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Freakonomics Blog

Who Is Alan B. Krueger?

President Barack Obama nominated a new chair of the White House Council of Economic Advisors on Monday: Princeton labor economist Alan B. Krueger will replace outgoing chair Austan Goolsbee. Krueger, 50, is known as a strict “empiricist” with a broad range of economic knowledge, having researched topics as diverse as subjective well-being to the relationship between the minimum wage and employment.
His 2007 book, What Makes a Terrorist, explores the economic roots of modern-day terrorism. Which Levitt has blogged about here on several occasions. Krueger was also presented Freakonomics with an award in 2006 at the National Council on Economic Education.
Krueger’s biggest asset in the job will likely be his expertise as a labor economist, as the Obama administration is desperate to reduce unemployment heading into the 2012 election.


New York City Media's Hurricane Overkill

By last Friday, New York City was in full-on hurricane panic mode. Public transportation was scheduled for a Saturday shut down, stores were selling out of batteries and flashlights, windows were being taped, sandbags stacked; three-hundred and seventy thousand people were evacuated. This was going to be bad, the local media kept telling us. Really, really bad. Even the number-crunching, data-driven Nate Silver got in on the action, posting an extensive piece on his fivethirtyeight blog that if Hurricane Irene got close enough to New York City, it could be the costliest natural disaster ever. And by Friday, it was heading straight for the Big Apple.
By midnight on Saturday, things (in the words of NBC anchor Brian Williams) were “getting a bit sporty” in NYC. Wind was gusting, rain was coming sideways. The streets were empty, save for dozens of intrepid local TV news reporters deployed throughout the city, standing ready to report on the impending damage. Which, remember, was going to be bad.
The center of Irene hit New York around 9am Sunday. Winds reached 65 mph, the strongest in 25 years. By 10 am, the worst was over. No hurricane-shattered skyscraper windows, no preemptive power outages, no real flooding to speak of. The general tone among New Yorkers Sunday morning was, “That’s it?” But to watch the local TV news on Sunday, the storm had been epic. Rather than call in their battalion of reporters stationed around the area, the NYC TV news media kept reporting. All day.


The Economist's Guide to Parenting: Economist Kids Photo Gallery

For our latest podcast, “The Economist’s Guide to Parenting” (you can download/subscribe at iTunes, get the RSS feed, listen live via the media player, or read a transcript here), we asked for parenting advice from a most unlikely group of people: economists. The roster of guests includes our very own Steve Levitt, Betsey Stevenson and Justin Wolfers; and also features economist parents Bruce Sacerdote, Melissa Kearney, Valerie Ramey, and Bryan Caplan.
As a bit of extra fun, we decided to make a photo gallery out of the cute family pictures they sent us. Take a look at these proud economist parents!


Why Are We Bashing Buffett?

What is altruism? Warren Buffett recently proposed a surtax on the very wealthiest Americans, including himself to help reduce the federal deficit. (This is a mild version of Obama’s perfectly reasonable proposal to tax family incomes above $250,000, i.e., fewer than 2% of families.) Buffett is being altruistic—the tax will reduce his net income. I always thought altruism was desirable, yet I’ve seen Buffett lampooned in the press.
I suppose one can argue that he’s really doing this to preserve the value of Berkshire Hathaway stock. (The same argument might apply when I donate blood—perhaps I do it because it makes me feel good, not to help others.) But: it’s a pretty sorry state of the world when someone offers to reduce his circumstances in order to help his country and is mocked.


Hurricane Shopping in NYC: And Then There Were But Keychain Flashlights Left

A weird week in New York City is only getting weirder. On Tuesday, for the first time since 1884, earthquake tremors were felt in the Big Apple; which, not surprisingly, came with no warning from earthquake prognosticators. Now, NYC is bracing for its first hurricane since 1985. (Any readers game for trying to calculate the odds of NYC getting hit by an earthquake and a hurricane in the same week, I’d love to see your estimates.) As I write, I’m watching out my window as people in the building across the street tape their windows. Which reminds me, I need duct tape!
Now that the MTA has announced that all NYC public transportation will be shut down beginning on noon Saturday, people are out in force doing some last minute hurricane shopping. So we decided to venture out and do a little reporting on what’s left, and what’s not.


