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In Does Ethics Have a Chance in a World of Consumers? Bauman, a former communist, argues that we would be better off altogether if we could control our need for “stuff”.

The longer book review is of interest.  The longer book is not.  In other words, Bauman has helped me control my need for "stuff."

Posted by Tyler Cowen on September 6, 2008 at 06:57 PM in Books | Permalink | Comments (15)

Rational Spelling

Here's a great, little video from Ed Rondthaler former president of the American Literacy Council and author of The Dictionary of Simplified American Spelling.  Loyal readers will know that simplified spelling or what I call rational spelling holds a special place in my heart.

I worry that the tyranny of spell checkers impedes evolution towards rational spelling.

Hat tip to Boing Boing.

Posted by Alex Tabarrok on September 6, 2008 at 12:52 PM in Science | Permalink | Comments (28)

Is this a sustainable business model?

Alternatively, you could call this "Markets in Everything":

The secret-spilling site Wikileaks announced this week that it's acquired thousands of e-mails belonging to a top aide to Venezuelan president Hugo Chavez. But don't look for them online. In a departure from its full-disclosure past, Wikileaks is auctioning off the cache to the highest bidder.

Wikileaks began soliciting bids from media organizations on Tuesday, for what it describes as thousands of e-mails and attachments from 2005 to 2008 that provide insight into Chavez's management, CIA activities in Venezuela and the Bolivarian revolution.

The winner gets exclusivity and embargoed access to the documents, though Wikileaks will publish all of them eventually.

Here is more.

Posted by Tyler Cowen on September 6, 2008 at 07:53 AM in Web/Tech | Permalink | Comments (10)

Why are governors in small states so popular?

Ezra Klein channels Andrew Gelman:

...small states tend to be more approving of their governors. Why? Gelman has some theories: "In a large state, there will be more ambitious politicians on the other side, eager to knock off the incumbent governor; small states often have part-time legislatures and thus the governor is involved in less political conflict; small states (notably Alaska) tend to get more funds per capita from the federal government, and it’s easier to be popular when you can disburse more funds; large states tend to be more heterogeneous and so it’s harder to keep all the voters happy. As the graphs show, the pattern isn’t perfect, but it looks real to me."

I have an additional hypothesis.  People from small states, especially atypical small states, sometimes have an inferiority complex vis-a-vis the other states or regions.  Taking pride in their politicians is one way of compensating for that.  Furthermore there is often less to do in underpopulated states and is not pride sometimes a substitute for action?  New Yorkers are not in fact so proud of the Metropolitan Opera, but in parts of Wisconsin the Green Bay Packers are king.

Posted by Tyler Cowen on September 6, 2008 at 07:34 AM in Political Science | Permalink | Comments (30)

Do economists think TV is good for you?

In a nutshell, yes:

The variation Mr. Gentzkow and Mr. Shapiro exploited was the timing of the introduction of TV into different cities. Television began taking off in the U.S. in 1946, after a wartime ban on TV production was lifted. But the Federal Communications Commission stopped granting new commercial television licenses from September 1948 to April 1952 while it made changes in allocating broadcast spectrum. There was a long lag between when some cities got television and when others did.

The economists then looked at results of a survey of 800 U.S. schools that administered tests to 346,662 sixth-grade, ninth-grade and 12th-grade students in 1965. Their finding: Adjusting for differences in household income, parents' educational background and other factors, children who lived in cities that gave them more exposure to television in early childhood performed better on the tests than those with less exposure.

The economists found that television was especially positive for children in households where English wasn't the primary language and parents' education level was lower. "We don't exactly know why that is, but a plausible interpretation is that the effect of television on cognitive development depends on what other kinds of activity television is substituting for," says Mr. Shapiro, 28.

Here is much more.  And yes the "Mr. Shapiro" is in fact Wunderkind Jesse Shapiro, a familiar figure to MR readers everywhere.  You'll find two versions of the paper here.

Addendum: Here is Alex's excellent post on the topic.

Posted by Tyler Cowen on September 6, 2008 at 06:34 AM in Television | Permalink | Comments (9)

Department of Uh-Oh, The End of the Mortgage Agencies

Fannie and Freddie’s preferred shares have been considered so safe that banking regulators let banks count them in the capital required as a cushion against loan losses.

That should read "*had* been considered so safe."  Further background is here and here.  We also have an impossibility theorem.  I do not see how our government can let the value of this preferred stock fall much further, given the extent to which bank insolvency would increase.  I also do not see how our government can prop up the value of this preferred stock to a significant degree.  Silly me.  I guess that means I bet on the latter impossibility.

Here is yet further discussion of the end game.  It seems the common stock owners will end up suffering more dilution than they had been expecting.  The $340 billion in agency debt held by the Chinese central bank will be protected, as it must be.  Have a nice day.

