Reader Tim Kelly sends in photo from a store in Lombard, Illinois:
As Tim writes:
I spotted an interesting sign while out Christmas shopping the other day. The sign stated the company’s “breakage policy,” where any broken item must be bought, but that the store will only charge half price on the broken item. The sign continued offered to repair the broken item, free of charge (I confirmed the free repairs from the shop owner, as it is not explicitly stated in the sign).
The sign was located on a mall kiosk selling Christmas ornaments. I imagine breakage is a big issue for such a shop, as their product is relatively fragile and are highly enticing to bored kids stuck Christmas shopping with their parents.
My initial instinct upon seeing the sign was that this policy seemed to be inviting people to game the system.
First there was “peak oil“; now there’s “peak farmland.” But it’s not what you think. Reuters reports that a group of scientists from the Program for the Human Environment at Rockefeller University just released a report detailing their findings:
The amount of land needed to grow crops worldwide is at a peak and an area more than twice the size of France can return to nature by 2060 due to rising yields and slower population growth, a group of experts said on Monday.
The report, conflicting with U.N. studies that say more cropland will be needed in coming decades to avert hunger and price spikes as the world population rises beyond 7 billion, said humanity had reached what it called “Peak Farmland.”
“Happily, the cause is not exhaustion of arable land, as many had feared, but rather moderation of population and tastes and ingenuity of farmers,” says Jesse Ausubel, the study’s lead author.
(HT: Free Exchange)
As Republicans and Democrats continue to bicker about spending and taxes, the Onion has stepped in with an excellent plan for averting a fiscal crisis:
STEP ONE: Eliminate school breakfast and lunch programs, Medicaid, the Consumer Product Safety Commission, the Environmental Protection Agency, Medicare, PBS, New Mexico, elk, the Coast Guard, and all dams.
And, our favorite, Step Three:
STEP THREE: Eliminate federal prison system by converting U.S. territory of Guam into an unsupervised penal colony known as “The Gauntlet.”
1. The hyperlink as a microtransaction of trust.
2. Money-back guarantees in the NBA: The Phoenix Suns to give money back if fans don’t have fun. (HT: V. Brenner.)
3. Fifty Shades of Grey gives all Random House employees $5,000 bonuses.
4. An interview with George Mitchell, the man who innovated fracking.
5. Felix Salmon explains the fiscal cliff with Legos and toys.
Our motto has always been “friends don’t let friends walk drunk.” We might have to add texting to that list. A new paper from BMJ Group shows that walking and texting is really not a good idea. The study looked at more than 1,000 pedestrians in Seattle, and found texting to be a particularly troublesome distraction:
Texters took almost two seconds (18%) longer to cross the average junction of three to four lanes than those who weren’t texting at the time.
And they were also almost four times more likely to ignore lights, to cross at the middle of the junction, or fail to look both ways before stepping off the curb.
In a country where more than 4,000 pedestrians are killed each year in traffic accidents, it seems sensible to do what we can to decrease our chances. The authors write:
Individuals may feel they have “safer use” than others, view commuting as “down time,” or have compulsive behaviors around mobile-device use. … Ultimately a shift in normative attitudes about pedestrian behavior, similar to efforts around drunk-driving, will be important to limit the … risk of mobile-device use.
Writing at the Monkey Cage, political scientist Cristian Vaccari describes his research about how political candidates, who often rely heavily on email lists, actually respond to emails:
As part of a broader study of the online presence of parties, party leaders, and Presidential candidates in Australia, France, Germany, Italy, Spain, the U.K., and the U.S., I tested whether and how rapidly their staffs responded to two types of emails (sent from separate fictitious accounts in the official language of each country): one asking for their positions on taxes (a cross-cutting issue that should not strongly differentiate between different types of parties), the other pledging to be willing to volunteer for them and asking for directions on how to do so. Emails were sent in the two weeks prior to national elections between 2007 and 2010 to a total of 142 parties and candidates. The results speak volumes to the lack of responsiveness among political actors: excluding automated responses, only one in five emails received a reply within one business day.
A new paper in the American Economic Review (abstract; PDF), summarized here, finds that Americans aren’t very consistent when thinking about financial risk. Liran Einav, Amy Finkelstein, Iuliana Pascu, and Mark R. Cullen, analyzing how people choose health insurance and 401(k) plans, found that “at most 30 percent of us make consistent decisions about financial risk across a variety of areas.” Their data set includes 13,000 Alcoa employees:
Because employees were making decisions in both the health-care and retirement domains, the researchers had the opportunity to see how the same individuals handled different types of choices. Or, as Finkelstein puts it, the economists could ask: “Does someone who’s willing to pay extra money to get comprehensive health insurance, who doesn’t seem willing to bear much financial exposure in a medical domain, also tend to be the one who, relative to their peers, invests more of their 401(k) in [safer] bonds rather than stocks?”
Reader Noah Dentzel claims that crowdfunding has overlooked virtues, and that it is giving rise to products that may never have happened via the traditional business model:
Most companies either a) raise money through traditional financing avenues or b) build a business slowly and invest first and then bring a new product to market. Crowdfunding allowed us to do everything backwards: by pre-selling a product before the tooling for it even exists, we get a good feeling for market demand and we then gain a clear picture of whether or not to move forward.
Meanwhile, because companies like us are financed through consumers (pre-selling), it’s essentially consumer driven business growth and innovation. We don’t have to wait around for angels or VCs, we can allow anyone from around the world (and a good third of our orders are from overseas) to invest in new ideas, new businesses and whatever will be crowdfunded next. What’s also pretty cool is that we’re making this product right here in California which isn’t too typical for a consumer electronic device these days. People ask why we’re not doing it in China and I just tell them that both in terms of quality and cost, we couldn’t afford it if we wanted to–these are some of the twists and turns that you see in the Crowdfunding consumer product long tail of manufacturing.
Check out Noah’s project here. Crowdfunding can, of course, also give rise to products like this.
Dan Kahan‘s research at the Cultural Cognition Project has found that even very smart people fit their knowledge to their ideology. (He has appeared on this blog a few times, and in our podcast “The Truth Is Out There…Isn’t It?”) Kahan has a new working paper (abstract; PDF) on political affiliations and bias, which argues that independents seem to show immunity to the bias that afflicts both conservatives and liberals:
Social psychologists have identified various plausible sources of ideological polarization over climate change, gun violence, national security, and like societal risks. This paper reports a study of three of them: the predominance of heuristic-driven information processing by members of the public; ideologically motivated cognition; and personality-trait correlates of political conservativism. The results of the study suggest reason to doubt two common surmises about how these dynamics interact. First, the study presents both observational and experimental data inconsistent with the hypothesis that political conservatism is distinctively associated with closed-mindedness: conservatives did no better or worse than liberals on an objective measure of cognitive reflection; and more importantly, both demonstrated the same unconscious tendency to fit assessments of empirical evidence to their ideological predispositions.
A new working paper (abstract; PDF) by Britta Augsburg, Ralph De Haas, Heike Harmgart, and Costas Meghir uses a randomized trial to assess a microcredit program in Bosnia:
[W]e randomly allocated loans to a subset of applicants considered too risky and “unreliable” to be offered loans as regular borrowers of a well established MFI [micro-finance institution] in Bosnia. Our group is poorer and generally more disadvantaged than regular borrowers. What is particularly interesting is that they have applied for the loan and thus believe they have a profitable investment opportunity; however, they were turned down. This is exactly the group we need to analyze if we are to understand whether alleviating liquidity constraints in this way can be an effective anti-poverty tool.
A new working paper by George Bulman, a Stanford Ph.D. candidate and former Teach for America teacher, looks at whether having an in-school SAT or ACT testing center affects test-taking and college enrollment: Because the additional cost of taking the exam at a neighboring high school is very small, standard economic models suggest that there should be no effect. To . . .