Freakonomics Radio Hits No. 1 on iTunes

This week, Freakonomics Radio hit No. 1 on iTunes as the top downloaded podcast. We’re thrilled, and of course, humbled. So, as always, thanks for listening everybody!


Bernanke Speaks. But What Did He Say?

So Ben Bernanke finally spoke today. And as I predicted yesterday, all the early headlines are expressing disappointment that Ben didn’t announce QE3. But this disappointment is misplaced. New policy announcements are for the Federal Open Market Committee, not the Chairman. The most he could do is give an indication of where he thinks things will go.
And he thinks they should ease policy.  Soon.
Here’s the case he made:
1. Unemployment is too high. This is the usual argument for easing monetary policy.
2. Inflation is below target. The usual constraint preventing this doesn’t bind.
3. The possibility that high long-term unemployment may persist “adds urgency to the need to achieve a cyclical recovery in employment.” There’s a special reason to be more aggressive.


A Rose is a Rose is a Preference Signal

A rose by any other name is just as sweet, isn’t it? Even virtual roses used in Korean online dating experiments. In a new working paper by main author Soohyung Lee of the University of Maryland, economists studied the impact on preference signaling – signals sent to a select few.
In the study, a major online dating company in Korea organized dating events with 613 participants, half men and half women. Everyone was given two free “virtual roses” that they could attach to an e-mail to a fellow participant, and a few were given 8 virtual roses. Although these roses cost nothing, attaching a rose to an e-mail drastically increased rates of acceptance, even among different “desirability” groups.


Mandating Calorie Counts: Has Libertarian Paternalism Gone Too Far?

Staring at the menu board on a recent and rare trip to a California fast-food chain, I was stunned by the cost of a milk shake: 880. Eight dollars for a milk shake, really? Well, no. That was the cost in terms of calories. But I would have gladly traded that in dollars and cents to be spared the knowledge of how many calories my post-triathlon race reward would cost me. Feeling sufficiently guilty once confronted with the calorie content, I downsized and saved a couple hundred calories. But I left feeling dissatisfied and unambiguously worse off.
This kind of experience could be coming to a restaurant near you by January, when the FDA plans to roll out mandatory calorie labeling regulations approved by Congress in the same bill that authorized ObamaCare. At chain restaurants with more than 20 locations, you won’t be able to avoid the calorie information, which is prescribed to be posted on menus and menu boards near prices and printed at least as large. So much for the days of blissful ignorance.
While the calorie labeling law is intended to improve health outcomes for individuals, it is effectively a government-mandated guilt trip and a sign that libertarian paternalism—the seemingly benign notion that “choice architects” can “nudge” people to make better decisions for themselves—has gone too far.


FREAK-est Links

This week, do bees have feelings? Deaths in Yosemite are twice the normal amount this year; evidence that El Nino causes tropical civil wars; surgeons’ cells are adapting to regular, safe doses of x-rays; and Australia’s strange strategy to combat the dengue fever virus.


John Adams Said it First

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.
Daniel Greenwald asked:

“If a person is not a liberal when he is twenty, he has no heart; if he is not a conservative when he is forty, he has no head.’ OR
‘If my son is not a liberal when he is twenty, I will disown him; if he is not a conservative when he is forty, I will disown him then.’
And other variants, I am sure.”

One of the pleasures of compiling the Yale Book of Quotations was tracing and cross-referencing different versions and precursors of famous quotes. This one is usually credited to Georges Clemenceau, but W. Gurney Benham‘s Book of Quotations cites French premier and historian Francois Guizot (1787-1874), translating his statement as “Not to be a republican at 20 is proof of want of heart; to be one at 30 is proof of want of head.” Benham asserts that “Clemenceau adopted this saying, substituting ‘socialiste’ for ‘republicain. ‘”
But I was delighted to find that John Adams had expressed a similar idea well before Guizot entered adulthood. Thomas Jefferson preserved this quip, writing in a 1799 journal that Adams had said: “A boy of 15 who is not a democrat is good for nothing, and he is no better who is a democrat at 20.”
Do any readers have any other quotations whose origins they would like me to attempt to trace?


