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China's "Little Emperors"

In a Freakonomics Radio episode called “Misadventures in Baby-Making,” we looked at the unintended consequences of China’s One Child Policy. A new paper (gated) in Science looks at the so-called “little emperors” and how they might impact China’s economy. From Bloomberg:

China’s one-child policy has produced adults that tend to have personality traits unsuited for starting businesses or managing companies, according to a study that adds to economic concerns surrounding the rule.

Using surveys of 421 men and women in Beijing and testing their skills in economic games, researchers in Australia found those born after the 1979 policy were more pessimistic, nervous, less conscientious, less competitive and more risk averse. They also found them to be 23 percent less prone to choose an occupation that entails business risk, such as becoming a stockbroker, entrepreneur or private firm manager.

(HT: Katherine Wells)


How Is Early-Childhood Intervention Like Compound Interest?

Jason Fletcher, who teaches public health at Yale, has written earlier on the connection between ADHD and crime. (The gist: “children who experience ADHD symptoms face a substantially increased likelihood of engaging in many types of criminal activities.”) He now has a new working paper called “The Effects of Childhood ADHD on Adult Labor Market Outcomes” (abstract, PDF):

While several types of mental illness, including substance abuse disorders, have been linked with poor labor market outcomes, no current research has been able to examine the effects of childhood ADHD.  As ADHD has become one of the most prevalent childhood mental conditions, it is useful to understand the full set of consequences of the illness.  This paper uses a longitudinal national sample, including sibling pairs, to show important labor market outcome consequences of ADHD.  The employment reduction is between 10-14 percentage points, the earnings reduction is approximately 33%, and the increase in social assistance is 15 points, which are larger than many estimates of the black-white earnings gap and the gender earnings gap.  A small share of the link is explained by education attainments and co-morbid health conditions and behaviors.  The results also show important differences in labor market consequences by family background and age of onset. These findings, along with similar research showing that ADHD is linked with poor education outcomes and adult crime, suggest that treating childhood ADHD can substantially increase the acquisition of human capital.

The more research of this sort that we see, the easier it is to believe the following: compound interest may indeed be the eighth wonder of the world, but early-childhood investment and intervention is probably Wonder 7.5.


The Midol Monopolist

A student writes that she became a monopolist in her freshman dorm — hoarding Midol to sell to her dorm-mates at the time each month when dorm-mate had a quite inelastic demand for this product. She also realized that at that time, there is an increasingly inelastic demand for chocolate-chip cookies, so she hoarded and sold those, too. She correctly notes that the two goods are complementary over time — more of both consumed on some days than on others. But I bet that over a short interval, they are substitutes — the satisfaction from one reduces the demand for the other. This illustrates how we need to think about the time dimension of consumer choice. I would also bet that her monopoly doesn’t last long. Anybody can bring the two products to the dorm and sell them — there are few barriers to entry. A better description is that she’s an innovating entrepreneur in what inherently will be a competitive industry.

(HT: A.S.)


Should Hospital Workers Who Don't Get a Flu Shot Be Required to Wear a Mask?

A few weeks ago, before the flu was national news, a reader who works at a hospital in Portland, Or., wrote to say:
“The organization I work for just started this policy, I think it is very interesting and may push those who don’t want to get a flu shot for whatever reason to get a flu shot to avoid the stigma of wearing a mask. The employee comment section has ranged from HIPPA violations to discrimination for those who can’t have a flu shot based on egg allergies.”

Here’s the policy:

You may have heard by now: Flu season is ramping up in Oregon, with cases now starting to affect hospitalized patients in greater numbers. For individuals whose immune systems are compromised by other conditions, the flu can be life threatening.

To keep patients safe, a new Influenza Vaccination and Masking policy requires that workforce members do one of two things during flu season:


Are Online Friends as Valuable as Real Ones?

New research (gated, sorry) by John Helliwell and Haifang Huang suggests the answer may be no, especially for those most in need of friendship. Depending on your perspective, this may strike you as a) revelatory or b) from the Dept. of “Duh.” The abstract:

A recent large Canadian survey permits us to compare real-time and on-line social networks as sources of subjective well-being.  The sample of 5,000 is drawn randomly from an on-line pool of respondents, a group well placed to have and value on-line friendships.  We find three key results.  First, the number of real-life friends is positively correlated with subjective well-being (SWB) even after controlling for income, demographic variables and personality differences.  Doubling the number of friends in real life has an equivalent effect on well-being as a 50% increase in income. Second, the size of online networks is largely uncorrelated with subjective well-being. Third, we find that real-life friends are much more important for people who are single, divorced, separated or widowed than they are for people who are married or living with a partner.  Findings from large international surveys (the European Social Surveys 2002-2008) are used to confirm the importance of real-life social networks to SWB; they also indicate a significantly smaller value of social networks to married or partnered couples.


Surprising New Findings on Obesity

One of the first Freakonomics Radio podcasts we made was an episode about the (surprisingly tenuous) link between obesity and health problems. A new study in The Journal of the American Medical Association finds that “Grade 1 obesity overall was not associated with higher mortality, and overweight was associated with significantly lower all-cause mortality.”  Writing for The Daily Beast, Kent Sepkowitz explains:

Compared to people with a normal weight (a BMI less than 25), the overweight (BMI between 25 to 30) had a 6 percent lower mortality rate—and both groups had a rate about 15 percent lower than the obese, especially the very obese (BMI above 35).

The explanation for the finding is uncertain. Perhaps the pleasantly plump but not obese have an extra reserve—a literal spare tire—that confers a survival advantage should they become seriously ill, whereas the lean-iacs do not. Or maybe the thin ones were thin because of a serious illness that, in the course the various studies, killed them. Or maybe the thin ones were thin because they were chain smokers living off Scotch and potato chips. Or just maybe the occasional pig-out does soothe the soul and make for a happier, healthier individual.

(HT: Andrew Sullivan)


What Can We Learn From Congress and African Farmers About Losing Weight?

I have an op-ed in the Wall Street Journal in which I call for some respect for Congress’s fiscal cliff idea. Congress, back in 2011, couldn’t agree on a budget, so it came up with a way to force the hand of its future self.  This idea of forcing one’s own future behavior dates back in our culture at least to Odysseus, who had his crew tie him to the ship’s mast so he wouldn’t be tempted by the sirens; and Cortes, who burned his ships to show his army that there would be no going back. 

Economists call this method of pushing your future self into some behavior a “commitment device.” [Related: a Freakonomics podcast on the topic is called “Save Me From Myself.”] From my WSJ op-ed:

Most of us don’t have crews and soldiers at our disposal, but many people still find ways to influence their future selves. Some compulsive shoppers will freeze their credit cards in blocks of ice to make sure they can’t get at them too readily when tempted. Some who are particularly prone to the siren song of their pillows in the morning place their alarm clock far from their bed, on the other side of the room, forcing their future self out of bed to shut it off. When MIT graduate student Guri Nanda developed an alarm clock, Clocky, that rolls off a night stand and hides when it goes off, the market beat a path to her door.


What's the Best Way to "Sponsor" Baby Girls?

A reader named Gunjan Aggarwal writes:

I came to the U.S. 7 years ago, worked in U.K./Switzerland/Netherlands/India prior to that. I work in human resources and have been fortunate to have been successful thus far in my career. We are moving on to a new location and a new job this year but this year will also perhaps give me an opportunity to invest some time/leadership on a cause that I have been very keen to “do something about”: contribute towards improving the lot of the girl child in India.
 
I have always thought of crowd-sourcing an incentive scheme by which we will “adopt” a few girls in their womb and give the parents a small amount every month, $50, to give birth to their girl child, to educate her till the age of 21. I was even more determined to do this in the wake of all the news about crimes against women in India — but then I heard your podcast on the “Cobra Effect.”

I would love to connect and get your thoughts on “scheming” this incentive forward!


Petitioning the President

The Atlantic has a roundup of the 12 goofiest petitions submitted so far to the White House’s We the People initiative.  Our two favorites: “Secure resources and funding, and begin construction of a Death Star by 2016” and “authorize the production of a recurring television program featuring Vice President Joe Biden.”  

A petition to “Direct the United States Mint to make a single platinum trillion-dollar coin” has so far garnered only 5,149 signatures (as compared to the Death Star’s 33,836 signatures), even though Paul Krugman recently endorsed of the idea. Stephen Colbert has also weighed in on the #Mintthecoin movement.


Shanzhai Skyscrapers

China is famously a hotbed of copying.  Western firms constantly kvetch about Chinese knockoffs of their products—and often with good reason. China’s intellectual property laws are fairly strong, at least on paper. The problem is that the laws aren’t effectively enforced – and it’s an open question whether the Chinese government is capable of shutting down the copyists. China’s uneasy relationship with intellectual-property law is due in no small part to China’s “shanzhai” culture. What is shanzhai? The literal meaning of the word is “mountain stronghold,” but it has come to connote imitation, and more, imitation done in a way that is upfront about its fakery and may even be celebrated for it. 

Shanzhai culture is incredibly vibrant and shows no sign of slowing down. Shanzhai cellphones, for instance, are sometimes applauded for their ingenuity. Some include nifty features not seen on the original they are imitating. Some mash-up features found on competing phones into a single device.  All are cheap.


How Political Are Judges?

Cass Sunstein, writing on Bloomberg View, reviews the research on judicial voting patterns to determine whether judges are really as “political” as people seem to think.  The good news: federal judges aren’t nearly as bad as politicians.  “Judges are far from mere politicians; we don’t see anything like the kind of polarization found in Congress,” writes Sunstein. “At the same time, judicial predispositions matter, and they help explain why judges are divided on some of the great issues of the day.”  

The research also indicates that even judges are subject to a phenomenon called “group polarization.”  “[J]udicial voting becomes a lot more ideological when judges sit on panels with two others appointed by presidents of the same political party,” Sunstein explains. “For example, Republican appointees side with plaintiffs complaining of disability discrimination about 29 percent of the time — but that number drops to 17 percent when they are sitting with two fellow Republican appointees.”

As for the Supreme Court, Sunstein highlights research from a new book on the political leanings of Supreme Court justices since 1937:

Strikingly, they find that of the six most conservative justices in their entire sample, no fewer than three are currently on the court (Clarence Thomas, Antonin Scalia and Samuel Alito). A fourth makes the top 10 (John Roberts). By contrast, none of the current justices ranks among the most liberal six, and only one makes the liberal top 10 (Ruth Bader Ginsburg).


How to Live Longer (Ep. 109)

Our latest Freakonomics Radio on Marketplace podcast is called “How to Live Longer.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player in the post, or read the transcript below.)

It looks into why Hall of Fame inductees, Oscar winners, and Nobel laureates seem to outlive their peers. The deeper question in the podcast concerns the relationship between status (not income!) and longevity — a fascinating, complex, and controversial topic (here’s a good place to start reading) about which I believe we’ll hear a great deal in years to come. It will be valuable to know what kind of “status boosts” confer health advantages and, conversely, how disappointment and the like can chip away at us.

This podcast was timed to coincide with two events this week: the annual Baseball Hall of Fame election, in which no players were selected this year for the first time since 1996 (here’s ESPN’s take and here’s a useful statistical snapshot); and the announcement of this year’s Oscar nominees.


