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Archive for June, 2011

How Common Is Drugged Driving?

From a recent USA Today article by Jonathan Shorman comes an astounding (to me) set of facts about drugs and driving that certainly ought to be considered as part of the conversation about decriminalizing marijuana:*

Researchers examined data on more than 44,000 drivers in single-vehicle crashes who died between 1999 and 2009. They found that 24.9% tested positive for drugs and 37% had blood-alcohol levels in excess of 0.08, the legal limit. Fifty-eight percent had no alcohol in their systems; 5% had less than 0.08. The data were from a government database on traffic fatalities.
Study co-authors Eduardo Romano** and Robert Voas of the Pacific Institute for Research and Evaluation in Calverton, Md., say their study is one of the first to show the prevalence of drug use among fatally injured drivers. Among drivers who tested positive for drugs, 22% were positive for marijuana, 22% for stimulants and 9% for narcotics.


Is the Debt Cap Unconstitutional? A "Thought Experiment" from 1998

Recent discussions of whether the Fourteenth Amendment’s Public Debt Clause would allow the president to ignore the debt limit reminded me of a paper on the topic that a former student of mine, Michael Abramowicz, wrote under my supervision almost fifteen years ago. Michael has since become a prolific scholar on other topics, and this year he had the rare distinction of publishing articles in both the Harvard Law Review (here) and the Yale Law Journal (here). Meanwhile, he and I have recently coauthored twice, on randomizing law (also with my colleague Yair Listokin) and on using bonds as commitment devices. I tried to find Michael’s old article with Google and couldn’t, so I wrote to him asking about it. With his permission, I include here his reply:


Greenwashing the Groceries

The news that In.Gredients, a “package free, zero-waste” grocery store, will debut in Austin, Texas is certainly cause for optimism. The store, which will be located on the rapidly gentrifying east side of town, is bound to find an eager market of young, progressive consumers raised on a steady diet of environmental ethics, especially the unmitigated horrors of plastic. In addition to its quest to eliminate waste, the store, according to its press release, also promises to promote local and organic food, thereby achieving a trifecta of green grocer bona fides. It should do well.
That said, I think the brains behind In.Gredients vastly underestimate the environmental implications of their bold idea. The tawdry rhetorical appeal to reduced packing, local production, and organic food might resonate with an audience accustomed to associating these traits with eco-correctness. But the carbon-footprint complex isn’t so simple. Fortunately, in this case (and somewhat coincidentally), it happens to be far more consistent with the store’s purported mission.


Do Synthetic Fat Substitutes Make You Fat? Ask the Rats Who Ate Pringles

In a whopper of counterintuitive research, and another reason to look askance at that supposed wonder of modern food science olestra (Olean), a study published by the American Psychological Association shows that synthetic fat substitutes used in low-calorie potato chips can backfire and contribute to weight gain more so than their fatty counterparts. How do we know? Researchers at Purdue fed Pringles to lab rats. Yes, the mathematically perfect, Einstein-inspired Pringles. Here’s how it worked:


What Will Be the Consequences of the Latest Prenatal-Testing Technologies?

Here’s some big — and good — news on the birth-technology front, from Amy Dockser Marcus in the Wall Street Journal:

New, noninvasive blood tests are being developed for expectant mothers to find out if their babies have genetic conditions such as Down syndrome, without the risks of tests available now.
Pregnant women often opt for a prenatal test called amniocentesis that requires a needle to be inserted through the walls of the abdomen and uterus to draw a sample of the fluid surrounding the fetus. The test is uncomfortable and carries a small risk of miscarriage, as does another invasive test for genetic disorders called chorionic villus sampling, or CVS, that samples tissue from the placenta.
Now, scientists say new tests of fetal DNA sampled from a mother’s blood can be used to screen for Down syndrome, which occurs in one in 691 live births and causes cognitive disabilities. The new blood tests could be performed as early as nine weeks into a pregnancy—earlier than amniocentesis—and may be available as soon as the end of this year.


