Will life extension increase risk aversion?

by  Tyler Cowen in

Scientist Tom Johnson says that humans someday might live to 350 years old. Aubrey De Grey argues that as our lifespans become longer, we might stop taking high-speed automobile trips. Why risk losing so much, and after all, what would the hurry be?

FuturePundit suggests that perhaps our level of risk-taking behavior is regulated by our biology and hormonal systems. So if driving a car doesn’t “feel too risky” now, living to 350 won’t change this, perhaps we were never making an intertemporal calculation in the first place. Furthermore, it is young males who take the most risks, and they have large numbers of years left to lose. So giving us more years might not change our behavior that much. FuturePundit then wonders how drugs and neuroscience engineering might change this conclusion. What if you could take drugs that would make you more averse to risky behavior? Might you then, sitting alone in your room, ponder your remaining 320 years and decide to clutch on to them?

Early Amazon civilization discovered

by  Tyler Cowen in

Researchers have now found hard evidence that the Amazon had a sophisticated and populous civilization, before the arrival of Columbus.

The finds lay to rest the notion that the region was pristine forest when the explorer landed in 1492…Although there was probably some untouched forest in the region, Heckenberger [the researcher] reckons that most was managed by the inhabitants and kept for cultural and symbolic, rather than economic, reasons. “It was probably very important to them just as Central Park is important to New Yorkers,” he says.

Here is the original link from Nature. Many individuals have been attached to “crankier” versions of this theory, suggesting that “prehistory” in the Americas was quite advanced, see here for a more skeptical take.

You can always resell it

by  Tyler Cowen in

Why not just give gifts of money? Prudence of Slate tells us that norms are changing, and that more people are finding cash gifts for weddings acceptable. The couple that posed the initial question put it as follows:

So they think it’s “tacky” to ask for money? Well, we think it’s worse to make people spend precious time getting gifts we don’t need or want.

Amen, says this economist, whose best wedding presents from this last May often were the gift certificates. I might add that co-blogger Alex and his wife gave us a very useful gift certificate for a framing shop.

One economic estimate suggested that Christmas gifts alone involve a “deadweight loss” of $4 billion. I’ve never been convinced by this number, gifts help people sort out how well their friends and loved ones understand them, and create new lines of communication, surely this is an offsetting benefit. And sometimes a surprise or show of affection, as embodied in a gift, is simply more fun. Nonetheless gifts are a form of signalling, and very often people invest too much effort in the signal, just to be higher in the pecking order. I hope Prudence is right about the change in norms.

Addendum: I read the following in the Weekend Financial Times: “In 1979, Karen Davis started a hickory-baked ham company in Marieta, Georgia, and on opening day her parents gave her a porcelain pig for good luck. Over the next two decades, she estimates that she got 400-500 pig gifts. “Pigs aren’t my thing,” she says, though she did warm to the piggy banks.” See the article for other examples of dubious gifts.

The trade deficit and the dollar

by  Tyler Cowen in

America has had persisting trade deficits, so some economists think the dollar is due for a big plunge. The magazine The Economist cites some commentators as suggesting a 40 percent decline against the Euro. Read the commentary of Brad DeLong, who resists making such a prediction himself. See Brad’s longer and more detailed discussion, where he raises the possibility that capital inflow into the U.S. will slow down and the dollar will plummet. He tells us that the whole process has gone on far longer than he would have expected, but again he stops short of offering his own prediction. He wonders when foreign investors will start worrying about the risk of a huge dollar depreciation.

I am more optimistic than the doomsayers (N.B.: I do not read Brad as belonging to this group, though perhaps he is flirting with the idea of joining), in part because I think that strong growth and productivity, which currently appear to be in the cards, can avoid or postpone a “day of reckoning” of this kind. America is simply a good place to invest, and will remain so for the foreseeable future. The dollar did decline by over 50 percent in the 1980s, against major currencies, but at that time high dollar values were more obviously a speculative bubble in the first place.

Monkey see, monkey do?

by  Tyler Cowen in

Monkeys appear to have an innate sense of when they are being treated unfairly, read here. Capuchin monkeys will refuse beneficial exchanges, if they see another monkey getting a better deal. Sound familiar? Similar results are found in the literature on experimental economics for humans, as Robert Frank notes at the link.