And the newspapers were wondering why the Dow tanked 345 points.

Posted by Tyler Cowen on September 5, 2008 at 10:39 PM in Current Affairs | Permalink | Comments (28)

Hail Giacomo Ponzetto!

He comments:

...Kotchen and Burger seem to ignore that the oil-drilling problem is a textbook application of dynamic programming. In particular, Dixit and Pindyck (1994, ch. 12) highlight the analogy between an undeveloped oil reserve and a call option on a dividend-paying stock. They conclude, referencing Paddock, Siegel and Smith's (1988) original study, that "the use of standard NPV methods would lead to substantial undervaluation of the reserve as well as premature development."

The rest is under the fold...

Since the option is perpetual, a closed-form solution is easy to obtain if one makes standard assumptions: production from a developed reserve is represented by exponential decline, the price of oil is a geometric Brownian motion, asset markets span, etc.

Following the authors cited above, assume:
-- a payout yield of 4% from a developed field;
-- a risk-free real interest rate of 1.25%;
-- a volatility of 0.2
Then the option value of waiting is such that we should only drill when the present value of the developed reserve is at least 1.6195 times the cost of developing it.

Suppose that the price of oil follows a martingale, so the current price of $105 per barrel is also the expected future price at any time. Suppose the ANWR reserve comprises 7.06bn barrels and that once the oilfield is developed it will pump out 5% of the reserve every year at a constant marginal cost of $5 per barrel

Then at the 1.25% discount rate the developed reserve is worth $564.8bn (which is reasonably close to Tyler's $600bn estimate). However, if we start drilling now the reserve will be developed in 10 years (EIA 2004, 2008), so we must calculate the present value of this sum. The correct discount rate here is the payout rate of 4% (Dixit and Pindyck 1994, p. 403), so the NPV of drilling now is $378.6bn. Therefore, the option value due to volatile oil prices implies that we should drill now only if the cost of drilling, including its environmental impact, is below $233.78bn.

Since the cost estimate above ($5 for getting a barrel of oil to market from an existing well in Alaska) only accounts for an NPV of $18.93bn, Kotchen and Burger's figures leave me with a $103.87bn cost of developing the reserve. Then we should drill now if the environmental cost is less then $130bn, or the willingness to accept compensation to allow drilling less than $590 per voter.

Admittedly all my figures are very rough estimates, but I believe this is the correct order of magnitude. The reserve is indeed worth about $600bn, but that is not very important, because the choice is not between drilling now or foregoing drilling forever, but between drilling now or waiting and seeing.

Furthermore I have ignored the possibility of cost-reducing technical progress. I don't see why drilling should become costlier or more environmentally damaging; but it probably could become more efficient on either account. That would increase the option value of waiting.

Obviously, we should rush to drill now if we expected oil prices to decline sharply in the future, because then the reserve would be rapidly depreciating while it is left in the ground. But that does not seem to be the argument of the bozos on either side of the aisle.

It's also worth noting:

1. Critics of drilling usually want to shut down the option forever and the political window cannot be expected to remain open forever.

2. There is a general global warming case against developing the resource.  Note that supply restrictions can be far more effective than a Pigou tax.  A Pigou tax doesn't guarantee the stuff won't be pumped anyway, albeit at lower profit.

3. The Pigouvian case against developing ANWR makes sense only if we are taking other systematic actions to raise the price of fossil fuels and restrict fossil fuel use.  Otherwise we may just be leaving a $600 billion dollar bill on the proverbial sidewalk.  This may be a classic case of twin-peaked preferences.

4. Depending how the money is spent, and on the general equilibrium properties of the system, it still may make sense to have a) a Pigou tax on fossil fuels, and b) ANWR development.  For one thing, it does matter who captures the profits from fossil fuel development.  You could imagine an even stiffer tax on imported fossil fuels (relative to what would be optimal without ANWR), combined with ANWR development.  You can spin out lots of tricky problems here.

Posted by Tyler Cowen on September 5, 2008 at 05:03 PM in Economics | Permalink | Comments (14)

Magnus #1?

17 year old Magnus Carlsen won a chess game today and is probably now, unofficially, ranked #1 in the world.  (World champion Anand lost and fell behind in rating points.)  Here is an illuminating recent profile of Magnus.  I believe Paul Samuelson is the closest to an economics prodigy we have had.  He was thirty-two when his Foundations of Economic Analysis was published but I have heard that he wrote the book at a much earlier age (does anyone know the exact age?).  He was probably one of the best economists in the world when he received his undergraduate degree at Chicago at the age of 20.  Frank Ramsey is another example of an economics prodigy although he didn't even think of himself as an economist per se.  Can you think of other prodigies in mathematical economics?  I attribute their scarcity to the relative aesthetic poverty of mathematical economics (for most people it's not that fun or beautiful) rather than the need for complementary experience-acquired wisdom.  Do you agree?

