Blog post headline of the day
"Is it Gouging if Politicians Charge $1000 for Meal?"
That is Michael Giberson, here is the post.
Paying people to stay in the path of the storm.
By now you have seen pictures of the long lines of cars leaving Texas. Some reports suggest average speeds of one mile per hour. It is unlikely that such a result is optimal.
Randall Parker suggested closing or limiting some of the on-ramps to freeways to limit clogging. Or perhaps we should have given priority to cars with more passengers, in part to encourage "car pooling." I’ve also heard rumors that the police closed off too many secondary roads. We went from paying too little attention to evacuation (Katrina) to pushing evacuation very hard (Rita), but unaware of its full difficulties (not to mention the exploding bus full of old people).
The economist recoils at the idea of quantity restrictions on cars. Might there be a way to use the price system? Having police collect tolls at the major highways is one option, but the very process would slow down traffic. And it doesn’t sound exactly fair to the poor. So how about a more devious, Swiftian idea? Pay people who stay behind. By the day, of course. And only if they own cars.
More on Contingent Fees
The ABA Journal Report has an article on my study of contingent fees (with E. Helland). I liked this:
"I’m actually a proponent of tort reform," Tabarrok says. "But I also believe in freedom of contract. What some reformers propose interferes with how plaintiffs reward their attorneys, and when I see interference with contract, I want there to be a high bar before it’s allowed.
The funniest line, however, was this:
Critics dispute the authors’ fundamental assumption that restrictions on contingent fees increase the incentive of lawyers to charge hourly fees. Despite Tabarrok’s assertion that the assumption is "trivial economics" and that "no economist would disagree with it," economists and legal scholars do.
Imagine that tips for waiters were banned. What would happen to wages? They would increase. No big surprise but apply the same idea to lawyer contingent fees and we get lots of objections.
I’m not fixated on the critics, however, because the main results of the paper are empirical. When contingent fees are restricted the number of dropped cases increases as does the time to settlement. The theory that this occurs because lawyers are shifting toward hourly fees is consistent with the empirical findings but there could be other explanations as well.
Betting odds for the forthcoming world chess championship
Read them here (scroll down just a bit), the Indian Vishy Anand is favored with implicit odds at 34.8 percent. Kasparov says either Anand, Leko, or Topalov will win with probability 95 percent, has he stopped buying their shares?
Addendum: The competition starts Tuesday. I’ve been expecting Topalov to win. Leko folded in his last game against Kramnik in their match. Anand is the most talented player but I feel his time has come and gone. If he had the will to be world champion, he would have achieved it by now, keeping in mind there have been several world championship titles he could have won!
Late breaking news on housing vouchers
From the WSJ Storm News Tracker:
2:32
p.m.: U.S. Homeland Security Secretary Michael Chertoff and Housing
Secretary Alphonso Jackson announced a program to pay for three-month
rental costs anywhere in the country for homeowners or renters whose
residences were destroyed by Katrina.
I agree with John Palmer, who sent me the clip, "This Is So Sensible, I Can Hardly Believe It!"
Congratulations to Ed Olsen!
Trailers Trashed
FEMA’s plan to house hurricane evacuees in trailers is already looking like a disaster:
Federal Emergency Management Agency officials complain of a drastic
shortage of sites suitable to state and local officials for the huge
trailer parks that FEMA hopes to establish for evacuees. Local and
parish leaders say FEMA’s plans to supply the trailer parks with water,
sewer, electricity and other services are haphazard or nonexistent, and
the encampments — some of which could include 15,000 units — are
bigger than any the agency has ever established.
Fortunately, Ed Olsen’s plan to expand the already existing housing voucher program is receiving a lot of support. The Senate has already passed a plan, a House plan is pending, only the administration lags. See also my previous post on Rotting in FEMA City.
America’s most dangerous animal, revisited
A few days ago I cited The New York Times on the honeybee. Many of you (thank you, all) have written in to mention the deer, a source of deadly car crashes. While this choice depends on your theory of causality, the word "dangerous" does seem to apply, here is one data source.
A history of New Orleans music
In easy-to-access MP3 podcast form, thanks to Boing Boing for the pointer.
My new teaching assignment
Holmes The Common Law
Posner Law and Literature
Dissents by Holmes and Frankfurter
PART I: THE LIMITS OF JUSTICE
September 8 Sophocles – Antigone
September 15 Plato Apology
September 22 The Bible – Selections from Exodus, Kings I and II-
Part II: LIBERTY AND LICENSE
September 29 More Utopia
October 6 Shakespeare Measure for Measure
October 13 Milton Areopagitica
Short Paper Due #1 (5 pages)
Part III: TRIALS AND ORDEALS
October 20 Twain Pudd’nhead Wilson
October 27 Melville Billy Budd
November 3 Selection from Dostoievsky The Brothers Karamazov
Kafka, In the Penal Colony from Collected Stories
Part IV: PERFORMANCE AND WITNESS
November 10 Bertolt Brecht The Caucasian Chalk Circle
(Methuen Student Ed.)
