New York City’s subways and buses carry roughly seven million passengers a day, which goes a long way toward explaining why New Yorkers have one of the smallest carbonfootprints in the U.S. Doesn’t that mean that mass transit is inevitably good for the environment?
Yes, no, and sometimes.
Our latest Freakonomics Radio onMarketplacepodcast is called “Mass Transit Hysteria.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player in the post, or read the transcript below.)
My Dutch friend walked into his bank for a short transaction and was kept waiting for 45 minutes. Infuriated, he told the manager that his time was too valuable for this. Ten days later a credit of €25 appeared on his account!
Why can’t service organizations that keep you waiting an overly long time all do this? Admittedly the proper price is not easy — Bill Gates’s time is more valuable than mine. But companies that offer a credit on your account if you have to wait more than some posted time would have a competitive advantage in attracting clients; and the threat of payment would provide lower-level managers an incentive to improve efficiency. The only example I know of this practice is our plumber, who advertises that if he is more than 30 minutes late, the cost of labor is waived. (HT to GAP)
We recently released our third set of hour-long Freakonomics Radio programs to NPR stations across the country. If you regularly listen to our podcast, there isn’t much new to hear but if you prefer to take in your radio program via the actual radio, now is your chance. Check your local station for listings. If you’re in the New York area, you can hear Freakonomics Radio on our flagship station, WNYC, for the next five weeks at the following times:
The other day, Levitt and I participated in a brainstorming session on how to fight childhood obesity, sponsored by the Robert Wood Johnson Foundation. (FWIW, we recorded the event and will try to turn it into a podcast.)
One topic that got a lot of traction was a targeted tax on sugary drinks and fatty foods. (This is often called a “fat tax” but should not be confused with a tax on overweight people.) Many people in the session were in favor of the idea but a few were skeptical, primarily because such a tax will be tricky to implement well. One objection that I was surprised no one raised: the simple fact that taxpayers might hate the tax and rebel against it to the point where it becomes politically and economically impossible.
We recently put out a two-part podcast called “Freakonomics Goes to College” (Part 1 here, Part 2 here, and together as an hour-long special). The main question we tried to answer was if, and on what dimensions, a college education is “worth it” — i.e., whether the returns to education are as robust as we’ve been led to think. (Short answer: yes.) Along the way, we talked to economists including David Card, Betsey Stevenson, and Justin Wolfers, and poked into the market for counterfeit degrees.
But let’s say you’re interested in the question from a practical, rather than a theoretical, perspective. That is, let’s say you’re an actual college student, or related to one, already deep in the throes of higher education, and that your primary question is: Okay, now what? Now that I’m here, what do I do to get the very most out of this expensive, time-consuming endeavor?
I am a big fan — one who especially appreciates your willingness to (perhaps enjoyment in?) exploring solutions that many would consider repugnant. In that spirit, I would love to get your thoughts on a seemingly unconscionable idea that I recently became aware of.
Every year the U.S. euthanizes approximately 3 to 4 million companion animals (mostly dogs and cats). To put it bluntly, what do you think about using these carcasses as a meat source? We expend enormous resources — land, money, and energy — in producing animal feed and ultimately meat. Given this expense, as well as the world’s need for protein sources, I’d love for you to weigh in on this rather repugnant idea.
In the wake of President Obama‘s solid re-election victory last night, we are left wondering (geeks that we are) about what (if anything) an Obama second term suggests about the future of IP law. We’ll talk mostly about copyright policy here: Any action on IP policy in the next couple of Congresses would probably focus on copyright, not least because we’ve just been through a substantial reform of the patent law and no one has any appetite to revisit that right away.
Even focusing only on copyright, the picture is far from clear. Millions of people joined in a wave of online activism back in January to defeat the copyright expansions offered in the SOPA and PIPA bills. But the coalition that defeated SOPA and PIPA is new and no one’s sure whether it’s a one-off or the beginning of a broader movement to slow, stop, or even reverse copyright’s relentless expansion. We’d note also that two of the entertainment industry’s favorite people in the House, Reps. Howard Berman and Mary Bono Mack, were both defeated last night. We doubt the losses have much to do with the pair’s outspoken copyright maximalism, but losing Berman and Bono is a further blow to a pro-copyright side that is still getting its collective head around the SOPA/PIPA debacle.
Participants were surveyed shortly after the paywall was announced and again 11 weeks after it was implemented to understand how they would react and adapt to this change. Most readers planned not to pay and ultimately did not. Instead, they devalued the newspaper, visited its Web site less frequently, and used loopholes, particularly those who thought the paywall would lead to inequality. Results of an experimental justification manipulation revealed that framing the paywall in terms of financial necessity moderately increased support and willingness to pay.
