Energy economics
What most of us think about energy supply is wrong. Energy supplies are unlimited; it is energetic order that’s scarce, and the order in energy that’s expensive…
Our main use of energy isn’t lighting, locomotion, or cooling; what we use energy for, mainly, is to extract, refine, process, and purify energy itself. And the more efficient we become at refining energy in this way, the more we want to use the final product. Thus, more efficient engines, motors, lights, and cars lead to more energy consumption, not less…
These are the seven great energy heresies we propound in this book:
1. The cost of energy as we use it has less and less to do with the cost of fuel. Increasingly, it depends instead on the cost of the hardware we use to refine and process the fuel. Thus, we are not witnessing the twilight of fuel.
2. "Waste" is virtuous. We use up most of our energy refining energy itself, and dumping waste energy in the process. The more such wasteful refining we do, the better things get all around. All this waste lets us do more life-arrirming thing better, more clearly, and more safely.
4. The competitive advantage in manufacturing is now swinging decisively back toward the United States…[information technologies]
6. The raw fuels are not running out. The faster we extract and burn them, the faster we find still more. Whatever it is that we so restlessly seek — and it isn’t in fact "energy" — we will never run out. Energy supplies are infinite…
That is all from the new Peter Huber and Mark Mills book, The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy. The authors do not quite connect their premises to their conclusions, but it makes for interesting reading. I took away the lesson that our energy consumption will rise indefinitely (and why), at least until our civilization falls.
Robert Heilbroner has passed away
Robert Heilbroner, author of Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers and among the most influential economic historians of the 20th century, has died in New York. He was 85.
Dr
Heilbroner, who had suffered for the past three years with Lewy Body
disease, a rare Alzheimer’s-like illness, died of a stroke last
Wednesday, according to his son, David.
Here is an obituary.
100 Things We Learned This Year
Number one is:
Street brawlers sometimes arm themselves with potato peelers, according to the Home Office, which wants to make them banned weapons.
But we are wiser yet:
Crows apparently like the taste of windscreen-wiper blades.
Here is the full list. And the nationality most likely to read spam? The Brazilians, of course. Sightings of UFOs are way down since the late 1990s, but for a step backwards:
Lasagne has replaced chicken tikka massala as the favourite dish of Britons.
The AEAs
I have just returned from the annual meeting of the American Economic Assocation. I was mostly stuck in a hotel room interviewing job candidates but what David Warsh reports about the conference I can also say was true of our interview candidates.
When historians look back on economics in the last quarter of the 20th century, one of its more striking features will be the explosion in the quantity and quality of empirical work that was done…
[T]he advent of the desk-top computer made it possible to make a distinguished career doing something besides theory, namely sorting through the rich details of the real world in hopes of illuminating underlying mechanisms that are supposed to exist, or even finding relationships whose existence was unexpected.
That much was on conspicuous last week when the American Economic Association and its many affiliates held its annual meeting here….
Work was presented on all kinds of of practical topics. For example: cars, gas and pollution policies; downtown parking and traffic congestion; kidney exchange; private funding in china’s education system; patent examiners impact on enforcement; rural and urban poverty in Africa; the sources of racial differences in health care in the United States; the relationship between wealth and democracy; the U.S. gender pay gap; the growing population of postdoctoral students in U.S. universities; the question of who receives IPO allocations and why — all of them buttressed by careful empirical work….
And in the forthcoming spring 2005 issue of the Journal of Economic Perspectives, David Colander of Middlebury College reports the results of a survey of students in seven top graduate schools of economics that he conducted, first in the early 1980s, then again last year….
The proportion of those reporting a belief that empirical work was very important had doubled (to 30 percent), while those describing excellence in math as vital to a successful career halved (to 30 percent).
