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Archive for July, 2011

Killer Cars: An Extra 1,000 Pounds Increases Crash Fatalities by 47%

Ever since the SUV craze began in the late 1980s, we’ve all known that heavier vehicles are safer for those driving them, but more dangerous for others on the road. Which is why we all started driving them. Now, in a new working paper, a pair of Berkeley economists have quantified not only the fatality risks of heavier cars for other drivers, but also the costs associated with them. Here’s the abstract:

Heavier vehicles are safer for their own occupants but more hazardous for the occupants of other vehicles. In this paper we estimate the increased probability of fatalities from being hit by a heavier vehicle in a collision. We show that, controlling for own-vehicle weight, being hit by a vehicle that is 1,000 pounds heavier results in a 47% increase in the baseline fatality probability. Estimation results further suggest that the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan). We calculate that the value of the external risk generated by the gain in fleet weight since 1989 is approximately 27 cents per gallon of gasoline. We further calculate that the total fatality externality is roughly equivalent to a gas tax of $1.08 per gallon. We consider two policy options for internalizing this external cost: a gas tax and an optimal weight varying mileage tax. Comparing these options, we find that the cost is similar for most vehicles.


Inmates Cash in on Prison Phone Glitch

From Arelis R. Hernández at the Orlando Sentinel comes a hilariously idiotic story of a jail in Lake County, Florida, where rather than having money withdrawn from their accounts, inmates were paid to make phone calls. So much so that one man bonded out after making 77 calls and having $1,250 deposited into his account. He ended up turning himself in a few hours later.


FREAK-est Links

Georgia’s shriveling peach economy, one-third of Michigan teachers feel pressured to cheat, the annual Big Mac index, a public library incentive scheme, and why West Virginia is awash in car crashes the week after a televised NASCAR race.


A Scuffle over "Scuffle"

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.
Jim asked:

This is a little different and may not really be possible to trace but…
For whatever reason, I am very irritated by the constant use of the world ‘scuffling’ to mean ‘struggling’ — as in having a hard time — by sportswriters and TV sportscasters and analysts (i.e., ‘Ever since his concussion, Justin Morneau has been really scuffling at the plate’). I was heartened to see that this New York Times article was reprinted with ‘struggling’ in place of ‘scuffling’ (see note at the bottom of the page).
I think of ‘scuffling’ in the context of fighting or struggling physically, not struggling in terms of performance in a sport or in a job, what have you. Do you agree that ‘scuffling’ in this context is misused? And, can you trace the beginnings of this mis-usage? I realize this is slightly different than what’s usually asked here but thank you.


Minority Rules: Why 10 Percent is All You Need

What does it take for an idea to spread from one to many? For a minority opinion to become the majority belief? According to a new study by scientists at the Rensselaer Polytechnic Institute, the answer is 10%. Once 10% of a population is committed to an idea, it’s inevitable that it will eventually become the prevailing opinion of the entire group. The key is to remain committed.
The research was done by scientists at RPI’s Social Cognitive Networks Academic Research Center (SCNARC), and published in the journal Physical Review E. Here’s the abstract:

We show how the prevailing majority opinion in a population can be rapidly reversed by a small fraction p of randomly distributed committed agents who consistently proselytize the opposing opinion and are immune to influence. Specifically, we show that when the committed fraction grows beyond a critical value pc=10%, there is a dramatic decrease in the time Tc taken for the entire population to adopt the committed opinion. In particular, for complete graphs we show that when p<pc, Tc~exp[a(p)N], whereas for p>pc, Tc~lnN. We conclude with simulation results for Erdos-Rényi random graphs and scale-free networks which show qualitatively similar behavior.


A Lesson in Free Vitamins

A friend mentioned an interesting way that the Internet can reduce cost, raise output, and that uses incentives cleverly. Her company created an educational ad campaign to encourage young women to engage in healthy activities. On several occasions various unrelated blogs mentioned that free vitamins were being given through the campaign’s website linked to the ads. Using Google Analytics she discovered that the website’s hits went up over tenfold after each mention on the blogs; but the data also showed that most of the new hits were by people who got onto the website just long enough to get the freebies.
In the next round the offers will be restructured so the freebies are available only after the person has watched an online educational video—and thus imbibed the health-promoting knowledge that was the purpose of the campaign.
[HT: CS]


Lottery Tickets for Safe Drivers?

