What happens when the heir to a family business isn’t up to the job? Not great things, apparently. But the Japanese have a solution: adult adoption. Rather than hand the firm to a less-than-worthy blood heir, Japanese families often adopt an adult to take over. This tradition is the subject of Vikas Mehrotra‘s paper “Adoptive Expectations: Rising Sons in Japanese Family Firms,” which is featured in our latest podcast and hour-long Freakonomics Radio special “The Church of Scionology.” (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player, or read the transcript here.)
America and Japan have the highest rates of adoption in the world – with one big difference. While the vast majority of adoptees in the U.S. are children, they account for just 2% of adoptions in Japan. The other 98% are males around 25 to 30. Mehrotra believes this is the key to one of Japan’s unique differences. Across the developed world, family firms under-perform professionally-run businesses. But in Japan, it’s the opposite. Japan’s strongest companies are led by scions, many of them adopted.
A new working paper from a quartet of economists proposes a new method of estimating how we value the “non-marketed amenities” of neighborhood choices such as avoiding pollution and living among people of our own race. The old static method, they say, underestimates our willingness to pay to avoid air pollution and crime, but overstates how much we value living near neighbors of our own race. Here’s the abstract:
Last week we solicited your questions for Tim Groseclose, a political science professor at UCLA and author of the new book, Left Turn: How Liberal Media Bias Distorts the American Mind. The response was fast and furious. A total of 149 questions (and counting) were posed in the comments section. We selected 14 of them for Groseclose to answer, and he obliged us quite promptly. As always, thanks to all for participating.
Q. Why does liberal media bias exist in the first place? What would you suggest as a way that a) journalists could be more aware of their own bias and limit it in their reporting; or b) the profession of journalism could attract a more unbiased (or merely more representative) cohort? – Jack
That’s the question we asked in our latest podcast and hour-long Freakonomics Radio special “The Church of Scionology.” You can download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript here.
We posed this question to some true American scions: Dick Yuengling of Yuengling beer — a fifth-generation CEO — would answer yes. Two of his daughters work at the family brewery right now, and one will likely succeed him in running it. On the other hand, musician Peter Buffett — son of Warren — would answer differently.
Leave it to the Dutch to turn a playground feature into public-transit innovation. Next time you’re tripping down a set of dirty, crowded subway stairs in your city, just remember that there’s a better way. The Dutch are calling it a “transit accelerator.”
In the Boston Globe, Andrea Estes and Scott Allen write about how people have been taking advantage of a statistical quirk in the rules of an obscure Massachusetts Lottery game called Cash WinFall. A Michigan couple in their 70s, Marjorie and Gerald Selbee, spent three days buying more than $600,000 in Cash WinFall tickets from two convenience stores in Sunderland, Mass. Their timing was purposeful:
For a few days about every three months, Cash WinFall may be the most reliably lucrative lottery game in the country. Because of a quirk in the rules, when the jackpot reaches roughly $2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least $100,000 worth of tickets. During these brief periods – “rolldown weeks’’ in gambling parlance – a tiny group of savvy bettors, among them highly trained computer scientists from MIT and Northeastern University, virtually take over the game. Just three groups, including the Selbees, claimed 1,105 of the 1,605 winning Cash WinFall tickets statewide after the rolldown week in May, according to lottery records. They also appear to have purchased about half the tickets, based on reports from the stores that the top gamblers frequent most.
This week: an economic analysis of gang colors; a chopstick shortage in China; the mathematics of basketball; the social networks of elephants, and are smart people getting smarter?
You may remember Phil Tetlock from our Freakonomics Radio hour-long episode “The Folly of Prediction.” He’s a psychologist at Penn and author of the deservedly well-regarded book Expert Political Judgment. Tetlock and some colleagues have embarked on an ambitious new study of prediction — and even better, they’re looking for volunteers. Specifically, they’re looking for people “who have a serious interest in and knowledge about world affairs, politics, and global economic matters and are interested in testing their own forecasting and reasoning skills.”
Doesn’t that sound like you? You need to be 18 or older, with a college degree. The project even pays a small honorarium. The start date has been pushed back to September, so you better act fast if you want in.
Here’s more information from Tetlock and colleagues:
The question of whether the rise of Internet pornography has reduced incidents of rape is nothing new, and something we’ve covered before. Back in 2006, Levitt expressed skepticism over research done by one of his former students that suggests a link, writing at the time:
The kind of variation in the data that gives the result is that states that are quicker to adopt the internet saw bigger declines in rape. He then does a nice thing in the paper, going beyond just this one prediction to test other hypotheses, like do crimes other than rape fall with the internet (he says no) and does other sexual behavior change with the internet (he says yes). The concern is always, with this kind of approach, that there are other factors that might be driving both the adoption of the internet and the decline in rape. The challenge to those who want to refute Todd Kendall’s argument is to identify those variables. The challenge for Todd is to find other kinds of “natural experiments” that support his hypothesis.
Now comes an article in the current issue of Scientific American Mind, which posits that for “most people, pornography has no negative effects—and it may even deter sexual violence.” The article, titled “The Sunny Side of Smut,” is by Melinda Wenner Moyer, a science writer. Here’s a full version of the piece, via Moyer’s website. Though an interesting read, the article adds no new empirical evidence to the subject, and relies heavily on the data showing that rape decreased faster in states that got the Internet quicker. As Levitt pointed out, that’s not enough to go on.
How do you tell if we’re getting better at a sport or a game, when you can never pit players from different eras against each other? For example, could Tom Brady carve up Pittsburgh’s Steel Curtain defense of the 1970s? Who would win one-on-one, Michael Jordan (in his prime) or LeBron James? Could Justin Verlander strike out Babe Ruth? Outside of video games, we’ll never know.
The obvious exceptions are track and field events, where accomplishments are measured in time and distance. And in those cases, we actually have been consistently chipping away at records, running faster, jumping higher etc. Though the recent use of performance-enhancing drugs has certainly tainted that “progress.”
But what about chess? Players are judged by a sophisticated rating system, though there’s a thought that scores have been inflated recently. A pair of academics have set out to address this by comparing the quality of play over the years. In their recent paper, Kenneth W. Regan, a computer science professor at the University of Buffalo, and Guy Haworth, an engineering professor at the University of Reading, examine the quality of players’ moves, rather than win-or-lose outcomes. Their conclusion is that yes, we are getting better at chess.
Ever since the SUV craze began in the late 1980s, we’ve all known that heavier vehicles are safer for those driving them, but more dangerous for others on the road. Which is why we all started driving them. Now, in a new working paper, a pair of Berkeley economists have quantified not only the fatality risks of heavier cars for other drivers, but also the costs associated with them. Here’s the abstract:
Heavier vehicles are safer for their own occupants but more hazardous for the occupants of other vehicles. In this paper we estimate the increased probability of fatalities from being hit by a heavier vehicle in a collision. We show that, controlling for own-vehicle weight, being hit by a vehicle that is 1,000 pounds heavier results in a 47% increase in the baseline fatality probability. Estimation results further suggest that the fatality risk is even higher if the striking vehicle is a light truck (SUV, pickup truck, or minivan). We calculate that the value of the external risk generated by the gain in fleet weight since 1989 is approximately 27 cents per gallon of gasoline. We further calculate that the total fatality externality is roughly equivalent to a gas tax of $1.08 per gallon. We consider two policy options for internalizing this external cost: a gas tax and an optimal weight varying mileage tax. Comparing these options, we find that the cost is similar for most vehicles.
From Arelis R. Hernández at the Orlando Sentinel comes a hilariously idiotic story of a jail in Lake County, Florida, where rather than having money withdrawn from their accounts, inmates were paid to make phone calls. So much so that one man bonded out after making 77 calls and having $1,250 deposited into his account. He ended up turning himself in a few hours later.
Georgia’s shriveling peach economy, one-third of Michigan teachers feel pressured to cheat, the annual Big Mac index, a public library incentive scheme, and why West Virginia is awash in car crashes the week after a televised NASCAR race.
Last month, Eric Morris wrote a post on red light cameras at traffic intersections in L.A. that sparked a robust debate in the comments section, something we always like. The debate centered around whether these devices are effective at reducing people’s willingness to run a red light, or whether they’re merely sources of revenue for the city. Perhaps you’ll feel similarly passionate about a new Australian study that examined the benefits of fixed speed cameras in New South Wales. From an ABC.net.au article:
On the whole [Auditor-General Peter Achterstraat] has found that speed cameras do change driver behavior and improve road safety but not in all cases. He has found 38 of the 141 fixed cameras across the state seem to have no significant benefit to road safety.
A recent Slate article by Jesse Bering outlines the strange and true world of culture-bound syndromes — mental illnesses that occur in certain geo-specific populations or “sociocultural milieus.” Perhaps the most famous is “amok,” the root of “run amok,” and a problem in Malaysia, Polynesia, Puerto Rico and the Navajo Nation. The syndrome affects males 20–45, who become homicidally violent after a perceived insult. After which, of course, the subject remembers very little. Sound like a good cover? It gets weirder.
