This came up in discussion on 2/15...Steve Horwitz does a good job explaining the economist's perspective. Links to articles can be found in the comments if you watch the video on its youtube page.
Greg Mankiw just had a blog post showing that a college degree is worth more for women than it is for men.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Sunday, February 24, 2013
Tuesday, January 15, 2013
My Parents are Economists #2: Don't Drink & Drive
My parents wanted to make sure that I would never drink & drive. On top of education about the disaster that can be caused by DUI, they also structured incentives to make it a dominant strategy for me to avoid drinking & driving.
The rule in our house went like this: if I were ever in a situation where I felt that I should not drive home, all I had to do was call my parents and they would come and get me. No questions asked, no threat of punishment. Let me repeat: I would NOT get in trouble for getting wasted as long as I was responsible and called for a ride home. On the other hand, if I were to drink & drive, then consequences would be severe if they found out. There is a high probability that they would find out since I live at home and my mom's nose could serve as a breathalyzer. They would be alerted to my return home by the alarm, so there's not a good way that I could have hidden intoxication upon return home. Even if I could have hidden intoxication with probability p, driving drunk would impose other costs on myself and others and I would always have the dominant strategy to avoid drunk driving.
The rule in our house went like this: if I were ever in a situation where I felt that I should not drive home, all I had to do was call my parents and they would come and get me. No questions asked, no threat of punishment. Let me repeat: I would NOT get in trouble for getting wasted as long as I was responsible and called for a ride home. On the other hand, if I were to drink & drive, then consequences would be severe if they found out. There is a high probability that they would find out since I live at home and my mom's nose could serve as a breathalyzer. They would be alerted to my return home by the alarm, so there's not a good way that I could have hidden intoxication upon return home. Even if I could have hidden intoxication with probability p, driving drunk would impose other costs on myself and others and I would always have the dominant strategy to avoid drunk driving.
Wednesday, December 12, 2012
My Parents are Economists #1: Honesty is the Best Policy
I think I might start a new blog series called My Parents are Economists. It's true that neither of them are professional economists and that they might not think like economists sometimes, but they taught me a lot about the economic way of thinking when I was growing up even if they didn't call it that.
So, economists (especially game theorists) will tell you that honesty is not always the best policy depending on the payoff structure of the game you are playing. My parents careful to make sure to structure payoffs such that truth telling led to higher payoffs than lying. I would always get in more trouble if they found out I was lying than if I told the truth initially. Since I'm a bad liar that raised the probability that they would sooner or later catch me in a lie to nearly 1.
As parents, you want to have an honest line of communication with your children. If you want them to be straightforward with you, then you can't chastise them for telling you things like when they had a few beers the other night.
So, economists (especially game theorists) will tell you that honesty is not always the best policy depending on the payoff structure of the game you are playing. My parents careful to make sure to structure payoffs such that truth telling led to higher payoffs than lying. I would always get in more trouble if they found out I was lying than if I told the truth initially. Since I'm a bad liar that raised the probability that they would sooner or later catch me in a lie to nearly 1.
As parents, you want to have an honest line of communication with your children. If you want them to be straightforward with you, then you can't chastise them for telling you things like when they had a few beers the other night.
Wednesday, November 28, 2012
Powerball!
So the powerball jackpot is around $500M at the moment (or maybe more). I've heard a lot of talk recently that it does not make sense to buy a ticket because your odds of winning are less than ___insert random unlikely event here___. I took it upon myself to look up the odds of winning and calculate the expected value of a ticket. Turns out that the expected value of the ticket depends on the size of the jackpot (surprise!). You want to purchase a ticket for $2 if the expected value is greater than the $2 that you have to spend on the ticket. In order to simplify things, I'll reduce all the non-jackpot figures.