Last month, Eric Morris wrote a post on red light cameras at traffic intersections in L.A. that sparked a robust debate in the comments section, something we always like. The debate centered around whether these devices are effective at reducing people’s willingness to run a red light, or whether they’re merely sources of revenue for the city. Perhaps you’ll feel similarly passionate about a new Australian study that examined the benefits of fixed speed cameras in New South Wales. From an ABC.net.au article:

On the whole [Auditor-General Peter Achterstraat] has found that speed cameras do change driver behavior and improve road safety but not in all cases. He has found 38 of the 141 fixed cameras across the state seem to have no significant benefit to road safety.


Culture-Bound Syndromes Run Amok

A recent Slate article by Jesse Bering outlines the strange and true world of culture-bound syndromes — mental illnesses that occur in certain geo-specific populations or “sociocultural milieus.” Perhaps the most famous is “amok,” the root of “run amok,” and a problem in Malaysia, Polynesia, Puerto Rico and the Navajo Nation. The syndrome affects males 20–45, who become homicidally violent after a perceived insult. After which, of course, the subject remembers very little. Sound like a good cover? It gets weirder.
In China, we find Koro: “in which the patient is convinced that protruding bodily organs, such as the male genitalia or female nipples, are retracting or disappearing into his or her body.” Koro, however, has a habit of jumping all over the globe, and has been well documented in Thailand, India and Africa. Koro’s internationalism, like that of other culture-bound diseases, throws the specificity of “culture” into question, and the genre of these illnesses remains murky, nearly impossible to define, and fertile ground for wild postulating. Mythology in particular permeates the “culture-bound” discussion. Perhaps it is the particular oral traditions of a people who jump beyond the campfire into the lives – and bodies – of their listeners.
And as for what America has to add? Muscle dysmorphia!


Blind to Our Own Blindness: Wisdom from Danny Kahneman

I recently had the chance to read an advance copy of an outstanding book by Daniel Kahneman entitled Thinking, Fast and Slow. The book will be published this fall.
Among the hundreds of interesting ideas in the book, there is one that I simply can’t get out of my head. Referring to how our minds work, Kahneman writes that not only are we sometimes “blind to the obvious,” but also we are “blind to our blindness.” For me, that one sentence summarizes a fundamental insight of his life’s work.
It’s one of those simple insights which is obvious when you think about it, but somehow incredibly easy to forget when mesmerized by the happenings of everyday life, leading to poor decision making.
Coming up with a good name for a problem is often an important part of coming up with a solution. So I’m thankful to Kahneman for planting the phrase “blind to my own blindness” in my brain. The next time I’m about to mindlessly make a terrible choice, I’m hoping that phrase will forcefully interject itself into my internal dialogue, causing me to think more clearly about my decision.
More likely, it will only be after the fact that I become aware that I was blind to my own blindness in a particular setting. At least I’ll have a succinct way of beating myself up.


Backyard Hens: A Trend Coming Home to Roost?

The infamous egg recall of 2010–which identified over 500,000 eggs infected with salmonella–inspired not only widespread condemnation of industrial egg production, but a reactionary upsurge in the trend of keeping backyard hens. For reasons that seem intuitively straightforward (but lack concrete substantiation), a critical mass of do-it-yourselfers determined that it was, among other benefits, safer and more humane to raise their “own” birds and eat their “own” eggs. As this movement continues to take shape, it’s worth asking if these evaluations are all they’re cracked up to be.
As for safety, we’ve really no way of knowing at this point. To the best of my knowledge (and please, if I am wrong, show me), nobody has calculated comparative rates of infection between backyard and industrialized birds. What we do know is that backyard chickens aren’t immune to disease outbreaks. Just last month Food Safety News reported that the CDC had identified 71 cases of salmonella (more than half under the age of 5) linked to backyard chickens. Eighteen people were hospitalized.


The Economic Value of (Very) Personal Data

Graphic designer Nicholas Felton keeps track of how many miles he walks each day. He also records how many book pages he reads, how many work e-mails he sends, and what songs he listens to. Felton’s become somewhat famous for his obsessive self-tracking, and the slick info-graphics he produces on himself each year. Both the Wall Street Journal and Slate have made videos about him, here and here.
Felton began tracking his daily habits and compiling a Personal Annual Report in 2005, available at his website.


Will U.S. Shale Gas Rebalance Global Politics?

Fascinating article from the Houston Chronicle:

The natural gas boom in the U.S. has weakened Russia’s influence on European energy supplies and could keep Iran’s influence in check for years to come, according to a new study from the Baker Institute for Public Policy at Rice University.

