1. Why are used TVs so expensive?
2. A New York Times Opinionator piece questions the reliability of social sciences.
3. Does sweating give away how you’ll play the Ultimatum game?
4. Does eating organic make you a jerk?
5. New study says obesity affects one-third of homeless.
6. Can happiness be bad sometimes?
7. Is coffee inversely related to death?
Matthew Yglesias recently noted that the very rich are unhappy with President Obama because he would like to increase the taxes on the very rich. Although this might be true, the number of people unhappy with Obama exceeds the number of people who comprise the very rich. So why are many of the non-rich unhappy with Obama? And why are so many other people quite happy with our current president?
Perhaps the answer is similar to a story frequently told about sports fans.
Back in the early 1990s, a friend of mine declared his hatred of Charles Barkley. At the time, Sir Charles was an All-Star for the Philadelphia 76ers. Sometime after this declaration, though, Barkley was traded to the Phoenix Suns. As a fan of the Suns, my friend changed his tune. With Sir Charles in Phoenix, my friend was now a fan of Barkley.
More recently, LeBron James was an extremely popular athlete in Cleveland. But when he changed his uniform to something from Miami, his popularity in Ohio plummeted.
These stories are not uncommon among sports fans. In fact, Jerry Seinfeld once observed that fans who behave like this are essentially “rooting for clothes.”
A study on the taxi market in Lima, Peru examines price differences between men and women. Taxi prices in Lima are set by bargaining, and the market of sellers is extremely competitive. The authors initially found, surprisingly, that “men face higher initial prices and rejection rates.”
However, when the experiment was performed again with a strategic move, the discrimination disappeared:
Passengers in this study begin by rejecting a first taxi to send a signal of low valuation to a second (waiting) taxi which they then negotiate with. Despite passengers otherwise using an identical bargaining script, we find that negotiated outcomes at the second taxi are gender blind. The second taxi treats men and women the same.
Economists Indraneel Chakraborty and Hans Holter have an explanation for all those extra hours Americans work as compared to Europeans: divorce rates (and tax rates) Here’s their theory:
We believe this is because marriage provides an implicit social insurance since the spouses are able to share their income. However, if divorce rates are higher in a society, women have a higher incentive to obtain work experience in case they find themselves alone in the future. The reason the incentive is higher is because in our data, women happen to be the second earner in the household more often than men. European women anticipate not getting divorced as often and hence find less reason to insure themselves by working as much as American women.
Chakraborty and Holter use U.S data to run a model testing their theory; their findings are interesting:
Is there a role for hope in poverty alleviation programs? According to a recent speech by economist Esther Duflo, there is. Duflo looked at a BRAC program in West Bengal; program participants were given a “small productive asset” (a cow, a goat, or some chickens) and a small stipend to encourage participants not to immediately eat the animal. The results were significant:
Well after the financial help and hand-holding had stopped, the families of those who had been randomly chosen for the BRAC programme were eating 15% more, earning 20% more each month and skipping fewer meals than people in a comparison group. They were also saving a lot. The effects were so large and persistent that they could not be attributed to the direct effects of the grants: people could not have sold enough milk, eggs or meat to explain the income gains. Nor were they simply selling the assets (although some did).
When we began our Freakonomics Radio podcast back in early 2010, it was something between a lark and an experiment. But we have produced 75 episodes by now, so it seemed time to gather all the episodes in one place. Here’s our new Freakonomics Podcast Archive, color-coded for your convenience to denote our three types of content: original podcasts (usually between 20 and 30 minutes long); our regular Marketplace segments (5 or 6 minutes long); and our 1-hour specials that air on public-radio stations across the country. Among our most popular podcasts to date: “Do More Expensive Wines Taste Better?” and “How Much Does the President of the U.S. Really Matter?”
You can of course subscribe via iTunes (where Freakonomics Radio occasionally hits the No. 1 ranking) or listen via our RSS feed.
Hope you enjoy; feedback welcome.
If you remember our podcast “Boo…Who?” (which was included in the hour-long special “Show and Yell“), you’ll know we love the topic of booing. David Herman, our sound engineer at Freakonomics Radio, experienced some first-hand booing last week. He wrote it up as a guest post:
How Does It Feel to Get Booed?
