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Archive for 2011

The Inefficiency of Local Food

Two members of Congress earlier this month introduced legislation advancing a food reform movement promising to help resolve the great environmental and nutritional problems of the early 21st century. The intent is to remake the agricultural landscape to look more like it did decades ago. But unless the most basic laws of economics cease to hold, the smallholder farming future envisioned by the local farming movement could jeopardize natural habitat and climate change mitigation efforts, while also endangering a tenuous and temporary victory in the battle against human hunger.

The “Local Farms, Food and Jobs Act” sponsored by Senator Sherrod Brown of Ohio and Representative Chellie Pingree of Maine, throws about $200 million to local farm programs. That’s a rounding error in the $3.7 trillion federal budget. But the bill follows on a federal rule that gives preference to local farms in contract bidding for school lunches. It also builds on high-profile advocacy by Michelle Obama, who has become a leader of the food reform movement, joining the likes of Michael Pollan, the author of The Omnivore’s Dilemma, and famed-chef Alice Waters. The bill’s introduction came as the world population hit 7 billion, a milestone that provides a stark reminder of the challenge agriculture faces to feed a world population expected to grow to 9 billion by 2050.


The Italian Debacle and the "Church of 'Scionology'"

The takeaways from our “Church of ‘Scionology'” radio program were as follows:

+ Economists have found that family firms that pass the company down to the next generation perform worse than if they had brought in professional management.

+ Family firms are particularly dominant in less-developed countries, which tend to have weaker markets and rule of law. Here’s Vikas Mehrotra on that point:

In the developed world, you have good contracting environments, a good system of law enforcement, and so on. So, in the developed world, you can hire professional managers and expect a certain, you know, sticking to the contract law, and so on. It’s rather more difficult to have the same kind of adherence to the rule of law in emerging economies. So, in emerging economies, family firms sort of provide a second-best solution to this poorly developed institutional problem.


"Football Freakonomics": Why Even Ice a Kicker?

The following is a cross-post from NFL.com, where we’ve recently launched a Football Freakonomics Project.

Icing the kicker: Even casual football fans have come to expect that when a game is on the line and the kicker is brought out to try a crucial field goal, the opposing coach might call a timeout just as the kicker approaches the ball.

Makes sense, doesn’t it? The coach can “ice” the kicker — mess with his mind, throw off his routine, make him stand around like an awkward guy at a cocktail party for all the world to see.

But does it work?


It's No Major Major Major Major, But …

… this was still a puzzling sign to behold. It’s on Lenox Ave. (a.k.a. Malcolm X Blvd.), in the southern end of Harlem:

Did your mind get stuck for a minute when it read those words, or did it quickly skip ahead and fill in a blank? (Danny Kahneman writes nicely about this phenomenon in Thinking, Fast and Slow.)

Once you walk a few steps further south, the sign becomes complete.


Famous Boos

Our latest Freakonomics Radio podcast, “Boo…Who?“, tackles the phenomenon of booing. Why do we do it? When and where (if ever) is it appropriate? While we focus mostly on modern examples, audiences have been voicing their displeasure for millennia. Tracing the boo back to its origins takes you to ancient Greece, and the Festival of Dionysia, when playwrights competed to determine whose tragedy was the best. Audience participation was considered a civic duty. At the Colosseum in Rome, booing, or the lack thereof, often determined whether a gladiator lived or died.

Hard to say exactly what a boo sounded like back then. Maybe more of a shout, a jeer, or a whistle, rather than the extended, cow-like booooooo we issue today. According to linguist Ben Zimmer, the first time the word “boo” appeared as an expression of dissatisfaction was in the diary of a British schoolboy in 1833. Zimmer wrote about it here. Below, we’ve compiled a list of some noteworthy boos. It is not remotely encyclopedic, and leans very heavily on very recent events. So feel free to supplement with more examples in the comments section.


