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Archive for 2012

Our Daily Bleg: Know Any Top-Tier Management Consultants Who Want to Talk About Their Trade?

We are working on a Freakonomics Radio episode about the management-consulting profession. It was inspired in part by a Robin Hanson blog post about the industry and the fact that Steve Levitt worked as a consultant between undergrad and grad school and has lately rekindled the flame, starting up a firm called The Greatest Good.

We are looking to interview an experienced consultant, preferably with a top firm, who can freely talk about the industry broadly and his or her work specifically.

If you are that person or can recommend such a person, please shoot us an e-mail here. Many thanks.


Mexican Food in America

In our latest podcast “You Eat What You Are, Part 1,” Tyler Cowen talked about the relationship between immigration and food. Gustavo Arellano, author of Taco USA: How Mexican Food Conquered America, has written in Reason a more sentimental account (with historic nuggets) of how Mexican food went mainstream:

Food is a natural conduit of change, evolution, and innovation. Wishing for a foodstuff to remain static, uncorrupted by outside influence — especially in these United States — is as ludicrous an idea as barring new immigrants from entering the country. Yet for more than a century, both sides of the political spectrum have fought to keep Mexican food in a ghetto. From the right has come the canard that the cuisine is unhealthy and alien, a stereotype dating to the days of the Mexican-American War, when urban legend had it that animals wouldn’t eat the corpses of fallen Mexican soldiers due to the high chile content in the decaying flesh. Noah Smithwick, an observer of the aftermath of the Battle of San Jacinto in 1836, claimed “the cattle got to chewing the bones [of Mexican soldiers], which so affected the milk that residents in the vicinity had to dig trenches and bury them.”


Nature’s View of Geoengineering

An editorial in Nature argues that geoengineering needs a charter if research on the topic is to move forward. The journal cites the recent cancellation of the Stratospheric Particle Injection for Climate Engineering (SPICE) experiment due to concerns about “intellectual-property rights, public engagement and the overall governance regime for such work.” Nature argues that resolving the intellectual-property concerns may be the easiest part:

More troubling is the lack of an overarching governance framework. Although the SPICE trial has been cancelled, other tests of geoengineering technology will surely follow. Other work, such as fiddling with clouds to make them more reflective or to try to bring on rain, touches on both climate-change mitigation and weather modification.

Geoengineers should keep trying. They should come together and draft detailed, practical actions that need to be taken to advance governance in the field. Regulation in these cutting-edge and controversial areas needs to be working before the experiments begin, rather than racing to catch up.

We touched on the very tricky governance questions in our SuperFreakonomics chapter about geoengineering:


Solving Problems in the Real World

I owe my favorite local bookstore, the Harvard Bookstore, for making another day for me. Wandering the tall, packed shelves on a warm and breezy evening, I ran across Schaum’s Outline of Principles of Economics. One subtitle on the cover: “964 fully solved problems.” The problems include, for example (from page 50): “True of false: As used in economics, the word demand is synonymous with need,” or “True or false: A surplus exists when the market price is above the equilibrium price.”

I didn’t long much for either answer.

Instead, as the U.S. mortgage market has, as James Kunstler predicted on October 10, 2005, imploded “like a death star” and dragged “every tradable instrument known to man into the quantum vacuum of finance that it create[d],” as euros flee from Greece, and as bank loans dry up in Spain, I wished that the 964 fully solved problems included one or two of the real problems.


Long Commutes: Bad for the Heart

A new study finds that, in addition to being a real downer, long commutes are related to bad health. Conducted by Christine Hoehner, Carolyn E. Barlow, Peg Allen, and Mario Schootman, the study found that long commutes are correlated with higher blood pressure and bigger waistlines.  “This is the first study to show that people who commute long distances to work were less fit, weighed more, were less physically active and had higher blood pressure,” said Hoehner. “All those are strong predictors of heart disease, diabetes, and some cancers.”


Freakonomics Radio on Stitcher

Stitcher is a “smart radio” app that lets you listen to podcasts and live radio on demand. I only heard of it once Stitcher began advertising on Freakonomics Radio, but then I started using it and I have to say I do love it.

As of today, I love Stitcher even a little bit more because it has just launched a Stitcher List of top programs around the world, and guess which program resides at No. 1?

Thanks to Stitcher and thanks to all of you who gobble up our radio program via whatever distribution method you choose. It is most gratifying!


A Memorial Day Post

It’s a beautiful Memorial Day weekend, marked at the American Military Cemetery in Margraten, the Netherlands by American and Dutch flags on the graves.  There are many visitors, almost all Dutch, on this solemn occasion, with the only Americans apparently us and the U.S. military personnel here for the occasion. 