By David Herman
Last weekend, I visited the Bell House in Brooklyn to hear the Budos Band, an afrobeat-inspired 10-piece instrumental group from Staten Island. According to the venue’s online ticket page, the show was slated to start at 9:00 PM. But 9:00 came and went, and then 10:00… 10:30… Granted, I’ve come to accept that no band will ever go on less than 30 minutes late, but this seemed to be pushing the bounds of good taste.
At about 10:45, the band made its way onstage from the wings. The (sold-out) house was packed with around 300 people, each of whom had paid $15 plus drinks. So as soon as the group got into position, almost two hours late, what happened?
“BOOOOOO!”
We’ve blogged before about the many advantages of being beautiful. New research indicates that looking “trustworthy” carries some benefits as well:
In a paper recently published in the PLoS One journal, researchers from Warwick Business School, the University College London and Dartmouth College, USA, carried out a series of experiments to see if people made decisions to trust others based on their faces.
They found people are more likely to invest money in someone whose face is generally perceived as trustworthy, even when they are given negative information about this person’s reputation.
“Trustworthiness is one of the most important traits for social and economic interactions and our study examines whether people take potentially costly actions in line with their face-based trustworthiness judgments,” said Dr. Chris Olivola, one of the study’s authors. “It seems we are still willing to go with our own instincts about whether we think someone looks like we can trust them.”
Now the only trick is for people who aren’t in fact trustworthy at all to appear as if they are. Or, as it’s been said before: Once you can fake sincerity, you’ve got it made.
(HT: Naked Capitalism)
Equilibration in a competitive or monopolistically competitive market is slow. It takes time for new businesses to perceive excess profits and to enter the market. But not always.
Like many major European venues, the Plaza Mayor in Madrid has many buskers operating. One busker had a particularly clever shtick: Dressed up like an infant in a stroller, he would squeal and squawk, especially whenever someone put money his jar. Many kids, and even this adult, did exactly that. In the 5 minutes I watched at least 10 people gave him something. BUT: Near the end of that time, other buskers, who had been observing him, moved their routines closer to his. His flow of customers diminished, with some going to the other, now nearby buskers. He still was attracting more money than the others, but his excess profits had been reduced by the new competition.
One of the most important economic issues we face today is how much to spend on education, both individually and as a society. As tax revenues decline due to demographic changes and deteriorating business conditions, municipalities have to make tough choices about which programs to cut, and education is often an early victim. Because we don’t yet have good measures of all the future benefits produced by better education today, school programs are easy targets for cost-cutting measures, especially in lower-income regions where parents are focused on meeting more basic needs and less likely to put up a fight. But experiments like Geoffrey Canada’s Harlem Children’s Zone hint at the enormous impact that early educational support can have on lifetime achievement.
I have my own example: Mrs. Ficalora, the best third-grade teacher ever.
A reader named Karim Kai Ani writes:
Guy walks into a bar and says, “We’ve got this math curriculum that everyone is saying is the bomb (a dangerous thing to say when you have my name, but go with me), and we’re Kickstarting a video series to offer teachers a new vision of what it means to teach math.”
And the waitress says, “You should see if the dudes from Freakonomics would tweet about it. Didn’t they mention Mathalicious on their blog once?”
Thanks to @PE_Mulroe via Twitter, here’s a story from the (Northwest Indiana) Post-Tribune that combines two of our favorite topics: elections and first names. It’s called “A Tale of Two Mike Browns in Lake County Politics”:
Did Mike Brown, the candidate for recorder, intentionally run on the name recognition earned by former recorder and Lake County Clerk Mike Brown?
The candidate says no. Incumbent Recorder Michelle Fajman and party boss Tom McDermott Jr. say yes. And the clerk with the same name? Well, as someone who backed Fajman in the election, he’s just sorry if anyone cast a ballot without knowing who was who.
The dangerous thing about gambling is that you happen to win sometimes just by chance. The gambler is quick to take credit for successes, but can always find some external factor to blame for losses.
Case in point: my Kentucky Derby picks. I picked three horses out of twenty starters: one to win, one to place, and one to show. The horse I picked to win had some terrible luck, hurting his ankle and eventually finishing 19th.
The horse I picked for second, I’ll Have Another, ended up winning the race. Bodemeister, my third-place pick, finished second. A two dollar exacta-box on my top three horses would have cost $12 and would have returned $306.
I also picked a horse to finish last, Daddy Long Legs, and he indeed finished dead last.
