Freakonomics reader Alan T. recently suggested that when we run an author Q&A on the blog that we announce it beforehand so that readers have time to check out the book first.
Good idea, Alan!
We will soon be running a Q&A with Hanna Rosin about her new book The End of Men: And the Rise of Women
If you ever travel to Israel (which, BTW, is a phenomenal place to visit regardless of your attitudes toward religion or Middle Eastern politics), you’ll certainly see the Church of the Holy Sepulchre, built on what many believe is the site of Jesus’ crucifixion and burial. But you might come away a bit disappointed; the church has something of a disorganized and ramshackle feel.
The problem is not that the site isn’t considered sacred, but that it’s considered too sacred. Thanks to its obvious import, it is shared—and has been for thousands of years—by multiple religious denominations, including the Greek Orthodox, Roman Catholic, Coptic Orthodox, Armenian Apostolic, Ethiopian Orthodox and Syriac Orthodox sects. (Sorry, Protestants, since Luther’s 95 Theses were not posted until 1517 you are Johnny-come-latelys and don’t get a piece of the action.)
Putting people in prison helps drive down crime but it’s not cheap, a fact that is troubling some states. So is there a way to cut incarceration rates without spiking crime? Yes, says economist Ben Vollaard in a recent article (long version) arguing in favor of “selective incapacitation”:
The idea of selective incapacitation is to make a distinction between offenders with a high and with a low propensity to commit crime. Those of the high propensity type – the prolific offenders – are responsible for a large share of violent and property crime (Tracy et al. 1990). To them, the default penalties have little deterrent effect. By making the length of a prison sentence conditional upon an offender’s criminal record, enhanced prison sentences can be targeted at this population. After all, by repeatedly breaking the law, these offenders reveal themselves to be of the prolific type (Polinsky and Rubinfeld 1991). Once the harsher sentences apply, the penalties may begin to make a difference, if not through deterrence, then by way of incapacitation in prison.
I’ve just gotten back home after a terrific few days at the Brookings Panel on Economic Activity. It’s my favorite gabfest of the year, featuring economic analysis that is both serious research, and also connected to ongoing policy debates. (OK, I’m biased–I’m an editor, and organize the conference along with Berkeley’s David Romer.) And while I think some of you may enjoy slogging your way through the latest papers, others may prefer your summaries simpler and lighter. So I went ahead and recorded a few short videos summarizing the papers. I hope you enjoy!
My wife took four grandkids to the Adventure Aquarium in Camden, New Jersey. Looking for a parking space, she noticed the usual handicapped parking spots near the entrance, but also parking spaces reserved for hybrid vehicles. The Aquarium, though not government-run, appears concerned about environmental issues and apparently tries to encourage energy conservation by making a visit easier for those who have chosen energy-efficient vehicles. The private sector is implicitly subsidizing the purchase of hybrid cars, not by offering monetary incentives, but by subsidizing the time cost of owning these cars. I suppose one can object that the subsidy matters more to those whose time is more valuable—presumably higher earners; but it’s still a neat way for the private sector to encourage energy efficiency. I wonder how many other examples exist of explicit non-monetary subsidies by the private sector? (HT to FWH)
New data on income inequality in the United States were just released. And they provide a useful teaching moment. The graph below, which comes from the Census Bureau, shows the evolution of the Gini coefficient since 1967. It’s pretty clear that this measure of inequality has been rising pretty much through this whole period.
p>But here’s how the Census Bureau chose to describe these data:
Based on the Gini index, income inequality increased by 1.6 percent between 2010 and 2011; this represents the first time the Gini index has shown an annual increase since 1993, the earliest year available for comparable measures of income inequality.
Say what?
The Knockoff Economy: How Imitation Sparks Innovation
The Knockoff Economy grew out of an earlier paper of ours on innovation in the fashion industry. We realized there were many creative fields that fell outside the scope of intellectual property law in one way or another, and just as importantly, these fields turned out to be really fun to explore. Writing the book allowed us to dig into things like football and fonts, and to do so in a way that, we hope, opens up a broader debate on the law and economics of innovation.