Addendum: Andrew Gelman considers statistics.

Posted by Tyler Cowen on September 5, 2008 at 03:39 PM in Education | Permalink | Comments (33)

Assorted links

1. Website about airline food, via Yan Li

2. The economics of amniocentesis

3. Arnold Kling has an important update

4. Women and hot cars, etc. -- what science has to say

Posted by Tyler Cowen on September 5, 2008 at 01:37 PM in Web/Tech | Permalink | Comments (4)

Why so many churches in Las Vegas?

Robert, a loyal MR reader asks,

I lived there for four years and was always curious.  I guess the more sin, the more churches???

For background, here is a 1997 look at the numbers.  It seems the city has more churches than average in per capita terms.  Among the cities claiming the highest number of churches per capita are Nashville, Grand Rapids, Mich., Waco, Texas, Wheaton, Ill., and Berkeley, Calif. (Berkeley?)  Overall the South has more churches per capita than the rest of the country.

I would think that most of the churches in Las Vegas are for the residents, not the tourists, and thus the quantity of sin is not a major factor.  Why should the residents be especially sinful?  (Don't forget that lots of sinful activities seem to be produced at constant returns to scale, so there's not always free-riding upon the sin infrastructure for tourists plus parking is an issue.)  In explaining the number of churches, I would expect three factors to play a role:

1. Perhaps migrants to Las Vegas are more likely to come from the South.

2. Most of the population growth is recent, so churches serve a valuable function of social networking.

3. Las Vegas has no dominant established religion so there is much religious competition and thus many different churches.

But surely Jacqueline (and others) can set us straight...

Posted by Tyler Cowen on September 5, 2008 at 07:43 AM in Religion | Permalink | Comments (41)

Silly me

I'd like to repeat how surprised I am at the size of the gains from drilling, or at least what appears to be the best current estimate of such gains.  What happened is simple.  I read people writing "Price won't go down much from drilling, therefore the gains are small," in various ways.  That is a non sequitur because there is producer surplus as well!  I committed a simple error.  Yet again.  And I committed this error because it fit in with my (nonetheless largely correct) preconception of politicians as bozos who will say anything for political gain or to sound good on TV.

Addendum: An Op-Ed on the topic.  And here's a skeptical Andrew Sullivan reader.  Like me, it doesn't seem he ever tried to look for a number.

Posted by Tyler Cowen on September 5, 2008 at 07:31 AM in Economics | Permalink | Comments (44)

Drill, drill, drill?: the economics of drilling

Matthew Kotchen and Nicholas Burger have done a real study of the economics of drilling in ANWR (ungated, published version here).  Ben Muse reports some of their results:

What are the benefits?  Kotchen and Burger estimated that the oil had a value of $374 billion (writing in July 2007, they assumed a long-term price of $53/barrel), but that it would cost $123 billion to extract and market.  The net return of $254 billion is divided consists of industry rents of $90 billion, Alaska tax revenues of $37 billion, and Federal tax revenues of $124 billion.

Under the authors' understanding of incidence, consumers wouldn't benefit much at all because oil prices would not fall noticeably.  Still, drilling makes economic sense if the loss of environmental amenities is valued at less than $1,141 a person (per American, not per Alaskan) and that was with a price of oil roughly half of today's price. 

At today's price of oil, a rough estimate of the benefit -- not counting environmental costs -- is over $600 billion.  So the whole issue seems much more important than I had thought just one hour ago.  Some approximation of taxes and transfers and auctions are available, so these gains can be redistributed to some extent if you wish.

That's a lot of wealth.

Posted by Tyler Cowen on September 4, 2008 at 11:31 PM in Economics | Permalink | Comments (72)

My IM dialogue with Ezra Klein

Find it here.  Here is Ezra's version of Markets in Everything.

Posted by Tyler Cowen on September 4, 2008 at 09:03 PM in Political Science | Permalink | Comments (7)

Tabarrok in Variety

"Unstable characters run amok in Tabarrok's oddball oeuvre..."

Apparently, my movie producer brother and I have more than family in common!

Here and here are previous MR posts on my brother's oddball oeuvre.

