In Book 2 of Plato’s Republic, Adeimantus poses a question worthy of an economics seminar:
Suppose now that a husbandman, or an artisan, brings some production to market, and he comes at a time when there is no one to exchange with him — is he to leave his calling and sit idle in the market-place?
Socrates replies:
Not at all; he will find people there who, seeing the want, undertake the office of salesmen. In well-ordered States they are commonly those who are the weakest in bodily strength, and therefore of little use for any other purpose; their duty is to be in the market, and to give money in exchange for goods to those who desire to sell and to take money from those who desire to buy.
All right, the “weakest in bodily strength” crack isn’t so nice, but it is nice to see Socrates (and Plato) give credit where credit is due — to the hardworking salespeople and money-handlers who keep our commerce flowing.
(HT: Carlos Eduardo Soares Concalves, via JPE.)
In today’s Journal, David Wessel nails it. (If you ask me, Wessel nails it consistently.) First, he asks the question that needs to be asked:
It has been two years since the flames were first spotted in Greece, yet the blaze still hasn’t been put out. Now it has spread to Italy.
It’s been five years since the U.S. housing bubble burst. Housing remains among the biggest reasons the U.S. economy is doing so poorly.
On both continents, there is no longer any doubt about the severity of the threat or the urgent need for better policies. Yet the players seem spectacularly unable to act.
What’s taking so long?
Is booing an act of verbal vandalism—or the last true expression of democracy?
As a fan of both Walter Isaacson and of Apple products, I have happily begun reading (along with a few million others) the new Steve Jobs biography. So far I find it to be as compelling as expected. Just a few pages into it, I was struck by this thought: as much as Jobs is known for the iPod, iPhone, iPad, etc., I couldn’t help but think that the book itself is in some ways Jobs’s final product.
In the introduction, “How This Book Came To Be,” Isaacson — who, it should be clear, is a true heavyweight — relates how Jobs approached and repeatedly pursued him to write the book. The terms were clear: Jobs would participate fully, and give others (including those who might be hostile to him) the go-ahead to do the same, and Jobs would have no right to approve or edit material. “He didn’t seek any control over what I wrote, or even ask to read it in advance,” Isaacson writes. That said, it becomes clear that Jobs was infinitely interested in shaping the book. To wit:
His only involvement came when my publisher was choosing the cover art. When he saw an early version of a proposed over treatment, he disliked it so much that he asked to have input in designing a new version. I was both amused and willing, so I readily assented.
A recent Times article describes a new interactive database put together by NYU that lets you track all subsidized housing in the city.
As the article makes clear, this database performs a variety of worthwhile functions — allowing renters or buyers to locate affordable housing; letting affordable-housing advocates keep track of when subsidized buildings are scheduled to potentially lose their subsidized status; etc.
There’s one potential function the article didn’t mention, however. Am I a cynic (or a jerk, or maybe just a realist) for thinking that this database will also be used by renters and homebuyers eager to avoid neighborhoods that have a lot of subsidized housing?
A National Post graphic does a good job showing causes of death across Canada by percentage, and notes that, for the first time, cancer is the leading cause in every province, responsible for about 30 percent of all deaths. That is a heartbreaking number, not least because cancer is a disease (or set of diseases, really) about which so much is still unknown.
As we wrote in a section of SuperFreakonomics called “We’re still getting our butts kicked by cancer,” seeing cancer statistics like this might naturally lead one to conclude that the “war on cancer” has been a dismal failure. That, however, would be an overstatement. While it’s true that we are, as one oncologist told us, “still getting our butts kicked,” there is somewhat of a silver lining in the cancer death rate.
The following is a cross-post from NFL.com, where we’ve recently launched a Football Freakonomics Project.
Economics is all about tradeoffs. If you want to buy a top-tier performance car, it’ll cost you a lot more than a Camry. If you’re looking for an investment that’ll set you up for life, you have to be willing to take on more risk.
NFL personnel decisions involve the same kind of tradeoffs. Better players generally cost more. Bigger players are generally slower. Just look at the NFL Draft, and how hard it is to balance all these tradeoffs when making your picks – especially when you’re spending huge money on a team leader whose future is impossible to predict. (We explored this puzzle earlier in “The Quarterback Quandary.”)
In this installment of “Football Freakonomics,” we look at a different kind of tradeoff – the decision of how to handle a player who’s gotten in trouble off the field. Unfortunately, you don’t have to think very hard to come up with a lot of big names from the recent past: Michael Vick, Ben Roethlisberger, and Plaxico Burress, to name just a few.
