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Freakonomics Blog

Time Between Tests

A new working paper (abstract; PDF) by Ian Fillmore and Devin G. Pope examines whether “cognitive fatigue” has any impact on exam results. The researchers looked at the number of days students had between AP exams, and found that resting time matters:

In many education and work environments, economic agents must perform several mental tasks in a short period of time. As with physical fatigue, it is likely that cognitive fatigue can occur and affect performance if a series of mental tasks are scheduled close together. In this paper, we identify the impact of time between cognitive tasks on performance in a particular context: the taking of Advanced Placement (AP) exams by high-school students. We exploit the fact that AP exam dates change from year to year, so that students who take two subject exams in one year may have a different number of days between the exams than students who take the same two exams in a different year. We find strong evidence that a shorter amount of time between exams is associated with lower scores, particularly on the second exam. Our estimates suggest that students who take exams with 10 days of separation are 8% more likely to pass both exams than students who take the same two exams with only 1 day of separation.


Good Intentions and Recycling Fraud

A recent Freakonomics radio podcast focused on the unintended consequences of bounties. Here’s another great example: California’s recycling redemption program no doubt seemed like a great idea when it was initiated, but an L.A. Times article suggests the system is being gamed. Last year, it appears that nearly 100 percent of recyclable cans sold in California were returned, and 104 percent (!) of plastic containers:

Crafty entrepreneurs are driving semi-trailers full of cans from Nevada or Arizona, which don’t have deposit laws, across the border and transforming their cargo into truckfuls of nickels. In addition, recyclers inside the state are claiming redemptions for the same containers several times over, or for containers that never existed.


What Will the Smartphone Kill?

Today’s smartphone, it is often said, has more computing power than an Apollo rocket.

So it should not be surprising that is it disrupting daily life left and right. Every day or two I seem to notice another common item whose usage is plummeting, perhaps bound for oblivion.

I will likely never buy an alarm clock again since my phone can handle the job better. Are clocks and wristwatches on the way out? Has anyone bought a road atlas lately — or even a dedicated GPS system for your car?


The Cobra Effect, Continued

Quite a few readers and listeners have written in with their own versions of “the cobra effect,” as described in our recent podcast of the same name. Here’s one particularly entertaining one, from Eblyn Miguel Angel:

I would like to bring a comment that came to mind when I heard your podcast on the “Cobra Effect,” in particular when Levitt mentions that for any scheme presented a government must come to the realization that there will be schemers who will break the system or get around it.

I bring this up because my family is Dominican and growing up my father told me a folk tale of something very similar to this involving electric meters in his home country.


Penicillin as an Aphrodisiac?

An interesting new paper (abstract; PDF) by the Emory economist Andrew M. Francis explores penicillin’s role in shaping modern sexuality:

It was not until 1943, amid world war, that penicillin was found to be an effective treatment for syphilis. This study investigated the hypothesis that a decrease in the cost of syphilis due to penicillin spurred an increase in risky non-traditional sex. Using nationally comprehensive vital statistics, this study found evidence that the era of modern sexuality originated in the mid to late 1950s. Measures of risky non-traditional sexual behavior began to rise during this period. These trends appeared to coincide with the collapse of the syphilis epidemic. Syphilis incidence reached an all-time low in 1957 and syphilis deaths fell rapidly during the 1940s and early 1950s. Regression analysis demonstrated that most measures of sexual behavior significantly increased immediately following the collapse of syphilis and most measures were significantly associated with the syphilis death rate. Together, the findings supported the notion that the discovery of penicillin decreased the cost of syphilis and thereby played an important role in shaping modern sexuality.

(HT: Marginal Revolution)


The Return of the Freelance Economist

A few weeks back, we posted a query from a young economist who, before heading for the job market, was looking to pick up  freelance work. She (yes, she) promised to report back with her progress, and now she has:

Thank you for posting my email. I received a decent handful of responses, but was not flooded with emails. I did get one big project that I am very excited about and will carry me through to the job market, so it worked out very well for me, but is probably not a good career strategy. I had no idea what to charge, so started with the rate I would have received from the employer that didn’t work out, which was clearly too high. I tried to make it clear that it was negotiable, but fear I may have scared off a few people.


Lying to Ourselves (Ep. 97)

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

The episode was inspired by a recent poll I saw on Yahoo! Finance (at left).

Does anyone believe for a minute that this many people would actually leave the U.S. if taxes (whatever that means, exactly) were to rise to 40 percent or even 70 percent?


Daniel Kahneman Calls for Change

Nobel laureate and frequent Freakonomics visitor Daniel Kahneman (author of Thinking, Fast and Slow)  has written an open letter to psychologists who work on social priming, calling for them “to restore the credibility of their field by creating a replication ring to check each others’ results.” Here’s an excerpt:

My reason for writing this letter is that I see a train wreck looming. I expect the first victims to be young people on the job market. Being associated with a controversial and suspicious field will put them at a severe disadvantage in the competition for positions. Because of the high visibility of the issue, you may already expect the coming crop of graduates to encounter problems. Another reason for writing is that I am old enough to remember two fields that went into a prolonged eclipse after similar outsider attacks on the replicability of findings: subliminal perception and dissonance reduction.

(HT: BPS Research Digest)


Austin's New Toll Lanes

Traffic in Austin is a mess, mainly because the city is long and linear (east-west travel is made difficult by the topography). In increasingly long rush hours, traffic barely moves on either north-south freeway. To solve the problem, the city is adding one lane in each direction to one freeway, but there will be tolls on that lane. Moreover, the tolls will be variable — but not by time of day or day of week. They will vary with traffic speed, rising when the average speed in the lane drops below 50 mph. Pretty neat — peak-load pricing taken to its logical extreme. The technology that makes this possible is fairly recent. And it’s a good example of how technical improvements raise well-being — in this case, allowing those whose value of time is high to substitute money for their time and reducing congestion on the “free” lanes for the rest of us.


Al Roth Takes Home the Nobel Prize

Hearty congratulations to Harvard economist Al Roth (now at Stanford), whose work has been featured on many occasions here at the Freakonomics blog!

When I talk about economists, one of the greatest compliments I give is to say that they changed the way people think about the world.  Al Roth definitely fits into that category.  The type of economics he is best known for is what is called “Market Design.”  Essentially, it means bringing market-type thinking to areas in which historically non-market allocation mechanisms have been used.  A few examples of the areas Roth has explored are matching fledgling doctors to hospitals for their residency, matching students to public schools in school choice programs, and matching kidney donors with those who need a kidney.

I know Roth changed my thinking because the first time I read Roth’s work in this area I had a strong reaction: this isn’t really economics.


"Under-Savers Anonymous": Using Peer Pressure to Save More Money

A new working paper by Felipe Kast, Stephan Meier, Dina Pomeranz combines two of our favorite topics, both explored in recent podcasts: our inability to save money and the efficacy of commitment devices. The paper is called “Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device” (abstract; PDF), and it reports a remarkable near-doubling of savings among those who submit to peer pressure:

We test the effectiveness of self-help peer groups as a commitment device for precautionary savings, through two randomized field experiments among 2,687 microentrepreneurs in Chile.  The first experiment finds that self-help peer groups are a powerful tool to increase savings (the number of deposits grows 3.5-fold and the average savings balance almost doubles).  Conversely, a substantially higher interest rate has no effect on most participants.


FREAK-est Links

1. Just published: Rough Beasts, Charles Siebert‘s new e-book on the Zanesville Zoo Massacre.

2. Chris Sprigman on software patents.

3. 36 bizarre economic indicators. (HT: V. Brenner)

4. Nathan Myhrvold‘s absurdly prolific and diverse output can now be sampled in one place, on his new website. Also, his award-winning six-volume $625 cookbook Modernist Cuisine: The Art and Science of Cooking has just been repurposed into a one-volume edition (retailing for just $140) called Modernist Cuisine at Home.


Season 3 of Freakonomics Radio Hits the Airwaves

We have just released five hour-long Freakonomics Radio episodes that will be airing this fall and winter on NPR affiliates around the country. Because these hours are mashups of earlier podcasts, we will not be releasing the hours into our podcast stream (iTunes version; RSS feed version), but you can download or listen to them here.

This is our third season of radio hours (the first two can be found here and here). You can look for your local station here, but I will warn you that this list is neither complete nor up-to-date. What I do know is that our last season was carried by roughly 220 stations. Your best bet is probably to check the website of your favorite NPR station — and, if they’re not yet carrying Freakonomics Radio, send them a sweet, imploring note, perhaps with a crisp $20 bill tucked inside. Public-radio folks are as honest as the day as long but they are also underpaid, so a small bribe just might tip the scales.

Hope you enjoy!


Money Didn’t Buy Happiness in Baseball in 2012

If you wish to win in baseball, your team has to spend money. Just look at the New York Yankees. USA Today reports that in 2012 the Yankees led the American League in spending.  And the Yankees finished with the best record in the American League.

Of course, one data point doesn’t a trend make. What do we see when we look past the Yankees?


"Information Wants to Be Shared"

The Australian economist Joshua Gans, who has shown up on this blog before, has published a new book called Information Wants to Be Shared. It “looks at the struggles facing information content industries — most notably, publishing (books and newspapers) — and examines the underlying economics of those industries.”  Gans and his publisher, HBR Press, are also running a pricing experiment:

HBR eBooks are all DRM-free but, in this case, if someone were to purchase the book (from HBR or from, say, Amazon or Apple), then they will find on the last page a coupon that they can send to a friend. The friend can then buy the book for only $0.99 directing from HBR. In other words, when you share with a friend, your friend gets a great deal. The usual price of the book is $4.99. I have outlined the rationale behind this at my blog Digitopoly. Basically, it is the sort of thing I advocate for information businesses in general.

Predictions?


Saving Boston's Long Wharf Park From Extinction

Have you visited the beautiful and historic Long Wharf Park on Boston Harbor? And what do you do when the government goes rogue?

The Boston Redevelopment Authority (BRA), in defiance of the Massachusetts Constitution, is trying to turn Long Wharf Park into a late-night restaurant and bar. The Massachusetts Constitution requires a two-thirds vote of the Legislature before public parkland can be converted to other uses. The vote has not happened, and the BRA is telling the world that it is unneeded. As featured in today’s Boston Globe, ten local residents, including me, have been trying to force the government to obey the constitution.


How Crack Cocaine Widened the Black-White Education Gap

A new working paper (abstract; PDF) from William N. Evans, Timothy J. Moore, and Craig Garthwaite presents one explanation for the decline in black high-school graduation rates beginning in the 1980s:

We propose the rise of crack cocaine markets as an explanation for the end to the convergence in black-white educational outcomes beginning in the mid-1980s. After constructing a measure to date the arrival of crack markets in cities and states, we show large increases in murder and incarceration rates after these dates. Black high school graduation rates also decline, and we estimate that crack markets accounts for between 40 and 73 percent of the fall in black male high school graduation rates. We argue that the primary mechanism is reduced educational investments in response to decreased returns to schooling.

How did crack cocaine depress schooling returns? “Crack markets had three primary impacts on young black males: an increased probability of being murdered, an increased risk of incarceration, and a potential source of income,” explain the authors. “Each limits the benefits of education.”  In other words, high school looks less attractive when you’re more likely to end up dead or in jail, or earn money.

This finding echoes a passage from Freakonomics:


Bring Your Questions for Hanna Rosin, Author of The End of Men

“In the Great Recession, three-quarters of the 7.5 million jobs lost were lost by men,” writes Hanna Rosin, author of the new book The End of Men (and the Rise of Women). “The worst-hit industries were overwhelmingly male, and deeply identified with macho: construction, manufacturing, high finance.  Some of those jobs have come back, but the dislocation is neither random nor temporary.  The recession merely revealed — and accelerated — a profound economic shift that has been going on for at least thirty years, and in some respects even longer.”