The site brought to mind the commonality of culture and purpose that prevailed in America during World War II, and that many Americans seemed to feel again after 9/11.  The role of a common culture and mutual trust in facilitating the operation of markets by lowering transaction costs cannot be overestimated. Their effect on the civility of political discourse is also crucial.  It’s sad that we moved away so rapidly from that commonality so quickly after 9/11.


Motorcycle Deaths Hold Steady

In SuperFreakonomics: The Illustrated Edition, we explored the bizarre, unintended consequence of repealing motorcycle helmet laws: an increase in human organs available for transplantation.

A new report shows that motorcycle deaths are not dropping. From the Wall Street Journal: 

A report released today by the Governors Highway Safety Association (GHSA) finds that no progress was made in reducing motorcyclist deaths in 2011. Based upon preliminary data from 50 states and the District of Columbia, GHSA projects that motorcycle fatalities remained at about 4,500 in 2011, the same level as 2010. Meanwhile, earlier this month, the National Highway Traffic Safety Administration projected that overall motor vehicle fatalities declined 1.7 percent in 2011, reaching their lowest level since 1949. Motorcycle deaths remain one of the few areas in highway safety where progress is not being made.


Bring Your Questions for Edward Humes, author of Garbology

We are quite fond of talking trash, literally: see our “Economics of Trash” podcast, and our “Weird Recycling” episode, and even the “Power of Poop.”

The journalist Edward Humes is also fascinated with trash. His new book Garbology: Our Dirty Love Affair with Trash is about the 102 tons of garbage the average American produces in a lifetime. Humes writes about what’s in our trash, how different communities deal with it, and how we might could think about trash differently: “Waste is the one environmental and economic harm that ordinary working Americans have the power to change — and prosper in the process.” 

Humes has agreed to field your trash questions, so ask away in the comments section and, as always, we’ll post his answers in short order.


The Busara Center

Behavioral economics has a new testing ground: the Busara Center for Behavioral Economics in Nairobi, Kenya. The lab, which will be open to researchers and students from around the world, is hosted by Innovations for Poverty Action (IPA).  Here’s its website blurb:

Busara is a state-of-the-art facility for experimental studies in behavioral economics and other social sciences, located in Nairobi, Kenya. The core of Busara is a pool of participants from the Nairobi slums, combined with a cluster of 20 networked computers with which researchers can investigate economic behavior and preferences. A central feature of the computer setup is that all computers have touchscreen monitors; together with specially developed paradigms, this allows for the participation of not only computer-illiterate, but entirely illiterate populations.

Johannes Haushofer, the Scientific Director of the Center, gave us a little more information:


Are Voters Just Rooting for Clothes?

Matthew Yglesias recently noted that the very rich are unhappy with President Obama because he would like to increase the taxes on the very rich.  Although this might be true, the number of people unhappy with Obama exceeds the number of people who comprise the very rich.  So why are many of the non-rich unhappy with Obama?  And why are so many other people quite happy with our current president? 

Perhaps the answer is similar to a story frequently told about sports fans.

Back in the early 1990s, a friend of mine declared his hatred of Charles Barkley.  At the time, Sir Charles was an All-Star for the Philadelphia 76ers.  Sometime after this declaration, though, Barkley was traded to the Phoenix Suns.  As a fan of the Suns, my friend changed his tune.  With Sir Charles in Phoenix, my friend was now a fan of Barkley.

More recently, LeBron James was an extremely popular athlete in Cleveland.  But when he changed his uniform to something from Miami, his popularity in Ohio plummeted.  

These stories are not uncommon among sports fans.  In fact, Jerry Seinfeld once observed that fans who behave like this are essentially “rooting for clothes.”


Men, Women, and Taxi Fare

A study on the taxi market in Lima, Peru examines price differences between men and women. Taxi prices in Lima are set by bargaining, and the market of sellers is extremely competitive. The authors initially found, surprisingly, that “men face higher initial prices and rejection rates.”

However, when the experiment was performed again with a strategic move, the discrimination disappeared:

Passengers in this study begin by rejecting a first taxi to send a signal of low valuation to a second (waiting) taxi which they then negotiate with. Despite passengers otherwise using an identical bargaining script, we find that negotiated outcomes at the second taxi are gender blind. The second taxi treats men and women the same.


Why Do American Women Work More Than Europeans?

Economists Indraneel Chakraborty and Hans Holter have an explanation for all those extra hours Americans work as compared to Europeans: divorce rates (and tax rates)  Here’s their theory:

We believe this is because marriage provides an implicit social insurance since the spouses are able to share their income. However, if divorce rates are higher in a society, women have a higher incentive to obtain work experience in case they find themselves alone in the future. The reason the incentive is higher is because in our data, women happen to be the second earner in the household more often than men. European women anticipate not getting divorced as often and hence find less reason to insure themselves by working as much as American women.