Healthcare Needs Insurance Companies Like a Fish Needs a Bicycle

My reveries about toasts landing butter side down — the subject of an upcoming blog entry — were pleasantly broken by the discussion on this blog of Ezekiel Emanuel’s analysis of healthcare spending, in which Emanuel goes to town on Left and Right policy ideas for cutting spending. Among his criticisms of Left ideas:

[I]t turns out that the combined profits of the country’s five largest for-profit health insurance companies — United, WellPoint, Aetna, Humana and Cigna — were $11.7 billion, only 0.5 percent of total health-care spending. Even confiscating every penny of those profits would add up to less than half of the cost-saving threshold.

I liked how he quoted the savings as a dimensionless number (the percentage of total healthcare spending).


For White Girls, a Bigger Penalty for Being Obese

We hear increasingly about the healthcare costs of obesity; but what about social costs?

A forthcoming Economics and Human Biology paper (abstract here; PDF here) by Mir Ali, Aliaksandr Amialchuk, and John Rizzo, titled “The Influence of Body Weight on Social Network Ties Among Adolescents,” makes this interesting argument:

We find that obese adolescents have fewer friends and are less socially integrated than their non-obese counterparts. We also find that such penalties in friendship networks are present among whites but not African-Americans or Hispanics, with the largest effect among white females.


FREAK-est Links

This week, the CIA uses social media to track our feelings; are you sure that’s honey you’re buying? More gruesome news from the organ black market; New study says we over-eat in order to social climb; Americans have fewer close friends than we used to; and the White House officially responds to petition demanding the truth about ET.


For Salespeople in Need of a Self-Esteem Boost …

In Book 2 of Plato’s Republic, Adeimantus poses a question worthy of an economics seminar:

Suppose now that a husbandman, or an artisan, brings some production to market, and he comes at a time when there is no one to exchange with him — is he to leave his calling and sit idle in the market-place?

Socrates replies:

Not at all; he will find people there who, seeing the want, undertake the office of salesmen. In well-ordered States they are commonly those who are the weakest in bodily strength, and therefore of little use for any other purpose; their duty is to be in the market, and to give money in exchange for goods to those who desire to sell and to take money from those who desire to buy.

All right, the “weakest in bodily strength” crack isn’t so nice, but it is nice to see Socrates (and Plato) give credit where credit is due — to the hardworking salespeople and money-handlers who keep our commerce flowing.

(HT: Carlos Eduardo Soares Concalves, via JPE.)


More Odd News from the World of Sumo Wrestling

One of the few international topics covered in the original Freakonomics was the chapter describing how sumo wrestlers collude to throw matches. Over the years, the sport has provided plenty of odd fodder for the blog. By that measure, the latest bizarre scandal that’s shaking the sumo world does not disappoint.

On Oct. 29, news broke that a top “sumo elder” was under investigation for abusing former apprentices. Details from The Japan Times:

Japan Sumo Association chief Hanaregoma has launched an investigation into allegations by a weekly magazine that sumo elder Naruto once beat a former apprentice with a block of wood and injected Czech-born wrestler Takanoyama with insulin in an attempt to increase his appetite so he could bulk up.

The article claims Naruto beat the apprentice wrestler with a block of wood if the taste of the protein-loaded “chankonabe” hot pot was not to his satisfaction. It also said he hit former sekiwake Wakanosato over the head with a shovel and injected Takanoyama with insulin to increase his appetite during the year before last, when he was in the third-tier makushita division.


Why Does the Worldwide Financial Crisis Fester So?

In today’s Journal, David Wessel nails it. (If you ask me, Wessel nails it consistently.) First, he asks the question that needs to be asked:

It has been two years since the flames were first spotted in Greece, yet the blaze still hasn’t been put out. Now it has spread to Italy.

It’s been five years since the U.S. housing bubble burst. Housing remains among the biggest reasons the U.S. economy is doing so poorly.

On both continents, there is no longer any doubt about the severity of the threat or the urgent need for better policies. Yet the players seem spectacularly unable to act.

What’s taking so long?


Steve Jobs's Final Product?

As a fan of both Walter Isaacson and of Apple products, I have happily begun reading (along with a few million others) the new Steve Jobs biography. So far I find it to be as compelling as expected. Just a few pages into it, I was struck by this thought: as much as Jobs is known for the iPod, iPhone, iPad, etc., I couldn’t help but think that the book itself is in some ways Jobs’s final product.

