68 percent of malpractice claims from 1996 through 1999 closed without the client receiving payment from the lawyer’s insurance company, and only 6.7 percent netted more than $50,000, according to a 2001 ABA survey. Why is it so hard? For one thing, only an estimated 30 to 50 percent of lawyers even carry insurance, so collecting is a long shot.

Here is his final parting blow, judge it as you wish, noting that a lawyer may know many other lawyers:

Unlike doctors, lawyers in most states are allowed to have sex with clients. And many do. Nearly 20 percent of attorneys surveyed nationwide by the University of Memphis in 1993 admitted they or a lawyer they knew had had an affair with a client.

New Nobel Prize

I hear it is Robert Engle and Clive Granger, not yet on the major news outlets, more to follow later today.

Addendum: Here is the press release from Stockholm. Here is a short article on cointegration, Granger’s most important contribution. Here is an introduction to ARCH models, a technique pioneered by Engle. Here is Engle’s home page, and Clive Granger’s home page.

My take: Very good picks, economists use their contributions all the time, note that their work is of less interest to the general public than is usually the case.