It’s been a few days. And although I ain’t over it yet, I think I can write about the Detroit Tigers losing the World Series.
When the playoff in baseball began, 10 teams – and their fans – were very happy. But the playoffs being what they are, we knew that only one team – and its fans – would actually be happy when the whole thing was over.
After the best-of-five series, the Tigers – and this fan – were quite happy. When the Tigers swept the Yankees, I was very happy. And then when the Giants swept the Tigers… okay, I wasn’t happy anymore.
So what did the Tigers and all the other “losers” (and yes, that includes the Yankees) learn from the playoffs?
A working paper by Sergio Beraldo, Raul Caruso, and Gilberto Turati looks at time preferences and their relation to crime over a five-year period in Italy. Using proxies for patience (some of which may strike some people as rather far-fetched), they found more crimes in areas where residents are more impatient and discount the future more:
In this paper we propose a first empirical test on the relationship between time preferences and crime using as a sample the whole set of Italian regions observed over the period 2002-2007. We consider both property and violent crimes. We proxy time preferences employing: 1) the amount of short-term debt to finance consumption (the consumer credit share); 2) the prevalence of obese people according to their body mass index (obesity); 3) 5 the willingness of individuals to engage in stable relationships (the marriage rate). In line with the theoretical prediction by Davis (1988), we find that where people are more impatient and discount the future more heavily, property and violent crimes are higher. In particular, the correlation between crime rates and time preferences is especially robust when time preferences are proxied both by the obesity and the marriage rates.
I was on the public-radio show Marketplace Tuesday evening, interviewed about waiting (sparked, I assume, by lines of people waiting to vote). I never vote on Election Day and never have to wait to vote: I take advantage of Texas’s early voting, which is quick and easy. I estimate the opportunity cost of people waiting in line on Tuesday — the value of their time — was around $1 billion. Those resources would have been much better spent creating facilities for early voting in all states. For that sum, a lot of election workers’ salaries could be paid and polling facilities could be kept open from late October through early November. An additional virtue is that more people might vote, and expanding democracy would be a good thing. Who couldn’t support this reallocation of resources?
Our recent podcast “The Cobra Effect” continues to draw listener/reader mail, with furtherexamples of bounties-gone-wrong. This one, from Dan Banks in Indiana, may be my favorite:
How about a failed bounty on houseflies?
I run a group home for criminal youth. They are generally manipulative and not too smart. We have a “point” system where they do work to earn points that they can spend on various tangibles and intangibles. It’s a great system as we print all the “currency” we want and exchange it for labor.
One summer we seemed to always have houseflies in the home. A frustrated staff offered 5 points for every fly carcass that was brought in and handed out flyswatters to the kids.
The unwillingness of women to negotiate their salaries is often blamed for the persistent male-female wage gap. A new paper (abstract; pdf) from Freakonomics favorite John List (and coauthor Andreas Leibbrandt) uses a field experiment to explore the issue:
By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the “rules of wage determination” are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
A major rationale — perhaps the major rationale — touted by supporters of mass transit is that by reducing our output of greenhouse gases and other pollutants, transit can help save the environment. The proposition seems intuitive and even obvious: by no longer encasing each traveler in thousands of pounds of difficult-to-move metal, surely transit is more energy-efficient. Plenty of analyses prove this. But then again, Aristotle, who was revered as the infallible font of truth for more than 1,000 years, proved that heavier objects fall faster than lighter ones and that women have fewer teeth than men. Might studies that demonstrate transit is greener be similarly wrong?
They might. The reason is that many studies of energy efficiency by mode often make questionable and — depending on the author’s point of view — self-serving assumptions. The main trick is to look at autos with but one passenger and compare them to transit vehicles in which every seat is full. (For example, see this.)
But in the real world, this is emphatically not the case.
Yes, it could all go up in smoke — legal challenges, including from the Federal government, and all that — but among the interesting developments from last night’s election (do yourself a favor and look at this map) is the news that Colorado and Washington voters chose to legalize marijuana. Here’s how the issue was phrased on the Colorado ballot:
Shall there be an amendment to the Colorado constitution concerning marijuana, and, in connection therewith, providing for the regulation of marijuana; permitting a person twenty-one years of age or older to consume or possess limited amounts of marijuana; providing for the licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores; permitting local governments to regulate or prohibit such facilities; requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp?