A new working paper (abstract; PDF) by Hilary W. Hoynes, Diane Whitmore Schanzenbach, and Douglas Almond examines the effects of in utero and childhood access to the social safety net, specifically food stamps:
A growing economics literature establishes a causal link between in utero shocks and health and human capital in adulthood. Most studies rely on extreme negative shocks such as famine and pandemics. We are the first to examine the impact of a positive and policy-driven change in economic resources available in utero and during childhood. In particular, we focus on the introduction of a key element of the U.S. safety net, the Food Stamp Program, which was rolled out across counties in the U.S. between 1961 and 1975. We use the Panel Study of Income Dynamics to assemble unique data linking family background and county of residence in early childhood to adult health and economic outcomes.
Laura Meckler of the Wall Street Journal investigates the value and possible future uses of President Obama’s massive “data trove.” Here’s a quick rundown of the data at stake:
Mr. Obama’s campaign collected 13.5 million email addresses in the 2008 election, according to people who worked on the effort. Officials say the list has grown since then, but officials won’t say by how much.
The campaign also has lists of volunteers, including the names of neighborhood team leaders who were the most active supporters. A donor database has names of millions of people who made small campaign contributions. Campaigns aren’t legally required to report the names of people who give less than $200 total, and these donors haven’t been made public.
Meckler reports that Obama’s staff plans to enlist supporters’ help in getting the President’s agenda passed, but is still debating what to do with the data over the long-term.
1. Did an “academic dream team” help Obama win the election?
2. Bond economics: which Bond villain plans are economically viable? (HT: V. Brenner)
3. Dutch artist Berndnaut Smilde figures out how to create clouds indoors for an exhibition.
4. Candy for quietness: police in Durham gave drunk students candy to quiet them. (HT: V. Brenner)
5. The world’s “poorest president“: Uruguay’s Jose Mujica lives on a farm.
A newly declassified report from the National Research Council analyzes the vulnerabilities of America’s electric-power system. Douglas Birch of Foreign Policy explains:
[T]he formerly secret report to the Department of Homeland Security focuses more on the U.S. electric power system’s older technology and lack of spare capacity, saying the “physical capabilities of much of the transmission network have not kept pace with the increasing burden that is being placed on it.” As a result, it found, sophisticated physical assaults against key facilities could damage difficult-to-replace hardware and cause multiple cascading failures with catastrophic results.
Hurricane Sandy wasn’t a “sophisticated physical assault,” but it still did the job.
A new working paper (abstract; PDF) by economists Peter Arcidiacono, Esteban Aucejo, Patrick Coate, and V. Joseph Hotz looks at the effects of California’s Proposition 209 on university matching:
Proposition 209 banned using racial preferences in admissions at California’s public colleges. We analyze unique data for all applicants and enrollees within the University of California (UC) system before and after Prop 209. After Prop 209, graduation rates of minorities increased by 4.4%. We characterize conditions required for better matching of students to campuses to account for this increase. We find that Prop 209 did improve matching and this improvement was important for the graduation gains experienced by less-prepared students. At the same time, better matching only explains about 20% of the overall graduation rate increase. Changes after Prop 209 in the selectivity of enrolled students explains 34-50% of the increase. Finally, it appears UC campuses responded to Prop 209 by doing more to help retain and graduate its students, which explains between 30-46% of the post-Prop 209 improvement in the graduation rate of minorities.
One caveat: the study doesn’t address outcomes for students who didn’t attend University of California schools as a result of the change.
In a new paper (abstract; PDF), psychologists Jonathan Cook and Shahzeen Attari surveyed users about the hotly debated New York Times paywall:
Participants were surveyed shortly after the paywall was announced and again 11 weeks after it was implemented to understand how they would react and adapt to this change. Most readers planned not to pay and ultimately did not. Instead, they devalued the newspaper, visited its Web site less frequently, and used loopholes, particularly those who thought the paywall would lead to inequality. Results of an experimental justification manipulation revealed that framing the paywall in terms of financial necessity moderately increased support and willingness to pay.