A Family of Gift-Maximizers

A reader/listener named T.K. writes from Salem, Or., having heard us talk about holiday gift-giving in our “Have a Very Homo Economicus Christmas” podcast:

Guys, thought you might be interested in a couple of econ-related oddities from my family at Christmas time. The first occurred this year. I am single and my brother and step-sister are both in relationships. My parents bought gifts for the boyfriend and girlfriend, and once I found out that they were planning to do that, I asked for my “share” of the boyfriend/girlfriend pool. I just wanted to be sure my take was the same as what my brother and his girlfriend, and step-sister and her boyfriend were getting. My parents obliged, so even though I am single, a few more Christmas gifts under the tree for me:) Don’t know how other families handle this issue, but it’s working beautifully in my family.


Does Math Make Research "Better"?

Yes — if you don’t know much math, that is. A new study finds that even academic scholars perceived research to be of higher quality if there’s some math involved — even if the math makes no sense. The experiment threw an irrelevant mathematical equation into research paper abstracts, and asked scholars of different fields to evaluate the quality of the research:

Mathematics is a fundamental tool of research. Although potentially applicable in every discipline, the amount of training in mathematics that students typically receive varies greatly between different disciplines. In those disciplines where most researchers do not master mathematics, the use of mathematics may be held in too much awe. To demonstrate this I conducted an online experiment with 200 participants, all of which had experience of reading research reports and a postgraduate degree (in any subject).


The Absurdity of U.S. Air Travel: Baggage Fees

On the way home from visiting my brother-in-law’s family in Ohio, we changed planes in Chicago. To avoid the baggage fees, we, like most of our fellow passengers, schlepped our luggage through the airport to the gate in Dayton.  Of course, we had to gate-check it because the overhead bins were long-full by the time we could board (boarding group: infinity). The plane arrived in Chicago late, we waited 20 minutes for our baggage to be unloaded, and then we sprinted to (and barely caught) our connecting flight to Boston.  Naturally, we had to gate-check the luggage for that flight as well.

Baggage fees brought U.S. airlines in 2011 a total of $3.4 billion. That amount is almost one-half of the industry’s 2011 profits of $7 billion. To double the airlines’ profits, the social benefit of which is highly unclear, society incurs many costs:


How Did the Worst Team in NBA History Become a Title Contender?

Kobe Bryant says that “other team” in LA – the Clippers – are title contenders in 2013.

And Kobe made this statement before the Clippers defeated the Lakers on Friday night and then destroyed the Golden State Warriors (who are currently a playoff contender in the West) the next night. 

Yes, the 27-8 Clippers look like contenders. 

Of course, fans in LA can easily remember the last time this happened. That was back in …

Okay, this has never happened.

Unlike every other big market team in North America, the Clippers have never, ever, ever been a title contender.  In fact, the very best season in franchise history was last season.  When the 2011-12 regular season ended, the Clippers had a mark of 40-26.  This mark was surpassed by seven other teams (including Kobe’s Lakers).  In the post-season, the Clippers reached the Western Conference semi-finals — where they were swept by the San Antonio Spurs.  

Such a season likely left many NBA observers thinking the Clippers were a “good” team, but hardly a real title contender.  Again, though, this was the best team in the history of the Clippers.  For the first time in franchise history (which began in Buffalo in 1970-71), the Clippers won 60% of their games. 

In 2012-13 the Clippers have moved beyond being the best team in franchise history to being one of the very best teams in the NBA.  After 35 games, the Clippers have a 0.771 winning percentage; a mark that – as of Tuesday morning – currently leads the NBA.

Clearly the Clippers are better than they were last year.  And that leads one to wonder… how did this worst team in NBA history become a title contender?


When the Economists Arrive, Do the Prostitutes Leave?

I was walking outside the American Economic Association meetings this past Sunday when a man stopped me and asked what all the university professors were doing in one place.  I told him that it was the annual convention of economists, and got a hearty laugh by telling him the old joke that when the economists arrived in town, the prostitutes left.  This joke is a good illustration: the arrival of economists represents a decrease in demand; the prostitutes’ leaving represents a decrease in the amount supplied.  I don’t know the shape of the supply curve, however, so I can’t speculate about the size of the change, if any, in the equilibrium price. But the joke does suggest that the equilibrium quantity transacted decreased.


