Marginal Revolution

NASA FAQ 2012

Alex Tabarrok

NASA scientists are frequently being asked questions concerning 2012 and for this reason they have created a web page to answer these questions and reassure the public. e.g.

Q: Is there a planet or brown dwarf called Nibiru or Planet X or Eris that is approaching the Earth and threatening our planet with widespread destruction?

A: Nibiru and other stories about wayward planets are an Internet hoax. There is no factual basis for these claims. If Nibiru or Planet X were real and headed for an encounter with the Earth in 2012, astronomers would have been tracking it for at least the past decade, and it would be visible by now to the naked eye. Obviously, it does not exist. Eris is real, but it is a dwarf planet similar to Pluto that will remain in the outer solar system; the closest it can come to Earth is about 4 billion miles.

Sigh.... I too fear for our planet.

Countercyclical "asset" of the day -- burglary watch

Tyler Cowen

With a lot more unemployed people, a lot more people are staying home, and they see more in their neighborhood," said Sgt. Thomas Lasater, who supervises the burglary unit of the police department in St. Louis County, Mo., where authorities recorded a whopping 35 percent drop in burglaries during the first six months of 2009.

The falling price of raw materials -- which had been producing copper and other thefts -- may be another reason for the change in trend.  Here is the story and I thank Daniel Lippman for the pointer.

Assorted links

Tyler Cowen

1. Scott Sumner, standing on one (?) foot.  And here is a Sumner podcast with Russ Roberts.

2. The physics of free throw shooting.

3. A mathematician discusses string theory and many other matters.

4. Is older music crowding out newer music?

Unemployment Breakdown

Alex Tabarrok

The NYTimes has a nice interactive graphic on unemployment rates and changes over time by demographic characteristic.  I am in the category--white men ages 25-44 with a college degree-- with almost the very lowest unemployment rate (3.9%).  Just to compare, as pointed out in the comments, black males 15-24 without a high school degree have an unemployment rate of 48.5%.  Check it out.

Hat tip to FlowingData.

Measuring the movie critics

Tyler Cowen

If you want to get a sense of the zeitgeist but can only read one review, you might prefer Rene Rodriguez, whose low standard deviation from the mean review score makes him very nearly a living critical average. If you are interested in an alternative perspective, Mick LaSalle's high standard deviation places him further from the critical pack than any of these peers. Reviews from both Michael Wilmington and Marc Savlov are so regularly and respectively positive and negative that they should perhaps be taken with a grain of salt.

The source article, which contains much more information, is here.  You'll find a visual representation of the critics's stances here.  Hat tip goes to Eric Barker.

If you're wondering, I don't have a "favorite movie critic."  I judge movies by the preview, the director, and by mentally aggregating the first five reviews I happen to read.  This works well for me.  If I had to go by a single source, by far it would be Variety magazine, which offers separate assessments of a movie's goodness and of its popularity with various demographics, a luxury which non-insider publications do not always have.  

China claim of the day

Tyler Cowen

If China remains culturally closed, the Chinese Century will never come to pass. Instead, the United States--a country that has struggled with race and racism for centuries, and in the process has become more culturally open and resilient--will dominate this century as it did the last.

That's from Reihan Salaam, who discusses how far the problem of Asian racism is from being solved.

Berlin memories

Tyler Cowen

I first visited Berlin in 1985, while traveling with Randall Kroszner.  We drove to West Berlin by car and we were terrified for the few hours we were underway in East Germany.  Randy did not drive over the speed limit once.  I was hardly a communist sympathizer but still I was unprepared for the day trip to East Berlin.  I saw soldiers goose-stepping down one of the main streets.  In the stores old ladies yelled and swung their brooms at me.  Many buildings still had bullet marks or bomb damage from World War II.  In a restaurant we ate a rubber Wiener Schnitzel and shared a table with an East German family; they did not have enough trust in their government to speak a word to us.  I was unable to spend my mandatory thirty-mark conversion on anything useful; I carried back some Stendahl and Goethe but didn't want the Lenin.  This was in the capital city in the showcase of the communist world.   

My biggest impression was simply that I had never seen evil before.

In the summer of 1990 I stayed in a dorm in East Berlin.  Everyone seemed normal.  Cute girls smiled.  Yet there were few signs of modern German life as a Westerner might understand it; it was as if I had stepped into an alternative science fiction universe.  The Vietnamese ran the street markets and Russian still mattered.  

