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Freakonomics Blog

This Is Your Brain on Altruism

We’ve had a lot to say about altruism, and how economists and others have tried to study it. A group of economists at the University of Zurich now claims to have found a spot in the brain associated with altruistic behavior. From Pacific Standard:

It’s called the right temporoparietal junction (or TPJ for short). Along with many other crucial functions, this neural crossroads gives us the ability to understand the perspectives of others—a prerequisite for empathy.

Swiss scholars report they have found a strong connection between the TPJ and a person’s willingness to engage in selfless acts.


Should You Ignore the Weather When Buying a New House or Car?

An NBER working paper (full PDF here) by Meghan R. Busse, Devin G. Pope, Jaren C. Pope, and Jorge Silva-Risso explores the role of projection bias when choosing a new car or house. It turns out that weather conditions are a huge factor when consumers are debating big purchases like houses or cars. The abstract:

Projection bias is the tendency to overpredict the degree to which one’s future tastes will resemble one’s current tastes. We test for evidence of projection bias in two of the largest and most important consumer markets – the car and housing markets. Using data for more than forty million vehicle transactions and four million housing purchases, we explore the impact of the weather on purchasing decisions. We find that the choice to purchase a convertible, a 4-wheel drive, or a vehicle that is black in color is highly dependent on the weather at the time of purchase in a way that is inconsistent with classical utility theory. Similarly, we find that the hedonic value that a swimming pool and that central air add to a house is higher when the house goes under contract in the summertime compared to the wintertime.


Ending the Math Wars in a Treaty of QAMA

As a country, we are often at war. If it’s not against Germany, England, terrorism, or Grenada, it’s the war on poverty (that’s gone so well), the war on cancer (ditto), and, of particular interest to me, the Math Wars, which have been raging for decades. On one side, the traditionalists insist on drilling and back to basics, “on behalf of sanity and quality in math education.” On the other side, the reformers insist on conceptual understanding using computers and calculators, to “promot[e] the rational reform of mathematics education.”

Both are half-right and half-crazy. As the reformers say, students need to understand what the mathematics means. Students whose word problem for “6 x 3 = 18” is of the form “There were 6 ducks, and 3 more showed up, so 6 times 3 is 18,” understand little. (See “Children Learning Multiplication, Part 1,” in the articles by Professor Thomas C. O’Brien.) As the traditionalists say, using computers for everything leads to needing a calculator to compute what 6.5 x 10 is.

However, there’s a tool to combine the merits of both sides: the Quick, Approximate, Mental Arithmetic (QAMA) calculator.


Golfing the Length of Detroit

I overlapped a little bit at the New York Times with Charlie LeDuff and let me just say that his reputation as a one-of-a-kind reporter is thoroughly deserved.

He now works for the Fox TV news station in Detroit. If you have ten minutes to spare, you should check out his recent piece: “Charlie LeDuff Golfs the Length of Detroit”.

Is it a) one of the most interesting pieces of reporting you’ll ever see? b) a kind of cultural criticism that almost never shows up in mainstream journalism? c) a golfing adventure that even the most adventuresome golfers have never considered?


Summer Solar Power

The City of Austin has given us a windfall:  As of October 1, it will pay 12.8 cents per kilowatt-hour for power generated by our new solar system instead of the previous 3 cents/kwh.  Of course, this seems fairer to me—but it also reflects more closely the value of the power we generate for the grid.  Demand varies over the day and season, and the city prices higher when more power is used (in summers, mostly for air conditioning)—it engages in peak-load pricing, a form of price discrimination.  Supply is limited by capacity, and in some cases in summer the capacity constraint is reached.  The power we produce is storable, presumably for release during the peak times when its opportunity cost is highest.  Thus the increased price paid to us reflects the value of what we generate.  Regrettably, my joy at this windfall is tempered by the simultaneous substantially increased price when we must purchase power because our system fails to generate enough for our needs!


Did Thomas Jefferson Really Father a Child With Sally Heming? And If Not, How Did the Story Get Born?

The podcast we’re putting out next week is called “Legacy of a Jerk.” It’s about how people’s reputations change, for better or worse, after their death. We talk at some length about Ty Cobb, widely considered to be one of the greatest baseball players who ever lived — and one of the nastiest humans. Suffice it to say that his reputation gets a second look in our episode.

With that idea in mind, I read with great interest Robert F. Turner‘s essay in the Wall Street Journal today about Thomas Jefferson having supposedly fathering a child with his slave Sally Hemings. Turner, a law professor at the University of Virginia, edited The Jefferson-Hemings Controversy: Report of the Scholars Commission. His Journal essay dismantles many of the arguments that seem to prove Jefferson’s paternity. Most interestingly, he provides a motivation for how the possibly untrue story was spread in the first place (and in this regard, there is a lot of overlap with the Ty Cobb story you’ll hear in our podcast next week).


