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Archive for 2012

Are Bilingual Immigrants Healthier?

A new study by Ariela Schachter, Rachel Tolbert Kimbro, and Bridget K. Gorman found that strong English skills and native language skills are associated with better health for immigrants. Using language as an indicator of adaptiveness to a new country, the researchers set out to investigate the “healthy immigrant effect”:

The “healthy immigrant effect”—whereby immigrants initially appear healthier than the native-born, although with time in the U.S. their health status declines—continues to puzzle scholars. Acculturation, or the process by which immigrants adapt to a host country, is a primary explanation of this phenomenon.


End of Illness Author David Agus Answers Your Questions

We recently solicited your questions for David Agus, the oncologist author of The End of Illness. Now he’s back with answers, including: the numbers on taking aspirin, how to get the most from a doctor visit, and the top 10 actions to reduce your cancer risk. I can guarantee you that his answers will enlighten and thrill some people and enrage and confound others. Thanks to everyone for their participation, and especially to Agus for the thorough answers. 

Q. I’m a 4th year medical student, and I watched your interview on The Daily Show when it first aired and really took issue with the way you presented many of these things. It seemed that you simplified your “solutions” to the point that it may actually be dangerous for people to listen to what you suggested. For example, you implied that everyone should be taking aspirin.


Who Will Win the Most Medals in the 2012 Summer Olympics?

Dan Johnson, an economist at Colorado College, has been predicting Olympic medal counts for years with a model that uses metrics like population count, income per capita, and home-country advantage. In the past six Olympics, his model has a correlation of 93 percent between predictions and actual medal counts, and 85 percent for gold medals.

For the Games in London this summer, Johnson predicts that the U.S. Will be the top medal winner, followed by China, Russia, then Britain — the same order they finished in the 2008 Beijing Olympics.


Would Paying College Players Really Destroy Competitive Balance?

March Madness is in the air. Over the next few weeks the nation will be focused on the fortunes of 68 college teams.  And all this focus on a supposedly amateur sport generates tremendous amounts of money.  For example, in 2010 CBS and Turner Broadcasting agree to pay the NCAA $10.8 billion to broadcast these games for fourteen seasons. This money represents more than 90% of the NCAA’s revenues.

Since colleges and universities tend to be non-profit, who gets all this money?  One person who seems to benefit is John Calipari, head basketball coach at the University of Kentucky.  Last summer, Kentucky extended Calipari’s contract, with a new deal that will pay him $36.5 million across the next eight seasons. Contracts like this – which seem comparable to what an NBA coach might command — are somewhat surprising. As economist Andrew Zimbalist has observed, the revenues of college sports – although apparently immense – pale in comparison to what we see in professional sports. And that leads one to wonder how a coach in college can command such a salary.


Are Fake Resumes Ethical for Academic Research?

“Audit studies” have been popular in labor economics research for 10 years.  The researcher sends resumés of artificial job applicants in response to job openings. Typically there is a crucial difference in some characteristic of the person that indicates a particular racial/gender/ethnic or other group to which one person within a pair of resumés belongs while the other does not.  The differential response of employers to the difference in the characteristic implied by the resumés is taken as a measure of discrimination in hiring.

Is this ethical? 


The Rise of the Prize

This is a guest post by Vijay V. Vaitheeswaran, who is the China Business Editor of The Economist and author of the just-published book Need, Speed, and Greed: How the New Rules of Innovation Can Transform Businesses, Propel Nations to Greatness, and Tame the World’s Most Wicked Problems.

The Rise of the Prize
By Vijay V. Vaitheeswaran

Could the incentive prize be the most powerful and yet most underutilized tool we have to tame the wicked problems of the twenty-first century?

Prizes in themselves are nothing new, of course. The Longitude Prize — a purse of up to £20,000 — was offered by the British Parliament in 1714 for the discovery of a practical means for ships to determine their longitude. This was an enormous problem on the high seas, as the inability to work out longitude on the sailboats of the age often led to costly and deadly errors in navigation. The greatest minds of the British scientific academy wrestled with this problem, but could not crack it.


