A recent national survey indicates that “[o]ne in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job.” Even higher-income households would find themselves in trouble quickly: “Ten percent of survey respondents earning $100K or more a year say they would immediately miss a payment.”
Even more Americans — 61 percent — wouldn’t be able to pay the rent or mortgage after five months of unemployment. Given the current state of the economy, it’s perhaps wise to heed Suze Orman‘s 2008 advice on this blog — she recommended an eight-month emergency savings fund.
This week, the suffering French nobility; adjusting for crime inflation, is New York really safer? Climate concerns: getting closer to that garden hose to the sky? And two signs of the times: Sesame Street debuts an impoverished Muppet, and Friendly’s goes bankrupt.
Allen R. Sanderson is an economist at the University of Chicago who enjoys, among other things, writing about sports. Some of his past work includes pieces on the puzzling economics of sports, why ties should be allowed in baseball, and how football highlights America’s least flattering features.
Sanderson’s most recent piece comes from the November 2011 issue of Chicago Life magazine, entitled “Taxes and Touchdowns.” In it, Sanderson argues in favor of imposing “steep” taxes on college football (and perhaps basketball) and that a college sports tax should be seen as the fifth sin tax, next to taxes on alcohol, cigarettes, gasoline and fat/sugar. And he’s not just talking about taxing certain aspects of college football; he’s talking about taxing the whole shebang: advertising, television broadcasts, logo merchandise sales, gate receipts. And then using that money to help support those “student-athletes” who don’t make it pro in their effort to finish up their education.
In our latest Freakonomics Radio podcast, “The Upside of Quitting,” we talk about strategic quitting. You can download/subscribe at iTunes, get the RSS feed, or read the transcript here.
One of the hardest things in life to quit is probably a career: what if you were great at your job, making decent money, but it’s just not what you want?
Dubner talks to a very interesting woman who was faced with such a choice, and how she came to her decision to just quit.
From the Freakonomics Radio live show in St. Paul, MN earlier this year (part of which was another podcast earlier this year), here’s the interview with Allie – with an animation by the talented Benjamin Arthur.
If you’re trying to lose weight, making a small change might help. A new study (summarized by the BPS Research Digest) finds that using the non-dominant hand can significantly reduce the kind of habitual eating that many indulge in without even noticing.
Psychologists invited 158 subjects to watch movie trailers in either a movie theater or a university department meeting room and provided participants (some habitual popcorn eaters, some not) with either stale or fresh popcorn. They found that “in the cinema setting the habitual popcorn eaters ate just as much of the popcorn when it was stale as when it was fresh.
This Freaky stat comes courtesy of reader Benjamin Bias, who brought to our attention this oddity, as noted by Joe Weisenthal at Business Insider:
Yesterday, Oct. 3, 2011, the S&P 500 closed at 1,099.23.
Exactly three years ago, on Oct. 3, 2008, the S&P 500 closed at 1,099.23.
As if investors needed anymore reason to be nervous these days.
Last week we solicited your questions for author and Harvard psychology professor Steven Pinker on his new book, The Better Angels of Our Nature: Why Violence Has Declined. You responded quickly with more than 50 questions. Now, Pinker is back with his answers to 10 of them. The result is a fascinating discussion (exactly the kind we like to have around here) on the roots of violence, the rationale for wars of the past and what a decrease in violence says about modern society. As always, thanks to everyone for participating.
Q Any thoughts on the negative side effects of decreased violence? Overpopulation? More sedentary populations? Decreased role for survival of the fittest? Not to say that violence is preferable, just wondering about the downsides of peace. – BL1Y
Next Monday, the Nobel Prize Committee will announce the recipient(s) of the 2011 Nobel Prize in Economic Sciences. If you think you know who’s going to score this year’s prize, head on over to Harvard’s Nobel Pool, “the world’s most accurate prediction market.”
Each entry will cost you $1; all entries and bets must be received by 11:59 PM on Sunday, October 9th. If you’re looking for inspiration, past predictions can be found here. And if you haven’t already, listen to our Freakonomics Radio podcast, “The Folly of Predictions,” to find out where we stand on the whole notion of predictions.
So Freakonomics readers, who are you betting on?
Our friend Joshua Gans, along with some colleagues, has launched a new blog devoted to the economics of digitization called digitopoly.org. Here, in a guest post, he explains the origins of the site, and what it’s all about.
