Marginal Revolution

Russ Roberts on "How Little We Know"

Tyler Cowen

The short essay on the financial crisis, and potential remedies, is here and it offers a Hayekian skepticism about many suggested solutions.  Excerpt:

Attempts to repair the system from the top-down will fail. We must find ways to let bottom-up solutions emerge.

Assorted links

Tyler Cowen

1. Audiobook version of David Hume's Treatise on Human Nature.

2. What some Iranians think of New Jersey.

3. Alan Lomax in Haiti.

4. James Wood tries to take down Paul Auster.

5. An unwanted kiss from a moral man.

6. What does the Miller-Moore amendment say?

The "paradox of choice" is not robust

Tyler Cowen

I missed this one while traveling, so I am grateful to the loyal MR reader who pointed it out to me:

... the psychological effect may not actually exist at all. It is hard to find much evidence that retailers are ferociously simplifying their offerings in an effort to boost sales. Starbucks boasts about its “87,000 drink combinations”; supermarkets are packed with options. This suggests that “choice demotivates” is not a universal human truth, but an effect that emerges under special circumstances.

Benjamin Scheibehenne, a psychologist at the University of Basel, was thinking along these lines when he decided (with Peter Todd and, later, Rainer Greifeneder) to design a range of experiments to figure out when choice demotivates, and when it does not.

But a curious thing happened almost immediately. They began by trying to replicate some classic experiments – such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect. Neither the original Lepper-Iyengar experiments nor the new study appears to be at fault: the results are just different and we don’t know why.

After designing 10 different experiments in which participants were asked to make a choice, and finding very little evidence that variety caused any problems, Scheibehenne and his colleagues tried to assemble all the studies, published and unpublished, of the effect.

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.”

That's by Tim Harford.  In my view, the so-called paradox of choice is one of the most overrated and incorrectly cited results in the social sciences.  The full account is here.

How worried should we be about the deficit?

Tyler Cowen

There have been many posts on this topic lately, start with Paul Krugman and Brad DeLong if you need to catch up.  Today I have a few simple points:

1. Even if "it is fine to borrow more" is the most likely scenario, it is not the only scenario.  Let's take a page from Marty Weitzman on climate change.  The worst-case scenarios matter too, because they can be very, very bad.  We need to think probabilistically about this issue.

2. Are there current intelligent discussions of the implied interest rate volatility embedded in current options prices?  If we are looking for market tests, why not start there?  Focusing on the point estimate of the market interest rate(s) discourages you from thinking probabilistically.

3. I know less about Belgium but I am not reassured by Krugman's point that "Italy can do it."  I and many other observers consider Italy's economy to be a basket case which will only get worse.  Nor is Japan in a satisfactory place, economically speaking.

4. Krugman writes: "Belgium is politically weak because of the linguistic divide; Italy is politically weak because it’s Italy. If these countries can run up debts of more than 100 percent of GDP without being destroyed by bond vigilantes, so can we."

I would interpret this evidence differently.  A high deficit often is an unfavorable symptom of bad politics, even if you think the high deficit is economically OK on its own terms.  It's a sign that you have dysfunctional institutions and decision-making procedures, as indeed they do in Belgium and Italy.  I believe that the not-always-swift American voter in fact understands high deficits -- correctly -- in this light.  They don't hold theories about "crowding out," rather they sense something in the house must be rotten.  And so they rail against deficits, as do some of their elected representatives.  It's a more justified reaction than the pure economics alone can illuminate.

When water regularly overflows from your toilet, you want the toilet fixed, whether or not the water is doing harm.

Sweet Trade

Alex Tabarrok

Here is a fun, easy and effective experiment that instructors can use to illustrate the gains from trade.  The instructor puts chocolate bars ("fun-size") or other candy in bags, one bag for each student. (Alternatively, you can use the type of small items that you can find at a dollar store.  Filling the bags is where the most work comes in especially if you have a large class). Students open the bag and are then asked to write down how much they would be willing to pay for the bag's contents.  But before snacking, students are allowed to trade.  After a few minutes of trade, ask the students to write down their valuation again.  Voila!  Gains from trade.  With a few numbers pulled at random from the students you can do a back of the envelope calculation for the total increase in value.  The experiment doesn't take long and the students will appreciate the candy!

