Marginal Revolution

Markets in everything

Coprolite.  It's cheaper than fossils, for obvious reasons.

Sentences of interest

The libertarian point is that the illegality and attendant marginalization of polygamy pushes it into isolated, authoritarian, quasi-state cult compounds where these kinds of crimes are most likely to take place.

That's Will Wilkinson and the point reminds me of recent party debates on drug legalization.  I don't mind legalizing polygamy (though I disapprove of the practice), but would such legalization prevent an FLDS type of episode?  Maybe the goals of the perpetrators are rape, abuse, and power-mad intimidation, rather than polygamy per se ("polygamy: merely a means to an end.")  In that case polygamy legalization won't limit their ability to set up isolated, authoritarian, quasi-state cult compounds for their nefarious purposes. 

Alternatively, if illicit polygamy is a marketing point that draws people to the compound in the first place, legalization may well help.  Oddly legalization helps most when the religious belief (in polygamy) is relatively sincere and the abuse accumulates through evolutionary processes of increasingly bestial behavior; legalization helps least when the religious belief in polygamy is for cynical reasons of control and could easily be replaced by some other marketing point.

Limited Liability

I will pinch hit for Tyler on a few questions of interest to readers beginning with, "What's up with limited liability corporations?"  A common libertarian argument is that groups do not possess rights beyond those of individuals.  If it is wrong for A, B and C to steal from D then it is wrong for A, B and C to call themselves a government and tax D. Similarly, we might ask if A, B and C must pay for any injuries that they negligently cause D then how can they justly combine together to form a corporation and limit their liability?  For this reason a consistent libertarian like Murray Rothbard rejects limited liability in tort as illegitimate.  (Critics of limited liability from the left, however, do not seem to carry their argument over to taxation.)

Do note that limited liability in tort is the crux.  Limited liability of shareholders to creditors is innocuous because this is just a matter of contract and regardless of the default law can be modified.

The economic argument against limited liability (JSTOR) is that it socializes risk.  But many people on both the right and the left think that limited liability is the acme of capitalism (see the extension for some quotes) without which capital markets would fall apart - thus at least some people think limited liability is important and necessary.

Empirical research, however, indicates that limited liability is just not that big a deal.  British firms had unlimited liability until 1855, California firms had unlimited liability until 1931, banks had double liability until the 1930s and American Express had unlimited liability until 1965.  None of this seemed to matter very much.

One reason why unlimited liability may not matter very much is that most of the time capital more than covers tort risk so unlimited liability is usually moot.  Insurance requirements, Basel-like capital requirements and other such laws cover externality problems when this is not the case.  Most of the time we are not on the bubble where tort does pay and even on the bubble managers can be found criminally liable for truly egregious torts.

Even in an enhanced tort risk environment unlimited liability may not be worth the candle because it can be gamed - assets can be shuffled around to judgment proof investors, and firms can decentralize.

Unlimited liability also raises transaction costs.  In a joint and several regime, for example, Bill Gates would be liable for all tort expenditures simply by owning one share of a corporation - that makes Bill Gates less likely to invest and more concerned with who else owns shares in the corporation.  And which shareholders should pay, the ones who own the stock when the tort claim is brought or the ones who owned the shares when the tort happened?  These problems can be solved but is it worth the hassle?

In my view, the bottom line is that limited liability lowers transaction costs and has few negative effects in part because torts usually do not bankrupt firms and other institutions (such as insurance) substitute for unlimited liability and in part because the advantages of unlimited liability would mostly be gamed away in anycase.

Addendum: Bainbridge has more.

“The limited liability corporation is the greatest single discovery of modern times. Even steam and electricity are less important than the limited liability company”.

Professor Butler President of Columbia University, 1911.

"This limited liability corporation is the bedrock of the market economy…And what do we, the citizenry, get in return for this generous public grant of limited liability? Originally, we told the corporation what to do. You are to deliver the goods and then go out of business. And then let humans live our lives. But corporations gained power, broke through democratic controls, and now roam around the world inflicting unspeakable damage on the earth."

Russell Mokhiber and Robert Weissman, Mother Jones 1999

What's a New York Times ad worth for a book?

Dani Rodrik tries an experiment:

Princeton University Press ran a small ad for my book last Sunday in the New York Times book review. I was curious if it would have any effect on sales, so I ran a little experiment.  I checked the book's sales ranking in amazon.com at periodic intervals starting on Saturday afternoon.

But the ad didn't matter so much (see also the comments on the post).  I would note a few points of speculation:

1. Below the top tier, a book can rise rapidly through the Amazon rankings without selling so many extra copies.

2. Amazon buyers are better educated and not representative of the market as a whole.

3. It is an open question whether the Amazon rankings are "honest," or strategically designed to sell what is hot at the moment, by making it look especially hot.

4. The best question to ask is: Is your book in Wal-Mart and Costco?

5. The next best metric is to check its location in Barnes and Noble.

6. Success of a book in Borders is less representative of overall success than it used to be; Borders (which is on the verge of going under, I might add) is now closer to an "indie" book store in many ways than it is to B&N.

Addendum: Chug writes in the comments: "display ads for books are not to sell books. they are for good relations between the publisher and the author...."

The McCain health care plan

Mr. McCain’s health plan centers on eliminating the tax breaks for employers who provide health insurance for their workers — a marked departure from the current system — and giving $5,000 tax credits to families to buy their own insurance. His goal in shifting from employer-based coverage to having people buy their own policies is to encourage competition and choice, and to drive down the costs of health insurance.

Here is more.  Portability is good but so many of the uninsured families do not pay $5000 in taxes.  Will this boil down to a subsidy to those who don't need it or to health insurance vouchers?  InTrade says there is a 39.6 percent chance we will find out.  And here is some vagueness:

Mr. McCain proposed that the federal government work with the states to cover those who cannot find insurance on the open market. With federal financial assistance, states would be encouraged to create high-risk pools that would contract with insurers to cover consumers who have been rejected on the open market.

Here is more detail; in part it sounds like revived HillaryCare (part I), but only for the high-risk cases rather than for the entire population.  The "notches" problem is obvious as people at the relevant margin hold out for the subsidized pool, thereby making the pool size larger and larger.

McCain also emphasizes lifestyle as a factor behind health; that's empirically important -- more so than health care -- but after cutting various stupid subsidies the government should not be the main driver there.  Megan McArdle comments overall.