Education As Incapacitation: Why Are States Making it Harder to Get a Learner's Permit?

I got in trouble earlier this summer when a teacher caught me surfing the Internet during a “Safe Driving Practices” class I had to attend so that my son could get his Connecticut driver’s license. While a parent has to attend for 2 hours, a 16-year-old must attend for a mind-numbing 8 hours before qualifying to take a written test. The mandatory class is part of Connecticut’s graduated driver licensing requirements, which make it (i) harder for a 16 or 17-year-old to get a learner’s permit, (ii) harder to get a license, and (iii) severely limits the kinds of driving you can do with these licenses.
I was surfing the Internet during class, because something the instructor said about accident statistics since the program was rolled out in 2008 seemed defensive – so I started to look up Connecticut statistics online.
Having attended 2 hours of the training, I seriously doubted that the 8-hour classes serve an educational function.  Nonetheless, surfing made me feel somewhat better about having to sit there because I learned that the new requirements are having an impact: they’re deterring young people from getting their licenses. Look, for example, at what happened to the number of 16 and 17-year-olds receiving learner permits in 2008 when the law took effect (which I calculated from this data):


Planned Obsolescence: A Lament for Quality Amid a World of Junk

Our family recently camped for a week in a nearby state forest where our most trusted item was a cast-iron frying pan. Its thickness distributes heat evenly. Nothing can harm it. The wrong kind of spatula won’t scratch some special non-stick coating.With simple care, it will last for a thousand years. Which reminded me how rare that combination of high quality and durability is today.
Most everything else I own is junk and seems to be designed that way. Here are several anecdotal examples:
In the old days, most Americans rented phones from the phone company (“Ma Bell”). My parents still own one, now over 30 years old, that survived raising three boys. These phones lasted forever. Meanwhile, Ma Bell was broken up in the 1980s. One engineer who worked for the phone company before and after the breakup told me of how the engineers were gathered together and given new ground rules: “It was all well and good in the old days to make phones with gold-plated contacts. But now it’s different. Here’s how to make the newer phones…” I think back on this comment as I watch one phone after another die, often after a few months.


Was Steve Jobs' Retirement Already Priced into Apple Stock?

When news broke last evening that Steve Jobs was stepping down as Apple CEO, shares of the company fell by more than 5% in after hours trading. By the opening bell this morning, they’d recovered half of those losses. And during the first hour of trading, shares of Apple were only down between 1.1% and 1.6%.
Compare that to when Jobs announced that he was taking a leave of absence back in January of this year (his third leave since 2004), when shares fell by more than 8%. Within ten days, the stock had regained the lost ground, off news that Apple’s revenue grew 70% in the fourth quarter. Back in January 2009, when Jobs left for health reasons, and ultimately a liver transplant, Apple shares dumped more than 10% in the immediate aftermath. Way back in the summer of 2004, when Jobs first announced that he’d had a cancerous tumor removed from his pancreas, the market’s reaction was a slow sell-off, but nothing too drastic. Back then shares were trading at only around $16, so there wasn’t nearly as much to chew off.
So, the market’s now had seven years to get used to the idea of life without Jobs at Apple. And there still seems to be plenty of optimism about the future share price. Check out the odds from Irish bookmaker Paddy Power on where Apple’s stock price will end 2011.


How to Improve iPhone's New Charity Snooze App: Pick an Anti-Charity

A new iPhone app links your alarm clock snooze button to your wallet. Every time you hit snooze, you pay. To be precise, 25 cents goes to charity. Whilst I admire the charitable impulse and the entrepreneurialism here, I do wonder how effective this commitment device will be. A quarter isn’t a lot. Particularly when in a deep slumber. And the money goes to a good thing. Two slight twists on this app would intrigue me:
1)      The anti-charity. A popular option at stickK.com (disclosure: Ian Ayres, fellow Freakonomics contributor, and I are co-Founders of stickK.com), is to pick an “anti-charity” such as the Bush or Clinton Presidential Libraries, depending on your particular persuasion (those in the UK can choose their most despised football team).
2)      The reverse: Donate if you do NOT press snooze. Set a goal for money to raise for a charity you love. Every day you do NOT press snooze, you add money to your “to donate” pot. (Yet another disclosure: this would thus work similarly to the American Cancer Society’s http://www.chooseyou.com campaign, which is powered by stickK.com).


