We are setting up a new series of interviews for Freakonomics Radio in which we’ll identify interesting/accomplished/prominent people and ask them a series of Freakonomics-ish questions, ranging from their professional accomplishments to personal quirks. I am eager to hear your suggestions on both:
1) The people you’d want to hear from; and
2) What kind of questions you’d like to hear them asked.
No idea is too big/small, outlandish/traditional, etc.
Thanks in advance.
A new NBER working paper (abstract; PDF) analyzes Warren Buffett‘s Berkshire Hathaway and the drivers of its stock market success. Beyond benefiting from Buffett’s ability to buy low and sell high, Berkshire has also been able to borrow cheaply:
Berkshire Hathaway has realized a Sharpe ratio of 0.76, higher than any other stock or mutual fund with a history of more than 30 years, and Berkshire has a significant alpha to traditional risk factors. However, we find that the alpha becomes insignificant when controlling for exposures to Betting-Against-Beta and Quality-Minus-Junk factors. Further, we estimate that Buffett’s leverage is about 1.6-to-1 on average. Buffett’s returns appear to be neither luck nor magic, but, rather, reward for the use of leverage combined with a focus on cheap, safe, quality stocks. Decomposing Berkshires’ portfolio into ownership in publicly traded stocks versus wholly-owned private companies, we find that the former performs the best, suggesting that Buffett’s returns are more due to stock selection than to his effect on management. These results have broad implications for market efficiency and the implementability of academic factors.
Forensic scientist Nicholas Petraco, who analyzed ashes in our podcast “The Troubled Cremation of Stevie the Cat,” is currently embroiled in a debate about a Jackson Pollock painting. From The New York Times:
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On one side stands Francis V. O’Connor, a stately Old World-style connoisseur with a Vandyke beard and curled mustache, who believes erudition and a practiced eye are essential to judging authenticity. Mr. O’Connor, a co-editor of the definitive Pollock catalog and a member of the now-disbanded Pollock-Krasner Foundation authentication committee, said “Red, Black and Silver” does not look like a Pollock.
“I don’t think there’s a Pollock expert in world that would look at that painting and agree it was a Pollock,” Mr. O’Connor said at a symposium this month.
In an article for The New York Times Magazine, Catherine Rampell explores the “wedding markup.” While planning her own wedding, Rampell was surprised by the lack of transparency in the wedding industry, even with all the wedding-related sites on the Internet:
Wedding vendors seemed to be trying to size me up to figure out how much I’m willing to pay; consumer advocates say this is a common practice, as is charging more for a given service for a wedding than for a “family function” or “corporate event.” Austan Goolsbee, an economics professor at the University of Chicago Booth School of Business, recalls that when he was married over a decade ago, one caterer initially quoted him about $60 a head, and then jacked up the price to about $90 per person after realizing the function was a wedding. These are forms of what economists call price discrimination; it sounds unfair, but it’s perfectly legal, and it’s easier to get away with in markets where there’s little price transparency and consumers are relatively uninformed.
Many of the industry experts Rampell interviewed attributed the markup to the fact that brides are usually less-informed “first-time shoppers,” and also to the “once-in-a-lifetime logic”: Read More »
In 2012, there were only 223 cases of polio in the world, as compared to 350,000 in 1988. An excellent, thoroughly reported new article in Wired, by the Kabul-based Matthieu Aikins, explores what it will take to completely eradicate the disease — and it will take a lot:
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The global campaign, decades in the making, has come down to this: an all-out, very expensive effort to eliminate the last few problem areas in some of the most troubled and undeveloped parts of the final three countries where polio is endemic: Afghanistan, Pakistan, and Nigeria. It is one of the most expensive and ambitious global health initiatives today, and it is tantalizingly close to victory. There are now just a few hundred cases of paralysis per year worldwide, down from roughly 350,000 when the campaign started in 1988. But going the final inch will require more than just good science and vast amounts of money—it will require a tremendous force of collective will.