Posted by Alex Tabarrok on September 4, 2008 at 11:23 AM in Film | Permalink | Comments (10)

The economics of secession

The classic paper is Buchanan and Faith, AER 1987.  Here is a recent extension of this classic work, with a dash of economic determinism:

Secessionist movements present themselves to the global public as analogues of colonial liberation movements: long-established identities are denied rights of self-determination by quasi-imperial authorities. Self-determination is presented as the solution to the challenge of peaceful coexistence between distinct peoples. The global public not only accepts this message but reinforces it: both Hollywood and diasporas relay it back to populations in developing countries. In this paper, we will argue that the discourse of secessionist movements cannot be taken at face value. We will suggest that a more realistic characterization of secessionist movements is that their sense of political identity is typically a recent contrivance designed to support perceived economic advantage, if the secession is successful, and facilitated by popular ignorance.

There are, of course, plenty of successful secessions.  Slovakia has been successful nation because of a language and a desire to be free of Czech rule, backed by EU free trade, EU largesse and political precommitment.  Or secession can help you break free of an evil empire, such as when Georgia left the former Soviet Union.  The most likely American state to make a success out of secession is, I think, Texas (or offer up your pick in the comments).  A Texan nation is hardly a good idea, but at least the state is big, has a diversified economy, has an outlet to the water, has a history of independence, and has a border with another nation, namely Mexico. 

The least likely American state to make a success of secession is, I think...Alaska.  The state takes in lots of federal money, has only a small natural population base, and is not too far from Russia.  Here are some data on which states receive the most on net from the federal government.  According to these numbers, only the state of New Mexico benefits more in (proportional) fiscal terms.  The states which fare the worst from federal transfers are New Jersey, Connecticut, New Hampshire, Minnesota and Illinois.

Posted by Tyler Cowen on September 4, 2008 at 07:22 AM in Political Science | Permalink | Comments (67)

On decay

Robert Gibbons wrote:

When I first read Coase’s (1984: 230) description of the collected works of the old-school institutionalists – as “a mass of descriptive material waiting for a theory, or a fire” – I thought it was (a) hysterically funny and (b) surely dead-on (even though I had not read this work). Sometime later, I encountered Krugman’s (1995: 27) assertion that “Like it or not, … the influence of ideas that have not been embalmed in models soon decays.” I think my reaction to Krugman was almost as enthusiastic as my reaction to Coase, although I hope the word “embalmed” gave me at least some pause.

Thanks to several MR readers for recommending this paper.  I would have written: "Like it or not, the influence of ideas soon decays."

Posted by Tyler Cowen on September 4, 2008 at 07:10 AM in Economics | Permalink | Comments (5)

My IM chat with Ross Douthat

It is here and it was produced yesterday afternoon.  The point about fertility was borrowed from Steve Sailer.

Posted by Tyler Cowen on September 4, 2008 at 07:09 AM in Sports | Permalink | Comments (21)

What is the classic book of the 80s and 90s?

That's Ryan Holiday's query.  This is not about quality, this is about "representing a literary era" or perhaps just representing the era itself.  I'll cite Bonfire of the Vanities and Fight Club as the obvious picks.  Loyal MR reader Jeff Ritze is thinking of Easton Ellis ("though not American Psycho").  How about you?  Dare I mention John Grisham's The Firm as embodying the blockbuster trend of King, Steele, Clancy and others?  There's always Harry Potter and graphic novels.

Posted by Tyler Cowen on September 3, 2008 at 06:42 PM in Books | Permalink | Comments (81)

Assorted links

1. ATBC reaps national applause

2. Fringe, starting soon

3. Standard of living and growth issues, from Robert Samuelson.

4. Volume II of Deirdre McCloskey's work in progress.

Posted by Tyler Cowen on September 3, 2008 at 02:46 PM in Web/Tech | Permalink | Comments (7)

Does this count as an event study?

...investors are also unnerved by the aftermath of the five-day war in early August.

Russian shares have lost about a third of their value since hitting record highs in May. Russian and Western bank analysts polled by Reuters have cut forecasts for Russia's gold and foreign exchange reserves.

As much as $25 billion in foreign capital may have left Russia since the Georgia conflict started, they said: while their growth forecasts were little changed at 7.5 percent, the crisis sharply cut the liquidity of the banking system.

Here is the article.  The pointer is from Matt Yglesias.

Posted by Tyler Cowen on September 3, 2008 at 01:12 PM in Current Affairs | Permalink | Comments (3)

The economic consequences of unwed motherhood

This was published in the American Economic Review in 1994:

We estimate the long-run and life-cycle effects of unplanned children on unwed mothers by comparing unmarried women who first gave birth to twins and unmarried mothers who bore singletons.  We find large short-term effects of unplanned births on labor-force participation, poverty, and welfare recipiency among unwed mothers, but not among married mothers.  Although most of the adverse economic effects of unplanned motherhood dissipate over time for whites, there are larger and more persistent negative effects on black unwed mothers.

Notice that comparing one birth to two, rather than zero to one, tries to address the identification problem, namely that early pregnancy may be correlated with other unfavorable conditions.  For the curious, here are many related articles.  And here is a very useful literature review, which suggests inconclusive results.