In the introduction, “How This Book Came To Be,” Isaacson — who, it should be clear, is a true heavyweight — relates how Jobs approached and repeatedly pursued him to write the book. The terms were clear: Jobs would participate fully, and give others (including those who might be hostile to him) the go-ahead to do the same, and Jobs would have no right to approve or edit material. “He didn’t seek any control over what I wrote, or even ask to read it in advance,” Isaacson writes. That said, it becomes clear that Jobs was infinitely interested in shaping the book. To wit:

His only involvement came when my publisher was choosing the cover art. When he saw an early version of a proposed over treatment, he disliked it so much that he asked to have input in designing a new version. I was both amused and willing, so I readily assented.


A Strange Study on Italian Nepotism

These are dark days for Italy. The country’s bond yields are way up; Prime Minister Silvio Berlusconi looks to be on his way out. And Italian soccer superstar Antonio Cassano is in the hospital recovering from a suspected stroke.

What better time then to blog about a strange new study about Italian nepotism? Authors Ruben Durante, Giovanna Labartino and Roberto Perotti study the effects that a 1998 law decentralizing the hiring process at Italian universities had on levels of nepotism. Pre-1998, candidates for academic positions were selected through a national process. After 1998, however, universities were given the power to hire their own professors. The researchers found that this decentralization led to increased nepotism in areas of “low civic capital,” but not in areas of “high civic capital.”


An Unintended Consequence of a Housing Database?

A recent Times article describes a new interactive database put together by NYU that lets you track all subsidized housing in the city.

As the article makes clear, this database performs a variety of worthwhile functions — allowing renters or buyers to locate affordable housing; letting affordable-housing advocates keep track of when subsidized buildings are scheduled to potentially lose their subsidized status; etc.

There’s one potential function the article didn’t mention, however. Am I a cynic (or a jerk, or maybe just a realist) for thinking that this database will also be used by renters and homebuyers eager to avoid neighborhoods that have a lot of subsidized housing?


UCLA's Crime Fighting Mathematicians

A team of mathematicians at UCLA have created an algorithm that can identify with relative accuracy which Los Angeles gang is responsible for an unsolved crime. When tested against cases with a known culprit, the mathematicians could correctly list the gang rivalry involved (out of the three most likely rivalries) about 80 percent of the time. Of these options, they ranked the responsible gang first about 50 percent of the time.

To develop their technique, the mathematicians studied a combination of solved and unsolved gang crimes throughout East L.A. over ten years. Explaining the process, author Andrea Bertozzi, director of applied mathematics at UCLA, says:

If police believe a crime might have been committed by one of seven or eight rival gangs, our method would look at recent historical events in the area and compute probabilities as to which of these gangs are most likely to have committed crime.


Democracy, Live and in Concert

At Saturday’s concert by the Chamber Orchestra Kremlin, the program offered a menu for the second half: The audience was to vote on whether it wished to hear the Tschaikovsky Serenade, the Dvorák Serenade, or Schubert’s Death and the Maiden Quartet (arranged for small string orchestra). After the intermission, the conductor briefly discussed each composer and described each piece, then asked for a show of hands.

I was worried: What if a plurality favored the Schubert (my choice), but the Dvorák had been a close second, with a majority of people vehemently against hearing the Schubert performed by anything other than four string instruments? I don’t imagine that second-preference voting would have been possible (fancier voting schemes regrettably generate larger transactions costs), so we would have listened to the Schubert even though more people would have been better off with the Dvorák.

Fortunately, a small majority of the audience shared my preference and we achieved the first-best (and heard a wonderful performance)!


The Silver Lining of More Cancer Deaths

A National Post graphic does a good job showing causes of death across Canada by percentage, and notes that, for the first time, cancer is the leading cause in every province, responsible for about 30 percent of all deaths. That is a heartbreaking number, not least because cancer is a disease (or set of diseases, really) about which so much is still unknown.