You can expect to earn $0.36 + $(Jackpot/175,223,510). That means that you should play only if (Jackpot/175,223,510) is larger than 1.64. This happens when the Jackpot is more than $287,266,557...BUT, actually, what you'd need is a take-home value of $287,266,557. After you take the lump sum and taxes come out of the jackpot it shrinks (I think to about 55% of its original size). I guess that means that the jackpot has to be over $500,000,000 in order to break even in expected value terms.
Assuming no taxes and a jackpot of about $550M, the expected value of a ticket is about $3.50 so it makes sense to spend $2 on the ticket...IF IF IF you are the only winner and we are not worrying about taxes.
As more and more people play *technically as more tickets are sold*, the odds of having to split the jackpot increase. Say you end up splitting a $600M jackpot if you win... then your expected value would be (300,000,000/175,223,501) + 0.36 = $2.07 which is just barely enough to justify buying the ticket (unless you really don't value the time that you spend waiting in line). Also, after taxes it looks like your expected value is less than the cost of the ticket.
All that being said, I bought 5 entries tonight on my way home. I don't expect to win, but the lottery gave me a ton of scholarship money and this could be viewed as a way that I'm giving back. Good luck all you players.
You can expect to earn $0.36 + $(Jackpot/175,223,510). That means that you should play only if (Jackpot/175,223,510) is larger than 1.64. This happens when the Jackpot is more than $287,266,557...BUT, actually, what you'd need is a take-home value of $287,266,557. After you take the lump sum and taxes come out of the jackpot it shrinks (I think to about 55% of its original size). I guess that means that the jackpot has to be over $500,000,000 in order to break even in expected value terms.
Assuming no taxes and a jackpot of about $550M, the expected value of a ticket is about $3.50 so it makes sense to spend $2 on the ticket...IF IF IF you are the only winner and we are not worrying about taxes.
As more and more people play *technically as more tickets are sold*, the odds of having to split the jackpot increase. Say you end up splitting a $600M jackpot if you win... then your expected value would be (300,000,000/175,223,501) + 0.36 = $2.07 which is just barely enough to justify buying the ticket (unless you really don't value the time that you spend waiting in line). Also, after taxes it looks like your expected value is less than the cost of the ticket.
All that being said, I bought 5 entries tonight on my way home. I don't expect to win, but the lottery gave me a ton of scholarship money and this could be viewed as a way that I'm giving back. Good luck all you players.
Monday, November 26, 2012
Beer Choice as a Signaling Device
I just shaved today and didn't get carded at the store to buy beer. I can almost always count on getting carded when I'm clean shaven. I wonder if the beer I bought is one reason I did not get carded. I picked up a 6er of Abita Restoration Ale and a big bottle of Abita Abbey Ale.
I think that underage drinkers are more likely to buy Natty Light or Bud Light or something along those lines. I wonder how effective it would be for underage kids to try buying better beer as a signaling device that they are older.
I think that underage drinkers are more likely to buy Natty Light or Bud Light or something along those lines. I wonder how effective it would be for underage kids to try buying better beer as a signaling device that they are older.
Tuesday, November 20, 2012
Tuesday, November 13, 2012
Open Letter to Peter Morici
Prof. Peter Morici
University of Maryland
Smith School of Business
College Park, MD
University of Maryland
Smith School of Business
College Park, MD
Dear Peter:
In your guest blog-post yesterday at CNBC you argue that the destruction caused by hurricane Irene will spark a “process of economic renewal [that] can leave communities better off than before” (“Economic Impact of Hurricane Irene“). Central to your argument is your claim that, because of the rebuilding, “the capital stock that emerges will prove more economically useful and productive.”
In other words, whenever assets still in use are destroyed, wealth will thereby be created – that is, people whose assets are destroyed will be made richer – because these destroyed assets are replaced with ones that are newer and more productive.
I hereby offer my services to you, at a modest wage, to destroy your house and your car. Act now, and I’ll throw in at no extra charge destruction of all of your clothing, furniture, computer hardware and software, and large and small household appliances.
