Reader Melissa Belvadi writes in with a question about preferences on fundraiser incentives:
Here in northeastern Canada, there is a very popular form of local fundraising called the “50-50.” Basically it’s a raffle, where 50% of the total money collected is then randomly given to one of the donors (odds weighted proportionately by the donation size), and the other 50% goes to the original ’cause’ of the fundraising, whether it be a local homeless shelter, a recent victim of something, or whatever that is of interest to the local community.
This strikes me as an incredibly bad deal, but a bit complicated to explain why, as it contains two components:
- As a gamble: poor expected value. I am not sure how to calculate this, but from my experience in Las Vegas where slot machines boast being set to 97% return ratios, a gamble where 50% goes to the “house” seems unlikely to be a good EV.
- As a charitable donation: poor “program ratio” — at most, 50% of my donation will go to the “program” (charitable cause) – this is considered a very poor ratio in the philanthropic world where typically 60% is the bare minimum acceptable – the BBB requires 65%.
Our most recent podcast, “Why Is ‘I Don’t Know’ So Hard to Say?,” continues to draw interesting replies. Here’s one from Erich Knobil, who works in the finance office of the Falls Baptist Church & Academy in Menomonee Falls, Wisc.:
A couple of minor notes about “I don’t know” —
Someone (a consultant) once told me the “Consultant’s Motto” was “Maybe wrong, but never in doubt.”
Someone else (female) once called it “Male Answer Disorder (MAD),” where men seem compelled to always have an answer for everything.
Anyone know of any good empirical work on whether MAD is real?
We’re working on a new Freakonomics Radio podcast about financial illiteracy, a topic we’ve visited a few times on this blog. Two guests you’ll hear from in the episode have held the same title: chairman of the White House Council of Economic Advisors.
First up is current chairman Alan Krueger, whom I asked what would improve if Americans were more financially literate:
KRUEGER: I think first and foremost, we’d probably have greater savings. People are often in a situation where they have to live paycheck to paycheck. That’s something I think we need as a country to work to improve. Most importantly I think we can improve income growth for the broad middle class. But many people who seem to have the wherewithal to save for the future find it difficult to save.
We should probably start a Strange Name Hall of Fame at some point to chronicle all the weird, wonderful, terrible names that readers have passed along to us since we first wrote about names in Freakonomics. This one, from Joyce Wilson, would probably make the cut:
I thought of Freakonomics when I was at a St. Louis area grocery store and saw cut-out paper snowflakes taped to the window with the makers’ names on them. The name I particularly noticed? Demonica.
Levitt’s reply when he saw this e-mail: “Perhaps the little girl’s mother is just a heavy metal fan.”
In today’s Wall Street Journal, Jared Diamond (not this
The caption reads “Bill Belichick of the New England Patriots, who was hired last week as Penn State’s new football coach.” That’s not quite right. The Bill from the Patriots who was hired by Penn State was the Patriots’ offensive coordinator Bill O’Brien, as Diamond’s article makes clear in the first paragraph. Belichick is still very much the head coach of the New England Patriots.
Our latest Freakonomics Radio on Marketplace podcast is called “The Season of Death.” The gist: Summertime brings far too many fatal accidents. But the numbers may surprise you.
(You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)
If you’re a longtime reader, you probably already have an idea of what we’re talking about. Human beings are, in general, quite bad at assessing risk. We tend to be scared of big, noisy, anomalous events – like shark attacks, which in an average year kill fewer than five people worldwide — while overlooking the seemingly quotidian reality of, say, drowning deaths (about 4,000 per year in the U.S. alone) and motorcycle fatalities (about 4,500 U.S. deaths annually). We have been exploring this idea since Freakonomics, where we asked whether a gun or a swimming pool is more “dangerous.”
Our latest Freakonomics Radio on Marketplace podcast is called “It’s Not the President, Stupid.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) The gist: it’s time to admit that the U.S. economy doesn’t have a commander-in-chief.
Over the years, we’ve regularly visited the question of how influential the president of the U.S. really is. This segment focuses on the president’s influence over the economy — which, if you believe polling data, will be the central concern for many voters as the 2012 election unfurls.
