Mourning Thatcher in Estonia

An Estonian Public Broadcasting news article about the death of former British prime minister Margaret Thatcher noted her efforts to help Estonia's early independent government break with Soviet-era policies. It also included the following:

Of the three, it was Thatcher's economic policies in particular that were often cited by Mart Laar, the country's prime minister who came to power after the first post-independence parliamentary elections, as the blueprint for his free-market reforms.

In 2010, Laar told the Freakonomics Radio podcast: "The flat tax I got on my first meeting with Margaret Thatcher, who I admired very much and who was a great admirer of Milton Friedman. I met her first when I had been prime minister I think for some months and so on, and when I told her what I am planning to do, she looked at me with these big eyes and said 'you are one brave young man.' And then a little bit introduced me on the realities of the Western world on which I was not very well informed. But I didn’t stop."

Freakonomics podcast listeners may recall that Laar appeared on one of our earliest podcasts "What Would the World Look Like if Economists Were in Charge?"

Pay After You Go?

We've blogged extensively about pay-as-you wish pricing schemes. Springwise reports that a Spanish concert promoter is now experimenting with post-concert pay-as-you-wish pricing:

Spanish promoters Caravana de Emerxencia have recognized this problem and addressed it through their upcoming gig, where attendees can decide the price of the ticket when they leave.

The concert is taking place on April 4 at Sala Capitol in Santiago, northern Spain. Four bands will be playing on the night – SkarallaosChotokoeuSkarnivals and Swingdigentes. At the end of the evening attendees can pay whatever price they think the event deserves.

How do you like this plan? How do you think you would respond?

Coming Up: The Sapphire iPhone?

Kevin Bullis of the MIT Technology Review looks at manufactured sapphire, which is currently used for armor on military vehicles and may be coming soon to an iPhone screen near you:

Sapphire is harder than any other natural material except diamond; by some measures, it’s three times stronger than Gorilla Glass, and it is also about three times more scratch resistant. That’s why Apple uses it now to protect the camera on its iPhone 5. [Eric] Virey says that all major mobile-phone makers are considering using sapphire to replace glass. “I’m convinced that some will start testing the water and release some high-end smartphones using sapphire in 2013,” he says.

(HT: The Big Picture)

Could Accelerated Learning Mean Big Bucks?

Reuven Brenner of The American explores the economic benefits of shortening college to three years:

Assume that after graduation the average salary would be just $20,000 and remain there. With 4 million students finishing one year earlier, this would add $80 billion to the national income during that year. Or at an average annual income of $40,000, it would add $160 billion. Assume now that the additional $80 billion in national income would be compounding at 7 percent over the next 40 years. This would then amount to an additional $1.2 trillion of wealth – for just one generation of 4 million students joining the labor force a year earlier at a $20,000 salary. At $40,000, this would amount to $2.4 trillion by the fortieth year – again, for just one generation of 4 million people joining the labor force a year earlier. The added wealth depends on how rosy one makes the assumptions about salaries or compounding rates. Add 10, 20, or 30 generations, each starting to work a year earlier, and the numbers run into the tens of trillions of dollars.

The indirect impacts may be as significant. One or two years of additional, compounding earnings could do a lot to shore up entitlement programs, with a more positive impact than requiring people 65 and older to stay in the labor force much longer: the magic of resulting compounding would start earlier.

(HT: The Dish)

How Gerrymandering Works

Writing for Bloomberg, Chris Christoff and Greg Giroux explore the math behind gerrymandering in Michigan with some fascinating examples and graphics.  The 14th congressional district, for example, looks pretty weird from high up:

Michigan’s 14th congressional district looks like a jagged letter ’S’ lying on its side.

From Detroit, one of the nation’s most Democratic cities, it meanders to the west, north and east, scooping up the black-majority cities of Southfield and Pontiac while bending sharply to avoid Bloomfield Hills, the affluent suburb where 2012 Republican presidential nominee Mitt Romney was raised.