TV Learns the Risks of Drug-Dealing From Freakonomics

In the pilot episode of USA’s new lawyer show Suits, one of the characters says: “A person is more likely to die while dealing drugs than on death row in Texas… It’s from Freakonomics. Do you read anything I give you?”
That was from Chapter 3 of Freakonomics (excerpt here). Though we’re flattered, we should point out that the drug dealers we were talking about sold crack cocaine on the street in Chicago during the peak of crack-and-crime wave. We can’t vouch for the risk of the run-of-the-mill drug dealer …
(HT to multiple readers, including Linda Jines and April Allridge)


Why Do We Fail to Do What’s Right? Authors of Blind Spots Answer Your Questions

Earlier this month, we published a guest post on the ethics of the decision-making that led to the 1986 Challenger shuttle disaster. That post was adapted from a new book called Blind Spots: Why We Fail to Do What’s Right and What to Do about It. The authors are Max Bazerman, a professor at Harvard Business School, and Ann Tenbrunsel, a professor of business ethics at Notre Dame.
We then solicited your questions for Brazerman and Tenbrunsel, who now return with their answers.


A Freakonomics Radio Bleg: Do You Boo? If So, When and Why?

We’re working on a Freakonomics Radio piece about booing — when it happens (and doesn’t), who does it (and doesn’t), what it means, etc. We’re looking for good stories and insights, so please let us know in the comments section what you’ve got, whether you were the booer, the booee, or a witness. The story might concern politics, sports, the theater or opera, whatever. Did you ever see kids boo a bad clown at a birthday party, e.g.? Am also interested in how booing breaks down along socioeconomic and cultural lines — does more booing really happen in the cheap seats? In a nutshell, we’re looking for the most interesting, surprising, revealing booing stories you’ve got. Many thanks in advance.


A Strange Sentence About Grand Slams

From today’s Times, an article by David Waldstein called “Mets’ Stretch Without a Slam? Gone. Gone“:

The Mets had gone 299 games and 280 plate appearances with the bases loaded since their last grand slam, while their opponents had hit 18 during that span. So when the opportunity arose in the fourth inning Tuesday night — with Jason Bay at the plate, no less — the chance of a Mets grand slam was slim.

Was the chance of a grand slam really so slim?


Appoint and Nominate: How to Fill the Vacancy Atop the CFPB

Last week, I published an op-ed in the Washington Post suggesting an “appoint and nominate” method by which President Obama could make a recess appointment of Elizabeth Warren to the Consumer Financial Protection Bureau, while still respecting the Senate’s confirmation process. I suggested that the president “should make a recess appointment of Elizabeth Warren and simultaneously nominate Sarah Raskin for the same position.”


How to Destroy a University

A colleague elsewhere, who wishes to remain nameless for fear of retribution, has illustrated how easy it is to destroy a university. His is abolishing its economics graduate programs; introductory economics will be taught in sections of 1,000 students; professors do their own purchasing of supplies; and upper-division courses are being sharply reduced in number.
All this is a response to calls for greater efficiency in higher education. Is this really greater efficiency? Or is it a move to a different point on the production possibility frontier, essentially choosing to convert a research institution into a mediocre equivalent of a two-year college? Calls for professors to teach more to save higher-education money have consequences—there ain’t no free lunch here. Of course, too, such policies drive away faculty members who might be interested in doing research. Fortunately, not all public universities are following this troglodyte approach.


Urban vs. Rural Minds: The Differences in Brain Behavior

The Economist reports that city dwellers are at a significantly increased risk of developing anxiety and mood disorders. Evidence from a new study by Andreas Meyer-Lindenberg, a German psychology professor, might point to why.
Urbanites, it turns out, deal with stress differently than rural residents. Meyer-Lindenberg identified a difference in the activity of the amygdalas, with those living in cities having the highest activity in this area of the brain. The amygdala is responsible for memory storage and emotional events, and scientists believe it’s also related to dealing with fear. Meyer-Lindenberg also found that people raised in cities have an off-kilter perigenual anterior cingulate cortex (pACC) amygdala link, a condition also present in schizophrenia.