Digonomics
By Joshua Gans
Some of the most popular blogs are tech blogs (Gizmodo, Engadget, TechCrunch) or blogs that place a tech perspective on social commentary (e.g., BoingBoing). And, as we know, economics blogs also tend to be popular. What was missing though was a blog devoted to the economics and competitive issues that arise in the digital age. What’s more, thanks to the NBER’s new Program on the Economics of Digitization (funded by the Sloan Foundation), there is a wealth of new research in this area. That’s how we came to setup a blog devoted to digital issues from an economics perspective.
A new study out of Australia shows that children who go to sleep early and wake up early are less likely to be obese. The results, published in the Oct. 1 issue of the journal Sleep, indicate that it’s not so much the amount of sleep kids get, but the times at which they get it that has the biggest impact on their weight.
A new study by Vanderbilt economist William J. Collins and Ph.D. candidate Katharine L. Shester looks at the long-term economic impact of the ambitious (and highly controversial) Housing Act of 1949, which used federal subsidies and the powers of eminent domain to “revitalize” American cities, i.e., to clear out the slums. By the time the program ended in 1974, 2,100 distinct urban renewal projects had been completed using grants that totaled about $53 billion (in 2009 dollars).
In one of the rare papers to collect and analyze data related to the program, Collins and Shester come up with a positive picture of its effects – at least in some ways. The authors are clear that the ugliness involved with pushing people out of low-income housing was the reason the program was shut down, and that their results do not “imply that the dislocation costs for displaced residents and businesses were unimportant.” From the abstract:
We use an instrumental variable strategy to estimate the program’s effects on city-level measures of median income, property values, employment and poverty rates, and population. The estimates are generally positive and economically significant, and they are not driven by differential changes in cities’ demographic composition.
This week, it’s official: coffee helps women with depression, charting the world mood through Twitter; our gloomy consumer confidence levels over the last three years; a marijuana DNA database; how geo-thermal plants can help produce lithium for electric car batteries; and Harvard and Yale’s endowments post killer returns.
This week the Census Bureau came out with revised statistics on the number of same-sex married couples. As of 2010, there were 131,729 same-sex married couples living in the U.S., and 514,735 same-sex unmarried partner households. These numbers are way below the previous estimates released last summer, which tabulated the number of same-sex married couples as 349,377, and same-sex unmarried partner households 552,620.
So, did 217,648 same-sex married couples simply vanish in the span of a couple months? No, the error seems to be due to a small number of people checking the wrong gender box on the door-to-door census form. Here’s the explanation:
This is a guest post by Duncan Watts, a principal research scientist at Yahoo! Labs, and the author of Everything is Obvious: Once You Know The Answer.
The Myth of Common Sense: Why The Social World Is Less Obvious Than It Seems
By Duncan Watts
“Mankind, it seems, makes a poorer performance of government than of almost any other human activity.”
–Barbara Tuchman, The March of Folly
“This is not rocket science”
–Bill Frist on fixing health care, The New York Times
As these two quotes illustrate, there is something strangely conflicted about contemporary views on government and policy. On one hand, many people are in apparent agreement that government frequently accomplishes less than it ought to, sometimes embarrassingly so. Yet on the other hand, many of these same people are also of the opinion that the failings of government do not imply any great difficulty of the problems themselves—that they are not rocket science, as it were.
A short paper published this week by NBER from authors Albert N. Link and Christopher J. Ruhm takes a simple but oft-neglected look into patents and creativity; namely, how creative parents influence their potentially creative children.
The abstract states:
In this paper we show that the patenting behavior of creative entrepreneurs is correlated with the patenting behavior of their fathers, which we refer to as a source of the entrepreneurs’ human capital endowments. Our argument for this relationship follows from established theories of developmental creativity, and our empirical analysis is based on survey data collected from MIT’s Technology Review winners.
This is a guest post by Jeff Mosenkis, a freelance producer with Freakonomics Radio who holds a Ph.D. in psychology and comparative human development.
Nazis, Sunken Ships, And a 60 Year-Old Game of Telephone
By Jeff Mosenkis
Did you hear the one about the two statisticians who go deer hunting? The first one misses his shot ten feet to the right of the deer; the second one misses ten feet to the left of the deer. They then high five each other and shout “Got him!”
While the quantitative method might not work for hunting, it apparently does for finding sunken warships. NPR’s Alix Spiegel reported this remarkable story about two Australian cognitive psychologists who used a statistical distribution to find two sunken World War II ships, 67 years after they were lost.