A hat tip to Randy Simmons who first introduced this experiment to me.

Sentences to ponder

Tyler Cowen

Argentina is nearly the size of India, but with less than one-thirtieth India’s population.

The full story, which mostly covers dining in Buenos Aires, is here.

Markets in everything: department of yikes

Tyler Cowen

This possibility had never occurred to me:

Racial attacks like the ones behind the arrest of 32 suspects in Denver are part of a trend spreading across the country, gang experts said Saturday.

As part of the trend, black gang members videotape the assaults in trendy tourist districts and sell them on the underground market as entertainment.

"They knock a young white guy out with one blow to see if his knees will wobble and surround them and take their money," said the Rev. Leon Kelly, who runs a Denver gang-prevention program. "It's a joke."

Here is the full story and I thank new reader Mark for the pointer.  By the way, am I wrong in thinking it a bit unusual how the words "black" and "white" are thrown around so casually in this story?

The lessons of "Climategate"

Tyler Cowen

I've had many readers emailing me, asking what I think of the "trove" of emails unearthed from climate change researchers.  I'll admit I haven't read through the rather embarrassing revelations, I've only read a few media summaries and excerpts.  I see a few lessons:

1. Do not criticize other people in emails or assume that your emails will remain confidential, especially if you are working on a politically controversial topic.  Ask a lawyer about this, if need be.  "Duh," they will say to you.

2. The Jacksonian mode of discourse, or mode of conduct for that matter, can do harm to your cause, especially if you are otherwise trying to claim the scientific high ground.

The substantive issues remains as they were.  In Bayesian terms, if it turns out that many leading scientists do not practice numbers one and two, I am surprised that you are surprised.  It's very often that the scientific consensus "sounds that way."

In other words, I don't think there's much here, although the episode should remind us of some common yet easily forgotten lessons.

I should add that this episode will seem very important to you, if you conceive of the matter in terms of the moral qualities of "us vs. them."

Addendum: Robin Hanson offers a similar opinion.  I wrote my post before reading his, yet we come to the same conclusions I think.

On Bryan Caplan's ethical intuitionism

Tyler Cowen

Bryan offers the most extensive version of his view I've seen him blog.  On overall method and meta-ethics, I'm not so far from Bryan (and someday he will get a post in praise of him).  But I usually disagree with his applications of the method.  For instance he seems to argue that because employees are allowed to discriminate against employers, we should allow for a reciprocal right of employer discrimination.

My first objection is that we cannot judge an argument like this outside of a particular historical context.  In some cases employer discrimination rights may be fine, in others not.  I don't think ethical intuitionism, as could be represented by abstract reasoning from analogy. can do the hard work here.  Rather we must look to the history to understand the meaning and long-term effects of the discriminatory act under question.  In some cases the discrimination is effectively perpetuating a regime of evil and thus it is morally wrong.

Here is another part of Bryan's argument:

Suppose A and B be are dating.  A has an equally good outside option.  B can't bear to live without A.  A therefore has some bargaining power - vastly more than most employers, in fact.  Yet almost everyone thinks it would be wrong to force A to stay with B.

If there is one intuition that many reasonable people have, it is that family and personal relationships are not, in moral terms, exactly like commercial or work place relationships.  I get nervous when I see ethical intuitionists serve up simple analogies across these various realms.  (In general I think Bryan creates too much license for analogical reasoning of this kind.)  This is also why I am not convinced by all of the arguments in Steve Landsburg's Fair Play.

My overall view is that ethical intuitionism settles many fewer issues than most of its proponents like to think.  That said, there is often nowhere else to go.  We somehow need to come to terms with two propositions at the same time:

1. We need to think more rather than less ethically.

2. The content of ethical philosophy tells us less, in reliable terms, than most people would like to believe.

Facebook rescission?

Tyler Cowen

A Canadian woman on long-term sick leave for depression says she lost her benefits because her insurance agent found photos of her on Facebook in which she appeared to be having fun.

Nathalie Blanchard has been on leave from her job at IBM in Bromont, Quebec, for the last year.

The Canadian Broadcasting Corp. reported Saturday she was diagnosed with major depression and was receiving monthly sick-leave benefits from insurance giant Manulife.

...She said her insurance agent described several pictures Blanchard posted on Facebook, including ones showing her having a good time at a Chippendales bar show, at her birthday party and on a sun holiday.