White House Economist Alan Krueger Answers Your Questions

We recently solicited your questions for Alan Krueger, chairman of the President’s Council of Economic Advisers. Below are Krueger’s answers, in which he talks about the Bush tax cuts, the American Jobs Act, and why NFL coaches should go for it on fourth down. Thanks to everyone for participating.

Q. The recovery from the recent recession has been great for corporate profits, but not so great for employment. I think that this is a natural result of the fact that when demand is insufficient, corporations focus on improving productivity rather than on producing more goods and services.

What can be done to increase employment? –Adam


How the NBA Takes Money From People Who Don’t Like Basketball

The Sacramento Kings will continue to exist. This week, the City Council approved a plan to finance a new home for the Kings in Sacramento. The price tag, though, is pretty steep.  The arena will cost $391 million, and $255.5 million will be coming from the city of Sacramento.   

Opponents of this plan – and there were just two on the nine-member Council – noted that sports arenas don’t provide much economic benefit. Furthermore, they questioned why public money should be given to a private business. 

As Councilwoman Sandy Sheedy – who voted no – observed: “This city is on the verge of insolvency. As far as I know, we still technically qualify for bankruptcy under federal law.”

Proponents of this plan, though, argued that this plan will create jobs and economic benefits.  And it was this argument that apparently persuaded the majority.

So we have two perspectives and one question: Do sports generate jobs and economic growth? 


Opera Toilet

Sometimes what might not seem like complements become such because of location. I came across a restroom in a Vienna underground station that had the sign “Opera Toilet” above the entrance. Clearly, the City must believe that natural bodily functions and listening to arias are complements, at least for customers in this most operatic of cities, the residence of Beethoven, Mozart and many Strausses. Presumably in Nashville now or soon, one will find the “Country Music Toilet.” What other such complements exist?


Women, Thinking About Relocating?

In honor of International Women’s Day, Foreign Policy has a roundup of five surprisingly good places to be a woman.  The Philippines, Spain, South Africa/Lesotho, Latvia, and Cuba all make their list. While it may be hard to believe that women fare well in the very same country that hosted a “Blonde Weekend” back in 2009, Latvian women are excelling . . .


What’s Hanging in Your Cubicle?

Last week, in honor of our “Dilbert Index” podcast about workplace morale, we asked readers to submit photos of their office spaces. Here’s what’s inside some of your cubicles: [slideshow auto=”on” thumbs=”on”]


Are We Living in a Loss-Averse World?

Three years ago today, the S&P 500 closed at 676.53.

Today, it opened at 1366.50.

As Businessweek asks: where’s the party for this bull market?

The article, by Whitney Kisling, is interesting throughout, exposing the massive pessimism still attached to the markets despite this steep recovery. It is well worth a read for anyone who believes (or wants to believe) that behavioral economics has a lot to teach us about real-world investing behavior.


Daylight Savings Time and "Cyberloafing"

New research suggests that people “cyberloaf” (i.e. websurf instead of working) more when they are tired. Some people may find this surprising. (We do not.) If nothing else, this is another argument against Daylight Savings Time. As the BPS Research Digest explains:

The investigators recognised an event that affects everyone’s sleep: when the clocks go forward for Daylight Saving Time. Prior evidence suggests we lose on average 40 minutes of sleep per night following the switch, as our body rhythms struggle to adjust.


How High Gas Prices Triggered the Housing Crisis

Republican presidential candidate Rick Santorum made headlines last week when he suggested that high gas prices made mortgages unaffordable, causing the recent housing bubble to burst and sending the economy into recession. It may sound far-fetched, but it is precisely the theory that I and a pair of coauthors presented in a working paper released five days before Santorum’s remarks.

We are actually a bit more nuanced, arguing that unexpectedly high gas prices triggered the collapse of the housing market — igniting a fire fueled by easy credit, lax lending practices, and speculation. It is a provocative claim and one with broad implications, but it is also a claim supported by economic theory and empirical evidence.

The federal government’s Financial Crisis Inquiry Commission asserted in its 2010 report that “it was the collapse of the housing bubble . . .that was the spark that ignited a string of events that led to a full-blown crisis in the fall of 2008.” And a broad, if not unanimous, consensus among economists suggests that the ongoing economic malaise was induced by a financial crisis caused by the housing crisis. Relatively less well-understood is what caused the housing crisis in the first place.