Our podcast this week is all about driving. Last spring, we had a podcast on driverless vehicles that heavily focused on its likely positive safety impacts. Over at Economix, economist Casey Mulligan explores another likely effect of both driverless cars and the drone delivery services that Amazon is experimenting with: property values increase in urban centers. Here’s Mulligan’s theory:
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As technology helps with moving goods and people more cheaply, it might seem that urban real estate would give up some of its price premium because distance becomes less of an obstacle to economic transactions. Wouldn’t a driverless car cause some workers to sell their Manhattan apartments and commute to their jobs from more spacious homes in the suburbs or even rural New York State?
The latest Freakonomics Radio podcast is all about our long, risky, and mostly unrequited love affair … with the automobile. (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.)
For more than 100 years, we’ve relied on the car to get from place to place; it changed the way we think about distance. But it has also been a deathtrap. John W. Lambert, the man who built the first gas-powered car in America, in 1891, got into a crash. You’ll hear about it from his great-granddaughter Carol Lambert. Read More »
A few weeks ago, we released a podcast called “Who Runs the Internet,” which included Levitt’s thoughts on whether online mayhem, including violent video games, may actually reduce real-world violence. Here’s what Levitt had to say on the matter:
Maybe the biggest effect of all of having these violent video games is that they’re super fun for people to play, especially adolescent boys, maybe even adolescent boys who are prone to real violence. And so if you can make video games fun enough, then kids will stop doing everything else. They’ll stop watching TV, they’ll stop doing homework, and they’ll stop going out and creating mayhem on the street.
The Times of Israel recently reported on a new study confirming Levitt’s theory:
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The research, done by The Center for Educational Technology, asserts that video games — even violent ones — are beneficial for children on a scale much bigger than originally thought. The claims are in contradiction to other studies that found that extended gaming led to depression, anxiety and stunted social development, not to mention the physical effects brought on by long hours of sitting. Some studies have also linked between video games and increased violent behavior in children, arguing that simulated violence leads to real-life violence.
One of our first Freakonomics Radio podcasts was about an innovative New York City Department of Education pilot program called School of One. You can listen to the podcast here, but here’s the gist: “The School of One tries to take advantage of technology to essentially customize education for every kid in every classroom and help teachers do their job more effectively. “
• Teach to One students started the 2012-13 academic year significantly below national averages
• The average gains of Teach to One students in sixth, seventh and eighth grades surpassed those made by students nationally by ~20%. The researchers said this is particularly noteworthy since participating schools would likely not have scored at the national average without Teach to One.
• The average gains of Teach to One students in most demographic sub-groups outperformed national norms
• Teach to One students who started with the weakest mathematics skills made the greatest gains—50 percent higher than the national average.
From a Freakonomics Radio listener named Luke Charley:
I am a 21-year-old male college student in Bismarck, ND. I listen to your podcast quite a bit, and I found the one about the energy saved by houses — I believe it was in the podcast titled “Riding the Herd Mentality.” Well, the weight room I frequent often had plates not racked back up after people were done working out. They would just leave them on the floor and it bothered me quite a bit. So I decided to write a sign saying, “Everybody else racks their weights, please do the same.” In the past two weeks since I have done that, every day when I have been in there, there were no weights on the floor! Applying what you learn on a podcast to a weight room is quite invigorating.
Way to go, Luke! Delighted this worked out (so far, at least) …
Our new podcast is called “Fighting Poverty With Actual Evidence.” (You can subscribe to the podcast at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.)
Not long ago, we put out a podcast that asked the question “Would a big bucket of cash really change your life?” That episode looked at whether winning a land lottery in antebellum Georgia significantly altered a given family’s financial future. University of Chicago economist Hoyt Bleakley, who studied that 1832 lottery, told us this:
BLEAKLEY: We see a really huge change in the wealth of the individuals, but we don’t see any difference in human capital. We don’t see that the children are going to school more. If your father won the lottery or lost the lottery the school attendance rates are pretty much the same, the literacy rates are pretty much the same. As we follow those sons into adulthood, their wealth looks the same in a statistical sense. Whether their father won the lottery, lost the lottery, their occupation looks the same. The grandchildren aren’t going to school more, the grandchildren aren’t more literate.
But one case study can’t definitively answer the larger question: what’s the best way to help poor people stop being poor? That’s the question we address in this new podcast. If features a discussion that Stephen Dubner recently moderated in New York City with Richard Thaler and Dean Karlan. Read More »