A few weeks ago, we wrote about the Fed’s $1 billion stash of unwanted coins, and the Federal government’s seemingly failed experiment to get us to trade in our dollar bills for dollar coins. The folks over at NPR’s Planet Money got inside access to see the pile of coins, which so far has cost $300 million to manufacture. Despite the clear failure to create demand, the program, authorized by Congress in 2005, won’t end until 2016.
Now it seems some folks have found an easy way to profit from all those unwanted coins. Planet Money reports that people have started buying the coins with their credit cards, thereby earning lots of airline reward miles. The coins are sent to them by the government for free. The buyers then deposit the coins in their bank accounts, pay off their credit card bill… et voila, a free plane ticket to Paris. While the U.S. Mint is a bit miffed by the scheme, a spokesman admits that there’s nothing illegal about it.
A new study by two economists from the University of British Columbia, John F. Helliwell and Shun Wang, shows that Americans are happier on weekends. This is more true for men than for women, as well as for married couples.
Abstract here:
This paper exploits the richness and large sample size of the Gallup/Healthways US daily poll to illustrate significant differences in the dynamics of two key measures of subjective well-being: emotions and life evaluations. We find that there is no day-of-week effect for life evaluations, represented here by the Cantril Ladder, but significantly more happiness, enjoyment, and laughter, and significantly less worry, sadness, and anger on weekends (including public holidays) than on weekdays. We then find strong evidence of the importance of the social context, both at work and at home, in explaining the size and likely determinants of the weekend effects for emotions. Weekend effects are twice as large for full-time paid workers as for the rest of the population, and are much smaller for those whose work supervisor is considered a partner rather than a boss and who report trustable and open work environments. A large portion of the weekend effects is explained by differences in the amount of time spent with friends or family between weekends and weekdays (7.1 vs. 5.4 hours). The extra daily social time of 1.7 hours in weekends raises average happiness by about 2%.
The Fed’s second round of monetary stimulus, the $600 billion QE2, ended on June 30. Since then, financial markets have rallied on news of another Greek bailout, and then fallen on weakening jobs and economic news from the U.S. The Dow is basically back to where it was when QE2 ended on June 30. So the world hasn’t ended, and yet there are those who think we need a third round. The minutes of the latest meeting of Federal Reserve officials, released Tuesday, show them divided on whether to implement a third round of monetary stimulus. Before we get ahead of ourselves, let’s first assess QE2. For that, we turn to two of our regular contributors, Justin Wolfers, and James Altucher.
One of the cool features we’ve added to the new blog is the “Surprise Me” button that allows you to randomly sample our archive of blog posts. You’ll find it all way at the bottom of the blog in the footer; second from the bottom in the left column. Give it a click, and you’re immediately transported into any one of our more than 5,000 posts. It’s a great way to find older posts you may not have seen. Remember, the blog started back in 2005, with this inaugural gem, titled, “Unleashing Our Baby.”
The latest employment numbers have already caused plenty of consternation. But they are actually worse than you may realize.
Most attention focuses just on the headline number, which says that only 18,000 new jobs were created last month. But the employment report actually contains many indicators, which rarely line up perfectly. The problem is that this time they do.
This week: No more drunk puppy-buying; the price tag of a hit song; a human homerun; the end of the mancession; why Americans’ cars are getting heavier; and why a pretty woman causes some men to crave war.
From the results of this year’s high-school “maturity exam” in Poland (courtesy of reader Artur Janc), comes this histogram showing the distribution of scores for the required Polish language test, which is the only subject that all students are required to take, and pass.
Not quite a normal distribution. The dip and spike that occurs at around 21 points just happens to coincide with the cut-off score for passing the exam. Poland employs a fairly elaborate system to avoid bias and grade inflation: removing students’ names from the exams, distributing them to thousands of teachers and graders across the country, employing a well-defined key to determine grades. But by the looks of these results, there’s clearly some sort of bias going on.
