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Archive for 2012

Tyler Cowen on Wal-Mart and World Hunger

Arabic Knowledge@Wharton interviews Tyler Cowen about food and economics.  Here’s a particularly interesting bit about why Wal-Mart’s presence in places like Africa might actually make it easier for the poor people to buy food there:

Cowen: If you look at wheat and rice, there have been price spikes over the last five years and they’ve made food a lot harder for poor people to afford. The so-called “Green Revolution” has somewhat slowed down. This is an unreported story. Crop yields are stagnant. It isn’t a problem we can solve overnight but it’s really one of the biggest problems in the world. It hardly gets any publicity. But for poor people in India, the Middle East and parts of Africa, it really matters.

Some of the problems are we don’t have enough trade. It could be either legal barriers or just costly to transport or trade things. If there could be a shortage of rice in one place, it actually not that easy to ship a lot of rice in there because of bad roads and so on.


The Cost of Friendship

Interesting if perhaps not so surprising: in a new working paper called “The Cost of Friendship,” Paul Gompers, Vladimir Mukharlyamov, and Yuhai Xuan argue that even in as performance-based an industry as venture capital, people tend to collaborate with people who have similar backgrounds, often to their detriment:

This paper explores two broad questions on collaboration between individuals.  First, we investigate what personal characteristics affect people’s desire to work together.  Second, given the influence of these personal characteristics, we analyze whether this attraction enhances or detracts from performance.    Addressing these problems in the venture capital syndication setting, we show that venture capitalists exhibit strong detrimental homophily in their co-investment decisions.  We find that individual venture capitalists choose to collaborate with other venture capitalists for both ability-based characteristics (e.g., whether both individuals in a dyad obtained a degree from a top university) and affinity-based characteristics (e.g., whether individuals in a pair share the same ethnic background, attended the same school, or worked for the same employer previously). 


Extreme Locavorism

As part of The Decolonizing Diet Project, a new study at the School of Native American Studies at Northern Michigan University, a group of 25 volunteers will spend the next year eating primarily foods that “were part of the Great Lakes diet prior to the year 1600.” As the blog Found Michigan explains:

The purpose of the study is to explore the relationship between humans and regional native foods; components include an ethnobotanist (for native plant identification), a physician (to check up on participants’ physical changes), group outings and potlucks, daily journaling for research subjects, and a master list of “DDP-eligible” foods. So, things like squash, bison, and wild leeks are in; things like tomatoes, cheese, and chocolate are out. What can’t be bought from local suppliers must be grown, hunted, fished, or foraged—meaning your next meal might be waiting in the woods as opposed to the grocery store.


Is College Worth It? Non-Grads Say Yes

Notwithstanding the ongoing controversy over rising college tuition costs, there’s one group of people who think that college is worth the cost: people who haven’t gone. Catherine Rampell of Economix blogs about a new survey of recent high school graduates:

Seven in 10 of these recent graduates said they would need more education if they were to have a successful career. Despite their belief in the value of post-secondary education, though, only 38 per cent definitely planned to attend college to get more education in the next five years. Barriers included skyrocketing tuitions and family obligations.

Many of the respondents felt differently at the start of high school — 35 per cent thought they would “definitely” go to college and 28 percent believed they would “probably” go.  Minority students were even more optimistic at the start of high school:


Kids, Don't Try This at Home — Olympic Edition

Am in London for work and, as always, delight in reading the newspapers here. From today’s Telegraph, my favorite article:

Accident and emergency departments have seen a 15 per cent rise in sports injuries as an unfortunate side effect of Olympic fever, figures show. Young men and boys are the most likely to be treated and peak times are Saturday afternoons and lunchtime Sundays. The figures indicate more people may be taking up sport in the run up to the Euro 2012 football tournament and the London Olympics. However more are ending up needing emergency treatment after knocks, cuts, sprains and strains, broken bones and head injuries, officials NHS figures show.


What China Censors

A new paper from Gary King, Jennifer Pan, and Margaret Roberts analyzes “millions of social media posts originating from nearly 1,400 different social media services all over China before the Chinese government is able to find, evaluate, and censor (i.e., remove from the Internet) the large subset they deem objectionable.”  Here’s what they found:

Contrary to previous understandings, posts with negative, even vitriolic, criticism of the state, its leaders, and its policies are not more likely to be censored. Instead, we show that the censorship program is aimed at curtailing collective action by silencing comments that represent, reinforce, or spur social mobilization, regardless of content. Censorship is oriented toward attempting to forestall collective activities that are occurring now or may occur in the future — and, as such, seem to clearly expose government intent, such as examples we offer where sharp increases in censorship presage government action outside the Internet.


A Cheaper Way to Stop Malaria?