The insurance company claims there is more to it than that.  Here is further information.

The practical value of economics as a science

Tyler Cowen

I know of three very good books on the actual (or sometimes hypothetical) application of economic ideas to real world problems:

1. Alex Tabarrok's Entrepreneurial Economics: Bright Ideas from the Dismal Science.

2. Some other book I haven't read and can no longer remember.

There is now a third:

3. Better Living Through Economics, edited by John J. Siegfried.  It covers emissions trading, the EITC, trade liberalization, welfare reform, the spectrum auction, airline deregulation, antitrust, the volunteer military, and Alvin Roth algorithms for deferred acceptance.  The contributions are uniformly excellent and written by top economists.

Assorted links

Tyler Cowen

1. Ben Casnocha reviews Kling and Schulz.

2. Are better-looking athletes more likely to win?

3. "Mozart was a Red" -- Murray Rothbard's satire of Rand, here is the full text.  It doesn't seem that funny to me.

4. Portrait of Durrr: an on-line poker player.

5. Seth Roberts interviews me.

Benton's smoky ham and bacon

Tyler Cowen

It's equal to the best I've had, including what I've sampled in Spain.  (I've also had especially fine ham in Slovenia.)  You can read about it and order it here.  It ships without incident or loss of value.  It's what David Chang uses in Momofuku and its affiliated restaurants, by the way.  It's not even very expensive.

Speaking of animal products, a few of you asked me a while ago how the eating of animals could possibly be morally justified.  My primary objection is to how we treat animals while they are alive, especially in factory farms.  The very rise and continuing existence of humanity is based on the widespread slaughter and extinction of other large mammals, not to mention other animals as well.  I'm not saying we should feel entirely comfortable with that, but rather a "non-aggression" stance toward other animals simply isn't possible, short of repudiating all of human civilization, even in its more primitive versions.  Everyone favors the murder of animals for human purposes, although different people draw the lines at different places.  I don't know of any good foundationalist approach to these issues, but at the very least we should be nicer to non-human animals at the margin and less willing to torture them.

At the policy level we should tax meat more heavily and regulate farms more strictly, for both environmental reasons and reasons of animal welfare.  I draw a line at where the life of the animal is "not worth living," but for me animal slaughter is not immoral per se. 

There are a few things you can do personally, including:

1. Buy less from factory farms.

2. Eat better meat and in turn eat less meat, substituting quality for quantity.  This is a common demographic pattern, so it shouldn't be too hard to mimic.

If you are a vegetarian, I think that is excellent.  If you're not, Benton's is a step toward both #1 and #2.

The culture that is Italy

Tyler Cowen

The new (old) labor market idea -- you can call it fifth best perhaps -- is hereditary jobs:

It is a problem many a company faces in these tough times: how to replace older – and costlier – workers with younger, cheaper ones.

A Rome bank has what it thinks is the solution: to make the jobs hereditary. Under a deal signed with unions this week, 76 employees of Banca di Credito Cooperativo di Roma (BCC di Roma) must take early retirement but they will get a choice: either take a payoff or leave your job to your son or daughter (or indeed any relative "up to the third degree", which would allow the post to be left even to great-nieces and nephews).

The full story is here and I thank The Browser for the pointer.

The corn genome

Tyler Cowen

I have many favorite topics which I don't blog much or at all.  One of these, taken from my time in Mexico, is the history of corn.  I very much enjoyed this recent article on the topic.  There is this good bit:

The sequencing revealed that an astonishing 85 percent of the corn genome is made up of "transposable elements" -- short stretches of DNA, some perhaps descended from viral invaders -- that show evidence of having moved around in corn's 10 chromosomes at some point in evolution. Their peregrinations provided the basis for new genes, or the on-and-off regulation of existing ones...

And this:

Corn's diversity of traits has been largely maintained, despite a century of intensive breeding. Modern corn produces cobs that range from the familiar farm-stand variety to lopsided baseballs and fat pencils and have a rainbow of kernel colors. Varieties of corn can have a greater genetic difference between them than what exists between human beings and chimpanzees.

And this:

Walbot, the Stanford geneticist, speculates that this unusual diversity survived because corn cultivation spread along a north-south axis. That exposed the species to a much greater variety of environmental conditions -- temperature, day length, rainfall, altitude -- than if it had spread along an east-west axis, as did wheat.

