Search the Site

Freakonomics Blog

An Economics Lesson from Rosh Hashanah

The Jewish New Year is announced by blasts on a ram’s horn (shofar). Many people use much larger horns instead (a kudu, for example). This year, as part of the religious service, a woman picked up the ram’s horn to blow a few sounds, and not much came out—a few feeble toots. After squeaking out half the required notes, she switched to the kudu horn—she switched to additional capital. With the larger horn she blasted the entire congregation out of their seats—truly wonderful sounds.

Even in a religious service we can observe that the marginal product of labor is enhanced by additional capital—even in this context labor and capital are complements in production.

(HT to AB)


"Football Freakonomics:" Is Momentum a Myth?

In the first segment of “Football Freakonomics,” Dubner examines the phenomenon of momentum and whether we can actually prove its existence in football games. Here’s a taste of what he found in the data: since 2007, immediately after a long kickoff or punt return, NFL teams are nearly four times as likely to score a touchdown on the next play than they are on a given play from scrimmage.


Video: Introducing "Football Freakonomics"

Last week, we told you about our new project with the NFL Network called “Football Freakonomics.” We’ll be posting segments here as they air throughout the season. “Football Freakonomics” will explore the hidden side of the NFL with original research and insight from brilliant minds from sport, academia, and beyond. We’ll look at data, stats, performance, salaries, and much more. Here’s the first segment to clue you in on what “Football Freakonomics” is all about.

You can also check out the “The Quarterback Quandary,” a segment Dubner did prior to the NFL Draft.


The Incomprehensible Jargon of Science

We blogged recently about the challenges of communicating scientific uncertainty to the public, especially when it comes to climate science. The October 2011 issue of Physics Today contains yet another article addressing the very same concept. From the article:

Scientists typically fail to craft simple, clear messages and repeat them often. They commonly overdo the level of detail, and people can have difficulty sorting out what is important. In short, the more you say, the less they hear. And scientists tend to speak in code. We encourage them to speak in plain language and choose their words with care. Many words that seem perfectly normal to scientists are incomprehensible jargon to the wider world. And there are usually simpler substitutes.

We particularly like the table provided at the end of the article, titled “Terms that have different meanings for scientists and the public.” For example, the scientific term “uncertainty” translates to “ignorance” for the general public; the article suggests scientists use the word “range” instead. Error, which the general public reads as “mistake, wrong, incorrect,” might be better replaced by “difference from exact true number.”


Horizontal vs. Vertical: An International Comparison of Teaching Methods

A new study released by NBER from authors Yann Algan, Pierre Cahuc and Andrei Shleifer takes a look at how teaching practices affect social capital. It’s long and detailed, so we’ll only give you the highlights: in a nutshell, there are major differences between societies that teach vertically (like a teacher lecturing) and societies that teach horizontally (with students working together in groups.)

And because everyone loves international comparisons, the difference between horizontal and vertical countries breaks down as follows:

Students work in groups more in Nordic countries (Denmark, Norway, Sweden) and Anglo-Saxon countries (Australia, United States and to a lesser extent Great Britain). This teaching practice is less common in East European countries and the Mediterranean (Greece, Cyprus, Portugal and, to a lesser extent, Italy). In contrast, in East European and Mediterranean countries, teachers spend more timing lecturing.


The Power of the FDA

What exactly happens when the Food and Drug Administration (FDA) issues one of those ominous Public Health Advisories (PHAs) about a pharmaceutical product? A new paper by Rena M. Conti, Haiden A. Huskamp and Ernst R. Berndt investigates.

 

From the abstract:

We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory.


Too Much Trash? Get Rid of the Trashcans

New York City’s Metropolitan Transportation Authority is trying a counterintuitive approach to cleaning up the subway by removing trash cans from some of its dirtiest stations. According to the New York Times, a subway stop in Queens and another in Greenwich Village have been entirely without trashcans for the last two weeks:

The idea is to reduce the load on the authority’s overtaxed garbage crew, which is struggling to complete its daily rounds of clearing out 40 tons of trash from the system.

But it also offers a novel experiment: will New Yorkers stop throwing things away in the subway if there is no place to put them?

Results have so far been mixed. While one bin-less station appeared relatively clean to a Times reporter, the experiment is obviously having some knock-on effects.