A working paper by Sergio Beraldo, Raul Caruso, and Gilberto Turati looks at time preferences and their relation to crime over a five-year period in Italy. Using proxies for patience (some of which may strike some people as rather far-fetched), they found more crimes in areas where residents are more impatient and discount the future more:
In this paper we propose a first empirical test on the relationship between time preferences and crime using as a sample the whole set of Italian regions observed over the period 2002-2007. We consider both property and violent crimes. We proxy time preferences employing: 1) the amount of short-term debt to finance consumption (the consumer credit share); 2) the prevalence of obese people according to their body mass index (obesity); 3) 5 the willingness of individuals to engage in stable relationships (the marriage rate). In line with the theoretical prediction by Davis (1988), we find that where people are more impatient and discount the future more heavily, property and violent crimes are higher. In particular, the correlation between crime rates and time preferences is especially robust when time preferences are proxied both by the obesity and the marriage rates.
The unwillingness of women to negotiate their salaries is often blamed for the persistent male-female wage gap. A new paper (abstract; pdf) from Freakonomics favorite John List (and coauthor Andreas Leibbrandt) uses a field experiment to explore the issue:
By using a natural field experiment that randomizes nearly 2,500 job-seekers into jobs that vary important details of the labor contract, we are able to observe both the nature of sorting and the extent of salary negotiations. We observe interesting data patterns. For example, we find that when there is no explicit statement that wages are negotiable, men are more likely to negotiate than women. However, when we explicitly mention the possibility that wages are negotiable, this difference disappears, and even tends to reverse. In terms of sorting, we find that men in contrast to women prefer job environments where the “rules of wage determination” are ambiguous. This leads to the gender gap being much more pronounced in jobs that leave negotiation of wage ambiguous.
An New England Journal of Medicine article looks at the probability of a bystander performing CPR based on neighborhood characteristics including income and race:
Among 14,225 patients with cardiac arrest, bystander-initiated CPR was provided to 4068 (28.6%). As compared with patients who had a cardiac arrest in high-income white neighborhoods, those in low-income black neighborhoods were less likely to receive bystander-initiated CPR (odds ratio, 0.49; 95% confidence interval [CI], 0.41 to 0.58). The same was true of patients with cardiac arrest in neighborhoods characterized as low-income white (odds ratio, 0.65; 95% CI, 0.51 to 0.82), low-income integrated (odds ratio, 0.62; 95% CI, 0.56 to 0.70), and high-income black (odds ratio, 0.77; 95% CI, 0.68 to 0.86). The odds ratio for bystander-initiated CPR in high-income integrated neighborhoods (1.03; 95% CI, 0.64 to 1.65) was similar to that for high-income white neighborhoods.
HarperCollins is running a sale on the SuperFreakonomics e-book for the next few weeks, offering it via all digital vendors for $3.99. The book’s total worldwide sales are > 1 million.
A German court has ruled that poker is a game of skill, as Levitt has argued before (and which a U.S. court has recently confirmed). The ruling is in response to poker player Eduard Scharf‘s claims that his poker winnings shouldn’t be taxed because poker is a game of chance, and “anyone can win a game of poker.” The court disagreed, ruling that “[H]e had to pay income tax on his winnings saying they counted as commercial income as they were linked to his personal skills.” (HT: Sven Seuken)
A Florida state task force on education has just released a recommendation to adjust tuition, by major.
“Tuition would be lower for students pursuing degrees most needed for Florida’s job market, including ones in science, technology, engineering and math, collectively known as the STEM fields,” writes Scott Travis of the South Florida Sun-Sentinel. Students in other majors — psychology and the performing arts, for example — would pay more. “The purpose would not be to exterminate programs or keep students from pursuing them. There will always be a need for them,” Dale Brill, the task force chair, told Travis. “But you better really want to do it, because you may have to pay more.”
Here‘s how Alex Taborrak (of Marginal Revolution) sees the plan:
In a new working paper (PDF; abstract), economists David G. Blanchflower, Andrew J. Oswald, and Sarah Stewart-Brown argue that you actually are what you eat:
Humans run on a fuel called food. Yet economists and other social scientists rarely study what people eat. We provide simple evidence consistent with the existence of a link between the consumption of fruit and vegetables and high well-being. In cross-sectional data, happiness and mental health rise in an approximately dose-response way with the number of daily portions of fruit and vegetables. The pattern is remarkably robust to adjustment for a large number of other demographic, social and economic variables. Well-being peaks at approximately 7 portions per day. We document this relationship in three data sets, covering approximately 80,000 randomly selected British individuals, and for seven measures of well-being (life satisfaction, WEMWBS mental well-being, GHQ mental disorders, self-reported health, happiness, nervousness, and feeling low).