Rosin’s book (here are some reviews), based on her controversial 2010 Atlantic essay, explores the new American marriage divide, the education gap between young men and women around the world, and the new Asian power women.


A Monopolist's Bridge

More than 25 per cent of trade between the U.S. and Canada goes over the Ambassador Bridge between Detroit and Windsor, Ontario. The bridge, built in 1929, has since 1979 been owned by one individual — Matty Moroun. He also owns duty-free stores and sells gasoline that escapes taxes. The Bridge isn’t quite a monopoly—there is also a tunnel; but the Bridge is more convenient for a lot of traffic.

Michigan has a constitutional amendment on the ballot requiring that any new bridge be approved by voters before state money is spent on it. Perhaps unsurprisingly, the Bridge owner is funding a large advertising campaign supporting the amendment. No monopolist likes to have the stream of monopoly profits diminished, which a new bridge would surely do. His political advertising is a smart move for him—a good way to ensure a continuing flow of profits.  Whether it’s good for Michigan, for U.S.-Canada trade and the well-being of the average North American consumer is questionable.  (HT to DJH)


Chinese Bluegrass

If you have 3 minutes and 41 seconds to spare on this fine Friday, you could do much worse than watching a performance of “Katy Hill” by Mei Han’s Red Chamber with John Reischman and the Jaybirds:

(HT: Nick Frisch)


Challenging the "End of Growth" Argument

Our latest podcast, “Why America’s Economic Growth May Be (Shh!) Over,” is based on a much–discussed paper (abstract, PDF) by the Northwestern economist Robert J. Gordon. It is a fascinating paper that is well worth a read, and its provocative argument has certainly gleaned a lot of attention.

The environmental economist Roger Pielke Jr. has read the paper and argues that Gordon is (what’s the best way to put this?) wrong:

Over the past month I have taken a close look at Gordon’s paper, the data he relies on and the papers that he cites.  My conclusions are that Gordon’s analysis is deeply flawed and tells us essentially nothing about the potential for future economic growth. It does help to reveal a big gap in the discipline of economics, and that is the utter lack of an explicit theory of growth and the mechanisms by which it actually takes place. What Gordon has provided, in his own words, is a “a provocative fantasy” one that tells us much about the discipline of economics but little about the state of the world.

I am not much for making predictions, but I wouldn’t be shocked if Gordon’s paper soon inspires a public forum or two on the topic and that Pielke is invited to rebut.


FiveThirtyEighter Nate Silver Answers Your Questions About Politics, Baseball, and The Signal and the Noise

We recently solicited your questions for Nate Silver regarding his new book The Signal and the Noise: Why So Many Predictions Fail — But Some Don’t. Not too surprisingly, a lot of the questions were about politics and baseball. Below are Nate’s answers to some of them. Thanks to him for playing along and to all of you (as always) for sending in the excellent questions.

Q. Under what circumstances will a voter actually change his/her mind about whom to vote for? I understand that this rarely happens (this study for example), and that most of the action involves undecided voters deciding whom to vote for.

Also, if political scientist are right that voters rarely change their minds, how can a large swing in the polls ever occur? A classic example that your briefly mention in your book is that of Michael Dukakis, who was ahead of GHW Bush by 10% at one point in 1988. –Alan T

A. We see more big shifts in the primaries, when voters don’t have that much information about the candidates. Dukakis was a relative unknown at the start of the 1988 race, before the two parties could advance their own narratives. You rarely see big swings in voter conversion in late stage presidential races, though. If I knew how to cause such a swing, I’d be drawing a big salary from one of the campaigns right now.


Why America’s Economic Growth May Be (Shh!) Over (Ep. 95)

With the Presidential debate finished, we are officially in the final lap of America’s second-favorite spectator sport. (Yes, football is better than politics.) Of all the talking that Barack Obama and Mitt Romney will do by Nov. 6, you can bet that a great deal of their breath will be expended on economic matters. Because that’s what the President of the United States does, right — runs our economy?