Posted by Tyler Cowen on September 3, 2008 at 10:58 AM in Economics | Permalink | Comments (18)

Tips for panhandlers, from panhandlers

Currently, the direct, humorous approach is in vogue. That's why in many cities today you'll hear some version of: "I won't lie to you, I need a drink." Panhandlers also report that asking for specific amounts of money lends credibility to pitches. "I need 43 more cents to get a cup of coffee," a panhandler will declare; some people will give exactly that much, while others will simply hand over a buck.

Oddly, the tips are offered on-line:

If it seems unlikely that a homeless person would surf the Web for advice on how to panhandle, that's exactly the point: many aren't homeless and are lying about their circumstances.

And what's the rate of return?:

Anecdotal surveys by journalists and police, and even testimony by panhandlers themselves, suggest that begging can yield anywhere from $20 to $100 a day—though police in Coos Bay, Oregon, found that local panhandlers were taking in as much as $300 a day in a Wal-Mart parking lot. “A panhandler could make thirty to forty thousand dollars a year, tax-free money,” Baker says.

Posted by Tyler Cowen on September 3, 2008 at 08:24 AM in Economics | Permalink | Comments (46)

The Anglo Files

Upper-class pronunciations are all over the place.  The Cholmondeleys are pronounced the CHUM-leys.  The Earl of Harewood is the Earl of HAR-wood.  The Beaulieux are the BEW-leys.  In accordance with the convention that French words should be pronounced as far away from the actual French style as humanly possible, just to show those French people who's boss, Beauchamp Place, a street in Knightsbridge, BEACH-um Place.  Jacques, in Shakespeare: JAKE-weeze.  Your valet is your VAL-let.  Madame Tussaud's wax museum?  To some Brits it's MA-dam TOO-sod's).

That is from Sarah Lyall's not fully analytical but often quite amusing The Anglo Files: A Field Guide to the British.

Here is a picture of Thomas Cholmondeley [CHUM-ley], and with this caption: "The trial has opened in Nairobi of an aristocrat accused of murdering a black Kenyan man he suspected of poaching on his family's 100,000-acre estate."  The case, the second of its kind brought against Thomas, remains pending.  Here is more information.  Here is his girlfriend.

Posted by Tyler Cowen on September 3, 2008 at 07:51 AM in Books | Permalink | Comments (31)

Nationalism

What do you get when you plot the genetic fingerprints of more than 1000 Europeans on a grid? An image that looks surprisingly like a map of Europe. The findings reveal that our DNA contains a sort of global positioning system, which researchers can use to pinpoint where in the world both we and our relatives came from....

"I couldn't believe the picture was so clear," says Carlos Bustamante, senior author and statistical geneticist at Cornell University. "I, for one, fell off my chair." Italy and Spain clearly had their own cluster of genetically similar individuals, for example, and there were even distinctions between French-, German-, and Italian- speaking populations within Switzerland.

The results make sense, says Bustamante. Because people in a region are more likely to marry and mate with each other--a factor that may be largely due to shared language--that gene pool will evolve as a separate cluster that corresponds to a place on the globe, he explains. "You don't randomly mate within Europe. ... If you live in Strait of Gibraltar, you're more likely to marry someone in Spain versus someone in Moscow."

That's Science reporting on a new paper, Genes Mirror Geography with Europe, in Nature.

Posted by Alex Tabarrok on September 3, 2008 at 06:45 AM in Science | Permalink | Comments (15)

Markets in self-constraint, a continuing series

Peter Risager, a loyal MR reader, relays the following to me:

A Danish chain of gyms is now offering membership free of charge, with the only caveat that you have to show up, in order for the membership to be free. If you fail to show up once per week you will be billed the normal monthly membership fee for that month. This should solve the problem with incentives that gym-membership normally carries - there is suddenly a very large (membership is around 85$ per month) incentive to show up each week.

He offers also a link in Danish.

Posted by Tyler Cowen on September 2, 2008 at 03:29 PM in Economics | Permalink | Comments (28)

Questions that are rarely asked

So if we could get people to exercise more, would they become more risk-loving, want less insurance, make more aggressive investments, and induce faster economic growth?  Would this be a good thing?

That's Robin Hanson, the basic empirical result is that physically weaker people are more risk-averse in a wide variety of settings.

Posted by Tyler Cowen on September 2, 2008 at 02:55 PM in Science | Permalink | Comments (11)

You can stop worrying

Martin Feldstein and John Taylor reassure us:

And by maintaining strong control over the growth of government spending, Mr. McCain will bring the budget into balance. His long record of fighting against excessive government spending, his plans to veto earmarks and reverse the spending binge of the past few years, and his strong commitment to balancing the budget can make this goal a reality.