Trade aside, so far I've yet to see many actual policy proposals from the McCain camp.  Mostly I've seen attempts to signal that they won't do anything too offensive to the party's right wing.  Very few of these trial balloons seem to be ideas that McCain had expressed much previous loyalty to.  I don't even think we should be analyzing these statements as policy proposals.  We should be wondering why the Republican Party has given up on the idea of policy proposals.

Roger Ebert is blogging

Here; I wonder if he still reads MR...

I thank Scott Cunningham for the pointer.

Back of the envelope

Is Wikipedia just the beginning?  Clay Shirky has turned off his TV and gotten down to work:

So if you take Wikipedia as a kind of unit, all of Wikipedia, the whole project--every page, every edit, every talk page, every line of code, in every language that Wikipedia exists in--that represents something like the cumulation of 100 million hours of human thought.  I worked this out with Martin Wattenberg at IBM; it's a back-of-the-envelope calculation, but it's the right order of magnitude, about 100 million hours of thought.

And television watching?  Two hundred billion hours, in the U.S. alone, every year. Put another way, now that we have a unit, that's 2,000 Wikipedia projects a year spent watching television.  Or put still another way, in the U.S., we spend 100 million hours every weekend, just watching the ads. This is a pretty big surplus. People asking, "Where do they find the time?" when they're looking at things like Wikipedia don't understand how tiny that entire project is, as a carve-out of this asset that's finally being dragged into what Tim calls an architecture of participation.

I thank Jules Sigall for the pointer.

Markets in everything, China fact of the day edition

Police in southern China have discovered a factory manufacturing Free Tibet flags, media reports say. The factory in Guangdong had been completing overseas orders for the flag of the Tibetan government-in-exile.

Here is the link, hat tip to Christopher Hayes.

Assorted links

1. The value of the marginal kid

2. New Mideast edition of the FT

3. Does resource wealth lead to tyranny?

4. Virginia Postrel and Grant McCracken on plagiarism and Virginia again

5. Is the "Great Filter" ahead us or behind us: Nick Bostrom roots against life on Mars

Collected advice for young economists

Lots of links, mostly excellent.  The Lucas research memoir was new to me.

Hat tip is to Craig Newmark.

Peter Thiel on the Great Bubble

One would not have thought it possible for the internet bubble of the late 1990s, the greatest boom in the history of the world, to be replaced within five years by a real estate bubble of even greater magnitude and worse stupidity. Under more normal circumstances, one would not have thought that the same mistake could happen twice in the lifetimes of the people involved...

The most straightforward explanation begins with the view that all of these bubbles are not truly separate, but instead represent different facets of a single Great Boom of unprecedented size and duration. As with the earlier bubbles of the modern age, the Great Boom has been based on a similar story of globalization, told and retold in different ways — and so we have seen a rotating series of local booms and bubbles as investors price a globally unified world through the prism of different markets.

Nevertheless, this Great Boom is also very different from all previous bubbles. This time around, globalization either will succeed and humanity will achieve a degree of freedom and prosperity that can scarcely be imagined, or globalization will fail and capitalism or even humanity itself may come to an end. The real alternative to good globalization is world war. And because of the nature of today ’s technology, such a war would be apocalyptic in the twenty-first century. Because there is not much time left, the Great Boom, taken as a whole, either is not a bubble at all, or it is the final and greatest bubble in history.

This also means that catastrophic risk has never been higher and the peso problem -- changing small probabilities of total collapse -- is screwing around with asset prices to an unprecedented degree.  Here is the full essay, which also has much of value on China, among other topics.  If nothing else, remember this:

...there is no good scenario for the world in which China fails.

And this:

...a long “China” position is not a forecast that financial globalization will succeed, but rather a bet that its internal contradictions will persist.

The hat tip is from wunderkind Ben Casnocha.

Markets in everything: reverse prostitution edition

Thousands of people in Africa will be paid to avoid unsafe sex, under a groundbreaking World Bank-backed experiment aimed at halting the spread of Aids.

The $1.8m trial – to be launched this year – will counsel 3,000 men and women aged 15-30 in southern rural Tanzania over three years, paying them on condition that periodic laboratory test results prove they have not contracted sexually transmitted infections.

The proposed payments of $45 equate to a quarter of annual income for some participants.

Here is the full story.  It is a joint private sector, public sector initiative, in case you were wondering.  I thank Johannes for the pointer.

How good would the abolition of zoning in New York City be?

Yes, I am opposed to many forms of zoning.  Without zoning our cities would be denser, more eco-friendly, cheaper to live in, more able to produce economies of agglomeration, and more immigrants would benefit from American prosperity.  Matt Yglesias periodically has good posts on this topic. 

More specifically, Manhattan would look more like Sao Paulo, with a true forest of skyscrapers instead of the current puny and indeed embarrassing line-up.  Many of these towers would be residential, as they are in Sao Paulo.  Many problems of cities, including congestion, would of course become worse.  Overall I see the gain as real but a small one, at least relative to gdp.

A key question is what zoning means.  Let's say you wanted to set up a shack on the sidewalk and live in it; should that be allowed?  How about a modest apartment building but without a water connection?  Should Manhattan really become like Sao Paulo?  Only in extreme cases would I wish to waive such infrastructure requirements for the housing stock.  And if you agree with me on that one, then you don't want to get rid of most zoning either.

Fried Rice

Dani Rodrik offers some criticisms of my piece on free trade in rice:

Cowen argues that freer trade in food commodities such as rice would boost global supplies and help reduce prices.  He is probably right about the first, but not about the second.

Angus offers some good responses plus see the comments section on my blog and his.  I'm with the guy who wrote: "I read the piece, Cowen never commits the fallacy."  Adam Smith weighs in too.

I'll put the rest under the fold...

The main point of my piece is that inter- and intra-national restrictions on trade in rice are bad, not that free trade reduces the price of rice for everyone.  Consider a simple analogy: if the quality of Interstate 95 declined, the price of barbecue in North Carolina might fall, namely because people like me wouldn't drive to go eat there.  Yet few people would argue that a nation can do better feeding itself by lowering the quality of its roads or for that matter littering its harbor with dangerous rocks or for that matter imposing export restrictions.  It doesn't knock down the trade argument, as an empirical claim, to cite the existence of pecuniary externalities.

Maybe Rodrik has in mind the commonly-heard argument that eliminating the agricultural subsidies of rich countries would produce vast benefits for poor countries.  I've criticized that claim myself; my column is careful to argue that the poor countries are the worst protectionists, often internally as well as externally.