Chakraborty and Holter use U.S data to run a model testing their theory; their findings are interesting:


Hope and Poverty

Is there a role for hope in poverty alleviation programs?  According to a recent speech by economist Esther Duflo, there is. Duflo looked at a BRAC program in West Bengal; program participants were given a “small productive asset” (a cow, a goat, or some chickens) and a small stipend to encourage participants not to immediately eat the animal. The results were significant:

Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the BRAC programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did).


Introducing the Freakonomics Podcast Archive

When we began our Freakonomics Radio podcast back in early 2010, it was something between a lark and an experiment. But we have produced 75 episodes by now, so it seemed time to gather all the episodes in one place. Here’s our new Freakonomics Podcast Archive, color-coded for your convenience to denote our three types of content: original podcasts (usually between 20 and 30 minutes long); our regular Marketplace segments (5 or 6 minutes long); and our 1-hour specials that air on public-radio stations across the country. Among our most popular podcasts to date: “Do More Expensive Wines Taste Better?” and “How Much Does the President of the U.S. Really Matter?”

You can of course subscribe via iTunes (where Freakonomics Radio occasionally hits the No. 1 ranking) or listen via our RSS feed.

Hope you enjoy; feedback welcome.

 


How Does It Feel to Get Booed?

If you remember our podcast “Boo…Who?” (which was included in the hour-long special “Show and Yell“), you’ll know we love the topic of booing. David Herman, our sound engineer at Freakonomics Radio, experienced some first-hand booing last week. He wrote it up as a guest post: 

How Does It Feel to Get Booed?

By David Herman

Last weekend, I visited the Bell House in Brooklyn to hear the Budos Band, an afrobeat-inspired 10-piece instrumental group from Staten Island.  According to the venue’s online ticket page, the show was slated to start at 9:00 PM. But 9:00 came and went, and then 10:00… 10:30… Granted, I’ve come to accept that no band will ever go on less than 30 minutes late, but this seemed to be pushing the bounds of good taste. 

At about 10:45, the band made its way onstage from the wings. The (sold-out) house was packed with around 300 people, each of whom had paid $15 plus drinks. So as soon as the group got into position, almost two hours late, what happened? 

“BOOOOOO!”


The Advantages of Looking "Trustworthy"

We’ve blogged before about the many advantages of being beautiful.  New research indicates that looking “trustworthy” carries some benefits as well:

In a paper recently published in the PLoS One journal, researchers from Warwick Business School, the University College London and Dartmouth College, USA, carried out a series of experiments to see if people made decisions to trust others based on their faces.

They found people are more likely to invest money in someone whose face is generally perceived as trustworthy, even when they are given negative information about this person’s reputation.

“Trustworthiness is one of the most important traits for social and economic interactions and our study examines whether people take potentially costly actions in line with their face-based trustworthiness judgments,” said Dr. Chris Olivola, one of the study’s authors. “It seems we are still willing to go with our own instincts about whether we think someone looks like we can trust them.”

Now the only trick is for people who aren’t in fact trustworthy at all to appear as if they are. Or, as it’s been said before: Once you can fake sincerity, you’ve got it made.

(HT: Naked Capitalism)


The Economics of Busking

Equilibration in a competitive or monopolistically competitive market is slow.  It takes time for new businesses to perceive excess profits and to enter the market. But not always.

Like many major European venues, the Plaza Mayor in Madrid has many buskers operating.  One busker had a particularly clever shtick:  Dressed up like an infant in a stroller, he would squeal and squawk, especially whenever someone put money his jar.  Many kids, and even this adult, did exactly that.  In the 5 minutes I watched at least 10 people gave him something. BUT:  Near the end of that time, other buskers, who had been observing him, moved their routines closer to his. His flow of customers diminished, with some going to the other, now nearby buskers.  He still was attracting more money than the others, but his excess profits had been reduced by the new competition. 


The Best Third-Grade Teacher Ever

One of the most important economic issues we face today is how much to spend on education, both individually and as a society. As tax revenues decline due to demographic changes and deteriorating business conditions, municipalities have to make tough choices about which programs to cut, and education is often an early victim. Because we don’t yet have good measures of all the future benefits produced by better education today, school programs are easy targets for cost-cutting measures, especially in lower-income regions where parents are focused on meeting more basic needs and less likely to put up a fight. But experiments like Geoffrey Canada’s Harlem Children’s Zone hint at the enormous impact that early educational support can have on lifetime achievement.

I have my own example: Mrs. Ficalora, the best third-grade teacher ever.


Raising Money to Teach Math

A reader named Karim Kai Ani writes:

Guy walks into a bar and says, “We’ve got this math curriculum that everyone is saying is the bomb (a dangerous thing to say when you have my name, but go with me), and we’re Kickstarting a video series to offer teachers a new vision of what it means to teach math.”