I have no problem with pedestrians pressing crosswalk buttons when they wait for the crossing light to change before crossing the intersection. Crossing lights and crosswalk buttons serve important safety function at busy intersections especially for disabled or elderly pedestrians who need a bit more time crossing the street.
But some pedestrians press the button with a conditional intention to cross the street before the crossing light changes if there is a break in the traffic. One often sees pedestrians approach an intersection, press the button, and then immediately cross the street, before the crossing light changes.
The pedestrian probably reasons a) “I have a right to press the button”; and b) having pushed it, I now see I can walk without inconveniencing anyone because there aren’t any cars coming.
A reader named David Stokes writes to say:
Last night’s Raiders – Chargers game gave one team a unique opportunity to implement the no-punt strategy.
With the Raiders’ long-snapper hurt, the Raiders coach had a much less risk-averse reason to try always going for it on fourth down. Especially after the first punt was blown and the punter tackled with the ball, who could blame the coach for going for it on fourth every time?
Alas, he proceeded to attempt more punts, and three in a row were blocked or otherwise blown.
FWIW, I think someone should make a documentary about long snappers. I am not kidding.
Resource-rich developing countries have long struggled to overcome the “resource curse,” which includes a strong streak of corruption, but now they’re getting a little help from the SEC. Here‘s Jeff Colgan of Foreign Policy:
[T]he SEC finally enacted long-overdue regulations requiring any oil company that is publicly listed on a U.S. stock exchange to report the tax, royalty, and other payments it shells out to foreign governments where it operates. Previously, companies were able to conceal this information, enabling a culture of corrupt payoffs that kept the petrodollars flowing into authoritarian leaders’ coffers — even where it directly contravened U.S. interests.
Colgan argues that in addition to helping developing countries, the regulation will reduce violence, which is good news for the U.S. as well. “Research shows that oil-producing states led by revolutionary governments like that of ousted Libyan leader Muammar al-Qaddafi are more than three times as likely to instigate militarized international conflicts as a typical state,” he writes.
A reader named Matt Hasten writes in to say:
While in Las Vegas last week for a convention, I took a taxi between casinos (might as well see a few while making my contribution). When it came time to pay and I pulled out a credit card, the cab driver informed me that using a credit card would mean paying a $3 fee in addition to the fare ($11.50). This struck me as a ridiculously high surcharge and when it came time to tip the cab driver (all of this using the back seat electronic card reader), I did not add anything extra. My logic was that while I usually tip 20% on cab fare, that would have only been $2.30 and I already was paying $3 above the fare.
I explained to the cab driver that the money I would usually spend tipping him was instead paying for the $3 fee the cab company imposed on me. The cab driver, understandably, saw things differently and had some colorful wishes for the remainder of my evening. At the time, I felt justified not tipping because I felt the only way to make my displeasure known about the fee was to stiff the cab driver and hope his (and other cab drivers’) anger of missing out on tips might put pressure on the cab company to change the policy. In hindsight, I do feel bad about stiffing the driver! I’m the kind of guy where you have to really mess up to earn less than a 20% tip at a restaurant.
I know the driver didn’t set the $3 credit card fee, but taking it out on him by not tipping was the only way I saw to make my displeasure known or, better yet, impact a greedy policy.
Was I right to not tip?
We’ve blogged before about the very common roommate/rent dilemma — that is, how to fairly split rent among roommates given that different rooms have different features. A reader named Michael Jancsy writes in with an auction solution and a request for feedback:
I recently designed an auction website [called “The Rent Is Too Damn Fair”] to help friends split apartments … The auction works by allowing each roommate to bid on each room in an apartment, and then identifies the permutation of roommates to rooms with the largest consumer surplus (sum of all bids minus rent paid to landlord) to decide who should live in what room. Each person’s rent is then calculated by dividing the surplus evenly over the occupants, so that the difference between a person’s bid and the rent paid is the same for each person.
A reader named Marc Krawitz writes in with a question. Does anyone have an answer for him?
I’m a recent architecture school graduate, and just wondering:
Given laws in America that don’t specifically require an architect to stamp drawings (as opposed to Europe), are architects economically valuable to a housing and building market/culture that strives for bottom dollar and cheap/fast returns? Assuming that hiring an architect has a positive impact on a project, is the time and financial investment on the part of the client worth it in the long run?