Well, actually, no. The President has far less influence over the economy than people tend to think — as we’ve pointed out not once, or twice, but three times.

That, of course, won’t stop the candidates from talking about their plans to “fix” or “heal” or “restore” our economy — all of which imply that we are in an economic doldrums that is sure to pass. But what if it doesn’t? What if the massive economic growth the U.S. has experienced through most of our history is a thing of the past?

That’s the topic of our latest Freakonomics Radio on Marketplace podcast. (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player in the post.)


A Tax Taxonomy

Dan Hamermesh’s much-discussed post about taxing capital gains brought to mind my own taxonomy of taxes, so to speak, from least to most progressive:

1. Poll tax. Everyone pays the same amount. What could be fairer than this?!
England tried it in the late 14th century, leading in 1381 to Wat Tyler‘s Rebellion. Six hundred years later, England tried it again, leading to the Poll Tax Riots.

2. Sales tax. Goods are taxed at a flat rate (often 17 to 20 percent in Europe, and 5 to 8 percent in various American jurisdictions). Because the wealthy spend a smaller fraction of their income on taxable goods than do the poor, this tax is less progressive than a flat income tax.

3. Flat income tax. Everyone pays the same fraction of his or her income. This tax was the core of Steve Forbes’s platform when he ran for president in 1996 and 2000.


Does Military Service Increase Future Wages?

In this month’s American Economic Journal, David Card and Ana Rute Cardoso explore the relationship between military service and future wages (abstract; PDF): 

We provide new evidence on the long-term impacts of peacetime conscription, using longitudinal data for Portuguese men born in 1967. These men were inducted at age 21, allowing us to use preconscription wages to control for ability differences between conscripts and nonconscripts. We find a significant 4-5 percentage point impact of service on the wages of men with only primary education, coupled with a zero effect for men with higher education. The effect for less-educated men suggests that mandatory service can be a valuable experience for those who might otherwise spend their careers in low-level jobs.


Do the Bacteria in Your Gut Also Influence Your Mind?

Last year, we put out a podcast called “The Power of Poop,” which looked at the use of fecal transplants (a.k.a. “transpoosions”) to treat everything from multiple sclerosis to Parkinson’s disease. A fascinating Scientific American article explores how gut bacteria may have even further-reaching functions:

In the past few years scientists have been discovering that these microscopic inhabitants of our body may be subtly altering our moods, emotions and perhaps even our personalities. Gut microbiota appear to alter gene activity in the brain and the development of key regions involved in memory and learning. These denizens of our intestines could help explain why psychiatric symptoms vary among individuals, as well as their responses to medications. Gut microbes could also account for some of the differences in mood, personality and thought processes that occur within and among individuals.

(HT: Market Design)


Consuming More Energy in the Pursuit of Saving Energy

Next week, we’ll be putting out a Freakonomics Radio podcast called “The Cobra Effect.” Without spilling the details now, I’ll tell you that it’s about unintended consequences, the kind of stuff that happens when clever-seeming incentives are let loose on an even cleverer public.

With that in mind, I was intrigued by the following e-mail from a reader named Eugene Kim:

My locality in Virginia has mandated biennial emissions inspections for automobiles before registrations can be renewed on those years. Since mine is expiring at the end of this month and it’s been two years since my last emissions test, I took my car to the service station this morning. They don’t seem to actually measure any emissions; they merely check the OBD computer for stored readings.

Here’s where it gets stupid. I don’t drive a lot. I take the train to work so I only drive on weekends, if that. (If you’re wondering why I even have a car, I bought it when I lived in the Midwest and needed it, but moved to the East Coast shortly thereafter and was upside-down on my loan. Plus I feel strangely vulnerable without a car.) Anyway, my car is idle a lot while the battery charge depletes slowly. And apparently, if it drops to a certain point the computer loses all those readings. I didn’t think it had gotten that low since the car hasn’t had any problems starting.