Here is a related part of Rodrik's critique:

Freer trade would reduce prices of food (relative to other prices) only in countries that are food importers.  Food exporters would experience a rise in the relative price of food, and there is simply no way of escaping that reality.

The great strength of Rodrik's work is how much he stresses the context-dependent nature of economic arguments and how "one size fits all" is often an oversimplification.  So beware when anyone writes "there is simply no way of escaping that reality."  Increasing returns are one way of escaping that reality.  Would the price of cars be lower in Japan today, if the Japanese had placed heavy export restrictions on Toyota autos?  Probably not.  (Constant returns, by the way, are another means of escaping from that reality.)  Now rice production may or may not be subject to increasing returns, but surely rice trade is a positive-sum game and also has broadly pro-egalitarian effects.

Trade really is an issue where a) economists have something to say and b) human lives are on the line.  If Rodrik wishes to argue, "Indonesia should ban the export of rice," then by all means he should just come right out and say so.  Let's have that debate.  But if not, I wonder if he could see his way toward using his considerable influence and writing eight simple words:

"The world should have free trade in rice."

Markets in Everything: Want Ads for Hit Men

One of Mexico's biggest drug cartels has launched a brazen recruiting campaign, putting up fliers and banners promising good pay, free cars and better food to army soldiers who join the cartel's elite band of hit men.

From USA Today.  Hat tip to Peter Gordon.

Freer trade could fill the world's rice bowl

Here is my latest New York Times column.  Here is the conclusion:

Lately, it’s become fashionable to assert that, in this time of financial market turmoil, the market-oriented teachings of Milton Friedman belong more to the past than to the future. The sadder truth is that when it comes to food production — arguably the most important of all human activities — Mr. Friedman’s free-trade ideas still haven’t seen the light of day.

Here is the most interesting paragraph:

The reality is that many of today’s commodity shortages, including that for oil, occur because ever more production and trade take place in relatively inefficient and inflexible countries. We’re accustomed to the response times of Silicon Valley, but when it comes to commodities production, many of the relevant institutions abroad have only one foot in the modern age. In other words, the world’s commodities table is very far from flat.

Here is the most tragic part of the piece:

Poor rice yields are not the major problem. The United Nations Food and Agriculture Organization estimates that global rice production increased by 1 percent last year and says that it is expected to increase 1.8 percent this year. That’s not impressive, but it shouldn’t cause starvation.

The more telling figure is that over the next year, international trade in rice is expected to decline more than 3 percent, when it should be expanding. The decline is attributable mainly to recent restrictions on rice exports in rice-producing countries like India, Indonesia, Vietnam, China, Cambodia and Egypt. 

Addendum: Also from today's NYT, read this supporting article, which covers grain in Argentina.  And from Duke, here is a related piece on Africa.

The 6yr old Reports

Yesterday I went to a party at Robin Hanson's.  Megan McArdle, Bryan Caplan, Will Wilkinson, Tyler and many others were in attendance, as was my 6-year old. 

"How was the party?," my wife asked the 6-year old.

"It was like this," he answered, "Blah, blah, blog.  My blog, blah, blah, blah.  Blog, blah, blog."

Tyler's more enthusiastic report is below.

Just how good would drug legalization be?

John Nye, Megan McArdle and I debated this question at a party today (Robin Hanson asked that we not ban robots, some people called for open borders, John and I explained the hierarchy of the economics profession to Will Wilkinson, and Bryan Caplan told me I have the uncanny ability to predict when people will die, among other highlights; sadly Alex had to leave early).  We also asked some questions that are seldom asked.

Under one model, local gangs have a more or less fixed ability to terrorize a neighborhood.  Even if everything is legalized, the gangs will continue local monopolies to maximize tribute, subject of course to constraints from other gangs and the police.  In this model, legalizing drugs doesn't do much good.  The local gang either shifts its monopoly to another area (milk and sugar, if need be), or de facto the gang's local monopoly on the drug trade continues.  The gang busts you if you try to get your supply of crack cocaine from Merck.  I call this the Rio de Janeiro model; no, drugs are not formally legal there but I don't think it would much matter if they were.

Under a second model, the ability of a local gang to monopolize and terrorize depends on the availability of drug trade revenue.  Take away illegal drugs and the gang collapses -- Merck outcompetes them -- and the neighborhood revitalizes.

Libertarian arguments for legalization typically envision the second model rather than the first.  I expect something in between.  So I don't favor the War on Drugs but I believe the benefits from stopping that war are often exaggerated.  Note that whether the first or second scenario holds may depend on just how easy drugs are to get legally.

One claim was that -- a'la Freakonomics -- current drug suppliers don't reap huge rents, so legalizing drugs won't much discourage them.

Another question from the evening is how much the abolition of zoning in New York City would boost gross national product.  I heard some overoptimistic estimates on that one.

On a scale of 1 to 10, I give the party at least a nine. 

Can we learn anything from the Democratic spat?

Between Clinton and Obama, that is.  One thing we learn is just how unpleasant a politics of confrontation can be and that's no matter what your political point of view.  Most voters don't define their views along the distinctions set down by the policy wonks.  So if you wish to start a political conflict to get your way on the wonky issues, that means you also end up starting a war -- possibly unintended -- on identity politics and also power politics.  Furthermore at least one of the sides in that war will care more about winning and seizing/keeping power than about policy per se.  Over time that's the side most likely to get its way.

We also learn that the American public polarizes along undesirable fault lines, observes a fight and puts a pox on both houses, and in general becomes more cynical about politics.  Think about this before pursuing polarization and quasi-class warfare.

The implication, however, is not that you always should stay put.  After all, today's status quo is a) highly imperfect, and b) the result of the ugly identity wars inherited from the past and surely that is not sacred either.

Nonetheless constructivist attempts to remake America will, by political debate, be reshaped along traditional fault lines.  That means your good idea -- be it libertarian, progressive, or whatever -- had better be pretty robust to mangling by the stupid, the emotional, the cynical, and the ill-informed.  It also means your policy analysis had better start with a good understanding of the relative strengths and weaknesses of the United States and try to build in a sustainable direction with the weights and the angles favoring what you wish to accomplish.  Tocqueville, Montesquieu and Madison look smarter and smarter all the time.

A while ago the progressives told us that we needed to fight a battle against the Republicans to reshape America.  Now there is a prior battle within the Democratic Party itself, noting of course that the hedge fund managers are sending most of their donations that way.  And even Paul Krugman and Ezra Klein can't agree on which candidate is the real progressive.  How many steps further backward will be taken?  We haven't even gotten to the point of trying to write progressive legislation or get it through Congress.