The Alphabet Diet
Eric Husman writes to me:
I have a personal theory I call the Alphabet Diet. I always begin with the fact that everyone who is eating anything is "on" a diet, and that when people do what is considered to be "going on" a diet, they are really *changing* their diet. I think the reason that most diets work at first is that they require you to change your eating habits. Since you are unfamiliar with the new rules, you basically cut back on the number of calories because you don’t know what’s "legal" and are confined to collections of suggested recipes based on a best-selling author’s preferences. As you discover foods within the diet that you like, you gradually get back to your previous calorie intake, i.e. you learn to "game" the diet. So I suggest that if you picked five letters at random from the alphabet and confine your diet to foods whose name does not contain those letters, you will see the same initial effects as the Atkins or any other diet. If the diet ceases to be effective, pick 5 new letters. It’s hard to write a best-selling book based on a principle that simple because there is no pseudo-scientific justification for random letters that will dazzle your would-be readership.
This is simple to graph with indifference curves. If you deny a person her ideal point, given previous income and prices, that person will then eat less. Over time, learning effects can counteract this tendency to some degree.
Here is my previous post on why the diet you choose does not seem to matter much.
Annual awards for prediction markets
Which prediction markets ("information futures") had the best year last year? Worst? Which contract performed the best or was the most interesting? What was the best academic paper in the area?
Find the answers to these questions, and many others here.
Thanks to Robin Hanson for the pointer, I will note that Robin was named (deservingly) as person of the year in this area, even though he bet Saddam would not be captured.
(Sad) joke of the day
Read it here.
The Time to Deduct
Congress has just passed a bill which lets taxpayers deduct this month’s donations to tsunami relief on their 2004 taxes. I think this is a good idea but why stop at one month and why stop at tsunami relief? Taxpayers can deduct IRA contributions from their previous years taxes up until April 15, why not allow the same thing for charitable deductions?
Allowing deductions to be made at the same time as taxes are paid will help individuals to make better decisions because it is much easier to examine the donation-tax tradeoff when you are doing your taxes in April than in the previous year when you are making your donations. Today, in contrast, you have to make your charitable donations at least 4 and a half months before the tradeoff becomes salient.
Is French taxation progressive?
…French social policy is not overwhelmingly redistributive, and it is not financed with progressive income taxes, as in Denmark and Sweden, nor is it financed with a mix of progressive income taxes and payroll taxes, as in Germany, Canada, and Britain. As in other corporatist/continental consrevative welfare states, French social spending is financed with a mix of regressive payroll taxes, regressive sales taxes, and, for a little over a decade, a smaller "general social contribution" tax…
From the 1950s until roughly 1980 France was the leader in income inequality among OECD nations….in France the top 20% of income earners received 24% of transfer payments and the bottom 20% of earners only 18%. By 1991 French social policy was slightly more progressive, but French manual workers "remain[ed] in virtually the same relative position…"
…France remains a highly stratified society in both the social and economic sense. The wealthiest 10% of the French income ladder are 50% richer than their Swedish counterparts and the upper quarter of the French income ladder is not brought down by the tax system the way it is in Denmark, Sweden, and Germany…today many of France’s wealthy citizens occupy privileged spots at the core of the "welfare state." This is one of the key reasons they tend to support it.
That is from Timothy Smith’s recent and excellent France in Crisis: Welfare, Inequality, and Globalization since 1980. The tale is told from a center-left perspective, and yes he also explains what the French get right. Highly recommended, it is the best book I know on the contemporary French economy and polity.
Toll Collect
After more than a year of delay, Toll Collect, Germany’s high-tech system of road pricing for big trucks, started operation earlier this week and appears to be working well. Some 800,000 trucks use Germany’s 12,000 km of highways every day – all of these trucks will soon be tracked by GPS (i.e. from outer space!) and the big ones will be billed. The toll system will also be tied into traffic reports and routing systems.
In other tolling news, Texas is considering a massive superhighway project that would be privately built, operated and tolled.
I see toll roads, most privately operated and some privately owned, as the road of the future. Road pricing can not only reduce congestion it can also help with accident externalities.
Previous posts on this topic including my debate with Tyler can be found here.
