Marginal Revolution

Home court advantage in basketball

We all feel the Celtic ouch and perhaps some of us delight in it.  Matt writes:

Kevin Drum notes two smart responses to the question of why home court advantage is so big, with one hypothesis pointing to the refs and another pointing to the idea that there are actually lots of differences from arena-to-arena.

Of course if the arena is the difference you would expect shooting guards, who need a good feel for the lights and angles of the basket, to have a bigger relative advantage at home than do the dunking big men.  That should be easy enough to test.  And maybe a look at Lakers-Clippers or Nets-Knicks history can clear up the importance of arena by holding geographic area constant. 

I wonder if a third component of home court advantage has to do with sleep.  People sleep better at home, if only because they don't have to go to such great lengths to get sex.  I recall reading that Larry Bird became a truly great player only once he...um...calmed down a bit.

I loved this question, and answer

Question for the day: what do libertarianism and the Many-Worlds Interpretation of quantum mechanics have in common? Interest in the two worldviews seems to be positively correlated: think of quantum computing pioneer David Deutsch, or several prominent posters over at Overcoming Bias, or … oh, alright, my sample size is admittedly pretty small.

...My own hypothesis has to do with bullet-dodgers versus bullet-swallowers.

And it ends with this:

So who’s right: the bullet-swallowing libertarian Many-Worlders, or the bullet-dodging intellectual kibitzers?  Well, that depends on whether the function is sin(x) or log(x).

Read more here and can you guess who the pointer is from?

The Storm

The storm ravaged the city’s architecture and infrastructure, took hundreds of lives, exiled hundreds of thousands of residents. But it also destroyed, or enabled the destruction of, the city’s public-school system—an outcome many New Orleanians saw as deliverance....The floodwaters, so the talk went, had washed this befouled slate clean—had offered, in a state official’s words, a “once-in-a-lifetime opportunity to reinvent public education.” In due course, that opportunity was taken:...Stripped of most of its domain and financing, the Orleans Parish School Board fired all 7,500 of its teachers and support staff, effectively breaking the teachers’ union. And the Bush administration stepped in with millions of dollars for the expansion of charter schools—publicly financed but independently run schools that answer to their own boards. The result was the fastest makeover of an urban school system in American history.

That's from The Atlantic just over a year ago.  Guess what?  It's working. The storm is coming.

New site about prediction markets

Here you will find regular updates on prediction markets, with the blog-like news function here.  You'll see there that the CFTC is requesting public comments on how to regulate "event contracts."  The site is launched by these people.

I thank Chris F. Masse for the pointer.

Predictions about religion

In their arguments with Christopher Hitchens and Richard Dawkins, the faithful have been defending the existence of God. That was the easy debate. The real challenge is going to come from people who feel the existence of the sacred, but who think that particular religions are just cultural artifacts built on top of universal human traits. It’s going to come from scientists whose beliefs overlap a bit with Buddhism.

That's from David Brooks.

Does the high oil price reflect a bubble?

Paul Krugman writes (and here):

The only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling.

But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels.

I've never been one to push the bubble hypothesis to explain the high price of oil but I find this an unusual argument to make against bubbles.  Isn't it easy enough to argue that the relevant hoarding is of oil in the ground rather than oil in strategic reserves or panic stockpiles?  We have lots of state-owned oil companies and maybe their way of speculating is simply to remain sluggish in their exploration and extraction activities, at least for the time being.

I think of a bubble as a market price which is above the fundamental value of the asset, largely for psychological reasons.  But with a commodity like oil the fundamental value of the asset depends on the marginal unit and thus how much oil is supplied.  Fundamental value, at least at the margin, adjusts to the price and in that sense the bubble hypothesis can seem tautologically false if we apply the traditional definition of a bubble. 

The key question, in my view, is how much more the oil-producing nations could bring to the market if a) their state-owned oil companies were not incompetent, and b) they did not tolerate this incompetence as an implicit form of speculation and collusion.  I will not offer an estimate here (I genuinely don't have one) but b) does leave some room for bubbly-like phenomena, whether or not stockpiles of pumped oil are high.  Note that in b) collusion and speculation work together and a) tosses incompetence into the mix.  The whole foul brew is probably easier to sustain in times of rising demand and thus oil price explanations are not going to be very simple, or easily separable, by the nature of the problem.

Addendum: Read Arnold Kling, here and here.