Scientists are working on genetically altering bugs  to eliminate the spread of diseases like malaria and the West Nile virus. A  Pacific Standard article describes the research:

Some researchers, including the Australians and groups at Johns Hopkins University in Baltimore, are smuggling a hitchhiking bacteria into the dengue-carrying mosquitoes that prevents them from passing on the virus. A British team is tinkering with DNA to either significantly reduce the lifespan of malaria-carrying mosquitoes (known as Anopheles) or kill females when they are just embryos. Either method would cause a population crash. In James’s lab in Southern California, scientists are working on similar techniques.

What these methods all share is the promise of blanket protection: they can theoretically kill or disable mosquitoes that insecticides miss—bugs nesting in hidden pools of water, for instance, or that lay eggs in storm drains or flower pots. What’s more, bioengineering bugs is relatively cheap and doesn’t require toxic pesticides.


Paying for "Transparently Useless Advice"

According to a new study, people do. Even when they know that the advice is useless.

Researchers Nattavudh Powdthavee and Yohanes E. Riyanto investigated why people pay for advice about the future, particularly since the future is generally unpredictable (see our  “Folly of Prediction” podcast on this topic). Their starting point:

Why do humans pay for advice about the future when most future events are predominantly random? What explains, e.g., the significant money spent in the finance industry on people who appear to be commenting about random walks, payments for services by witchdoctors, or some other false-expert setting?


Bring Your Food Questions for Foodie Economist Tyler Cowen

Our latest full-length podcasts are “You Eat What You Are,” Parts 1 and 2. They were inspired in part by Tyler Cowen‘s latest book An Economist Gets Lunch: New Rules for Everyday Foodies. Here’s what I had to say about the book in a blurb: “Tyler Cowen’s latest book is a real treat, probably my favorite thing he’s ever written. It does a fantastic job exploring the economics, culture, esthetics, and realities of food, and delivers a mountain of compelling facts. Most of all it’s encouraging — not a screed, despite its occasionally serious arguments — and brings the fun back to eating. Delicious!”


Pedaling and Charging

People multitask (in economists’ language, “engage in joint production”) in a surprising variety of ways.  A neat example appeared in Brussels Airport, with a sign saying “charge your phone and laptop.” But the charging was done by you sitting on a saddle and peddling a machine that generated the power charging your device.  This combination of activities illustrates the difficulty in classifying activities:  Was it work or was it leisure (exercise), to pick two of the major aggregates that I use in my research?  Was it an investment of time or was it consumption?  In this and many other ways, changing technology renders rapidly obsolete the categories we have created to classify things and activities.


Recycling for Songs

Reader Peter Danza tipped us off to the way Sweden is trying to incentivize its citizens to return bottles. The reward: free music:

Sweden has a deposit bottle system similar to many other countries – plastic bottles and metal cans carry a deposit value (“pant” in Swedish) of usually 1 or 2 Swedish crowns, equal to about 15 to 25 US cents. This system should take care of itself: Most consumers should return their bottles (to retrieve their money back), and if they carelessly throw them away, there are a whole lot of poorer people who gladly look for bottles in the trash. That’s exactly how it works in Germany. (In fact, when you go out at night with a beer bottle and you’ve emptied it, you’re usually nice enough to put it next to a trash can rather than inside.)

That same system seems to be facing troubles in Sweden, however. So much so that now the bottle deposit organisation Pantamera commenced a campaign to promote returning bottles: If you return a bottle, take a photo of the receipt and send it to their website, you will receive free songs by a well known Swedish DJ.


How to Cheat in Online Courses

An article in Chronicle of Higher Education explains how the increase in online courses has made cheating a lot easier. For example, Bob Smith (not his real name) successfully arranged a test-cheating scheme with several friends.  The tests “pulled questions at random from a bank of possibilities” and could be taken anywhere, but had to be taken within a short window of time each week:

Mr. Smith figured out that the actual number of possible questions in the test bank was pretty small. If he and his friends got together to take the test jointly, they could paste the questions they saw into the shared Google Doc, along with the right or wrong answers. The schemers would go through the test quickly, one at a time, logging their work as they went. The first student often did poorly, since he had never seen the material before, though he would search an online version of the textbook on Google Books for relevant keywords to make informed guesses. The next student did significantly better, thanks to the cheat sheet, and subsequent test-takers upped their scores even further. They took turns going first. Students in the course were allowed to take each test twice, with the two results averaged into a final score.

“So the grades are bouncing back and forth, but we’re all guaranteed an A in the end,” Mr. Smith told me. “We’re playing the system, and we’re playing the system pretty well.”


What's Your Favorite "Edutainment" Podcast?

Freakonomics Radio has been nominated as one of the top “edutainment” podcasts on iTunes, and the biggest vote-getter will be featured on iTunes in July. You can vote here. I will warn you, the competition is very stiff — we’re up against Radiolab (which would probably get my vote, to be honest), the TED Talks podcast, and some other formidables.