Related: Michael Graves writes about the death of drawing in architecture.
Men in the ultra-Orthodox religious community in Jerusalem object to women walking on the street in short skirts or sleeveless blouses, even attacking those who venture out in such unacceptable outfits. Very few women will dare to go out dressed that way in certain sections of this magnificent city. News of the Weird reports a solution that shifts the cost of enforcing the policy to the men: Members of “modesty patrols” are now selling ultra-Orthodox men glasses that blur distant images, thus preventing them from seeing “immodestly dressed” women. This is a neat application of the Coase Theorem, and it seems a fair one: With these glasses, the costs of enforcing the men’s religious beliefs will be borne by the men rather than by women who choose how they wish to dress.
1. Do images of babies help curb crime? A graffiti social experiment in southeast London. (HT: Alex Berezow)
2. Stanford startup Maykah creates toys for girls that encourage them to study math and science.
3. Amazon’s election map. (HT: Flowing Data)
4. Brown University’s student radio show also looks at whether college is worth it.
5. FREAK-shot: an ATM machine that offers risk-free gambling. (HT: Lou Wigdor)
Fascinating article in today’s Times by Richard Sandomir about how the owners of the old American Basketball Association team the St. Louis Spirit are still being compensated for an agreement forged in 1976, when the Spirit were excluded from joining the NBA. Those owners, Ozzie and Daniel Silna, were given a share — in perpetuity — of future TV revenues:
In 1980-81, the first year the Silnas were eligible to get their share of TV money, they received $521,749, according to court documents filed by the N.B.A. For the 2010-11 season, they received $17,450,000. The N.B.A.’s latest TV deal, with ESPN and TNT, is worth $7.4 billion over eight years. Soon, the Silnas’ total take will hit $300 million. …
This is a crosspost from Consultative Group to Assist the Poor (CGAP).
There was plenty of encouraging information shared at the recent “Reaching the Poorest 2012” meeting, convened by CGAP and the Ford Foundation. Together with my fellow researchers, I was among the panelists who presented the findings of well over five years worth of randomized control trials evaluating the impact of the Graduation Model. The projects that were evaluated in Bangladesh, Pakistan, Honduras, and India showed an impact on the livelihoods of the poorest that were targeted. The results were mostly heartening – they showed that Graduation Program participants typically improved their food security, stabilized and diversified income, and increased their assets.
The benefits we’re seeing in the lives of the poorest are big and important. The results are strong evidence that the Graduation Model can work. (We’ll know even more in a couple years when we have full results from seven pilots, with more sites and longer term results to see if results sustain themselves.) One of the most intriguing, and I believe important, results is the simplest: happiness went up in the two sites where “happiness” was measured (Honduras and West Bengal). As part of the surveys to measure the impact of the program on their livelihoods, participants were also asked a series of questions on their general level of happiness and mental health. Often we talk about consumption and income as a measure of wellbeing.
A lot of people write to us looking for work — which, sadly, we are nearly always unable to provide. But once in a while we do hear of a good opportunity for the Freakonomically inclined. To wit:
The U.K. Cabinet Office’s Behavioural Insight Team — better known as the Nudge Unit because of its allegiance to the excellent Richard Thaler/Cass Sunstein book Nudge
Successful candidates will need to show that they:
1. have a good understanding of the behavioural science literature
2. have an understanding and ideally ability to conduct randomised controlled trials to test policy interventions; and
3. are highly motivated individuals capable of developing innovative solutions to often complex policy problems.
4. are strong team playersCandidates should be prepared to work on potentially any aspect of government or wider public sector policy. For example, over the past year the team has led work on health, energy, fraud, electoral registration, charitable giving, consumer affairs, the labour market, and access to finance for SMEs [that’s Euro-speak for “small and medium enterprises“]
Our latest Freakonomics Radio on Marketplace podcast is called “Can Selling Beer Cut Down on Public Drunkenness?”