There is extraordinary genetic information and power in corn.  I am always willing to read another book on the history of corn and its breeding.

Is the Senate bill fiscally responsible?

Tyler Cowen

Matt Yglesias writes:

The bill contains provisions that have front-loaded positive impacts on the deficit and also have provisions that have back-loaded positive impacts on the deficit. The bill, rather intelligently, seems to balance this out well leading to net deficit reductions in the short-, medium-, and long-terms. The bill by no means solves the considerable long-term fiscal challenges to the United States, but it does improve the situation. If people want to say that on balance they think the bill is a bad idea, that’s fine, but to do so is to oppose what’s far-and-away the most politically realistic way to enact non-trivial long- and medium-term deficit reduction in the 111th Congress.

I should coin a new MR term: the retreat into the relative.  As I understand it, the apparently fiscally responsible portions of the bill come from a) eventual cuts in Medicare spending, and b) rising taxes on some health insurance plans and they come later of course.  Few Congressional representatives are willing to do these things today, so should we predict they will be done in the future?  (The same problem plagues Waxman-Markey, by the way, so these back and forth rhetorical debates are becoming quite common.)  In my view, policies structured in this manner are simply another way of doing deficit spending.

To quote Matt, he writes of: "the most politically realistic way...to enact...deficit reduction."  That sounds powerful.  and in fact I agree with his claim as it is worded.  But if all the politically realistic options make our fiscal position worse rather than better (Congress likes to spend money more than it likes to inflict pain on voters)...well, this bill still makes the deficit problem worse.  Even it is the best of the realistic worsening options.  We should be wary of the retreat into the relative because all the options may be bad.  Nor should the phrase "building a framework" be translated into anything but "we are unwilling to do this now or anytime soon and thus we are engaging in more de facto deficit spending."

The fact that Republicans can (correctly) be blamed for making the bill worse does not constitute an argument that the current bill will make things, in fiscal terms, better. 

Citing inconsistencies of bill opponents ("but he didn't scream loud enough about [fill in the blank] way back when") does not help on this score either.

Another argument I have seen in MR comments is: if we can't solve this health care costs problem it won't matter, therefore we can spend more without making the problem in net terms worse.  That's a fallacy and you would never apply such reasoning while driving over the speed limit ("I'll accelerate right now, after all at some point I've got to slow down anyway.")  Think of it as a kind of Zen-like, reverse Sorites ploy: "It is adding stones which takes a pile away."  Or "Let us add stones.  The pile must disappear in any case."

Here is a numerical style guide (SG) for identifying future arguments in these veins, because they will recur when you have an activist government which wants to be very popular, combined with an under-educated, short-term oriented citizenry:

SG1. The retreat into the relative: "All the other options are even worse."

SG2. Blame the Republicans: "They made the bill bad, not us."

SG3. The critic is evil or inconsistent: "Your views are inconsistent, or you are morally questionable, so I can dismiss your worries."

From now on in the MR comments section you can just cite the appropriate number and spare yourself carpal tunnel syndrome. 

Addendum: Megan McArdle adds relevant comments and also here.

Badges? We don't need no stinkin badges.

Alex Tabarrok

In pursuit of an Eagle Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours hours over several weeks to clear a walking path in an east Allentown park.

Little did the do-gooder know that his altruistic act would put him in the cross hairs of the city's largest municipal union.

Nick Balzano, president of the local Service Employees International Union, told Allentown City Council Tuesday that the union is considering filing a grievance against the city for allowing Anderson to clear a 1,000-foot walking and biking path at Kimmets Lock Park.

"We'll be looking into the Cub Scout or Boy Scout who did the trails," Balzano told the council.

Story here. Hat tip to Modeled Behavior.

Assorted links, second dose

Tyler Cowen

1. Air Genius Gary Leff is hailed by CNN.

2. Good post on interest rates (though I am not sure I agree with it).  Brad DeLong comments.  Critically important stuff and two of the best recent economics blog posts, in some time.

3. The world's first native Klingon speaker?

4. Spider silk tapestry.

5. Via Yana, France's hamster hotel, and here.

Markets in everything?

Tyler Cowen

A gang in the remote Peruvian jungle has been killing people for their fat, the police said Thursday, accusing the gang’s members of draining fat from bodies and selling it on the black market for use in cosmetics...