Bring Your Questions for Brandwashed Author Martin Lindstrom

Though the exact percentage is debatable, the fact is that the vast majority of U.S. GDP is made up of personal consumption. The American consumer doesn’t just drive the U.S. economy, for decades he’s been driving the global one as well. Though that dynamic is slowly changing as Americans cut back on just about everything we buy, for the better part of the last 60 years, the U.S. consumer has been king. And from this has sprung a massive marketing and advertising industry coldly focused on a singular goal: getting us to buy as much stuff as they possibly can.

In his new book Brandwashed: Tricks Companies Use to Manipulate Our Minds and Persuade Us to Buy, marketing guru Martin Lindstrom trains a bright light on his own industry to uncover all the unsavory things that marketers do to subtly, or not so subtly, influence our buying habits. Lindstrom’s agreed to answer your questions, so fire away in the comments section. As always, we’ll post his replies in due course.


Pew Study: People Undervalue Their Local Newspaper

A new research report from the Pew Research Center reveals that while Americans get their local news from a variety of different sources, they far undervalue their local paper as a major source of that news. Authors Tom Rosenstiel, Amy Mitchell, Kristen Purcell and Lee Rainie write:

In all, the data in a new national survey show that the majority (64%) of American adults use at least three different types of media every week to get news and information about their local community—and 15% rely on at least six different kinds of media weekly.

The most interesting statistic is the mixed messages that people send about their local newspaper. While 69 percent of Americans claim that losing their local newspaper would have no impact, their reading habits show that people rely on print and online papers for 11 out of 16 major news topics. The authors write: “In other words, local TV draws a mass audience largely around a few popular subjects; local newspapers attract a smaller cohort of citizens but for a wider range of civically oriented subjects.”

 

 


How to Learn (Not Just) a Language Quickly

I was never good at languages. Although my first language was Punjabi, I grew up as a monolingual English speaker. In grade school, I took French for many years with grades of mostly Bs and a few Cs. However, I managed to learn fairly fluent German in just a few months. As I look back on it, I realize that I applied methods that help in learning any subject, which is my reason for telling you what I did.

It was 20 years ago in the eight-week language course at the Goethe Institute in Prien am Chiemsee, a beautiful resort town in the foothills of the Bavarian Alps (sadly, that school has since closed its doors). Upon arrival, we took placement tests to determine a suitable class. The instructors offered me the choice of starting in the highest of the three beginning levels or in the lowest of the three intermediate levels. (In college I had studied a year of German, which I estimate as comparable to four weeks of immersion in language school.)

I chose the intermediate class. For the first five weeks, I understood almost nothing that the teacher or the other students said. However, in the sixth week of the course, something amazing happened. Each day in that week I understood more.


Why Does the Likelihood of Terrorism Increase After Natural Disasters?

In a new RAND working paper, authors Claude Berrebi and Jordan Ostwald use international data to argue that countries which experience a major natural disaster are more likely to have an increase in terrorism activity afterward. In the abstract they write:

…Using a structured methodology and detailed data on terrorism, disasters, and other relevant controls for 167 countries between 1970 and 2007, we find a strong positive impact of disaster-related deaths on subsequent terrorism deaths and incidence. We find that, on average, an increase in deaths from natural disasters of 25,000 leads to an increase in the following year of approximately 33 percent in the number of deaths from terrorism, an increase of approximately 22 percent in the number of terrorist attacks, and an increase of approximately 16 percent in the number wounded in terrorist attacks, holding all other factors constant.


What's the Impact of Viagra's Patent Extension?

Last summer, a court ruled in favor of Pfizer’s patent on Viagra, extending its monopoly on the product through 2019. Many jokes were made when Viagra was first marketed, with Jay Leno remarking that it would keep comedians in business for years. With the patent extension, the price of Viagra will remain high for another 8 years.

There are many implications of this, but my question is the narrow one: What related markets will be affected by the absence of a generic equivalent of Viagra and the product’s continuing high price, and how?


Introducing "Football Freakonomics" on the NFL Network

As readers of this blog know, I like the NFL quite a bit (although not, for whatever reason, college football). I have written about players from the past like John Unitas and Franco Harris; I also love to follow the modern NFL and all its tricky issues.

So I’m thrilled to be hosting a new segment on the NFL Network called “Football Freakonomics.” We did a short program together for the NFL Draft, called “The Quarterback Quandary,” and now we’re partnering up for an ongoing set of segments. The first Football Freakonomics feature will air this Sunday on the network’s “NFL GameDay Morning.” We’ll explore all kinds of issues — winning/losing, performance, salaries, etc. — and we’ll lean on original research as well as the insights of many brilliant people from sport, academia, and beyond.