Is There Such a Thing as "Office Logic"? Bring Your Questions for the Authors of The Org

We have been exploring, on this blog and especially in our Marketplace radio segments, the mores of the American office, from bosses to morale to the benefits of working from home.

If these topics interest you even a little bit, then you might want to check out The Org: The Underlying Logic of the Office, a new book by Ray Fisman and Tim Sullivan. Fisman, who has appeared on the blog before, teaches at Columbia, writes at Slate, and is the co-author of Economic Gangsters; Sullivan is the editorial director of Harvard Business Review Press.


How Much Financial Inequality Is Due to Financial Illiteracy?

Annamaria Lusardi, whose ground-breaking research on financial literacy has been featured here several times, has put out a new working paper (with co-authors Pierre-Carl Michaud and Olivia S. Mitchell) that could be read as laying much of the blame for the lack of household wealth at the foot of the members of said household. The paper is called “Optimal Financial Knowledge and Wealth Inequality” (abstract; PDF):

While financial knowledge is strongly positively related to household wealth, there is also considerable cross-sectional variation in both financial knowledge and net asset levels.  To explore these patterns, we develop a calibrated stochastic life cycle model featuring endogenous financial knowledge accumulation.  The model generates substantial wealth inequality, over and above that of standard life cycle models; this is because higher earners typically have more hump-shaped labor income profiles and lower retirement benefits which, when interacted with precautionary saving motives, boost their need for private wealth accumulation and thus financial knowledge.

Our simulations show that endogenous financial knowledge accumulation has the potential to account for a large proportion of wealth inequality. 


Who Controls the Switch on a Geoengineering Machine?

Most discussions about geoengineering start out with the tricky scientific issues but eventually get to the even trickier issue of governance. As we wrote in SuperFreakonomics:

As of this writing, there is no regulatory framework to prohibit anyone — a government, a private institution, even an individual — from putting sulfur dioxide in the atmosphere. (If there were, many of the world’s nearly eight thousand coal-burning electricity units would be in a lot of trouble.) Still, [Nathan] Myhrvold admits that “it would freak people out” if someone unilaterally built the thing.


How Can A New College Football Coach Avoid Getting Fired?

More than 25 college football teams have decided to change head coaches in the past few weeks.  As the new coaches get hired and settled into their new jobs, one suspects that all of them believe that they will be the person who will change the fortunes of their new schools.

Unfortunately – as published research seems to indicate – it doesn’t seem likely that many of these coaches will really make a difference. Aside from that ambition, these coaches are definitely hoping to stay in their current position until they decide to voluntarily leave for an even better paying job.  In other words, these coaches hope to avoid getting fired.


More on Ty Cobb From His Biographer's Son

Our “Legacy of a Jerk” podcast covered the notorious legacy of baseball great Ty Cobb, whom history has recorded as an ungracious and vicious human being. But the writer Charlie Leerhsen, who is working on a new biography of Cobb, says this reputation is undeserved — and, moreover, is largely the product of one man’s assessment, that man being an earlier Cobb biographer named Al Stump.

We recently heard from Stump’s son John, and his note is well worth a read:

It was with interest that I read the exchange on Ty Cobb. I’ll disclose that I’m Al Stump’s son and that Charlie Leerhsen and I have communicated earlier in this year, once by phone call and a number of emails. One thought is that while I do agree about human projection on things that are negative, by Vohs’s point of view it also seems that we can never objectively say anything negative about Cobb, for ex. w/o it being this shadow projection. How can we get to the objective truth then?