Why Aren't There More Female Patent-Holders?

We’ve blogged before about gender inequality and the persistent male/female wage gap.  A new working paper by Jennifer Hunt, Jean-Philippe Garant, Hannah Herman, and David J. Munroe highlights another arena where women are lagging: commercialized patents. Only 7.5 percent of regular patent and 5.5 percent of commercial patent holders are female.  The authors explored various explanations for the gap:

Using the National Survey of College Graduates 2003, we find only 7% of the gap is accounted for by women’s lower probability of holding any science or engineering degree, because women with such a degree are scarcely more likely to patent than women without.


The Thinking Jacket: A New Trend

A new paper in the Journal of Experimental Social Psychology finds that elementary school teachers worldwide might want to start encouraging students to put on their “thinking coats” instead of “thinking caps.”  

Researchers Hajo Adam and Adam D. Galinsky found that “wearing a white lab coat — a piece of clothing associated with care and attentiveness — improved performance on tests requiring close and sustained attention.”


What can Eeyore and Tigger Teach Bernanke About Monetary Policy?

What can Eeyore and Tigger tell us about the current state of monetary policy?  A lot.  At least that’s the argument that Betsey Stevenson and I make in our new column for Bloomberg View.

The Fed is now engaged in the game of “forward guidance”—they’ve announced that they anticipate keeping interest rates at zero, until late 2014—and hope that it will shape the recovery.  But what effects will this announcement have?  To figure this out, let’s visit two of the greatest ever Fed Chairmen: Eeyore and Tigger.


“AI: Adventures in Ideas”: Getting to “Yes (I’ll Participate in Your Survey)”

Freakonomics readers may know that I’m not the most qualified person to talk about using surveys. My first attempt — asking street gang members “How does it feel to be black and poor? Very bad, bad, good, …” — was met with laughter, disbelief and, scorn. (I suppose it was all uphill from that point!)

A basic question social scientists confront is: Why would you want to participate in our survey? Interviews can be long and boring; who wants to sit on the phone or stand on a streetcorner answering questions? A few bucks may not be worth the time. In fact, you have likely already perfected methods of avoiding telemarketers and sidewalk interviewers. From a data standpoint, your skilled avoidance is our problem: the views of respondents can differ from non-participants. From political races to consumer habits to opinion polls … we love numbers, and we need participation to get an accurate reading.


Question of the Day: Does a Lack of Exposure to the Arts Lead to Disaster?

A reader named Matt Radcliffe writes:

I’ve been working on a project concerning musical theater performance. I have a hypothesis which seems intuitive enough to me — that a lack of exposure to creative arts can lead to disastrous results for individuals (lack of education, poverty, etc).

I can find a plethora of research that proves the opposite (exposure to creative arts can lead to success), but I can’t find anything towards my hypothesis.


Does Studying Economics Teach You to Lie?

A new paper by Raúl López-Pérez and Eli Spiegelman investigates “truth preferences” — i.e., preferences for being honest versus lying. Their goal was to study whether economics students lie more as a result of their education. Or do liars self-select? From the paper:

Does studying economics give people “maximizing” habits of thought, and thus cause them to  behave more in line with its own predictions, or do people already inclined towards such behavior tend to self-select into economics?

A computer test structured with a slight incentive to lie was administered to 258 students at The Autonomous University of Madrid. The screen showed two colors, and participants were paid 14 euros for declaring blue and 15 euros for declaring green to another person, regardless of the actual color shown on screen. So what happened? According to the authors, the business and economics (“B&E”) majors gamed the system.


Surviving "the Tyranny of E-mail"

Like a plague of locusts, they give us no rest. They gobble our irreplaceable asset: our time. The faster we swat them away, the faster they arrive. Our modern locust plague is email.

Fortunately, I found The Tyranny of E-mail: The Four-Thousand-Year Journey to Your Inbox by John Freeman a week ago at the Harvard Bookstore, one of the few surviving independent bookstores in Cambridge, MA. Alas, the book was discounted to $5.99 — which probably means that it is on remainder. That is a shame, for it is a rich and thoughtful book, mixing history, analysis, outrage, and remedy.