The first segment is titled “Is Momentum a Myth?” (If you’ve read the fine book Scorecasting, you may know where we’re headed with this one.) I haven’t seen it yet but all the NFL folks I’ve been working with in production are absolutely top-notch, so I’m sure they’ve come up with something great.


Dogs and Cigars

I’m back to inviting readers to submit quotations whose origins they want me to try to trace, using my book, The Yale Book of Quotations, and my more recent researches.

Sarah C. asked:

“When and where did the term ‘doggie bag’ (as in bringing home leftovers from a restaurant) originate?”

It is fascinating that you ask this, since I have long used “doggie bag” as my example of how historical dictionaries like the Oxford English Dictionary can shed light on the history of things as well as the history of words. The OED cites the following as its first two illustrations of “doggie bag” and related terminology:
“It’s a pleasure to hand this beautiful Doggie Pak to your patrons To Take Home Bones For Their dog… Printed in three colors… It’s class.”
–American Restaurant, Sept. 1952

“More and more restaurant meals are going to the dogs, if stepped-up demand for the ‘Doggy Bag’ is any indication.”
Huronite & Daily Plainsman (Huron, South Dakota), July 7, 1957


The Downside of Research: How Small Uncertainties Can Lead to Big Differences

Contrary to popular perception, most research yields very few conclusions with 100 percent certainty. That’s why you’ll often hear economists state their conclusions with “95 percent certainty.” It means they’re pretty sure, but there’s still a small margin for error. The science of climate change is no different, and, according to a Washington Post blog post, scientists are currently struggling with how to explain that uncertainty to the public. “What do you do when there’s a small but real chance that global warming could lead to a catastrophe?” asks Brad Plumer. “How do you talk about that in a way that’s useful to policymakers?”


Confessions of a Racecar Driver

Last week we got an email from a reader named Daniel Herrington. He had just finished listening to our podcast, “The Upside of Quitting,” and wanted to tell us about a big quit he’s been pondering recently.

Daniel is a 25 year-old race car driver. He’s also an engineering graduate student at Duke. On the race track, he’s had enough success to keep at it: he’s won at Chicagoland Speedway, and had multiple top ten finishes. But it’s not quite enough to convince him that racing’s the right path. The sport is super expensive; plus, Daniel’s success has been a bit spotty. He’s only completed 2 full seasons in the last 7 years. Keep at it, and he might wind up a star. But he could also end up a middle-aged, burned-out race car driver with no other career to fall back on. So Daniel is hedging and pursuing a graduate degree.

Daniel agreed to answer some of our questions. The result is an honest, revealing piece, one that (especially given the tragic death of Indy Car driver Dan Wheldon last weekend) sheds light on the tough decisions many young drivers face, where they have to weigh the considerable risks of the sport against its obvious thrill.


America, the Underpopulated?

A recent editorial in The New York Sun argues that all this political bickering about immigration among Republican candidates misses an important truth: America is actually underpopulated. From the article:

[N]ot a single Republican candidate has spoken up for the idea that America is an underpopulated country. In terms of population density, it is, at 83 persons a square mile, an impoverished country, barely a quarter of the rich density of China, which is running way behind India. America just has enormous room for population growth.

And a desperate need.

What do you think, readers? Is America under-populated? Would Montana and Wyoming, for example, benefit from a few more people?

(HT: Paul Kedrosky)


FREAK-est Links

100-year-old man the oldest person to complete a full-distance marathon. Subject-object-verb: Linguists think we used to talk like Yoda. What percent are you? Use the WSJ‘s new calculator. Made in China: when a misreading results in a size 1450 monster slipper. Households under-report credit card debt by one-third. Egypt’s “Facebook Revolutionary” is now advising Occupy Wall Street. Will the world . . .


Evaluating Teachers: What About Doing it the Old-Fashioned Way?

As part of our ongoing obsession with improving public education, we bring you a new study from Jonah E. Rockoff of Columbia Business School and Cecilia Speroni, a former doctoral student at Columbia’s Teachers College, that explores the power of objective and subjective teacher evaluations. While an emphasis on merit pay and test scores can lead to widespread cheating (as covered in this week’s Freakonomics Marketplace podcast), not to mention the occasional Matt Damon outburst, Rockoff and Speroni offer a potential glimmer of hope for the old-fashioned approach: the study finds that subjective teacher evaluations for New York City teachers had strong predictive power for future student performance. Here’s the abstract:


Time Banks: Got Time for Lunch?