One major note: the researchers caution that reverse causality may be an issue. That is, rather than fruit and vegetables causing well-being, it may be that well-adjusted people prefer eating a lot of fruit and vegetables. The authors recommend additional “randomized trials to explore the consequences for mental health of different levels of fruit-and-vegetable consumption.”
A new working paper (abstract; PDF) by Ian Fillmore and Devin G. Pope examines whether “cognitive fatigue” has any impact on exam results. The researchers looked at the number of days students had between AP exams, and found that resting time matters:
In many education and work environments, economic agents must perform several mental tasks in a short period of time. As with physical fatigue, it is likely that cognitive fatigue can occur and affect performance if a series of mental tasks are scheduled close together. In this paper, we identify the impact of time between cognitive tasks on performance in a particular context: the taking of Advanced Placement (AP) exams by high-school students. We exploit the fact that AP exam dates change from year to year, so that students who take two subject exams in one year may have a different number of days between the exams than students who take the same two exams in a different year. We find strong evidence that a shorter amount of time between exams is associated with lower scores, particularly on the second exam. Our estimates suggest that students who take exams with 10 days of separation are 8% more likely to pass both exams than students who take the same two exams with only 1 day of separation.
A recent Freakonomics radio podcast focused on the unintended consequences of bounties. Here’s another great example: California’s recycling redemption program no doubt seemed like a great idea when it was initiated, but an L.A. Times article suggests the system is being gamed. Last year, it appears that nearly 100 percent of recyclable cans sold in California were returned, and 104 percent (!) of plastic containers:
Crafty entrepreneurs are driving semi-trailers full of cans from Nevada or Arizona, which don’t have deposit laws, across the border and transforming their cargo into truckfuls of nickels. In addition, recyclers inside the state are claiming redemptions for the same containers several times over, or for containers that never existed.
An interesting new paper (abstract; PDF) by the Emory economist Andrew M. Francis explores penicillin’s role in shaping modern sexuality:
It was not until 1943, amid world war, that penicillin was found to be an effective treatment for syphilis. This study investigated the hypothesis that a decrease in the cost of syphilis due to penicillin spurred an increase in risky non-traditional sex. Using nationally comprehensive vital statistics, this study found evidence that the era of modern sexuality originated in the mid to late 1950s. Measures of risky non-traditional sexual behavior began to rise during this period. These trends appeared to coincide with the collapse of the syphilis epidemic. Syphilis incidence reached an all-time low in 1957 and syphilis deaths fell rapidly during the 1940s and early 1950s. Regression analysis demonstrated that most measures of sexual behavior significantly increased immediately following the collapse of syphilis and most measures were significantly associated with the syphilis death rate. Together, the findings supported the notion that the discovery of penicillin decreased the cost of syphilis and thereby played an important role in shaping modern sexuality.
(HT: Marginal Revolution)
Another big-time college sports program okays beer sales in the stadium. (HT: Oliver Luck)
2. Sixty leading economists (including Justin Wolfers) weigh in on what’s wrong with our economy and how to fix it.
3. Introducing Jewrotica (via Heeb).
4. Does retraining help the unemployed?
5. New videos from Mathalicious (whom we’ve blogged about before).
6. A cool visualization of how information spreads on social networks.
Last night’s Presidential debate inspired speculation — albeit contradictory speculation — about whether the candidates had read a certain book:
Nobel laureate and frequent Freakonomics visitor Daniel Kahneman (author of Thinking, Fast and Slow
My reason for writing this letter is that I see a train wreck looming. I expect the first victims to be young people on the job market. Being associated with a controversial and suspicious field will put them at a severe disadvantage in the competition for positions. Because of the high visibility of the issue, you may already expect the coming crop of graduates to encounter problems. Another reason for writing is that I am old enough to remember two fields that went into a prolonged eclipse after similar outsider attacks on the replicability of findings: subliminal perception and dissonance reduction.
(HT: BPS Research Digest)
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