Here is the full article, hat tip to Greg Mankiw.

This article claims that goldfish are as smart as mice.

Posted by Tyler Cowen on September 2, 2008 at 12:57 PM in Political Science | Permalink | Comments (38)

Good Money

At the dawn of the industrial revolution as workers left the fields and moved to industrial employment the demand for a means of payment increased dramatically.  Workers, once paid in kind, needed to be paid in a medium they could use to buy the necessities of life.  Small-tender bank notes, however, were illegal and in Great Britain the production of coin was monopolized by the Royal Mint which failed to provide enough high quality coin to meet the demands of workers and business.  Silver coin, despite the efforts of Sir Isaac Newton, was overvalued and fled the country.  Gold was too expensive to make coins suitable for workingmen and the Mint could not or would not produce high-quality copper coins.

Good Money is George Selgin's explanation of how enterprising button makers solved what Sargent and Velde called The Big Problem of Small Change thereby making the industrial revolution possible.  Selgin is a monetary theorist so you might expect a dry account of monetary history but the mint-battle between Matthew Boulton, whom Wired once named the ultimate CEO, and copper-king Thomas Williams propels the story forward. If you can imagine, Good Money is something of a cross between Friedman and Schwartz's A Monetary History of the United States (although not as broad in scope) and a business epic like Barbarians at the Gate.   I also liked how Selgin draws on newspapers, novels, limericks and tavern songs to illustrate the problems and events of the time.  This bard was both a good economist (he has Gresham's Law!) and public choice scholar.

'Tis Gold buys Votes, or they'd have swarmed ere now,
Copper serves only for the meaner Sort of People
Copper never goes at Court
And since on Shilling can full Twelve Pence weight,
Silver is better in Germany
'Tis true the Vulgar seek it, What of that?
They are not Statesmen,-let the Vulgar wait.

The money problem influenced and was influenced by all of the major events of the day so Good Money is also an economic and political history of the industrial revolution.  Here's an interesting tidbit. Company stores were not so much a way for firms to rip off employees (why not just pay them less?) but were rather a means of economizing on coin.  Selgin shows how the shortage of coin sheds light on a number of other otherwise peculiar business practices. 

What lessons can be drawn from the history of private coinage?  Private money circulated only if it was voluntarily accepted as a means payment.  Thus the primary problem faced by private firms was how to create trust and credibility.  To encourage circulation, for example, issuers promised to redeem their tokens in gold (which the Royal Mint did not).  In turn, the promise to redeem gave producers an incentive to make their coins difficult to counterfeit, which they did by making the coins beautiful - numismatists will appreciate the full-color illustrations of the private coinage produced by Boulton and his rivals - as well as technologically advanced. 

Today, the big problem of small change is no longer such a big problem, although shortages of wanted coin continue to occur sporadically around the world (e.g. here and here) as well as surpluses of unwanted coin.  Nevertheless, the basic problems of private coinage were trust and credibility.  Modern issuers of digital cash face the same problems and thus Selgin's history is a valuable reminder about the scope and potential of alternative monetary institutions.

Full Disclosure: I was enthusiastic about Good Money when I read it in manuscript which is why it is published by the University of Michigan Press and co-published by the Independent Institute where I am director of research (n.b. you can buy Good Money at the previous link at a small discount to the Amazon price).

Posted by Alex Tabarrok on September 2, 2008 at 07:44 AM in Economics, History | Permalink | Comments (15)

Mirrors as a means of reducing (increasing?) bias

People exhibit less prejudice when they're in the presence of a mirror, Dutch researchers have shown. Carina Wiekens and Diederik Stapel said this effect occurs because mirrors make us more aware of our public appearance, and therefore remind us of the need to fall in line with social norms.

Here is more.  Perhaps I have seen too many vampire movies, but in general I am of the opinion that mirrors have a real influence on our behavior.

Posted by Tyler Cowen on September 2, 2008 at 06:50 AM in Science | Permalink | Comments (9)

Dealing with Darwin

A man who knows he has this allele, she added, might be able to use the knowledge to ignore tugs of restlessness he might feel in his marriage: "You can say, 'Oh, it is just my DNA, and I am going to ignore it.' "

...Fisher [an academic researcher], who described herself as a romantic, said she would not reject a potential mate who has two copies of the risky allele. She paused, then added: "But I might not start a joint bank account with them for the first few years."

Here is the full story.  Maybe they should put that on a T-shirt: "Oh, it is just my DNA, and I am going to ignore it."