Resist the temptation to put the backward steps into the category of "the utopian should."  Such a move runs as follows: "OK, we didn't do that, we should have done that.  I never predicted we would do that.  I just should we should have."  (Libertarians I might add often commit a similar vice.)  That response is non-falsifiable and so you can hold on to it all you want, but you'd get further by embracing the evolutionary yet non-Panglossian tradition in political thought.  Similarly, libertarians should take more seriously the idea that Sweden should build on its current strengths as well.

I'll be frank: I'm not rooting for Hillary Clinton.  But that's not for any instrumental reason or for that matter for any quasi-libertarian reason or not even for the many reasons you'll find outlined by Andrew Sullivan.  It's for purely subjective and arbitrary reasons and I won't say more than that (though I could).  Maybe I'd drop that dislike if she'd wave around a copy of Fredric Bastiat but in the meantime there you go.  Note also that I am hardly the most biased person evaluating this political race and that I didn't feel this way a year ago.

The bottom line is this: real world political debate is not fundamentally a macro-cosm of the thought processes of a smart person, or of one smart person debating another.  The politics of confrontation usually turn ugly. 

How to choose an apartment

Omkar, a loyal MR reader, asks:

I'm looking for an apartment (Fremont), and it's my first one. Do you think that most people over or underinvest in the quality of their accommodations? On one hand, it's where you spend the most time (especially if you're like me and have in-house hobbies). On the other, I think it's probably easy to overestimate the impact an additional unit of luxury housing will have on everyday life.

The standard results from the happiness literature are that people grow accustomed to lots of living space but that we undervalue the hassle of a lengthy or stressful commute.  Kahneman's work also suggests you should spend more time with your friends, so maybe that means living near them as well.  I don't know if these results are true at all margins.  Moving from a mid-sized mansion to a large mansion probably doesn't make you happier, but the switch from a one- to two-bedroom apartment might.

Personally, I'll stress the benefits of rooming with someone who is both compatible and intelligent, but that isn't exactly the question that was asked.  Your apartment should also be a gateway to new experiences, so perhaps you should live near the highway. or other effective modes of transport.

So, readers, when we are looking for an apartment, what is the bias we are most likely to have?

Trade and inequality, revisited -- Rooftops edition

Another way of investigating the relationship between inequality and trade with poor countries implies that China may actually help the poor, suggests new work from University of Chicago economists Christian Broda and John Romalis.

Instead of focusing purely on what's produced outside of the country, Broda and Romalis turn their attention to an interesting but obvious relationship between imports and consumption within our border: The goods exported by poorer countries are typically consumed by lower-income Americans. Our typical methods of quantifying inequality, however, don't take this into account.

At the same time, inflation in the price of these goods has fallen behind inflation in services, which make up a greater portion of what wealthier people buy. Taken together, these trends imply that official measures may be overstating the rise in inequality.

Looking at trade data between 1994 and 2005, Broda and Romalis construct inflation rates for different income groups and find that rates for the richest outpaced rates for the poorest by about 4 percent over the period. Since income inequality between the top and bottom 10 percent of earners grew by about 6 percent, the different inflation rates among income groups wipes out about two-thirds of the rise in inequality.

The emphasis in that last sentence is mine.  It continues:

China's role in this new way of analyzing inequality is large, accounting for about 50 percent of the total reduction.

And scream this part from the rooftops too [how do you scream a parenthesis?]:

(A very interesting aside. Broda and Romalis also find that the poor are more likely than the rich to buy newer goods. Because of the lag in how quickly the CPI tracks new products, the researchers argue that once this "new goods bias" which serves to keep official inflation rates higher than they actually are since newer goods are typically cheaper, is factored out, inequality between the rich and the poor between 1994 and 2005 may not have changed at all.)

Here is the link.  Again, here is the Broda and Romalis paper.  If this holds up it is big, big news and we must revise many claims that have been made about inequality, trade, and China.

Assorted links

1. The emancipatory power of the American hotel

2. The ideological migration of Christopher Hitchens

3. What do we understand about recessions?, by Bob Hall, via Mark Thoma

4. What should the World Bank know about governance?, starring Acemoglu, Rodrik, North, Fukuyama and others

5. When learning by example backfires

6. Update on auction-rate securities

Seasteading

A small but passionate minority is deeply dissatisfied with current political systems.  These people seek the autonomy to live under and experiment with different political, social, and economic systems than currently exist. It is this search for sovereignty, for the freedom of self-government, which is the fundamental motivation for seasteading.

That's Patri Friedman (son of David, son of Milton) and Wayne Gramlich in their seasteading manifesto. In interesting news, The Seasteading Institute has secured funding of $500,000 from PayPal founder Peter Thiel to help make the idea a reality.

Long-term trends are somewhat favorable for seasteading because with a cell phone and internet access more and more people could live on a seastead and make a living.  Cruise ships are already floating cities with few regulations or taxes.  Harold Berman argues that the rise of the West was due to competitive law.  Homeowner's organizations, hotels and condos are private governments (for more see my edited book The Voluntary City.).

Competitive law appears to increase efficiency but it's less clear that competition among governments gives rise to a libertarian world.  Homeowner associations, for example, often impose stricter zoning regulations than cities.  You could say that the system as a whole is more libertarian, but no one lives in the system as a whole.

Maybe liberty comes not from choice of government but from forcing people who are unlike to live together.  Isn't the real reason the First Amendment has any force not that people agree on the value of freedom of speech but rather that they disagree on who they want to shut up?  Is religious freedom a product of agreement on the value of religious freedom or is it a product of disagreement on who is going to hell?      

Still I hope for the best and congratulate Patri.  Seasteading has come a long way.

Questions that are rarely asked, a continuing series

Why do affluent, middle-class, and poor voters all seem so exquisitely sensitive to election-year income growth for the wealthiest families?

Oddly, the voting of lower-income voters is relatively insensitive to their own election-year incomes.  One option is that media reporting is biased toward coverage of the rich and famous.  Another option is that we, as voters, are biased toward considering our pleasure or displeasure with the strength of the high-ranking members of our tribe.

That question is from Larry Bartels's Unequal Democracy: The Political Economy of the New Gilded Age.

Here is a previous installment in the series.