As we wrote in a section of SuperFreakonomics called “We’re still getting our butts kicked by cancer,” seeing cancer statistics like this might naturally lead one to conclude that the “war on cancer” has been a dismal failure. That, however, would be an overstatement. While it’s true that we are, as one oncologist told us, “still getting our butts kicked,” there is somewhat of a silver lining in the cancer death rate.


"Football Freakonomics": Tradeoffs Are Everywhere

The following is a cross-post from NFL.com, where we’ve recently launched a Football Freakonomics Project.

Economics is all about tradeoffs. If you want to buy a top-tier performance car, it’ll cost you a lot more than a Camry. If you’re looking for an investment that’ll set you up for life, you have to be willing to take on more risk.

NFL personnel decisions involve the same kind of tradeoffs. Better players generally cost more. Bigger players are generally slower. Just look at the NFL Draft, and how hard it is to balance all these tradeoffs when making your picks – especially when you’re spending huge money on a team leader whose future is impossible to predict. (We explored this puzzle earlier in “The Quarterback Quandary.”)

In this installment of “Football Freakonomics,” we look at a different kind of tradeoff – the decision of how to handle a player who’s gotten in trouble off the field. Unfortunately, you don’t have to think very hard to come up with a lot of big names from the recent past: Michael Vick, Ben Roethlisberger, and Plaxico Burress, to name just a few.

With guys like these, the tradeoff is pretty clear. The player has already proven his value on the field, so that’s the upside. But will his off-the-field trouble follow him back into the game? And then you’ve got to wonder how his physical performance will be affected by his time off for bad behavior.

It would be nice to be able to give a purely scientific answer to the following question: After getting into big off-the-field trouble, do players tend to perform better, the same, or worse?


Fertility: Canadian Pioneer Style

Pioneers breed like rabbits, or so says a new study published in Science and reviewed in Scientific American. The study analyzed marriage and birth records in Canada’s Charlevoix Saguenay Lac-Saint-Jean region (northeast of Quebec City) and found that “families living on the edges of the expansions had 20 percent more children than families living at the settlement’s core. They also married one year earlier, on average, and contributed up to four times more genes to the region’s current population.” Henry Harpending, an anthropologist unaffiliated with the study, compares the behavior of pioneers to plant species:


Dad-or-Daughter Contest: We Have a Winner

I’m happy to announce that Elizabeth Simpson won the Dad-or-Daughter Songwriting Contest by correctly identifying Friend Zone as the song that I coauthored with my daughter, as well as correctly identifying a line in that song that I composed (“But you just laughed it off and said we’d always be bros”), and a line in the song that Anna composed (“I bought a shirt today with your favorite band.”).

Elizabeth turns out to be a former student from my 2006 small group in contracts. In her email, she describes the method behind her entry:


Drops in the Bucket: How Far Along Are We Really Toward Reducing Healthcare Spending?

This is a guest post by Jeff Mosenkis, a freelance producer with Freakonomics Radio who holds a Ph.D. in psychology and comparative human development.

Ezekiel Emanuel has a series of columns in the New York Times exploring healthcare costs that’s worth examining. Emanuel is an oncologist and prolific bioethicist. He has an M.D. and a Ph.D. in political philosophy from Harvard, where he also taught. He advised the White House on healthcare, and was recently named chair of the bioethics department at Penn. And yes, he’s the older brother of Chicago mayor Rahm Emanuel, and Hollywood agent Ari Emanuel (fictionalized by Jeremy Piven on Entourage).

Two weeks ago, Emanuel pointed out that even though the U.S. outspends every other country on healthcare ($2.6 trillion a year; the equivalent of France’s entire GDP), we’re nowhere near the healthiest country. This week, he debunks ideas from the Left and Right about how to fix soaring costs.


Cockpit Confidential: How Difficult Was That Landing in Poland?

In the past, we’ve brought you the airline expertise of Captain Steve. Now, in a new feature we’re calling “Cockpit Confidential,” commercial airline pilot Patrick Smith writes about the hidden side of the airline industry. First up, Smith takes you behind the scenes of the recent belly-landing of a Polish Airlines 767, looking at what the media got wrong and what was likely going on inside the cockpit as the crew scrambled to deal with an almost unprecedented situation.