Posted by Tyler Cowen on September 2, 2008 at 06:10 AM in Science | Permalink | Comments (8)

Econometrics of Bigfoot and UFOs

Peter Leeson is posting over at Freakonomics on the econometrics of bigfoot and ufos, he finds that states with a lot of ufo sightings also have a lot of bigfoot sightings.  Unfortunately, Leeson draws entirely wrong conclusions from his research.  If he wants to explain his results, my young colleague needs to study the classics

Posted by Alex Tabarrok on September 1, 2008 at 07:22 PM in Television | Permalink | Comments (10)

Assorted links

1. Anarchism and Justice, by Roy A. Childs, or at least part of it.  Here is more related material, all via David Boaz.

2. Joe Nocera on The Wall Street Journal.

3. Peter Leeson guest blogs for Freakonomics; I very much like his first post on UFOs.

4. New "ideas blog" at NYT; a nice try and it may get better but it still lacks a voice.

5. Bus reform in Santiago: a sad story.

6. Is commitment-phobia genetic?

Posted by Tyler Cowen on September 1, 2008 at 06:23 PM in Web/Tech | Permalink | Comments (9)

Sorry people, I can't resist

Which means I've been arguing this with Natasha.  But I'd like to point out: a) none of the commentators know the actual circumstances behind Bristol's pregnancy, b) it's unlikely the father was actually forced to marry Bristol; maybe he thought it was the right thing to do, c) I am very glad they are having the baby, noting that I do also favor birth control, d) There is and should be a general rule to treat candidates' children with the utmost respect, e) I fully understand that John McCain needs to read Adam Smith on the division of labor, overconfidence, and also wise decision-making, f) when an attractive woman is criticized by less attractive men, large segments of the public respond accordingly, g) Obama is wise to say nothing about this, h) Palin should not be required to document every claim she makes about her personal life and it is little short of outrageous to demand gynecological information from her, and, most of all i) without families like this our nation would have no chance of affording the social welfare programs proposed by the Democratic Party.

I love the United States of America.

Addendum: Hail Kevin Drum, but read his commentators.

Posted by Tyler Cowen on September 1, 2008 at 03:00 PM in Current Affairs | Permalink | Comments (136)

The Minnesota Somali autism puzzle

Somali students comprise only 6 percent of the Minneapolis school system, but one-quarter of the children in the city’s early childhood autism programs. Health officials are baffled.

Here is more.  Here is a follow-up story.  Oddly Somali families in Sweden call autism "the Swedish disease."  There hasn't been thimerosal in vaccines for some time plus that would not explain the higher incidence of autism among these groups of Somali children.  It also seems that the Somali kids have especially severe cases of autism.

So what is the environmental trigger?  A combined lack of sunlight and vitamin D activation is the only real hypothesis I can find

Mother's testosterone levels, if high, can influence a male child to extreme maturational delay. (A child's maturation rate is set at six weeks before birth.) If the mother has immigrated from an equatorial region with consistent diurnal light cycles of 30% to a relatively extreme northern climate, the influence of light on the pineal gland influencing testosterone levels can dramatically skew mothers testosterone. The question is, do the Minnesota Somali autistic children's birthday's congregate in certain seasons. If so, this hypothesis becomes more likely. See http://www.neoteny.org/?cat=7, particularly http://www.neoteny.org/?p=85.

Yet even that sounds screwy to me (at least it's testable), noting that if you pursue the links you will not find mainstream science at the end of the tunnel.  But the independent appearance of the phenomenon in Sweden and Minneapolis suggests it isn't just a statistical fluke.  And the numerous Somali immigrants in Virginia don't seem to have the same problems. 

Here are some further readings.  Here is a speculation that autism rates are higher in immigrant communities more generally.  Addendum: Here is more on Sweden.

Posted by Tyler Cowen on September 1, 2008 at 07:32 AM in Medicine | Permalink | Comments (34)

My Favorite Things Alaska

All this attention is being devoted to Alaska, so I thought I should do my own evaluation.  Note in advance that politicians don't usually make these lists, they're not "favorite" enough for me.  And enough about her for now anyway (though I'll note in passing, in response to Andrew Sullivan and others, that if voters want to like her, they'll simply refuse to see McCain in the properly cynical light); but no more comments on this issue for now as I want the blogosphere back!

1. Novel, set in: Jack London's Call of the Wild or White Fang are the obvious choices.  Did you know that London's fiction was very widely read in the former Soviet Union?

2. Music: There's Jewel and Bette Midler and maybe you're all wondering which one I will pick.  But the excellent Kevin Johansen, also associated with Buenos Aires I might add, is the proverbial rabbit from the hat.  Ha! 

3. Movie, set in: Both Never Cry Wolf and Grizzly Man are very good; the former had a lead character named Tyler before the name became fashionable.  And isn't Nanook of the North set in Alaska?  Into the Wild is another pick and I doubt if I have exhausted the list.