The Opportunity Cost of Water

With the continuing drought in South Texas, the issue of how to allocate scarce water resources has flared up again. Rice farmers south of Austin want water from the Colorado River for their crops; yet the two storage lakes on the river, which provide most of the Austin area’s drinking water, are less than half full.  As one rice farmer told the the Austin American-Statesman: “Water availability should be based on sound hydrology and not on political pressure.” It should be based on neither—it should be based on economics—what is the opportunity cost of the water?  In particular, one might ask why the U.S. is growing rice at all.  It is hard to believe we have a comparative advantage in rice-growing and that it shouldn’t all be imported.  That’s especially true about rice grown in dry South Texas. We grow rice because of entrenched interests that obtained water rights many years ago.  The rice farmers get heavily subsidized water precisely because of the political pressure this man deplores—and they now want to compound the effects of bad policy.


An Economist's Guide to Year-End Charitable Giving

The end of the year is a giving season for many (I suppose a cynical economist might think tax deductions has something to do with it).  Most of us like to make sure we’re making well-researched and wise decisions when it comes to our money, be it reading the online reviews before a purchase or investing our savings. By contrast, donating to charities can seem like a “black box.”  Many of us our rely on what feels right or seek out an organization in an area we have a personal connection to, but examining some bad habits about charity giving might help make sure our dollars go farther this giving season.

Bad Giving Habit #1: Choosing based on low overhead and fundraising expense ratios

Administrative expenses tell you nothing about if the charity’s work actually does anything, or if it does, how much good it does. The proper question to ask should be “for every $1 I give, how much good is generated?” and not care about how the sausage is made. Different organizations might have different business models, and two organizations might approach the same problem, say clean water in poor villages from two different approaches – perhaps digging new wells versus cleaning existing water sources. Don’t ask who spends less on expenses like copier toner and legal costs, ask which organization will get clean water to the most people with your money. I went into this in more detail in a post a while ago, and when I compared charities’ ranks on a site that rank using overhead ratios, to a site that does thorough research on effectiveness, organizations that were rated as more effective also tended to have slightly higher expense ratios.


Do We Really Tip Based on the Waiter's Service?

For whatever reason, tipping is a subject that always seems to fascinate. Maybe it’s because it represents a sort of shotgun marriage between economic behavior and “normal” behavior (i.e., profit-maximizing and altruism). In that light, a reader named Joshua Talley raises an interesting question. I am interested to hear your replies.

I’ve been a waiter for years.  I pride myself on providing prompt, professional service.  But I’ve always wondered how much the quality of service impacts the tip. Despite the notion that the tip reflects the quality of service, it seems likely to me that aside from instances of extremely good or extremely poor service, most people simply tip what they normally tip.  For instance, some people are 10 percenters, many are 15 percenters and some are 20 percenters, etc., and it takes either very good or very poor service to change this.  Am I right?


How Much Does a Good Boss Really Matter? (Ep. 107)

Our latest Freakonomics Radio on Marketplace podcast is called “How Much Does a Good Boss Really Matter?”  (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) 

It’s based on a recent working paper called “The Value of Bosses” (abstract; PDF) by Edward Lazear, Kathryn Shaw, and Christopher Stanton. In the podcast, you’ll hear Lazear describe the basic problem:

LAZEAR: Suppose you look at a firm and you see that the firm is highly productive. Well, it may be highly productive because it has productive workers, because it has productive technology, or because it has good supervisors that are enhancing the productivity of the workers, and it’s not so easy to tease out one effect from another.

So how can you measure the impact of the bosses? Data, people, data. And Shaw came up with a huge data set from a company that included roughly 23,000 employees and 2,000 bosses.


FREAK-Shot: Christmas Ornament Edition

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.


In Response to Your Queries About Gun Violence…

We’ve gotten a lot of requests to comment on the massacre in Newtown, Ct., especially regarding the issue of guns. I haven’t done so because I don’t feel I have anything meaningful to contribute at this time, especially to the victims’ families, except for my deepest sympathy.

I will point to some things we’ve already written on the topic: Chapter 4 of Freakonomics, pp. 130-133; a quorum on how to reduce gun deaths; and a Q&A with the photographer-author of Armed America. And we are starting to produce a podcast about gun violence, to be released sometime in the spring.

Wishing everyone a more peaceful holiday season than the tragic events in recent months have prepared us for…