(You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)
It features Oliver Luck, the athletic director at West Virginia University, whose Top 10-ranked football team opened the 2012 season by beating Marshall 69-34. Luck himself played quarterback at West Virginia from 1978 to 1981 and, after a four-year NFL career, got into sports administration. These days, he is best known as the father of Indianapolis Colts’ rookie quarterback Andrew Luck.
As the A.D. at West Virginia, here’s what Luck saw happening at home football games:
“People drinking far too much at pre-game parties and tailgate parties before games. Sneaking alcohol into games. Leaving at halftime or any point during the game to go back out to the tailgate to drink even more and come back into the game. … They would usually drink hard liquor — ‘get their buzz back on’ and come back into the game for the third quarter. And the police again would know exactly at what point in the third quarter these ‘throw-up calls’ would start to come over the radio.”
Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation
THE KNOCKOFF ECONOMY
CONCLUSION
The traditional justification for trademark law, which protects brands, has little to do with innovation. Instead, trademark law’s justification is that brands help consumers identify the source of products, and thereby buy the item they want–and not an imitation. And yet brands—like Apple, or J. Crew–play an important and often unappreciated creativity-inducing role in several of the industries we explore in The Knockoff Economy.
Put in economic terms, trademarks reduce the search costs associated with consumption. If you’ve had a positive experience with basketball shoes from Adidas, then marking them with the trademark-protected three-stripes helps ensure that you can quickly find their shoes the next time you are shopping. And of course it also lets everyone else know which shoes you prefer.
Wowie kazowie! The Marginal Revolution blog, whose excellence is routinely noted on this blog, is launching a free, online Marginal Revolution University (MRU). From the announcement:
We think education should be better, cheaper, and easier to access. So we decided to take matters into our own hands and create a new online education platform toward those ends. We have decided to do more to communicate our personal vision of economics to you and to the broader world. …
Here are a few of the principles behind MR University:
In the forthcoming book Jewish Jocks: An Unorthodox Hall of Fame
(HT: M.T.)
One of the great lessons of contracts (and of the law more generally) is that the timing of actions can dramatically change legal consequences. An offeree who says “I accept” a moment after the offer is withdrawn is in a very different position than an offeree who says the same thing a moment before an attempt to withdrawn.
This past summer three sports stories seemed to turn on matters of timing. Les Carpenter writes that Lance Armstrong could have avoided is downfall if he had stayed retired:
The irony is that Armstrong could have remained a hero. He could have been a saint, as well as a beacon of light to millions who never would have thought he had cheated throughout his career. All he had to do was stay retired.
The AP reports that Brazilian drug lords are colluding to get rid of crack cocaine even though it will result in millions of lost dollars. Why? Because crack customers have made their jobs unmanageable:
“Rio was always cocaine and marijuana,” [former police chief Mario Sergio Duarte] said. “If drug traffickers are coming up with this strategy of going back to cocaine and marijuana, it’s not because they suddenly developed an awareness, or because they want to be charitable and help the addicts. It’s just that crack brings them too much trouble to be worth it.”
A lawyer for the gangs confirms this:
Miguel Sancho, a senior producer with ABC’s 20/20, writes in with a question I’ve often wondered myself but cannot answer. Can you?
A thought – every hurricane season we see headlines ascribing blame for lives lost on a given storm. “Hurricane Irene Blamed for Five Deaths in North Carolina,” etc. Certainly when people drown, are killed by floating debris, or die because they can’t make it to the hospital, the statistic sounds logical. But it occurred to me that perhaps, in the interests of fairness and accuracy, we should also give Hurricanes “credit” for lives not lost thanks to the interruption of normal human activity. How many homicides, vehicular fatalities, or drug overdoses didn’t happen [last] week in New Orleans, for example, because people were otherwise occupied protecting themselves from Hurricane Isaac? Just wondering if anyone has ever studied this, comparing average morbidity rates in hurricane zones to the stats during the times when hurricanes roll through.
This is not to suggest that overall, hurricanes are a social good. Bastiat’s broken-windows fallacy and all that. But perhaps in this one particular metric, we aren’t seeing the whole picture.
Please don’t judge Sancho’s observation as insensitive to the death and destruction caused by the hurricane itself. I can assure you he is not.
