Monday, August 31, 2009

Emptying the Bottle: August '09 Links List

1) Maybe conservatives should worship Truman, not Reagan.

2) What happens when "clunkers" are exchanged for cash.

3) Avalanches as weapons in WWI.

4) Art by the pros or done by 4-year-olds? You take the test.

5) “Pee in the shower! Save the Atlantic rain forest!”

6) 99 things you should have already experienced on the internet unless you're a loser or old.

7) Google Alerts, how am I just finding out about this?

8) Six Word Stories, exactly what it sounds like.

9) Government helps to end racism by paying interracial couples.

10) Were the bank bailouts a good idea? Yes, say libertarians Tyler Cowen and Megan McArdle.

Here are previous links lists and here are my daily Bookmarks.

Sunday, August 30, 2009

Economies of Praise

Most bloggers recognize the importance of the economies of words. Every extra word used takes value away from each individual word. Here's a great NPR interview pointed out by Justin Wehr on how this idea can be applied to how we deal with our children. You already know I am planning on having kids and that I have wishes for good parenting, so here is something I can apply to my future children and my current students:
Children today hear so much praise that they've decoded its real meaning. We're making a mistake in thinking that we can manipulate them without recognizing that manipulation is at hand. So, the research is clear that children only under the age of seven take praise at face value and after that period of time, they learn the pattern. Kids who are praised a lot are the kids who teachers and parents are worried about.
Kids become obsessed with looking good, not actually doing good. In the classroom
they tend to not want to take academic risks. And the worst consequence is that they make this conclusion: I should be getting by on my natural gifts, therefore, to show other kids I'm working hard, would be to broadcast that I'm not naturally smart. When, in fact, in real life you can't get anywhere without not just some intelligence, but also a lot effort and persistence.
I can personally identify with that situation. I remember in graduate school struggling to grasp the calculus of economics, all the while trying not to let on to the truth. Failure shouldn't be ignored, but instead be recognized as a reality of living life.

Saturday, August 29, 2009

Economics of Marrying for Money

Here's Tim Harford, author of the weekly column "Dear Economist" in the Financial Times. He's answering a mother's question about how much time her daughter should spend on education vs. looking good for a future rich husband:
Surprising as this may seem in the 21st century, your daughter’s strategy is not unusual. Evidence on speed-dating gathered by the economists Michèle Belot and Marco Francesconi shows that women are attracted by rich men, while men focus more on a woman’s physical appearance. Lena Edlund, another economist, has found that in the areas of her native Sweden where the wealthiest men live, women of prime marriageable age are over-represented.

However, your daughter is only 15; for Edlund, “prime marriageable age” is 25-44. Your daughter is either going to have to get her hooks into this chap unusually early, or she is going to have to keep him on the boil for another decade – a lot of nail-painting.

Not only is she concentrating her investments into a single asset by abandoning her education, but she may even be making her main goal harder to achieve. Belot and Francesconi discovered that a strong social trend towards “assortative mating” means that although educated, high-achieving men are not interested in marrying a rich woman, they do like educated high-achieving women, rather than shallow girls with shiny nails.

Your daughter should learn to work hard and look good at the same time. Not only will it advance her immediate goals, it will also – sadly – stand her in good stead for the rest of her life.
So this girl shouldn't just sit back and hope for missionary dating.

Wednesday, August 26, 2009

I Pledge of Allegiance to the Republic?

Students came back to school this week and in the public schools that means I will have to regularly observe the Pledge of Allegiance. Here's the Cato Institute's Gene Healy on the subject:
From its inception, in 1892, the Pledge has been a slavish ritual of devotion to the state, wholly inappropriate for a free people. It was written by Francis Bellamy, a Christian Socialist pushed out of his post as a Baptist minister for delivering pulpit-pounding sermons on such topics as "Jesus the Socialist." Bellamy was devoted to the ideas of his more-famous cousin Edward Bellamy, author of the 1888 utopian novel Looking Backward. Looking Backward describes the future United States as a regimented worker's paradise where everyone has equal incomes, and men are drafted into the country's "industrial army" at the age of 21, serving in the jobs assigned them by the state.
I pledge allegience to my loved ones, and to my God, but not to my government.

Tuesday, August 25, 2009

Most Dangerous Activity

What is your most dangerous activity? For most of us it's either eat fast food or drive a car. Since I'm not really looking to eat much healthier, at least at this age, l'll focus on driving. Although automobile deaths are actually decreasing (probably due to safer cars), there were still 42,636 people killed in 2005. That's twice the population of the town I grew up in. It is the number one reason for death in people ages 1-34. That includes me, so let's take a look at the details:
Nationwide, 49% of fatal crashes happen at night, with a fatality rate per mile of travel about three times as high as daytime hours.
Probably a combination of fatigue and alcohol. The fewest deaths
happened early in the morning, between 4 a.m. and 5 a.m. Those hours see significantly less traffic--only 9% of the average amount during peak hours.

Mid-week days like Tuesday and Wednesday also pose the lowest number of fatalities, both averaging fewer drivers
fatalities actually drop across the nation during days with high amounts of snow, both because more people stay at home and because they tend to drive slower under inclement weather
I guess the best time to get groceries is at 4am on a Tuesday during a snow storm.

Monday, August 24, 2009

A New Generation of Men

After thinking through my imaginary Wife Swap family, I realized something: the husband of my bizarro family would look a lot like the typical husband of my father's generation. Recently my wife went to a woman's bible study where they discussed the problems they had connecting to their husbands. He's "not relational", "too independent", "not talkative", "private" or (brace yourself) "simple". As I was thinking through these ideas I realized that men have changed. Just like our fathers aren't the same as their "greatest generation" fathers, I'm not the same as my "baby boom" father. I'm very intensely relational and publicly introspective. My generation, with our Facebook, Twitter, and blogs are unbelievably open. There's also a different perspective on jobs. I have 11 jobs (fastfood, waiter, sound technician, cashier, desk clerk, freshmen mentor, athelete tutor, bartender disablity servies graduate assistant, substitute teacher, and now high school teacher) and I'm only 24. I've even seen my peers less focused on income, and more focused on leisure. I personally wouldn't care if my wife made more than me. Speaking of, congratulations to my wife Traci on a well deserved promotion!

Sunday, August 23, 2009

Eight Economic Costs of Government Spending

Everyone, from the right and the left, recognizes that government spending may hurt economic growth. Here are the reasons why (in my own words from this Cato Institute video):

1) Extraction Costs: There are three ways for the government to get money. All have adverse effects on citizens:
  • taxes: any government spending is taken from consumer spending (not even counting the costs of getting it= bureaucracy & accountants)
  • borrowing: there is a finite amount of money to be loaned and any money loans to the government (through bonds) is money not invested in private industries (through stocks)
  • printing money: leads to inflation (essentially a tax) and too much can lead to disaster (Zimbabwe)
2) Displacement Cost: An extension of the first idea in that the money is now taken from the private sector is used in the public sector. Most people/businesses/charities agree that they know how to spend their money better than most politicians. This goes for money spent on capital (every bridge to nowhere is one private nuclear power plant not built) to labor. The hiring of political advisers, government bureaucrats or executive czars takes our most productive members of society out of their respective places. From Timothy Geithner to Obama himself, these are all smart people who spend their time arguing at town hall meetings. Not to discount the importance of their jobs, but the more important government jobs their are, the less skilled private workforce we have.

3) Negative Multiplier Cost: Sometimes government spending is directly harmful. For example many regulatory agencies have small budgets, but impose huge costs on the private sector. I see this in the time I spend meeting government requirements for teachers. Not to say all regulations are bad, but undoubtedly regulation decreases output per dollar.

4) Behavioral Subsidy Cost: Many government programs encourage undesirable decisions. Welfare encourages encourages leisure over work. Home loan subsidies encourages consumer debt. Unemployment insurance encourages, well unemployment. Because wealth is determined by productivity, these policies shrink the economic pie.

5) Behavior Penalty Cost: This is the flip side of the last one. Government not only encourages bad behaviors, but it discourages good ones. Although tariffs are historically low, there are still laws that limit American citizens from buying the products that they want. Even cash for clunkers, which I discussed earlier, encouraged the purchase of new cars (within a certain time limit making saving for the purchase difficult) and will in the long run increase the cost of used cars (mostly purchased by the poor).

6) Market Distortion Cost: Government interference blinds consumers to real prices. For example in health care, also discussed earlier, because of government subsidies and the encouragement of employer provided insurance, consumers rarely pay the full price for care and in turn purchase too much. The same is probably true for education.

7) Inefficiency Cost: The industries that the government directly runs (Post Office, education, etc) could be run by private industries more efficiently. This is probably where the heart of the debate lies. Exactly how inefficient government run businesses are is hard to measure.

8) Stagnation Cost: Lack of "what would have been" in innovation. Without competition and a motive for profit, government run businesses have no incentive to improve. When I can get a banana from Costa Rica for less than it costs to send a letter to my neighbor, you know something is wrong.

However, do not think that I don't want government to do anything. I want it do to less sure, but I still need it to do the one thing that no business can do, enforce and protect property rights. The limited amount of the things I would like my government to do can be traced back to property rights. Here's what I mean:
  • federal, state, and local military protects my life, liberty, and property
  • protection under the law from violent crimes against my life, liberty and property
  • enforcement of contracts on behalf of my life, liberty and property
This is not what the government of the United States of America looks like (and despite the rhetoric not what it looked like in the late 1700's). And as long as I am on the political fringe, there is little chance it will ever be what I want it to.

Saturday, August 22, 2009

Thinking About Thinking About Zombies

I have given my response to a zombie attack quite a bit a thought. Through the years I've realized I'm not the only one. I'm one of over 70,000 members of the Facebook group "The Hardest Part of a Zombie Apocalypse Will be Pretending I'm Not Excited" (one of only a few groups I grace my presence with). So you might ask: why would people think so much about something so unlikely? Well first, the possible costs are high. If you are caught unprepared, you'll be another unnamed screaming victim in the background one of many zombie movies. However, if you have given it proper consideration, you may survive. That, I believe, is why people give zombies more thought than other horror creatures. If you are attacked by vampires, werewolves, poltergeists, aliens, or any other supernatural beast, the best you can do is try to follow the "rules" of surviving scary movies. Zombies, on the other hand, are beat by good planning, a good wall, and a good blow to the brain. As strange as this post admittedly is, it's not like I wrote a Mathematical Modeling of an Outbreak of Zombie Infection:
Zombies are a popular figure in pop culture/entertainment and they are usually portrayed as being brought about through an outbreak or epidemic. Consequently, we model a zombie attack, using biological assumptions based on popular zombie movies. We introduce a basic model for zombie infection, determine equilibria and their stability, and illustrate the outcome with numerical solutions. We then refine the model to introduce a latent period of zombification, whereby humans are infected, but not infectious, before becoming undead. We then modify the model to include the effects of possible quarantine or a cure. Finally, we examine the impact of regular, impulsive reductions in the number of zombies and derive conditions under which eradication can occur. We show that only quick, aggressive attacks can stave off the doomsday scenario: the collapse of society as zombies overtake us all.
So to summarize: an outbreak will be disastrous, unless there is a quick, well planned attack. So keep your shotgun close and I'll see you in the designated safe zone (mine is the nearest Super Walmart).

Friday, August 21, 2009

Economics of Being Hugh Hefner's Girlfriend

From the perspective of a former girlfriend (and before that former law student):
Being a Hefner Girlfriend was a specialised job, not to be confused with being a Playboy Playmate. In fact, Girlfriends were not allowed to become Playmates because Hef had found that they tended to flee the Mansion as soon as they collected their $25,000 Playmate cheque. Girlfriends were given their own bedroom, an allowance of $1,000 a week in cash, a new car, free dental and medical treatment, almost limitless clothes, hairdos, make-up and facials and all the cosmetic surgery they could wish for – Izabella reckons Hef shelled out $70,000 a year on breast implants.
I would not have imagined it would be so, well professional. Like say, the oldest profession?
And then, of course, there was the sex – though surprisingly little of it according to Izabella. She reckons she had “less than 15 intimate minutes” with Hef in her two-and-a-half years at the Mansion – “I may as well have lived in a convent.” His main Girlfriend, Holly, shared his bedroom and presumably took care of his quotidian sexual needs – but Wednesdays and Fridays were Sex Nights when all the Girlfriends were expected to be on bedroom duty – though it was up to them whether they participated.
I mean this to empower, not to degrade: how is this not prostitution?

