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Freakonomics Blog

Marginal Cost of the 26th Naked Actor

An English newspaper reports that an opera producer has had to cut back the number of naked male actors from 88 to 25 for fear that, given the size of the stage, some of the naked actors would fall into the orchestra pit.  The stage is fixed capital; the marginal product of the 26th naked actor is negative — the production would be severely disrupted if an actor fell off the stage.  Since the opera is about the “sex-crazed Duchess of Argyll,” presumably the marginal product of the first actor is positive — given the Duchess’s proclivities, having zero naked actors would make no sense; marginal products decrease but are still positive up through 25, then become negative thereafter. This is, of course, in the short run; perhaps if there were more time to produce the play, the capital stock could be increased — a larger stage could be built — and the marginal product of the 26th actor would be positive. (HT: CB)


Taking on the Myths of Child Mortality

Hans Rosling, whose fantastic animated-data talks have been featured here before, has a new one about child-mortality trends.

The video was timed to coincide with the release of Bill Gates‘s 2013 Annual Letter, which notes successful health reforms in Ethiopia and the importance of quality measurements.  “[A]ny innovation — whether it’s a new vaccine or an improved seed — can’t have an impact unless it reaches the people who will benefit from it,” writes Gates.


A Soybean in the Supreme Court: Bowman v. Monsanto

The idea of patenting a living organism is strange to some people, if not frightening. Nonetheless, these kinds of patents have existed for decades. On Tuesday, the Supreme Court held argument in Bowman v. Monsanto, a case that will test just how far these patents reach. 

Vernon Hugh Bowman is a 75-year-old Indiana soybean farmer. Like pretty much every soybean farmer in America, Bowman is a regular purchaser of “Roundup-Ready” soybean seed from Monsanto. Farmers who plant the variety are able to kill weeds, but not soybeans, by spraying their fields with Roundup. Today, over 90% of the soybean crop in the U.S. uses Monsanto’s patented variety.

One special feature of a living thing is that it can grow and reproduce. And so farmers who buy Roundup-Ready soybean seed sign a contract with Monsanto promising that they will not replant any of the soybeans that they harvest. Monsanto wants farmers to buy a fresh batch of seed every time they plant a soybean crop — and not grow their own.


A Better Way to Rank Colleges?

Amidst another scandal surrounding U.S. News and World Report’s college rankings, economists Christopher N. Avery, Mark E. Glickman, Caroline M. Hoxby, and Andrew Metrick have proposed another option: rankings based on students’ revealed preferences. Here’s the abstract:

We present a method of ranking U.S. undergraduate programs based on students’ revealed preferences. When a student chooses a college among those that have admitted him, that college “wins” his “tournament.” Our method efficiently integrates the information from thousands of such tournaments. We implement the method using data from a national sample of high-achieving students. We demonstrate that this ranking method has strong theoretical properties, eliminating incentives for colleges to adopt strategic, inefficient admissions policies to improve their rankings. We also show empirically that our ranking is (1) not vulnerable to strategic manipulation; (2) similar regardless of whether we control for variables, such as net cost, that vary among a college’s admits; (3) similar regardless of whether we account for students selecting where to apply, including Early Decision. We exemplify multiple rankings for different types of students who have preferences that vary systematically.


The Downside of More Miles Per Gallon (Ep. 115)

Our latest Freakonomics Radio on Marketplace podcast is called “The Downside of More Miles Per Gallon.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

The gist: the Federal gas tax is a primary source of infrastructure funding but, politically, it has proven a hard tax to increase. Furthermore, because the tax is a fixed amount (18.4 cents per gallon) rather than a percentage, gas-tax revenues don’t rise even when gas prices do — as has been happening lately.

Even worse, as modern cars travel further on a gallon of gas (good news, right?), they contribute even less money for the roads they travel. And cars are going to get even more fuel-efficient.

So what’s to be done? Some politicians want to get rid of gas taxes in favor of an increased sales tax — which, Eric Morris argues, is a bad idea, since it shifts the burden to non-drivers.


Question of the Day: How to Get Roommates to Share in Cleaning?

A reader named Jason Stauffer writes:

I live with four guys in a house. We had no cleaning schedule until about a month ago, but the house was never cluttered, and was more than clean enough for actual women to feel comfortable visiting. Even the bathroom was clean enough for the girls to freely use it without vomiting. However since we have implemented our cleaning schedule the house has gotten into worse and worse shape. The toilet downstairs is even looking so bad I don’t want to use it. What gives?