So, like the gambler I am, I take credit for the good outcomes, and write off my horse finishing 19th as merely bad luck.
And, of course, that means I will push my luck on the Preakness, which goes off today.
I wish I had more exciting picks, but this time my algorithm likes the two favorites, Bodemeister and I’ll Have Another. For third, I’d go with Optimizer.
An interesting e-mail from a reader:
Hello. My name is Thiago, and I am writing from Brazil. I always read freakonomics posts thru my rss reader and I saw a news today that inspired me to write to you.
Rio de Janeiro’s police started a new policy to incentivize cops to arrest the most wanted drug dealers. The prize: 15 days off and one weekend in a beautiful island at Angra dos Reis with all costs included.I wondered if this incentive will have a positive effect, whereas there are bad cops who are bribed by drug dealers. What if these bad officers began to been rewarded by drug dealer with tickets to Disney instead of arrest them?
We’ve written a few times about what we call reverse incentives: comedian and activist Dick Gregory‘s use of the N word; Planned Parenthood turning abortion protestors into a fund-raising scheme; and the “pledge-a-picket” drive.
The latest instance comes from fashion designer Marc Jacobs. It began when the graffiti artist Kidult vandalized Jacobs’s SoHo shop by scrawling “ART” across the storefront. A Twitter war followed, but Jacobs wasn’t done. As The New York Observer reports:
In response to James McWilliams‘s still-reverberating post about why more environmentalists don’t promote veganism, a reader named Mary writes:
I have always wondered why environmentalists are so reluctant to promote veganism, but eager to promote alternative transportation. Many residents of the U.S. are currently locked in to their car-dependent lifestyle, with large mortgages in suburbs with no safe sidewalks or bike lanes and inefficient transit. Ditching their car is logistically much more difficult to do than buying beans instead of meat at the grocery store. Currently, the infrastructure for reducing car use is lacking in many communities, though vegan foods, like beans, grains, fruits, and vegetables, are much more easily obtained.
It’s an interesting point. A few related thoughts come to mind:
The Times-Picayune reports on Louisiana’s prison ecosystem — and the perverse incentives for sheriffs to keep inmate numbers high:
Louisiana’s incarceration rate is nearly triple Iran’s, seven times China’s and 10 times Germany’s.
The hidden engine behind the state’s well-oiled prison machine is cold, hard cash. A majority of Louisiana inmates are housed in for-profit facilities, which must be supplied with a constant influx of human beings or a $182 million industry will go bankrupt.
Several homegrown private prison companies command a slice of the market. But in a uniquely Louisiana twist, most prison entrepreneurs are rural sheriffs, who hold tremendous sway in remote parishes like Madison, Avoyelles, East Carroll and Concordia. A good portion of Louisiana law enforcement is financed with dollars legally skimmed off the top of prison operations.
1. Is a new cut of steak worthy of a patent? (HT: Eric M. Jones)
2. First there were metrosexuals; now meet the urban datasexual. (HT: Jeff Bladt)
3. Is flopping a problem in the NBA?
4. Fighter pilot Mary Cummings explains robotic crop dusting.
5. Corporate takeovers: they trim the fat, including corporate jets.
6. Does the ability to feel guilt make for great leaders?
7. Evidence that director John Waters still hitchhikes.
Mark Cuban, who answered reader questions here a while back, compares rising college tuition costs to the housing bubble in a recent blog post. Here’s his argument:
It’s just a matter of time until we see the same meltdown in traditional college education. Like the real estate industry, prices will rise until the market revolts. Then it will be too late. Students will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down. And when prices come down Universities will have to cut costs beyond what they are able to. They will have so many legacy costs, from tenured professors to construction projects to research they will be saddled with legacy costs and debt in much the same way the newspaper industry was. Which will all lead to a de-levering and a de-stabilization of the University system as we know it.
And it can’t happen fast enough.
A few months ago we wrote about whether shoemaker-to-the-stars Christian Louboutin ought to have a monopoly over red shoe soles. Last week, in Kentucky, a similar issue arose concerning red wax. The red in question was on the neck of bottles of booze—specifically, Maker’s Mark bourbon and Jose Cuervo’s Riserva de la Familia tequila, which both feature a bottle cap seal made of red, dripping wax (Cuervo has since shifted to a straight-edged red wax seal). Maker’s, which used the dripping wax seal first, sued Cuervo, claiming trademark infringement.