Because, I’m sure, almost all of these things that I’ll destroy for you are more than a few days old (and, hence, are hampered by wear and tear), you’ll be obliged to replace them with newer versions that are “more economically useful and productive.” You will, by your own logic, be made richer.
Just send me a note with some times that are good for you for me to come by with sledge hammers and blowtorches. Given the short distance between Fairfax and College Park, I can be at your place pronto.
Oh, as an extra bonus, I promise not to clean up the mess! That way, there’ll be more jobs created for clean-up crews in your neighborhood.
Sincerely,
Donald J. Boudreaux
Donald J. Boudreaux
Sunday, November 11, 2012
Nash Equilibrium in Layman's Terms
My girlfriend watched a documentary about John Nash and how he overcame his schizophrenia. I tried telling her about the Nash Equilibrium (NE) concept and she didn't understand...so either I did a poor job explaining or she wasn't focusing on my explanation or a bit of both. I'm going to attempt to define NE and give an example in layman's terms below.
NE is a game theory concept, so it applies to games. Economists use the word game a bit differently than other people, so you can think of a game as a scenario where more than one player interact with each other and the payoffs (perhaps who wins and who loses and by how much) are determined by the decisions of all the players. A simple game is played on The Price is Right. The winner is the player who guesses the number closest to the value of the item without going over. All four players make a guess and therefore whether or not one player is a winner depends on the value of the item and the guesses of the other three players. Likewise, paper-rock-scissors is a game. If you throw rock, your payoff depends on what your opponent throws.
In a NE, no player can increase his own payoff by deviating if everyone else keeps their move the same. Think about letting just one player (at a time) have a do-over...if they change their move, then we say they have deviated. Another aspect of NE that hurts brains is that there can be multiple NE in one game. I am going to describe a two player game for simplicity.
THE GAME:
You and I get to pick an integer between 1 and 9 inclusive. We do not get to communicate with each other about what we will pick. Say that you pick a number by writing it down and giving the paper to a person organizing the game. The payoffs are as follows: if we pick the same number, then we each get paid that number of dollars (by the person who is organizing the game). If we pick different numbers then we each have to pay the same number of dollars as the number we picked (to the person organizing the game).
Example 1 payoff:
I pick 5 and you pick 7. Now I have to pay 5 and you have to pay 7.
Example 2 payoff:
We both pick 4. Now we both get paid $4.
What about the NE?:
The moves we made in example 1 are not a NE. If I were allowed to deviate, I would change my pick to 7 and we would both get paid $7. If you were allowed to deviate then you'd pick 5 and we'd both get $5. It only takes one of us wanting to deviate to make the scenario a non-NE. The moves we made in example 2 are a NE. If either of us were given the chance to deviate (given that the other player cannot change their move) then neither of us would want to because we'd go from getting $4 to paying something which does not make us better off.
Here's the tricky thing...
First of all, you have to get past the idea that this is a simultaneous move game and you will not know what your opponent has chosen until after you have made your move. Second of all, you might have deduced that any time we both pick the same number in the game above leads to a NE. That is correct. There are 9 NEs for that game. We could settle on any one of them and it would be a NE. All other choices where we pick different numbers are not NEs because one of us would like to deviate if we knew that the other person would not be able to change his answer.
I hope that helps. I can answer any questions in the comments.
Note: I've only discussed pure strategy NE because mixed strategy will blow your mind...and I can't say much about it to the lay person except that it would be bad for a player to commit to a strategy such as "always choose paper in paper-rock-scissors" because the opponent would then crush you by always choosing scissors.
NE is a game theory concept, so it applies to games. Economists use the word game a bit differently than other people, so you can think of a game as a scenario where more than one player interact with each other and the payoffs (perhaps who wins and who loses and by how much) are determined by the decisions of all the players. A simple game is played on The Price is Right. The winner is the player who guesses the number closest to the value of the item without going over. All four players make a guess and therefore whether or not one player is a winner depends on the value of the item and the guesses of the other three players. Likewise, paper-rock-scissors is a game. If you throw rock, your payoff depends on what your opponent throws.
In a NE, no player can increase his own payoff by deviating if everyone else keeps their move the same. Think about letting just one player (at a time) have a do-over...if they change their move, then we say they have deviated. Another aspect of NE that hurts brains is that there can be multiple NE in one game. I am going to describe a two player game for simplicity.
THE GAME:
You and I get to pick an integer between 1 and 9 inclusive. We do not get to communicate with each other about what we will pick. Say that you pick a number by writing it down and giving the paper to a person organizing the game. The payoffs are as follows: if we pick the same number, then we each get paid that number of dollars (by the person who is organizing the game). If we pick different numbers then we each have to pay the same number of dollars as the number we picked (to the person organizing the game).
Example 1 payoff:
I pick 5 and you pick 7. Now I have to pay 5 and you have to pay 7.
Example 2 payoff:
We both pick 4. Now we both get paid $4.
What about the NE?:
The moves we made in example 1 are not a NE. If I were allowed to deviate, I would change my pick to 7 and we would both get paid $7. If you were allowed to deviate then you'd pick 5 and we'd both get $5. It only takes one of us wanting to deviate to make the scenario a non-NE. The moves we made in example 2 are a NE. If either of us were given the chance to deviate (given that the other player cannot change their move) then neither of us would want to because we'd go from getting $4 to paying something which does not make us better off.
Here's the tricky thing...
First of all, you have to get past the idea that this is a simultaneous move game and you will not know what your opponent has chosen until after you have made your move. Second of all, you might have deduced that any time we both pick the same number in the game above leads to a NE. That is correct. There are 9 NEs for that game. We could settle on any one of them and it would be a NE. All other choices where we pick different numbers are not NEs because one of us would like to deviate if we knew that the other person would not be able to change his answer.
I hope that helps. I can answer any questions in the comments.
Note: I've only discussed pure strategy NE because mixed strategy will blow your mind...and I can't say much about it to the lay person except that it would be bad for a player to commit to a strategy such as "always choose paper in paper-rock-scissors" because the opponent would then crush you by always choosing scissors.
Saturday, November 10, 2012
Greg Mankiw on Health Insurance
I was at the Cengage Learning annual teaching conference on Friday and had a great time. Gail Hoyt gave a seminar for grad students about the top 5 tips for effective teaching & top 5 tips for the job market. That was really good and followed by N. Gregory Mankiw's keynote address at lunch. What Mankiw said really resonated with me. I had no idea that he was so light-hearted and funny...I feel like he could give Yoram Bauman (the stand-up economist) a run for his money if he tried.
Mankiw's speech was about the fiscal challenge ahead. I really liked what Mankiw had to say about gas taxes (there should be a ~$2.00/gallon tax on gas to help correct the negative externalities generated by driving) and getting rid of the mortgage interest deduction on taxes (even though I own a house, I realize that this is a terribly inequitable tax and costs our government lots of revenues). What really resonated with me was his take on medical insurance. I've actually had much the same conversation with my girlfriend and it was super duper neat-o to hear Dr. Mankiw express my views from his mouth to a room full of people/webcast full of viewers. Here's the upshot of the problems with medical insurance:
People are using medical insurance as non-insurance. Insurance should be for unexpected events, not regular medicine or treatments. Since medical insurance compensation is tax deductible, people have too much of it. To see why, consider what would happen if your auto insurance was tax deductible. You would tell your employer that you're willing to take a pay cut if he pays for your auto insurance policy. You would want better coverage than you currently have (as long as insurance is a normal good, which it's hard to argue otherwise). Normal auto insurance now covers incidental things like accidents but it does not cover regular maintenance items like new tires, burned out headlights, oil changes, and filter replacement. If you had the tax deductible setup, then you'd want as much of your car expenses to be covered by insurance (with a more expensive policy). We would probably see clauses allowing insurance to cover filter replacement and oil changes. People might even want to go as far as to have their policy cover gasoline fill-ups.