How Smart Is the Octopus?

We’ve blogged extensively about the often human-like behavior of monkeys, but here’s another animal that may give monkeys a run for their money: the octopus.

“Only recently have scientists accorded chimpanzees, so closely related to humans we can share blood transfusions, the dignity of having a mind,” writes Sy Montgomery in a new article for Orion Magazine. “But now, increasingly, researchers who study octopuses are convinced that these boneless, alien animals—creatures whose ancestors diverged from the lineage that would lead to ours roughly 500 to 700 million years ago—have developed intelligence, emotions, and individual personalities.”

Here’s one example of the animal’s intelligence:


The Pricing Strategy of Omelets

A café in Seattle offers a 3-egg omelet breakfast for $7.99, and a 6-egg omelet breakfast for $9.99. They will let two people split the 6-egg omelet, and even let the two people order one slice of different kinds of toast with the shared omelet. Is this pricing strategy crazy?

Perhaps, but unless each person would order a 3-egg omelet otherwise and pay $15.98, perhaps not. The marginal cost of making the 6-egg omelet is really just the 3 eggs, which cost much less than $2. The good deal on the shared 6-egg omelet induces a couple to split it, and stuff themselves, rather than split a 3-egg omelet, which my wife and I often do. The incentives provided by this pricing decision may actually raise the café’s profits.

(HT to MH)


"Football Freakonomics": Controversy

In this segment of “Football Freakonomics,” Dubner looks at how players perform after returning from controversial suspensions and jail-time.


The Academic Origins of China's One Child Policy

In our latest Freakonomics Radio podcast, “Misadventures in Baby-Making,” we describe an academic paper by a Dutch mathematics professor that might have been one of the inspirations of the controversial One Child Policy in China.

Here’s the story: in the early 1970s, Geert Jan Olsder co-authored the paper “Population Planning; a Distributed Time Optimal Control Problem.” He saw population as a mathematical constraint problem, where an optimal birth rate could be found:

“Given a certain initial age profile the population must be “steered” as quickly as possible to another, prescribed, final age profile by means of a suitable chosen birth rate.”

The model considered the natural birth rate and mortality rate, an economic constraint, and time. And like any good empirical scientist, Olsder makes this warning in his paper:

“This paper is not concerned with the social and political problems involved in establishing the best mechanism for a program of population management….The optimal birth rate may unbalance the age distribution during the time interval concerned, which could give rise to economic and social problems.”


Bleg: Most Notable Quote of 2011

I’m starting to think about my annual list, run by the Associated Press, of the top 10 most notable quotations of the year. By “notable” I mean “important” or “famous” or “particularly revealing of the spirit of our times” rather than necessarily being eloquent or admirable. Last year’s winners were a tie between Tony Hayward‘s “I’d like my life back” and Christine O’Donnell‘s “I’m not a witch.”

I would welcome suggestions of notable quotations from 2011, particularly ones from politics or popular culture or entertainment or sports or business or technology.


If You're Looking for a Deal on Tuition…

In stark contrast to the rest of its peers, the University of Charleston, a private university in West Virginia, recently announced a 22 percent tuition cut for new students for the fall 2012 semester. From a recent press release:

The university is guaranteeing that no undergraduate student will pay more than $19,500 for tuition next year. This is a reduction of $5,500 or 22% from 2011-12 tuition of $25,000. Tuition for new freshmen and undergraduate transfer students will be $19,500. Tuition for returning undergraduates next year will be $25,500, with a guarantee of at least $6,000 in university aid, ensuring that no student will pay more than $19,500 in tuition.


FoxConn Is Building an "Empire of Robots"

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.

From the AFP:

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.


When Is the 99% Really the 5%?

A reader comment from the website of a certain well-read newspaper:

Here’s a lesson in economics for OWS. Explain to the “99%” that they are actually in the 5% of richest people on the planet. Then take their wealth and redistribute it to the 95% of the world that is poorer than them. See how they feel about wealth redistribution then.

However you may feel about the sentiment expressed by Tom H., you have to think that his framing skills would be admired by Messrs. Tversky, Kahneman, and Thaler.