Reading about the horrific train crash in Spain that killed at least 80, and thinking back to the (rare) fatal airplane crash in San Francisco brought to mind the ride I took in a driverless car a few months back at Carnegie Mellon University. Many people still distrust a computer to get them from Point A to B. How long will it be before our thinking changes and we distrust humans to do the same? The train and plane crashes both appear to be due to human error, as are the vast majority of automobile crashes (which kill more than 1 million people worldwide each year).
I haven’t spent all that much time in Spain but one of the most striking observations from a recent visit was how hard it is to buy a train ticket from a machine. In many cases, you have to wait in (long) line for a human ticket-seller. Whenever I asked why, I was told this was simply done to protect jobs — an understandable, if unsatisfying, defense in a country with 27% unemployment.
It does make me wonder how much a country or culture with a strong sense of job protection will be resistant to technological changes purely on employment grounds, even if they might produce large gains for the greater good.
Anthony Weiner is still running for mayor of New York as I write this, though that status may soon change. Not coincidentally, a reader named Jon Creem (an unfortunate aptonym in this case?) writes in to say:
Yesterday I enjoyed listening to your show about “Quitting.” The segment where you explained “sunk cost” was especially interesting.
I took the explanation as people’s unwillingness to give up due to the amount of investment (time, money, etc) they have already made.
Then, when catching up on the latest Anthony Weiner mayoral saga, I couldn’t help make a connection.
Is this guy refusing to remove himself from the race because he feels he has done too much already to drop out now? In my opinion the odds are stacked against him regardless of how good a politician he is.
I assume continuing to campaign will only cost him more time and money. Is it worth it for him to continue?
Insofar as pride and ego are components of sunk cost, I guess Jon is right. On the other hand, it doesn’t strike me that Weiner’s continuing to run is really about sunk cost. Modern politics is so often an exercise in ego, hubris, and narcissism — and if I were to armchair-analyze Weiner, I’d suggest that these factors are much more important than the sunk costs of time and money.
You know the saying: a winner never quits and a quitter never wins. To which Freakonomics Radio says … Are you sure?
In Bloomberg BusinessWeek, Peter Coy writes an excellent piece on the Bureau of Economic Analysis’s upcoming revision of Gross Domestic Product measurement. That may not sound very interesting but Coy does a great job showing the macro and micro angles. To wit:
On July 31, the U.S. Bureau of Economic Analysis will rewrite history on a grand scale by restating the size and composition of the gross domestic product, all the way back to the first year it was recorded, 1929. The biggest change will be the reclassification—nay, the elevation—of research and development. R&D will no longer be treated as a mere expense, like the electricity bill or food for the company cafeteria. It will be categorized on the government’s books as an investment, akin to constructing a factory or digging a mine. In another victory for intellectual property, original works of art such as films, music, and books will be treated for the first time as long-lived assets.
And:
The U.S. generates a disproportionate share of its wealth from the likes of patents, copyrights, trademarks, designs, cultural creations, and business processes. To see the intangible economy in numbers, look at Apple’s (AAPL) balance sheet: Property, plant, and equipment, those traditional forms of wealth from the industrial and preindustrial eras, account for $15 billion of its $400 billion market value—just 4 percent of the total. They’re only 7 percent of market value at moviemaker Time Warner (TWX) and drugmaker Pfizer (PFE).
The Encyclopedia of Ethical Failures catalogs the fiscal, sexual, and mental lapses of federal workers — all with an eye toward preventing the next big mistake.
From a reader named Philip Mulder comes this photograph:
Philip says this is a hair-cutting joint in Washington, D.C. As you can see, it offers a 50% discount if your name is — in this case — Amanda, Rachel, Katie, Peter, Andrew, or David. I don’t have my master database of black-white names handy (hey, it’s summer), but I’m pretty sure that at least five out of those six skew pretty white. So, a couple of questions:
At the core of the debate over the value of college is a collage of evidence showing that it produces better lifetime outcomes not just in income but in health and happiness. How does this happen? And how can we be sure that we aren’t just seeing a selection bias — i.e., that people who go to college would have been richer, healthier, and happier in any case?
Here’s a new working paper (abstract; PDF), by Kasey Buckles, Andreas Hagemann, Ofer Malamud, Melinda Morrill, and Abigail Wozniak which purports to show the long-term health effects of a college education. Granted, their data stretches back to the Vietnam War draft (a good instrumental variable, which other researchers have used) but their findings are significant nonetheless.
We exploit exogenous variation in college completion induced by draft-avoidance behavior during the Vietnam War to examine the impact of college completion on adult mortality. Our preferred estimates imply that increasing college completion rates from the level of the state with the lowest induced rate to the highest would decrease
cumulative mortality by 28 percent relative to the mean. Most of the reduction in mortality is from deaths due to cancer and heart disease. We also explore potential mechanisms, including differential earnings, health insurance, and health behaviors, using data from the Census, ACS, and NHIS.
Differential earnings and health insurance are of course related to the income boost that college graduates receive. It is the “health behaviors” that are learned/adopted by college graduates that are especially interesting.
Most of the coverage of the turmoil in Egypt and Syria (the latter of which has decreased in proportion to an increase in coverage of the former) focuses on political, religious, and social factors. These are all obviously important. But once you read David P. Goldman‘s op-ed in the Wall Street Journal about the economic underpinnings of the Arab revolutions, you may see things differently. A few key excerpts:
Sometimes economies can’t be fixed after decades of statist misdirection, and the people simply get up and go. Since the debt crisis of the 1980s, 10 million poor Mexicans—victims of a post-revolutionary policy that kept rural Mexicans trapped on government-owned collective farms—have migrated to the United States. Today, Egyptians and Syrians face economic problems much worse than Mexico’s, but there is nowhere for them to go. Half a century of socialist mismanagement has left the two Arab states unable to meet the basic needs of their people, with economies so damaged that they may be past the point of recovery in our lifetimes.
This is the crucial background to understanding the state failure in Egypt and civil war in Syria. It may not be within America’s power to reverse their free falls; the best scenario for the U.S. is to manage the chaos as best it can.
Peak oil? Probably not. But have we reached “peak motorization” in the U.S.?
Michael Sivak of the University of Michigan’s Transportation Research Institute says the answer is quite possibly yes:
The absolute number of vehicles reached a maximum in 2008. However, it is likely that this was only a temporary maximum and that the decline after 2008 was primarily driven by the current economic downturn that started in 2008. Consequently, with the improving economy and the expected increase in the U.S. population, it is highly likely that (from a long-term perspective) the absolute number of vehicles has not yet peaked.On the other hand, the rates of vehicles per person, licensed driver, and household reached their maxima prior to the onset of the current economic downturn. Consequently, it is likely that the declines in these rates prior to the current economic downturn (i.e., prior to 2008) reflect other societal changes that influence the need for vehicles (e.g., increases in telecommuting and in the use of public transportation). Therefore, the recent maxima in these rates have better chances of being long-term peaks as well.
But Sivak is smart enough to hedge his prediction:
However, because the changes in the rates from 2008 on likely reflect both the relevant societal changes and the current economic downturn, whether the recent maxima in the rates will represent long-term peaks as well will be influenced by the extent to which the relevant societal changes turn out to be permanent.
I like following sports for a lot of reasons beyond the sheer entertainment; I’ve explained why here
and here. The cast of characters is constantly evolving and, often, capable of producing true drama. Sometimes this drama takes the form of an Aaron Hernandez crime story. But more often, if you’re willing to look, you’ll find the story of a Jacky Kaba or a Shamarko Thomas.
Who???
Here, read for yourselves. Jacky Kaba, originally from Liberia, played basketball at Seton Hall University and is now an associate professor of sociology there; his research has appeared on our blog. Jerry Izenberg has written a fine piece about Kaba on the occasion of his gaining U.S. citizenship.
Shamarko Thomas is an undersized defensive back just drafted by the Pittsburgh Steelers; Everett Cook has written an inspiring article about his personal and familial struggles to date. I hope Thomas prospers (and I say that not just because he’s a Steeler).
Volkswagen has designed it, it’s called the XL1:
The XL1 represents the car as blue-ribbon science fair project. But unlike other megacars, which are built to maximize speed and power, this one, more than ten years and upward of a billion dollars in the designing, contains not one centimeter of wasted space or poundage. The engineers eliminated power steering because it would have added 10 kilograms. For maximum lightness, the core of its body and chassis is comprised of a one-piece molded carbon-fiber monocoque. The magnesium wheels get wrapped in custom-light Michelin rubber. The windows lower with hand cranks. There’s no radio — the sound system wraps through the Garmin GPS — and no place to plug in your smartphone, because Bluetooth is lighter.
The crash of Asiana Airlines flight 214 in San Francisco on Saturday killed two people. Given the circumstances, it could have been much, much worse.