In a recent New Yorker column, one of our best economics journalists, James Surowiecki, discusses Mayor Bloomberg’s proposal to ban sales of soft drinks in containers exceeding 16 ounces. Mayor Bloomberg clearly believes, and Surowiecki seems to agree, that people would consume smaller amounts of soft drinks and fewer calories if a ban were enacted.
But would the effect result from behavioral considerations—many people will drink only one serving whether it is 8 oz. or 32 oz.? Or would it result from the second drink costing more time—the effort to get up and order a second 16-oz. drink after buying one—and more money—because the per-ounce price reflects the additional cost of serving two 16-oz. portions instead of one larger portion? Outside the laboratory, what many argue is evidence for behavioral economics can often be explained by standard neoclassical considerations of money and time costs in demand.
Here is an excerpt from The Knockoff Economy: How Imitation Sparks Innovation
In The Knockoff Economy we examine the relationship between copying and creativity. Most people who study this area look at industries such as music or publishing, where intellectual property (IP) protections are central. We do something different: we explore innovative industries—such as fashion, food, fonts, and finance–in which IP is either unavailable or not effective. In these industries copying is common, yet we find that innovation thrives. In a world in which technology is making copying ever easier, we think these industries have a lot to teach us. And one of the key lessons is that copying is not just a destructive force; it can also be productive. Harnessing the productive side of copying—the ability to refine, improve, and update existing innovations—is at the heart of this excerpt.
THE KNOCKOFF ECONOMY
CHAPTER 4
Rules against copying don’t just cover outright imitation. They also address variations: works that use that some portion of another creative work but add in new stuff, and in the process transform the original work. Think of Shepard Fairey’s famous Hope poster of Barack Obama, which took an existing photograph and reworked it into an iconic image:
A new paper from Nicola Lacetera, Mario Macis, and Sarah S. Stith (abstract; PDF) looks at whether various incentives are helping in getting more organ donations and bone-marrow donations:
In an attempt to alleviate the shortfall in organs and bone marrow available for transplants, many U.S. states passed legislation providing leave to organ and bone marrow donors and/or tax benefits for live and deceased organ and bone marrow donations and to employers of donors. We exploit cross-state variation in the timing and passage of such legislation to analyze its impact on organ donations by living and deceased persons, on measures of the quality of the organs transplanted, and on the number of bone marrow donations. We find that these provisions did not have a significant impact on the quantity of organs donated. The leave legislation, however, did have a positive impact on bone marrow donations. We also find some evidence of a positive impact on the quality of organ transplants, measured by post-transplant survival rates. Our results suggest that these types of legislation work for moderately invasive procedures such as bone marrow donation, but may be too low for organ donation, which is riskier and more burdensome to the donor.
Are we perhaps inching closer to a legal market in organs?
A recent paper (full PDF here) by Young Hoon Lee and Seung Chan Ahn makes a clever point about occupations in which people are paid for a main activity and a secondary area where success depends on productivity in the main activity. If success in the latter also depends on some other characteristic, people who are well-endowed with that characteristic will invest more in the skills needed to be productive in the main activity: the incentives created by that synergy will spill over to earnings in the main activity.
Their example is the Ladies Professional Golf Association (LPGA). Better-looking golfers get lower scores (perform better) — but only going from average-lookers to the best-looking. Below the average, there’s no effect of differences in looks on tournament scores. That makes sense — you probably won’t get more endorsement opportunities if you’re average-looking instead of bad-looking. Although not golf, one might call this the Sharapova Effect. Are there other labor markets, or other activities, in which a similarly unusual synergy exists??
Economists, long inspired by Milton Friedman and others, generally embrace the concept of school choice. But actual evidence on its efficacy has been thin.
A new working paper by Justine S. Hastings, Christopher A. Neilson, and Seth D. Zimmerman, using data from a low-income urban school district, offers some encouraging news for choice advocates:
[W]e use unique daily data on individual-level student absences and suspensions to show that lottery winners have significantly lower truancies after they learn about lottery outcomes but before they enroll in their new schools. The effects are largest for male students entering high school, whose truancy rates decline by 21% in the months after winning the lottery.
How do the authors interpret this finding?