Previewing Jackson Hole: Why Markets Are Setting Themselves Up for Disappointment

On Friday all econ-loving eyes will be focused on Jackson Hole, Wyoming. Think of it as Oscar night for macroeconomists. Except with sensible shoes rather than plunging necklines. But the anticipation and gossip is just as intense. Markets are convinced that Ben Bernanke’s going to make a major announcement. I disagree.  Here’s why:
1.       Central bankers generally try to be more boring than their audience wants them to be. That won’t change.
2.       The run of data since the last Fed meeting hasn’t really changed, so why would monetary policy?
3.       Given the slim governing coalition, Ben can’t get too far ahead of the rest of the committee. So look for all the action to come from official Fed statements, rather than cryptic hints at Jackson Hole.
4.       Sometimes Fed Chairmen are accidentally more interesting than they mean to be. At last year’s conference Big Ben shared some of his thinking about alternative monetary tools. This was news in 2010, and it excited the markets. But today, we’ve all thought long and hard about the alternatives, so it’s hard to see a surprise coming.


Abortion Is Legal, but What Percentage of Ob-gyns Will Provide One?

A new study released by the American College of Obstetrics and Gynecology, from main author Debra Stulberg, surveys 1,144 ob-gyns (1,800 were initially approached) to see how many provide abortion services. Though legal, abortion is much harder to come by than one might expect: while 97% of ob-gyns reported having encountered women seeking an abortion, only 14% said they were willing to perform the service.
The authors further break down willing abortion providers based on gender, location, and religious affiliation. Here’s the abstract:


Go Ahead and Get Mad: Why Anger Spurs Creativity (But Not for Long)

A series of studies by Dutch researchers examines the effect anger has on people’s problem solving skills, and finds that angry people produce a higher volume of ideas, as well as more creative ones than their non-angry counterparts. The study’s authors reason that anger is usually accompanied by a feeling of intense energy and a less-structured style of thinking, two factors that lead to creative forms of brainstorming.
That burst of productivity however is short-lived and ultimately creativity is reduced as a result. The authors found that anger leads to initially higher levels of creativity than sadness, but that anger depletes resources more. As a result creative performance declines over time more for angry people than sad ones.
So, if it’s your job to be creative for long periods of time, better to be sad than angry. But if all you need are short bursts of sporadic creativity, rage away.


How the "Accident Hump" Tells Us Boys Are Maturing Faster

We’ve known for a while that girls have been maturing at a faster rate for much of the last 100 years, if not longer. Disease reduction and better nutrition are thought to be the biggest factors. But what about boys? Researchers have long thought they were maturing faster too. But lacking the obvious (monthly) data, the evidence proved tricky.
Now, a German researcher believes he’s found the answer by looking at, of all things, male teenage death rates. When girls hit puberty, they get their period. When boys hit puberty, they start doing stupid stuff, hence what’s called “The accident hump,” a spike in mortality rates that coincides with the peak of male hormone production during puberty. That hump it seems has been shifting to earlier and earlier in life.
The new study, by Joshua Goldstein, director of the Max Planck Institute for Demographic Research in Rostock, Germany, finds that the age of sexual maturity for boys has been decreasing by about 2.5 months each decade, since at least the middle of the 18th century.