(HT: The Big Picture)

FREAK-est Links

1. Do customs and postal service discriminate against "atheist" parcels?

2. Now there are wristbands to monitor whether doctors are washing their hands. (HT: R.E. Riker)

3. Dan Ariely is offering a free online course: “A Beginner’s Guide to Irrational Behavior.” Sign up here.

4. Dan Pallotta argues that non-profits should be run like real companies.

5. A new study of English literature finds that the use of mood words is steadily decreasing.

Should No-Shows Be Shamed on Twitter?

Restaurants that take reservations risk misallocating resources if a customer doesn't show up. So is there a good way to place an appropriate cost on no-shows? Philly.com reports on one restaurant owner's tactic and its drawbacks:

The owner of L.A. restaurant Red  Medicine went to social media to Tweet the full names of no-shows Saturday.

Eater L.A. has an interview with Red Medicine owner Noah Ellis, who said he tweeted the names out of frustration.

"Either restaurants are forced to overbook and make the guests (that actually showed up) wait, or they do what we do, turn away guests for some prime-time slots because they’re booked, and then have empty tables,” he said.

Weighing in on the matter was Consumerist, which posits that the tactic may backfire, as some patrons may balk at making a reservation there, even if they intend to keep it.

Who Suffers in Bad Weather?

The weather -- its effects on the environment, behavior, sports, and society -- has long been of interest to Freakonomics.  Now a new working paper from Warren Anderson, Noel D. Johnson, and Mark Koyama explores the effects of cold growing seasons on discrimination against Jewish communities between 1100 and 1800:

What factors caused the persecution of minorities in medieval and early modern Europe? We build a model that predicts that minority communities were more likely to be expropriated in the wake of negative income shocks. We then use panel data consisting of 785 city-level expulsions of Jews from 933 European cities between 1100 and 1800 to test the implications of the model. We use the variation in city-level temperature to test whether expulsions were associated with colder growing seasons. We find that a one standard deviation decrease in average growing season temperature in the fifteenth and sixteenth centuries was associated with a one to two percentage point increase in the likelihood that a Jewish community would be expelled. Drawing on our model and on additional historical evidence we argue that the rise of state capacity was one reason why this relationship between negative income shocks and expulsions weakened after 1600.

Does Economics Have an Egalitarian Core?

Tyler Cowen, who appears in these parts pretty regularly, writes in a Times column about the egalitarian core of the economics profession:

Economic analysis is itself value-free, but in practice it encourages a cosmopolitan interest in natural equality. Many economic models, of course, assume that all individuals are motivated by rational self-interest or some variant thereof; even the so-called behavioral theories tweak only the fringes of a basically common, rational understanding of people. The crucial implication is this: If you treat all individuals as fundamentally the same in your theoretical constructs, it would be odd to insist that the law should suddenly start treating them differently.

Cowen concludes by exploring a modern-day application of this putatively egalitarian core:

A distressingly large portion of the debate in many countries analyzes the effects of higher immigration on domestic citizens alone and seeks to restrict immigration to protect a national culture or existing economic interests. The obvious but too-often-underemphasized reality is that immigration is a significant gain for most people who move to a new country.

Parents and Their Preschoolers

A working paper (abstract; PDF) from economists Michael Baker and Kevin Milligan advances another possible explanation for the lagging academic performance of boys -- preschool boys, at least.  Here's the abstract:

We study differences in the time parents spend with boys and girls at preschool ages in Canada, the UK and the US. We refine previous evidence that fathers commit more time to boys, showing this greater commitment emerges with age and is not present for very young children. We next examine differences in specific parental teaching activities such as reading and the use of number and letters. We find the parents commit more of this time to girls, starting at ages as young as 9 months. We explore possible explanations of this greater commitment to girls including explicit parental preference and boy-girl differences in costs of these time inputs. Finally, we offer evidence that these differences in time inputs are important: in each country the boy-girl difference in inputs can account for a non-trivial proportion of the boy-girl difference in preschool reading and math scores.

The authors' results also indicate that the time differences are not due to parents' gender preferences, but may be related to the opportunity cost of the mother's time.  "Given that time spent reading with children (primarily boys) increases after the introduction of a new child care subsidy, the parental time inputs we study may not be easily substituted by non-parental care," they write. "Instead, this finding is consistent with a story in which boys are less rewarding to teach, and parents are more willing to persevere with boys once they are not responsible for their care throughout the day."