In this Marketplace segment, you’ll hear from Austan Goolsbee, the University of Chicago economist who has served President Obama as both campaign adviser and chairman of the Council of Economic Advisers:
GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.
The preliminaries are finally over. As we head into the first weekend of NFL playoffs, the conversation shifts. No longer are we talking about the long arc of the season – about working out the kinks, getting schemes in place, or jockeying for position. Now, with every game a do-or-die game, we’re talking about which team is peaking at the right time. Because no matter how good (or bad) your record may be, the final summit is in sight and it’s time to turn on the juice.
In the latest installment of “Football Freakonomics,” we look at the art and science of peaking. What’s the best way to assess a team’s peak position?
1. “Why tornadoes take the weekends off.” (HT: Michael Teague)
2. Who knew that glove-making, of all sorts, was such a Jewish field?
3. A “twin-town” in Ukraine: interesting and a little bit bizarre — especially “the terrors of grade 6.” (HT: Kelly Fawke)
4. Freakonomics in an Ohio State Univ. court case.
5. The most gracious I’ve-been-fired note ever?
In our latest podcast, “Why Is ‘I Don’t Know’ So Hard to Say?,” Levitt talked about how it is practically forbidden in the business world to say that you don’t know the answer to a question, lest you be deemed incompetent or irrelevant.
That idea has generated some reader feedback that I thought was interesting enough to share. First, from Mike Wrubel, an office manager for a medical practice in Elkhart, Indiana:
I would generally agree with the notion that people in business are very much inclined to not say “I don’t know.” I have worked in the same hospital for 20 years, and while I am very comfortable saying it, not everyone else is. I think people fear being perceived by others as they are not paying attention to their work, or being seen as incompetent, or that it’s their job to “know.”
1. Danny Kahneman‘s Thinking, Fast and Slow
2. Is “big data” really ready for primetime?
3. An economist (Laurence Kotlikoff) is running for President. (Did he listen to this?) His books include The Coming Generational Storm and Spend ‘Til the End: Raising Your Living Standard in Today’s Economy and When You Retire
(HT: Peter Coy)
4. Active trading — of military products! — between countries at war. (Especially interesting in light of Iran’s blockade threat.) (HT: David Wigram)
Research in Motion, the Waterloo, Ontario, company that makes BlackBerrys, has been hemorrhaging market share in North America. But a blog reader named Jon Markman, a lawyer living in Washington, D.C., has discovered a land where the BlackBerry still dominates:
I wanted to send along an interesting thing I noticed on a recent trip to the Dominican Republic to visit my in-laws.
In the past when I’ve been there, I’ve noticed that everyone uses a BlackBerry; my wife and I were the only people I’d ever seen using anything else (other than a “dumb” phone, but those are pretty rare these days everywhere!). I figured it was only a matter of time; trends and technology seem to often lag a little when making it to the island. Given that BlackBerry has fading for years, I thought, soon it would fade there, too.
Our latest Freakonomics Radio on Marketplace podcast is called “The Hidden Cost of False Alarms.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)
The central facts: between 94 and 99 percent of burglar-alarm calls turn out to be false alarms, and false alarms make up between 10 and 20 percent of all calls to police.
There are at least three things to consider upon learning these facts:
1. If a particular medical screening had such a high false-positive rate, it would likely be considered worse than worthless; but:
2. With more than 2 million annual burglaries in the U.S., perhaps it’s worth putting up with so many false positives in service of the greater deterrent; as long as:
3. The cost of all those false positives are borne by the right people.
Can you already figure out whether No. 3 is in fact the case?
… that @Freakonomics will soon hit 400,000 followers.
FWIW, we are spiffing up for re-released the Twitter podcast we did a while back. Anything we missed in that episode that we can fix?
Back in 2008, shortly after the Presidential election, we solicited reader questions for Congressman Ron Paul, who had run for President that year. He happens to be running again this year and, in light of his strong third-place showing in the Iowa caucuses last night, I thought it might be interesting to republish his replies. They are well-considered and interesting throughout, and it is especially interesting to read them four years later in light of how political circumstances have shifted (or haven’t).
Q.What was your first thought when you found out McCain chose Palin as his running mate?