Inheriting a Rembrandt: A Rare Case of a Monopoly

We inherited several art works, including a Rembrandt etching—a portrait of an old man. Is it worth anything?? An art appraiser/detective hunted down its story. The print itself is new—pulled on highest-quality paper in the 1990s from Rembrandt’s plates. Apparently no prints were made in most of the 20th century. In the 1990s the plate’s owner pulled a small number, but none since, and none planned.
The owner has a monopoly on the plate and understands revenue maximization (there are essentially no variable costs): Pull just enough prints to have sufficient quantity to drive the price elasticity of demand to unity, but no more than that. Not only does his strategy gain him the most revenue, but it keeps the price of our print up in case we decide to sell it. This is a rare case where I benefit from monopoly!


The Law of Unintended Consequences

There’s a natural ratio of men to women for our species, and it is not equal. For every 100 girls, 105 boys are born. But in some places, like India and China, the ratio is skewed. One Chinese city recorded an astounding 163 boys born per 100 girls. So, why is this happening?
The ultrasound.
The expanding use of this technology has allowed expecting parents to abort unwanted girls and keep the boys. The ability to sex-select has caused the disappearance of an estimated 160 million girls in Asia alone.
In this Marketplace segment, Stephen J. Dubner reports on the unintended consequences that come with new technology.


Are States with Better Educated Legislatures Better Governed?

That depends on how you define “better governed.” If, for simplicity’s sake, you measure the quality of governance by fiscal solvency (or more aptly the lack thereof), then the answer appears to be no. Of course, these are strange times; forty-two states have a combined fiscal deficit of more than $100 billion, so maybe the data’s a bit skewed. Still, comparing a Chronicle of Higher Education report on the collective education level of each state legislature, to Stateline.com’s list of state budget deficits from March seems worthwhile. And the results don’t exactly make the case for education being a good predictor of fiscal competence.


College Athletes and Sudden Cardiac Death: Why Do Male Basketball Players Have Such a High Risk?

There’s an interesting story in today’s Wall Street Journal, by Katherine Hobson about a new method some cardiologists have come up with to better diagnose life-threatening heart conditions among student athletes. Apparently, since the hearts of well-conditioned athletes sometimes put out more electrical voltage than average, their ECG’s can often look like that of someone with a heart problem. This has led to an underestimation of the risks that sudden cardiac death (SCD) poses to student athletes, according to the study, even though it’s their leading medical cause of death during exercise. The findings were published this month in the American Heart Association journal Circulation. You can read the abstract here.
What really caught my eye though was an info-graphic the WSJ ran next to the story. Using data from Circulation, the graphic depicts the overall rates of SCD, from high to low, per year among NCAA college athletes, broken out by different sports.


Exam High Schools: Not As Great As We Thought

Exam high schools are generally regarded as a cut above, turning out congressmen, scholars, and all-around high achievers. They account for over half of the top 109 American schools in the U.S. News and World Report best high schools list, and an incredible 20 out of 21 from Newsweek’s list of “public elite.”
But a new study from Will Dobbie and Roland Fryer of Harvard throws cold water on this notion, and calls into question whether the exam schools typically cited for excellence are, well, really all that excellent.
Writing for the National Bureau of Economic Research, Dobbie and Fryer take a fresh look into the measurable achievements of exam school students, specifically focusing on three well-known schools in New York City: Brooklyn Tech, Bronx Science, and Stuyvesant. While attending an exam school might be great for your overall education, and resume, this doesn’t come through in terms of increased test scores or college achievement. Here’s the abstract:


Pay to Play: Should Registered Organ Donors Get Priority as Recipients?

The organ donor waiting list in America is a long one. There’s far too much demand for a very limited supply. In 2010, 89,316 people were on the kidney transplant waiting list, while the number of living donors was only 6,282, and the number of deceased donor transplants was 10,622. Freakonomics is no stranger to the repugnant discussion of the organ market. America’s particular organ donation policies, however, aren’t practiced everywhere. Singapore and Israel give priority to potential recipients who were already registered donors. A new working paper written by Judd B. Kessler of Wharton, and Alvin E. Roth from Harvard further tests this idea of priority-to-participants in an incentivized game. Here’s the abstract:


As Gold Prices Soar, Criminals Catch On

It seems like nearly every day this summer, the price of gold hits a new high. Today is no exception. Not surprisingly, criminals around the world are starting to take notice. First, from Stuart Pfeifer writing in the LA. Times:

So far this year, gold chains have been snatched from the necks of at least 110 people during street robberies in Olvera’s South Los Angeles division. His officers are circulating fliers and showing up at churches and community centers to warn residents to stop wearing gold in public, or at least to tuck it under their clothes.