Rating RateMyProfessors.com

You’ve heard the reasons why professors don’t trust RateMyProfessors.com, the Web site to which students flock. Students who don’t do the work have equal say with those who do. The best way to get good ratings is to be relatively easy on grades, good looking or both, and so forth. But what if the much derided Web site’s rankings have a high correlation with markers that are more widely accepted as measures of faculty performance? Last year, a scholarly study found a high correlation between RateMyProfessors.com and a university’s own system of student evaluations. Now, a new study is finding a high correlation between RateMyProfessors and a student evaluation system used nationally.

Strike another victory for Web 2.0.  Here is more.

Stupid Box Tricks for Intellectuals

This is stupid but it makes me laugh the more I think about it. The original idea is due to Claude Shannon.  Hat tip to Boing Boing.

Is Richard Posner right about air travel and its problems?

Who better to ask than Air Genius Gary Leff:?

...the usually sober, sometimes brilliant, and certainly prolific judge and scholar offers up an unusually misguided rant on why he believes “airline service is so bad” over at the Becker-Posner Blog...

Here is Posner's charge, which I might add calls for air travel reregulation.  Read Gary's whole response.  I don't, as they say, have a horse in this race (noting that Gary and I work together at GMU).  What I do know points to two major problems: badly run airports (rather than air travel deregulation per se) and too many flights clustered at peak hours.  That puts me closer to Gary's analysis than Posner's.  Congestion pricing and true markets for all airport services would solve many of the problems, in my view.

Graduate school advice

A loyal MR reader asks:

I am now beginning the process of choosing classes for next year. I thought your advice might again be useful. I am in the unusual position of finding nearly all fields potentially interesting. I also feel relatively capable of pursuing most of them, with the exception of pure theory or pure econometrics...I am tempted to do economic history + something else. If I do history, perhaps I ought to do finance, micro, or metrics in order to signal technical capability?

If you were in my place, what fields would you choose? Are their particular people...at XXXX...whom you would absolutely want to take a course with/work with? Is it possible to be a macroeconomist without doing extremely technical work? Are some fields more tolerant of heterodox views than others? You told us [once] that you thought econ. grad. school should be Micro 1 - Micro 16. Does this mean I ought to take more micro next year? Given my limited ability to know where my interests will lie in the future, how should I think about this decision?

My advice here is simple: 

1. To potential academic employers you are defined by your job market paper, your letters of recommendation, and by your publications, if you have any.  Your formal "fields" aren't that important, nor are your classes per se.

2. Pick classes to learn skills and choose your classes on the quality of the professor, not on the topic per se. A quick classroom visit often reveals this quality within thirty seconds.

3. Pick a mentor that you, on a personal basis, relate to very well.  This is of extreme importance.  If he or she doesn't like you, all is lost.

By the way, here is Ben Casnocha's advice on how to be a good mentee.  What other advice would you all give this person?   

The Countercyclical Asset, part II

During a recent book interview, an ABC news anchor asked me what kind of impact the real world's subprime mortgage crisis and related fallout would have on Second Life's economy.  I speculated that it would probably provide an ironic boost, noting how the last recession of 2003 was important to Second Life's early growth.  "I can't tell you how many people I met then," I told her, "who were out-of-work programmers and web designers creating content in SL while they looked for jobs." 

That was an off-the-cuff answer, but the latest economic figures from Linden Lab suggest a similar pattern may indeed be happening now.  In-world spending activity has been increasing steadily since the mid-2007 prohibition against virtual gambling.  "The Second Life economy," Zee Linden noted, "does not appear to be affected by the slowing economy of the United States."  SL blogger Roland Legrand took a look at the numbers, and had a similar thought to me: "Could it be that people find refuge from the 'real world' troubles in virtual worlds and that the SL economy 'profits' in that way from the crisis?" 

Here is the link.  Here is the first installment of The Countercyclical Asset.

Nabokov's last work will not be burned

Surprise.  That's against his deathbed instructions, in case you haven't been following the controversy.

Europe fact of the day

Ahem:

At a time when the world’s top climate experts agree that carbon emissions must be rapidly reduced to hold down global warming, Italy’s major electricity producer, Enel, is converting its massive power plant here from oil to coal, generally the dirtiest fuel on earth.

Over the next five years, Italy will increase its reliance on coal to 33 percent from 14 percent. Power generated by Enel from coal will rise to 50 percent.

And Italy is not alone in its return to coal. Driven by rising demand, record high oil and natural gas prices, concerns over energy security and an aversion to nuclear energy, European countries are expected to put into operation about 50 coal-fired plants over the next five years, plants that will be in use for the next five decades.

Here is the full story.

Non-mainstream schools of thought

A loyal MR reader requests coverage:

On mainstream versus "fringier" economic schools of thought (and schools themselves too if you like); and on different schools of thought generally, and your take on them; where economic theory is at present.

Here is me on Sraffa and the neo-Ricardians and also post-Keynesians and the Cambridge capital debates.  The Austrians I cover all the time.  Here is my post on what is new and essential in economics.  Overall I don't believe in schools of thought for modern economics.  Think of the notion of a school of thought as a brand.  The whole point of the internet is to break down branding into the evaluation smaller units, including individuals and their very particular ideas, even doing cite counts paper by paper.  Why move toward more macro branding in that kind of environment?  You can think of trustworthy bloggers as another means of branding and also as substitutes for schools of thought.

Today I see neuroeconomics and personality psychology as two frontiers, plus economic history, but I wouldn't call any of those schools of thought, nor should they be.

Hendrik Houthakker dies at 83

Here is the Post obituary.  Here is Houthakker at scholar.google.com, most of all on consumer behavior and conditions under which revealed preference is a coherent theory of individual behavior.  Here is another obituary; not only did he serve on the CEA twice but he was selected by the Pope as Knight Commander with Star in the Papal Equestrian Order of St. Gregory the Great.

Demand Response

A large share of the special green issue of the NYTimes Magazine was closely tied to economics.  I find this encouraging.  Here is one interesting bit:

...demand response has become one of the most powerful green techniques for protecting the nation’s overtaxed power grids. When a blackout looms, utilities call a small coterie of demand-response firms. These firms prearrange for major users of electricity — factories, shopping malls, skyscrapers — to shut down all nonessential electricity in exchange for payments, often totaling tens of thousands of dollars each year. It’s expensive, but far less so than a blackout that cascades across the country....ConsumerPowerline controls 300 huge buildings in New York alone, where hastily brokered turnoffs by Macy’s and major hotels prevented the spread of a 2006 blackout in Queens — a blackout that lasted for more than a week — into Manhattan.