If this sounds ridiculous to you, consider someone with a monthly prescription that is covered by their insurance. That might be too much insurance coverage. I think that there are ways around "insuring" monthly prescriptions. One reason why it's attractive to have insurance coverage for monthly prescriptions is the difference in cost between paying out-of-pocket vs. paying through insurance. Part of the reason for the price difference is the market power of the insurance company compared to that of an individual consumer. The insurance company can negotiate lower rates. Another reason is that healthy people are subsidizing pill takers. That setup might make sense for temporary prescriptions but not regular recurring prescriptions (which is like auto insurance covering gasoline).
If my gasoline were subsidized, you can bet that I'd drive more than I do now. So would everyone else. It's a tragedy of the commons type problem. The monetary outlays on gasoline would increase and people would be concerned about the rising costs of auto insurance...but they wouldn't want to remove the moral hazard (speaking just about the gas and not about reckless driving) associated with purchasing that insurance.
Speaking of the rising cost of medical insurance, Mankiw does not think this is a bad thing. One reason why the cost has increased is that the productivity of medical capital has increased. We are also able to do amazing things with medical technology that we couldn't in the past. When I broke my wrists, I was able to regain a near full range of motion. I was informed by my surgeon that I would have about half the range of motion in each plane had this accident occurred only 5 years earlier. Mankiw offers a thought experiment: would you agree to pay the rate on medical treatment paid by your grandfather (in his 40s) in exchange for only getting the care that he could have received all those years ago. Mankiw's personal answer is no. My answer is no. What about yours? Consider the drugs that have been invented since then. The MRI technology, laser surgery, etc. Those things are more expensive than the older alternatives, but they're also more effective. Mankiw further points out that we do not seem to experience diminishing marginal utility in years of life like we do for consuming other goods. Nobody says "I've made it to 74 and it's all downhill from here...I don't care if I live another year." We do say "I've had 47 slices of apple pie...I would hate to eat a 48th." Given that a goal of medical care is to prolong life (or to improve the quality) then he thinks that we'd be willing to spend plenty more on it. Perhaps with everything else getting cheaper we have more money to spend on medical care. He would like to see medical care keep increasing in cost to keep up with the technological improvements.
I think another reason medical costs have risen is the shift in demand for medical services caused by insured people. I'll admit that I've gone to the clinic at school for a sore throat because the visit was free. I would not have driven to the doctor's office and paid $100 for a similar visit. Driving down the cost of medical care will require: 1) aligning doctors' incentives to provide cheaper medical care, 2) driving down demand for medical services...perhaps by a preference shift toward healthier lifestyles or sudden death inducing activities and/or 3) a bigger increase in the supply of medical inputs.
I hope I've done some justice to his talk. I've added some of my own thoughts along the way, so don't get mad at Greg if you disagree with anything above unless directly attributed to him.
Mankiw's speech was about the fiscal challenge ahead. I really liked what Mankiw had to say about gas taxes (there should be a ~$2.00/gallon tax on gas to help correct the negative externalities generated by driving) and getting rid of the mortgage interest deduction on taxes (even though I own a house, I realize that this is a terribly inequitable tax and costs our government lots of revenues). What really resonated with me was his take on medical insurance. I've actually had much the same conversation with my girlfriend and it was super duper neat-o to hear Dr. Mankiw express my views from his mouth to a room full of people/webcast full of viewers. Here's the upshot of the problems with medical insurance:
People are using medical insurance as non-insurance. Insurance should be for unexpected events, not regular medicine or treatments. Since medical insurance compensation is tax deductible, people have too much of it. To see why, consider what would happen if your auto insurance was tax deductible. You would tell your employer that you're willing to take a pay cut if he pays for your auto insurance policy. You would want better coverage than you currently have (as long as insurance is a normal good, which it's hard to argue otherwise). Normal auto insurance now covers incidental things like accidents but it does not cover regular maintenance items like new tires, burned out headlights, oil changes, and filter replacement. If you had the tax deductible setup, then you'd want as much of your car expenses to be covered by insurance (with a more expensive policy). We would probably see clauses allowing insurance to cover filter replacement and oil changes. People might even want to go as far as to have their policy cover gasoline fill-ups.
