Every month, the Conference Board releases its consumer confidence index. Last month, confidence was up. The index is supposed to be a reading of how we feel about the current economic climate, a measurement of what Keynes referred to as our animal spirits. But while these surveys indicate how we're reacting to the economy, they also influence it, creating a sort of self-reinforcing feedback loop. So, is the economy dictating our mood? Or is our mood dictating the economy?
Our latest podcast, "Weird Recycling," featured Carlos Ayala, the Vice President of International at Perdue Farms. Stephen Dubner's interview with him centered on chicken feet -- or chicken paws, as they're called in the industry. Until about 20 years ago, paws were close to value-less for a U.S. chicken company. But thanks to huge demand in China, paws have become big profit centers. The U.S. now exports about 300,000 metric tons of chicken paws every year. Perdue alone produces more than a billion chicken feet a year, which according to Ayala brings in more than $40 million of revenue. In fact, Ayala says that without the paw, chicken companies would be hard-pressed to stay in business:
The rogue trader is a recurring character in the story of finance over the last 20 years. This is the guy who makes secret, unauthorized bets with his bank's money, driven by some seeming combination of inadequacy and a huge appetite for risk, and abetted at times by an amazing lack of internal controls.
The deeper he goes, the harder he has to work to conceal his deception until one day, it inevitably comes crashing down. The bank loses billions, the trader (sometimes) goes to jail. The story is repeated every several years. The latest version broke in September when UBS announced it had lost more than $2 billion as a result of rogue trader Kweku Adoboli.
In his new e-book, How to Be a Rogue Trader, Financial Times columnist John Gapper explains why this story has become so familiar over the years. As he puts it, the rogue trader is a species of sorts within the world of finance, a special breed with certain behaviors and characteristics that are consistent through time. Gapper delves into evolutionary biology and the research of Daniel Kahneman to better understand the nature of men like Nick Leeson, Joe Jett, and Jerome Kerviel.
In our Freakonomics Football episode "Why Even Ice a Kicker?", Stephen Dubner explores the NFL fad of calling a timeout just before the opposing team's kicker attempts a crucial field goal. The idea is to get into the kicker's head, and make him think about all that pressure he's under to make a big kick. The practice has become all but routine in the NFL, even though, according to the data, it doesn't work, and in some cases even backfires.
But what about when a coach ices his own kicker?
That's essentially what Dallas Cowboys head coach Jason Garrett did on Sunday during a game against the Arizona Cardinals. With the score tied at 13, and just seven seconds left in regulation, Dallas rookie kicker Dan Bailey lined up for a potential game-winning 49-yard field goal. Right before the snap, Garrett called timeout. Bailey kicked it anyway, and nailed it. His second attempt? Not so good— he shanked it, wide left. The game went into overtime, and Dallas ended up losing 19-13 to the Arizona Cardinals.
Michael Shermer is perhaps the world's only professional skeptic. As the founding publisher of Skeptic magazine and executive director of the Skeptics Society, Shermer has turned his innate skepticism into a full-time job. In our recent podcast "The Truth Is Out There...Isn't It?" Stephen Dubner talks to Shermer about the evolutionary basis for our tendency toward "magical thinking" and why humans are conditioned to see threats often where none exist. Here's an excerpt:
A new study (PDF here) by University of Notre Dame economist Kasey Buckles and graduate student Elizabeth Munnich finds that siblings spaced more than two years apart have higher reading and math scores than children born closer together. The positive effects were seen only in older siblings, not in younger ones.
The authors attribute at least part of the difference to older children getting more of their parents’ time during the first formative years of their lives before a younger sibling comes along.
In the zero-sum game of competitive markets, one company's misstep is often a rival's gain. But what about in the marketplace of religion?
A new study (PDF here) titled “Substitution and Stigma: Evidence on Religious Competition from the Catholic Sex-Abuse Scandal," by Notre Dame economist Daniel Hungerman, looks at whether other religious faiths gained from the Catholic Church sex abuse scandal. Using data from 1990-2007, Hungerman finds significant spillover effects on other religious groups.
The big winner? Baptist churches, both financially and in membership growth.
Chances are, if you've heard of the Chinese technology giant FoxConn, it's because it manufactures the iPhone and iPad. Last year, at an iPhone manufacturing complex in South China, there were a number of worker suicides that made news.
In apparent attempt to fix some of its labor issues, Foxconn's parent company, Taiwan-based Hon Hai Precision Industry, is now making a big push into robots.
The project, which is initially forecast to cost the Taiwan-based Hon Hai Precision Industry Tw$6.7 billion ($223 million), was unveiled Saturday when Terry Gou, chairman of the conglomerate, broke ground for the construction of a research and development unit in Taichung, central Taiwan.
"The investment marks the beginning of Hon Hai's bid to build an empire of robots," the Central Taiwan Science Park authorities said in a statement.
It's one of the ultimate chicken or egg questions: Does democracy lead to increases in education and income, or do education and higher income lead to democracy? It's a tricky one, considering that over the last 200 years, they've essentially moved in tandem across much of the developed world.
So which is affecting which? A new working paper (full version here) by Fabrice Murtin and Romain Wacziarg attempts to untangle the two to understand whether democracy grows from education and higher income, or vice versa.
Now, Lindstrom, returns with his answers to a few of them. As always thanks for every one who participated.
Q One more question occurred to me: Marketing is intended to persuade us to buy products, but it also serves another latent function which is to educate us about new products, about differences between products, or about the products themselves. Given this educational benefit, among other benefits, do you think marketing is a net good or a net bad for society on the whole? - NZ