The Verdict Is in: Sociology and Political Science Deserve the Hatchet

Last week, I asked Freakonomics.com readers “Which Social Science Should Die?” The results are in. Thank you for your clear-eyed, sober judgment. Recall that some of you answered in the comments (see previous link) and others visited the on-line poll (which is still open). As of this writing, more than 1,200 votes have been registered. 

And the winner — er, “LOSER”(!) is: 

Let’s Kill Off Sociology and Political Science!

As you can see from the chart below, nearly 50 percent believed that college/university presidents should eliminate sociology. Nearly 30 percent thought poli sci should be shuttered. [Editor’s note: it is perhaps not surprising that Freakonomics readers wouldn’t vote to eliminate economics.]


Faster Than Light: A Guest Post

I recently had occasion to e-chat with Rocky Kolb, a well-regarded astronomer and astrophysicist at the University of Chicago. Talk turned, of course, to the recent likely discovery of the Higgs boson — but, as Kolb talk about that, he raised an even broader and more interesting point about scientific discovery.

He was good enough to write up his thoughts in a guest blog post that I am pleased to present below:

 

Faster Than Light
By Rocky Kolb

After the news coverage of the past week, everyone now understands what a Higgs particle is, and why physicists were so excited about the July 4th announcement of its probable discovery at CERN, a huge European physics accelerator laboratory.  (The disclaimer “probable” is because it could turn out that the new particle seen at CERN is not the Higgs after all, but an imposter particle with properties like the Higgs.)

For a few days it was common to see, hear, or read my colleagues struggling to explain why the discovery of a Higgs particle is a triumph for science.  But after a week of physics in the news, the media has moved on to cover the Tom Cruise–Katie Holmes divorce and shark sightings near beaches.  Perhaps all the public will be left with is a memory that there was a triumph for science.  Science works: theories are tested and confirmed by experiment.

I think that the CERN Higgs discovery was, indeed, a triumph for science.  However, the Higgs was not the only dramatic announcement at CERN in the past year.  But the other dramatic result is something many physicists would rather forget.


Remembering Chinatown

Learning that Los Angeles’s Chinatown is fighting a Walmart store, including with a lawsuit against the city, reminded me of what I learned in that Chinatown years ago.

One midnight, fed up from revising our dissertations all day, a friend and I drove the 10 minutes from Caltech into Chinatown to dine at Full House Seafood, open until 2 AM. (My Ph.D. adviser once asked why graduate students all seem to live on Guam time.) The restaurant was lively and crowded but not packed, and we quickly got a table. While waiting to give our order, I noticed an African-American man sitting on the chairs near the front counter. Even though several tables were free, the waiters did not offer him a table. Other customers came in, and were seated. As our dumplings arrived and got eaten, and then the spicy tofu, the man still sat on the small chairs.


On Not Following Your Own Advice

A Bloomberg article by Michael J. Moore shows that finance and investment employees frequently commit the cardinal sin of failing to diversify their personal holdings by holding too much of their own company’s stock:

Current and former Morgan Stanley employees, who receive company shares to match their 401(k) contributions, held 24 percent of retirement assets in the firm’s stock before last year’s decline, the highest percentage of any of the banks. They lost $570 million in 2011 as the shares plunged 44 percent.

Bank of America Corp. (BAC) employees lost the most, $1.37 billion, as the lender’s stock dropped 58 percent last year. Workers at JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), both based in New York, also lost hundreds of millions of dollars.

JPMorgan employees, some of whom received stock in the company until last year to match retirement contributions, devoted 18 percent of their funds to the lender’s shares at the end of 2010. Bank of America employees put 13 percent of their assets in the bank’s stock, while the figures for Citigroup and New York-based Goldman Sachs Group Inc. (GS) were 8 percent and 2 percent, respectively.


In Case of Rain

In the town where we stay on the New Jersey shore the local movie theater advertises: In case of rain, we will have an extra show at 1PM on weekdays. Pretty clever. If it’s rainy, the demand curve for going to the movies shifts rightward—who wants to go to the beach in the rain. Accordingly, the theater increases the amount of showings supplied to the market. But why don’t they raise the price of tickets on bad-weather days? Presumably because it would create bad will among customers who might feel exploited, but perhaps there are other reasons. (I can’t imagine that it is difficult to alter prices on a daily basis.)


How Much Do Football Wins Pay Off for a College?