The beginning of wisdom, it was said, is to call things by their right names. By that venerable standard, this is a wise book.


Ed Glaeser Argues Against Food Stamps

Over at Bloomberg View, Ed Glaeser argues that the shift in government aid from cash payments to in-kind transfers like food stamps is a mistake:

We should ask for two things from any redistribution system. It should do as much as possible for society, especially the poor. It should do as little as possible to encourage permanent poverty. And, whenever possible, it should help poor Americans find a path toward self-sustaining prosperity.


My Target-Date Fund Is Bigger Than Yours

We’ve banged the drum quite a bit on the need for greater financial literacy. If you care about such things, you might want to take a look at a new working paper by Pierluigi Balduzzi and Jonathan Reuter called “Heterogeneity in Target-Date Funds and the Pension Protection Act of 2006” (abstract; PDF).

That isn’t the sexiest title ever, and if you don’t care at all about personal finance or investing then you probably shouldn’t go near it. But if you care even a little bit, the paper has some interesting lessons even beyond the fairly narrow focus of Target-Date Funds. A Target-Date Fund is, in a nutshell, a mutual fund whose asset allocation automatically shifts over time as the target date approaches.


The Economics of the Vegetarian Option

Went to a one-star Michelin restaurant in Bonn last night.  One of the best meals I’ve ever eaten. Three of the four of us ordered the five-course prix fixe all-vegetarian menu.  As we left, I thanked the chef-owner — who responded “Despite it being vegetarian!”

He seemed slightly upset about serving this menu. Was it because his revenue from it was only €63 compared to €91 for a five-course regular menu (which had one meat and one fish course)?  Maybe. But I don’t believe the vegetarian menu used less labor, nor was there a €28 difference in materials cost. 


Can Single-Sex Education Make Women Less Risk-Averse?

Research indicates that women are generally more risk-averse than men, and this risk-aversion is often cited as a partial explanation for the shortage of women in high-level corporate positions. A new essay by Alison Booth, Lina Cardona Sosa, and Patrick Nolen suggests that single-sex education may change women’s risk preferences.  In a recent paper, the researchers conducted a controlled experiment:

[W]e designed a controlled experiment using all incoming first year economics and business students at a British university. The subjects were asked to make choices over real-stakes lotteries at two distinct dates – the first week of term and the eighth week of term…

Prior to the start of the academic year, students were randomly assigned to classes. Our ‘nurturing’ environment is the experimental peer-group or class to which students were randomly assigned by the timetabling office. The class groups were of three different types – all female, all male, or mixed gender.


Should the Government Be Targeting a Different Kind of Discrimination?

A new working paper from Uri Gneezy, John List, and Michael K. Price looks at discrimination via a variety of field experiments and more than 3,000 individual transactions:

In certain markets, the observed discrimination is not bigotry or animus-based, but consistent with the notion of profit-maximization, or Pigou’s (1920) “third-degree price discrimination”: in their pursuit of the most profitable transactions, marketers use observable characteristics to make statistical inference about reservation values of market agents. In others, the discrimination is more in line with Becker’s (1957) taste based theory of discrimination, or animus.

Interestingly, the nature of discrimination is less driven by particulars of the market or institutions, rather the nature of the disparate behavior is driven by whether the object of discrimination is a choice of the individual or is uncontrollable.


The Wealth Effect: It Ain't Pretty

A fascinating Boston Globe article by Britt Peterson reviews the research on the far-reaching psychological effects of wealth. “Rich people have a harder time connecting with others, showing less empathy to the extent of dehumanizing those who are different from them,” writes Peterson. “They are less charitable and generous. They are less likely to help someone in trouble.”  Even more depressing: These traits are “developed,”  not “inherited.”

While money may not be the root of all evil, it can make people “insensitive” according to Kathleen Vohs, one of the researchers whose work was profiled in the article. “When people are reminded of money, they get better at pursing their personal goals,” she explains. “On the negative side, they become poor at interpersonal functioning. They’re not all that nice to be around. They’re not openly mean or disagreeable, but they can be insensitive.”