Steve Levitt’s poker project

How much more succesful can a player be if he knows the odds? What
are the best betting strategies for getting the most money out of a
winning hand? Are there simple betting strategies that can be used to
win money even with losing hands? To what extent does position from the
button and position relative to other players matter? Does having a big
stack of chips allow a player to bully others and win more of their
money? Do people lose big after winning a big hand, or does success
follow success? These are some of the many questions we would like to
answer.

Our
goal is to understand the factors that make players succesful at poker.
Many people have written books on poker theory, but there has yet to be
a systematic analysis using actual data on what works and what doesn’t.
University of Chicago economist Steven Levitt hopes to change this and
perform the first large scale analysis of poker.

Here is the link.  And by the way, here is Steve’s update on car seats vs. seat belts.  Furthermore most of Steve’s papers are now on-line.  Thanks to Chris F. Masse and Joseph O’Malley for the pointers.

Who eats meat without feet?

Earlier I wrote, "We will soon need a new word for people who eat meat but not animals."  Most of the suggestions I got were awful (no, not your suggestion that was great).  Seriously, thanks to everyone who wrote.  Here are a few that I thought especially interesting.

From Brock Cusick, synthetarian.   I like it but I fear that synthetic still has negative connotation and we want a word that will be adopted by those who practice it.

From Chris Rasch, Cultivore, Cultivarian or Ameglians (scroll to Dish of the Day.)

From Travis Corcoran, Soylent-atarians.  Also good but a mite obscure.

In the end my choice is for VeggieTechie or VT, as in I’m a VT (also good for putting on restaurant menus).  Thus in the hopes of scoring a Google cascade:

Definition: VeggieTechie – a person who eats vegetables and synthetic meat but not meat harvested from an animal.

In the meantime AntiGravitas has another question, Is it cannibalism to eat vat-grown human meat?

The fall of Hollywood?

OK, Sith is now the tenth highest grossing film of all time, and probably headed toward number seven.  But Wall Street is bearish on film stocks; on Monday Dreamworks shares fell more than 13%.  The big fear is that DVD sales are falling, as Shrek 2 bombed in this market.  Hollywood box office has been down for nineteen weeks out of twenty, and believe me Harry Potter won’t do Johnny Depp and Tim Burton any favors.  Daniel Gross opined that Hollywood is the next Detroit.  Others see a big mystery in falling receipts.  Yet others blame blue-state bigotry.  I will offer a few more fundamental hypotheses:

1. Hollywood cannot control its marketing costs or star salaries.  The growing importance of DVDs increases the "needle in the haystack" problem for any single film and thus locks studios into more marketing, creating a vicious spiral.

2. TV is now so much better, and offers artists greater creative freedom.  Why watch movies?

3. The Internet is outcompeting cinema, whether at the multiplex or on DVD.

4. Big TV screens are keeping people at home, which lowers box office receipts.  This also hurts the long-term prospects of many DVDs.

5. The demand for DVDs has fallen because movie lovers have completed their core collections, just as the demands for classical CDs have fallen.

5. The demand for DVDs was due to fall in any case.  Forget the collectors, you buy DVDs to have a stock on hand so you don’t have to run out to the video store on short notice.  Now everyone has a stock.  Stocks must be replenished every now and then, but there is no longer a large new cohort simultaneously building up a stock from scratch.

The bottom line: These trends do not appear reversible in the short run.  It is not just that this year’s movies mostly stink.

Claims my Russian wife laughs at (a continuing series)

"You know darling, we don’t need to buy insurance for our air conditioner repairs.  We should buy insurance only for truly catastrophic events, such as might bankrupt us.  Look at it this way.  The insurance company has to make money, and of course they have overhead and processing expenses.  So the company must offer, in dollar terms, negative expected value on this insurance.  Of course we are not rich, but having to fix the air conditioner again would be a small expenditure relative to our budgets.  For all practical purposes, our marginal utility of money curve is flat across that range.  We should not waste our money insuring against such small events."

Here is a previous installment in the series.

Bounty Hunting, the sad part

The sky was dark as I drove to Baltimore to try my hand at bounty hunting; it was 5:15 am.  Fugitives from the law tend not be early-rising types so bounty hunters search homes in the morning and the streets at night.

Dennis, who has been in the business 21 years and has volunteered to show me the ropes, hands me a photo.  Our first fugitive is a surprise.  Taken a few years ago in better times, the photo is of an attractive young woman perhaps at her prom.  She has long, blond hair and bright eyes.  She is smiling. 

We drive to the house where a tip places her recently.  It’s a middle class home in a nice suburb.  Children’s toys are strewn about the garden.  I’m accompanied by Dennis and two of his co-workers, a former police officer and a former sherrif’s deputy.  One of them takes the back while Dennis knocks.  A women still in her nightclothes answers.  She does not seem surprised to have four men knocking at her door in the early morning.  She volunteers that we can search the house.  We enter and get the whole story.

"Chrissy" is her niece.  She was at the house two days ago and may return. Chrissy has had her life ruined by drugs.  Or, perhaps she has ruined her life with drugs – sometimes it’s hard to tell.  She is now a heroin addict whose boyfriend regularly beats her.  The aunt is momentarily shocked when we show her the photo.  No, she doesn’t look like that anymore – her hair is brown, her face is covered with scabs and usually bruised, she weighs maybe 85 pounds.  "Be gentle with her," the Aunt says even though "she will probably fight."

The Aunt gives us another location – Chrissy is living out of her car with her mother.  We are about to leave when the Aunt thanks us for being quiet, there’s a child in the house who was scared when the police last came.  The child is Chrissy’s son.

