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Archive for 2011

How Are Sharks Less Dangerous than Vending Machines? An Exercise in Conditional Risk

Did you know that vending machines, not a major danger in most of our minds, are twice as likely to kill you as a shark? I heard this statistic at the new shark-and-ray touch tank of the New England Aquarium, which I try to visit weekly with my daughters. You stand at a large, shallow tank with plexiglass walls and can lay your hand in the water, gently feeling the sharks and sting rays swimming by.
The aquarium probably wants to convince visitors that sharks are not the fierce predators of Jaws fame, and thereby help protect sharks from hunting and extinction. Although I could admire this motive, the comparison always surprised me. My number sense complained that sharks simply must be more dangerous than vending machines.
However, upon looking up the risks, I found that the comparison was correct. The yearly risk (in the United States) of dying from a shark attack is roughly 1 in 250 million. In contrast, the yearly risk of dying from a vending machine accident is roughly 1 in 112 million. The vending machine is indeed roughly twice as lethal as the shark!
Why then was I still troubled by the comparison? Maybe my number sense needed a tune up, and I should just accept the statistical facts of life. I then started thinking about it using the method of easy cases.


The Price of Blown Glass: Opportunity Cost and Demand Elasticity

A puzzle. My nephew has switched to making art glass full-time, and I think his work is gorgeous. His problem, though, is figuring out what price to charge. Among other things, he blows gorgeous candlesticks, which he thought of selling for $70 a pair. I say he should charge $250 a pair. He says no, because he thinks he can sell many more at the lower price.
He assumes it takes one hour of his time to blow a pair after he’s done the first pair, and incurred the fixed cost. So I guess his decision depends on the opportunity cost of his time and the elasticity of demand for his product. Clearly, there is a set of combinations of the cost of his time and the expected change in quantity sold that would make him indifferent between the high and low prices, with a higher opportunity cost requiring a higher demand elasticity if the price is lower.
Given the two prices, what is this set? And what do you think the demand elasticity actually is in this case? (HT to SEH)


Freakonomics Poll: Would You Stop Someone From Jumping Off a Bridge?

In the last Freakonomics Radio episode “The Suicide Paradox,” (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript here) we talked to a San Francisco cabbie with a long name who said something that caught our attention:

One night I picked up a guy, I think down nearby Tenderloin and he want to go Golden Gate Bridge. Must be 11 o’clock at night. And I said “okay,” so I drove on Franklin Street. He said, “You want to ask me why I go to Golden Gate Bridge this late?” I said, “No, but if you want to tell me I guess I will listen to it.”
And he said “I’m going to go and jump off the Golden Gate Bridge” and I said, “Okay.” He said, “You’re not going to stop me?” I said, “No, why should I?”

The cabbie doesn’t know what happened to his passenger, but he did call the coast guard immediately afterwards. Suicide isn’t illegal in the U.S., and as a citizen of a country that prides itself on individual rights – what would you do?


There Ain't No Such Thing as a Free Lunch: South Korea Edition

You’ve heard it before, if not from Milton Friedman, then surely from a proselytizing grandparent or a macro econ professor: There ain’t no such thing as a free lunch (TANSTAAFL). Of course, that’s not exactly true. Some 31 million low-income public school children in the U.S. get just that every year: a free or reduced lunch.

As Western countries tighten their belts and look to reduce social welfare spending, the city council in Seoul, South Korea is considering expanding free lunches beyond just the “proven” underprivileged, to all 810,000 of Seoul’s elementary and middle school students at a cost of $378 million annually.


Why The U.S. Needs More Minority Teachers

When it comes to achievement, does it matter if a student and a teacher are the same race? And if so, how much? That’s the essential question posed by a trio of economists in a new working paper, the first to test whether minority instructors have a positive effect on the academic achievement of minority students at the college level.
Their results indicate an emphatic yes, and may hold a partial solution (although a tricky one to enact) to one of the most persistent and vexing problems facing the U.S. education system: the achievement gap between non-minority and minority students. Less than than one-fifth of African-Americans, and less than one-eighth of Latinos between 25 and 29 years-old have a college degree. According to the U.S. Department of Education, only 9.6% of full-time instructional faculty at U.S. colleges are black, Latino or Native American. And yet, these groups make up a third of the college-age population.