San Francisco, City of Bans, Edition No. 3

First came a de facto ban of Happy Meals; then a proposal for a ban on circumcisions; now comes a proposal to ban the sale of just about every living animal, including goldfish. From the L.A. Times:

Yes, goldfish. And guppies, gobies, gouramies, glowlight tetras, German blue rams. No fish, no fowl, no reptiles, no amphibians, no cats, no dogs, no gerbils, no rats. If it flies, crawls, runs, swims or slithers, you would not be able to buy it in the city named for the patron saint of animals.


Taking Lab Rats Seriously: The Case Against (Most) Animal Testing

Billions upon billions of animals are used every year for the purposes of scientific experimentation. It’s actually hard to think of another practice that’s as commonplace as it is controversial (biotechnology, perhaps?). It goes without saying that many of these experiments are a waste of time and resources. The NIH, for example, recently spent about $4 million exploring how the menstrual cycles of monkeys were influenced by cocaine, meth, and heroin. Other animal-based experiments, however, appear to have genuine utilitarian value, contributing useful information to our knowledge of Parkinson’s, Alzheimer’s, and several cancers. Delve into this issue and you’ll find that only one thing is certain: clear answers aren’t forthcoming.
I generally believe that animal experimentation is a morally flawed way to accumulate scientific knowledge. That said, I plead agnosticism when it comes to rare cases of direct benefit to human life. I’m sure that if one of my children were afflicted with a life threatening disease and experimentation on monkeys had a plausible chance of finding a cure, I’d reluctantly support that research. As much as I’d like to be consistent on this issue–as I’m able to be with, say, my diet–I’m afraid I must take convenient refuge in Emerson’s saying about foolish consistency and little minds. As I said, nothing about the morality of animal experimentation is easy.


The Fed's $1 Billion Stash of Unwanted Coins

The folks over at NPR’s Planet Money have a great piece today on the stash of unused dollar coins that’s piling up at the Federal Reserve. Back in 2005, Congress passed a law ordering the Fed to mint a series of dollar coins honoring the presidents. The plan was to wean Americans off paper bills. It hasn’t exactly worked. There are currently about 1.2 billion dollar coins sitting unused in Federal Reserve vaults. The program has cost $300 million so far, and is scheduled to run through 2016.


Stimulus Package Analysis: Which Type of Spending Created The Most Jobs?

Bruce Sacerdote and James Feyrer, both of Dartmouth, have produced a paper that looks at how the stimulus package (American Recovery and Reinvestment Act) affected employment, and which type of spending had the most (and least) amount of impact. It’s among the first detailed analyses of employment and earnings effects from the stimulus that uses actual employment outcomes. Here’s the abstract (full version here):


Cornering the Market… for He-Man?

One of the fundamental principles of economics is that scarcity creates value. The rarer something is, the more valuable it becomes. History is loaded with examples of investors (speculators?) cornering the market in all kinds of things in order to set the price and make a killing. From Cornelius Vanderbilt buying up shares of the Harlem railroad in the 1860s, to the Hunt brothers acquiring roughly half the world’s silver in 1979, to the Sumitomo copper affair of the mid-1990s, to Porsche’s 2008 attempt to corner the market in Volkswagen shares.
Now, from the UK comes a strange and highly obscure attempt to corner the market for a good whose value is much less obvious. A performance artist named Jamie Moakes has decided to see if the principle of scarcity applies to 1980s action figures; specifically, a character from the old He-Man cartoon, Ram Man. Moakes has now collected 136 Ram Man figures, an exercise he’s dubbed “You Will be Rare” and is documenting on Youtube.