I realize it is the height of hypocrisy for us, the guys who say that voting is overvalued, to ask for your vote. But if you don’t mind voting for hypocrites, go ahead and tick the box.


What Surgeons Get Paid, and What Patients Think Surgeons Get Paid

Jared Foran, an orthopedic surgeon in Denver, is a co-author of a new study called “Patient Perception of Physician Reimbursement in Elective Total Hip and Knee Arthroplasty” (PDF here). The authors surveyed 1,200 patients to see how much they thought orthopedic surgeons should make and what Medicare actually pays for a hip or knee replacement.

In an e-mail, Foran describes their results:

On average, patients thought that surgeons should receive $18,501 for total hip replacements,  and $16,822 for total knee replacements. Patients estimated actual Medicare reimbursement to be $11,151 for total hip replacements and $8,902 for total knee replacements.  Seventy per cent of patients stated that Medicare reimbursement was “much lower” than what it should be, and only 1% felt that it was higher than it should be.


Hope and Ye Shall Find

I am not an avid runner but I do it pretty regularly because it is good, cheap, easy exercise. I often run in Central Park. The other day on my run there, it was hotter than usual and I ran further than usual, maybe 5 miles. So I really, really wanted to buy an iced coffee when this ordeal was over. I usually tuck a $5 or $10 bill into my running shorts but I’d forgotten. Oh well.

But then, just a few hundred yards from the end of my run I saw on the ground directly in front of me a suspicious little lump of green paper. I stopped. It was money. Three single dollar bills, crisply folded. Just enough for an iced coffee. I was grateful to whoever dropped it and I hoped it didn’t represent their last three dollars.


Thirty-Two Innovations That Will "Change Your Tomorrow"

The New York Times Magazine‘s “Innovations” issue is a good read. Of the 32 innovations listed, the most interesting to me were Nos. 14, 15, and 16. The appeal of the middle, anyone? Or maybe I’m just a fan of Catherine Rampell, who wrote two of those three.

Here they are:

The Shutup Gun When you aim the SpeechJammer at someone, it records that person’s voice and plays it back to him with a delay of a few hundred milliseconds. This seems to gum up the brain’s cognitive processes — a phenomenon known as delayed auditory feedback — and can painlessly render the person unable to speak.

Kazutaka Kurihara, one of the SpeechJammer’s creators, sees it as a tool to prevent loudmouths from overtaking meetings and public forums, and he’d like to miniaturize his invention so that it can be built into cellphones. “It’s different from conventional weapons such as samurai swords,” Kurihara says. “We hope it will build a more peaceful world.” — Catherine Rampell


Michael Jordan, the Bobcats, and Running the Lottery Treadmill

The Charlotte Bobcats came into existence in 2004.  At the conclusion of the next five seasons, the Bobcats finished out of the playoffs and hence earned a trip to the NBA’s lottery.  

After all of these lottery picks, the Bobcats finally made the playoffs in 2010.  That Bobcat team – the best in franchise history – only won 44 games and failed to win a playoff game.  Nevertheless, this squad was the highlight in the brief history of this team. 

Two short years after this epic campaign (epic by Bobcat standards), Charlotte has posted the worst season in franchise history.  In fact, with a winning percentage of only 0.106, the 2011-12 Bobcats were the worst team in NBA history.

If we look at what happened to Charlotte’s roster, it is easy to see why this team became so bad so quickly.  Back in 2009-10 the Bobcats were led by the following players (Wins Produced numbers taken from theNBAGeek.com, explanation of Wins Produced offered here): Gerald Wallace, Raymond Felton, Boris Diaw, Stephen Jackson, Nazr Mohammed, and Tyson Chandler.   


Your Garbage Questions, Answered

Last week, we solicited your questions for journalist Edward Humes, who seems to love trash as much as we do. His new book is Garbology: Our Dirty Love Affair with Trash. 

Below are his answers to some of your questions. He writes about New York City’s cleanup, the facts about burning trash and recycling, how incentives work (or fail) when it comes to trash, and, of course, the Great Pacific Garbage Patch.

Thanks to Humes for answering so many questions, and to all of you for your good questions (and candor).


A Year in the Life of an American Soldier

In honor of Memorial Day, Foreign Policy  published a fantastic photo essay on a year in the life of an American soldier.  “It has been a tumultuous year for the U.S. Armed Services,” the magazine writes, “one that included the complete withdrawal of troops from Iraq and preparations for a dramatic drawdown of combat troops in Afghanistan, the end of the Don’t Ask, Don’t Tell policy, the removal of a dictator in Libya, and a strategic pivot to Asia. At the same time, the American military has weathered a scandal over burning Qurans in Afghanistan and stared down the barrel of a looming budget fight in Congress.”  The essay includes images of soldiers training in the U.S. and elsewhere, patrolling and in combat in Afghanistan, and returning home.


