Marginal Revolution

Tips for scoring with the opposite sex

Yes, reading:

"The men polled said they would be most impressed by women who read news websites, Shakespeare or song lyrics. Women said men should have read Nelson Mandela's biography or Shakespeare."

Here is the link.  46% of the surveyed men lie about what they have read -- to impress partners -- and 33% of the surveyed women admit to lying about their reading habits.  In fact it's the second most likely form of lying (or so people say) for purposes of sexual conquest, with lying about one's own sexual past as the most likely form of lying.

And for teenagers? (presumably British):

Top of the list to impress a teenage boy are Facebook and MySpace followed by text messages, Harry Potter and song lyrics. Magazines like Zoo and Nuts are number seven. To impress a teenage girl, it is the same top two, followed by song lyrics, cookery books and Harry Potter. Reassuringly, Jane Austen is number seven.

Here are the actual lists but of course I believe people are lying about those too.

The rule of law?

That's Ford's UAW contract.  You can read those 2215 pages, and other UAW contracts, here.  I thank Tim Miller for the pointer.

How to run a Ponzi scheme

Investors may have been duped because Mr. Madoff sent detailed brokerage statements to investors whose money he managed, sometimes reporting hundreds of individual stock trades per month. Investors who asked for their money back could have it returned within days. And while typical Ponzi schemes promise very high returns, Mr. Madoff’s promised returns were relatively realistic — about 10 percent a year — though they were unrealistically steady.

It seems this scheme went on for "years or even decades," which means it lasted longer than many legitimate concerns.  Nomura had been searching out international clients for him.  Checks and balances were weak:

...because he had his own securities firm, Mr. Madoff kept custody over his clients’ accounts and processed all their stock trades himself. His only check appears to have been Friehling & Horowitz, a tiny auditing firm based in New City, N.Y. Wealthy individuals and other money managers entrusted billions of dollars to funds that in turn invested in his firm, based on his reputation and reported returns.

In reality the "fund" simply was not there and now grandmothers have been fleeced.  That is a scary lesson about the financial sector as a whole (and prudential regulation) but if it is any comfort an unregulated hedge fund could not have done the same.  Those funds hold their portfolios at banks and thus you can check as to whether they actually "exist."

Progress against Economicitis?

Jason Shafrin, the Healthcare Economist, has a nice post explaining how a statistical illusion can make early screening for disease appear much more effective than it really is.

Here is an example using the dreaded disease economicitis.  Let us divide people into 3 groups.

• Healthy: You live forever.
• 1st stage economicitis is asymptomatic. Life expectancy when 1st stage economicitis begins is 10 years.  One half of economicisits cases are 1st stage.
• 2nd stage economicitis appears when individuals mysteriously grow a third or possibly fourth hand.  Life expectancy with second stage economicitis is 2 years.  One half of economicitis cases are 2nd stage.

Before any screening was developed, individuals would learn they had economicitis  when they started growing extra hands.  Thus, documented life expectancy for those with  economicitis was 2 years, since all individuals who were recorded as having  economicitis were in the 2nd stage.

Let us assume that a screening technique is now available.  If the screening device is able to detect 100% of stage 1 and stage 2 economicitis cases, then we will see that life expectancy will increased to 6 years (10/2+2/2=6). Statisticians looking at the data may claim the following: “The economicitis screening test has increased life expectancy after diagnosis from 2 to 6 years!”

This claim, however, is false since there is no effective treatment for  economicitis.  The increase in average life expectancy is not due to any improvement in health care, but only because the relatively healthier individuals with 1st stage economicitis are now being detected by the test.

Many years ago, David Plotkin had a article in The Atlantic dealing with this issue and others with respect to breast cancer. The statistics are somewhat out of date but the article remains of real value.

How to spend the stimulus

Here is a NYT symposium of economists, including yours truly.  I very much like Andrew Samwick's point:

If I had my druthers, the word ’stimulus’ would be expunged from public discussion, along with ‘bailout’ and ‘rescue.’ These words convey the idea that, because we have so mismanaged our economic and financial affairs, we are somehow able or entitled to conjure up additional funds out of thin air to fix our problems.