Last weekend, I was walking around New York’s Lower East Side when I stumbled upon an interesting restaurant. The counter was serving Thai food, but they didn’t take cash – they only took time.

For a home-cooked lunch (with table service), I was told I’d have to pay with a half-hour of my time. This was an alternative economy staged by artists Julieta Aranda and Anton Vidokle as part of Creative Time’s Living as Form exhibition, part of a larger community movement of time banks going on nationally.

A time bank is not a barter system. Your good (or service) is not directly exchanged for another good or service. There’s a medium of exchange: it’s time, not money.

Some interesting history from their artist statement


Lessons of the Listeria Outbreak: Do Locavores Make Us Less Safe?

As the death toll from listeria in cantaloupe reached 25 this week, marking the deadliest outbreak of foodborne illness in a quarter-century, some industry insiders are placing blame on the local foods movement. On economic grounds, they may have a point.

The contaminated melons were traced to a self-described small farm in Colorado that the FDA said had “poor sanitary” conditions. The FDA reported Wednesday that it found listeria in numerous areas of the farm’s packing facility, including a floor drain, a produce dryer, and a conveyor belt. Standing water and poorly designed equipment created “the perfect environment for listeria growth and spread,” according to one FDA expert. The farm claimed to have passed an outside audit just days before the outbreak that has sickened more than 100 people and devastated the cantaloupe industry. Farmers in California are plowing their crops under because of the collapse in demand.


"The Stock Market Crash of 2008 Caused the Great Recession"

That is the title of a new working paper by UCLA economist Roger Farmer (abstract here; PDF here).

Note that Farmer doesn’t argue that the crash “contributed to” the recession, or “was a leading indicator” of the recession — but, rather, that the crash “caused” the recession. It’s worth acknowledging that a) Farmer attributes the housing-market crash as the direct trigger of the stock-market crash; and that b) he does this in service of the larger question: how to beat back unemployment.

From the abstract:

This paper argues that the stock market crash of 2008, triggered by a collapse in house prices, caused the Great Recession. The paper has three parts. First, it provides evidence of a high correlation between the value of the stock market and the unemployment rate in U.S. data since 1929. Second, it compares a new model of the economy developed in recent papers and books by Farmer, with a classical model and with a textbook Keynesian approach. Third, it provides evidence that fiscal stimulus will not permanently restore full employment. In Farmer’s model, as in the Keynesian model, employment is demand determined. But aggregate demand depends on wealth, not on income.


AARP is Wrong About Inflation

I’m getting a 3.6 percent increase in my Social Security retirement benefits on January 1. This reflects the rise in the “cost of living.” I’m happy for the money, but it’s wrong: every economist who has studied the issue knows that the Consumer Price Index (CPI-U) used for this adjustment overstates inflation by failing to account for the fact that people substitute away from goods and services whose prices rise relatively rapidly.

For a decade the U.S. Bureau of Labor Statistics has published a measure that accounts for this substitution, the chained CPI (C-CPI-U). Over the last 10 years it has risen 24.4 percent, while the CPI-U has risen 27.4 percent (and 3.7 instead of 3.9 percent this past 12 months). The C-CPI-U is a better measure of the cost-of-living, and it should be used (although even it overstates inflation because it doesn’t account fully for improvement of products).

Unsurprisingly, groups claiming to represent us greedy geezers are vehemently against even this change, “This so-called ‘chained CPI,’ through compounding, would cut seniors’ benefits by thousands of dollars over their lifetimes ….,” said AARP Executive Vice President Nancy LeaMond.

Of course, nobody’s benefits would be cut. Rather, their future benefits would rise less rapidly and would reflect better the prices of the goods they consume. My advice to other geezers: suck it up—this is the right thing for society and the right thing logically.


Goldman Sachs Stumbles: The End of the "Vampire Squid"?

A few years ago, a friend of mine who used to work on Wall Street told me that the only stock anyone needed to own was Goldman Sachs. He was of course half-joking (I sure hope this wasn’t the advice he was giving clients), but his point was clear: whatever price increases were happening out in the world, whatever profits were there for the taking, no matter the market, you could be fairly certain that Goldman was on the scene.

The image of Goldman Sachs as some sort of omnivorous, ever-present beast was perpetuated by Matt Taibbi in his 2010 Rolling Stone article, in which he dubbed the firm “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” And that was just the second sentence.