The continuing rise of religious publishing

Yes the new Harry Potter will be a big hit, but the real growth in publishing revenue is coming elsewhere:

In 2004, religious books represented 7 percent of all book sales, with $1.95 billion in net revenues. The book industry overall totaled $26.45 billion in net revenues, according to the Book Industry Study Group. Translated into consumer spending, readers spent $3.7 billion on religious books, a category that includes Christian books. That is an increase of nearly 285 percent from 1983.  "It is the only book category where we’ve seen that kind of growth rate," Greco said.

Here is the full story.

Rogue Economist!

A famous economist is trying to capture terrorists by combing through data on banking records.  Wimpy. Wimpy. Wimpy.  A real rogue economist would go after them with his bare hands.  Grrrrr! 🙂

Today, I am in Baltimore, one of the roughest cities in the United States.  Not content to study bounty hunters from the safe confines of my desk I am going hunting with the real thing.  Is this my dangerous summer?  Nah, that is next summer!

I am really going to Baltimore to learn.  Tyler writes on development and globalization and spends a lot of time traveling and living in poor countries.  It’s a good model to emulate.  Blackboard economics can only get you so far.  I am working on a book about bounty hunting but also about bounties and prizes more generally.  I figure one less equation and one more story about Doc Rock and the Fugitive will double my sales.    

The Dogs of Peace

Last night as I was trying to sleep, something strange happened: a dog barked, and then another replied.  When I was in Liberia last year, just after the siege of Monrovia, I never heard or saw dogs.  At that time, the residents had been so poor and desperate that most of the dogs had been eaten.

Driving around yesterday, I also saw goats and chickens, lots of chickens (I awoke this morning to the call of a rooster). Another member of our team saw cows. This is a significant change from one year ago.  Farm animals require food, i.e. foregone current consumption.  Farm animals are the capital of pre-capitalist societies, they represent savings and property rights and are a sign that people have some hope for the future. 

The return of the dogs is a small beginning for a ravaged land but it is a beginning.

Markets in Everything: Secret Lovers

The SecretLover collection of cards is "the first
line exclusively for people having affairs."  There are cards to give to your secret lover on birthdays, special occasions, even anniversaries!

I want to go on record as saying that I am totally opposed to this depraved idea.  I hope that this business fails utterly.  It’s hard enough to remember my wife’s birthday, Valentine’s day, our anniversary etc.  And now I’m supposed to send my secret lover cards as well?  Outrageous.

Thanks to Avery Katz for the pointer.

Alfonso Lorenzo in The Wall Street Journal

See the front page of today’s Wall Street Journal:

Since his schizophrenia was diagnosed in 1991, Alfonso Lorenzo Santos has divided his time between a psychiatric clinic in Cuernavaca and his tiny lime-green house in this remote mountain village. At home, he often gets so violent his neighbors chain him to a wall.  Yet despite his anger and terrifying delusions, Mr. Lorenzo has become one of Mexico’s most innovative folk painters, piling points upon points of paint on paper, like tiny tiles in a mosaic.

Mr. Lorenzo, now around 54 years old — he was orphaned and doesn’t know his age exactly — is part of a generation of Mexican-Indian artists from the Balsas river region, about 75 miles from Acapulco. These artists started painting in the 1960s for tourist dollars on bark paper, called amate in the Nahuatl language.

One group of amate painters moved to Cuernavaca in the 1970s to live with Edmond Rabkin, a New York expatriate who introduced them to Western literature and music. Those artists, especially Marcial Camilo Ayala, whose work is now displayed at the Smithsonian’s National Museum of the American Indian in Washington, often paint romantic visions of village life.

Some Ameyaltepec artists developed a harder edge, especially Mr. Lorenzo, whose figures rarely smile and whose birds have menacing claws. In the 1970s, Mr. Lorenzo moved to Mexico City, where an art dealer promoted him as the descendant of Aztec princes, and where he had his first psychotic episode, says Gobi Stromberg, a Cuernavaca art patron. Complaining to friends that his heart was exploding, he returned to Ameyaltepec around 1980, wandered the arid mountains, cursed at neighbors and flung stones at them. Barely 5 feet tall, but stocky, Mr. Lorenzo became a threatening figure. After villagers decided he had to be restrained, several volunteers wrestled him to the ground and chained him to a wall in his house, where he remained for several years…

"He likes the goriness of Catholicism because it depicts a kind of scary world he lives in," says George Mason University professor Tyler Cowen, who has written a book on amate paintings.

Here is the story (WSJ password required, so just buy the paper, and note that the above links are mine, not theirs).  I am pleased to have served as translator for much of the work behind this article.  Here is my previous post on Alfonso, and an extensive link to photos.

More evidence for a housing bubble?

At least 70,800 apartment units were sold to condominium developers nationwide in 2004, up from 7,800 in 2002, according to Real Capital Analytics, a New York consulting firm.

As of June 1, at least 43,900 units have been sold to developers this year, says Dan Fasulo, director of market analysis for the firm. There are about 19 million rental apartments in the USA.

The conversions are occurring most rapidly in Southern California, Northern Virginia and the Miami and Las Vegas areas.

Here is the full story.  Might this suggest that rentals are underpriced relative to ownership?  Well…many of these condos end up back on the rental market.  What are the belief options? 

1. The condo market (does it have more fools?) is more bubbly than the market for rentable real estate, and entrepreneurs are arbitraging this difference.  Stupid people are holding condos and renting them out, rather than flipping them, under the belief that prices will rise for the indefinite future. 

2. The tax benefits of owning are higher in the condo market, but there is a fixed cost to conversion.  As real estate prices rise, it becomes more worthwhile to pursue these tax benefits, and thus we see more conversions.

Stay tuned…