Elsewhere, here is a passage from Megan McArdle:

Is the government going to guarantee approximately 70 million owner-occupied homes in America against a 25% price drop?  No, because that's $3.5 trillion dollars, if my mental arithmetic serves.  Or is it only going to give the money to the least responsible homeowners:  the ones with small (or no) downpayments, houses they could only afford at short-term teaser rates, and a long string of missed payments?  The numbers, and the political arithmetic, don't add up.  Indeed, any such program would positively encourage people to default, in order to get the government to cram down their loans.

In other words, don't spend the stimulus on the housing market.  From another angle, Angus reports:

I guess I'd rather give my money to people who are going to use it to try to make more money (i.e. save/spend it in the market system) than give it to people who are going to use it to try and get re-elected.

And here's more from Greg Mankiw.

Markets in everything

Wearable air bags for the elderly (click on "Start Reading" to get through).

Can you guess in which country?

If you keep on clicking on that link, you'll go through the NYT's Year in Ideas 2008, always worth reading.  I found at least half of them worthwhile (a very good way to spend your Friday night) but sadly they do not have a separate link for each bit.  Under "B" you will find an interesting discussion of the Bus-Wait Problem, namely when you should stop waiting for that bus and start walking.  The advice is that usually you should wait. 

Here is separate information on "the glass cliff," a fascinating phenomenon.

Law and Economics 2.0

On Thursday the Kauffman Foundation will announce that it is making $10 million in initial contributions to found an initiative aimed at reinvigorating, and, to some extent redirecting, the exceedingly influential school of thought that has come to be known as “law and economics.”...Kauffman’s new “Law, Innovation and Growth” initiative seeks to refocus the law-and-economics debate to center on the promotion of entrepreneurship [law and growth, dynamic efficiency etc., AT]...

Robert Litan will direct.

Litan’s role model here, he acknowledges, is Henry Manne, a dean emeritus at George Mason University School of Law in Arlington, Vir., who was law-and-economics’ chief proselytizer and salesman.

More here.  Hat tip to Tim Kane at Growthology.

Prudie on husbands who write books

A Slate reader writes in to Prudie:

My dear, highly educated husband has written a book. While he has many talents, writing isn't among them. He paid someone to edit the book, which helped it somewhat, but it's still awful. I've gone through it as well and cleaned it up the best I could without completely rewriting it. The problem is my attitude—I don't feel it's my place to crush my husband's dream but find it hard to just sit there with a smile on my face while he goes on and on about how life will change when he's a best-selling author. It's not going to happen. I realize that at one point a publisher (or a stack of rejection letters) will make the point without me doing so, but I'm not quite sure how to act now. I love him and want to be supportive of him following his dreams, but I don't want him to waste his time. Do I stand by and lie, or break the news to him somehow?

For Prudie's answer, and Trudie's answer (remember Trudie?), you must look under the fold...

Trudie chuckled when she read these two sentences from Prudie:

I can't tell if your husband's fantasies are sweetly pathetic or disturbingly delusional.

...and...

You don't need to crush your husband—you're right, the marketplace will take care of that task...

The highly egalitarian Trudie believes that everyone deserves a chance.  What would Immanuel Kant's wife (it is no accident he didn't have one) have said about his draft of Critique of Pure Reason?  Trudie offers the husband -- if he can be located -- the following deal, maintaining his anonymity if he so wishes.  I'll read the manuscript, or at least try to, and tell everyone what I really think.

Assorted links

1. Virginia Postrel on the economics of bubbles.

2. The economic outlook.

3. Frog picture; recommended.

4. Robot density.

5. We'll do the next two chapters of Keynes on Monday.

Markets in everything

Of 51 countries that have received reward payments since 1999, six overestimated their immunization gains by a factor of four, 10 overestimated them by a factor of two, and 23 by less than two. Eight underestimated their progress.

Here is the article, interesting throughout.  The bottom line is this:

Since 1986, progress in childhood immunization in the developing world has been about half that officially reported by governments in the developing world. Not only are year-to-year improvements overstated, but the total percentage of children immunized is far lower than publicly acknowledged, the study found.