It would appear that the squid has since had a few of its tentacles lopped off, or at least been shrunken down to size. For only the second time since it went public in 1999, Goldman Sachs has posted a quarterly loss.


How an Absent Father Affects Boys and Girls Differently

According to the U.S. Census Bureau, the share of children living in mother-only households has risen from 8 percent in 1960 to 23 percent in 2010. Freakonomics has a long-standing interest in the role parents play in the lives of their children, and while we usually find no merit in helicopter parenting, a basic level of involvement is obviously important. Past research has shown that a father’s involvement with his children is linked to all kinds of beneficial outcomes, from higher academic achievement, improved social and emotional well-being, to lower incidences of delinquency, risk taking, and other problem behaviors.

A new working paper from authors Deborah A. Cobb-Clark and Erdal Tekin examines the relationship between juvenile delinquency and the role of a father in the household, particularly in terms of the different effects an absent father has on boys and girls. They discovered, among other things, that sons benefit far more from a father (or father-figure) than daughters do. From the abstract:

…we find that adolescent boys engage in more delinquent behavior if there is no father figure in their lives. However, adolescent girls’ behavior is largely independent of the presence (or absence) of their fathers.


The Suburb as the Slum: Housing Voucher Shifts in America

A new working paper from the Brookings Institution’s Metropolitan Opportunity series examines a major demographic shift in housing voucher recipients from the cities to the suburbs. Authors Kenya Covington, Lance Freeman and Michael A. Stoll write: “Just as the suburbanization of poverty has gathered momentum, Americans who use housing choice vouchers (HCV) to help pay for their housing have increasingly moved into suburban areas as well.” The authors studied data from 2000 to 2008 to see how this shift has taken place.

They found that:

Nearly half of all HCV recipients lived in suburban areas in 2008. However, HCV recipients remained less suburbanized than the total population, the poor population, and affordable housing units generally.
Black HCV recipients suburbanized fastest over the 2000 to 2008 period, though white HCV recipients were still more suburbanized than their black or Latino counterparts by 2008. Black HCV recipients’ suburbanization rate increased by nearly 5 percent over this period, while for Latinos it increased by about 1 percent. The suburbanization rate for white HCV recipients declined slightly.


What Will Be the Impact of Seven Billion People?

On Halloween this year, the world’s population will hit seven billion — or so estimates the United Nations Population Fund. Spooky, considering we hit six billion only a little more than a decade ago. Elizabeth Kolbert offers a brief history of population growth in a recent New Yorker article:

Depending on how you look at things, it has taken humanity a long time to reach this landmark, or practically no time at all. Around ten thousand years ago, there were maybe five million people on earth. By the time of the First Dynasty in Egypt, the number was up to about fifteen million, and by the time of the birth of Christ it had climbed to somewhere in the vicinity of two hundred million. Global population finally reached a billion around 1800, just a couple of years after Thomas Malthus published his famous essay warning that human numbers would always be held in check by war, pestilence, or “inevitable famine.”

Of course, we all know that Malthus was a little off the mark.


Did Risk of Divorce Drive Boomer Women to Increase Their Education?

A new working paper from authors Raquel Fernandez and Joyce Cheng Wong highlights the stark differences in the lives of two generations of American women: those born in 1935 and those born just 20 years later in 1955. The authors found that education, wage structure and divorce were the main causes to changes in labor force participation.

From the abstract:

Women born in 1935 went to college significantly less than their male counterparts and married women’s labor force participation (LFP) averaged 40% between the ages of thirty and forty. The cohort born twenty years later behaved very differently. The education gender gap was eliminated and married women’s LFP averaged 70% over the same ages… We find that the higher probability of divorce and the changes in wage structure faced by the 1955 cohort are each able to explain, in isolation, a large proportion (about 60%) of the observed changes in female LFP.


Are We Really Losing 1% of GDP Due to Poor Health? Also, a Poll on Polling

We’ve been writing a lot about obesity recently. First, it was this study about projected future obesity rates, then we covered Denmark’s saturated fat tax, which Steve Sexton then criticized for being inefficient. So, if you’re tired of reading fat-related posts on our blog, I get it. But as long as reports like this one from Gallup keep coming out, we’re going to keep writing about them, especially when they include so many interesting conversation points.

Here are the top-line numbers:

About 86% of full-time American workers are above normal weight or have at least one chronic condition. These workers miss a combined estimate of 450 million more days of work each year than their healthy counterparts, resulting in an estimated cost of more than $153 billion in lost productivity per year. That’s roughly 1% of GDP.