Wednesday, August 19, 2009

A Little Art For Thought

That's from Willard Wigan, the Mirco Sculptor. See, I do appreciate some art!

Tuesday, August 18, 2009

Five Factor Model of Personality Test

Although I'm a big fan of Myers-Briggs, I have heard of the Five Factor Model of Personality. So I took the test and here are my results:
This trait reflects preference for, and behavior in, social situations. People high in extraversion are energetic and seek out the company of others. Low scorers (introverts) tend to be more quiet and reserved. Compared to other people who have taken this test, your score on this dimension (40) is relatively high.

This trait reflects how we tend to interact with others. People high in agreeableness tend to be trusting, friendly and cooperative. Low scorers tend to be more aggressive and less cooperative. Compared to other people who have taken this test, your score on this dimension (19) is relatively low.

This trait reflects how organized and persistent we are in pursuing our goals. High scorers are methodical, well organized and dutiful. Low scorers are less careful, less focused and more likely to be distracted from tasks. Compared to other people who have taken this test, your score on this dimension (21) is relatively low.

This trait reflects the tendency to experience negative thoughts and feelings. High scorers are prone to insecurity and emotional distress. Low scorers tend to be more relaxed, less emotional and less prone to distress. Compared to other people who have taken this test, your score on this dimension (11) is relatively low.

This trait reflects 'open-mindedness' and interest in culture. High scorers tend to be imaginative, creative, and to seek out cultural and educational experiences. Low scorers are more down-to-earth, less interested in art and more practical in nature. Compared to other people who have taken this test, your score on this dimension (24) is about average.
Extraversion should be no surprise. I didn't really get Agreeableness, after all I love people. But then I remembered how little I liked group work and how I am always trying to figure out what people are "actually thinking". My low score on Conscientiousness is part of the reason why I started this blog. I have a goal of learning, but it is hard for me to get motivated to read. So I use my Extraversion and desire to teach people as motivation to organize my thoughts. As for Neuroticism, well if you've met me I'm pretty laid back. Openess also threw me for a loop at first. Then I remembered my recent trip to D.C. I loved going to see the Washington Improv Theater, but was quickly bored at the American History Museum (and I teach US History). I guess it depends on the cultural experience.

Monday, August 17, 2009

Thoughts on Health Care Reform

Everyone wants health care reform, the debate lies in what kind. Since there is currently no exact plan proposed and because this issue is fairly complex, I'll leave it to a collection of 20 ideas I’ve been considering that I think you should too:

1) First, we need to understand the purpose of insurance. Whether it's health insurance, car insurance, or life insurance, the purpose of these are to pool risk as a safety net to pay for catastrophic events. The hope is that you never need to use them, but if you do, your family isn't bankrupted by a single event. Health insurance does not exist so I can get a $100 discount on eye glasses. It exists to so I can get a $100,000 cancer treatment. This seems to work in the car insurance industry. Sure they don't give me a discount on oil changes, but they do repair my car if someone damages it. One reason health insurance isn't like car insurance is the over 2,000 government mandates that add between 20-50$ to the cost of premiums. If consumers bore the full burden of non-catastrophic care, they would be less susceptible to the moral hazards of health care (another example with some teeth).

2) Although I do want changes to the current system, I want it done slowly and with transparency. That is hard to do when activists portray our current system as hopeless. America's health care system isn't the best, but it's far from the worst. Some things that are not taken into account is how we live. I, and my fellow Americans, eat meaty, salty, fatty and delicious food with very little exercise (many walk less than an hour a week). Another reason why our care seems worse than it actually is, is measurement. If you simply measure life expectancy from birth to death America looks bad. However, the US does well for cancer, heart attacks, and strokes. In fact, life expectancy when you're older is than in those in Europe.

3) One of the most common problems discussed is the long waits for care (people wait more than 18 weeks for treatment in the U.K.). Don't get me wrong, waiting over 4 months for treatment is not ideal, but it is necessary with heavily subsidized care. As the price moves closer to zero, people will demand more care. Everyone cannot get all the care they want (unlimited wants > limited resources), so it must be rationed. One way is to get people to wait in line, thereby increasing the opportunity cost. You have to ration care, whether it's with lines or by denying services. I think the best way is the way we ration everything from food, furniture and cell phones, with price.