A. At first, I thought it was a pretty savvy choice from a political perspective. I also knew that she had said some nice things about me in the past. At the same time, I knew that to be on the ticket, she would have to toe the line on foreign policy and the war, so that tempered a lot of my enthusiasm.
Q. Who in Congress would you consider to be your closest peer(s)?
A. There are a lot of members who I work with on a variety of different issues. Walter Jones is a good friend and works with me on foreign policy. Often on spending, if there is a 432-3 vote, the other two congressmen voting with me are Jeff Flake and Paul Broun. A lot of times, I work with Democrats on civil liberties issues. I guess my point is that people from all over the political spectrum can side with liberty and the Constitution. The goal is to get a majority to vote that way most of the time.
Levitt and Dubner answer your FREAK-quently Asked Questions about certifying politicians, irrational fears, and the toughest three words in the English language.
Alan Pisarski, a transportation scholar featured in our podcast about the disappearance of hitchhiking, writes in to say:
My niece was back home in Milwaukee visiting family and stocked up on bagels, lox, and cream cheese to take home to Kentucky (forget for our purposes the madness of thinking that Milwaukee has a clue about bagels etc. – she is right – at least they have heard of them in contrast to KY). Anyways, the wonderful folk at TSA said she could take the bagels on board and the lox, but the cream cheese was out! But being proud civil servants – an oxymoron if ever there was one — they agreed that it would be okay, and she could bring it on board, if the cream cheese was spread on the bagels. Please write this down for future reference.
Our latest Freakonomics Radio on Marketplace podcast is called “A Rose By Any Other Distance.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)
With Mother’s Day coming up, we thought it’d be interesting to look at the cut-flower industry. Americans spend about $12 billion a year on them. Mario Valle, a wholesaler at the L.A. Flower District, tells us that Mother’s Day is easily his biggest day of the year: “It’s 30 percent of my year. Everyone has a mother!”
Today’s question on “Football Freakonomics” is a tricky one. Which incentive is stronger for an NFL player: landing a big contract or winning the Super Bowl?
It can be devilishly hard to find out what truly motivates people to do what they do. There are a lot of reasons for this. Different people have different preferences; an incentive that works for a while may wear off over time; and it’s dangerous to rely on what people say about their motivation, since most of us are concerned about saying “the right thing.”
It’s better, therefore, to measure actual behavior – in this case, for instance, how players perform before and after signing a big contract.
A reader named Tim Wadlow writes in with an interesting theory:
I spent about 10 years as a operations management consultant, working with dirty, dull, and dangerous manufacturing companies.
After spending time at roughly 100 manufacturing locations around the world, I noticed an odd trend: the direction that employees parked in their parking spots highly correlated with employee morale and satisfaction with their jobs. Most of the cars parked forward? A good company to work for, with employees who want to get to work. Most cars backwards? It seems as though the moment that the employee got to work, he or she was planning a quick exit.
Next time you drive by a manufacturing company check it out.
Maybe CEO’s should study Google Earth maps of their parking lots to determine if they are changing a companies culture?
These days, I read a lot of books on an iPad 2 using the Kindle app. It is for the most part a very good experience, especially for recreational reading. As millions of others have noted, having an electronic device loaded up with a mini-library of e-books is especially valuable while traveling, which is when I do a lot of my reading.
The other day, on vacation with the family, I came across a pitfall. I was reading the old football novel North Dallas Forty (thanks to Henry for the suggestion, and all of you for other suggestions). It’s pretty entertaining — especially the race stuff and drug stuff. As it happened, my 9-year-old daughter was curled up beside me reading her book (The Doll People). She took at look at what I was reading. Her eyes immediately found a four-letter word.
A reader we’ll call H., who’s in the rental-property business, writes in with a bizarre story about his bank. Assuming it is at least 60% true from both sides (his side and the bank’s), what are we to make of this?
My partner and I were looking to obtain a small business loan. Our banker told us that loans are very hard to obtain because banks are being very stringent. Not like we were going to shut down without a loan, but we figured it could help us grow the business. So, in an effort to build credit (and a good relationship) for our business with a major U.S. bank, my partner and I proposed to our banker that we would give him $50,000 cash to hold onto and in return, have the bank loan us $50k for 5 years. Basically we were securing the loan with cash as collateral. This way, we could prove to the bank that we are a responsible business and were hoping that after this first loan, the bank will be willing to lend to us in the future with more favorable terms.