An NBER paper by Michael L. Anderson looks into the how a university’s football performance affects its academic performance:

Spending on big-time college athletics is often justified on the grounds that athletic success attracts students and raises donations. Testing this claim has proven difficult because success is not randomly assigned. We exploit data on bookmaker spreads to estimate the probability of winning each game for college football teams. We then condition on these probabilities using a propensity score design to estimate the effects of winning on donations, applications, and enrollment. The resulting estimates represent causal effects under the assumption that, conditional on bookmaker spreads, winning is uncorrelated with potential outcomes. Two complications arise in our design. First, team wins evolve dynamically throughout the season. Second, winning a game early in the season reveals that a team is better than anticipated and thus increases expected season wins by more than one-for-one. We address these complications by combining an instrumental variables-type estimator with the propensity score design. We find that winning reduces acceptance rates and increases donations, applications, academic reputation, in-state enrollment, and incoming SAT scores.


Macho, Macho Men

New research (summarized in the BPS Research Digest) from psychologists Jonathan Weaver, Joseph Vandello, and Jennifer Bosson indicates that men whose masculinity is threatened become “myopic and more prone to take risks.” Here’s the abstract:

Among the conjectured causes of the recent U.S. financial crisis is the hyper-masculine culture of Wall Street that promotes extreme risk-taking. In two experiments, we found that threats to their manhood motivated men to take greater financial risks and favor immediate (vs. delayed) fiscal rewards. In Experiment 1, men placed larger bets during a gambling game after a gender threat as compared to men in an affirmation condition. In Experiment 2, after a gender threat, men pursued an immediate financial payoff rather than waiting for interest to accrue, but only if they believed their decision was public. When the decision was private, gender-threatened men did not show the same desire for immediate reward. These results suggest that gender threats may shift men’s financial decisions toward more risky and short-sighted public choices.


Saving Money By Converting to Christianity

The Phnom Penh Post reports on a Cambodian village that’s converting to Christianity for economic reasons:

At upwards of US$500, the cost of slaughtering a buffalo to revive a relative condemned to ill-health by the spirits has pushed the Jarai indigenous minority residents of Somkul village in Ratanakkiri to a more affordable religious option: Christianity.

In the village in O’Yadav district’s Som Thom commune, about 80 per cent of the community have given up on spirits and ghosts in favour of Sunday sermons and modern medicine. 


Religion, Crime, and Television

A new survey study by Amir Hetsroni (who has also studied the difference between real doctors and TV doctors) and Hila Levenstein looks at the relationship between TV viewing and crime perception. The study, to be published next year in Psychological Reports, found a difference between religious and non-religious participants. From Ynetnews:

Yet the data collected from the 778 residents of northern Israel who watched channels 2 and 10 during prime time viewing hours in 2009 revealed some unexpected information. 

It soon became clear that among secular viewers there was a certain connection between television viewing and fear of falling victim to a crime. Whereas a situation called Counter-Cultivation was diagnosed among religious viewers. This means that the more they watched television, the less they feared becoming a victim of a crime.


How Will California's Parks Do Under Private Management?

California embarked this week on a grand experiment in common property resource management when, in order to help close a gaping budget hole, it turns over dozens of state parks to private firms and community coalitions.

Seventy of the state’s 278 parks were set to close July 1. But a last-minute change to the state budget will keep all but five open, though many will not be managed by the state. At least six parks will remain open under corporate contracts with firms like American Land and Leisure, which operates campgrounds in 12 states. Dozens more have been rescued, at least temporarily, by local municipalities, private donors, and non-profit organizations.

Economists have long-held that the tragedy of the commons — any individual has too little incentive to protect from exploitation a non-excludable resource he holds in common with potentially countless others — could only be overcome by state intervention or private ownership.


How Petrified Wood Gives You a Guilty Conscience

A reader and podcast listener named Paul Tucker writes to say:

While listening to the “Herd Mentality” podcast piece about the Petrified Forest National Park, I thought you missed a very pertinent display at the park. At the south entrance to the National Park the visitor center has the Rainbow Forest Museum. In the museum there is a room dedicated completely to the theft of petrified wood. It is called the Guilt Room. The room is filled with pieces of petrified wood and the packages they arrived in and their accompanying letters of remorse and contrition by people who are trying to assuage their guilt by returning the offensive fossils.


Adventures in Ideas: Which Social Science Should Die?

Freakonomics Readers,

I’d like to enlist you in a debate that, to date, is mostly occurring within the academy.

Imagine that, in order to respond both to budgetary pressures and calls for greater relevance of the American academy, College & University Presidents are re-examining their social science disciplines. They have decided to eliminate one major discipline. In your opinion, which of the following is no longer as relevant to the mission of research and education, and should be eliminated as a consequence?


