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Freakonomics Blog

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.


Recession Time Survey: 30% of Foregone Work Hours Spent on Sleep, Watching TV

Even after a decent jobs report earlier this month, unemployment is still over 9%. The underemployment rate? That’s 16%, and includes part-time workers who’d rather be full-time, plus people who’ve simply stopped looking for a job. So what are we doing with all that extra free time?
A new study by economists from Princeton and the University of Chicago breaks it down. The bulk of foregone market work time during the recent recession, they say, is spent on leisure.
Here’s the abstract:


Dogs Can Smell Lung Cancer

A new study by German researchers apparently shows that “sniffer dogs” can reliably smell lung cancer on the breath of patients. The finding could significantly improve early detection methods of the disease, which is the deadliest form of cancer worldwide. The research was published in European Respiratory Journal. Here’s the abstract:

Patient prognosis in lung cancer (LC) largely depends on early diagnosis. Exhaled breath of patients may represent the ideal specimen for future LC screening. However, the clinical applicability of current diagnostic sensor technologies based on signal pattern analysis remains incalculable due to their inability to identify a clear target. To test the robustness of the presence of a so far unknown volatile organic compound in the breath of patients with LC, sniffer dogs were applied.
Exhalation samples of 220 volunteers (healthy individuals, confirmed LC, or COPD) were presented to sniffer dogs following a rigid scientific protocol. Patient history, drug administration and clinicopathological data were analysed to identify potential bias or confounders.
LC was identified with an overall sensitivity of 71% and a specificity of 93%. LC detection was independent from COPD and the presence of tobacco smoke and food odors. Logistic regression identified two drugs as potential confounders.


Carbon Taxes in Canada, Solar Shutdown in Massachusetts: Climate Lessons For California

Recent news delivered two different verdicts on two different climate policy experiments, both of which carry lessons for California and its delayed carbon reduction plan. The first, a revenue-neutral carbon tax in British Columbia is “a winner.” So says The Economist. But the second, the Massachusetts front of President Obama’s green jobs initiative, is a failure. What else to conclude from this week’s bankruptcy filing by Evergreen Solar, a recipient of millions in federal stimulus dollars and state subsidies?
There are lessons in both stories for lawmakers in the U.S., especially our environmental policy frontiersmen in California, who in 2013 will impose the only carbon policy outside Europe to rival that of our northern neighbor in its seriousness and aggressiveness.


FREAK-est Links

This week, the fastest human-like robot, why the government just bought $40 million of chicken, an iPhone app to keep you from hitting the snooze bar, the environmental upside of cloud computing, and a scientific explanation of the phenomenon known as Beer Goggles.


The End is Nigh: Let's All Move to Barter Village!

Let’s face it: things aren’t great right now. The economy is on its back. Our political system is a mess. The South is stuck in a record-breaking drought. And Tiger Woods has apparently forgotten how to play golf. Clearly, the apocalypse is upon us.
Where to turn in such dark times? How about Barter Village. Located in a tiny castle (yes, castle) in northeast Arkansas, Barter Village is an “experimental educational project” where people who’ve been particularly hurt by the down economy can go to learn survival skills such as organic farming, sewing and, yes, bowhunting. Villagers hunt, fish and learn to dress their own game.

After providing for their own needs, Barter Village residents take their excess produce, meats, and handmade goods to the nearby castle market. Items sold there generate a meager income to help cover the costs of their stay at Barter Village. Any excess is divided evenly among the villagers to help fund their own survival community.


There Are Opinions, And Then There Are Facts

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.
Enter your name asked:

“I’d like to know the origin of the statement, ‘You are entitled to your own opinions, but not to your own facts.’ I’ve seen a version of it attributed to Daniel Patrick Moynihan, but it would be fun to know if he’s the origin, or if he quoted someone else.”


The Worst Mistake I Ever Made: An Economists' Parenting Quorum

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 turned to some of our favorite economists for advice on how to raise children. It’s safe to say you won’t find much of what you hear in any “expert’s” guide to parenting (which was of course the point) but it was a thought-provoking exercise in applying economic principles to one of life’s most perplexing and stimulating activities. As a supplement to the podcast, we thought it would be fun to convene a Freakonomics Quorum and ask some of our contributors, not for their best moment as a parent, but for their worst. The specific question we asked was:

What is the worst mistake you ever made as a parent?

Good sports that they are, they obliged with some lighthearted anecdotes of how sometimes the best intentions of rational, unemotional economists often run face-first into something called kids.