4) Rationing with price does not mean we keep things the way they are now, because we do not have a free market health care system. The government already covers a third of Americans through Medicare (elderly) and Medicaid (children/poor). That's not even counting paying for the uninsured through subsidized emergency care. The government is also in charge of medical licensing and it restricts out of state insurance purchases (limiting competition). In some ways these increasing costs are good, it's why we are living longer, healthier lives then ever before. However, rationing with price has become harder in the last couple decades as costs have increased.

5) So then the question must be asked, why are costs going up? Costs in health care are increasing because we are buying more care and better care. Much like the market for animal health care, increases in quality and income have increased costs. America's cost is increasing right along with the industrialized nations of Europe. When trying to bring down health care costs, government must be sure it isn't also bringing down quality.

6) Here are some simple examples of free market health care bringing costs down:
7) One of the main questions that needs to be answered is what makes the market for health care different than the market for shoes? The only answer I could think of is a gap between producer knowledge and consumer knowledge. Buyers of health care aren't experts and have to take their doctors advice. However, other complex products like houses, colleges, are designer clothes don't seem broken. Maybe that's why we have realtors, guidance couselors, and wives. Good thing for us, there are now private businesses that assist as health care advocates.

8) However, advocates are rare, and not all complicated products are profitable enough to support an assistant. This is where good old fashioned reputations become important. Take my mechanic for example. When I first moved to NC I asked around in search of a good car repair shop. I know close to nothing about cars, and need to be able to trust that I'm not getting ripped off. I was given a couple of names, read reviews online, and tried out some myself. I now have a great mechanic that I trust to do what they can for a competitive price. There is no reason to believe competition won't work in this same way for health care and insurance. Admittedly there are still huge gaps in information, which explains why Arby's still exists, but for the most part bad doctors fail and good doctors flourish, thereby encouraging all doctors to be good.

9) Competition, in theory, will force businesses to provide the best product they can at the best price. Then why, in practice, does the medical industry seem to fall short? The market failure we see is really government failure (see my comments on this blog post). Most of the complaints about our current health care system can be dealt with by improving our legal system. Flagrant law suits can be reigned in by tort reform. Bad doctors can be replaced by not limiting the number of doctors, and rescission (unmaking of a contract between parties) can be eliminated by better enforcement of agreements. There is one major reform that deserves its own number.

10) Even though it's how a majority of Americans get health insurance, it does not need to be connected to their job. The only reason they are tied together is a fluke of history. During WWII the government put a wage ceiling on how much people could get paid, so businesses began to offer employer-paid health care as a way entice workers. Now, we only pay 14% of health care costs directly, so we rarely know what the real price is. How can businesses ration on price when consumers don't even know what they are? Also, if you lose your job, you lose your health insurance. Remove the tax exemption for businesses to buy health insurance and give it to individuals.

11) The main losers in our current system are the uninsured. Whether they are unemployed, self-employed, or employed without insurance, these 45.7 million people that are at most risk. But who are the uninsured? Here are some stats:
  • 26% of the uninsured are eligible for some public coverage
  • 21% of the uninsured are immigrants
  • 20% of the uninsured have family incomes greater than $75,000 (more than me)
  • 40% of the uninsured are young
Although I don't think it's totally fair, this cartoon helps put this crisis in perspective. It's also worth noting that the uninsured are only slightly less healthy than the insured, which means they are still insurable.

12) Unintended consequences are also important, here are a couple of examples:
  • more regulation would increase costs and lead to less people with insurance
  • to it's going to be very expensive and we don't have a lot of extra government funds
  • the amazing, but currently unknown improvements in health care that would be developed for profit (most medical advances come from America's "broken" system)
13) Unlucky number so we won't put one here (actually my html messed up and somehow deleted parts of my post and I can't remember what this one was).

14) You cannot pass laws that ignore pre-existing conditions. It's a cost and businesses have to know what their costs are. Imagine trying to buy a warranty for a broken TV. These evil profit mongering businesses aren't evil (well I guess that's up to you) or really that profitable (health insurance industry ranks 86th in profit margin).

15) Speaking of evil, opponents need to stop demonizing health care reformers. It's just distracting from real complaints. Sadly, the debate over this issue has only increased my desire for more politcal apathy among the masses.