In 1999 I heard an emotional performance of Fidelio there and most of the audience cried.

I like spending time in Berlin.  But I am never sure I like Berlin itself, West or East.  Berlin is Germany being imperial.  Berlin is Germany looking toward the east.  Today Berlin is Germany pretending it is normal, while not yet having a new identity.  Here is Kurt Tucholsky (in German) on Berlin.  Here is a silly quotation about Berlin:

“Berlin combines the culture of New York, the traffic system of Tokyo, the nature of Seattle, and the historical treasures of, well, Berlin.”

Here is the Berlin Sony Center.  Here is the Reichstag.  Here is the Jewish Museum.  Here is Knut, from the Berlin Zoo.

Assorted links

Tyler Cowen

1. Photos from inside a Colombian prison.

2. How to increase altruism in toddlers?

3. Soviet mathematics as pure status competition.

4. How people count money, across culture (video).

5. Real vs. placebo coffee: people don't know if it's decaf.

High-speed rail fact of the day

Tyler Cowen

American Intercity rail service is slower today than it was in the 1940s.

Here is the full article, by train expert Mark Reutter.  It is a good look at some of the obstacles facing a successful high-speed rail program.

How short a time horizon is needed to motivate catch-up growth?

Tyler Cowen

A few centuries ago, the ratio between the per capita income of the richest country and poorest country was maybe five to one.  Today it is maybe one hundred to one.

The classic example of economic catch-up is given by East Asia in the mid-twentieth century, starting with Japan.  In those days it was possible to obtain near-parity with the West in about thirty to thirty-five years.  In other words, as a young man you could see near-parity before you retired and you could see near-parity for your grandchildren.  You could see your children making it halfway there, even before they are entering the workforce.

What if, in the future, for the remaining poor countries, the West (and East Asia) is so rich that catch-up takes seventy years?  One hundred years?  Will any poor country be bothered?  Won't it all seem too far off to be worth the trouble?  (Catch-up growth takes lots of hard work and savings and sacrifices of previous social norms.)  Or do you believe in a technology-transfer Solow model where the maximum possible rate of catch-up growth keeps on growing?  One hundred years from now, will it be plausible to imagine catch-up growth of twenty or thirty percent a year?

What's actually in the health care bill

Tyler Cowen

Here's a new blog devoted to that topic.

*The Art of Not Being Governed*

Tyler Cowen

The subtitle is An Anarchist History of Upland Southeast Asia and the author is James C. Scott of Yale University.  Here is a summary from the Preface:

...I argue that the [Southeast Asian] hill peoples are best understood as runaway, fugitive, maroon communities who have, over the course of two millennia, been fleeing the oppressions of state-making projects in the valleys -- slavery, conscription taxes, corvée labor, epidemics, and warfare.  Most of the areas in which they reside may be aptly called shatter zones or zones of refuge.

Virtually everything about these people's livelihoods, social organizations, ideologies, and (more controversially) even their largely oral cultures, can be read as strategic positionings designed to keep the state at arm's length.  Their physical dispersion in rugged terrain, their mobility, their cropping practices, their kinship structure, their pliable ethnic identities, and their devotion to prophetic, millenarian leaders effectively serve to avoid incorporations into states and to prevent states from springing up among them.  The particular state that most of them have been evading has been the precocious Han-Chinese state.

Highly recommended, this is a book Gordon Tullock would love.  So far it has received surprisingly little publicity but it strikes me as essential reading about Afghanistan as well.  Here is a much earlier Crooked Timber post on Scott.

Assorted links

Tyler Cowen

1. The vote to defund political science: how it went.

2. Jason Kottke doesn't read books anymore.

3. "Food rewards obsessiveness," the best eater in the United States.  The full article is gated (the link offers only an excerpt), so buy the 9 November New Yorker.  I don't usually link to gated material of this kind, but this was one of the three or four best magazine pieces I'll read in a year.

4. Why Buffett bought that railroad.

5. Weird stuff McDonald's sells around the world.  In the Philippines it is "spaghetti soaked in sugar."

6. Fruitless endeavors, or not?: translating works of literature into games of chess against each other, using a computer program.

7. Were the Neanderthals just unlucky?

8. Françoise Sagan: an appreciation.

Why it's harder than before to get into your favorite college

Tyler Cowen

Caroline Hoxby reports:

This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.