Channeling FDR: The Moral Case Against Unemployment

My last weekend in D.C. provided a final chance to enjoy my favorite haunts. And so I found myself walking amongst the memorialized giants of U.S. history: Washington, Lincoln, and now, Martin Luther King. On I walked, through the FDR Memorial, where I stumbled across the chiseled message below. Sure, I had seen it before. But I had forgotten how beautiful it is. And with the President about to announce his new jobs package, and Congress set to (hopefully!) debate these measures, it seems well worth sharing my serendipitous moment with Franklin Delano Roosevelt. A reminder, if you like, of why we care.


A Freaky Human Flying Squirrel Video

Our friend Annitra Morrison sent in this video the other day, and I’ve watched it at least a dozen times. It’s by professional BASE jumper, wingsuit flyer, and all around crazy person Jeb Corliss, whom you might remember from 2006, when he was arrested on the observation deck of the Empire State Building, restrained by the NYPD before he could BASE jump off of it. My question after watching this video is: how many physics calculations did Corliss and Co. do before he took the giant leap? And also, considering how close he comes (watch at the 1:19 mark, don’t worry you’ll get a few looks at it) was he correct?


The Liberation of Use-Them-Or-Lose-Them Frequent Flyer Miles

This year, Daniel Kahneman has me wondering about what is the best way to organize my vacation time. In this great TED talk – The Riddle of Experience versus Memory, he talks about the tradeoffs we must make in increasing our moment-to-moment experience of happiness versus increasing our memories of happiness.
If you want to maximize your memories of happiness, you should spend more time taking pictures of your vacation and jam more events into each day. If you want to maximize your moment-to-moment experience of happiness, you spend less time recording your experience and more time experiencing them directly.


The Revolution Will Not Be Televised. But It Will Be Tweeted

A new paper from Chris Edmond at the University of Melbourne examines how the quantity and quality of information impacts regime change. This is particularly timely in light of the Arab Spring taking place across the Middle East, and the current goose chase for Muammar Gaddafi.
Edmond constructs a simple model to study how a regime’s chances of survival are a ffected by changes in information technology. He finds that information alone does not destabilize an oppressive regime. In fact, more information (and the control of that information) is a major source of political strength for any ruling party. The state controlled media of North Korea is a current example of the power of propaganda, much as it was in the Soviet Union and Nazi Germany, where the state heavily subsidized the diffusion of radios during the 1930s to help spread Nazi propaganda.


The Hurricane "Vaccine"

Parts of the East Coast are still recovering from the destruction of Hurricane Irene. The storm wreaked havoc, causing more than 40 deaths and billions of dollars in damages. One thing that is striking about hurricanes is that, even after years of study, all we really know how to do is deal with the symptoms; we don’t actually have a way to treat the disease itself.
So what if there were a hurricane “vaccine”?


Bring Your Questions for Peg Tyre, Author of The Good School

Peg Tyre is a Pulitzer Prize-winning journalist who specializes in writing about education policy. In her 2008 book, The Trouble with Boys, she delved into the growing academic achievement gap between boys and girls to examine why boys are falling so far behind in the classroom. In her new book, The Good School: How Smart Parents Get Their Kids The Education They Deserve, Tyre mines education research data to find out which programs and strategies give kids the highest probabilities of academic success. The result is a concise handbook for parents, one that applies a macro-economic view of education in an effort to create a more rational market around school choice.
As another school year kicks off, Tyre has agreed to answer your questions about The Good School, and anything else education-related. So fire away in the comments section. Before you do, take a look at the table of contents from The Good School printed below, and also read Tyre’s adapted excerpt from the book on the merits (or lack thereof) of teaching to the test.