16) Profit is still the best motivator for giving consumers what they want. Denying services promised is an issue, but one that should be dealt with tort reform. However, refusal of treatment isn't always a bad thing. It is possible that the cost of treatment is too high when compared to the likelihood of help it would do. If not I'd get screened for skin cancer weekly. Again, we have to ration health care somehow and transparency is key.

17) Central to this debate is the something I mentioned last month, who do you fear: government intervention or unchecked businesses? The information is so massive, it's helpful to think generally about which will deliver better options.

18) Another argument I've heard in favor of more government intervention is from the documentary Sicko. Michael Moore takes a group of Americans over to Cuba for cheaper care. Yes, drugs may be cheaper overseas, but that's just price discrimination, something that happens at the movie theater all the time.

19) And now a personal complaint. If, in you opinion, you think everyone deserves health insurance from their government, then know you are forcing fellow citizens (with the threat of jail time) to support it as well. If you don't want to live in a world where Americans don't have health insurance, this is the only way to do it.

20) When I started this post (I wasn't expecting it to be so long either), it seemed Obama's plan would be pass. On July 26th Intrade, an online prediction market (earlier), gave the public plan over a 45% chance of passing. Today it's below 15%. However this is not a victory for anyone. Like I said in the beginning, everyone wants some kind of health care reform.

Conclusion: I want a consumer driven market just like I do for all markets. I want citizens to save and buy the health care they can afford, and in extreme situations have health insurance.

Sunday, August 16, 2009

My Wife Swap Family

My wife and I love to watch the television show Wife Swap. It involves two families on different ends of the spectrum, thrown together for two weeks. There have been atheists with baptists, messy with OCD, and soccer moms with party moms. So it got me thinking, what would my bizarro family look like? I thought of three things:

1) They would be extremely hard working. I have been surprisingly satisfied with sleeping and blogging over my summer break. Although I work pretty hard during the school year (I'm a new teacher) I can consume leisure like the best of them.

2) They would be very non-confrontational. There is regularly a heated discussion in my house. Usually incited by me and wisely ended by my wife. I find it very hard to keep quiet when I disagree with someone.

3) And lastly they would have a lot of responsibility. I am very particular with what I give my time to. Although I stay pretty busy (teaching, reading, blogging, improv) most of it is personal consumption.

Though one thing I have learned watching the show is that if you are ever asked to be it you are probably pretty crazy. So you should say no and go straight to the counseling. So I'm wondering, what would your Wife Swap family look like?

Saturday, August 15, 2009

Named My Tale

I saw the folks from Name Your Tale on The Talk Show a while back. I submitted my title and they gave me this 100 word story:
So Funny I’m Jealous I Didn’t Say It

A party.

“What is he trying to do with that outfit?” Sarah asked Roy. Roy was deep in whiskey and clever as a fifth grade joke. The two of them were making fun of people.

“He’s trying out for an ugly competition,” Roy said and knew it was horrible.

“Dude looks like a virus with pants,” Sarah said. “Dude looks like a STD in a sports jacket!”

And, in the bathroom, Roy wrote it down on toilet paper. A STD in a sports jacket. He would use that later, in front of Sarah, by accident, and they’d stop being friends.
Submit your own and you'll get an email you when they post it.

Friday, August 14, 2009

Economics of Saying Crazy Shit on TV

Some of the nation's biggest advertisers are distancing themselves from Fox News host Glenn Beck after he called President Obama a racist during a July 28 broadcast. Geico has pulled its ads from Fox News Channel's "The Glenn Beck Program.", which is owned by LexisNexis, also has vowed not to advertise during the program
This is some proof that 24 hour news stations, no matter how bad they get, are still subject to market forces. If you want better news, demand it.