The last fatal commercial flight in the U.S. was on Feb. 12, 2009, when 50 people were killed in the crash of Colgan Air Flight 3407 near Buffalo, N.Y.
The last fatal flight of a major U.S. airline was on Nov. 12, 2001, when 265 people were killed in the crash of American Airlines Flight 587 shortly after takeoff from John F. Kennedy Airport in New York.
Number of people killed in U.S. traffic accidents since the last fatal commercial crash in the U.S.: approximately 143,200.*
Number of people killed in U.S. traffic accidents since the last fatal major U.S. airline crash in the U.S.: approximately 442,600.**
Number of U.S. newspapers, TV networks, etc., that did not feature Asiana Airlines flight 214 crash as its top story: approximately zero.
What does “Pride and Prejudice” have to do with nuclear deterrence?
A reader from Wadsworth, Ohio, named Tom Morris writes with an idea. He is a lawyer and, he says, and an “occasional acting judge in a small town”:
In my capacity as acting judge, I find myself repeatedly dealing with the same issues. Young adults irresponsibly having kids without any ability, either monetarily or emotionally, to raise them. These unwanted kids are left unsupervised, and are more likely to commit crimes and have more unwanted kids, which continues this cycle.
While I have not crunched the numbers to support this hypothesis, it is consistent with Dr. Levitt’s study made famous from your first book. Unwanted children are a bad thing. Preventing this “bad thing” would lead to a reduction in crime, reduction in poverty, and a reduction of just about every other social ill I can think of.
The black-white education gap has been widely observed at many age levels. In a new working paper called “Race and College Success” (abstract; PDF), Peter Arcidiacono and Cory Koedel examine why blacks who are admitted to college are so much less likely than whites to graduate:
Conditional on enrollment, African American students are substantially less likely to graduate from 4-year public universities than white students.* Using administrative micro data from Missouri, we decompose the graduation gap between African Americans and whites into four factors: (1) racial differences in how students sort to universities, (2) racial differences in how students sort to initial majors, (3) racial differences in school quality prior to entry, and (4) racial differences in other observed pre-entry skills. Pre-entry skills explain 65 and 86 percent of the gap for women and men respectively. A small role is found for differential sorting into college, particularly for women, and this is driven by African Americans being disproportionately represented at urban schools and the schools at the very bottom of the quality distribution.
* “At around 40 percent, six-year graduation rates for African Americans are over twenty percentage points lower than for whites (DeAngelo et al., 2011, National Center for Education Statistics, 2012).”
It has become increasingly common for colleges and universities to charge different tuition for different undergraduate majors. Do those prices actually influence degree production? In a new working paper (abstract; PDF), Kevin M. Stange argues that the answer is yes:
In the face of declining state support, many universities have introduced differential pricing by undergraduate program as an alternative to across-the-board tuition increases. This practice aligns price more closely with instructional costs and students’ ability to pay post-graduation. Exploiting the staggered adoption of these policies across universities, this paper finds that differential pricing does alter the allocation of students to majors, though heterogeneity across fields may suggest a greater supply response in particularly oversubscribed fields such as nursing. There is some evidence that student groups already underrepresented in certain fields are particularly affected by the new pricing policies. Price does appear to be a policy lever through which state governments can alter the field composition of the workforce they are training with the public higher education system.
If you are the sort of person who worries that the U.S. is not producing enough college graduates with science degrees, it’s worth wondering exactly why that is. In a new working paper, Ralph Stinebrickner and Todd R. Stinebrickner offer a compelling answer: science is hard. Here’s the abstract (sorry, full paper seems to be gated).
Taking advantage of unique longitudinal data, we provide the first characterization of what college students believe at the time of entrance about their final major, relate these beliefs to actual major outcomes, and, provide an understanding of why students hold the initial beliefs about majors that they do. The data collection and analysis are based directly on a conceptual model in which a student’s final major is best viewed as the end result of a learning process. We find that students enter school quite optimistic/interested about obtaining a science degree, but that relatively few students end up graduating with a science degree. The substantial overoptimism about completing a degree in science can be attributed largely to students beginning school with misperceptions about their ability to perform well academically in science.
Do we file this item under “overconfidence” or “good gatekeeping”?
Gay marriage and gay rights have dominated much of the U.S. news over the past week. In Russia, meanwhile, from the Associated Press:
Russian President Vladimir Putin has signed into law a measure that stigmatizes gay people and bans giving children any information about homosexuality. …
The ban on “propaganda of nontraditional sexual relations” is part of an effort to promote traditional Russian values over Western liberalism, which the Kremlin and the Russian Orthodox Church see as corrupting Russian youth and contributing to the protests against Putin’s rule.