From the comments: "America the Beautiful"?

I'm always one for airing grievances:

Tyler, Common among economists and some among the autisitic spectrum is the tenedency to belive the map is more real than the landscape, the model complete and accurate and that everything you were taught in econ seminars came donw on tablets. The Candide, America love it or leave it attitude is a tad tiresome. There are problems out there big guy and the Solow model or the Romer Model don't mean shit.

Here is a compendium of my anti-American attitudes:

1. The number of Americans in prison remains an underreported scandal, as well as the conditions they face.

2. Problems of race relations are underestimated, to this very day.

3. For whatever reasons, smart American women seem to be more insecure than are Western European women.  Yes that's a vulnerable overgeneralization and I will take some lumps for it in the comments but I still think it's basically true.

4. I could not live in rural America and be happy.

5. America faces a massive current and future problem resulting from the apparent uneducability of a large chunk of its citizens.  While I do favor school choice, it's not just government education which is at fault; many better school systems around the world are government-run.

6. Gun owners may well be happy, but it is not a culture I relate to.

7. The American culture of individual freedom is closely linked to the prevalence of mental illness and gun-based violence in this country.  We can't seem to get only the brighter side of non-conformity.

8. America is the worst offender when it comes to factory farming and the treatment of animals.

On the brighter side, America has a decent economic track record, the Solow model does matter (try living and earning in countries with poor Solow indicators), America remains the world's leading innovator, and most Americans -- at least those not in prison or on drugs -- can expect a bright future.  It's not as if I'm pushing the future economic prospects of Suriname. 

I also believe (contra the blogging progressives) that America is fated (for better or worse, but in my view not worse) to remain predominantly captured by corporate interests and that America does a better job absorbing and elevating immigrants than perhaps any other country. 

Many Europeans fear deep down that America will have a permanently higher growth rate and that the European way of life will, sooner or later, be forced to disappear.  Right now I would bet against this proposition, as I see a new Europe revitalized by intra-EU immigration.  But there is still, say, a 30 percent chance it is true and polemics against Uncle Sam are in part a reflection of that deep insecurity.   

More on energy pessimism

Paul Krugman writes:

You might say that this is my answer to those who cheerfully assert that human ingenuity and technological progress will solve all our problems. For the last 35 years, progress on energy technologies has consistently fallen below expectations.

It's worth noting that if we had to build today's energy infrastructure working under the current regulatory and NIMBY burden, it probably could not be done.  So it shouldn't be surprising that building a new energy infrastructure is proving so hard.  There's a reason why many of us think deregulation is a big issue and it's not because we want to see people poisoned by Chinese botchagaloop.

Division of labor is limited by the extent of the market

His specialty is static apnea: holding your breath while remaining immobile in a swimming pool. It requires some of same skills as being buried alive for a week, Mr. Blaine said: “It’s all in your mind. You’ve got to stay calm and slow everything down.”

The guy can hold his breath for sixteen minutes; here is the article, interesting throughout.  He is also versatile:

As a self-described endurance artist, he’d spent 35 hours atop a 105-foot pole and survived a week buried in a coffin. He’d fasted for 44 days in a box suspended over the Thames, a nutritional experiment that was written up in The New England Journal of Medicine (with Mr. Blaine listed as a co-author).

Nor had I known this:

Immersing the face in water produces a protective action in humans similar to that in dolphins, seals, otters and whales. Called the mammalian diving reflex, it quickly lowers the heart rate and then constricts blood vessels in the limbs so that blood is reserved for the heart and the brain.

What will happen with commodity prices?

Megan McArdle gives one bottom line, referring to Paul Krugman's somewhat pessimistic column.  I would say that China has been massively productive but not so much in producing commodities.  That means the demand for commodities has gone up much more rapidly than the supply.  You could imagine an alternative universe in which China grew by figuring out ways to produce oil, copper, and rice much more cheaply.  Of course that's not what happened and it is relatively easy to see why not.  Following some good policy changes, Chinese growth has been driven by a massive rural to urban migration and yes we are talking about hundreds of millions of people.  It's plastic basketballs that have become cheaper, not the products of farms.

The mere addition of labor inputs to urban areas doesn't, in the short run, help you produce commodities more cheaply.  Think of the Solow model where K and L have gone up lots but the rate of generating new ideas is only slightly higher.

When all those new Chinese engineers and scientists are at the peak of their creative powers, this relationship will reverse itself and commodities prices will plunge.  But it's quicker to produce another toy than to bring about a new Green Revolution, so in the meantime commodity prices are very high.  I give the current price trend another ten or fifteen years or so to run.  Eventually high commodity prices will seem permanent and then the bottom will drop out.

We've never had a rapid and successful migration of hundreds of millions before, ever.

What I've Been Reading

1. The World is What It Is, by Patrick French.  This authorized (yes, authorized) biography digs up all the dirt on V.S. Naipaul; I've never read anything like it.  Here is a Paul Theroux review.  Here is another rave review.  Theroux's own self-loathing, quasi-fictional biography of his "friendship" with Naipaul -- Sir Vidia's Shadow -- remains one of my favorite books but this is a wonderful sequel.  And if you haven't read through Naipaul's ouevre you should, especially A Bend in the River, A Turn in the South, and Among the Believers, among others.  There is something to be said for misanthropy raised to an art form and packed with intellectual content.

2. Paradise with Serpents, by Robert Carver.  The only question is whether this is the first or the second best book on Paraguay in the English language; here is the other contender.

3. The wisdom of Arnold Kling

4. Problems with farm price futures, worth a read.

Answering your questions

Who knows, maybe I'll try to get to them all.  Here's the first:

What impact will algorithmic game theory have on economics?

I'd start by asking: will game theory pure and simple have (further) impact on economics?  And I'd say basically "no."  The common concepts and tricks of game theory are invaluable but we already have those and I don't see any more coming down the pike.  Algorithmic game theory will address problems internal to game theory and within that context it will flourish.  Finding equilibria, and discriminating among multiple equilibria, are otherwise very difficult problems and AGT is a natural way to crack those nuts.  So AGT will have continued practical applications in computer science and problems of engineering.  But it won't much affect how most economists think about the world or do their research.

As for NBA analysis, I'll just say that a) Boston is still an odds-on favorite, b) No one ever really told us what happened to Andrew Bynum, and c) Even though Phoenix probably won't make it, the Shaq trade was very clearly a good idea and all you doubters should offer up mea culpas.

