Marginal Revolution

Predictions about immigration and attractiveness

Sebastian Flyte, an unusual commentator, wrote:

A man's mate value is tied to status - if he emigrates he throws away whatever mate value he built up in his life. A girl's is tied to youth and beauty. These are carried with her luggage.

He has a point.  Female migrants should on average be prettier, ceteris paribus, than those who stay in the old country.  That means holding constant income, education, and some other variables.  Female immigrants should find it easier to marry into the receiving country's population than do male immigrants.  From a public choice point of view, the women in the country receiving the immigrants should be more suspicious of liberal immigration policies than should be the men in the receiving country.  It is up for grabs whether male immigrants should be handsomer or uglier than average, relative to their home country populations, again holding constant some relevant variables.

Markets in everything, human carpet edition

A man walks into a bar. He’s carrying a carpet under his arm. He wraps himself in the carpet, lies on the floor, covers his face and waits for people to step on him. A sign taped to the bar reads: “Step on carpet.”

People step on the carpet — dozens, in fact. The more people who step on the carpet, particularly if they are women in heels, the happier the man is. Some are timid, others are audacious. Some dance on the man. Some step on him while ordering their drinks, completely unaware that a live body is underfoot. Some just stand there, frozen, looking totally freaked out.

Four hours later, the man slips out from beneath his carpet, folds it up, tucks it under his arm and heads home. “It was a nice party,” he says cheerily, as if he were talking about something far more ordinary, like, say, a backyard barbecue.

His standard rate is $200 "a session," he seems to enjoy the work, in some situations he values the situation as a fetish, he once had ten women stand on him, and the market structure appears to be one of duopoly.  Here is more and I thank Jeffrey Valentine for the pointer.

Is suicide expensive?

Ezra Klein writes:

But it's expensive. With only Switzerland in the market, there's little competition. And in addition to the 4,000 euros required for the services of Dignitas, you also have to pay for your flight, and for those of your loved ones.

Well, sort of.  But if you already have $4,000, or can borrow $4,000 (don't tell them why you want the money), ex post it's actually not as expensive as it looks.  Which may help explain why the demand is somewhat inelastic.

Project Tuva

Bill Gates has bought the rights to Richard Feynman's lectures, The Character of Physical Law, and has put them on the web with lots of annotations.  Nicely done.

I liked Feynman's point about Newton's law of gravity being used by astrologers, "That's the strange world we live in, that all the advances and understanding are used only to continue the nonsense which has existed for 2,000 years."

Hat tip to Tierney Lab.

The Increased Competitiveness of the US Economy

Deloitte has just released The Shift Index, a study of long-term trends in the U.S. economy.   Two interesting graphs follow which put some numbers on conventional wisdom.  The US economy has become much more competitive over time. We can see this in the economy wide Herfindahl-Hirschman Index, a measure of market concentration, which has halved in the latest forty years (click to enlarge) and also in the topple rate.

The topple rate is a measure of how the rank of large firms on return of assets changes over time.  The topple rate has increased by about 60% over the past forty years (ignoring the recent blip up).  What this means is that the firms on top are less likely to stay on top today than in the past - the recent blip up indicates the upheaval in firm rankings during the current recession.  Notice also that an increased topple rate implies an increase in stock market volatility which we have also seen over the long-run (not just in recent years).

As a result of increased competition and also, I believe, greater wealth and reduced interest rates, the economy wide return on assets has decreased by 75% (see the report).

If the return on assets has decreased but productivity and wealth are up then where has the wealth gone?  To consumers and the creative class.  Thus, increased competition in the economy has driven down the return to capital and at the same time has increased the return to the complementary input which is in greatest fixed supply, creative labor.  More data in the full report.

*Economist* forum on Justin Lin and banking in developing countries

Lin is chief economist at the World Bank.  You will find the forum here and it includes responses by Antoinette Schoer, Ross Levine, Abhijit Banerjee, Luigi Zingales, Mark Thoma, and others.  My comment is here.  Excerpt:

I can't decide whether I agree with everything in this essay or disagree with everything in this essay. 

I see Mr Lin using the words “should”, “need to”, and phrases like “what matter most” or “not the way to go”. But who or what is the active agent here? The country’s home government? The World Bank? When it comes to all these banking systems, are we simply rooting for particular paths and outcomes—such as small and simple banks—or is Mr Lin making policy recommendations about how to get there? We never know.

Meanwhile, via Kottke, here is the World Cup Stacking Record (recommended).

Intrade vs. MSM: Sotomayor Nomination

What tells you more about the Sotomayor nomination, all of the chatter and debate in the MSM over her "controversial" remarks or the single number from intrade: bids at 98,5, i.e. an estimated probability of confirmation of 98.5% (as of July 14, 11:12 pm EST)?

Loyal-reader Jim Ward writes: 

Do reporters and news Agencies even know to check the betting markets? Or do they just ignore it, because “X sure to happen, nothing to see” is not a story? Or they don’t want to seem biased, and have to provide 2 sides to every story...Why not just throw Intrade odds into every story as an addendum?

I'm actually amazed at how far prediciton markets have come.  In Entrepreneurial Economics I wrote:

...perhaps one day, instead of quoting an expert, the New York Times editorial section will refer to the latest quote on "health care plan A" available in the business pages.

At the time, I didn't think that day would be just a few years in the future. Admittedly, we are not quite there yet but during the last election it was common for media outlets to refer to the prediction markets.  I think this trend will continue.  Can futarchy be far behind?

Markets in everything; the culture that is Japanese

This year Japan has gone konkatsu-crazy, with the trend spawning countless magazine articles, a weekly TV drama and a best-selling book.

A Tokyo shrine now offers konkatsu prayer services, a Hokkaido baseball team has set up special seats for those looking for mates, and a Tokyo ward office arranges dating excursions to restaurants and aquariums.

A lingerie maker has even come up with a konkatsu bra with a ticking clock that can be stopped by inserting an engagement ring.

Here is much more.  I thank KunLung Wu for the pointer.

Getting stuck in the bad equilibrium in India

The poor in India are victims of state indifference and corruption; somewhere between a quarter and a half of all subsidized food meant for them, for example, is stolen by corrupt government officials.  And yet if one asks the poor what jobs they would like their children to have the number one answer is to work for the government.  (See also my earlier post on Regulation and distrust for a model.)

In his magnificient, if poorly titled, In Spite of the Gods: The Strange Rise of Modern India, Edward Luce provides a sadly, poignant analogy: 

To the poor the state is both an enemy and a friend.  It tantalizes them with a ladder that promises to lift them out of poverty but it habitually kicks them in the teeth when they turn to it for help.  It inspires both fear and promise. To India's poor the state is like an abusive father whom you can never abandon.  It is through you that his sins are likely to live on.

Luce's book is the best of recent books on India, highly recommended.

ATMs in casinos

Should the service fee by high or low?  It could cut either way.  A low service fee encourages withdrawals and thus gambling, which is profitable for the casino.  A high service fee takes in money from the desperate and those with high time preference.

It was $4.99.  (Of course that is n = 1.)

On the other hand, they let you take out up to $1000, well above the average.

Another user told me you are especially likely to get $100 bills from the machine.  Perhaps the hope is that you will buy $100 in chips rather than trying to break the bill.