Here is one summary of the paper.  The ungated version is here.  Note that the incomplete nature of globalization for higher ed means this process still has a long way to run.

By the way, does this logic also apply to romance?  To really good sporting events?  To meeting and befriending celebrities?  Is this a more general prediction in a superstars model?

How to run a successful blog

Tyler Cowen

...They understand that public opinion matters...they understand that it’s a little harder to criticize someone after you’ve met him and he’s given you free cookies...they couldn't possibly have expected to change anybody’s mind, they understand that it’s better to talk to your critics than to avoid them. Waldman talks about some of the techniques used to make the attendees [readers] feel like they were being treated as special guests.

Whoops!  That's not advice for running a successful blog.  Those are James Kwak's comments on how Treasury tries to trick visiting bloggers.  We bloggers should know.  We give away lots of free stuff too, more than cookies even if it is sometimes sour rather than sweet.

Assorted links

Tyler Cowen

1. More lessons from the VHA.

2. Net use does not lead to social isolation.

3. IQ predicts portfolio diversification, at least in Finland.

4. Finish time variation in marathons, across time and across Boston and New York.

5. What your phone might do for you two years from now.

6. John Cassidy on the health care bill.

Talks at TEDx Midatlantic

Tyler Cowen

The talks are here, including one by yours truly on the limits of story-based thinking.  I was happy to meet Sonja Sohn.  One thing I learned from this experience is that if you follow professional entertainers, the "status rub-off" effect dominates the "suffer by comparison" effect.  The audience is primed to be sympathetic to you and many of them do not actually know which of the speakers are truly the high status people.  Perhaps the talk has to meet some minimum quality standard, or involve some minimum level of self-confidence, for the rub-off effect to hold.

Addendum: Arnold Kling comments.

Impressions from Treasury

Tyler Cowen

I will enumerate a few (you can trace other accounts here):

1. Tim Geithner is very smart and he was conceptually stronger than one might have expected.

2. I believe that the long, L-shaped hallways encourage "visits to offices" rather than hallway conversations; this is a speculation and perhaps some reader can confirm or deny it.

3. The quality of the painted portraits of Treasury Secretaries declines as time passes.

4. The free cookies were good and fresh, with a warm, fluid chocolate interior.  There was water to drink, but no mineral water.

5. For all their talk about outreach, etc. I believe at least a few of them wanted to hear from an outside source whether we think they are totally ****ed or not.  They heard. 

6. I worry less than did some of the other bloggers about the Treasury awareness of major economic problems going forward.  As governmental institutions go, Treasury has a real incentive to a) worry about the fiscal future, and b) worry about worst-case scenarios, including for financial institutions.  Their daily interaction with the bond market gives them a longer time horizon and a more economics-friendly perspective than most of their bureaucratic counterparts.  The problem is Congress.  For instance if someone at Treasury had a Yves Smith view of the banking system, they could not much act on it.

7. "You guys are a welcome change of pace," or something like that, remarked one senior Treasury official.  Although this was flattery, I believe it was meant sincerely.  They were also a welcome change of pace.

8. I asked one senior Treasury official which book, thinker, or economic theorist had most shaped his thinking about the financial crisis.  In the ensuing discussion the book Lords of Finance was recommended, though I could not say whether it was intended as a totally direct answer to the question as stated.

*You Are What You Choose*

Tyler Cowen

Scott DeMarchi and James T. Hamilton have a new book out and the subtitle is The Habits of Mind That Really Determine How We Make Decisions.  I take this to be the key paragraph:

It's called fast food, but your decision-making process in ordering a chicken sandwich can be incredibly complex.  In the following section, we describe six core habits of mind that affect how you make decisions in all areas of your life.  We call these TRAITS: Time, Risk, Altruism, Information, meToo, and Stickiness.

Here is a review and explication of the book.

The wisdom of Garett Jones

Tyler Cowen

Workers mostly build organizational capital, not final output. This explains high productivity per 'worker' during recessions.

That is from Twitter, the link is here.

Give them your tired, your poor, your huddled masses

Alex Tabarrok

Three countries that relied on low-skilled immigrant workers during good times — Japan, Spain, and the Czech Republic — have recently introduced voluntary return programs programs, popularly known as "pay-to-go" programs, in an effort to reduce the number of unemployed immigrants.