The study, “Shale Gas and U.S. National Security,” says the surge of drilling in shale formations will have an impact on global supply for years to come and limit the need for the U.S. to import liquefied natural gas, or LNG, for at least 20 to 30 years.

That means more LNG shipments from the Middle East will be available for Europe, which has been beholden to Russia for a large portion of its gas, supplied by pipelines.

The study, funded by the U.S. Department of Energy, predicts that Russia’s share of the natural-gas market in Western Europe will drop to as little as 13 percent by 2040, down from 27 percent in 2009.


In New York City, It Still Pays to Hop the Subway Turnstile

A report by New York City’s Metropolitan Transportation Authority seems to prove that hopping a subway turnstile is worth the risk of getting caught and fined. The MTA estimates that riders entered the subway without paying 18.5 million times in 2009 (an average of 50,684 a day) while the police issued just 120,000 summonses, or 1 for every 154 jumps.
The report figures that a regular turnstile jumper has a chance of getting caught only once every 6 to 13 weeks. At $100 per fine, this works out to be cheaper than a $27 weekly unlimited Metrocard that would cost $162 over six weeks. So the fare-skipper who gets nabbed only once in that period still comes out ahead by $62. And that was in 2009. While the price for a weekly pass has since increased to $29, the cost of the fine has not, so in 2011 it pays even more to hop the turnstile.
From the Daily News:

“This basic street economics might explain observed evasion behaviors,” the authors of the report wrote, arguing stiffer penalties might cut down on scofflaws. “Higher fines or arrests may have better deterrent effects.”


FREAK-est Links

The remedial science of boarding an airplane, a 3-D printer for personalized chocolate, the true meritocracy of Japanese police dogs, charting undergraduate grade inflation through the years, and would you give up the Internet for $1 million?


Tim Groseclose's New Book on Liberal Media Bias

My good friend and co-author Tim Groseclose has a new book out entitled Left Turn: How Liberal Media Bias Distorts the American Mind. As the title suggests, it has a definite conservative slant. It is not, however, a right-wing rant by any means. Rather, it is a carefully researched and amusingly written book by a highly regarded academic.
I’m bored to death by politics. So I didn’t expect to enjoy Groseclose’s book, but I really did. I’m always surprised when an academic can write for a general audience, but Groseclose definitely has that gift.
As I said in my blurb for his book, liberals will not like what Groseclose has to say, but that is all the more reason why liberals should read his book.


Are Rising Prices a Sign of Health in an Industry?

Or do they signify desperation? This is the question that arose earlier this month in Congress, when the House Judiciary Committee again took up the question of creating copyright protection for fashion designs.
We (really, Chris) testified as the sole opponents to the Innovative Design Protection and Piracy Prevention Act, or IDPPPA, which would for the first time in American history provide a short (3 year) copyright for fashion designs, such as the cut and look of a particular dress or suit. To bolster our argument against the IDPPPA, Chris presented data from the Bureau of Labor Statistics that showed that since 1998 apparel prices in the U.S. had dropped or stayed steady—with one exception. At the very top level, prices rose dramatically in this period—by over 200%. The full testimony and graph can be found here.


Did Rating Agencies Give Preference to Big Banks?

At the heart of the financial crisis was the market for mortgage-backed securities (MBS). These are the “toxic assets” that larded up bank balance sheets and all but froze the credit markets in the fall of 2008. Turns out a lot of those assets are still sitting there. Though they’ve mostly been downgraded to junk status, many of them began life as gold-plated investment products thanks to the AAA ratings they received from the rating agencies Moody’s, S&P, and Fitch. These firms that allowed so much junk to be passed off as gold were essentially the enablers of the financial crisis.
The relationship between the rating agencies and banks is a perfect case study of flawed incentives. With banks paying them to rate their investment products, and so much money pouring in at the height of the mortgage-boom (driving record profits for the highly competitive rating agencies), Moody’s, S&P, and Fitch had a strong incentive to play along.
A new study adds more fodder to the argument that these agencies were unduly influenced by the institutions whose products they were grading. It basically posits that the more MBS an institution issued, the better rating their stuff received.


The Virtues of Free Markets?