Okay, everybody, let’s hear what you have to say about private vs. public incentives, moral hazard, and the general cleanliness of men.


How to Game a Grading Curve

Students in three of Professor Peter Fröhlich‘s computer programming classes at Johns Hopkins University recently devised a method to game their final grades.  Frolich grades exams on a curve — the highest grade in the class, whatever it may be, becomes 100 percent, and “everybody else gets a percentage relative to it.”  So students collectively planned a boycott:

Because they all did, a zero was the highest score in each of the three classes, which, by the rules of Fröhlich’s curve, meant every student received an A.

“The students refused to come into the room and take the exam, so we sat there for a while: me on the inside, they on the outside,” Fröhlich said. “After about 20-30 minutes I would give up…. Then we all left.” The students waited outside the rooms to make sure that others honored the boycott, and were poised to go in if someone had. No one did, though.

Catherine Rampell discusses the strategy:


An Economic Analysis of "Stop and Frisk"

A new working paper (gated) from Decio Coviello and Nicola Persico:

We analyze data on NYPD’s “stop and frisk program” in an effort to identify racial bias on the part of the police officers making the stops.    We find that the officers are not biased against African Americans relative to whites, because the latter are being stopped despite being a “less productive stop” for a police officer.

Excerpts:

New York City’s stop-and-frisk program disproportionally impacts minorities. The New York Civil Liberties Union makes this point forcefully by documenting that, in 2011, 52.9 percent of stops were of blacks, 33.7 percent were of Latinos, while whites accounted for only 9.3 percent of the stops. This disparate impact is unfortunate, but should not be surprising if we believe that crime and therefore policing are disproportionally concentrated in minority-rich neighborhoods.

However, mere disparate impact is not the same as impermissible behavior. Discrimination law in the United States generally does not prohibit disparate impact, as long as it does not reflect an intent to discriminate. Therefore, if one is interested in impermissible behavior, it is helpful to have an empirical strategy which goes beyond merely documenting disparate impact, and can detect racial animus on the part of the police.


Could Gas Cost More Than Your Car?

A major story on the NBC Today Show was about the sharp rise in the price of gasoline.  One “expert” claimed that, unless you have a very fuel-efficient vehicle, over a car’s lifetime gasoline will cost you more than the purchase price.  Really?  Say a new car costs $20,000, and is driven for 10 years, 12,000 miles/year.  If gasoline is $4/gallon, and the car gets a paltry 24 miles/gallon, today’s average for new cars, gasoline costs $20,000. So, even without discounting. the “expert” is wrong. 

Even if gas were $5/gallon, unless one discounts the future at a rate below 1 percent, the present value of the gasoline purchased is less than the price of the car.  I doubt that there are many new vehicles for which the expert statement is true, even if gas prices rise permanently far above the current price.  I do wish so-called “experts” knew the basics of Econ 1.


Any Tips for Dealing With People You Can't Stand?

A friend writes:

In my job, I have to deal with a few people I really can’t stand. Most of my co-workers are fine, and they are good at their jobs. The people I can’t stand aren’t good at their jobs but they are good at ingratiating themselves with the top bosses. When I say I “can’t stand” them, I should explain that this feeling started out professionally. I got frustrated at how lazy and sloppy and stupid they are in their work. But then my feelings snowballed and now I can’t stand them personally either. But it’s not that big of a company and I have to deal with all of them all the time, especially in meetings. I would love to hit them in the faces with frying pans but I don’t think that is a good idea. Any useful and hopefully peaceful suggestions?

This note caught my attention because we have just begun working on a podcast about spite. I am eager to hear your suggestions.


Levitt on Reddit: "Ask Me Anything" at Noon

I’m not sure how I got talked into it, but I agreed to do an AMA (Ask Me Anything) on Reddit today.

These are the sorts of questions I’m looking forward to:

Q: Would you rather fight one hundred duck-sized horses or one horse-sized duck?

And here are the kinds of answers I’ll be giving.