Tabarrok on NPR

Here's me talking about bounty hunters and private prisons with Margot Adler.

Request for requests

Comments are open, so please let us know what you are interested in reading about.  The only promise is that of weak monotonicity, namely that your mention won't lower the chance of the topic being covered.

Million dollar blocks

An innovative analysis by Eric Cadora highlights "million-dollar blocks" -- individual city blocks where more than one million dollars per block per year are spent to incarcerate individuals from that block.  Some blocks cost over five million dollars per year...A million dollars, coincidentally, is roughly what it would cost to pay for one patrol officer, twenty-four hours a day, every day for one year.

That is from Peter Moskos's Cop in the Hood: My Year Spent Policing Baltimore's Eastern District.  In Brooklyn of 2003, there were 35 million dollar blocks.  Here is more information, plus maps and graphs.

Bad Money

That's the new book by Kevin Phillips.  He concludes:

The thirty- to forty-year tumble from national preeminence that made life more glum for most folk in seventeenth-century Spain, and eighteenth-century Holland, and the Britain from the 1910s to the 1950s may be somewhat moderated for the United States because of a position as a North American continental economic power with a large resource and population base...

Boo hoo, I say; I'll be crying all the way to Rio.  Overall this book is a catalog of the usual arguments about the financial problems of the United States, peak oil, the potential weakness of the dollar, and related worries.  Phillips doesn't seem to think that finance is much of a productive economic sector.  He is keen on the "inflation is larger than we realize" line, citing high growth rates for M3 (he doesn't realize how much the different aggregates can move around and differ from each other) and then the Fed's discontinuation of that statistic.  But who has been tricked?  Either the current market estimate of inflation is the best estimate available, or you know that it is wrong and you will be a very rich man.  I find the former scenario more plausible.

If there's anything wrong with gdp statistics, it's either environmental problems or that we don't have good measures of the productivity of government itself.  Those problems are built into how the number is calculated and there is no conspiracy to make America look much richer than it really is.

There is remarkably little on future expected productivity growth or whether America will solve the problem of educating its non-upwardly-mobile, which are both (the?) major issues for our economic future.  The author should spend a week locked in a room with the Solow model.  There is also precious little recognition that America in twenty years' time will almost certainly be a good bit wealthier than today.  Given that no other country is about to take us over, does relative international status really matter so much for the happiness of Americans?  I don't think so.  The richer the Chinese get, the more I feel good about living in the world's first country to be a true product of The Enlightenment.  If only Phillips could feel the same way.

The future of Toyota

Some of Toyota's U.S. plans are now more than 20 years old, and a growing number of its workers are paid the top wage of about $25 an hour.  That's less than Detroit's veteran union hands make now, but a contract inked last fall will enable U.S. automakers to replace many highly paid employees with cheaper workers.  By 2011, Toyota's cost advantage over Detroit could disappear.

By late 2009, Toyota's assembly plant in Georgetown, Kentucky could have the highest labor costs of any auto factory in the country.  Here is the story.

When I visited Utah, I rented a Hyundai and I have to say it drove very nicely...

Assorted links

1. Don't fire John Yoo

2. Income inequality, from Greg Mankiw

3. How much appearing on Colbert helps your book

4. India's "brain gain"

Ain't My America

The author is Bill Kauffman and the subtitle is The Long, Noble History of Antiwar Conservatism and Middle-American Anti-Imperialism.  Here is one excerpt:

Above all, they feared empire, whose properties were enumerated well by the doubly pen-named Garet Garrett: novelist, exponent of free enterprise and individualism, and a once-reliable if unspectacular stable horse for the Saturday Evening Post.  Writing in 1953, he set down a quintet of imperial requisites.

1. The executive power of the government shall be dominant.

2. Domestic policy becomes subordinate to foreign policy.

3. Ascendancy of the military mind to such a point at last that the civilian mind is intimidated.

4. A system of satellite nations.

5. A complex of vaunting and fear.

He could have listed this too.  In my view this book goes wrong by failing to consider that the right-wing, anti-militarist tradition was wrong on some pretty critical cases.  Nonetheless if you are looking for a well-informed, well-written, and up-to-date book on that tradition, consider this your go-to source.

Non-profit prediction markets

At Bet2give, an online electronic prediction market, anyone can “bet” real money on the outcome of these events but with a twist – the “winnings” go to a charity of the person’s choice.

Here is the full article, and here is Bet2give.com.  One of the "problems" with prediction markets is that they are zero-sum investments and traders cannot on average hope to come out ahead.  So why trade?  If only people really "in the know" trade liquidity will be low.  If too many "betting for fun" fools trade, the prices don't mean that much.  You might get the right mix of informed and uninformed but who knows?  So the idea of doing these in charitable form might make some sense.

Why are gun owners so happy?

Arthur Brooks reports:

Who are all these gun owners? Are they the uneducated poor, left behind? It turns out they have the same level of formal education as nongun owners, on average. Furthermore, they earn 32% more per year than nonowners. Americans with guns are neither a small nor downtrodden group.

Nor are they "bitter." In 2006, 36% of gun owners said they were "very happy," while 9% were "not too happy." Meanwhile, only 30% of people without guns were very happy, and 16% were not too happy.

In 1996, gun owners spent about 15% less of their time than nonowners feeling "outraged at something somebody had done." It's easy enough in certain precincts to caricature armed Americans as an angry and miserable fringe group. But it just isn't true. The data say that the people in the approximately 40 million American households with guns are generally happier than those people in households that don't have guns.

The gun-owning happiness gap exists on both sides of the political aisle. Gun-owning Republicans are more likely than nonowning Republicans to be very happy (46% to 37%). Democrats with guns are slightly likelier than Democrats without guns to be very happy as well (32% to 29%). Similarly, holding income constant, one still finds that gun owners are happiest.

By the way, if you are curious, I have never even touched a gun.

Addendum: Arthur has a new (and very good) book out, Gross National Happiness.

A trip to El Bulli

Air Genius Gary Leff crossed the Atlantic for one purpose alone and now the voyage is blogged, gripping throughout.  My favorite passage is this:

Two women walked in ahead of us, they had been meandering around the grounds and then presented themselves (in sweatshirts and tennis shoes) and asked to be seated for dinner… without reservations. They were turned away in an exceptionally polite way.

Sentences of wisdom

What’s missing is a recognition of how mysterious the secret of economic growth remains, despite all the energy that economists have poured into solving it.

