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Why Online Poker Should Be Legal (Ep. 93)

In our latest Freakonomics Radio podcast, Steve Levitt visits with Marketplace‘s Kai Ryssdal to discuss his poker research and his personal poker history. The episode is called “Why Online Poker Should Be Legal.” You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.

In case you haven’t been following the long-running legal story, here’s the gist. Online poker was growing fast in the U.S. until Congress passed the Unlawful Internet Gambling Enforcement Act of 2006, which pretty much shut things down. The ruling was based in large part on the government’s reasoning that poker is predominantly a game of chance as opposed to a game of skill.  But is this classification correct?


Seal Training or Learning?

Yesterday I got a short and sweet insight into learning, courtesy of the New England Aquarium, where I took our daughters for our weekly visit. One of our favorite exhibits is the training session for the sea lions and fur seals. In the audience this time were about 100 school children with parents and teachers. To introduce the session, the lead trainer conducted the following discussion:

How many of you do chores? (Many hands go up.)

How many of you get an allowance for doing chores? (Most hands remain in the air.)

How many of do homework?

  • How many you have to finish your homework before you can go outside to play? (Lots of hands still in the air.)

    I see lots of hands! It makes homework not so bad because you get a reward at the end.


    • Are Pirate Ransoms Tax-Deductible?

    Reader Martin Dimitrov writes in:

    Are ransoms paid to pirates tax deductible? The question actually makes sense to me. If we can pay medical insurance and dependent care pre-tax, we should be able to deduct the ransoms (typically a substantial sum) paid to save our relatives/dependents. 

    According to the IRS, the answer is yes, since ransom qualifies as theft, along with blackmail, embezzlement, and extortion. You must, however, show proof of your loss. So make sure to get a receipt, or file a police report. A recent court order in India also allows for tax deduction on ransom. This has some lawmakers worrying about a potential unintended consequence: a spike in fake kidnappings.


    Locally Produced Condoms?

    The Los Angeles City Council may require condoms in porn movies produced in the city limits. How will this affect the market?  Whether companies stay in L.A. or leave, costs will rise (condom costs if they stay, the costs of relocation, loss of agglomeration economies, if they move outside the city limits).  If costs do rise, will that matter to producers? I imagine product demand is fairly inelastic, and they can easily pass the cost increase onto consumers. But even if costs were unaffected, consumer demand might shift far leftward if producers remained in L.A., since customers may not wish to view protected sex. Industry members lobbied strongly against the bill — perhaps because they feared the direct drop in demand rather than the cost increase.


    Is Higher Income Inequality Associated with Lower Intergenerational Mobility?

    A lot of our political debate boils down to questions about equality of outcomes versus equality of opportunity. But it turns out that they’re pretty closely related. Take a look at the chart below, which is from a terrific recent speech (with charts!) by Alan Krueger:

    The horizontal axis shows the Gini coefficient, which is a summary of the degree of income inequality for each country. I think of this as a measure of inequality of outcomes. The United States sits out there on the right, which says that we have high inequality, which I bet that doesn’t surprise you.


    Is Good Corporate Citizenship Also Good for the Bottom Line? (Ep. 71)

    Our latest Freakonomics Radio on Marketplace podcast is called “Is Good Corporate Citizenship Also Good for the Bottom Line?” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

    The short answer: yes. That’s the finding of Robert G. Eccles, Ioannis Ioannou and George Serafeim from their recent paper “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance” :

    “We show that there is significant variation in future accounting and stock market performance across the two groups of firms. We track corporate performance for 18 years and find that sustainable firms outperform traditional firms in terms of both stock market and accounting performance.”


    Best Fan Mail Ever?

    Given the risk of dislocating an elbow while patting oneself on the back, we don’t usually print fan mail. But this one, from James J. Krefft (also an author himself), needed to be shared: Recently I borrowed a copy of your book from a friend (so basically pure benefit for me) and I must say I am impressed. I am well-read, . . .


    Location, Location, Location

    One of the private-sector retail stores adjacent to the main Austin cemetery sells grave monuments and related items, while another is a major gardening center. These are sensible location decisions—these retailers provide convenience to customers who will be using the cemetery.

    A similar example is provided by the locational choice of our sons’ orthodontist—directly across the street from the local middle school. These are examples of agglomeration economies, but are in the retail sector and based on consumer demand, not production.

    I wonder what are other good/bizarre examples in which small retail firms’ locational choices are determined by the fixed location of a major public facility that attracts potential customers? Brothels next to seaports?


    A Technology Paradox

    David Brooks, in his Times column today (emphasis added):

    When I started covering presidential primaries, the best part was getting to know the candidates. We journalists would ride around in vans and buses with them and get an intimate look at what it’s like to endure this soul-destroying process. But the ubiquity of Web cams and tweets has ended that off-the-record culture. As the technology gets more open, the lines of political communications become more closed.

    True enough, and I’m surprised that more people don’t consider this paradox.


