Marginal Revolution

What makes you happy?

Sentences to ponder:

Dr. Kahneman said unless the findings were replicated, he could not accept that a spouse’s happiness had less impact than a next-door neighbor. Dr. Christakis believes that indicates that people take emotional cues from their own gender.

Read the whole fascinating article.  You'll find a link to the paper here.

Assorted links

1. The economics of public speaking

2. Eric Posner's theory of pardons

3. Sex and politics

4. Bryan Caplan on moderate Islam

5. Department of Yikes

Why do so many more women study abroad?

The ratio is about 2-1.  And it's not just because women are concentrated in the "study abroad intensive" humanities:

The National Science Foundation reports that men earn 80 percent of bachelor’s degrees in engineering. But women’s participation in a study abroad consortium for engineers, the Global Engineering Education Exchange, typically ranges from 30 to nearly 40 percent (39.3 percent this academic year) — far outstripping their 20 percent representation in the field.

Here is what the experts think:

Among the many conventional wisdom-type explanations pervading in the study abroad field: differing maturity and risk-taking levels among 18- to 21-year-old men and women; a sense that females, concerned about safety, are more inclined to attend a college-sanctioned study abroad program than travel on their own; and, again, varying study abroad participation rates in male versus female-dominated fields.

I favor a more Hansonian explanation, such as this:

“The three main factors I found were motherhood, age and safety,” said McKinney, associate director of the Center for Global Education at Butler University. “Essentially, my informants shared with me that they really hope someday to be mothers and they can’t imagine being able to travel abroad and also be a mom. So if they’re going to have an overseas experience, they’re going to do it before they become mothers,” she said, adding that her informants “really felt plagued by the age of 30. They have a very long to-do list.”

If that hypothesis is true, what are the other testable implications?  What other forms of intertemporal substitution should we observe?

A Lot to Lose

Ted Frank and Ray Lehmann are taking the Stickk approach to weight loss to an extreme.  For every pound less than 60 (!) that Ray fails to lose in the next 9 months he has agreed to pay Ted, $1000.  Thus as much as $60,000 is on the line.  Ted has made the same bet with Ray.  The world has been put on notice.

Now this does raise an interesting prisoner's dilemma problem, with Ted and Ray as the prisoners.  If the prisoners can agree to "cooperate" they could both eat and lose neither weight nor money.  But with $1000 per pound at stake can Ray count on Ted not to cheat on his diet by dieting (and vice-versa)?  But in this context is cooperation really cooperation or is it just joint self-sabotage?  A true dilemma.  But I have a solution.

I stand ready to be Leviathan!  As a service to my friends, I propose that Ted and Ray pay me $1000 for every pound less than 60 that they fail to lose.  Hell, out of the goodness of my heart, I will pay each of them $500 upfront for the honor of being Leviathan.  Now that is an incentive! 

Need I tell you that Ted and Ray are long-time loyal MR readers?       

The AD-AS model with a vertical AD curve

Paul Krugman creates a simple model of the 1930s, based on a vertical AD curve; Greg Mankiw comments and Krugman adds some explanation.

I have a few comments (under the fold)...

1. In the 1940s, Franco Modigliani showed that this kind of argument required infinite liquidity preference, not just very strong liquidity preference.  This kind of discontinuity matters in most models with liquidity preference.

2. The model suggests that negative supply shocks don't hurt the economy yet the Dust Bowl was bad for aggregate output.  Arguably the AD curve should be kinked and vertical only after some inflection point.  But then we are back to negative supply shocks mattering.

3. The model implies that labor unions won't hurt output but the model does not show that labor unions won't hurt employment and indeed the latter question was the original point of contention.  A sufficiently high legally binding minimum wage will cause employers to lay off workers, vertical AD curve or not.  Maybe capital substitutes for labor or Y stays put for some other reason but employment will go down.

4. I no longer understand Krugman's overall story.  He notes that the New Deal years saw a good bit of recovery (I agree), he notes that fiscal policy was not very expansionary (I agree), he believes there was a liquidity trap (I don't agree), and he believes that positive supply shocks run up against a more or less vertical AD curve and thus don't help output (I don't agree).  Given all of Krugman's views, AS doesn't much matter and AD didn't much expand.  So what exactly drove the (partial) recovery of the 1930s?

Maybe I am taking the model too literally but without the vertical AD curve there is not much else in the model to interpret.

Markets in everything

Police have made an arrest in an armoured car robbery in the US in which the suspect used the free online classifieds website Craigslist to hire decoys...

Here is the link, courtesy of John de Palma.

Elsewhere in the series, here is runmyerrands.com, with reputational markers for the dogwalkers, courtesy of Steve Adeff.