If this sounds ridiculous to you, consider someone with a monthly prescription that is covered by their insurance. That might be too much insurance coverage. I think that there are ways around "insuring" monthly prescriptions. One reason why it's attractive to have insurance coverage for monthly prescriptions is the difference in cost between paying out-of-pocket vs. paying through insurance. Part of the reason for the price difference is the market power of the insurance company compared to that of an individual consumer. The insurance company can negotiate lower rates. Another reason is that healthy people are subsidizing pill takers. That setup might make sense for temporary prescriptions but not regular recurring prescriptions (which is like auto insurance covering gasoline).
If my gasoline were subsidized, you can bet that I'd drive more than I do now. So would everyone else. It's a tragedy of the commons type problem. The monetary outlays on gasoline would increase and people would be concerned about the rising costs of auto insurance...but they wouldn't want to remove the moral hazard (speaking just about the gas and not about reckless driving) associated with purchasing that insurance.
Speaking of the rising cost of medical insurance, Mankiw does not think this is a bad thing. One reason why the cost has increased is that the productivity of medical capital has increased. We are also able to do amazing things with medical technology that we couldn't in the past. When I broke my wrists, I was able to regain a near full range of motion. I was informed by my surgeon that I would have about half the range of motion in each plane had this accident occurred only 5 years earlier. Mankiw offers a thought experiment: would you agree to pay the rate on medical treatment paid by your grandfather (in his 40s) in exchange for only getting the care that he could have received all those years ago. Mankiw's personal answer is no. My answer is no. What about yours? Consider the drugs that have been invented since then. The MRI technology, laser surgery, etc. Those things are more expensive than the older alternatives, but they're also more effective. Mankiw further points out that we do not seem to experience diminishing marginal utility in years of life like we do for consuming other goods. Nobody says "I've made it to 74 and it's all downhill from here...I don't care if I live another year." We do say "I've had 47 slices of apple pie...I would hate to eat a 48th." Given that a goal of medical care is to prolong life (or to improve the quality) then he thinks that we'd be willing to spend plenty more on it. Perhaps with everything else getting cheaper we have more money to spend on medical care. He would like to see medical care keep increasing in cost to keep up with the technological improvements.
I think another reason medical costs have risen is the shift in demand for medical services caused by insured people. I'll admit that I've gone to the clinic at school for a sore throat because the visit was free. I would not have driven to the doctor's office and paid $100 for a similar visit. Driving down the cost of medical care will require: 1) aligning doctors' incentives to provide cheaper medical care, 2) driving down demand for medical services...perhaps by a preference shift toward healthier lifestyles or sudden death inducing activities and/or 3) a bigger increase in the supply of medical inputs.
I hope I've done some justice to his talk. I've added some of my own thoughts along the way, so don't get mad at Greg if you disagree with anything above unless directly attributed to him.
Saturday, September 29, 2012
Dialogue: Job Security
Austin: Hey Larry, looks like you'e making a mess in there.
Larry (the janitor): Sometimes you've got to make a mess to clean a mess.
Austin: That's what they call job security.
Larry (the janitor): Sometimes you've got to make a mess to clean a mess.
Austin: That's what they call job security.
Wednesday, September 26, 2012
Bad News About Honduran Private City
Looks like the dream is dead. A slightly watered down version of this city might be realized, but I don't like what I've learned about adaptations to the original idea. Paul Romer answers some questions on Marginal Revolution.