In our books, Dubner and I have argued that economic analysis (at least the way we try to do it) is neither moral nor immoral. We try to start with a question, obtain a set of facts, and then understand where those facts lead, trying not to be prejudiced one way or the other by moral considerations when coming to a conclusion.
Similarly, I’ve never really thought of markets as being moral or immoral.
Mark Zupan, the dean of the University of Rochester’s William E. Simon School of Business, thinks differently. In a recent piece, Zupan makes an argument that most people will find counterintuitive: he claims that free markets foster integrity and cooperation. I’m not sure I fully agree with him, but the basic idea is sensible and straightforward. Markets lead to firms that survive for long periods of time. Reputations are important to firms, which leads them to behave in virtuous ways, not because they’re inherently moral, but because virtue is good for business in the long run.


Waiting in Line Pays $3 an Hour in China

From NPR’s Beijing correspondent Louisa Lim, comes a story about China’s epic lines, and the money-making opportunity they’ve spawned:

Earlier this month, people waited four days and three nights to register for low-income housing in the central city of Xian, while admission to a certain Beijing kindergarten in Changping last year required a week-long, round-the-clock queue, for which people set up camp beds along the pavement.

A half-day wait at the bank is also apparently not unusual. It’s all led to this:

For the past two years, Li Qicai, 28, has made a career out of waiting in line. What’s more, he now outsources the waiting to others. He employs four full-time queuers and a host of freelancers, who, for a cost of about $3 an hour, will do the waiting for you.
“I’m just selling my time for money,” says Li. “You don’t need any skills, except the ability to suffer. For some jobs, you need to look good. If you want to buy things for rich people, you can’t look like a farmer or they’ll think you’re a scalper.”

The Chinese media pins the phenomenon on an economy driven by laziness, where low labor costs fuel China’s “convenience culture.”
One more point: if it takes a week to wait in line to sign up for kindergarten now, what happens if China’s most populous-province gets its wish, and the country’s one-child policy is overturned?


Why It's Better to be Beta than Alpha

“Uneasy lies the head that wears a crown.”

That’s from William Shakespeare’s Henry IV, Part 2. The point is that it’s not easy being No. 1; constantly having to watch your back, stressing over who might be angling to knock you off, and steal your crown.
Four hundred years later, scientists are finally getting around to proving that axiom. A new study of baboons shows that being the alpha male in a group dynamic may not be worth the stress the position imposes. Here’s the abstract:

In social hierarchies, dominant individuals experience reproductive and health benefits, but the costs of social dominance remain a topic of debate. Prevailing hypotheses predict that higher-ranking males experience higher testosterone and glucocorticoid (stress hormone) levels than lower-ranking males when hierarchies are unstable but not otherwise. In this long-term study of rank-related stress in a natural population of savannah baboons (Papio cynocephalus), high-ranking males had higher testosterone and lower glucocorticoid levels than other males, regardless of hierarchy stability. The singular exception was for the highest-ranking (alpha) males, who exhibited both high testosterone and high glucocorticoid levels. In particular, alpha males exhibited much higher stress hormone levels than second-ranking (beta) males, suggesting that being at the very top may be more costly than previously thought.


Hispanic Population Growth Now Driven More by Births, Not Immigration

From a Pew Research Center analysis of the latest Census data:

In the decade from 2000 to 2010, the Mexican-American population grew by 7.2 million as a result of births and 4.2 million as a result of new immigrant arrivals. This is a change from the previous two decades when the number of new immigrants either matched or exceeded the number of births.
The current surge in births among Mexican-Americans is largely attributable to the immigration wave that has brought more than 10 million immigrants to the United States from Mexico since 1970. Between 2006 and 2010 alone, more than half (53%) of all Mexican-American births were to Mexican immigrant parents. As a group, these immigrants are more likely than U.S.-born Americans to be in their prime child-bearing years. They also have much higher fertility.


The Costco Effect: Why Does the Wholesaler Cause Inflation?

There’s a lot of data showing that Walmart causes prices to decline when it enters a local market (see here, here and here). Why then, according to a new study, does Costco have the opposite effect, and cause competitors to raise their prices? The answer boils down to the complex ways that stores choose to compete against each other, and shows that not all big box retailers are created equal. Here’s the abstract:

Prior research shows grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam’s Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This is consistent with incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.