    How Much Does Campaign Spending Influence the Election? A Freakonomics Quorum

    We have long argued (most recently in this Marketplace podcast) that campaign spending isn’t nearly as influential in elections as the conventional wisdom holds.

    This week, with the G.O.P. presidential hopefuls in South Carolina spending lots of money (and time and effort) and everyone’s talking about “super PAC” spending, we thought it was a good occasion to air this question out further. We’ve convened a Freakonomics Quorum on the topic, soliciting replies from a few folks with expertise in the realm. Thanks to all of them for participating.


    Retirement Kills (Ep. 75)

    Are you bummed out that you might have to postpone retirement for financial reasons?

    Well, there may be a silver lining: it looks like retirement may be bad for your health. That’s the topic of our latest Freakonomics Radio on Marketplace podcast, “Retirement Kills.” (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

    The Great Recession has put a lot of retirement plans on hold, often at the behest of governments who can’t afford to pay pensions. Germany, the U.K., and France have all upped their retirement ages.  And the U.S. is seeing a lot more older workers as well. Lisa Boily of the Bureau of Labor Statistics tells us that people 55 and older are expected to represent 25 percent of the labor force by 2020.

    Part of this is simple demographics — the graying of the baby boom — but Americans are also working longer.


    A Cheap Employee Is … a Cheap Employee (Ep. 79)

    Our latest Freakonomics Radio on Marketplace podcast is called “A Cheap Employee Is … a Cheap Employee.” 

    (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

    It’s about the question of whether low-paid employees are indeed a good deal for a retailer’s bottom line as the conventional wisdom states.

    The piece begins with a couple of stories from blog readers, Eric M. Jones and Jamie Crouthamel, which were solicited earlier here. (One of the true pleasures of operating this blog is having a channel by which to turn readers into radio guests — thanks!)


    Football Freakonomics: The Frozen Conundrum

    Well, it’s January. And even though my team stumbled into inglorious, injury-plagued defeat, the most exciting football is yet to be played — some of it in very cold weather.

    So we thought it was time to take a look at the various effects, and hidden side, of cold weather. That’s the focus of our latest installment of Football Freakonomics.

    It is no secret that weather, cold or hot, has a significant effect on athletic performance. I don’t want to start an argument here about what constitutes a sport and what doesn’t, but I will say that the most frustrating six hours of my life was spent on a lake in upstate New York trying to coax some walleye through a hole in the ice. Brrr! 


    The Mathematics of Magic

    I don’t particularly like math.  I’ve never been a fan of magic either.  For some reason, however, when I heard about a new book entitled Magical Mathematics written by two first-rate mathematicians, Persi Diaconis and Ron Graham, I felt compelled to buy it and read it.

    I have to say that it is really good, and I would highly recommend it to any nerd.  It is a really artful melding of card tricks that are remarkable, with explanations of the underlying math concepts that are at one level so simple and clear that almost anyone could get the basic intuition for what they are talking about, but at another level so deep and difficult that it is probably hopeless for someone like me to ever truly understand. 


    What Does Tim Tebow Pray For?

    In a recent Football Freakonomics video about Tim Tebow, I made a connection between his faith and performance: Tebow is hardly the first NFL quarterback to be demonstrative about his religious faith. But he’s very demonstrative – and it’s worth considering how that faith may affect his play. By definition, faith often translates into a kind of fearlessness. Tim Tebow . . .


    Where Murder Is Falling, and Rising

    Encouraging news via the Associated Press: For the first time in almost half a century, homicide has fallen off the list of the nation’s top 15 causes of death. In Mexico, meanwhile, the murder trend continues to move in the opposite direction: During the first nine months of 2011, some 12,903 people were killed in drug-related violence—11% more than the . . .


    How Much Do Music and Movie Piracy Really Hurt the U.S. Economy?

    Supporters of stronger intellectual property enforcement — such as those behind the proposed new Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) bills in Congress — argue that online piracy is a huge problem, one which costs the U.S. economy between $200 and $250 billion per year, and is responsible for the loss of 750,000 American jobs. 

    These numbers seem truly dire: a $250 billion per year loss would be almost $800 for every man, woman, and child in America. And 750,000 jobs – that’s twice the number of those employed in the entire motion picture industry in 2010.

    The good news is that the numbers are wrong.


    What Makes Chuck Skinny?

    Weight Watchers has ads in heavy rotation with Charles Barkley saying: “lose weight like a man.” 

    You can also hear him mention his success in his Saturday Night Live monologue.

    Something is working. Since starting WW, he’s lost 38 pounds. But what about the Weight Watchers program that has him shedding so much weight?

    Is it the group weigh-ins?

    Is it the famous Weight Watchers point system? 

    Or is it something else?


    10,000 hours later: the PGA Tour?