Stupid product warnings
A toilet brush with a tag that says "Do not use for personal hygiene" has taken top prize for the wackiest consumer warning label of the year, according to an anti-lawsuit group.
The Michigan Lawsuit Abuse Watch, M-LAW, whose main mission is to reveal how lawsuits and anxiety over lawsuits have created a need for overly obvious warnings on products, sponsors the The Wacky Warning Label Contest each year.
Other top finishers this year include:
— A scooter with the warning "This product moves when used."
— A digital thermometer with the advice "Once used rectally, the thermometer should not be used orally."
— An electric blender used for chopping and dicing that reminds users to " "Never remove food or other items from the blades while the product is operating."
— And a three-inch bag of air used for packaging that read "Do not use this product as a toy, pillow, or flotation device."
How many people can you warn how quickly?
Why didn’t warnings race around the Web ahead of the tsunami? We live at a time when news of Scott Peterson’s guilty verdict can spread in minutes from cell phone text messages sent from inside the courtroom to millions of people across the planet. Yet no one took advantage of the Web as the tsunami dashed toward shorelines.
"An effective viral campaign could’ve been launched in minutes," says Toronto-based tech author Don Tapscott.
Why didn’t thousands of tourists’ cell phones chirp with a call or text message saying, "Run away!"? Why didn’t BlackBerrys buzz with e-mail? Why didn’t TV sets at resorts show CNN reporting where the waves might hit next?
"These questions are going to haunt us," says Yrjo Lansipuro at the Ministry of Foreign Affairs of Finland, a nation that lost about 200 citizens who were in the regions hit by the tsunamis.
"Could a warning have reached people in time?"
Let’s say that I, and I alone, knew that a major disaster would strike the Indian coast in three hours’ time. What would I do? I admire the State Department in many regards, but calling them would not be my first instinct (it takes long enough to get an ordinary reimbursement processed there). I would try the following:
1. Post a warning on MR and Volokh.com, with suitably serious language, and a plea to spread the word.
2. Call or email the few people I know in India.
3. Google to the phone numbers of tourist hotels on the coast, call them up, and sound serious, lying if necessary.
How many people, if any, would such efforts save? Probably not very many, unless I got lucky at the hotel level. How would I phrase the warnings to sound credible, elicit cooperation, and minimize free-rider problems? Keep in mind that cranks predict earthquakes all the time, what is to distinguish me from them? Furthermore no local wants to scare away potential tourists or customers.
Our best bet may be coordinated cell phone warnings sent to customers in the affected regions:
…we now have a system in place that enables us to issue a warning to customers of Finnish mobile operators in any region of the world with 30 minutes’ notice…
Read more here. This article discusses how much scientists knew in the first place.
Incentives matter
Swofford, a postal worker from Seminole County, claimed his prize Tuesday in a $34.7 million lump sum payout, ending weeks of mystery about who won the November 24 drawing.
Swofford, 53, and his wife separated three years ago. But two weeks after the winning numbers were announced, Ann Swofford served him with divorce papers and claimed a share of the prize.
Just before Christmas, the Swoffords and their lawyers hammered out an agreement. His wife will get $5.25 million and $1 million will be set aside to support their 11-year-old son. In return, she agreed not to seek any more of Swofford’s winnings.
Swofford said he remembered reading about a divorce case where a lottery winner kept it a secret and was penalized in court.
Here is the full story. And here is a very different discussion of how incentives can matter.
How to lose weight
If you want to lose weight, stop worrying about which diet is most effective and simply pick whatever programme you find easiest to follow.
Read more here.
Gerard Debreu has passed away
Gerard Debreu, 83, a former University of California
at Berkeley economist who won a Nobel Prize for breakthroughs in the
study of supply and demand, died Dec. 31 in Paris. No cause of death
was reported.Dr. Debreu taught at Berkeley for more than 30 years.
He won the 1983 Nobel Prize in economic sciences for his theoretical
work on how prices operate to balance supply and demand.
Here is an obituary. Here is The New York Times account.