Three suspects have confessed to killing five people for their fat, said Col. Jorge Mejía, chief of Peru’s anti-kidnapping police. He said the suspects, two of whom were arrested carrying bottles of liquid fat, told the police it was worth $60,000 a gallon.

Colonel Mejía said the suspects had told the police that the fat had been sold to intermediaries in Lima, the capital. While police officials suspect that the fat was sold to cosmetic companies in Europe, he said he could not confirm any sales.

That's from The New York Times, not The Weekly World News.  Medical "experts" express varying degrees of skepticism about the depth and liquidity of this market, but if you read the whole article you will encounter some truly graphic descriptions of the production process.  Caveat emptor.

Assorted links

Tyler Cowen

1. How much will U.S. taxes ever go up?

2. Useful lateral thinking and how it is described by the lateral thinker.

3. The biological bases of business and entrepreneurship.

4. One hour show with me in Second Life; they even did up a Tyler Cowen avatar.  Other shows are here, including economist Robert Frank and libertarian Adam Thierer.

5. Matt Kahn on "cash for caulkers".

6. The new AEA calendar of economists.  To whet your appetite, here is a photo of Francis Ysidro Edgeworth.

*The Unincorporated Man* and slavery

Tyler Cowen

As long as we are on the topic of slavery, why not consider fiction?  This science fiction novel has an intriguing economic premise: you're born a slave and you're not free until you can buy yourself back from your owner (which may be a corporation).

It may sound funny to think that a slave can save money but arguably an optimal slavery contract in a high-productivity society will give the slave some residual claimancy and some property rights, in order to spur work effort.

At some point you wonder whether a slave in this futuristic society is better off buying the rights to himself or herself.  (Then he has to find individual health insurance!)  If the system of slavery is truly secure, it's like living under Laffer Curve-maximizing taxation.  That's oppressive, but many people have lived under worse.  There would be lots of "Nudge" as well and with advanced technology very effective monitoring and control.

Is it possible that in such a world you would trust only a person who was a slave?

In many historical instances, slaves cannot precommit to "no revolt."  So slaves aren't allowed to earn at the Laffer maximum point, for fear they will rebel or otherwise receive or lobby for greater rights.  Real world slavery is much much worse than this hypothetical portrait might make it seem.

I won't have time to read through the novel (the new Alice Munro is out, for one thing) but I thought the premise was an intriguing one.  The Amazon reader reviews are favorable.

In praise of Robin Hanson

Tyler Cowen

My fondest memory of Robin Hanson is when we interviewed him for a job and, during his on-campus visit, I gave him some papers I had been working on.  Later he emailed me back, before getting the offer I might add, and told me the papers weren't very good and what was wrong with them. 

Ten years later, as his colleague, I disagree with Robin on many topics, including futarchy, whether we will become computer uploads, and meta-ethics (oh, if Robin would only advocate the ethical theory he so consistently lives by!..instead of his contorted contractarian version of preference utilitarianism, which he sometimes calls "dealism.").  Despite our disagreements, Robin and I are oddly in frequent common agreement on practical "life topics."  Most of all, I view Robin as a reductionist thinker to a greater degree than I am comfortable with for myself; relative to Robin, I'm more attached to the mumbo-jumbo of the mess and the piling on of multiple perspectives to the point of squishiness.

Those of us who speak regularly with Robin know how brightly his star blazes.  He's a truly original and important thinker in a way that few are, plus on analytic back and forth he is blindingly fast and accurate.  But you can't expect him to be a "I'm going to agree with him all around" kind of guy; he isn't.  If you are one of his detractors, or even just a common sense skeptic, you can always find many of his beliefs to be outright absurd,  The real question, however, is how much you can learn from him and on that he is an A+.

Addendum: Robin responds.

Assorted links

Tyler Cowen

1. Scott Sumner's most absurd belief: India as #1 in gdp by 2109.

2. Click "play" and watch unemployment grow.

3. Who is Hollywood's most overpaid star, relative to box office returns?  Will Farrell is #1 it seems.

4. Markets in everything: NYC McDonald's with sleek Danish furniture.

5. Saddam's strategic thinking.

6. Via Caroline Flyn, China ethnicity of the week, good for a whole year (photos, recommended).

7. The Political Economy of Trust, by Henry Farrell.

MR vocabulary guide

Tyler Cowen

1. "Self-recommending": the very nature of the authors and project suggest it will be good or very good.  This also often (but not always) means I haven't read it yet.  I am reluctant to recommend *anything* I haven't read, but I am signaling it is very likely recommendation-worthy and I wish to let you know about it sooner rather than later.