Susan Glaspell Jury of Her Peers
November 17 Rebecca West, A Train of Powder
Harriet Jacobs Incidents in the Life of a Slave Girl
(selections)
November24 – THANKSGIVING
PART V: LITERATURE AND LEGAL CHANGE
December 1 Chinua Achebe Things Fall Apart
Tyler Cowen, Ramist
I organize my memory spatially. I remember all of my thousands of CDs, but am clueless about the relatively small number of iTunes I have purchased. Papers spread out on my office and home floors horizontally, but I know where everything is and what it means. Each of my messes contains unreconstructible information.
My wife is a sweetheart, and my greatest terror is an overzealous maid.
If I lived in a small area, my mental life would be much poorer. That is also why I love driving around and why I do not care to live by the ocean.
Human-to-human transmission of avian flu in Indonesia?
There appear to be increasing clusters of human cases of avian flu in Indonesia. Check out the Avian flu blog (scroll down just a tiny bit) for an account. Recombinomics offers a technical discussion of the cases.
The best case option is that avian flu, at least in Indonesia, has become more efficient in jumping from birds to humans.
The most likely option is that weak human-to-human transmission has been going on in Indonesia, and possibly Vietnam, for some months. Fortunately this still could end up being a false alarm. Note also that options one and two could both be true at the same time.
The worst option is…well, the best case option is scary enough. Indonesian families commonly live with either doves or chickens or both.
Give the Lawyer his Cut
The latest issue of Forbes (Oct. 3) has an article by myself on contingent fees. (It’s based on a short AEI book, Two Cheers for Contingent Fees with Eric Helland).
Contrary to popular argument, contingent fees serve a social purpose. A lawyer paid by contingent fee will only take those cases that have a decent probability of winning – thus contingent-fee lawyers act as screeners, saving the court system and everyone else the trouble of examining frivolous cases. That’s right, contingent-fee lawyers reduce the number of frivolous cases! When contingent fees are restricted, lawyers naturally turn to alternatives such as charging by the hour. But a lawyer paid by the hour has little incentive to screen. Helland and I find evidence consistent with the screening function of contingent fees.
In states that restrict contingent fees,
plaintiffs dropped 18% of cases before trial without getting a
settlement. In states where lawyers were free to take their usual 33%
cut, they dropped only 5% of cases. This tells us that lawyers had
already screened out the junk suits and were pursuing those with merit.Our study also shows that the time to
settlement in medical malpractice cases is 22% longer in states that
restrict contingent fees. In Florida, in the 300 days after contingent
fees were restricted in 1985, settlement time increased by 13%. Why?
When lawyers are paid by the hour, they have little incentive to settle
quickly.
By the way, one of the fun things about doing an article for Forbes is that they always send out a professional photographer – which for an academic like me can be quite a thrill as they really do primp and preen over you.
Turn to the right, oh yes, that’s it, hold it, hold it, Great! The camera loves you! Now lean back a little, good, good, good. Be like a Cheetah, a Cheetah. No a Lion, yes, a Lion. Hold it, Hold it. Yes. Wonderful! Wonderful!
I exaggerate, but it was fun. Unfortunately, the photo is not online so you will have to go to the newsstand to see the result. It’s arty, but I’d say they captured the lion. Yeah, baby.
Google is using prediction markets within the firm
The markets were designed to forecast product launch dates, new office openings, and many other things of strategic importance to Google. So far, more than a thousand Googlers have bid on 146 events in 43 different subject areas (no payment is required to play).
We designed the market so that the price of an event should, in theory, reflect a consensus probability that the event will occur. To determine accuracy of the market, we looked at the connection between prices of events and the frequency with which they actually occurred. If prices are correct, events priced at 10 cents should occur about 10 percent of the time.
In the graph below, the X-axis indicates the price ranges for the
group. The orange line represents the average price, which is how often
outcomes in that group should actually happen according to market
prices. The purple line is how often they did happen. Ideally these
would be equal, and as you can see they’re pretty close. So our prices
really do represent probabilities – very exciting!
Here is the story, and thanks to several of you who sent in the link.
Who are the world’s top intellectuals?
Cast your five votes here, plus you can see how old each candidate is and how many of these names you have read or heard of. Several economists, such as Krugman, Becker, Sen, Summers, and Bhagwati, are included in the polling; Hernando de Soto and Richard Posner make the list as well. For other nominees, how about Derek Parfit and Milton Friedman? Philip Roth? The politically incorrect Michel Houllebecq? Bruno Latour? Marvin Minsky or Hans Moravec? I am glad to see Pramoedya Toer on the list. How about the Google people? An early blogger?
The most dangerous animal
What is the most dangerous animal in the United States, not counting people? View here. Read here. If that (NYT) link won’t work for you, here is another source.