The Physics of Putting

I always love it when I’ve been doing something one way my whole life, and then someone explains to me there is a better way to do that same thing, and the new way is so simple I can immediately switch and see benefits.
Usually it is a new technology that unlocks the magic. For instance, XM Radio, iTunes and Pandora all fundamentally changed the way I listen to music. My Sonicare toothbrush is a hundred times better than a regular toothbrush. After the creation of seedless watermelons, I would never again intentionally buy one that had seeds. Microwave popcorn is another example.
What is even neater, I think, than a new technology changing things, is when someone just comes up with a better way of thinking about a problem. I’ve done a little bit of reading on the origins of randomized experimentation, and it is fascinating to see how that new and powerful idea emerged.
On a much smaller scale, I’ve recently had that sort of change in my thinking about another issue: how to read putts on the green when playing golf.


An Apparent Non-Money Pricing Anomaly

The City of Austin offers airport parking in three tiers, from garage ($20/day), to close-in surface ($10/day), to distant surface ($7/day). Frequent parkers accumulate points entitling them to free parking days.
The incentives for redeeming the points are bizarre:

Garage 2500 points

Close In 2500 points

Long Term 2500 points

The “price” of a free parking day is the same for the very desirable garage, where I never park if I have to pay $$, and for the close-in parking (where I park for $$ if staying fewer than 5 days) as well as for the long-term (where I park only if staying more than 4 days). Seeing this, we will redeem our 10,000 points for four days in the garage—parking for “free” anywhere else makes no sense. Now if the airlines would only charge the same number of frequent-flyer miles for a trip to Australia as they do for a trip to New York, I would be even better off!


What Would it Be Like to Climb 26 Years of Federal Spending?

Data is often difficult to comprehend, especially when the numbers are huge. As Sanjoy Mahajan points out, the $14.3 trillion national debt seems impossible to fathom. It’s not a numeracy problem; it’s more a question of how to divide the gigantic number into parcels we can understand. Mahajan suggests using smaller measures we can handle – namely thinking about debt in per capita terms.
Fortunately there are also some media tech folks to the rescue. This spring, two computer engineers from Minneapolis challenged designers and coders to come up with a visual program to help the public understand the U.S. federal budget. You can see the winners here. If you want a fun way to understand the cuts that Obama’s talking about, the game Budget Climb lets you physically experience 26 years of federal spending data in a virtual reality, interactive format.


How to Eat What You Kill

Life only tastes good when you eat what you kill. When you hustle for what you earn and someone pays you money in proportion to the service you’ve offered, the idea you’ve created, your ability to execute on it, and their ability to consume it in a way that benefits them.
Someone asked me the other day, “What does it mean when you say you ‘Eat what you kill’?”
It means that the greatest pleasure is going into the jungle and mastering the ability to hunt and survive without the help of masters who only pretend to guarantee our safety; i.e., bosses. Whether you’re an entrepreneur, an employee, a student, a homemaker, a writer — it’s time to start forgetting about all the ways the world has promised you safety and comfort.
Human knowledge has torn apart our families, our bank accounts, and lulled us into a creepy sense of Disney stability. A good friend of mine was just laid off from his job of ten years. He found out through an email and was asked not to come into work for the rest of the week and to clean out his desk when security came in on Saturday. All of that human knowledge in an email. Ten years of work. Time to cut costs. “What do I do now?” he asked me.


A Stack of Bills Reaching to the Moon: How to Quantify Our National Debt

Now that the U.S. national debt is in the headlines, the media is awash in astronomical numbers such as $14.3 trillion (the current debt). Everyone realizes that this number is incomprehensible. Even back in 1981, when the national debt was only about $1 trillion, the debt was still incomprehensible. Thus, speechwriters for Ronald Reagan created, or at least popularized, a widely used attempt to give it meaning. Speaking to Congress in February 1981, Reagan said:

A few weeks ago I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high.

This comparison is often quoted as a stack of one-dollar bills 67,000 miles high (perhaps because thousand-dollar bills don’t exist). No matter which denomination you use, I give the explanation an A for effort, but an F for performance. For I have little idea of how far 67,000 miles is. I know it’s way too far to walk and even too far to fly (jumbo jets have a maximum range of around 7,000 miles). But is it large as a national debt? I have no idea. Perhaps a large national debt would reach all the way to Mars. The connection to a height has merely replaced one meaningless idea ($1 trillion) with another meaningless idea (a stack 67,000 miles high).


Want to Jump-Start the Housing Market? Get Rid of the Realtors!

Okay, okay, that’s not quite the message of a new working paper by Panle Jia Barwick and Parag A. Pathak called “The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston.” But for those of us who have thought about the Realtor’s role in the housing market, it’s tempting to jump to that conclusion. Here’s the full version of the study, and here’s the abstract:

This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.