President Obama’s personal evolution toward accepting same-sex marriage has certainly made plenty of headlines. But perhaps the bigger—and untold story—is the evolution of marriage itself, and how the generational shift in how we experience marriage underpins rising toward support for same-sex marriage. At least that’s the idea that Betsey Stevenson and I explore in our latest column:
For our grandparents’ generation, marriage was about separate roles, separate spheres and specialization. Gary Becker, an economist at the University of Chicago, won the Nobel Prize partly for describing the family as an economic institution — a bit like a small firm that employs people with different skills to produce both income and a well-run household.
We recently solicited your questions for social psychologist Jonathan Haidt, author of The Righteous Mind: Why Good People Are Divided by Politics and Religion
Below are his responses about confirmation bias in religion, the “score” of our morals, the power of branding, how his research has made him a centrist, and how the search for truth is hampered by our own biases. Big thanks to him and all our readers for another great Q&A.
Time reports on a new study on why Asians have a higher rate of nearsightedness:
It has long been thought that nearsightedness is mostly a hereditary problem, but researchers led by Ian Morgan of Australian National University say the data suggest that environment has a lot more to do with it.
Reporting in the journal Lancet, the authors note that up to 90% of young adults in major East Asian countries, including China, Taiwan, Japan, Singapore and South Korea, are nearsighted. The overall rate of myopia in the U.K., by contrast, is about 20% to 30%.
In The Atlantic, Megan McArdle traces the economics of ransom negotiation:
Economists would describe hostage negotiation as a bilateral monopoly price negotiation that is structurally just a special case of chicken. That is, unlike a barrel of oil or a freight car full of soybeans which can trade on an extremely liquid market with innumerable buyers and sellers, a hostage has exactly one seller (the kidnappers) and exactly one buyer (the employer and/or family of the hostage). When there is only one buyer, the opportunity cost for ransoming the hostage is zero.
Here is how the Associated Press led the story describing the Miami Heat’s elimination of the New York Knicks in the 2012 NBA Playoffs:
The final horn sounded, and LeBron James wrapped his arms around Carmelo Anthony in a warm embrace.
Their head-to-head scoring matchup in this series was even, 139 points apiece.
Just about everything else tipped Miami’s way — so the Heat are moving on and the New York Knicks are going home.
Such a lead gives the impression that Carmelo Anthony and LeBron James played about the same in this series. If we delve a bit deeper, though, we see that the scoring totals are quite deceptive.
The BBC reports that Portugal will be cutting 4 of its 14 public holidays as an “austerity measure”:
Two religious festivals and two other public holidays will be suspended for five years from 2013.
The decision over which Catholic festivals to cut was negotiated with the Vatican.
It is hoped the suspension of the public holidays will improve competitiveness and boost economic activity.
An FDA panel just approved the first drug recommended for preventing infection by, rather than limiting the effects of the HIV virus. Part of the discussion by panel members was classic economics, expressing concerns that the drug’s availability would reduce people’s willingness to take as much care, in particular that it might reduce condom use.
The same issue has been mentioned and analyzed in various economic studies, including old ones about the effects of mandating car seat-belt use on automobile accidents, and about the impact of sex education on teenage sexual activity and pregnancy. Any insurance or safety measure generates a moral hazard; the important issue is the net effect on the outcome of interest — in this case, HIV infection.
From a reader named Becca Levin:
Hi, I just listened to your podcast with NPR on the impact of shipping flowers. May I suggest, if you should ever air it again, you consider the song “Plastic Roses“
by the Chenille Sisters. A sample line: “He sent me plastic roses, the kind that never fade … ” A touching love song about lasting memories.
Freakonomics described the economics of a crack-selling gang — a tournament model where you don’t earn much unless you can get to the top of the pyramid. Columbia Business School professor Ray Fisman, who has shown up on this blog before, argues that politics isn’t all that different. In Slate, Fisman summarizes his new working paper, coauthored with Florian Schulz and Vikrant Vig, which uses disclosed finances of politicians in India in the last election cycle. The researchers found that being a politician doesn’t really pay off:
1. Will putting your organ donor status on Facebook encourage organ donation?
2. Economist humor: When a physicist meets an economist.
3. Will the UAE outlaw junk food in schools?
4. CNN releases 13 years of transcripts.
5. Why fiction might be good for you.
6. The 10 Commandments of Twitter: Academics Edition.