A month ago, we ran a post featuring a handful of the latest odds on Intrade, including the chances (84% at the time) that Dominique Strauss-Kahn would be found guilty of at least one charge. Those odds have dropped below 10% in the last week, on the news that his accuser may have credibility issues. But when exactly did that price move start?
Reader Chris Reed wrote in asking us to look into the possibility that there was insider trading in the prediction markets on the DSK news. The initial New York Times piece that broke the story that the DSK trial was on the verge of collapse was first posted online Thursday night, June 30, before appearing on the front page of Friday’s paper. The Times doesn’t time-stamp its articles, but the Huffington Post does. Their story linking to the Times piece is time-stamped 9:38 PM ET.
Here’s a smart take on the current state of law schools from Jonathan Tjarks over at Policymic.com. It’s a rather depressing look at how the odds are similarly stacked against law school grads and college football players. After opening with a nice reference to Sudhir Venkatesh‘s study of the economics of crack from Chapter 3 of Freakonomics, Tjarks’ piece boils down to the following analysis:
Admittance into a top-14 law school, like a scholarship from a top-10 college football program, is the culmination of a lifetime of striving. Of the over 100,000 high school seniors who play football, fewer than 3,000 sign Division I letters of intent. Similarly, the top 25% in Harvard Law’s 2009 class had an average GPA of 3.95 and a LSAT score of 175, which puts them in the 99th percentile of the over 100,000 test takers each year.
Yet, despite overcoming nearly impossible odds, each group still has the toughest test of their lives ahead of them — each other. NFL teams rarely draft players not at the top of the depth chart, even at powerhouses like Texas or Oklahoma. And even at Harvard or Columbia Law, “Big Law” firms — those with the coveted $160,000 starting salaries — don’t reach too far below the median class rank when selecting first-year associate.
An investigation into Atlanta’s public school system has uncovered evidence that teachers and principals have been secretly erasing and correcting answers on students’ tests for as long as a decade. A state investigation found that 178 educators at 44 of the district’s 56 schools engaged in cheating. The report is a huge blow to an urban school district that for years was hailed as one of the country’s most successful due to increased student performance.
From the Atlanta Journal-Constitution:
Superintendent Beverly Hall and her top aides ignored, buried, destroyed or altered complaints about misconduct, claimed ignorance of wrongdoing and accused naysayers of failing to believe in poor children’s ability to learn.
For years — as long as a decade — this was how the Atlanta school district produced gains on state curriculum tests. The scores soared so dramatically they brought national acclaim to Hall and the district, according to an investigative report released Tuesday by Gov. Nathan Deal.
In the report, the governor’s special investigators describe an enterprise where unethical — and potentially illegal — behavior pierced every level of the bureaucracy, allowing district staff to reap praise and sometimes bonuses by misleading the children, parents and community they served.
The report accuses top district officials of wrongdoing that could lead to criminal charges in some cases.
A recent study by a team of economists at Northeastern University’s Center for Labor Market Studies argues that the current economic recovery is the worst since World War II for worker pay and job growth — but the best for corporate profits. The headline:
Over this six-quarter period [from Q2 of 2009 to Q4 of 2010], corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income.
That’s right. Of the $528 billion in real national income gained between the second quarter of 2009 and the fourth quarter of 2010, pre-tax corporate profits accounted for $464 billion, while wages rose by just $7 billion.
A new study by the Cultural Cognition Project, a team headed up by Yale law professor Dan Kahan, shows that people who are more science- and math-literate tend to be more skeptical about the consequences of climate change. Increased scientific literacy also leads to higher polarization on climate-change issues:
The conventional explanation for controversy over climate change emphasizes impediments to public understanding: Limited popular knowledge of science, the inability of ordinary citizens to assess technical information, and the resulting widespread use of unreliable cognitive heuristics to assess risk. A large survey of U.S. adults (N = 1540) found little support for this account. On the whole, the most scientifically literate and numerate subjects were slightly less likely, not more, to see climate change as a serious threat than the least scientifically literate and numerate ones. More importantly, greater scientific literacy and numeracy were associated with greater cultural polarization: Respondents predisposed by their values to dismiss climate change evidence became more dismissive, and those predisposed by their values to credit such evidence more concerned, as science literacy and numeracy increased. We suggest that this evidence reflects a conflict between two levels of rationality: The individual level, which is characterized by citizens’ effective use of their knowledge and reasoning capacities to form risk perceptions that express their cultural commitments; and the collective level, which is characterized by citizens’ failure to converge on the best available scientific evidence on how to promote their common welfare. Dispelling this, “tragedy of the risk-perception commons,” we argue, should be understood as the central aim of the science of science communication.
A new study has some interesting things to say about the demand curve of heroin users. Drawing data from volunteers who use the drug daily, researchers Juliette Roddy, Caren Steinmiller, and Mark Greenwald tested three parameters: an income shock; removing the financial support of family and friends; and multiplying the the risk of getting caught. They found that income reduction had some effect: as income decreases, those who purchase a lot of heroin scaled back more than those who bought a little. When government subsidies were removed, participants also attested that they would buy less. They also found that participants with cocaine in their urine were more efficient drug buyers – this subgroup lowered transaction costs by shaving both distance (making sure they lived close to a drug dealer) and time in their purchases. They found that the more frequent the user, the most cost-effective they are about their heroin purchases, with those who also use cocaine being the most effective shoppers.
This week: Why is our vision getting worse? Could an airline-style loyalty program work for public transportation? Why rich people are bad at reading the emotions of strangers, and a Cornell study uncovers corruption among Amazon’s top reviewers.
In a whopper of counterintuitive research, and another reason to look askance at that supposed wonder of modern food science olestra (Olean), a study published by the American Psychological Association shows that synthetic fat substitutes used in low-calorie potato chips can backfire and contribute to weight gain more so than their fatty counterparts. How do we know? Researchers at Purdue fed Pringles to lab rats. Yes, the mathematically perfect, Einstein-inspired Pringles. Here’s how it worked:
In the pilot episode of USA’s new lawyer show Suits, one of the characters says: “A person is more likely to die while dealing drugs than on death row in Texas… It’s from Freakonomics. Do you read anything I give you?”
That was from Chapter 3 of Freakonomics (excerpt here). Though we’re flattered, we should point out that the drug dealers we were talking about sold crack cocaine on the street in Chicago during the peak of crack-and-crime wave. We can’t vouch for the risk of the run-of-the-mill drug dealer …
(HT to multiple readers, including Linda Jines and April Allridge)
The Economist reports that city dwellers are at a significantly increased risk of developing anxiety and mood disorders. Evidence from a new study by Andreas Meyer-Lindenberg, a German psychology professor, might point to why.
Urbanites, it turns out, deal with stress differently than rural residents. Meyer-Lindenberg identified a difference in the activity of the amygdalas, with those living in cities having the highest activity in this area of the brain. The amygdala is responsible for memory storage and emotional events, and scientists believe it’s also related to dealing with fear. Meyer-Lindenberg also found that people raised in cities have an off-kilter perigenual anterior cingulate cortex (pACC) amygdala link, a condition also present in schizophrenia.
The folks over at NPR’s Planet Money have a great piece today on the stash of unused dollar coins that’s piling up at the Federal Reserve. Back in 2005, Congress passed a law ordering the Fed to mint a series of dollar coins honoring the presidents. The plan was to wean Americans off paper bills. It hasn’t exactly worked. There are currently about 1.2 billion dollar coins sitting unused in Federal Reserve vaults. The program has cost $300 million so far, and is scheduled to run through 2016.