Tuesday, September 25, 2012
Private City in Honduras
I got pretty excited when I heard about a private city that is being built in Honduras. The details are not all worked out yet, but I expect them to have open immigration policies like the good 'ol USA used to. The only tax will be a property tax. No income tax, no capital gains tax, no estate tax, no sales tax, etc. I'm not sure how the tax structure will be designed, but I imagine a straight ad valorem setup where you pay about 5% of the value of your property each year...that way the government has an incentive to provide an area where people want to live.
Since there are not going to be many taxes, there won't be many public services. I imagine that the garbage collectors will contract with each apartment building or office building or private residence. Power will be generated by private companies and sold to individual customers. It will be very easy to start a business. There will not be a large police force, but I understand that the city can employ legitimate use of force from Honduras. As an effort to provide stability, a 2/3 majority will be needed to change laws in the city.
The only "catch" that makes this place not "completely free" is one tiny little regulation that I personally have no problem with. Each business will have to employ a minimum percentage of native Hondurans in order that a portion of the prosperity generated by this city benefits Hondurans. I don't forsee this being a problem because the best and brightest ones will be hired and I anticipate that there will be an excess supply of highly qualified Honduran workers for at least a few years.
If this city fails like some haters think it might, then the only people who lose are the investors. If the city performs well, it could transform that part of Honduras in much the same way that Hong Kong was transformed from a rocky island into a booming economy.
If this place turns out to be a success, maybe I can end up teaching at a university in this city...
Since there are not going to be many taxes, there won't be many public services. I imagine that the garbage collectors will contract with each apartment building or office building or private residence. Power will be generated by private companies and sold to individual customers. It will be very easy to start a business. There will not be a large police force, but I understand that the city can employ legitimate use of force from Honduras. As an effort to provide stability, a 2/3 majority will be needed to change laws in the city.
The only "catch" that makes this place not "completely free" is one tiny little regulation that I personally have no problem with. Each business will have to employ a minimum percentage of native Hondurans in order that a portion of the prosperity generated by this city benefits Hondurans. I don't forsee this being a problem because the best and brightest ones will be hired and I anticipate that there will be an excess supply of highly qualified Honduran workers for at least a few years.
If this city fails like some haters think it might, then the only people who lose are the investors. If the city performs well, it could transform that part of Honduras in much the same way that Hong Kong was transformed from a rocky island into a booming economy.
If this place turns out to be a success, maybe I can end up teaching at a university in this city...
Thursday, September 20, 2012
Some of My Research on SSRN
I have submitted some research to Social Science Quarterly and it is under review. I was informed that it is fine to also post that research online at a site like Social Science Research Network. Here's a link to my paper coauthored with Dr. Charles Barrilleaux and Dr. Daniel Scheller.
Tuesday, September 18, 2012
Atlas Shrugged Part I
I watched Atlas Shrugged Part I with the econ club tonight. If you don't read the book before watching the movie, there are tons of characters heaped on you in this first installment of the trilogy. It's tough to draw the connections between everyone without a background of how the story will unfold. The movie times the presentation of information to the audience differently than the text.
It's true that there are some bad sets and terrible CGI, but I feel like this first movie was just a setup for an awesome Part II. I hope they can trim the speech in Part III or else it's doomed to be boring. Overall, the actors did a good job of portraying the characters. I was an especially big fan of Taylor Schilling who plays Dagny Taggart. She showed the confidence and determination that I imagined while reading the book.
Watching the movie now makes this book feels particularly prescient. At one point, I seriously thought I heard Obama's voice from one of the government types who was basically talking about spreading the wealth around. Spreading the wealth is a nice concept until one stops to consider where that wealth comes from before it is spread or who is in charge of the spreading or what sorts of incentives that creates for everyone. In response to these incentives, Ellis Wyatt sets his own very valuable oil field on fire. This is where Part I of the movie ends. It is not unreasonable to think that non-fictional characters faced with the same incentives could do the same thing.