An New England Journal of Medicine article looks at the probability of a bystander performing CPR based on neighborhood characteristics including income and race:
Among 14,225 patients with cardiac arrest, bystander-initiated CPR was provided to 4068 (28.6%). As compared with patients who had a cardiac arrest in high-income white neighborhoods, those in low-income black neighborhoods were less likely to receive bystander-initiated CPR (odds ratio, 0.49; 95% confidence interval [CI], 0.41 to 0.58). The same was true of patients with cardiac arrest in neighborhoods characterized as low-income white (odds ratio, 0.65; 95% CI, 0.51 to 0.82), low-income integrated (odds ratio, 0.62; 95% CI, 0.56 to 0.70), and high-income black (odds ratio, 0.77; 95% CI, 0.68 to 0.86). The odds ratio for bystander-initiated CPR in high-income integrated neighborhoods (1.03; 95% CI, 0.64 to 1.65) was similar to that for high-income white neighborhoods.
HarperCollins is running a sale on the SuperFreakonomics e-book for the next few weeks, offering it via all digital vendors for $3.99. The book’s total worldwide sales are > 1 million.
Very interesting backgrounder on Stephen Salter, the British scientist who, in the course of trying to turn ocean waves into electric power, discovered a potential way to prevent, or at least limit, the impact of hurricanes:
Devastating tropical storms of the kind that battered the U.S. last week could be weakened and rendered less deadly using a simple and cheap technology based on a surprising component – old car tyres.
One of Britain’s leading marine engineers, Stephen Salter, emeritus professor of engineering design at Edinburgh university and a global pioneer of wave power research, has patented with Microsoft billionaires Bill Gates and Nathan Myhrvold the idea of using thousands of tyres lashed together to support giant plastic tubes which extend 100m deep into the ocean.
Wave action on the ocean surface would force warm surface water down into the deeper ocean. If non-return valves were used, he says, the result would be to mix the waters and cool the surface temperature of the ocean to under 26.5C, the critical temperature at which hurricanes form.
The New York Times published an interesting article last week about an ongoing dispute in Europe between Google and European newspapers (and their supporters in government). The issue is whether Google must pay for the privilege of linking to those sites, or should be able to link for free. Of course, at stake is who gains the revenue that comes from aggregating and compiling links.
As the Times notes:
Google got rich by selling a simple proposition: The links it provides to other Web sites are worth a lot of money, so much that millions of advertisers are willing to pay the company billions of dollars for them.
Now some European newspaper and magazine publishers, frustrated by their inability to make more of their own money from the Web, want to reverse the equation. Google, they say, should pay them for links, because they provide the material on which the Web giant is generating all that revenue.
A German court has ruled that poker is a game of skill, as Levitt has arguedbefore (and which a U.S. court has recently confirmed). The ruling is in response to poker player Eduard Scharf‘s claims that his poker winnings shouldn’t be taxed because poker is a game of chance, and “anyone can win a game of poker.” The court disagreed, ruling that “[H]e had to pay income tax on his winnings saying they counted as commercial income as they were linked to his personal skills.” (HT: Sven Seuken)
Instead of trick or treat, how about treatment or control? We conducted two new studies on my porch this year for Halloween. Unfortunately, the mayor of New Haven recommended that people delay trick-or-treating post-Sandy even though the neighborhood was in good shape. This caused lots of confusion, and a turnout of half of the normal turnout of 600 or so kids. So sample size is down, standard errors up.
Alas, two nice results. Both written up in one-page one-graph papers.
Our recent podcast “The Cobra Effect” explored the unintended consequences of bounty programs. The episode was inspired by a visit to South Africa not long ago, where I was told about a rat problem in the Johannesburg township of Alexandra. For whatever reason, that story didn’t make the episode. But now the Guardian comes to the rescue, reporting on Alex’s efforts to fight off the rats by offering a cellphone for every 60 rats caught:
[C]ity officials have distributed cages and the mobile phone company 8ta has sponsored the volunteer ratcatchers.
Resident Joseph Mothapo says he has won two phones and plans to get one for each member of his family. “It’s easy,” he told South Africa’s Mail & Guardian newspaper, wielding a large cage containing rats. “You put your leftover food inside and the rats climb in, getting caught as the trap door closes.”
But there were signs that the P.R. stunt could backfire, as animals rights activists criticised the initiative on social networks.
Will this lead to rat farming or other shenanigans? The Guardian reports that owls have also been distributed to help hunt down the rats.