That's James Surowiecki, reviewing Ha-Joon Chang's Bad Samaritans and writing on free trade; the piece is interesting throughout.  The pointer is from Ben Casnocha.

Ontdek je innerlijke econoom

The Dutch edition is out now, or at least I have copies in my hands.  You can buy it at these places.  The Korean edition is out as well, but I don't know how to Google the title.

Good Letter, Wrong Address

Mark Thoma has an An Open Letter to ABC about the Presidential Debate signed by Brad DeLong, Kevin Drum, Henry Farrell, Eric Alterman and many others. 

The debate was a revolting descent into tabloid journalism and a gross disservice to Americans concerned about the great issues facing the nation and the world.... For 53 minutes, we heard no question about public policy from either moderator. ABC seemed less interested in provoking serious discussion than in trying to generate cheap shot sound-bites for later rebroadcast. The questions asked by Mr. Stephanopoulos and Mr. Gibson were a disgrace...

I agree.  The only thing the signatories got wrong was where to send the letter.  The letter should have been addressed to the American public.  After all, this debate, which came in the flurry of all the tabloid journalism of the past several weeks, was the most-watched of the 2008 presidential campaign.  The public got what it wanted.

The Horse the Wheel and Language

The tribes Europeans encountered in their colonial ventures in Africa, South Asia, the Pacific, and the Americas were at first assumed to have existed for a long time.  They often claimed antiquity for themselves.  But many tribes are now believed to have been transient political communities of the historical moment.  Like the Ojibwa, some might have crystallized only after contact with European agents who wanted to deal with bounded groups to facilitate the negotiation of territorial treaties.  And the same critical attitude toward bounded tribal territories is applied to European history.  Ancient European tribal identities -- Celt, Scythians, Cimbri, Teoton, and Pict -- are now frequently seen as convenient names for chamelon-like political alliances that had no true ethnic identity, or as brief ethnic phenomena that were unable to persist for any length of time, or even as entirely imaginary later inventions.

That is from David W. Anthony's The Horse The Wheel and Language: How Bronze-Age Riders from the Eurasian Steppe Shaped the Modern World.  In particular this book focuses on the origin of the Indo-European language group and the relationship between archeology and linguistics.  He is also skeptical of Jared Diamond's well-known thesis that early Europe had much diffusion of innovation in the East-West direction.  Recommended.

Climate solutions and carbon dividends

Peter Barnes, Climate Solutions: A Citizen's Guide is the full title.  This simple book is written in the form of punchlines and cartoons but it's still one of the more insightful treatments of the topic.  He is skeptical of a carbon tax:

A carbon tax will never be high enough to do the job.

A low carbon tax would create the illusion of action without changing business as usual.

His alternative proposal has four steps:

1. Carbon cap is gradually lowered 80% by 2050.

2. Carbon permits are auctioned.

3. Clean energy becomes competitive.

4. You get an equal share in the form of permit income.

The "carbon dividends" of course are intended to make the tax politically palatable.  Naturally I am worried by the idea of revenue addiction, not to mention the general practice of redistributing income from business to citizens simply because it is popular to do so.  It might feel pretty good at first but we don't want to encourage Chavez-like behavior on the part of our government.

A broader question is whether the carbon dividends in fact make the citizenry better off.  First there is the question of the incidence of the initial carbon tax, which of course falls on individuals one way or another.  Second, does just sending people money, collectively, make the populace better off?  Aggregate demand effects aside, will the fiscal stimulus make the citizenry as a whole better off?  No.  Will printing up more money and sending it to everyone, even if that is popular, make people better off?  No.

(As an aside, does the Humean quantity theory experiment redistribute wealth from corporations -- which don't sleep on pillows and thus cannot wake up in the morning to "more money" -- to individuals, who do sleep on pillows?  Or is the corporate veil fully pierced?  Just wondering...)

I fear versions of this idea whose (possible) popularity rests on tricking voters.  Being pro-science also means being pro-economic science. 

The general point remains that most discussions of global warming focus on prices and technologies alone, without incorporating realistic models of politics.  By the way, if you think John McCain is a straight talker, try this for yikes. 

The countercyclical asset

Sorry, but the problem has become worse and I have to blog this again:

In Haiti, where three-quarters of the population earns less than $2 a day and one in five children is chronically malnourished, the one business booming amid all the gloom is the selling of patties made of mud, oil and sugar, typically consumed only by the most destitute.

“It’s salty and it has butter and you don’t know you’re eating dirt,” said Olwich Louis Jeune, 24, who has taken to eating them more often in recent months. “It makes your stomach quiet down.”

Netflix pricing

It looks kind of screwy; 3 movies at a time is $16.99 a month but 8 movies at a time is $47.99 a month.  After three movies, the average cost of a rental (see the link for the numbers) is either flat or rising.  Why go for the 8 movies deal instead of setting up separate accounts and queues, thereby saving money?  Why is Netflix encouraging everyone to do the 3 movies a month version of the plan?  Why are there no quantity discounts past the 3 movies a month margin?  (And, by the way, aren't there still lower prices for newbies, at least for a while?)

I suspect this is one of those pricing models that traps a small number of overenthusiastic patrons into paying more, keep a few others away from overgorging on old Jackie Chan films and then quitting prematurely, and de facto gives most customers a pretty flat pricing structure.  Transparency is sacrificed but does anyone really care?

The pointer is from Angus Hedrick.

Charles Darwin on-line

Wow.  It's supposed to amount to about 90,000 pages; here is an article about the project.  Here are a few indicated highlights.

India fact of the day

Ratio of the estimated number of fake doctors practicing in Delhi, India, to the number of real ones: 1:1

That is from Harper's Index, May 2008.

The safety of elevators

Nonetheless, elevators are extraordinarily safe—far safer than cars, to say nothing of other forms of vertical transport. Escalators are scary. Statistics are elusive...but the claim, routinely advanced by elevator professionals, that elevators are ten times as safe as escalators seems to arise from fifteen-year-old numbers showing that, while there are roughly twenty times as many elevators as escalators, there are only a third more elevator accidents. An average of twenty-six people die in (or on) elevators in the United States every year, but most of these are people being paid to work on them. That may still seem like a lot, until you consider that that many die in automobiles every five hours. In New York City, home to fifty-eight thousand elevators, there are eleven billion elevator trips a year—thirty million every day—and yet hardly more than two dozen passengers get banged up enough to seek medical attention. The Otis Elevator Company, the world’s oldest and biggest elevator manufacturer, claims that