2. An "Assorted link" that ends with a question mark: Worth thinking about, but I wish to distance myself from the conclusion and the methods of the study, without being contrary per se.

3. Hansonian: of, or relating to Robin Hanson.  Yesterday I asked Garett Jones whether his date was as pretty as Robin is smart.

4. The Jacksonian mode of discourse.  I am opposed to this.  Political and economic pamphlets in the Jacksonian era were excessively polemical and sometimes the Jacksonian mode is still used today, in 2009, believe it or not.

5. Wunderkind: Take the average age of that person's relevant peers.  If said person is either under twenty or less than half that average, that person may qualify for "Wunderkind" status. 

6. Markets in everything: Some of these are celebratory but many of these are sad or tragic.  Usually I am trying to get you to think about -- as a philosophical question -- why the market exists at all and not whether it should be legal.  

7. Tyrone is my brother and alter-ego who believes the opposite of what Tyler believes.  Trudie offers personal advice.  Neither has good time management skills and thus they don't write very much these days.

8. "Shout it from the rooftops": What to do with wordy, obscure truths which the world badly needs to learn.

What have I left out?

Is this why the Senate bill has an ok CBO rating?

Tyler Cowen

Because the program would begin taking in premiums immediately but would not start paying benefits until 2016, congressional budget analysts have forecast that it would generate a nearly $60 billion surplus over the next 10 years, cash that would help the larger measure's balance on paper.

Not long ago I filed this under "Department of Uh-Oh."  In the longer run it is very bad for the budget and it is simply an accounting trick.  It's a sign that fiscal responsibility will never come to U.S. health care.  And yes there is a long-term care provision in the Senate bill.  Although I have not read through its current incarnation of 2000-some pages, I am willing to bet we are getting the cost back-loaded version of the idea.

*From Poverty to Prosperity* watch

Tyler Cowen

That's the title of the new and self-recommending book by Arnold Kling and Nick Schulz.  This work has text by the authors, interspersed with interviews with famous economists, including Robert Fogel, Robert Solow, Joel Mokyr, Doug North, Bill Easterly, Edmund Phelps, Amar Bhide, William Lewis, and Bill Baumol.  Here is Paul Romer:

It's the kind of culture that can tolerate rap music and extreme sports that can also create space for guys like Page and Brin and Google.  That's one of our hidden strengths.

You can buy the book here.  The subtitle is Intangible Assets, Hidden Liabilities and the Lasting Triumph over Scarcity.

Giovanni Peri's latest on immigration and productivity

Tyler Cowen

Here is the abstract and it has to do with a Smithian theme, namely division of labor:

Using the large variation in the inflow of immigrants across US states we analyze the impact of immigration on state employment, average hours worked, physical capital accumulation and, most importantly, total factor productivity and its skill bias. We use the location of a state relative to the Mexican border and to the main ports of entry, as well as the existence of communities of immigrants before 1960, as instruments. We find no evidence that immigrants crowded-out employment and hours worked by natives. At the same time we find robust evidence that they increased total factor productivity, on the one hand, while they decreased capital intensity and the skill-bias of production technologies, on the other. These results are robust to controlling for several other determinants of productivity that may vary with geography such as R&D spending, computer adoption, international competition in the form of exports and sector composition. Our results suggest that immigrants promoted efficient task specialization, thus increasing TFP and, at the same time, promoted the adoption of unskilled-biased technology as the theory of directed technological change would predict. Combining these effects, an increase in employment in a US state of 1% due to immigrants produced an increase in income per worker of 0.5% in that state.

The paper is here.

What did Obama eat in China?

Tyler Cowen

I've been trying to find out what Obama ate in China and this is the closest I can come:

"We're also hosting a 'Stars and Stripes' week featuring iconic American cuisine," said a hotel spokesperson, who declined to give her name due to company policy.

"The White House guests may want to enjoy New Orleans flavors, American steak BBQs and Jack Daniel's cocktails," she added.