Will Rahm Emanuel's Merit-pay System Work Where Others Haven't?

Last week, Chicago mayor Rahm Emanuel announced that he’s rolling out a merit pay program specifically for school principals, using $5 million in donated funds. The plan is particularly bold considering its announcement comes on the heels of quite a bit of evidence, from research to scandals, showing the faults of merit pay.

In March, we wrote about Harvard economist Roland Fryer‘s study on New York City’s failed merit pay experiment, the Schoolwide Performance Bonus Program, which was shutdown last month. A subsequent RAND report echoes much of Fryer’s findings:

…the theory underlying school-based pay-for-performance programs may be flawed. Motivation alone might not be sufficient. Even if the bonus here had inspired teachers to improve, they might have lacked the capacity or resources — such as school leadership, expertise, instructional materials, or time — to bring about improvement.


The Unintended Congo "Catastrophe" of Dodd-Frank Conflict Mineral Provision

A number of months ago I wrote a blog entry on the requirement in the Dodd-Frank bill, put in by then-Senator (and now Kansas governor) Sam Brownback, prohibiting the purchase of “conflict minerals”—those that might be used to finance warfare in Africa, particularly the Congo. I noted the very simple economic point that this would create a surplus that would drive prices down, mostly harm local miners, but benefit buyers/countries without U.S.-level scruples about these purchases.
I shouldn’t brag—any Econ I student could have seen this point; but it is nice, albeit depressing to see this prediction come true. From David Aronson in the New York Times:

For locals, however, the law has been a catastrophe. In South Kivu Province, I heard from scores of artisanal miners and small-scale purchasers, who used to make a few dollars a day digging ore out of mountainsides with hand tools. Paltry as it may seem, this income was a lifeline for people in a region that was devastated by 32 years of misrule under the kleptocracy of Mobutu Sese Seko (when the country was known as Zaire) and that is now just beginning to emerge from over a decade of brutal war and internal strife.


Freakonomics Poll: Should Being a Parent Require a License?

Toward the end of our latest Freakonomics Radio podcast, “The Economist’s Guide to Parenting,” Steve Levitt points to the loads of social science research demonstrating that the one sure-fire way to have a bad life, is to have a mother who doesn’t love you. Which brings him to a rather radical point: should parenting be licensed? Here’s a bit from the transcript:

LEVITT:There’s a lot of research on un-wantedness and tremendous historical data sets from social science of the last fifty years that suggest that if your mother doesn’t love you, nothing good will happen to you in life. The lowest common denominator for having a kid who turns out well is the kid being loved. And if I were president for a day, maybe dictator for a day, one of the first things that I might do would be to make it harder to be a parent, to make the standards for being a parent more difficult. You should have to demonstrate some proficiency at parenting perhaps to be a parent.


Study Shows Animals Starting to Move to Higher Latitudes, Elevations

A new study out of the University of York shows that animals are moving to higher latitudes and elevations as a result of global warming. The research, which is a meta-analysis of previous individual studies, finds that about 1,300 species are shifting habitat faster than had previously been assumed. But they’re not all moving toward cooler temperatures. The data are mostly skewed toward Europe and North America. Here’s the abstract:

The distributions of many terrestrial organisms are currently shifting in latitude or elevation in response to changing climate. Using a meta-analysis, we estimated that the distributions of species have recently shifted to higher elevations at a median rate of 11.0 meters per decade, and to higher latitudes at a median rate of 16.9 kilometers per decade. These rates are approximately two and three times faster than previously reported. The distances moved by species are greatest in studies showing the highest levels of warming, with average latitudinal shifts being generally sufficient to track temperature changes. However, individual species vary greatly in their rates of change, suggesting that the range shift of each species depends on multiple internal species traits and external drivers of change. Rapid average shifts derive from a wide diversity of responses by individual species.