With guys like these, the tradeoff is pretty clear. The player has already proven his value on the field, so that’s the upside. But will his off-the-field trouble follow him back into the game? And then you’ve got to wonder how his physical performance will be affected by his time off for bad behavior.
It would be nice to be able to give a purely scientific answer to the following question: After getting into big off-the-field trouble, do players tend to perform better, the same, or worse?
A reader comment from the website of a certain well-read newspaper:
- Tom H wrote:
Here’s a lesson in economics for OWS. Explain to the “99%” that they are actually in the 5% of richest people on the planet. Then take their wealth and redistribute it to the 95% of the world that is poorer than them. See how they feel about wealth redistribution then.
However you may feel about the sentiment expressed by Tom H., you have to think that his framing skills would be admired by Messrs. Tversky, Kahneman, and Thaler.
I like keeping up with things, large and small, as much as the next person.
Or maybe I don’t. That’s what I’m trying to figure out.
As someone who’s done a lot of journalism, I certainly have an appetite for being first with a story. In fact, most of the journalism I’ve written was stuff that no one else was writing about. But there’s a big difference between looking off the beaten path and trying to land a scoop within a beat that 100 other journalists are covering. I was never much into that. I understand that news organizations value the scoop but I do question how valuable such scoops really are — especially these days, when the first-mover often gets drowned out by the 1,000 who follow.
But lately I’ve been thinking about the information flow from the demand side rather than the supply side.
An election cycle brings about more than voting around the world. There are many odd by-products, often inspired by how the incentives line up for those in power.
As someone who has written about geoengineering (and been hit with the requisite slime for doing so), I was more than a little surprised to see the results of a survey about the public’s view of geongineering (abstract here; PDF here) by researchers at the University of Calgary, Harvard, and Simon Fraser University, and published in Environmental Research Letters. From the press release:
Research on geoengineering appears to have broad public support, as a new, internationally-representative survey revealed that 72 per cent of respondents approved research into the climate-manipulating technique…. Public awareness of geoengineering is remarkably broad. Eight per cent of the sample were able to provide a correct definition of geoengineering, an increase on previous estimates; however, 45 per cent of the sample correctly defined the alternative term “climate engineering”, adding weight to the argument that “geoengineering” may be misleading and difficult to understand.
We are constantly wowed by new technologies and policies meant to make childbirth better. But beware the unintended consequences.
In the first segment of “Football Freakonomics,” Dubner examines the phenomenon of momentum and whether we can actually prove its existence in football games. Here’s a taste of what he found in the data: since 2007, immediately after a long kickoff or punt return, NFL teams are nearly four times as likely to score a touchdown on the next play than they are on a given play from scrimmage.
As readers of this blog know, I like the NFL quite a bit (although not, for whatever reason, college football). I have written about players from the past like John Unitas and Franco Harris; I also love to follow the modern NFL and all its tricky issues.
So I’m thrilled to be hosting a new segment on the NFL Network called “Football Freakonomics.” We did a short program together for the NFL Draft, called “The Quarterback Quandary,” and now we’re partnering up for an ongoing set of segments. The first Football Freakonomics feature will air this Sunday on the network’s “NFL GameDay Morning.” We’ll explore all kinds of issues — winning/losing, performance, salaries, etc. — and we’ll lean on original research as well as the insights of many brilliant people from sport, academia, and beyond.
The first segment is titled “Is Momentum a Myth?” (If you’ve read the fine book Scorecasting, you may know where we’re headed with this one.) I haven’t seen it yet but all the NFL folks I’ve been working with in production are absolutely top-notch, so I’m sure they’ve come up with something great.
That is the title of a new working paper by UCLA economist Roger Farmer (abstract here; PDF here).
Note that Farmer doesn’t argue that the crash “contributed to” the recession, or “was a leading indicator” of the recession — but, rather, that the crash “caused” the recession. It’s worth acknowledging that a) Farmer attributes the housing-market crash as the direct trigger of the stock-market crash; and that b) he does this in service of the larger question: how to beat back unemployment.
From the abstract:
This paper argues that the stock market crash of 2008, triggered by a collapse in house prices, caused the Great Recession. The paper has three parts. First, it provides evidence of a high correlation between the value of the stock market and the unemployment rate in U.S. data since 1929. Second, it compares a new model of the economy developed in recent papers and books by Farmer, with a classical model and with a textbook Keynesian approach. Third, it provides evidence that fiscal stimulus will not permanently restore full employment. In Farmer’s model, as in the Keynesian model, employment is demand determined. But aggregate demand depends on wealth, not on income.
High-stakes testing has produced some rotten apples. But they can be caught.
A reader named Clark Case encountered this wi-fi login window at a Doubletree hotel in Orlando. Paging Chris Anderson? Eh … probably not. While there might be some reasonable explanation — is the 24-hour connection ad-supported maybe? — my guess is it’s a simple error.
With the help of our latest podcast, “Where Have All the Hitchhikers Gone?”, Freakonomics Radio has jumped to No. 1 on iTunes.
This happens once in a while, but is still rare enough to be a big treat. (Ira Glass — who once gave us some podcast advice — has pretty much taken up permanent residence on No. 1 iTunes Place; the rest of us mortals camp out down the street.)
If you visit iTunes this week, you’ll see a lovely promotional banner (below) for our program. That certainly helped with the No. 1 ranking. But so did you! Thanks to all of you for listening, downloading, and spreading the word. We have a great lineup of new episodes coming this fall, and our podcast has just gone weekly.
If you feel like letting us know your favorite (and/or least favorite) episodes in the comments below, that’d be helpful. Good feedback is valuable, in life and in art, but it can be devilishly hard to come by. So we’ll give you an incentive: we’ll send some Freakonomics swag to whoever writes the most interesting positive review and whoever writes the most interesting negative review as well.
An e-mail from Brazil:
My name is Mauricio Castro, I have a social communications degree and teach interface design and multimedia systems.
I have a story I’d like to share with you guys.
I live in a nice neighborhood in the city of Vitória, Brazil. Being close to the beach, the city code forbids tall buildings in order to maintain sunlight in the sand all time. The maximum floor number is three.
So it’s only natural that most buildings here don’t have elevators. Even some new ones are presented only with stairs, especially those built for the younger customers.
So I went to the health clinic the other day and the nurse was telling me about the rising numbers of youngsters suffering from strokes. There are lots of explanations for these numbers rising, but mostly lifestyle and drug abuse.
I’ve been thinking a bit lately about security overkill. This includes not just the notion of “security theater” — security measures meant to inspire comfort by mere show of force/complexity — but the many instances in which someone places a layer of security between me and my everyday activities with no apparent benefit whatsoever.
My bank would surely argue that its many and various anti-fraud measures are valuable but in truth a) they are meant to protect the bank, not me; and b) they are cumbersome to the point of ridiculous. It’s gotten to where I can predict which credit-card charge will trigger the bank’s idiot algorithm and freeze my account because it didn’t like the Zip code where I used the card.
And security overkill has trickled down into the civilian world. When the class parents at my kids’ school send out a list of parent contact info at the start of each school year, it comes via a password-protected Excel spreadsheet. Keep in mind this list doesn’t contain Social Security numbers or bank information — just names, addresses, and phone numbers of the kids’ parents. I can imagine the day several months hence when someone actually needs to use the list and will find herself locked out by the long-forgotten password.
A reader named Rodolfo Ostolaza writes in with a most heartfelt plea about violence in Mexico. He would welcome all suggestions.
I live in Mexico City and, although the wave of violence in my country has not yet fully reached this area, I’m worried because we are living a state of terror, with bloody attacks, and a lack of humanity. That is why I am requesting your help.
What do you think we can do to change this? According to the chapter on crime reduction in Freakonomics, a judge’s decision was more influential than a change in public policy and law enforcement bodies in reducing crime in the U.S. I wish we could apply this “recipe” (allowing abortion throughout Mexico, which is currently legal only in Mexico City) to keep the hope that, in the future, things will be brighter. However, considering the Mexican idiosyncrasy, with strong influence of the Catholic Church, I believe that this measure would have, at best, a marginal impact.
I want you to share this question with your readers. Give us suggestions, ideas, different perspectives to analyze the problem. What follows are some thoughts and questions of how, I think, the problem should be analyzed.
First we must understand precisely the problem itself. It is true that the violence began to grow exponentially after President Calderón declared war.
Did we needlessly scare ourselves into ditching a good thing? And, with millions of cars driving around with no passengers, should we be rooting for a renaissance?
The world is a more peaceful place today that at any time in history — by a long, long shot.
On a blog called The Sedulous Pleb, Jim Powell posts video reviews of podcasts he’s listened to, sermons he’s seen, and the like. When does he make these video reviews? While he’s driving! Jim seems like a bright and thoughtful guy; I just hope he’s a really, really good driver on top of that.
His review of a recent Freakonomics Radio podcast looks to have been done while he was driving at night:
(HT: J.L.)
Last week, I was out in Chicago for a couple of days working with Levitt. We had lunch at the Booth School cafeteria (with its great soda design) — or at least we tried to have lunch. There was a nice-looking case of sandwiches, and I asked the guy behind the counter for one of the turkey-cranberry sandwiches.
“No,” he said. “I can’t sell it to you.”
“Why not?” I asked.
“We’re closing. I can’t sell it to you.”
It was about 2:32 p.m. on a weekday afternoon. The sandwich I was eyeing was one of maybe 15 or 20 in the case. And then the guy behind the counter drags over a big trash can and throws my sandwich into it, and then all the other sandwiches too. It might have been my imagination — or maybe just hunger — but he seemed to take delight in throwing away the food for which I was ready to pay full price.
A reader named Elliot Millican writes in to say:
At one point in SuperFreakonomics you mentioned a particular brand of hair clippers that are offered for humans and for pets. You noted that the human clippers carried a higher price even though they appeared almost identical. You went on to say that the pricing scheme is a simple result of the consumer’s willingness to pay more for their clippers than they would their dog’s. [Yes indeed: this is known as price discrimination.]
These hair clippers reminded me of something I experienced when my wife and I were engaged (8 years ago). Let me quickly give the background: due to limited wedding budget, we had our wedding at church and a reception at the church with cake, punch, and light food. This allowed us to invite as many people as we wanted because the church was free and the cake/food prices weren’t terribly expensive. But we had a second reception just for family and wedding party at a hotel (for about 60 people). This second reception was more like your traditional wedding reception… open bar, sit-down dinner, and a DJ. In short, it was expensive, but affordable with only a fraction of the guest list.
Season 1, Episode 5
You know the bromide: “a winner never quits, and a quitter never wins.”
To which Freakonomics Radio says … Are you sure? Sometimes quitting is strategic, and sometimes it can be your best possible plan.
That is the gist of our latest Freakonomics Radio podcast, “The Upside of Quitting.” This is the last of five hour-long podcasts we’ve been putting out lately. Some of you may have heard them on public-radio stations around the country, but now all the hours are being fed into our podcast stream. (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player above, or read the transcript here.)
To help us understand quitting, we look at a couple of key economic concepts in this episode: sunk cost and opportunity cost. Sunk cost is about the past – it’s the time or money or sweat equity you’ve put into a job or relationship or a project, and which makes quitting hard. Opportunity cost is about the future. It means that for every hour or dollar you spend on one thing, you’re giving up the opportunity to spend that hour or dollar on something else – something that might make your life better. If only you weren’t so worried about the sunk cost. If only you could …. quit.
You know the saying: a winner never quits and a quitter never wins. To which Freakonomics Radio says … Are you sure?
Last week, we solicited your questions for John Tierney and Roy Baumeister, authors of the new book Willpower: Rediscovering the Greatest Human Strength . You responded with a variety of interesting questions, and now Tierney and Baumeister return with some in-depth answers.
Thanks to everyone for participating.
Q. Is willpower a single commodity (so to speak), or is there, as I suspect, a one type of willpower for, say, dieting, another one for academic study, another for this, another for that? –AaronS
A. No, there’s just one single resource (or commodity). There’s one source of mental energy for resisting temptation and performing other acts of self-control, and this willpower is also depleted by making decisions. What you experience may reflect the fact that willpower is limited and so people have to allocate it: they use it at the office to work effectively and diligently, but have messy homes and are short-tempered in the evening. Or people who show wonderful self-control at dealing with personal relationships but can’t seem to meet their deadlines.
It was great to see some familiar names on this year’s list of MacArthur “genius” awards. They include Roland Fryer of Harvard, who has shown up many times on this blog as well as in Freakonomics and in the New York Times. His work on everything from the black-white baby-name gap to education incentives is well-deserving of MacArthur recognition, and I’m sure this is hardly the last award he’ll win. Another winner was Jad Abumrad of the wonderful radio show RadioLab. If you don’t know this show, you should. I was also very pleased to see Kevin Guskiewicz on the MacArthur list; he’s at the forefront of research into sports injuries, especially the kind of helmet-induced football injuries we’ve discussed in the past.
On the other side of the ledger is the very disturbing news that the online poker site Full Tilt Poker has been operating, in the words of the U.S. Attorney in Manhattan, as “a Ponzi scheme,” siphoning off customers’ money to make multi-million dollar payments to Full Tilt’s owners, who include Chris “Jesus” Ferguson, Howard Lederer, and Rafe Furst, who has appeared on this blog multiple times. Yes, we live in a world of presumed innocence; but this Journal article and the lawsuit highlights don’t paint a pretty picture. FWIW, here’s Rafe’s public response.
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