Freakonomics Radio, Hour-long Episode 4: “The Folly of Prediction”

It’s impossible to predict the future, but humans can’t help themselves. From the economy to the presidency to the Super Bowl, educated and intelligent people promise insight and repeatedly fail by wide margins. These mistakes and misses go unpunished, both publicly and in our brain, which has become trained to ignore the record of those who make them. In this hour of Freakonomics Radio, we’ll dream of the day when bad predictors pay – when the accuracy rate of pundits appear next to their faces on TV, when the weatherman who botches the 5-day forecast by 20 degrees has to make his next appearance soaking wet. We’ll also look at the deep roots of divining what tomorrow brings, from the invention of religion to new understandings of how we make decisions about the future.


Why Do Airlines Always Lose Money? Hint: It's Not Due to Taxes or Fuel Costs

It’s been more than 30 years since the airline industry was deregulated in 1978. Since then it’s lost nearly $60 billion on U.S. operations, though most of the losses have come since 9/11. The airlines were already in trouble before the attacks happened. The plunge in demand and resulting liquidity crisis led to billions in government cash and loan guarantees– the first true bailout of the 21st century, and certainly a sign of things to come in the next decade.
In a paper published last month, (Abstract here; full version here) Berkeley economist and overall airline guru Severin Borenstein examines some of the most common explanations for the airline industry’s dismal performance, and why experts and deregulation advocates failed so badly to predict what would happen after deregulation 30 years ago.


The Best Trader in the World Worked for Bernie Madoff

The night Bernie Madoff got caught for running a $60 billion Ponzi scheme I got a call from my friend “Eddie” (not his real name) who for many years worked for Madoff. I couldn’t tell if he was crying but he was very upset. “I can’t believe it,” he said, “Bernie was like a father to me. Mark Madoff was like a brother to me.” We spoke on and off all night as more news came in and he came to grips with the new world he was living in.
I called Eddie yesterday and said I wanted to write an article about him and how I thought he was the best trader I ever knew. I’ve met and worked with over a thousand traders. I traded for hedge funds. I ran a fund of hedge funds. I’ve written five books on trading. And Eddie is the best trader I’ve ever come across.


FREAK-est Links

This week: Researchers say it pays to be loyal; are ovulating women better at detecting sexual orientation? Nathan Myhrvold on risk and the state of the Earth; a Gallup poll suggests slowing migration, and why your paycheck just might kill you.


Did Gender Inequality Start With the Plow?

From a pair of Harvard economists, Alberto Alesina and Nathan Nunn, and a UCLA business school professor, Paola Giuliano, comes this working paper (Abstract here and below; full version here) that tests the hypothesis that current gender role differences can be traced to shifting methods of agriculture, particularly the introduction of the plow, which required significant upper body strength, grip strength, and burst of power that favored men over women.


It Takes a Village

I’m back to inviting readers to submit quotations whose origins they want me to try to trace, using my book, The Yale Book of Quotations, and my more recent researches.
noor asked:

“It takes a whole community to raise a child”

The Yale Book of Quotations traces the proverb “It takes a village to raise a child” back to 1989. Subsequent to the publication of the YBQ, I found that Toni Morrison was quoted in Essence, July 1981: “I don’t think one parent can raise a child. I don’t think two parents can raise a child. You really need the whole village.” The forthcoming Yale Book of Modern Proverbs notes: “The saying is often referred to as an ‘African’ or a ‘West African’ proverb; however, no prototype from Africa has been discovered — though several sayings from that continent do urge cooperation in child rearing and other enterprises.”
Do any readers have any other quotations whose origins they would like me to attempt to trace?


More Misadventures in Foreign Aid?

Last week CNN told the story here and here of Derreck Kayongo, a refugee from Uganda now living in Atlanta. His father was a soap-maker, and Mr. Kayongo is following in his footsteps, but with a nonprofit twist: he cleans and reprocesses discarded used soap bars from American hotels and ships them to Africa. He started the Global Soap Project, a U.S.-based non-profit organization, to do this.
An inspiring story of someone trying to turn waste into something good. That of course is great, and I like the ingenuity. And I admire how Mr. Kayongo has managed to navigate both the nonprofit and corporate space to figure out how to mobilize people to contribute the soap, and to coordinate delivery to people in need.
But is the best solution here really half-used soap?