A: I would take the one big duck, for sure.  I’ll be an underdog either way (that is true in most fights I’m in).  When you are the underdog, you want luck to play as big a role as possible.  With one big duck, maybe I manage to get in a lucky swing with my 7-iron and end it quickly.  With 100 little horses, even if I get lucky and wipe out a few of them, there are still 97 more to deal with.  Plus, I’ve been bit by a horse, and it is no fun.  I also recently got attacked by fire ants, and that was no fun either.  The thought of horse jaws on those fire ants makes my skin crawl.

To check it out, just go to Reddit IAmA at noon, ET.


Cigarettes as Weight Control

We’ve noted before that the U.S. decline in smoking (among teens as well as adults) has likely contributed to the rise in obesity. In a new working paper (gated), John Cawley and Stephanie von Hinke Kessler Scholder consider the degree to which smoking is a conscious effort to avoid weight gain:

We provide new evidence on the extent to which the demand for cigarettes is derived from the demand for weight control (i.e. weight loss or avoidance of weight gain).  We utilize nationally representative data [the Health Behavior in School-Aged Children (HBSC) and the National Health and Nutrition Examination Surveys (NHANES)] that provide the most direct evidence to date on this question:  individuals are directly asked whether they smoke to control their weight.  We find that, among teenagers who smoke frequently, 46% of girls and 30% of boys are smoking in part to control their weight.  This practice is significantly more common among youths who describe themselves as too fat than those who describe themselves as about the right weight.

The derived demand for cigarettes has important implications for tax policy.  Under reasonable assumptions, the demand for cigarettes is less price elastic among those who smoke for weight control.  Thus, taxes on cigarettes will result in less behavior change (but more revenue collection and less deadweight loss) among those for whom the demand for cigarettes is a derived demand.  Public health efforts to reduce smoking initiation and encourage cessation may wish to design campaigns to alter the derived nature of cigarette demand, especially among adolescent girls.


A New Matching Market for Dog Buyers

Al Roth, the Nobel Prize winner and market design guru who’s worked on everything from organ exchanges to school matching, posts a reader email about Wagaroo, a new matching market for dog buyers and responsible breeders. Christine Exley, an Economics grad student at Stanford, writes:

It is estimated that 23.5 million people plan to acquire a pet every year.  Of this, 1.5 million intend to buy their pet from a breeder, 5 million are committed to adopting their pet, and 17 million are undecided about the source for their new pet. At the same time, 3 million dogs and cats are killed every year in shelters because they cannot find a home. When you account for people acquiring dogs from shelters, rescue groups, the street (i.e., strays), friends, family members and purebred breeders, there are still over 6 million people acquiring dogs and cats from “other” sources. These other sources (as well as some of the listed sources) are likely puppy mills – places that mass-produce dogs for profit in horrid conditions.


Chinese Corruption?

The outgoing leader of China, Hu Jintao, has made fighting corruption one of the centerpieces of his party’s agenda.  Perhaps because of that, my corruption antennae were working overtime while I was in China. 

In Beijing, it seemed like our tour guide was perhaps a little corrupt.  For example, we attended an acrobatic show one night.  Included in the tour package were regular tickets to the show.  There were also two more expensive classes of tickets available, we were told, that would afford a better view.  The difference in price was not that great – maybe an extra $10 per person for the best tickets, and $5 more for intermediate tickets.  We gave the tour guide the extra $10 per person and told him to upgrade us to the most expensive tickets.  Our seats were indeed not bad, roughly the twentieth row of a theater that had perhaps 60 rows.  The back of chair was emblazoned with the letters “VIP.”  But here is the thing:  almost every seat in rows 16 to 20 was filled.  Rows 3 to 15 were completely empty (as were rows 40-60…it was not a big crowd on hand).  Rows 1 and 2 were completely full.  The only logical conclusion I could draw was that within each price range, the theater filled seats from front to back, and that our tour guide had taken the extra $10 per person, pocketed half of it, and bought us tickets in the intermediate price range.  Had the theater not been so empty, his scheme wouldn’t have been at all obvious – we would have thought it was just bad luck that we were in the back of the VIP section, but the empty rows gave him away.


What If Your Future Had Been Decided By Someone Else's Coin Toss?

From a reader we’ll call O.X.H.:

I listened to your podcast on letting a coin decide your future – and wanted to make my own, small contribution to your piece. I am an attending physician now – but back when I was in medical school (early 2000s), I helped out with the admissions process by interviewing prospective candidates. On one day of interviews, my faculty colleague and I conducted six interviews – and by the end of the day, our job was to rank each of the candidates that we had interviewed. We independently agreed on No. 1 and No. 2 (and No. 5 and No. 6), but neither of us could decide between No. 3 and No. 4. He asked me how we should resolve this – and I (jokingly) suggested that we should flip a coin. Ironically, he loved the idea – and pulled out a coin, and then we assigned each candidate to heads/tails. We said that whoever won the coin toss would get 3rd. (Interestingly, we flipped the coin only once – not two out of three.)


Explaining Love

Following my #lovedata challenge this morning, the first few attempts at explaining love around the world are already trickling in.

But first, the finding that blew my mind. Commenter Renars pointed out that the very data I had plotted—the proportion of people feeling love in a country on a typical day, versus a measure of GDP per capita (a measure of average income)–form a heart-shaped cloud. Really. Take a closer look at it. This may be the most amazing chart I’ve ever drawn.


In Search of Some Freakonomics Guinea Pigs

A few weeks back, we launched Freakonomics Experiments, a website designed to help you make both big and small decisions in your life when you’re feeling stuck. First, we try to get you thinking differently about the choices with the hope you can figure it out on your own. If that fails, we flip a coin to help you decide.

Now, we are looking for a handful of folks who are willing to take it to a whole other level. We are looking for an intrepid few who, in the name of Freakonomics, are willing to let a coin toss decide a handful of life decisions. We want to get to know you, watch your life unfold at the mercy of fate, and make you characters in our next book.

If you think you have what it takes, fill out the online application and you just may be one of the few, the not-so-proud, the Freak guinea pigs.


Crunching the Numbers on Love

I’ve spent the last few days crunching data from the largest-ever international survey of love.  Specifically, in 2006 and 2007, the Gallup World Poll went to 136 countries around the world and asked people, “Did you experience love for a lot of the day yesterday?” Betsey Stevenson and I report our initial analysis of the data in our latest column.  A snippet:

The good news: Ours is a loving world. On a typical day, about 70 percent of people worldwide reported a love-filled day. In the U.S., 81 percent felt love… Across the world as a whole, the widowed and divorced are the least likely to experience love. Married folks feel more of it than singles. People who live together out of wedlock report getting even more love than married spouses… If you’re young and not feeling all that loved this Valentine’s Day, don’t despair: You’re not alone. Young adults are among the least likely to experience love. It gets better with age, ultimately peaking in the mid-30s or mid-40s in most countries before fading again into the twilight years.


The Best “Green” Hotel Message I’ve Ever Seen

I’m always suspicious of companies who tout how environmentally friendly they are, when being green happens to coincide with cost savings for the firm.  The best example is the ubiquitous message you see in hotel rooms asking the guest, in the spirit of the environment, not to have the sheets and towels washed during your visit.  I have a hard time believing that if the situation were reversed – that the green answer was quite costly – the hotels would be such tree huggers.  (For the record, I don’t care at all whether my sheets and towels get washed, so I cooperate.)

At a hotel in China, I finally found a “green” message that I found compelling:


Minimum Wage Wars Round 23

President Obama has proposed increasing the federal minimum wage from $7.25 to $9. Since the demand for low-skilled labor is quite elastic, this will kill off a few jobs that would otherwise have been created. Not very many, because relatively few people would otherwise be paid between $7.25 and $9 anyway (in an economy with an average wage of about $20/hour); but this is a job-killing idea.

The President’s proposal to index the minimum wage to the CPI is nearly excellent (except we should tie it to average wages, not the CPI).  Doing this would end the repeated fighting over the minimum wage that distracts attention from other labor issues that are so very much more important. It would be a great saving of political energy not to have to debate the minimum wage year after year.  I’d even be willing to see it increased to $9 next year if in addition it were indexed as I propose. 


"Is Everything We Know About Password-Stealing Wrong?"

The next time your bank or credit-card company frantically calls and texts and e-mails you (all at the same time) to say it has noticed “suspicious activity” on your account — like buying gas in a ZIP code a bit poorer than your own — and says it has suspended your account “for your protection,” tell them to read this paper, by Dinei Florencio and Cormac Herley of Microsoft Research. A key passage:

We show that, in spite of appearances, password-stealing is a bad business proposition. … It is worth, at the outset, dispelling a widely-held misapprehension about password-stealing. Thieves certainly steal passwords, and money is certainly a large part of their motivation, but when they successfully extract money from financial accounts individual consumers do not pay. In the US, Regulation E of the Federal Reserve limits consumer liability, in the event of fraud, to $50 (this is separate from the $50 limit for credit-card fraud, Regulation CC) and covers “any electronic transfer that is initiated through an electronic terminal, telephone, computer or magnetic tape.” In the US banks, brokerages, and credit unions are governed by this regulation and most go beyond it and o ffer a zero liability policy to consumers.

(HT: Peter Baehr)


What's the Real Crime Rate in China?

Official statistics would certainly suggest that crime in China is extremely low.  Murder rates in China are roughly one-fifth as high as in the United States.  According to the official crime statistics there, all crimes are rare.  China certainly feels safe. We walked the streets in rich areas and poor and not for a moment did I ever feel threatened.  Graffiti was completely absent.  The one instance where I thought I finally found some graffiti near a train station in the city of Shangrao, the spray painted message on a bridge turned out not to be graffiti, but rather a government warning that anyone caught defecating under the bridge would be severely punished.

Yet, there were all sorts of odd behaviors that made it seem like some crimes were a big problem. 

First, there seemed to be an obsession with the risk of counterfeit money.  Our tour guides felt the need to teach us how to identify fake money.  Whenever I bought something with currency, the shopkeeper went through a variety of tricks to validate the legitimacy of the bills. 


An Economic Explanation for the Horsemeat Scandal

From the Independent:

A law banning horses from Romanian roads may be responsible for the surge in the fraudulent sale of horsemeat on the European beef market, a French politician said yesterday.

Horse-drawn carts were a common form of transport for centuries in Romania, but hundreds of thousands of the animals are feared to have been sent to the abattoir after the change in road rules.

The law, which was passed six years ago but only enforced recently, also banned carts drawn by donkeys, leading to speculation among food-industry officials in France that some of the “horse meat” which has turned up on supermarket shelves in Britain, France and Sweden may, in fact, turn out to be donkey meat. “Horses have been banned from Romanian roads and millions of animals have been sent to the slaughterhouse,” said Jose Bove, a veteran campaigner for small farmers who is now vice-president of the European Parliament agriculture committee.


Staffing the Park Gates

Eight years ago I blogged about a trip up to Haleakala National Park in Maui, noticing that at 9:45AM the National Park Service didn’t bother staffing the entry gate, thus not collecting the entry fee.  Presumably the variable cost of the staff time wasn’t covered by the few entrants at that early hour.  

This week we made the same trip at the same early arrival time — but now the gate was staffed and a Park Service attendant collected entry fees.


Christmas in China

I spent 12 days in China with my family over Christmas this year, a whirlwind tour that took us to seven different cities, including the birth-cities of my two adopted daughters.  In a series of blog posts this week, I recount a few observations from the trip.

 

Last I heard, the Communist Party in China wasn’t that enthusiastic about Christianity.  You never would have known it spending Christmas there with my family a few months back.

We arrived in the Beijing airport to the sounds of Rudolph the Red-Nosed Reindeer playing in the background.  Pretty much the only music we heard the whole trip was Christmas music.  This was true not just in places frequented by tourists, but also in shopping malls and restaurants as far-flung as Nanchang and Zhenjiang  — two cities where we didn’t see a single American in two days.


It's Not You, It's the Data

At McSweeney’s, Josh Freedman breaks up with his girlfriend, economist-style:

Susan, we need to talk. I’ve been doing a lot of thinking lately. About us. I really like you, but ever since we met in that econ class in college I knew there was something missing from how I felt: quantitative reasoning. We can say we love each other all we want, but I just can’t trust it without the data. And after performing an in-depth cost-benefit analysis of our relationship, I just don’t think this is working out.

Please know that this decision was not rash. In fact, it was anything but—it was completely devoid of emotion. I just made a series of quantitative calculations, culled from available OECD data on comparable families and conservative estimates of future likelihoods. I then assigned weights to various “feelings” based on importance, as judged by the relevant scholarly literature. From this, it was easy to determine that given all of the options available, the winning decision on both cost-effectiveness and comparative-effectiveness grounds was to see other people.

(HT: Greg Mankiw)