In China, we find Koro: “in which the patient is convinced that protruding bodily organs, such as the male genitalia or female nipples, are retracting or disappearing into his or her body.” Koro, however, has a habit of jumping all over the globe, and has been well documented in Thailand, India and Africa. Koro’s internationalism, like that of other culture-bound diseases, throws the specificity of “culture” into question, and the genre of these illnesses remains murky, nearly impossible to define, and fertile ground for wild postulating. Mythology in particular permeates the “culture-bound” discussion. Perhaps it is the particular oral traditions of a people who jump beyond the campfire into the lives – and bodies – of their listeners.
And as for what America has to add? Muscle dysmorphia!
A report by New York City’s Metropolitan Transportation Authority seems to prove that hopping a subway turnstile is worth the risk of getting caught and fined. The MTA estimates that riders entered the subway without paying 18.5 million times in 2009 (an average of 50,684 a day) while the police issued just 120,000 summonses, or 1 for every 154 jumps.
The report figures that a regular turnstile jumper has a chance of getting caught only once every 6 to 13 weeks. At $100 per fine, this works out to be cheaper than a $27 weekly unlimited Metrocard that would cost $162 over six weeks. So the fare-skipper who gets nabbed only once in that period still comes out ahead by $62. And that was in 2009. While the price for a weekly pass has since increased to $29, the cost of the fine has not, so in 2011 it pays even more to hop the turnstile.
From the Daily News:
“This basic street economics might explain observed evasion behaviors,” the authors of the report wrote, arguing stiffer penalties might cut down on scofflaws. “Higher fines or arrests may have better deterrent effects.”
The remedial science of boarding an airplane, a 3-D printer for personalized chocolate, the true meritocracy of Japanese police dogs, charting undergraduate grade inflation through the years, and would you give up the Internet for $1 million?
From NPR’s Beijing correspondent Louisa Lim, comes a story about China’s epic lines, and the money-making opportunity they’ve spawned:
Earlier this month, people waited four days and three nights to register for low-income housing in the central city of Xian, while admission to a certain Beijing kindergarten in Changping last year required a week-long, round-the-clock queue, for which people set up camp beds along the pavement.
A half-day wait at the bank is also apparently not unusual. It’s all led to this:
For the past two years, Li Qicai, 28, has made a career out of waiting in line. What’s more, he now outsources the waiting to others. He employs four full-time queuers and a host of freelancers, who, for a cost of about $3 an hour, will do the waiting for you.
“I’m just selling my time for money,” says Li. “You don’t need any skills, except the ability to suffer. For some jobs, you need to look good. If you want to buy things for rich people, you can’t look like a farmer or they’ll think you’re a scalper.”
The Chinese media pins the phenomenon on an economy driven by laziness, where low labor costs fuel China’s “convenience culture.”
One more point: if it takes a week to wait in line to sign up for kindergarten now, what happens if China’s most populous-province gets its wish, and the country’s one-child policy is overturned?
From a Pew Research Center analysis of the latest Census data:
In the decade from 2000 to 2010, the Mexican-American population grew by 7.2 million as a result of births and 4.2 million as a result of new immigrant arrivals. This is a change from the previous two decades when the number of new immigrants either matched or exceeded the number of births.
The current surge in births among Mexican-Americans is largely attributable to the immigration wave that has brought more than 10 million immigrants to the United States from Mexico since 1970. Between 2006 and 2010 alone, more than half (53%) of all Mexican-American births were to Mexican immigrant parents. As a group, these immigrants are more likely than U.S.-born Americans to be in their prime child-bearing years. They also have much higher fertility.
Data is often difficult to comprehend, especially when the numbers are huge. As Sanjoy Mahajan points out, the $14.3 trillion national debt seems impossible to fathom. It’s not a numeracy problem; it’s more a question of how to divide the gigantic number into parcels we can understand. Mahajan suggests using smaller measures we can handle – namely thinking about debt in per capita terms.
Fortunately there are also some media tech folks to the rescue. This spring, two computer engineers from Minneapolis challenged designers and coders to come up with a visual program to help the public understand the U.S. federal budget. You can see the winners here. If you want a fun way to understand the cuts that Obama’s talking about, the game Budget Climb lets you physically experience 26 years of federal spending data in a virtual reality, interactive format.
The economics of law schools (now more expensive than 4 years of college), a fake Apple store in China, what Carmageddon taught us about behavioral economics, JSTOR hacker gets indicted on felony charges, and an insect that’s survived for a million years without sex.