And the waitress says, “You should see if the dudes from Freakonomics would tweet about it. Didn’t they mention Mathalicious on their blog once?”


Mike Brown Vs. Mike Brown

Thanks to @PE_Mulroe via Twitter, here’s a story from the (Northwest Indiana) Post-Tribune that combines two of our favorite topics: elections and first names. It’s called “A Tale of Two Mike Browns in Lake County Politics”:

Did Mike Brown, the candidate for recorder, intentionally run on the name recognition earned by former recorder and Lake County Clerk Mike Brown?

The candidate says no. Incumbent Recorder Michelle Fajman and party boss Tom McDermott Jr. say yes. And the clerk with the same name? Well, as someone who backed Fajman in the election, he’s just sorry if anyone cast a ballot without knowing who was who.


Pushing My Luck on the Preakness

The dangerous thing about gambling is that you happen to win sometimes just by chance.  The gambler is quick to take credit for successes, but can always find some external factor to blame for losses.

Case in point: my Kentucky Derby picks.  I picked three horses out of twenty starters: one to win, one to place, and one to show.  The horse I picked to win had some terrible luck, hurting his ankle and eventually finishing 19th.

The horse I picked for second, I’ll Have Another, ended up winning the race.  Bodemeister, my third-place pick, finished second.   A two dollar exacta-box on my top three horses would have cost $12 and would have returned $306.

I also picked a horse to finish last, Daddy Long Legs, and he indeed finished dead last.

So, like the gambler I am, I take credit for the good outcomes, and write off my horse finishing 19th as merely bad luck.

And, of course, that means I will push my luck on the Preakness, which goes off today.

I wish I had more exciting picks, but this time my algorithm likes the two favorites, Bodemeister and I’ll Have Another.  For third, I’d go with Optimizer.


How Will Rio's Arrest Bounty Play Out?

An interesting e-mail from a reader:

Hello. My name is Thiago, and I am writing from Brazil. I always read freakonomics posts thru my rss reader and I saw a news today that inspired me to write to you.
 
Rio de Janeiro’s  police started a new policy to incentivize cops to arrest the most wanted drug dealers. The prize: 15 days off and one weekend in a beautiful island at Angra dos Reis with all costs included.

I wondered if this incentive will have a positive effect, whereas there are bad cops who are bribed by drug dealers. What if these bad officers began to been rewarded by drug dealer with tickets to Disney instead of arrest them?


When Graffiti Strikes Back

We’ve written a few times about what we call reverse incentives: comedian and activist Dick Gregory‘s use of the N word; Planned Parenthood turning abortion protestors into a fund-raising scheme; and the “pledge-a-picket” drive.

The latest instance comes from fashion designer Marc Jacobs. It began when the graffiti artist Kidult vandalized Jacobs’s SoHo shop by scrawling “ART” across the storefront. A Twitter war followed, but Jacobs wasn’t done. As The New York Observer reports:


Is a Meat-Eating Cyclist a Contradiction?

In response to James McWilliams‘s still-reverberating post about why more environmentalists don’t promote veganism, a reader named Mary writes:

I have always wondered why environmentalists are so reluctant to promote veganism, but eager to promote alternative transportation. Many residents of the U.S. are currently locked in to their car-dependent lifestyle, with large mortgages in suburbs with no safe sidewalks or bike lanes and inefficient transit. Ditching their car is logistically much more difficult to do than buying beans instead of meat at the grocery store. Currently, the infrastructure for reducing car use is lacking in many communities, though vegan foods, like beans, grains, fruits, and vegetables, are much more easily obtained.

It’s an interesting point. A few related thoughts come to mind:


The Economics of For-Profit Prisons

The Times-Picayune reports on Louisiana’s prison ecosystem — and the perverse incentives for sheriffs to keep inmate numbers high:

Louisiana’s incarceration rate is nearly triple Iran’s, seven times China’s and 10 times Germany’s.

The hidden engine behind the state’s well-oiled prison machine is cold, hard cash. A majority of Louisiana inmates are housed in for-profit facilities, which must be supplied with a constant influx of human beings or a $182 million industry will go bankrupt.

Several homegrown private prison companies command a slice of the market. But in a uniquely Louisiana twist, most prison entrepreneurs are rural sheriffs, who hold tremendous sway in remote parishes like Madison, Avoyelles, East Carroll and Concordia. A good portion of Louisiana law enforcement is financed with dollars legally skimmed off the top of prison operations.


Mark Cuban on the "College Bubble"

Mark Cuban, who answered reader questions here a while back, compares rising college tuition costs to the housing bubble in a recent blog post.  Here’s his argument:

It’s just a matter of time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. Students will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it.

And it can’t happen fast enough.