    Last spring, I jokingly (okay, maybe half-jokingly) wrote about my quest to make the Champions Tour, the professional golf tour for people over the age of 50.  In that post, I made reference to the ideas of Anders Ericsson, an old friend whom Dubner and I wrote about in our New York Times column back in 2006, and whose ideas later became the centerpiece of a number of popular books.  Anders is the one who thinks that talent is unimportant. Oversimplifying a bit, he argues that with 10,000 hours of the right kind of deliberate practice, more or less anyone can become more or less world-class at anything. I’ve spent 5,000 hours practicing golf, so if I could just find the time for 5,000 more, I should be able to compete with the pros. Or at least that is what the theory says.  My scorecards seem to be telling a different story!

    It turns out I’ve got a kindred spirit in this pursuit, only this guy is dead serious.  A few years back, twenty-something Dan McLaughlin decided he wanted to play on the PGA tour.  Never mind that he had only played golf once or twice in his life and had done quite poorly those times.  He knew the 10,000 hour argument, and he thought it would be fun to give it a test.  So he quit his job, found a golf coach, and has devoted his life to golf ever since.  So far he is 2,500 hours into his 10,000 hour quest, which he chronicles at thedanplan.com.


    The Economics of Prostitution, Belle Epoque Edition

    Two French economists, Simon Porcher and Alexandre Frondizi, have been working on a paper about the economics of Paris street prostitution in the late 19th century.

    In 1878, there were an estimated 23,000 unregistered prostitutes and 3,991 registered prostitutes. Gathering data from 339 arrests, the researchers found that street prostitutes were generally young, unskilled, and well-paid:

    They tended to work with pimps that were from the same area and clustered in neighborhoods where they could compete with regulated brothels. Street prostitutes not only generated profits for themselves but also for a whole bunch of actors, thereby switching the whole local economy to this industry, at the expense of the formal economy.


    Does Money Really Buy Elections? (Ep. 57)

    Mitt Romney won big in New Hampshire, but his opponents are vowing to push on in South Carolina. Which means stepping up their pleas for cash. In an e-mail to supporters, Rick Santorum wrote:

    We must show real progress tonight and redouble our efforts … That’s why my campaign launched the “Game On” Moneybomb, and why we need your help right now. As you already know, we are facing serious and well-funded opposition for the nomination.

    That’s the kind of language that confirms one of the biggest truisms in politics: money buys elections.

    But how true is that truism?


    When It Pays to Say "I Don't Know"

    In response to our recent podcast called “Why Is ‘I Don’t Know’ So Hard to Say?,” a reader named Timothy McCollough writes in with a most interesting story. He teaches at a private international school in Santo Domingo, Dominican Republic. His courses include two sections of AP microeconomics, sociology, and “regular economics.” Because it’s a private school, he adds, “we have freer reign to set up classroom incentives and engage students as we see fit.” For instance:

    In my classroom, students lose 1/4 point for wrong answers on quizzes. But for writing “I don’t know,” they get 1/4 point. (A correct answer is 1 point). The rationale is that if someone is in a medical emergency, and someone asks me what should be done, the answer “I don’t know” is much preferable to a guess. “I don’t know” leads the questioner to ask someone who hopefully is knowledgeable.


    Reflections on Visiting an Indian Slum

    I recently visited India for the first time, spending a grand total of 30 hours there. During that time, however, my experiences ran the gamut. I spent the day in the Zakhira slum in New Delhi, and then just a few hours later, enjoyed a sumptuous dinner sitting next to former Australia Prime Minister John Howard, his wife Janette, and other luminaries.

    My first impression of India was that the chaos on Indian roads was beyond belief: people walking and riding bikes on what appear to be freeways, motorcycles with three riders, open trucks crammed with people, the constant din of honking everywhere by everyone. On top of that, the people driving me never seemed to know how to get anywhere. It took over an hour to get from the airport to my hotel, a seemingly endless series of turns (including numerous u-turns) and my driver rolling down his window and yelling for directions at nearly every stoplight. I was surprised when the return trip to the airport, with a different driver, took only 20 minutes and was nearly a straight shot. I will say, however, that I saw only one cow on the trip.


    Question of the Day: Any Good Stories About Workplace Morale?

    We’re working on a new podcast episode about morale in the workplace, and need your help. The episode was inspired a recent blog post in which a reader posited an interesting theory: morale is higher at companies where a lot of employees park nose-in (indicating they’re eager to get to work) rather than nose-out (indicating they can’t wait to get home).

    My request here is two-fold:

    1. We’ve started poking into the academic literature on company morale but haven’t gotten very far, so please let us know any good leads.

    2. We’re also interested in hearing stories about morale at your workplace, be it high or low, and especially any clever/strange indicators of morale and unusual methods that have been used to measure morale.

    Thanks in advance!


    What's Wrong With Cash for Grades? (Ep. 83)

    Our latest Freakonomics Radio on Marketplace podcast is called “What’s Wrong With Cash for Grades?”

    (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.)

    In it, Steve Levitt talks to Kai Ryssdal about whether it’s effective to pay kids to do well in school. Levitt, along with John List, Susanne Neckermann, and Sally Sadoff, recently wrote up a working paper (PDF here) based on their field experiments in Chicago schools. Levitt blogged about the paper earlier; here’s the Atlantic‘s take.