One of the fundamental principles of economics is that scarcity creates value. The rarer something is, the more valuable it becomes. History is loaded with examples of investors (speculators?) cornering the market in all kinds of things in order to set the price and make a killing. From Cornelius Vanderbilt buying up shares of the Harlem railroad in the 1860s, to the Hunt brothers acquiring roughly half the world’s silver in 1979, to the Sumitomo copper affair of the mid-1990s, to Porsche’s 2008 attempt to corner the market in Volkswagen shares.
Now, from the UK comes a strange and highly obscure attempt to corner the market for a good whose value is much less obvious. A performance artist named Jamie Moakes has decided to see if the principle of scarcity applies to 1980s action figures; specifically, a character from the old He-Man cartoon, Ram Man. Moakes has now collected 136 Ram Man figures, an exercise he’s dubbed “You Will be Rare” and is documenting on Youtube.
This week: Researchers say it pays to be loyal; are ovulating women better at detecting sexual orientation? Nathan Myhrvold on risk and the state of the Earth; a Gallup poll suggests slowing migration, and why your paycheck just might kill you.
Jeff Mosenkis, a freelance producer with Freakonomics Radio, holds a Ph.D. in psychology and comparative human development.
Government Safety Regulation: Kind Mother or Big Brother?
By Jeff Mosenkis
On the same day last week, news stories broke about two different parts of government demonstrating two different ideological approaches to regulating consumer safety. In the first, the FDA came out with rules standardizing the labeling of sunscreen, after 33 years of deliberation.
Presumably, the reasoning behind making sure the claims on sunscreens are clear and uniform across different products (like the standardized nutrition information on food packaging) is to allow consumers to make better decisions for themselves. Let’s call this the Kind Mother approach.We are given information that strongly hints at which is the right choice, but ultimately are still able to decide for ourselves.
At the same time, the Consumer Product Safety Commission (CPSC) has directed its staff to draft regulations governing the safety of table saws. An estimated 40,000 people are injured every year when hands, fingers or other body parts find their way into the path of a table saw blade.
This week: Why life expectancy for women is decreasing in some parts of the U.S. Iceland crowdsources its new constitution. How brain scans of teenagers can predict future pop hits, and may even be able to determine whether they’ll grow up to be a criminal.
Last week, Freakonomics Radio took to the stage for a live event at the historic Fitzgerald Theater in St. Paul, Minn. Not only is St. Paul the home of Freakonomics Radio co-producer American Public Media, but Steve Levitt also grew up in the Twin Cities. So the live event had a good deal of “this is your life” stuff in it, including a Quiz Bowl competition between Team Levitt (Steve, his sister Linda Jines, and their father Michael) against the current team from St. Paul Academy, where both Steve and Linda starred on the Quiz Bowl team in their day.
We’ll release a podcast next week drawn from the live event, including the Quiz Bowl competition. In the meantime, who do you think won?
Organ donation is a familiar topic around here. Back in December, we discussed whether there should be a legal market for organs in a podcast episode called “You Say Repugnant, I Say… Lets Do it!” A few weeks ago, we blogged about whether the idea of a legal organ market is losing its stigma. So we were immediately intrigued by news that emerged earlier this month from China, about a 17-year-old boy who had sold his kidney for $3,392 to buy a new iPad 2. From the BBC:
The 17-year-old, identified only as Little Zheng, told a local TV station he had arranged the sale of the kidney over the internet. The story only came to light after the teenager’s mother became suspicious. The case highlights China’s black market in organ trafficking. A scarcity of organ donors has led to a flourishing trade.
The story turned out to be perfect fodder for Michele Goodwin, who has embarked on a three-part series on organ transplantation over at the Chronicle of Higher Education. Goodwin argues that the organ transplant market is far too restrictive, and makes the case for creating better incentives for organ donors in order to undercut the black market.
Jeff Mosenkis, a freelance producer with Freakonomics Radio, holds a Ph.D. in psychology and comparative human development.