I am glad that I got to watch this movie with the right audience. I don't think it would have been as good on my own or without a discussion afterward.
It's true that there are some bad sets and terrible CGI, but I feel like this first movie was just a setup for an awesome Part II. I hope they can trim the speech in Part III or else it's doomed to be boring. Overall, the actors did a good job of portraying the characters. I was an especially big fan of Taylor Schilling who plays Dagny Taggart. She showed the confidence and determination that I imagined while reading the book.
Watching the movie now makes this book feels particularly prescient. At one point, I seriously thought I heard Obama's voice from one of the government types who was basically talking about spreading the wealth around. Spreading the wealth is a nice concept until one stops to consider where that wealth comes from before it is spread or who is in charge of the spreading or what sorts of incentives that creates for everyone. In response to these incentives, Ellis Wyatt sets his own very valuable oil field on fire. This is where Part I of the movie ends. It is not unreasonable to think that non-fictional characters faced with the same incentives could do the same thing.
I am glad that I got to watch this movie with the right audience. I don't think it would have been as good on my own or without a discussion afterward.
Monday, July 30, 2012
Call Me Back, Maybe?
When you get disconnected on the phone, who is supposed to call the other person back? Sometimes you end up calling each other at the same time and both get busy signals. Sometimes you just wait for the other person to call you back and it never happens. I've come up with a solution to this problem with my girlfriend. We developed a rule to determine who should initiate the phone call after the call drops.
The system goes like this: if you initiated the call in the first place, then you initiate the call after it gets dropped. Exception: if one person is driving, then the driver does not make the outgoing call.
Try this system. If everyone starts using it, then this could solve the coordination problem. Right now this solution only works for me and my girlfriend. I'm trying to transition some people that I regularly talk to on the phone to use this system. Who knows, this could become the new standard.
The system goes like this: if you initiated the call in the first place, then you initiate the call after it gets dropped. Exception: if one person is driving, then the driver does not make the outgoing call.
Try this system. If everyone starts using it, then this could solve the coordination problem. Right now this solution only works for me and my girlfriend. I'm trying to transition some people that I regularly talk to on the phone to use this system. Who knows, this could become the new standard.
Saturday, February 12, 2011
Costume Parties as Signaling
When I moved to Tallahassee, I noticed a big difference between Tallahassee parties and HC parties. The majority of parties I attended in Tally my first year here were themed such that attendees were encouraged, if not required, to dress up. Not that there was an absence of themed parties at the HC, it's just that there was maybe one pimps-n-hoes party to every 15 normal ones. In Tally, there are about 15 themed parties to every non-themed one. Why the difference? If you guessed economics, you must have read the title of this post...
Have you ever been to a normal (non-themed) party when some people who were not invited stopped by and somehow ended up ruining everyone's good time? I can remember everyone being sent home because some unknown dude punched an invited party-goer in the nose. There was a party from which I was fortunate enough to be absent when some kids tried to sell hard drugs then stole some personal property. I think everyone's had the experience of wondering if some of the people at the party are vouched for or if they're just drinking free booze.
Dressing up is a way to let everyone else at the party know that you are on the inside. You got the invite and prepared for the party so you belong there. This mechanism wasn't needed at the HC because everyone knew everyone else at a glance. If a stranger was spotted, they were asked who they were with. That's not so easy to do in a school a couple hundred times as big as the HC.
I went to a party in Tally where I knew one of the guys who lived there and some other invitees (who had confirmed that they were coming via Facebook). Well, these other invitees ended up going to a different party and I was there with a ton of people whom I'd never met. Luckily, I was dressed for the occasion and nobody thought that I might not belong.
Signaling is costly. It means that one must dress up for parties in Tally. This act requires forethought, perhaps purchase of new attire or accessories, and time to get dressed up. However, the benefits of keeping strangers away (and having an automatic topic of conversation with fellow party-goers) outweigh the costs in places where this phenomenon exists.
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