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Lessons From a No-Tipping Restaurant

Our recent podcast about tipping mentioned a San Diego restaurant, the Linkery, that adopted a strict no-tipping policy. The Linkery has since closed its doors, but owner Jay Porter (who was featured in the podcast) has been writing about the effects of a no-tipping policy. Here’s Part 1 and Part 2 of his blog posts. A summary of his takeaways:

1) Due to poorly cohering laws in many Western U.S. states, using a service charge has typically been the only legal way for a restaurant business to balance wages between servers, bartenders, cooks and dishwashers. That’s why restaurants like Chez Panisse instituted such a [service charge] policy.. Subsequent court decisions in the Western U.S. have opened up the possibility that other arrangements are legal, but the service charge is still the safest model.

2) Because tips cannot legally, in most cases, be controlled by the employer, they are typically distributed (or not distributed, as the case may be) according to a social compact between the employees. That social compact is either unenforced or enforced through social means, like ostracization. In either event, the systems for both acquiring and distributing tips are easily gamed by members of the compact who are intent on doing so.

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Do Baby Girls Cause Divorce?: Full Transcript

This is a transcript of the Freakonomics Radio podcast “Do Baby Girls Cause Divorce.” [MUSIC: The Jaguars, “By By Mai Thai” (from The Jaguars)] Enrico MORETTI: I’m Enrico Moretti and I’m a professor of economics at Berkeley. Stephen J. DUBNER: Okay, very good. So Enrico, a listener wrote to us with a very, very straightforward […] Read More »



FREAK-est Links

1. They said it would never happen: Israel’s ultra-orthodox lose many of their exemptions.

2. Health-care economics: how the American Medical Association prices medical procedures.

3. The most popular page on Wikipedia in 2012: Facebook. (HT: Eric M. Jones)

4. Everyone knows that the French work fewer hours — but judging by their GDP per capita, they are very productive. Read More »



Selling Thigh Space

Quartz reports that a Japanese P.R. company is paying women to wear advertising stickers on their thighs:

Advertising on women’s skin appears to be much more cost-effective than forking out exorbitant sums for public billboard space. In 2012, the overall expenditure on ‘outdoor’ advertising in Japan was ¥299.5 billion ($2.99 billion) (pdf). The going rate on each thigh, according to the company, is $121 per day. The 3,000 Japanese women who signed up to participate will slap stickers on their thighs in exchange for that sum. The campaigns, which began rolling out earlier this year, so far have included plugs for the movie Ted and the band Green Day.

The agency has a few requirements for its walking billboards: they must be over 18, have at least 20 friends on social networking sites, and must post pictures of themselves wearing the sticker in two different geographic locations.  The agency also “recommends” that the women wear miniskirts and long socks to draw attention to the ads.  “It’s an absolutely perfect place to put an advertisement, as this is what guys are eager to look at and girls are eager to expose,” Hidenori Atsumi, the agency’s CEO, told ITN.

(HT: Marginal Revolution)



Trends in School Financing

The New York Fed recently released an interesting set of maps and charts on school financing in New York and New Jersey that demonstrate the effect of national fiscal policy on public-school students. Their findings:

  • School funding and school expenditures increased steadily through the 2000s, but have slowed in the past year or two.
  • Federal funding swelled during the federal stimulus period, but has since begun to ebb.
  • Recent patterns in state and local funding show signs of slowing down.
  • While instructional expenditures remained on trend (or suffered only slightly) during the recession, there is evidence of sharper cuts in recent years.
  • In spite of these broad patterns, there are considerable variations across states and districts.
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    Trust Among Thieves

    A new paper by Federico Varese and Paolo Campana looks at police-intercepted phone data on the Italian and Russian mafia to study how criminals cooperate. In  “Cooperation in Criminal Organizations: Kinship and Violence as Credible Commitments” (abstract; PDF), they find that sharing information on violent acts increased cooperation. Varese writes to us in an email: “The idea is that criminals might trust each other more after they have shared compromising information on themselves and especially have used violence together, an insight from Thomas Schelling that we test and found to be correct.”

    The abstract:

    The paper argues that kinship ties and sharing information on violent acts can be interpreted as forms of ‘hostage-taking’ likely to increase cooperation among co-offenders. The paper tests this hypothesis among members of two criminal groups, a Camorra clan based just outside Naples, and a Russian Mafia group that moved to Romein the mid-1990s. The data consist of the transcripts of phone intercepts conducted on both groups by the Italian police over several months. After turning the data into a series of network matrices, we use Multivariate Quadratic Assignment Procedure to test the hypothesis. We conclude that the likelihood of cooperation is higher among members who have shared information about violent acts. Violence has a stronger effect than kinship in predicting tie formation and thus cooperation. When non-kinship-based mechanisms fostering cooperation exist, criminal groups are likely to resort to them.



    How Politicians Plug Electric Cars

    A new study by Bradley W. Lane, Natalie Messer-Betts, Devin Hartmann, Sanya Carley, Rachel M. Krause, and John D. Graham on why governments promote electric vehicles finds that the environmental benefits of the vehicles have little to do with politicians’ motives for supporting the industry. Perhaps not surprisingly, “Government Promotion of the Electric Car: Risk Management or Industrial Policy?” (gated) finds that the economic benefits of the industry are the primary motivator for most governments. From the press release:

    Contrary to common belief, many of the world’s most powerful nations promote the manufacture and sale of electric vehicles primarily for reasons of economic development – notably job creation – not because of their potential to improve the environment through decreased air pollution and oil consumption.

    This is among the main findings of a study by researchers at the Indiana University Bloomington School of Public and Environmental (SPEA) and University of Kansas that analyzed policies related to electric vehicles (EVs) in California, China, the European Union, France, Germany, and the United States – political jurisdictions with significant automotive industries and markets for EVs.

    “Billions of dollars are being invested despite doubts that some express about the viability of electricity as a propulsion system,” said John D. Graham, SPEA dean and co-author of the study. “The objective of many of these national and sub-national governments is to establish a significant position – or even dominance – in the global marketplace for these emerging, innovative new technologies.”



    The History of Obesity Revisited

    We’ve blogged before about the obesity epidemic, and whether or not it is a recent phenomenon; John Komlos and Marek Brabec have argued that obesity rates actually began rising in the early 20th century. A new study (abstract; PDF) by Paul von Hippel and Ramzi Nahhas looks at 60 years of data on child obesity and finds that the increase in obesity rates started with children born in the 1970s and 1980s. Von Hippel wrote to us in an email:

    Intrigued by the conflicting extrapolation results, Ramzi Nahhas and I decided to look at measurements that were actually taken before 1960. We analyzed the heights and weights of children in the Fels Longitudinal Study, an ongoing study that since the 1930s has measured children from shortly after birth until age 18. Most of the children come from the area near Dayton, Ohio, which is not a mirror of the nation but has an obesity rate that is close to the national average.

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