The programs established in 2008-2009 generally provide unemployed legal migrants with stipends that cover the cost of a one-way plane ticket "home." Some programs also offer migrants a lump-sum payment.

More here.

Assorted links

Tyler Cowen

1. Geithner meets with bloggers, and here: "We were offered a tray of cookies at the meeting, from which I abstained on principle. Those of you who think that's silly have no idea how much I like cookies."

2. Assuming a can opener, more on health care costs.

3. More on the multiplier (shout it from the rooftops).

4. Mandates don't stay modest.

5. Lane Kenworthy reviews Create Your Own Economy.

Do cellphones outnumber light bulbs in Uganda?

Tyler Cowen

Maybe so.

Hat tip goes to the always-impressive Rachel Strohm.

One path to the Georgist solution?

Tyler Cowen

Without bankruptcy protection, a city that couldn’t pay bondholders would be forced to raise taxes until it could. This happened to West Palm Beach, Florida in the Depression and property tax rates rose to 42.5 percent of assessed value.

Here is more (interesting throughout) and I thank Chug for the pointer.

Fifty Years of Economic History in one Figure

Alex Tabarrok

David Beckworth sums up a lot of recent economic history in one figure.

A few thoughts:  I wish Arnold Kling were correct that inflation is around the corner.  We could use some inflation to get back on track.  Nominal wages are simply not flexible enough to get the job done in short order and there is much to fear from populist backlash.

See also the link above for a remarkably similar figure for the OECD which illustrates the US's role of monetary hegemon. 

How to save The New York Times?

Tyler Cowen

I was reading an NYT account of its finances and came across the following:

More radical moves, like dropping the sports section, have been rejected because they would undermine the quality of The Times or would not save much money, Keller said.

"Or"?  Which is it?  It would not  undermine the quality of the paper from a Platonist point of vew; the NYT sports section isn't even as good as USA Today.  It's hard to believe the section is cheap to produce, but if it were that again would imply it wasn't so special.

Is Keller trying to say something like: "We also don't think the section is that good, but if we cut it we'll lose those subscribers who take only one paper and still demand minimum sports coverage"?  For these subscribers, is it not possible to rent out somebody else's sports section and stick it in the paper with a NYT label on it and maybe an extra article about the Knicks?

Assorted links

Tyler Cowen

1. Jeff Ely will laugh at this.

2. Markets in everything: waiting in line for swine flu shots.

3. John Cassidy blog on "rational irrationality."

4. What does your doctor really think of you?

Dolphin markets in everything, Gresham's Law edition

Tyler Cowen

I enjoyed this story:

Kelly has taken this task one step further. When people drop paper into the water she hides it under a rock at the bottom of the pool. The next time a trainer passes, she goes down to the rock and tears off a piece of paper to give to the trainer. After a fish reward, she goes back down, tears off another piece of paper, gets another fish, and so on. This behaviour is interesting because it shows that Kelly has a sense of the future and delays gratification. She has realised that a big piece of paper gets the same reward as a small piece and so delivers only small pieces to keep the extra food coming. She has, in effect, trained the humans.

Her cunning has not stopped there. One day, when a gull flew into her pool, she grabbed it, waited for the trainers and then gave it to them. It was a large bird and so the trainers gave her lots of fish. This seemed to give Kelly a new idea. The next time she was fed, instead of eating the last fish, she took it to the bottom of the pool and hid it under the rock where she had been hiding the paper. When no trainers were present, she brought the fish to the surface and used it to lure the gulls, which she would catch to get even more fish. After mastering this lucrative strategy, she taught her calf, who taught other calves, and so gull-baiting has become a hot game among the dolphins.

Here is the full article and I thank David Curran for the pointer.

So how would dolphin bimetallism work?  I think we know!

Geoengineering with Iron Fertilization

Alex Tabarrok

As even their critics admit, Levitt and Dubner have performed a useful service in drawing greater popular attention to geoengineering.  Garden hoses to the sky,however, are not the only approach.  Iron fertilization is simpler, cheaper and much more easily testable. 

Most people are aware that CO2 and temperature are positively correlated in the long historical record but fewer people know that iron dust correlates negatively on the same scale - that is, temperature and CO2 levels are low when iron-dust is high.  The graph illustrates.