Here is one summary from The Washington Times, the only paper I can find in today’s Virginia power blackout, they don’t yet have the link on-line:

When both monkeys were given a cucumber slice after handing over the token, they completed the trade 95 percent of the time.
But when one was given the tastier grape for the same amount of work, the rate of cooperation from the other monkey fell to 60 percent…The refusal to make the exchange increased as the experiment continued…The scientists concluded that capuchins apparently measure rewards in relative terms…the tropical forest-dwelling capuchins were chosen for the experiment because they often share food.

One commentator on the study, a Charles Janson of SUNY, suggests that the behavior of the monkeys might have been learned in captivity (again, cited in The Washington Times).

Storming the MarginalRevolution

by  Tyler Cowen in

We at MarginalRevolution are committed to providing regular fresh content on a daily basis. That being said, we live in Northern Virginia, a big storm is coming, and Governor Mark Warner says we might lose electrical power for a while. I don’t expect blogging problems, but on the off-chance that you don’t hear from us for a short while, keep faith, we will be back as soon as conditions permit.

Panic at the Iowa Electronic Market?

by  Fabio Rojas in

The Iowa Electronic Market is an online securities exchange where traders buy and sell contracts whose monetary value depends on political events. Most contracts pay $1 if the event happens (Bush re-elected) or pay by vote share (e.g., “Vote share Bush 2000” would pay $.49).

Early this week, the contract “California recall cancelled” was selling for about $.05 – very confident the recall would go through. Then the panel of the 9th circuit postponed and the market jumped to about $1.10. Today, “recall cancelled” is trading at about $.03!! Could this be an example of a stampede at the Iowa Market? Is a single trader driving this market? If you are a trader, drop me an email and tell me your thoughts on what happened this week.

Advice for budding bloggers

by  Tyler Cowen in

Here is more on how blogs succeed, or fail, from Daniel Drezner. Focus on your audience, he says, rather than obsessing on getting links from the popular mega-blogs, such as Instapundit. Don’t neglect the link from Electric Venom, she says the world of blogging is a bit like high school, it has its bullies, people who go through friends like laundry, and so on. Her conclusion: don’t do it if you don’t enjoy it. John Scalzi tells us that the future belongs to the amateur blogger (N.B.: he is paid), and that the mega-bloggers have to focus on boring topics, such as Howard Dean.

Executive Pay

by  Fabio Rojas

The career of New York Stock Exchange Head Richard Grasso came to an end yesterday amid a furor related to his enormous compensation package (see here). Of course, the question is not how big his package was, but how much value did he add to the NYSE and was his fee competitive? Hard to say about the first since the NYSE is a non-profit corporation, but Grasso ($140M pay out) would be paid more than Jefferey Barbakow, who, according to Forbes’ magazine (click here, then click on “view list by rank”), was the highest paid executive of a publicly held firm in 2002 at $116M.

Are cell phones killing off ghost stories?

by  Tyler Cowen in

Could ghost sightings be declining with the advent of cell phones? Will haunted houses lose their luster? The link is from the ever-excellent www.cronaca.com.

I can think of at least two explanations for this possible phenomenon. First, perhaps people with cell phones feel safer and hallucinate less. Second, perhaps it is harder to lie/self-delude right on the spot than afterwards, imagine telling your friend there is a ghost right next to you now. What if your friend asks to speak to it or hear it groaning? I also would like more data, how about alien abduction stories, noting that spaceships are presumably “dead zones.” My calling plan does not mention them…

Frankenfoods and the environment

by  Tyler Cowen

Can genetically-modified foods help us clean up the environment? Jonathan Rauch says yes. We will need fewer herbicides, less irrigation, and we will have less need to farm on environmentally sensitive lands. By limitating habitat destruction we will support biodiversity.

Molecular biologist Don Doering goes further:

[He] envisions transgenic crops designed specifically to solve environmental problems: crops that might fertilize the soil, crops that could clean water, crops tailored to remedy the ecological problems of specific places. “Suddenly you might find yourself with a virtually chemical-free agriculture, where your cropland itself is filtering the water, it’s protecting the watershed, it’s providing habitat,” Doering told me. “There is still so little investment in what I call design-for-environment.”

Rauch goes out on a limb:

I hereby hazard a prediction. In ten years or less, most American environmentalists (European ones are more dogmatic) will regard genetic modification as one of their most powerful tools. In only the past ten years or so, after all, environmentalists have reversed field and embraced market mechanisms–tradable emissions permits and the like–as useful in the fight against pollution. The environmental logic of biotechnology is, if anything, even more compelling. The potential upside of genetic modification is simply too large to ignore–and therefore environmentalists will not ignore it. Biotechnology will transform agriculture, and in doing so will transform American environmentalism.