On the evening of November 19, 1941, the HMAS Sydney was off the coast of Western Australia when it exchanged fire with the German HSK Kormoran, and sunk with all 645 crewmen aboard. It was a national tragedy, particularly because nobody knew exactly what happened to the ship and why it sunk. The German crew scuttled their damaged ship, and 317 surviving German sailors were picked up in lifeboats at sea or on shore and interrogated.
McKinsey is out with a new report on government innovation in Kenya and the Republic of Georgia. It’s basically the story of how developing countries can harness technology to circumvent entrenched bureaucracy and make government both cheaper and more efficient.
Here are both cases in a nutshell, with a couple snippets from each:
Kenya:
Challenge: Nearly 40% of Kenyans live on less than $2 a day, and corruption is still cited as an ongoing challenge for citizens and businesses. The World Bank has reported, however, that if Kenya can sustain its recent growth rate, it’s on track to become a lower-middle-income country in the next decade. And a new constitution establishes the citizen’s right to access government information—a right that must now be implemented.
With Libya finishing off a bloody revolution, the war in Afghanistan nearly a decade old, and Mexico engulfed in a savage drug war — it might not seem like it, but we’re living in the most peaceable time in history. That’s more of a commentary on just how violent our past is, rather than the tranquility of the present.
In his new book, The Better Angels of Our Nature: Why Violence Has Declined, Harvard psychology professor Steven Pinker lays out the difference in stark contrast, quantifying the dramatic decrease in violence over the ages, and uncovering the reasons for its decline. Pinker operates under the premise that the past is like a foreign country, and that we need to be reminded of its brutality. Starting with a tour of human history that stretches back to 8000 BCE, Pinker offers glimpses along the way, and shows how in the early going, violence persisted even as society and culture evolved.
In our latest Freakonomics Radio podcast, “The Folly of Prediction,” we talk about the incentives behind making predictions, and how wrong predictions often go unpunished, which is why people make so many of them.
But recent news out of Italy seems to take the premise of punishing bad predictions a bit too far. From the New York Times:
Seven Italian seismologists and scientists went on trial on manslaughter charges on Tuesday, accused of not adequately warning residents of a central Italian region before an earthquake that killed 309 people in April 2009. Prosecutors say that the seven defendants, members of a national panel that assesses major risks, played down the risk of a major earthquake’s occurring even though there had been significant seismic activity near L’Aquila, the capital of the Abruzzo region, in the months before the quake.
J.C. Bradbury is a long-time friend and contributor to the Freakonomics blog. An associate professor of economics at Kennesaw State University, Bradbury is the author of two books on baseball: The Baseball Economist: The Real Game Exposed, and Hot Stove Economics: Understanding Baseball’s Second Season. For years, he covered the intersection of baseball and economics on his Sabernomics blog.
So with the new movie Moneyball out, we wanted to get J.C.’s thoughts on how well the book translates onto the big screen, and whether it does justice to the wonky, sabermetrics approach to baseball.
An Economist’s Thoughts on Moneyball
By J.C. Bradbury
When it was published in 2003, the book Moneyball generated a buzz in the field of economics because it covered several topics economists like, such as constrained maximization, market efficiency, entrepreneurship, and statistical analysis. To most people, economics is boring: it’s a class they took because they had to. Author Michael Lewis introduced important economic concepts through a venue that millions of Americans pay to watch. As a book, it succeeded, but I was skeptical that it could work as a movie. I was wrong. Even my wife, who only reluctantly agreed to see the movie with me, enjoyed it.
Reader Philip sent in this FREAK shot. No one said you have to be a math whiz to be a bartender — but, is there any logic in this from the bar’s perspective? Do they just assume patrons can’t or won’t do the simple math, and instead choose the bigger 32 ounce beer for $3? Do you have a FREAK . . .
Usually, it’s New York City that complains bitterly about its diplomat parking ticket situation. The U.N. may be a beacon of hope and peaceful negotiation around the world, but it brings with it workers who use their immunity to park in front of fire hydrants, red zones, and anywhere else they please – it’s the stuff of urban legends and West Wing episodes.
Washington, D.C. is getting in on this complaining game. According to a new article on WTOP.com. D.C. takes the #2 spot with a diplomat ticket total of more than $500,000. New York City is owed a grand total of $17.2 million.
In 2003, the state department issued dire warnings to embassies in New York and D.C. threatening to withhold foreign assistance if parking tickets were not paid. So far though, it seems no foreign assistance has been withheld.