Yes! That’s the argument in a new Historical Biology paper called “A Call to Search for Fossilized Gastric Pellets.” Here’s the abstract:
Numerous extant carnivorous, piscivorous and insectivorous species – including birds, pinnipeds, varanid lizards and crocodiles and mammals – routinely ingest food combined with a high proportion of indigestible material that can be neither absorbed through digestion nor eliminated as faecal matter. Their solution is to egest the indigestible portion through the mouth as a gastric pellet. The status of gastric pellets in extant species is reviewed. Arguments based on phylogeny, anatomy and biomechanics strongly suggest that many extinct species, including crocodilians and pterosaurs, may also have produced gastric pellets routinely.
We know it’s terribly dangerous to drive drunk. But heading home on foot isn’t the solution.
In Freakonomics, we wrote about how the black-white gap in America exists not only in vital matters like education, income, and health but in seemingly trivial matters like baby names and preferences in TV shows.
With that in mind, it’s interesting to take a look at a new poll by Public Policy Polling (PDF; Yahoo! writeup) about Americans’ football preferences. The headline finding is that the Green Bay Packers are now “America’s team,” with 22 percent of respondents listing the Packers as their favorite team. (I have a feeling that winning the Super Bowl last year and going 12-0 to start this season had a little something to do with that; let’s see what the poll shows this time next year.) But PPP also asked the 700+ respondents their race, gender, and voting ideology, and it’s interesting to see how the favorability rating of individual players varies.
1. NPR offers a taxonomy of online complainers; which kind are you?
2. The next sports book I’m dying to read; some background.
3. “Judicial Hellholes“: Philadelphia tops the list. (HT: Ryan)
4. Carl Bialik on silly cocaine stats.
‘Tis the season – for the firing of head coaches, that is. In the space of two weeks, three teams – the Jaguars, Chiefs, and Dolphins – canned their top man.
Allow me to make two seemingly contradictory points:
Our latest “Football Freakonomics” segment (video below) asks whether firing a head coach really does much to improve a team’s chances – or if it’s simply the standard move for losing organizations, meant to appease critics in the media, the stands, and even the locker room.
The following is a cross-post from NFL.com, where we’ve recently launched a Football Freakonomics Project. This segment aired before last Sunday’s Patriots-Broncos game.
One of the arguments both for and against Tim Tebow as a viable, long-term NFL starter is the idea that he should simply not be doing what he’s doing right now. Tebow’s critics say he’s getting far too much credit for his 7-1 record as a starter this season – that he’s benefiting from an unexplainable run of luck — while his supporters point to the exceptional performances he’s turned in immediately following those fortuitous bounces.
So how is a team that ranks second-to-last in passing yards, whose quarterback completes fewer than half his throws, pulling out miraculous victories week after week?
The thrill of customization, via Pandora and a radical new teaching method.
A reader called HDT writes to say:
I live in Mexico and have often wondered why more American economists and students of economics don’t often venture down here because the country offers what seems, to me at least, a treasure trove of economic oddities that should fascinate anyone interested in how markets work.
* As Mexico is heading toward what’s likely to be the second most important election in its history, the subject of vote-buying is of particular interest if for no other reason than that it’s practiced fairly openly, especially in rural areas. I know that during the last elections, here in Yucatan, votes were being bought, in cash, for around $80. (Pigs and cows were also exchanged for votes, but I wasn’t ever able to find out what the “going rate” was for those particular transactions.) There are, of course, people employed by the major political parties who specialize in determining what votes are worth throughout the country. I imagine they’re easier to find, and talk to, than you might expect.
* There’s also the rather intriguing issue of how Mexican real estate agents determine a reasonable price for any given property they’re hoping to sell. The problem is that it’s customary to decrease the tax burden on the sale of a home by getting the buyer to lie about how much he or paid. In other words, the sales prices stated in government records are almost never accurate. Everyone knows this. And yet, properties regularly change hands and real estate agents do manage to make a living. But how?
Any takers?
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