The Saddest National Anthems in the World

Our latest Freakonomics Radio podcast, “The Suicide Paradox,” (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript here) investigates the mystery of suicide.
Our Virgil in the journey was David Lester, a professor at Richard Stockton College of New Jersey and the dean of suicide studies. Lester is prolific: he has over 1000 citations regarding suicide on a wide range of topics, from quirky informal studies to serious stats. He’s written about which day of the week suicide occurs the most, what blood type suicide rates are associated with, and whether suicide rates are higher in nations with greater rainfall.
One of our favorites by Lester is “National Anthems and Suicide Rates.” Here’s the abstract:


Usain Bolt Has Another World Record

Usain Bolt has set another world record, this time with his Jamaican teammates in the 4 x100-meter relay. Bolt ran the anchor leg. A week earlier, Bolt false-started in the 100 final of the World Championships in Daegu, South Korea, an infraction that comes with the harshest of penalties: disqualification.
Check out our previous pieces on the statistical anomaly that is Usain Bolt by Justin Wolfers and Ian Ayres.
Usain Bolt: It’s Just Not Normal
Who’s the World’s Fastest Runner?
How Impressive is Usain Bolt? A Freakonomics Quiz
Usain Bolt is No Takeru Kobayashi


Does HDTV Increase Demand for Make-up Artists?

A major technical change in TV has been the introduction of HD broadcasting and receivers. For the same price you get higher quality, so this can be viewed as a rightward change in supply. This change has affected a surprisingly related market—that for make-up artists.
Now if you’re on television, as I discovered, every single “flyaway hair” is visible. Most of my hair flew away many years ago, but what’s left might still stick out and need careful laying down by a specialist. A make-up artist tells me that demand for her services has been helped tremendously by the introduction of digital broadcasting and HD receivers.
[HT to NN]


Finally: A Garden Hose to the Sky

Well, it’s actually happening. An idea reported on extensively in SuperFreakonomics has come to fruition, and some mad scientists are getting their way (and a little government funding) to build a garden hose to the sky – and save the world by cooling it down.
A team of British researchers called SPICE (Stratospheric Particle Injection for Climate Engineering), is attempting to pump particles of water into the atmosphere as a test run before moving onto sulfates and aerosols that would reflect sunlight away from earth, mimicking a volcano effect. SPICE is building the garden hose at an undisclosed location, with £1.6 million in UK government funding and the backing of the Royal Society.


Your End of Days: Would Life-Length Testing Save the Government Money?

A Spanish company announced this summer that it can help determine when people will die by using a blood sample, a $700 test, and research that earned three American geneticists the Nobel Prize in medicine in 2009. Though the test has its critics, and though it won’t offer an exact date for one’s death, it does promise to reduce uncertainty about longevity by examining a tiny part of DNA that reveals biological age as opposed to chronological age. Successive generations of the test are likely to improve in predictive power.
Our ignorance about an individual’s longevity is the source of a number of problems. Many of them are personal, but some have implications for society writ large, and taxpayers in particular. So one wonders: if the government can make you confront the calorie content of your diet, can it also make you confront your mortality?
If the government were to mandate “life length” testing, it could help resolve the intractable lifetime savings problem. Pervasive under-saving among households is a result of our impatience, to be sure, but it is certainly also a consequence of the fact that no one knows how long his savings need to last. Save too much and you miss out on having fun when you’re alive. Save too little and you end up broke and reliant on the social safety net that taxpayers fund.


Justin Wolfers on August's Dismal Jobs Report

So the jobs numbers from August are out and they’re not pretty. Employers added no net new jobs last month, the first time that’s happened since February 1945. In early trading, the Dow is down some 200 points.
Thankfully, today is a heads day for Justin Wolfers in his Twitter experiment, which he’s been at for a month now (Follow him @JustinWolfers). As soon as the numbers hit the fan this morning, Wolfers posted some brief thoughts to Google+, which we share below:


Bonn, Germany Taxes Prostitutes with Nightly "Parking Permits." A Deadweight Loss?