 

The basic mechanism that appears to drive the association between low temperature, low CO2 and high iron-dust levels is that iron-rich dust sometimes sweeps off the continents into the oceans where it creates a plankton bloom.  Phytoplankton take up CO2 in order to grow and as they die and produce fecal matter (I kid you not) carbon sinks to the lower depths or bottom of the ocean where it may remain for 100 to a 1000 or to even to millions of years (in the latter case eventually becoming oil).

A big advantage of iron fertilization as a way of reducing CO2 is that this process occurs naturally all the time and thus may be studied.  It is also possible to run experiments.  Indeed a dozen small-scale experiments over the past decade have already been run with all showing that iron fertilization does create phytoplankton blooms and some showing carbon sequestration.  Interestingly, private firms looking for future carbon offset sources are driving much of the research into iron fertilization.

Of course, all the usual caveats about uncertainty and unintended consequences apply.  Oceanus, the magazine of the Woods Hole Oceanographic Institution has an excellent issue on this topic.

Famous Economists Quiz

Alex Tabarrok

The Jeopardy contestants didn't do very well but here is your chance.  Robert Whaples has created a quick quiz for his students on famous economists.   I expect most MR readers will get all the answers right but fortunately the quiz is timed.  I answered all questions correctly in 49 seconds.  Go for it!

The test of time?

Tyler Cowen

Eighty years ago the Manchester Guardian (as this paper then was) ran a poll to discover from its readers' votes the "novelists who may be read in 2029".

George Simmers, on his literary greatwarfiction blog, has jumped the gun by 20 years with some satirical reflections on the top five novelists in that poll.

Only another 20 years to go, and the top five are already looking shaky:
They are John Galsworthy (1,180 votes), H. G. Wells (933), Arnold Bennett (654), Rudyard Kipling (455), J. M. Barrie (286).

What of James Joyce, Virginia Woolf, DH Lawrence, Henry Green, Ivy Compton-Burnett, Agatha Christie, EM Forster, and Jean Rhys? This distinguished crew either do not figure in the 1929 poll, or clock in with derisory counts (Joyce gets fewer than 10 votes – alongside Max Beerbohm, it's pleasing to note).

I love Galsworthy and for that matter Wells.  Here is the article.  Here is further commentary.  By the way, no one back then voted for Agatha Christie, who is now probably the most frequently read of the British writers from that era.

For the pointer I thank the always-excellent Literary Saloon.

How should we price the "public option" for dogs?

Tyler Cowen

David, a loyal MR reader, asks:

Why do I have to make an appointment, wait in line, fill out a slew of paperwork, and pay $70 to adopt a dog that otherwise would likely have been euthanized (at the taxpayers' expense), and yet bringing your very own human child into the world takes nothing more than a few shots of tequila or a broken condom?

I am not suggesting that we stand at a first-best equilibrium, but I can think of one reason for this apparent pricing anomaly.  If dogs were free (or if dog ownership required only that you show up with a fresh condom), too many people would experiment with owning dogs and then abandon them to the public commons.  The $70, or whatever it costs, screens for serious dog owners, as does the paperwork requirement.  

So should the price of kids be changed?  I would suggest that for most women bringing a child into the world (much less raising it) requires more than "a few shots of tequila or a broken condom".  That too screens for serious mothers to some extent.  If we raised the price of kids, as we could do easily with tax law and EITC reforms, we'd have fewer kids in the world.  If we raised the price of adopting dogs, there would be more do-it-at-home puppy production and more dogs.  Neither population change strikes me as an especially desirable outcome and thus we have what we have.

The rising fortunes of John Geanakoplos

Tyler Cowen

It is a front-page WSJ article, read it here.  Excerpt:

In a 2000 academic paper, Mr. Geanakoplos offered a theory. He said that when banks set margins very low, lending more against a given amount of collateral, they have a powerful effect on a specific group of investors. These are buyers, whether hedge funds or aspiring homeowners, who for various reasons place a higher value on a given type of collateral. He called them "natural buyers."

Using large amounts of borrowed money, or leverage, these buyers push up prices to extreme levels. Because those prices are far above what would make sense for investors using less borrowed money, they violate the idea of efficient markets. But if a jolt of bad news makes lenders uncertain about the immediate future, they raise margins, forcing the leveraged optimists to sell. That triggers a downward spiral as falling prices and rising margins reinforce one another. Banks can stifle the economy as they become wary of lending under any circumstances.

I thank Daniel Lippman for the pointer.