A few weeks ago, we got an e-mail from a reader Vishal Dosanjh, who lives in St. Louis:
My daughter asked me this morning why the fancy neighborhoods are the best places to go trick-or-treating. It puzzled me for a moment and then realized it was an economic question. I gave her an answer about disposable income and societal expectations. Anyway I thought it might be up your alley, and I wonder if it’s even true. Do wealthy neighborhoods/people actually give out better candy? She’s 8 by the way.
We set out to answer Vishal’s question in our latest Freakonomics Radio on Marketplace podcast.
A student writes that she understood arbitrage at age seven. She brought Scooby-Doo Fruity Snacks from her grandmother’s house (no charge to my student) to her Vacation Bible School class. She was a monopolist in the class—nobody else brought snacks; and since the demand was quite inelastic, she was able to sell her Fruity Snacks for a good price. Regrettably, her business was shut down because, as the teacher said, she was engaging in “uncharitable exploitation of [her] peers.” She was also invited not to return to Bible School, showing that clever economic behavior may only pay monetarily. (HT: CAP)
A Florida state task force on education has just released a recommendation to adjust tuition, by major.
“Tuition would be lower for students pursuing degrees most needed for Florida’s job market, including ones in science, technology, engineering and math, collectively known as the STEM fields,” writes Scott Travis of the South Florida Sun-Sentinel. Students in other majors — psychology and the performing arts, for example — would pay more. “The purpose would not be to exterminate programs or keep students from pursuing them. There will always be a need for them,” Dale Brill, the task force chair, told Travis. “But you better really want to do it, because you may have to pay more.”
Here‘s how Alex Taborrak (of Marginal Revolution) sees the plan:
With the U.S. presidential election nearly here, everyone seems to have politics on their mind. Unlike most people, economists tend to have an indifference towards voting. The way economists see it, the chances of an individual’s vote influencing an election outcome is vanishingly small, so unless it is fun to vote, it doesn’t make much sense to do so. On top of that, there are a number of theoretical results, most famously Arrow’s Impossibility Theorem, which highlight how difficult it is to design political systems/voting mechanisms that reliably aggregate the preferences of the electorate.
Mostly, these theoretical explorations into the virtues and vices of democracy leave me yawning.
Last spring, however, my colleague Glen Weyl mentioned an idea along these lines that was so simple and elegant that I was amazed no one had ever thought of it before. In Glen’s voting mechanism, every voter can vote as many times as he or she likes. The catch, however, is that you have to pay each time you vote, and the amount you have to pay is a function of the square of the number of votes you cast.
If there is one thing that politicians love to do it’s to promise people things now and not worry about how we will pay for those promises until sometime far into the future, when some other politician is on the hook to balance the budget.
We see this all the time in the form of budget deficits in the federal government, and also with the accounting tricks used on the Social Security Trust Fund.
These sorts of shenanigans get less press at the state and local level because many state and local governments are required to have balanced budgets (this paper by my thesis adviser Jim Poterba lays out some of the details). There are, of course, ways for states to get around the balanced-budget provisions. The method that currently casts the greatest shadow over the future is underfunded pensions. State governments promise generous retirement packages to state employees, but use accounting tricks to avoid recognizing the full value of what taxpayers will owe in the future to cover those debts.
Much has been made of the plan the Oklahoma City Thunder followed in building a title contender. Here are the basic steps the Thunder supposedly followed:
1.Lose a bunch of games across a few seasons, which allows a team to accumulate lottery picks 2. Draft “stars” with lottery picks 3. Sign “stars” to long-term contracts 4. Win a title (or more)
The Thunder did well with step one. Starting with their last two seasons in Seattle in 2006-07, this franchise had three seasons where it won 31 games, 20 games, and 23 games.
These performances primarily led to the following four high picks in the draft:
From mid-July to mid-October, I became addicted—to the Presidential election. By October 20, I was looking at the FiveThirtyEight blog at least four times a day, and was constantly checking Google News and other websites. This was a classic addiction—after three or four searches each time, I stopped because my marginal utility was diminishing. But after another hour without my “fix,” I had to search again and got tremendous pleasure from that first search. The addiction was interfering with my work.
The theory of rational addiction suggested a solution—go cold turkey. So I vowed not to look at the FiveThirtyEight blog—and I’ve now been “clean” for 6 days. To mitigate my withdrawal symptoms, watching the NLCS and the World Series has served as my methadone. Watching baseball for me has the virtue that it’s self-contained—I’ve not developed any addiction and only watch the games. And if I can stay clean through Nov. 6, my problem will be solved!
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