In Bonn, Germany, brothels and saunas pay taxes. Yet street prostitution is not taxed, so that the government has given streetwalkers a competitive advantage. To ensure fairness, the Bonn government has constructed meters along the main streets where the women solicit, with each woman required to purchase a “parking permit” of €6 each night.
As an economist, I would prefer to see hourly fees charged, but the costs of administering a fixed fee are much lower and probably yield greater net revenue. The only problem is that the fixed fee gives an incentive to shift work time toward fewer nights per week but more hours per night worked. A clear deadweight loss from this tax.
[HT to DJ]


FREAK-est Links

This week, Cornell’s robots talk to each other, Linkedin mines its own data for stats on what makes an entrepreneur, Dan Ariely thinks algorithms should replace financial advisors; how old is human brain chemistry? And a Rutgers study shows most unemployed Americans wish they were younger.


Congratulations, You've Lost! How Slot Machines Disguise Losses as Wins

Casinos are designed for a single purpose: to separate you from your money. And they’re good at it. Commercial casinos in the U.S. made nearly $35 billion in revenue last year, up a percent from 2009.
While they represent just a fraction of that revenue, slot machines are the casino gateway drug for the least savvy gamblers. It’s why they’re by the door. More than any other casino game, slots condition people to keep playing through positive reinforcement (bells and whistles). And the odds have gotten worse as technology has improved.
Though today’s sophisticated multi-line machines have a higher “win-rate,” the amount won is negligible, and often less than what was originally gambled. A recent study by researchers at the University of Waterloo in Ontario, finds that these multi-line machines are more effective than their single-line predecessors at taking money from the gambler by disguising losses as wins.


Study Shows School Uniforms Improve Attendance, But Not Grades

The school uniform debate isn’t exactly raging these days, but there’s still data to be gathered and examined as to how slacks and blazers affect school kids. According to a new study by researchers at the University of Houston, school uniforms seem to be decently effective at improving student attendance and teacher retention, but have no real impact on improving student achievement. For their data, researchers looked at the effects school uniforms had on a large urban school district in the Southwest United States.
Here’s the abstract:


Are Sex Offender Laws Backfiring?

A pair of new studies raise questions as to whether sex offender registries and community notification laws actually reduce recidivism of sex offenders, or even lead to lower sex crime rates overall. Both are published in the University of Chicago’s Journal of Law and Economics.
The first study by Jonah Rockoff of Columbia Business School, and J.J. Prescott, a law professor at the University of Michigan, parses out the effectiveness of the two basic types of sex offender laws. While they find that the registration of released sex offenders is associated with a 13% decrease in crime from the sample mean, public notification laws proved to be counterproductive, and led to slightly higher rates of sex crime because of what the authors refer to as a “relative utility effect”:

Our results suggest that community notification deters first-time sex offenders, but may increase recidivism by registered offenders by increasing the relative attractiveness of criminal behavior. This finding is consistent with work by criminologists showing that notification may contribute to recidivism by imposing social and financial costs on registered sex offenders and, as a result, making non-criminal activity relatively less attractive.
…[C]onvicted sex offenders become more likely to commit crime when their information is made public because the associated psychological, social, or financial costs make crime more attractive.


Were Colonial Americans More Literate than Americans Today?

In 1776, one book, written in complex language, sold over 120,000 copies in Colonial America. That number does seem large on its own. However, to give it even more meaning, I like to convert it to an equivalent number today.
This conversion is a task for proportional reasoning—one of my favorite tools for finding meaning in the numbers that surround us. First convert 120,000 into a fraction of the U.S. population in 1776: compared to the population at the time of 2.5 million, 120,000 is roughly 1 in 20, or 5%. Today’s U.S. population is about 300 million—of which 5% is 15 million.
Fifteen million copies today! More surprisingly, Common Sense by Thomas Paine sold this equivalent in just three months. In its first year, it sold 500,000 copies, or 20% of the colonial population. Today’s equivalent is 60 million copies. On Wikipedia’s list of bestselling books, all books that have sold that many or more copies have done so over a much longer time. The shortest time is 8 years, for The Da Vinci Code; several others, such as Heidi, were published in the 19th century.
Another surprise arrives upon opening Common Sense: the sophistication of the writing and reasoning.