Is loud sex a billion dollar problem? A town in Brazil creates their own currency to boost local economy. Yawning might not mean you’re bored, but that your brain needs cooling. Bonus for your employees: gifts are more effective than money. Video gamers beat scientist at enzyme structuring; could lead to new AIDS drug. Pricing the atmosphere: worth 100 times . . .
Our latest Freakonomics Radio podcast, “The Folly of Prediction,” is built around the premise that humans love to predict the future, but are generally terrible at it. (You can download/subscribe at iTunes, get the RSS feed, or read the transcript here.) But predictions about world politics and the economy are hard — there are so many moving parts.
In the podcast, you’ll hear from Freakonomics researcher Hayes Davenport, who ran the numbers for us on how accurate expert NFL pickings have been for the last 3 years. He put together a guest post for us on football predictions.
Picking the NFL Playoffs: How the Experts Fumble the Snap
As careers in journalism go, making preseason NFL predictions is about as safe as they come these days. The picks you make in August can’t be reviewed for four months, and by that time almost nobody remembers or cares what any individual picker predicted. So when Stephen asked me to look at the success rate of NFL experts in predicting division winners at the beginning of the season, I was excited to look back at the last few years of picks and help offer this industry one of its first brushes with accountability.
So, we crashed yesterday because reddit picked up our story on Japanese adult adoptions, and it caught internet fire. Which is great! Except that we weren’t ready to handle more than double a normal day’s traffic in a matter of hours.
We’re not the first site to be crashed by reddit, which hails itself as the “Front page of the internet,” and sometimes organizes crashes on purpose. But that wasn’t us, their users liked our story: for a moment on Wednesday, ours was the top story on the site’s Today I Learned page.
Ultimately, this is good news, and gives us a great reason to expand. In the meantime, the problem is being addressed. We apologize for the inconvenience and, as always, thanks for reading.
The term “merit pay” has gained a prominent place in the debate over education reform. First it was former D.C. schools chancellor Michelle Rhee trumpeting it as a key to fixing D.C.’s ailing public schools. Then a handful of other districts gave it a go, including Denver, New York City, and Nashville. Merit pay is a big plank in Education Secretary Arne Duncan‘s platform; and Chicago mayor Rahm Emanuel has just launched his own version of merit pay that focuses incentives toward principals.
There’s just one problem: educators almost universally hate merit pay, and have been adamantly opposed to it from day one. Simply, teachers say merit pay won’t work.
In the last year, there’s been some pretty damning evidence proving them right; research showing that merit pay, in a variety of shapes and sizes, fails to raise student performance. In the worst of cases, such as the scandal in Atlanta, it’s contributed to flat-out cheating on the part of teachers and administrators. So, are we surprised that educators don’t respond to monetary incentives? What makes teachers different?
For answers to these and related questions, we decided to convene a Freakonomics Quorum.
Americans are fat. The latest obesity estimates reach as high as 30% of the population. The future looks worse. There’s been much hand wringing over the years, with a new television show sprouting up every season imploring the obese to lose weight. But everyone wants to know: why is this happening?
Researchers Charles Baum and Shin-Yi Chou provide a detailed look at the leading indicators of weight, using the National Longitudinal Survey of Youth from 1979 and 1997 to compare the habits, similarities and differences between people of the same age – just a quarter century apart. The results aren’t pleasant: the largest effect on our recent weight gain? The decline in cigarette smoking.
Does media concentration lead to biased coverage? A new paper from two Berkeley economists, Stefano Delavigna and Alec Kennedy, studies News Corp. and Time Warner, and approaches the big question through a small window: movie reviews. Here’s the abstract:
In honor of Fashion Week, Freakonomics would like to shine a light on a fashion trend happening south of the border in Mexico. We’ve covered the copyright battle over red-soled shoes, but today we’re focusing on Edgar “La Barbie” Valdez Villarreal, the alleged drug cartel boss who was arrested last year.
Last Friday, our contributor and friend Justin Wolfers decided to have some end-of-the-week fun and run a caption contest for a pretty amusing picture he came across. The response was great: the post got 170 comments. As promised, we picked a winner based on the number of thumbs-up approvals given.
That lucky, and witty winner, is VB in NV, who posted the following less than 10 minutes after the post went live:
“I checked the vault Mr. President, and we’re down to a stack of twenties about this high.”
Well-loved. Like or Dislike:276
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We’re going to give you some Freakonomics swag, VB, so watch out for an email from us. Thanks to everybody for participating!
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