That was the Marriott but I suspect the Chinese government had a say in things or at the very least it was negotiated.  It's an interesting question which side is signaling the dominance with that choice; I say the Chinese.  Fortunately in Beijing it seems he had:

Obama-Hu 90 min meal feat. prawns, soups and lamb chops, plus a presentation of Chinese noodle making, which the Americans enjoyed.

Economics and biography

Tyler Cowen

I think of the biographer as standing up and demanding that economists take their own method seriously.  Surely the economist should at some point be required to explain something in the life of an actual human being.

That is from my (favorable) review of E. Roy Weintraub and Evelyn L. Forget, Economists' Lives: Biography and Autobiography in the History of Economics.  The review will be published in a journal called Biography.

Assorted links

Tyler Cowen

1. Strange China video of the day.

2. Do men live longer if they marry smarter women? (No, I haven't checked if the original paper deals with the identification problem in a reasonable way.)

3. Another review of *The Big Questions*.

4. Daron Acemoglu in Esquire on economic growth.

5. How to get wealthy from your own life insurance (hint: Hansonian).

How do you convince someone to stay away?

Tyler Cowen

The feverish but resilient Megan McArdle refers us to a problem in signaling theory:

Slate ponders how to communicate the danger of radioactive waste to the far future.  The problem is, if they can't read English, or recognize the radiation trefoil, anything you do sounds more likely to intrigue future anthropologists than to warn them off...

Juliet Lapidos at Slate writes:

Even if future trespassers could understand what keep and out mean when placed side by side, there's no reason to assume they'd follow directions. In "Expert Judgment," the panelists observe that "[m]useums and private collections abound with [keep out signs] removed from burial sites."

...Likewise, a scavenger on the Carlsbad site in the year 12,000 C.E. may dismiss the menace of radiation poisoning as mere superstition. ("So I'm supposed to think that if I dig here, invisible energy beams will kill me?") Hence the crux of the problem: Not only must intruders understand the message that nuclear waste is near and dangerous; they must also believe it.

How can we solve this problem?  Similarly, if an attractive woman tells you "You don't want to go out with me" do you believe her and act on that?  What other problems have this structure?

Monitoring the bureaucracy in Dubai

Tyler Cowen

Sheikh Mohammed oversees a cadre of undercover mystery shoppers...They pose as prickly members of the public seeking the government's help.  Their reports are instrumental in firings and promotions.  No bureaucrat can be sure the demanding customer across the counter isn't secretly reporting to the boss.  Once in a while, Sheikh Mohammed turns up at 7:30 on surprise inspections.  He's been known to fire late-arriving managers on the spot. 

That is from Jim Krane's fascinating City of Gold: Dubai and the Dream of Capitalism.  This is pretty clearly the best book on Dubai.  It has an insider's perspective but is also analytical.  Recommended

Only in economics are floors above ceilings!

Alex Tabarrok

Only in economics are floors above ceilings!  It might be better to say "a minimum allowed price above the market price" and "a maximum allowed price below the market price," although that is a bit of a mouthful.  I find that the floors and ceilings language does work, however, if the instructor explicitly points out the oddity of floors above ceilings!  In that case, students find the distinction memorable.

Chindogu, making the simple complicated

Tyler Cowen

Today's bizarrely fascinating cultural nugget from Japan: Chindogu. Literally translated as "weird tool," Chindogu is the Japanese art of creating deliberately complex devices that solve simple everyday problems.

Here is one example:

The Dumbbell Phone

People cite "lack of time" as the number one reason they don't work out more. With the dumbbell phone, that's no longer an excuse. Great for bulking up at your otherwise worthless telemarketing job, this phone will have you shaped and sculpted in no time.

This phone also makes a great gift, especially to that parent, friend, or girlfriend who's been known to talk your ear off on the phone. It's subtle, but effective, especially for those with weak arms.

You'll see a photo here, along with a discussion of other ideas, such as using "solar power" to light your cigarette or a fan to cool off your hot noodles.  The "grid-backed" shirt helps you tell your partner where to scratch your back.  It's a trend:

There's the International Chindogu Society, the Ten Tenets of Chindogu (Number Three: "Inherent in every Chindogu is the spirit of anarchy"), and scores of websites devoted to tracking the newest, and most ridiculous, Chindogu inventions.