Training to Save in Ghana

Freakonomics fans will already know that financial literacy is a hot issue for researchers – it’s in everybody’s best interest to get people making better financial decisions, but frankly, we’re not terribly good at it.  The natural response is that if you just explain to people how to make better decisions, they’ll do it, but as we’ve heard in the podcast, it ain’t necessarily so. Just taking rational, clear-thinking adults and explaining how to make better financial decisions makes them feel good, but doesn’t necessarily help them make better decisions.

So we wondered if we could fix the problem by backing up the process and starting early, when kids were still in school.  And we decided to do it in a place where people can use all the financial help they can get – Ghana, which has one of the lowest savings rates in Africa.


Pricing in the Land of Beers

Belgium prides itself on being “The Land of Beers.”  A Belgian student tells me that this pride leads to some unusual pricing policies among the less well-known breweries.  Apparently, many charge a higher price for their products when they are sold within the local area around the brewery, since people are proud of their local brand.  This is a clear example of demand-based price discrimination.  The average cost of selling locally is probably below that of selling elsewhere (lower transportation costs); but locals’ pride in the native tipple gives the brewers some monopoly power, which they are happy to exploit.  The brewers are made better off (higher profits) by the locals’ behavior; and the local people must be better off, otherwise they would choose different brews.


What Would Tyler Say?

Economist Tyler Cowen‘s Twitter feed was recently hacked — for the purposes of selling a weight-loss product.  In response, and following in the heels of his successful and hilarious #FedValentines economics meme, our own Justin Wolfers proposed a new project — #tylertweets.  Some of our favorites:

  • The best Whoppers are to be found at BKs attached to gas stations, but avoid if they advertise clean restrooms. –Art Carden @artcarden
  • cannibalism is wrong, but not for the reasons its critics say. We ignore the wisdom of cannibals at our peril. -@ModeledBehavior
  • My #tylertweets involve the Gold Standard, two albino goldfish, a braised goat and Paul Krugman in a small town in Mexico. –Justin Wolfers @justinwolfers

The Vegas Strip Steak Patent

We’ve noted before on this blog that food receives limited protection from copying. But that doesn’t mean it receives no protection. As we all know, Coca-Cola’s secret formula is still secret. And sometimes food companies patent novel (and not so novel) dishes and techniques.

Patent and “trade secret” (the legal right Coke relies on) present very different economic benefits, however. Trade secret is forever—if the secret can be kept secret. Patent, by contrast, lasts 20 years and protects the invention against any copyist. More importantly, patent is fundamentally based on disclosure: to patent something, you have to explain how it works.

How do firms choose between the two? That’s a big question. But we can get a window on it by looking at something that has been in the news lately—the so-called  “Vegas Strip Steak.”


The Future of Repugnance

Al Roth, whom we’ve blogged about in the past, is known (to me, at least) as the King of Repugnance.

Not that Roth is himself in any way repugnant (quite the opposite), but he is masterful at  thinking about the kind of transactions that we find morally or ethically or otherwise disturbing and how the trends of repugnance shift over time.

For a forthcoming book anthology called In 100 Years (inspired, Roth tells us, by a 1930 essay by Keynes called “Economic Possibilities of Our Grandchildren"), Roth has written an essay (PDF here) about the future of repugnance:


Churchill Style

I have a friend named Barry Singer, an author who also runs a bookshop that specializes in Churchillania.

He has now combined all these passions to write a book called Churchill Style: The Art of Being Winston Churchill. It seems at first glance to be mainly a guide to what Churchill ate, drank, smoked, and wore but it truly is a phenomenal book in that it also brings us deeply into how Churchill thought, struggled, and persevered in his personal and political lives.


When the Internet Brings You a Piece of Your Own Past

Oh, internet, how I do love thee!

You deliver things daily to my doorstep that I didn’t know I wanted, that I didn’t even know existed, but which instantly put a lapidary glow on a humdrum day.

The latest example concerns my father. His name was Solomon Paul Dubner; he died when I was 10; he was a newspaperman; I wrote about him at length in my first book, for which I thought I’d read everything he wrote.

But the internet — or, really, a blog post on the Schenectady County (N.Y.) Historical Society Library site — delivered this nugget about a fascinating place called the Dialogue Coffee House in Schenectady. It is described as:

“[A] non-profit organization aimed at creating dialogue among members of the local community. The organization’s coffee house hosted presentations and open dialogues about a number of topics, including social, economic, and political issues, local politics and government, civil rights, the war in Vietnam, visual and performing arts, health, religion and spirituality, psychology, labor issues, education, morality, and the nature of dialogue. While controversial topics were often featured at the Dialogue Coffee House, the atmosphere tended toward conversation rather than debate. In addition to open discussions and presentations, the coffee house also provided a space for underground films, musical performances, and plays as an impetus for dialogue.”