Hefty fines can now be imposed on those who provide information about the lesbian, gay, bisexual and transgender community to minors or hold gay pride rallies.
What happens to your reputation when you’re no longer around to defend it?
“Our findings suggest that increases in the real price of one calorie in food for home consumption and the real price of fast-food restaurant food lead to improvements in obesity outcomes among youths. We also find that an increase in the real price of fruits and vegetables has negative consequences for these outcomes.”
That’s from a new paper (abstract; PDF) by Michael Grossman, Erdal Tekin, and Roy Wada, called “Food Prices and Body Fatness among Youths.”
As we’ve argued in Freakonomics and in a recent podcast, a child’s first name isn’t nearly as influential on that child’s outcome as many people would like to think.
That said, it would be a mistake to say that a name is unimportant — especially because even the belief that a name is important can make it, on some level, actually important.
Also: a name can carry far greater significance than as a mere label for an individual person; it can say something about you as a member of a tribe, a community, a nation.
A noteworthy (if often overlooked) part of Jewish history is the renaming, in the Bible, of Abram as Abraham and Sarai as Sarah. Along those lines, it was interesting to read this blog post from the Israel State Archives about how David Ben-Gurion wanted Israelis to swap out their European names for Hebrew ones.
Allison Zelkowitz, the Thailand program director for Save the Children, writes in to say:
I listen to your podcast frequently, and I was particularly interested by your show on the “herd mentality.”
Do you guys have any ideas to help me (and Save the Children in Thailand) figure out how to get parents to put helmets on their children in Thailand (or in other parts in the developing world?)
Thailand ranks worst in the world for motorbike and two-wheeler casualties, with more than 11,000 motorbike drivers or passengers dying annually. Traffic accidents are one of the highest causes of death for children in Thailand. Helmet wearing is low overall, but it is particularly low for children – it is common to see parents wearing helmets on a motorcycle with children who are not.
This, as you can imagine, blows my mind. Save the Children is working to design a program to address this, and as a result of your program on the herd mentality, I’m seriously considering trying to video parents at intersections and project large images of them on screens at the same intersection, with “thumbs down” signs when their kids aren’t wearing helmets (similar to the “shaming” you mentioned on your show.)
Any other ideas on how we could change parents behavior in this regard would be so appreciated!
From a reader named Ben Doty:
Quick question that may benefit from an economist’s perspective, possibly relating to complimentary goods, signaling, expertise, and education:
If you walk into a surf shop and the stench of marijuana nearly knocks you over, does that make you more or less likely to purchase surfing lessons there?
What do you say, readers? I have never been in a surf shop myself; I have, however, been in the pro shop at various golf courses and I can tell you that I have never once smelled marijuana there.
You might think that someone with a 50-50 chance of getting a fatal disease would want to know for sure — but you would be wrong. What does this say about our supposed thirst for certainty?
Yesterday we gave an update on how attaching a lottery payout to bank accounts can help people save more money. A reader named Drew writes in about a different lottery nudge:
When I was studying abroad in China (2006) a friend told me that I should always insist on getting the receipt whenever I ate at a restaurant, because the receipts are scratch-off lottery tickets.
I didn’t think very much of it at the time (as a visitor, I didn’t think I’d ever collect any winnings), but one of the Freakonomics podcasts that talked about capturing unreported income (I think it was “The Tax Man Nudgeth“) reminded me of their ingenious system to encourage customers to demand that restaurants report their income.
I wasn’t sure if it was still going on, but this blog suggests that it still was at least a year ago. Here is an older post with a little bit more detail about the system.
I will be in Singapore soon — first visit — with only a little bit of spare time but I’d like to see and learn and do some worthwhile things. Suggestions? Many thanks in advance.
Back in 2010, we put out a two-part podcast (Part 1; Part 2) about Prize-Linked Savings (PLS) plans, which combine the safety of a savings account with the thrill of a lottery payout. It is one of the most intriguing ideas we’ve run across in some time. Maybe not earth-shattering, but potentially an important way to help people save more money.
Now a group of scholars (including the University of Maryland economist Melissa Kearney, who was featured in the podcast) have put out a working paper (abstract; PDF) that set up experiments to determine whether a PLS plan would actually induce better savings behavior. Their answer is yes.
Yet another reason to blame your parents for pretty much everything.
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