Abercrombie's "Situation" Subsidy Sunk its Stock Price Right? Not Quite

So this morning, Abercrombie and Fitch reported solid earnings for the second quarter. Its revenue was up 23% off strong international sales, and its net income rose 64% to $0.35 a share, beating Wall Street estimates of $0.29. So how come its stock price closed down nearly 9% today?
If you believe the knee-jerk mythology of the Internet, the answer’s simple: The Situation. Here’s the story: On Tuesday, the market closed with Abercrombie stock above $70 a share. That night, the Ohio-based company released a statement (strangely dated Aug. 12) titled “A Win-Win Situation,” in which it announced that it had “offered compensation” to Michael “The Situation” Sorentino to “cease” wearing its clothes. Here’s the entire statement:

We are deeply concerned that Mr. Sorrentino’s association with our brand could cause significant damage to our image. We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans. We have therefore offered a substantial payment to Michael ‘The Situation’ Sorrentino and the producers of MTV’s The Jersey Shore to have the character wear an alternate brand. We have also extended this offer to other members of the cast, and are urgently waiting a response.”


Narcissists Look Like Good Leaders. But Are They?

Generally speaking, narcissists tend to do well in life. Which is strange, since we usually look down on traits such as arrogance and inflated self-image. And yet, for all the reasons we hate them, society usually rewards narcissists in one crucial category: leadership. For some reason, even though we claim to see through all the trappings of self-love and big egos, we tend to think that narcissists make good leaders, and in group settings, consistently lift them to positions of power. Apparently, we’ve been duped. While narcissists may look like good leaders, according to a new study by a group of psychology researchers from the University of Amsterdam, they’re actually really bad at leading.
The study is due to be published in the October issue of the journal Psychological Science. Here’s the abstract:


Don't Call it a Comeback: Euro-Babies on the Rise

Along with its current sovereign debt issues, Europe has been facing a declining birthrate for the last couple decades- something that becomes a particular problem when welfare systems don’t have enough young contributors to support the old. But according to a recent RAND research brief, European fertility rates appear to be bouncing back.

Many European governments have been concerned about falling fertility rates, due to the welfare implications of an aging population supported by a shrinking workforce. However, ‘doomsday’ scenarios of fertility spiraling downwards and European populations imploding have not materialized; indeed, recent snapshots of indicators for childbearing suggest some recovery in fertility.

European women are still waiting longer to have children, but they’re having them at the same rate that they did a generation ago. The initial period in the 1970s and 1980s when women waited to have children left a data set that might be more of a hiccup than a permanent population change.


Reason No. 1,382,992 to Hate Politics

Is there any question that if Governor Rick Perry of Texas were a Democrat that all the left-leaning editorialists, economists, bloggers, etc., would be bending over backward to praise the Texas employment picture rather than bending over backward to belittle it?


Paris Under Siege: Why Were Cats Four Times the Price of Dogs?

In his discussion of the Siege of Paris 1870-71, David McCullough in The Greater Journey discusses the path of meat prices. One observer “considered cats ‘downright good eating,’ as apparently did many people. The price of a cat on the market was four times that of a dog.” Whether the price difference was really based on demand—differences in tastes for the two kinds of meat—or supply—is not mentioned in the book, but perhaps Parisians protected Fido less well than they protected Fluffy.
This illustrates a ubiquitous problem in discussing price differences: It’s easy to adduce a cause on one side of the market, but just as easy to bring up another cause on the other side of the market. I would bet on demand in this case, though, since it’s easier to protect Fido than a loose-running cat.


Cocaine Addicts Prefer Present Cash Over Future Coke

A new study by addiction and neuroscience researchers sheds new light on understanding how cocaine addicts make decisions, and how they value the drug against the immediate and delayed reward of other items, such as cash. The upshot is that addicts discount cocaine at a steeper rate than they do money, consistently choosing to have money now, rather than twice the value of cocaine later. Here’s how the experiment worked:
Forty-seven cocaine addicts (who were all seeking treatment) were asked to guess the number of grams of cocaine worth $1,000. They were each then given a series of choices: cocaine now versus more cocaine later; money now versus more money later; cocaine now versus money later; or money now versus cocaine later. The initial amount offered for the immediate choice has half of the full value, and the delayed amount was always the full value. Preference was almost exclusively given to the money now option, according to the study’s lead researcher, Warren K. Bickel, a psychology professor at Virginia Tech, and director of the Advanced Recovery Research Center there.


Nice Guys Never Win (Neither Do Mean Girls)

For years, we’ve been hearing from fictional alpha males like Ari Gold and Gordon Gekko that nice guys finish last. Now, according to a collection of studies soon to be released in the Journal of Personality and Social Psychology, there appears to be some truth to the axiom. While nice guys don’t necessarily finish last, they rarely finish first. Researchers Beth A. Livingston of Cornell, Timothy A. Judge of Notre Dame, and Charlice Hurst of the University of Western Ontario, show how “agreeableness” negatively affects monetary earnings. Moreover, their research shows that this “agreeable gap” is more pronounced in men than women, who still trail their male counterparts. Here’s a full version of the study. And here’s the abstract:


Freakonomics Poll: Will New Cigarette Warning Labels Reduce Smoking?

Soon, new warning labels on cigarette packs will have even scarier messages, and photos too. Canada has been doing this for years. Will it reduce smoking?
Here are three quick thoughts.
1) I strongly doubt it will increase the quantity of information about smoking. Folks know it is bad for you already.
2) This does not mean it won’t work. Maybe people try to forget the health risks in that moment of passion (folks know birth control helps prevent pregnancy, but similarly, when faced with impending temptations, magically forget such trivial details). Will these photos remind them at that moment of temptation? Maybe. Or maybe it will increase how often their kids or friends give them grief for it, thus creating some social pressure to stop. Naturally there is a counter-argument, that this may enhance teenage smoking, if “being bad” makes it cooler.


Prove Paul Krugman Wrong! Vote Wolfers

(8/24) Update: It appears that Real Paul Krugman was never on Google+. Instead, it was a hoax by a prankster with an ideological axe to grind. I’ll just say: He was convincing. And I was punk’d.
OK, so I’m in week three of my Twitter experiment.  And a funny thing happened along the way.  Google Plus. I’m enjoying the conversation at Twitter.  But I think G+ is the better technology. So I’ve started posting my more polished (and sometimes more verbose) gems over on Google+.
So far, it’s a bit quiet.  But helpfully, Patrick Bernau has compiled a page of economists publicly posting at Google+.  So if you prefer Google, you’ll love this page.


Raising MPG Standards: The Second-best Solution to a Gas Tax Increase

It got surprisingly little press coverage given the degree to which it will affect our lives (thanks, pesky world economic meltdown), but in case you missed it, the Obama administration recently worked out a compromise with the major automakers that will dramatically raise the corporate average fuel economy (CAFE) standards.
The new regulations mandate that the mix of new cars sold in the year 2025 must achieve about 54.5 miles per gallon (though if you read the fine print you’ll see that credits for various other green innovations mean that actual fuel economy will be more like 40 MPG.) For reference, the auto fleet currently on the road gets about 27 MPG. It’s a well-done agreement that will help avoid well-done citizens as global warming accelerates.
Before proceeding, let me note that I am strongly in favor of this policy. The problem of excessive fossil fuel use in transportation is multidimensional: if the issue of global warming doesn’t move you, the thought of Hugo Chavez and Mahmoud Ahmadinejad using our own hard-earned dollars to tweak our geopolitical noses should.
However, it is worth noting that raising CAFE standards is what political scientists and economists call a “second-best” solution; we could be doing considerably better if we thought all of this through more clearly.


The Economics of Economics Blogs

Last week, the World Bank blog Development Impact wrote about the influence of economics blogs on downloads of research papers. It included Freakonomics.com, as well as 5 other blogs — Aid Watch, Chris Blattman, NYT’s Economix, Marginal Revolution, and Paul Krugman. Using stats from Research Papers in Economics, it found spikes after blogs cover a paper. For us, it found a 450-470 increase in abstract views and downloads. Check out their cool graph:


Why Are Rhino Horns Twice as Valuable as Gold?

The price of gold has hit all-time highs recently, touching $1,800 an ounce as the stock market swooned last Wednesday. But there’s another commodity that’s enjoying an even bigger bull market these days: rhino horns. According to a recent study by Kenya-based ivory expert Esmond Martin, and his colleague Lucy Vigne, the ivory trade is hotter than ever, fueled by booming demand in China, where it is coveted for its supposed medicinal purposes. The study found that the number of ivory items on sale in southern China has more than doubled since 2004. And most of it is traded illegally.


Beauty Pays is Out! Bring Your Questions for Dan Hamermesh

Beauty Pays is out!! (Princeton University Press, 2011, available from the Press, or either hardbound or Kindle version). Its central point is that beauty affects outcomes in markets because it is scarce. It details how these effects function, how large they are, and what they imply about a wide array of markets.
It includes relevant jokes, songs, etc., lots of pictures but no graphs. Despite a “chatty” tone the discussion of beauty illustrates ideas comprising almost half of an introductory micro course.
It raises a wide array of issues and questions. I’m happy to answer any questions that Freakonomics readers might have, so please ask away in the comments section below!
Here’s the table of contents:


Give Me Liberty, or Give Me Steps

James Barron and Sydney Ember write in the New York Times about the upcoming closure of the crown of the Statue of Liberty. If you are skeptical of how the government spends money, this article will fuel your fire.
Barron and Ember write:

Interior Secretary Ken Salazar says it [the crown of the Statue of Liberty] needs a $27.25 million renovation for additional safety improvements that he promised in 2009.

My guess is that, even by government standards, this is a project where the safety benefit per dollar spent is miniscule, or non-existent.


Can You Trademark a Color?

Could Pablo Picasso sue Claude Monet for using his signature melancholy blue color? That question was raised this week by a federal judge in New York. The suit before the judge was not actually brought by Picasso. But it did involve a trademark in a color.
As his many fans know, Christian Louboutin is an artist of the foot. His shoes are widely revered (see songstress Jennifer Lopez’s ode, “Louboutins”) and not cheap: close to four figures in many cases, and sometimes more. Louboutin shoes also feature a well-known quirk: red soles. And when the venerable fashion house of Yves St. Laurent began selling red soled shoes recently, Louboutin—who had trademarked said soles in 2008—quickly sued.