Another U.S. Solar Firm Goes Bust

Two weeks ago, Steve Sexton wrote about the bankruptcy of Evergreen Solar in Massachusetts. Today it’s California’s Solyndra that’s shutting down.
From the Washington Post:

The unexpected announcement raised questions about whether taxpayers would be responsible for the entire $535 million in loans that the company used to build a Silicon Valley factory. The wisdom of loan guarantees granted to the company by the Obama administration had already been questioned by government auditors and been the target of a subpoena from House Republicans.
The start-up venture has long been an administration favorite, and its Fremont, Calif., factory received visits from both the president and Energy Secretary Steve Chu. Both used their visits to praise the company for creating jobs and leading the way into a new economy fueled by green energy businesses.


Our Future Looks Fat: Study Predicts Nearly Half the U.S. Population Will be Obese by 2030

The results of a new study by public health researchers at Columbia University and Oxford University forecasts that by 2030, there will be an additional 65 million obese adults living in the U. S., and 11 million more in the U.K. That would bring the U.S. obese population up from 99 million to 164 million, roughly half the population. The findings suggest that as a result, medical costs associated with the treatment of preventable diseases (diabetes, heart disease, stroke, cancer) will increase somewhere between $48 billion and $66 billion per year, in the U.S. alone
The study, published in the Aug. 27 issue of The Lancet, was led by Y. Claire Wang of Columbia’s Mailman School of Public Health.


The Music Industry Copyright Battle: When is Owning More Like Renting?

A rash of recent news articles (like here and here) have noted that in a little over a year, an obscure provision of U.S. copyright law takes effect – one which allows songwriters and musicians to exercise their “termination rights” and take back from the record labels many thousands of songs they licensed 35 years ago.
So, for example, Boston will be able to take back Don’t Look Back. Gloria Gaynor can repo Love Tracks, and Elvis Costello can reclaim This Year’s Model. Less auspiciously, Kiss guitarist Ace Frehley can reclaim his entire solo album. (The music industry may not mind losing this one.) And every Jan. 1, a whole new crop of artists looking to lay claim to their termination rights will appear.
The music industry, already reeling from online piracy and digital downloads, is fighting back against what they see as the looming loss of their property—and the huge profits that still come from some of these records. Why would Congress create a system where, 35 years after making a record that no one knew for sure would be a hit, musicians could take back control—and profits—over the best-selling songs?


Paging Rick Perry's Texas Doctors

Texas Gov. Rick Perry claims to have lured many doctors to Texas, some of the many jobs he claims to have created. (The media’s treatment of which we’ve touched on here.) At the same time, a friend on the board of a local community health center says they cannot find doctors to staff it—there is an insufficient supply at the wage they have always been paying. How can this be consistent with Perry’s claim?
One possibility is that the reduction in malpractice insurance costs raised the net wage in the private sector relative to the public sector. Even if Perry’s claim is correct, there may be more doctors than before, but relative supply may have shifted to the private sector, leading to a shortage in the public sector.


What if We Paid Bank Regulators for Performance?

Well then they probably wouldn’t make much money would they? Zing! No but seriously. A new paper by two law professors, Frederick Tung of Boston University and M. Todd Henderson of Chicago, proposes just that. Here’s the abstract (with a link to the full paper):
The authors are essentially proposing giving regulators stakes in the banks they oversee, by tying their bonuses to the changing value of the banks’ securities, theoretically giving them a motive to intervene when things look dicey. If the incentives are well designed, the authors argue, regulators would capture the benefits that accrue from making banks more valuable, and suffer the negative consequences when banks fail.


Why Do Housing Vouchers Lead to Fewer Deaths Among Young Girls, But Not Boys?

A new NBER working paper by Brian Jacob, Jens Ludwig and Douglas Miller examines how improved housing conditions impact child mortality rates in Chicago. The improvement in child mortality seems to apply only to girls, and not boys. The data come from Chicago’s resuscitated housing voucher system, from 1997 through 2005. Here’s the abstract:
The study builds on the findings of the federal government’s Moving to Opportunity experiment, which started in the mid-1990s and offered randomly chosen residents of public housing the chance to move to a wealthier neighborhood (poverty below 10%). Among adults, rates of obesity and mental health problems declined, but the effects were mixed on the risky behaviors of kids. Girls did better, while boys did worse.