Banned Products, Available in Poor Countries

In a recent Harry Hole mystery novel, The Leopard, Jo Nesbø (an economist as well as novelist) has Harry ask someone, “Where would you go to get it [a particular anesthetic] now?” and is answered, “Ex-Soviet states. Or Africa….The producer sells it at bargain-basement prices since the European ban, so it ends up in poor countries.” When rich countries ban something, they increase its supply to poor countries that refuse to ban it.  Prices are lowered to consumers there.  Rich countries’ safety is enhanced, poor countries’ worsened, with the only consolation that consumers in poor countries become able to obtain the harmful substance at lower prices.  Are people in each country better off, worse off, or what?


Getting and Giving: How Does Receiving Financial Aid Affect Later Donations?

We ran a blog post a while back about how alumni should think about giving money to their alma maters. A recent NBER paper (abstract; PDF) by Jonathan Meer and Harvey S. Rosen looks at the “donative behaviour” of alumni who received financial aid. It has some really interesting conclusions:

The empirical work is based upon micro data on alumni giving at an anonymous research university.  We focus on three types of financial aid, scholarships, loans, and campus jobs. …

Our main findings are:  1) Individuals who took out student loans are less likely to make a gift, other things being the same.  We conjecture that this phenomenon is caused by an “annoyance effect” —
alumni resent the fact that they are burdened with loans.  2) Scholarship aid reduces the size of a gift, but has little effect on the probability of donating.  The negative effect of receiving a scholarship on donations decreases in absolute value with the size of the scholarship.  We do not find any evidence that scholarship recipients give less because they have relatively low incomes post graduation.  3) Aid in the form of campus jobs does not have a strong effect on donative behavior.

 


Bring Your Questions for Alex Stone, Author of Fooling Houdini

I get sent about 200 books a year by strangers who want me to provide blurbs.  About 199 out of those 200 will walk away empty-handed.   Most of the time I don’t even open the book – it would be a full-time job just to read everything sent my way.  Occasionally a subject will really interest me, and I will spend some time with a book, but certainly not read it from cover to cover.  And about once a year, I actually start reading one of these books and like it so much I can’t put it down. 

That book is Fooling Houdini: Magicians, Mentalists, Math Geeks, and the Hidden Powers of the Mind , by Alex Stone.  I happened to receive the book not long after I blogged about a book by two mathematicians on the mathematics of magic.  That mathematics book was excellent and taught me a lot, but wasn’t exactly a page turner.  In contrast, the first 30 pages of Fooling Houdini was some of the most engaging non-fiction I’ve read in a long time.


How to Make a Better Athlete

Olympic athletes have become increasingly reliant on scientists as advisers. A Wired article by Mark McClusky explores the efforts of sports scientists to improve athletic performance as gains have become harder to achieve. The Australian Institute of Sport is leading the charge; its success is best-demonstrated by an example from the skeleton, a sledding event that was recently reintroduced as an Olympic event:

They determined that one significant predictor of success had nothing to do with the sled itself or even the skill of the pilot. The faster a competitor pushed the sled through the 30-meter start zone before jumping on it, the better they performed. So researchers set up a national testing campaign, looking for women with backgrounds in competitive sports who excelled at the 30-meter sprint. They also evaluated candidates to see how well they responded to feedback and coaching. Eventually, they picked a group of 10 athletes—including track sprinters, a water skier, and several surf lifesavers, an Australian sport that requires sprinting through sand.


Homeownership and Suburban Sprawl

A new paper from economist (and city-lover) Ed Glaeser argues in favor of a reevaluation of government policies towards homeownership.  The abstract:

The most fundamental fact about rental housing in the United States is that rental units are overwhelmingly in multifamily structures. This fact surely reflects the agency problems associated with renting single-family dwellings, and it should influence all discussions of rental housing policy. Policies that encourage homeowning are implicitly encouraging people to move away from higher density living; policies that discourage renting are implicitly discouraging multifamily buildings.


Apple's New Podcast App

Apple has just released an app called Podcasts which, yes, helps you download and manage podcast from the iTunes store.

Coverage of the app can be found here, here, here, and here.

I haven’t used the app yet so I cannot comment on it — some of the iTunes reviews indicate some fixes are needed — but I have to say that I do like Apple’s taste in the podcasts it has chosen for its promo materials:


The Traffic Mimes

Our recent podcast “Riding the Herd Mentality” featured Antanas Mockus, the former mayor of Bogota, Colombia, who, among other unorthodox methods, hired mimes to tame the city’s unruly traffic. The mimes ridiculed bad behavior and handed out thumbs-up/thumbs-down cards to help people shame bad drivers.  Some photographic evidence: