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Tim Groseclose's New Book on Liberal Media Bias

My good friend and co-author Tim Groseclose has a new book out entitled Left Turn: How Liberal Media Bias Distorts the American Mind. As the title suggests, it has a definite conservative slant. It is not, however, a right-wing rant by any means. Rather, it is a carefully researched and amusingly written book by a highly regarded academic.
I’m bored to death by politics. So I didn’t expect to enjoy Groseclose’s book, but I really did. I’m always surprised when an academic can write for a general audience, but Groseclose definitely has that gift.
As I said in my blurb for his book, liberals will not like what Groseclose has to say, but that is all the more reason why liberals should read his book.


Are Rising Prices a Sign of Health in an Industry?

Or do they signify desperation? This is the question that arose earlier this month in Congress, when the House Judiciary Committee again took up the question of creating copyright protection for fashion designs.
We (really, Chris) testified as the sole opponents to the Innovative Design Protection and Piracy Prevention Act, or IDPPPA, which would for the first time in American history provide a short (3 year) copyright for fashion designs, such as the cut and look of a particular dress or suit. To bolster our argument against the IDPPPA, Chris presented data from the Bureau of Labor Statistics that showed that since 1998 apparel prices in the U.S. had dropped or stayed steady—with one exception. At the very top level, prices rose dramatically in this period—by over 200%. The full testimony and graph can be found here.


Did Rating Agencies Give Preference to Big Banks?

At the heart of the financial crisis was the market for mortgage-backed securities (MBS). These are the “toxic assets” that larded up bank balance sheets and all but froze the credit markets in the fall of 2008. Turns out a lot of those assets are still sitting there. Though they’ve mostly been downgraded to junk status, many of them began life as gold-plated investment products thanks to the AAA ratings they received from the rating agencies Moody’s, S&P, and Fitch. These firms that allowed so much junk to be passed off as gold were essentially the enablers of the financial crisis.
The relationship between the rating agencies and banks is a perfect case study of flawed incentives. With banks paying them to rate their investment products, and so much money pouring in at the height of the mortgage-boom (driving record profits for the highly competitive rating agencies), Moody’s, S&P, and Fitch had a strong incentive to play along.
A new study adds more fodder to the argument that these agencies were unduly influenced by the institutions whose products they were grading. It basically posits that the more MBS an institution issued, the better rating their stuff received.


The Virtues of Free Markets?

In our books, Dubner and I have argued that economic analysis (at least the way we try to do it) is neither moral nor immoral. We try to start with a question, obtain a set of facts, and then understand where those facts lead, trying not to be prejudiced one way or the other by moral considerations when coming to a conclusion.
Similarly, I’ve never really thought of markets as being moral or immoral.
Mark Zupan, the dean of the University of Rochester’s William E. Simon School of Business, thinks differently. In a recent piece, Zupan makes an argument that most people will find counterintuitive: he claims that free markets foster integrity and cooperation. I’m not sure I fully agree with him, but the basic idea is sensible and straightforward. Markets lead to firms that survive for long periods of time. Reputations are important to firms, which leads them to behave in virtuous ways, not because they’re inherently moral, but because virtue is good for business in the long run.


Waiting in Line Pays $3 an Hour in China

From NPR’s Beijing correspondent Louisa Lim, comes a story about China’s epic lines, and the money-making opportunity they’ve spawned:

Earlier this month, people waited four days and three nights to register for low-income housing in the central city of Xian, while admission to a certain Beijing kindergarten in Changping last year required a week-long, round-the-clock queue, for which people set up camp beds along the pavement.

A half-day wait at the bank is also apparently not unusual. It’s all led to this:

For the past two years, Li Qicai, 28, has made a career out of waiting in line. What’s more, he now outsources the waiting to others. He employs four full-time queuers and a host of freelancers, who, for a cost of about $3 an hour, will do the waiting for you.
“I’m just selling my time for money,” says Li. “You don’t need any skills, except the ability to suffer. For some jobs, you need to look good. If you want to buy things for rich people, you can’t look like a farmer or they’ll think you’re a scalper.”

The Chinese media pins the phenomenon on an economy driven by laziness, where low labor costs fuel China’s “convenience culture.”
One more point: if it takes a week to wait in line to sign up for kindergarten now, what happens if China’s most populous-province gets its wish, and the country’s one-child policy is overturned?


Why It's Better to be Beta than Alpha

“Uneasy lies the head that wears a crown.”

That’s from William Shakespeare’s Henry IV, Part 2. The point is that it’s not easy being No. 1; constantly having to watch your back, stressing over who might be angling to knock you off, and steal your crown.
Four hundred years later, scientists are finally getting around to proving that axiom. A new study of baboons shows that being the alpha male in a group dynamic may not be worth the stress the position imposes. Here’s the abstract:

In social hierarchies, dominant individuals experience reproductive and health benefits, but the costs of social dominance remain a topic of debate. Prevailing hypotheses predict that higher-ranking males experience higher testosterone and glucocorticoid (stress hormone) levels than lower-ranking males when hierarchies are unstable but not otherwise. In this long-term study of rank-related stress in a natural population of savannah baboons (Papio cynocephalus), high-ranking males had higher testosterone and lower glucocorticoid levels than other males, regardless of hierarchy stability. The singular exception was for the highest-ranking (alpha) males, who exhibited both high testosterone and high glucocorticoid levels. In particular, alpha males exhibited much higher stress hormone levels than second-ranking (beta) males, suggesting that being at the very top may be more costly than previously thought.


Hispanic Population Growth Now Driven More by Births, Not Immigration

From a Pew Research Center analysis of the latest Census data:

In the decade from 2000 to 2010, the Mexican-American population grew by 7.2 million as a result of births and 4.2 million as a result of new immigrant arrivals. This is a change from the previous two decades when the number of new immigrants either matched or exceeded the number of births.
The current surge in births among Mexican-Americans is largely attributable to the immigration wave that has brought more than 10 million immigrants to the United States from Mexico since 1970. Between 2006 and 2010 alone, more than half (53%) of all Mexican-American births were to Mexican immigrant parents. As a group, these immigrants are more likely than U.S.-born Americans to be in their prime child-bearing years. They also have much higher fertility.


The Costco Effect: Why Does the Wholesaler Cause Inflation?

There’s a lot of data showing that Walmart causes prices to decline when it enters a local market (see here, here and here). Why then, according to a new study, does Costco have the opposite effect, and cause competitors to raise their prices? The answer boils down to the complex ways that stores choose to compete against each other, and shows that not all big box retailers are created equal. Here’s the abstract:

Prior research shows grocery stores reduce prices to compete with Walmart Supercenters. This study finds evidence that the competitive effects of two other big box retailers – Costco and Walmart-owned Sam’s Club – are quite different. Using city-level panel grocery price data matched with a unique data set on Walmart and warehouse club locations, we find that Costco entry is associated with higher grocery prices at incumbent retailers, and that the effect is strongest in cities with small populations and high grocery store densities. This is consistent with incumbents competing with Costco along non-price dimensions such as product quality or quality of the shopping experience. We find no evidence that Sam’s Club entry affects grocery stores’ prices, consistent with Sam’s Club’s focus on small businesses instead of consumers.


The Physics of Putting

I always love it when I’ve been doing something one way my whole life, and then someone explains to me there is a better way to do that same thing, and the new way is so simple I can immediately switch and see benefits.
Usually it is a new technology that unlocks the magic. For instance, XM Radio, iTunes and Pandora all fundamentally changed the way I listen to music. My Sonicare toothbrush is a hundred times better than a regular toothbrush. After the creation of seedless watermelons, I would never again intentionally buy one that had seeds. Microwave popcorn is another example.
What is even neater, I think, than a new technology changing things, is when someone just comes up with a better way of thinking about a problem. I’ve done a little bit of reading on the origins of randomized experimentation, and it is fascinating to see how that new and powerful idea emerged.
On a much smaller scale, I’ve recently had that sort of change in my thinking about another issue: how to read putts on the green when playing golf.


An Apparent Non-Money Pricing Anomaly

The City of Austin offers airport parking in three tiers, from garage ($20/day), to close-in surface ($10/day), to distant surface ($7/day). Frequent parkers accumulate points entitling them to free parking days.
The incentives for redeeming the points are bizarre:

Garage 2500 points

Close In 2500 points

Long Term 2500 points

The “price” of a free parking day is the same for the very desirable garage, where I never park if I have to pay $$, and for the close-in parking (where I park for $$ if staying fewer than 5 days) as well as for the long-term (where I park only if staying more than 4 days). Seeing this, we will redeem our 10,000 points for four days in the garage—parking for “free” anywhere else makes no sense. Now if the airlines would only charge the same number of frequent-flyer miles for a trip to Australia as they do for a trip to New York, I would be even better off!


What Would it Be Like to Climb 26 Years of Federal Spending?

Data is often difficult to comprehend, especially when the numbers are huge. As Sanjoy Mahajan points out, the $14.3 trillion national debt seems impossible to fathom. It’s not a numeracy problem; it’s more a question of how to divide the gigantic number into parcels we can understand. Mahajan suggests using smaller measures we can handle – namely thinking about debt in per capita terms.
Fortunately there are also some media tech folks to the rescue. This spring, two computer engineers from Minneapolis challenged designers and coders to come up with a visual program to help the public understand the U.S. federal budget. You can see the winners here. If you want a fun way to understand the cuts that Obama’s talking about, the game Budget Climb lets you physically experience 26 years of federal spending data in a virtual reality, interactive format.


How to Eat What You Kill

Life only tastes good when you eat what you kill. When you hustle for what you earn and someone pays you money in proportion to the service you’ve offered, the idea you’ve created, your ability to execute on it, and their ability to consume it in a way that benefits them.
Someone asked me the other day, “What does it mean when you say you ‘Eat what you kill’?”
It means that the greatest pleasure is going into the jungle and mastering the ability to hunt and survive without the help of masters who only pretend to guarantee our safety; i.e., bosses. Whether you’re an entrepreneur, an employee, a student, a homemaker, a writer — it’s time to start forgetting about all the ways the world has promised you safety and comfort.
Human knowledge has torn apart our families, our bank accounts, and lulled us into a creepy sense of Disney stability. A good friend of mine was just laid off from his job of ten years. He found out through an email and was asked not to come into work for the rest of the week and to clean out his desk when security came in on Saturday. All of that human knowledge in an email. Ten years of work. Time to cut costs. “What do I do now?” he asked me.


A Stack of Bills Reaching to the Moon: How to Quantify Our National Debt

Now that the U.S. national debt is in the headlines, the media is awash in astronomical numbers such as $14.3 trillion (the current debt). Everyone realizes that this number is incomprehensible. Even back in 1981, when the national debt was only about $1 trillion, the debt was still incomprehensible. Thus, speechwriters for Ronald Reagan created, or at least popularized, a widely used attempt to give it meaning. Speaking to Congress in February 1981, Reagan said:

A few weeks ago I called such a figure, a trillion dollars, incomprehensible, and I’ve been trying ever since to think of a way to illustrate how big a trillion really is. And the best I could come up with is that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high.

This comparison is often quoted as a stack of one-dollar bills 67,000 miles high (perhaps because thousand-dollar bills don’t exist). No matter which denomination you use, I give the explanation an A for effort, but an F for performance. For I have little idea of how far 67,000 miles is. I know it’s way too far to walk and even too far to fly (jumbo jets have a maximum range of around 7,000 miles). But is it large as a national debt? I have no idea. Perhaps a large national debt would reach all the way to Mars. The connection to a height has merely replaced one meaningless idea ($1 trillion) with another meaningless idea (a stack 67,000 miles high).


Want to Jump-Start the Housing Market? Get Rid of the Realtors!

Okay, okay, that’s not quite the message of a new working paper by Panle Jia Barwick and Parag A. Pathak called “The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston.” But for those of us who have thought about the Realtor’s role in the housing market, it’s tempting to jump to that conclusion. Here’s the full version of the study, and here’s the abstract:

This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.


With the NFL Lockout Just About Over, a Sports Economist Weighs In

If there was any doubt as to how valuable the NFL is, all you had to do was flip to ESPN on Thursday night. The cable network ran an hours-long, special lockout edition of SportsCenter following news that the owners approved a proposed collective-bargaining agreement. From a ratings standpoint, it probably wasn’t that hard a call: the prime-time program the network broke into was a softball game between the U.S. and Czech Republic, which got bumped to ESPN2.
The NFL players still have to ratify the deal, and have until next Tuesday to do so. If they sign, free agency and training camp would begin on July 27, not soon enough to salvage the Hall of Fame game. One clear loser in this whole lockout situation is the city of Canton, Ohio, which according to Fox Sports Midwest, will lose out on millions of dollars of economic impact. As I thought about the broader implications that the four-month lockout has had on the country’s most lucrative professional sports league (the NFL brings in $9 billion of annual revenue), I fired off some questions to sports economist Dave Berri, who was kind enough to offer some quick responses.


FREAK-est Links

The economics of law schools (now more expensive than 4 years of college), a fake Apple store in China, what Carmageddon taught us about behavioral economics, JSTOR hacker gets indicted on felony charges, and an insect that’s survived for a million years without sex.


"I Never Said Most of the Things I Said"

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.
BT asked:

“Yogi Berra has been quoted as having said, ‘I never said most of the things I said.’ Is this correct? How many of the famous quotations associated with him been incorrectly attributed to him?”


Do Results of Oregon's Medicaid Lottery Boost the Case for Obamacare?

One of the many debates over the new health care law is whether increased access to health insurance really improves the public’s overall health and financial security. Even though there are hundreds of studies comparing insured and uninsured groups of people, there’s nothing definitive so far that answers the question one way or the other. The problem is getting clean data which clearly demonstrates behavior before and after people have had access to health care, rather than comparing two separate groups of people.
But a new study by a group of economists and health care researchers may provide the first empirical evidence that shows expanding health care coverage to low-income individuals does result in better reported health, more preventative care, and improved financial well-being.


Advancements in Panhandling: Don't Forget to Feed the Meter

Back in 2006, I wrote a Newsweek article about the problems that warm-weather cities like Orlando and Las Vegas were having with their homeless populations, and the rather creative methods they were using to control them — namely banning public feedings and consigning all panhandling to 3-by-15-foot “panhandling zones” painted on sidewalks.
Turns out the solutions have only gotten more creative in the last few years. The newest innovation are “homeless meters,” repurposed parking meters — painted a different color and set back from the street — that people can deposit coins into rather than give spare change to panhandlers. Cities then donate the collected money to nonprofit groups, which in turn use the funds to buy things like bus tickets. Advocates say this cuts down on the abuse of funds, and ensures that donations are put to the best use.


Sensible Pricing at the Ballpark

When I was a kid, tickets for grandstand seats at Comiskey Park (where my team, the White Sox, used to play) cost the same regardless of who the opponent was (only 7 possible in those days), the time of day or day of week. At a recent Minnesota Twins game I learned that MLB has gotten smart, pricing differentially depending on the identity of the opponent and the date/time of the game.
For games in the same one-week period a home plate view grandstand seat in Target Field ranges from $36 to $45, with a higher price for night games, weekend games and, most important, for more attractive opponents (sadly, higher, other things equal, for the Red Sox than the White Sox). Probably aided by web technology, teams can do a better job of equilibrating demand and the (fixed) supply of seats, although the current price range and the partly-empty stadium in the game I saw (against the last-place Kansas City Royals) still doesn’t seem great enough to accomplish this completely.


Our Daily Bleg: What Economic Concepts Should Kids Know?

This bleg comes from reader Wayne Smith, who asks for suggestions on which economic concepts are the most important for kids to learn:

What topics do the Freakonomics readers feel are most important to teach kids 8-13 years old? Aside, of course, from the fact that the man keeps you down.
I was listening to The History of Sesame Street audio book the other day and thought that it would be nice to come up with a YouTube show with decent production value that outlines basic economic concepts in an entertaining way. Concepts like capital, value, supply/demand, trade, time value of money, interest, saving and borrowing, opportunity cost, taxation,and so on. This would be more narrative than something like Khan Academy. Naturally each concept can have an episode devoted to it and each concept can be addressed in different ways in different episodes, but in scenarios geared toward kids. What do the readers think about this as a concept?


Did Women's Lib Movement Increase Income Gap in the U.S.?

Reader Chris Fawcett writes in with an intriguing question: How did the women’s liberation movement affect the income gap in the U.S.?
Income inequality has been on the rise in the U.S. since the 1970s, roughly the same time that women began entering the workforce in large numbers. Considering the amount of attention the widening income gap gets these days as a source of our economic woes, it seemed like something worth posting.
Here’s how Chris sees the issue:

There are a number of ways I believe this has had a big impact (maybe the biggest impact of any single issue):
1. Women’s participation in the workplace has doubled in the past half century.
2. The divorce rate has increased steadily in the past half century.
3. It is more socially acceptable to not have children (through choice or abortion).
4. People are getting married later in life.
In relation to the commonly used CBO “household” income numbers, I think these issues may have had a huge effect on the perception of the widening income gap as follows:


Which City has the Most Dis-Honest Tea Drinkers?

According to an experiment by Honest Tea, it’s L.A.
The company has placed unattended racks of its cold bottled tea on street corners in a handful of cities. A sign asks people to pay $1 per bottle, a heavy discount already. Viewers then “watched people wrestle with their conscience.” Hidden cameras live-stream the action here.
So far, the citizens of Seattle are coming out as the most honest, with 97% of people paying. Atlanta, Boston, Dallas and Cincinnati are in second with 96%. L.A. is last with 87% — they were actually at 90% earlier today, but that fell as the day went on, and the temperature went up. Here are yesterday’s high temperatures for the handful of cities, in order of payment rates:


A Teaching Moment on Numeracy

It’s an embarrassing episode. The opening sentence of James B. Stewart’s Tangled Webs: How False Statements Are Undermining America is:
“We know how many murders are committed each year — 1,318,398 in 2009.”
But this is false. As Jeffrey Rosen notes in a savage New York Times review, there were 15,241 murders in 2009. The cited number isn’t just wrong, it’s wrong by two orders of magnitude. Where did the 1,318,398 come from? It’s the number of violent crimes, which includes robbery, rape and assault. And only a small proportion of all violent crimes — a little more than 1 in 100 — are murders.
And so this provides a useful teaching moment for thinking about numeracy. How can you avoid such errors?


Why Has There Been So Much Hacking Lately? Or Is It Just Reported More? A Freakonomics Quorum

You don’t have to be all that sharp to see that there’s a lot of hacking going on lately. As I type, Rupert Murdoch and his allies are testifying before British Parliament over the mushrooming News of the World disaster. It seems like everyone on earth is getting hacked: consultants and cops, Sony and the Senate, the IMF and Citi, and firms ranging from Lockheed Martin (China suspected) to Google (ditto) to dowdy old PBS. But is there really more hacking than usual of late, or are we just more observant?
To answer this question, we put together a Freakonomics Quorum of cyber-security and I.T. experts (see past Quorums here) and asked them the following:

Why has there been such a spike in hacking recently? Or is it merely a function of us paying closer attention and of institutions being more open about reporting security breaches?


What's a Good "Doomsday Currency"?

A reader named Marcus Kalka writes:

I have a weird question, but a good one. With all the talk about the value of the U.S. dollar falling and the U.S. dollar losing its status as the world’s reserve currency, I am curious to know your guys’ thoughts on what possible temporary alternative currency you believe would be the most optimal for us here in America in a hypothetical future doomsday scenario — i.e., what one should stock a lot of in his or her basement in the event of a [heaven forbid] total financial meltdown? Historically, cigarettes, alcohol, candy, and even packs of mackerel have been used as a bartering commodity currency where cash is not as useful or cannot be used. And so, my question for you is this: From an economic standpoint, which item do you think would make the most ideal “doomsday currency” in the U.S. for this time period? Perhaps cigarettes or wine? Gold or silver coins? Cans of tuna? Baseball cards? Bottles of water? Any thoughts? And any ideas on a potential makeshift currency sign?

Tough one. How about … gems (the old standby), cell phones, iPads, SIM cards, incandescent light bulbs, toolboxes, running shoes …


The Comparative Advantage Juice

We came close to overturning comparative advantage last night with our new juice-squeezer. Using it requires peeling the oranges, which involves rolling them around, making two circumferential cuts, and then stripping the flesh out. Only then can the flesh be thrown in the squeezer. After doing this together, my wife announced that I was so incompetent that the elapsed time in the first three steps would be less if she did everything and I watched. What she really meant was, “Daniel, your marginal productivity is very low! (But it wasn’t negative: I was able to put the oranges in the squeezer, but she could have done that too, and the “assembly line” would have moved faster.)
How many household production activities are there where even the second cook “spoils the broth”?


Our Daily Bleg: How to Fairly Divide an Estate?

A while back, we ran a bleg in which a reader needed help dividing up a loved one’s furniture and other property. Now a reader named M. writes with a trickier and more philosophical estate-dividing problem:

My grandmother is 93 and in decent health. She has 4 biological children, 10 grandchildren, 23 great-grandchildren and a great-great-grandchild is possible (the oldest great-grandchild is married.) She has a decent amount of assets; barring unforeseen circumstances her estate will be a few million dollars.
From the perspective of fairness, one might say the estate should be divided equally between the four children. From a purely biological perspective, an individual wants to see that his or her genetics be passed on to future generations. In our case, while one of the children produced two grandchildren who in turn have only one of the great-grandchildren, another child produced 5 grandchildren and they in turn 10 of the great-grandchildren.


A Corruption/Parking Tickets Map

Forbes‘s Jon Bruner has made a cool map of economists Raymond Fisman and Edward Miguel‘s paper “Cultures of Corruption: Evidence From Diplomatic Parking Tickets” (noted here earlier). The paper measured diplomats who used their immunity to dodge parking fines, resulting in a list of violations per U.N. diplomat. Kuwait tops the list at 246 violations per diplomat. The map is paired with corruption scores from Transparency International, Bruner notes:

Fisman and Miguel set out to use the parking data to understand the impact of social norms on official corruption. The idea is that diplomatic parking violations are essentially consequence free, except for any approbation that might come from the diplomat’s home state. A political culture that doesn’t mind its diplomats racking up parking tickets might not mind outright corruption.