This bleg comes from reader Wayne Smith, who asks for suggestions on which economic concepts are the most important for kids to learn:
What topics do the Freakonomics readers feel are most important to teach kids 8-13 years old? Aside, of course, from the fact that the man keeps you down.
I was listening to The History of Sesame Street audio book the other day and thought that it would be nice to come up with a YouTube show with decent production value that outlines basic economic concepts in an entertaining way. Concepts like capital, value, supply/demand, trade, time value of money, interest, saving and borrowing, opportunity cost, taxation,and so on. This would be more narrative than something like Khan Academy. Naturally each concept can have an episode devoted to it and each concept can be addressed in different ways in different episodes, but in scenarios geared toward kids. What do the readers think about this as a concept?
Reader Chris Fawcett writes in with an intriguing question: How did the women’s liberation movement affect the income gap in the U.S.?
Income inequality has been on the rise in the U.S. since the 1970s, roughly the same time that women began entering the workforce in large numbers. Considering the amount of attention the widening income gap gets these days as a source of our economic woes, it seemed like something worth posting.
Here’s how Chris sees the issue:
There are a number of ways I believe this has had a big impact (maybe the biggest impact of any single issue):
1. Women’s participation in the workplace has doubled in the past half century.
2. The divorce rate has increased steadily in the past half century.
3. It is more socially acceptable to not have children (through choice or abortion).
4. People are getting married later in life.
In relation to the commonly used CBO “household” income numbers, I think these issues may have had a huge effect on the perception of the widening income gap as follows:
According to an experiment by Honest Tea, it’s L.A.
The company has placed unattended racks of its cold bottled tea on street corners in a handful of cities. A sign asks people to pay $1 per bottle, a heavy discount already. Viewers then “watched people wrestle with their conscience.” Hidden cameras live-stream the action here.
So far, the citizens of Seattle are coming out as the most honest, with 97% of people paying. Atlanta, Boston, Dallas and Cincinnati are in second with 96%. L.A. is last with 87% — they were actually at 90% earlier today, but that fell as the day went on, and the temperature went up. Here are yesterday’s high temperatures for the handful of cities, in order of payment rates:
Forbes‘s Jon Bruner has made a cool map of economists Raymond Fisman and Edward Miguel‘s paper “Cultures of Corruption: Evidence From Diplomatic Parking Tickets” (noted here earlier). The paper measured diplomats who used their immunity to dodge parking fines, resulting in a list of violations per U.N. diplomat. Kuwait tops the list at 246 violations per diplomat. The map is paired with corruption scores from Transparency International, Bruner notes:
Fisman and Miguel set out to use the parking data to understand the impact of social norms on official corruption. The idea is that diplomatic parking violations are essentially consequence free, except for any approbation that might come from the diplomat’s home state. A political culture that doesn’t mind its diplomats racking up parking tickets might not mind outright corruption.
Using science for art, and art for science. How much does it cost to go to Hogwarts? Stephen Hawking: If we can colonize space within 200 years, humans will survive. World map: 7 billion people and their income. Creating a market for cigarette butts: at $3 a pound, it’s well worth it. Monkeys and fair use: if a monkey takes . . .
Stephen Dubner’s first book, Turbulent Souls, has been optioned by The Group Entertainment (Variety‘s report here), with writer Larry Gross (48 Hours, True Crime, We Don’t Live Here Anymore) to adapt the memoir for the big screen. Not that we have a say in this, but just for fun we’d like to find out which actor Freakonomics readers think should play the Dubner in the film.
As if we needed more evidence that people often fail to practice rational, thoughtful analysis in making a decision. A new study by Travis Carter at the Center for Decision Research at the University of Chicago Booth School of Business finds that people who are briefly exposed to the American flag shift toward Republican beliefs.
Abstract inside; full version here.
Over at Intrade, there are two “hot” markets involving the odds that Congress will raise the U.S. debt ceiling.
– Congress to approve increase in U.S. debt ceiling before midnight on July 31, 2011: 40% (It was 65% a month ago)
– Congress to approve increase in U.S. debt ceiling before midnight Aug. 31, 2011: 75% (It was 85% a month ago)
And at Irish bookmaker PaddyPower.com, here is the line on a Moody’s downgrade:
Will Moody’s downgrade the U.S.?
-Yes: 9/2
-No: 1/8
According to a new poll from the Pew Research Center and the Washington Post, more people see raising the debt limit as a bigger risk than not raising it. Though it’s close, and the margin has shrunk over the last two months, 47% say they’re more concerned about the risks that raising the debt limit pose to the U.S. economy than they are over the fallout of failing to do so; 42% see it the other way around.
Sounds like a good time for a Freakonomics Poll:
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