Cracking the F&#%ing Humor Code
By Jeff Mosenkis
Just in time for Father’s Day, imagine rocking your little one to sleep with the lines:
“The windows are dark in the town, child
The whales huddle down in the deep
I’ll read you one very last book if you swear
You’ll go the F–k to sleep.”
The lines are from the new “kids” book Go the F**k to Sleep, by Adam Mansbach, which became a runaway hit after a PDF of the book was circulated online widely. It’s fully illustrated and written like a kids’ bedtime book, except for the exasperated expressions most kids might not quite understand. If you know anybody with kids, you probably got the e-mail (if not, refresh — it’s probably there by now). Months before publication, it shot up to No. 1 on Amazon, prompting its tiny publisher to move up its publication date.
As of this writing, it’s still ranked No. 2 overall on Amazon, and first in both humor and parenting & families sections. The movie rights have been optioned.
It might seem like a long shot that a profanity-laced purported kids book from a niche publisher should be such a runaway hit, but one clue why might come from humor researchers at the University of Colorado Boulder Leeds School of Business.
Back in March we wrote about a Norwegian study which showed that an increase in maternity leave led to lower high-school dropout rates for the children of those moms. But a new working paper about maternity leave in Canada (abstract here) highlights some possible negative effects of extra maternity — specifically on a child’s cognitive development at ages 4 and 5. At issue isn’t the extra time a mother spends with her child, but the timing of when she returns to work, and the abrupt change it causes.
Michael Baker of the University of Toronto and Kevin Milligan of The University of British Columbia focused their research on a Canadian law passed at the end of 2000 that extended maternity leave from 6 months to a full year. As a result, the timing of the return to work changed from an average of just under 6 months to nearly 9 months:
We find that the expansion of parental leave — and the resulting extra time mothers spent with their child in his/her first year of life—had no positive impact on indices of children’s cognitive and behavioral development; this despite the fact it had substantial impacts on the maternal care and non-licensed non-parental care children received in their first year, as well as how long they were breastfed. For our behavioral indices we can rule out all but very modest improvements. For our cognitive measures the estimated impact of the reform is small, negative and statistically significant for PPVT and Who Am I? This latter result highlights the relatively neglected issue of how changes in maternity leave laws affect the timing of the mothers’ return to work. Specifically, it is consistent with the hypothesis that some ages are better than others for abrupt changes in the parent-child relationship.
This week: Does having a full bladder help you make more rational decisions? A survey of the best Civil War facial hair; why wheat beer is good for marathoners; and whether the Consumer Financial Protection Bureau is the largest field study ever in behavioral economics.
This week, Bloomberg BusinessWeek put the financial woes of the U.S. Postal Service on its cover with a story titled “The End of Mail.” The dire plight of the USPS isn’t exactly news — it’s been losing money since 2006, including nearly $20 billion since 2007. But the cliff the agency has been driving toward is fast approaching. The agency is now almost $15 billion in debt. Unless the government steps in, it will default on $5.5 billion of retiree health-care costs in September. By October it will reach its legal debt limit, and by the end of the year, the USPS will be out of cash — insolvent and unable to operate.
So what to do? How do you fix a federal agency that, if private, would rank as the 29th largest company on the Fortune 500 list? It can’t just go away, can it?
Is there a mathematics generation gap? Do good restaurant reviews cause price hikes? Journals of the American Economic Association wave goodbye to double blind peer reviews, and more.
Oh, my neck! Oh, my back!
Every day, legal decisions are made based on the pain, suffering, and anxiety people say they’re feeling, even though we have no objective way to measure them. So what if we could see inside people’s minds — not just to know what they’re feeling now, but what they’ve felt in the past too?
Advancements in neuroscience are already improving our ability to do so. A new article published in the Emory Law Journal (full version here) entitled “The Experiential Future of the Law,” by Brooklyn Law School professor Adam Kolber, looks at how these advancements will continue over the next 30 years (to the point of near mind-reading), and how they’ll inevitably lead to changes in the law.
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