4. Basketball player: Carlos Boozer is from Juneau.

5. Sculpture: Alaska is probably #1 in the entire United States once you consider the indigenous peoples.  The best works are from the 1950s and 60s and they are not always attributable.  My personal favorite is Thomassie Annanok but of course that is a matter of taste.  Ingo Hessel's book on Inuit Art is a favorite of mine, noting that it focuses more on Canada than Alaska.

6. Other arts: The Tlingit (some of whom live in Canada) have excellent totem poles, boxes, and carvings.  The Haida are another rich artistic tradition.

7. Novel, set in: Michael Chabon's The Yiddish Policeman's Union is the obvious pick plus I hear The Cloud Atlas (The Liam Callanan book, not the David Mitchell one, which is very good but not connected to Alaska) is good.

8. Travel book, set in: Jonathan Raban's Passage to Juneau: A Sea and its Meanings is lovely.  I've never read John Muir's Travels in Alaska but it is likely a contender.

9. Blogger: Hail Ben Muse of Alaska, advocate of free trade!

The bottom line: It relies too much on "set in," but overall the list is better than I had been expecting.  Sadly, Alaska is the one American state I have yet to visit.

Posted by Tyler Cowen on September 1, 2008 at 07:06 AM in The Arts | Permalink | Comments (35)

Levee calculations

I can't track down the original source here, but it sounds broadly consistent with other things I've read:

Under the 100-year standard...experts say that every house being rebuilt in New Orleans has a 26 percent chance of being flooded again over a 30-year mortgage; and every child born in New Orleans would have nearly a 60 percent chance of seeing a major flood in his or her life...

At the same time, the corps has run into funding problems, lawsuits, a tangle of local interests and engineering difficulties -- all of which has led to delays in getting the promised work done.

An initial September 2010 target to complete the $14.8 billion in post-Katrina work has slipped to mid-2011. Then last September, an Army audit found 84 percent of work behind schedule because of engineering complexities, environmental provisos and real estate transactions. The report added that costs would likely soar.  A more recent analysis shows the start of 84 of 156 projects was delayed -- 15 of them by six months or more. Meanwhile, a critical analysis of what it would take to build even stronger protection -- 500-year-type levees -- was supposed to be done last December but remains unfinished.

On the road to recovery, the agency has installed faulty drainage pumps, used outdated measurements, issued incorrect data, unearthed critical flaws, made conflicting statements about flood risk and flunked reviews by the National Research Council.

When it comes to storm protection and urban reconstruction, "halfway" is not a good solution.  There could have been a real rebuilding and protection, or the price signals from insurance companies could have been allowed to shrink the city more fundamentally than what happened.  Here is a relevant study.

Posted by Tyler Cowen on August 31, 2008 at 12:32 PM in Current Affairs | Permalink | Comments (26)

Assorted links

1. Tim Groseclose, muckraking hero.  Here's follow-up coverage from Eugene Volokh.  Here is the Groseclose report.

2. The wisdom of John V

3. Economist Simon Patten on brevity

4. Africa map of the day

5. Was Wikipedia ahead of the betting markets?

Posted by Tyler Cowen on August 31, 2008 at 11:57 AM in Web/Tech | Permalink | Comments (2)

What is sold on Indian roads

I loved this post.  And here is my favorite part:

Ear Cleaners: Though not a part of the South Indian road market, these people are quite a force in North India.

Temple Priests: In many roads of India, temples awkwardly jut out into the roads (they can't be demolished as they will cause an uproar in religious India). Priests either belonging to neighbouring temple or dedicated to that temple start early morning’s ablutions for the Gods. It is also common to see small temples for Virgin Mary.

Posted by Tyler Cowen on August 31, 2008 at 08:16 AM in Data Source | Permalink | Comments (7)

The ten most underrated science fiction movies

Here is one such list.  It offers up:

1. Primer
2. Aeon Flux
3. Body Snatchers (1993!)
4. Tron
5. Sleeper
6. eXistenZ
7. A Boy and His Dog
8. Enemy Mine
9. Gattaca
10. Silent Running

My picks would have been Mission to Mars and Titan A.ESunshine is also quite good and not so well known.  At times I regard What Dreams May Come as science fiction.  Can I call John Carpenter's The Thing underrated?  (Is Gattaca underrated?  I don't think so, not any more.  Is the wonderful eXistenZ underrated?)  Then there are the three Stars Wars prequels, each deeply underrated (unlike The Clone Wars, which defies every rational choice theory known to mankind).  But we've had other comment threads on the prequels, so don't flame me on that one.  Offer up your picks, with an explanation why.

Posted by Tyler Cowen on August 31, 2008 at 07:27 AM in Film | Permalink | Comments (80)