The Substitution Effect: How Reality TV Killed the Soap Opera

The Wall Street Journal has a story about all the long-running soap operas that are going off the air. A cohort of die-hard fans is protesting the move, arguing that the shows are more popular than their ratings suggest, and even threatening to sue ABC’s parent company Disney for causing them “mental distress” by canceling the shows. But the fact remains that their viewership is down, and sponsors have been pulling out, making the shows unprofitable for the television stations even in non-prime-time slots. One might think it is because of rising female labor-force participation–but the increase has been quite slow for the past 20 years. The reason is competition for viewers with a new, cheaper product—“reality TV.”
Apparently soaps and reality shows attract similar viewers—they appear to be substitutes for the average consumer. As with any new product that is hot, its substitutes suffer when it enters the market. As the World Turns and Guiding Light have given way to such pathetic substitutes as The Apprentice and Let’s Make a Deal.


The Fed's Wishful (And Wrong) Thinking About Unemployment

No one seems to have noticed that the Fed’s latest unemployment projections just don’t make sense. While most economists are concerned about a jobless recovery, the Fed is forecasting lots of jobs, but little recovery. Yes, today’s projections suggest only tepid output growth in the next few years. And given this, it’s hard to see how we will make much of a dent in the unemployment rate. Yet the Fed believes otherwise, cheerfully (wishfully?) forecasting declining unemployment.


A Kid Who Can Handle His Putter — and, More Important, Hyperbolic Discounting

It’s always good to see someone willing to pass up a certain short-term gain in favor of a potential long-term gain that’s much more significant. In this case it’s a teenage golfer — with a big assist from his father. From the Washington Post:

How much is your high school athletic career worth?
That is the question an Anne Arundel County teenager had to decide last month after winning $5,000 in a putting contest at a charity golf outing.
However, before 15-year-old Garrett Sauls, a freshman at South River High School, could think about a spending spree — perhaps a new putter, some wedges and new tennis shoes — his father realized that accepting the money might present a problem.


A Reader Debate: Economists-Turned Parents Vs. Parents-Turned Economists

On Friday I speculated that perhaps becoming a parent changed how I approach economics. To broaden the discussion, I posed the following thought experiment: what kind of economists would we be if we learned our economics only after we were parents?
The always-interesting Robin Hanson responded:

I don’t need to speculate – I am exactly that kind of economist. I started econ grad school with two kids, ages 0 and 2, and had no undergrad econ… But none of that makes me doubt the value of neoclassical econ. How could it? First, econ makes sense of a complex social world by leaving important things out, on purpose – that is the point of models, to be simple enough to understand… Having an emotional parenting experience is as irrelevant to the value of neoclassical econ as having a mystical drug experience is to the validity of basic physics.


Flawed Incentives and Dubious Morals: JPMorgan & CDOs That Were "Built to Fail"

It’s been a busy week for JPMorgan Chase. It’s only Wednesday, and already the bank has settled one civil fraud lawsuit, and been slapped with another one. Both shed light on Wall Street’s flawed system of incentives that helped bring on the financial crisis. They also raise questions as to the morals of bankers.
On Tuesday, JPMorgan agreed to pay $153 million to settle civil fraud charges brought by the SEC alleging that it “misled” investors when it sold them junky mortgage bonds. The deal in question was put together by Magnetar Capital. If you’re not familiar with Magnetar, it’s an Illinois-based hedge fund that made a killing shorting synthetic mortgage-backed securities that were essentially built to fail. Here’s how it worked: Magnetar would put down a few million bucks to start a collateralized-debt obligation (CDO), cram it full of the junkiest mortgage bonds it could find, then get a bank like JPMorgan to sell it off to investors as a triple-A, gold-plated piece of the booming housing market; when in reality it was a time bomb filled with toxic waste.