Thursday, August 13, 2009

How Reading Should Be

I'm not a veteran reader. I probably read 10 times more books my first year at Clemson, than I had I had up to that point. As a social science emphasis I read a lot, but none for pleasure. I didn't read news regularly until my wife's grandfather bought me a subscription to the Economist right before grad school . But it wasn't until I started blogging that reading for pleasure was a daily activity. Since then, I've read more online in the last two years than in my life prior. I think it's because the internet was made for consumption. If you find something interesting you read it. If something more interesting is referenced in the article you click on it. It's like following Alice down the most interesting rabbit hole. Unlike books which sometimes make me feel trapped, the internet is flexible. It's even inspired me to increase my reading speed (clocked at 210 per minute). So am I doomed to book phobia? Not if I use the same "enjoy or ditch" system with books, as Tyler Cowen proposes. Or even better, maybe the next generation of Kindles will make books so cheap and easy we'll flip through them like TV channels. We may even see bookshelves go the way of CD racks. Although that's unlikely, I do have one unread copy of Cowen's Discover Your Inner Economist on my shelf, and no unread Marginal Revolution posts.

Update: Commenter Kev sends me a link that suggests it's the journey, not the information that we love. Either way I love it.

Wednesday, August 12, 2009

Economics According to Kids

This week I'm teaching a DSI summer camp for 7-9 year olds. It's been fun and I've learned more about teaching improv. But today I got a lesson in kid-onomics. At snack time you can either bring your own or buy one at the concession stand. So one of my kids asked me this:
Is there a place where we can get money?
And here is some kid's ideas from the stand up class taught by @GregBrainos:

Tuesday, August 11, 2009

Efficient Income-ish Tax

My main problem with the income tax is not its "fairness", because we all have different understandings of what that word means. I don't like taxing income because it discourages something that is inherently good, work. Could you imagine putting extra taxes on green technology, healthy food, or charity? I do understand, though I may not agree with, people's desire for a more progressive tax system. Now if only there was a way to tax the rich at a higher rate without taxing them for being rich! Well according to economist Greg Mankiw, a 6-foot American earns $5,525 more a similar worker 7 inches shorter. Some possible explanations include self-esteem or better nutrition, but either way this could collect the needed tax dollars "fairly" without encouraging people to work less. Is taxing someone's height more absurd than taxing how much they work, how much they drive, or how much they smoke?

Monday, August 10, 2009

Debunking Cash for Clunkers

At first I didn't see this issue worth discussing, but then the government appropriated another $2 billion. First off, the idea of destroying useful products as means to make a nation wealthier is pure nonsense. It didn't work for agriculture in the 1930's and it won't work now. It's also not much of an improvement for the environment. BusinessWeek estimates that there is only a "reduction of only 0.04%" of gallons used (not counting an expected increase in miles driven due to better gas mileage or even fun new car). It's also not accounting for the energy used to junk the old cars and make the new ones.

Forget about the dangers of increased driving and increased consumer debt, what frustrates me most is that there is a simpler, more efficient solution. Even though I commute 1 hour and 1/2 a day to work, I support increasing the gas tax a way to improve emissions, traffic and safety. It is more efficient (demand for gas is fairly inelastic), more equitable, and it's simpler (compared to a 4 month program that ran out of money in a week).

This programs exists not because politicians are irrational, but because voters are. As a teacher, I think voter education is the solution. Too bad my AP Econ class got cut in the slimming budget.

Derrick Comedy Presents: Mystery Team

Here is a short film from my favorite sketch group Derrick Comedy. It's based on the full length movie going nationwide in October:

Sunday, August 09, 2009

Invest in a Student

One of many mental posts that never made it to print was my consideration of whether government low interest college loans were a good thing or not. Although I was a recipient, I'm weary of saying that subsidizing college attendance is the job of government. So, if I got my wish and dropped government student aid, how would I have paid for school (I do have six siblings and a taste for summer school)? What if a market for investing in college students was created? Imagine an investor reading profiles of students (GPA, clubs, jobs interests, etc) and deciding to give them $ in exchange for % of their future earning for a # years. This could be the great equalizer. A poor minority who shows promise could raise enough capital to go to school anywhere.

Then I heard about Monotizing Emma:
The year is 2013 and boutique investment bank Thackeray Walsh is arranging the first-ever securitization of smart teenagers.Nothing like the insanely convoluted securities that brought the global economy to its knees in 2008-2009, this bond is backed by something far more valuable than sub-prime mortgages or toxic assets.It’s backed by an A-list pool of adolescents pledging their future earnings. They get money now in return for a share of their subsequent income.
Should of copyrighted it when I had the chance. Well this just a play, surely this can't exist in real life. Think again:
Students and alumni connect through UniThrive’s online community. Alumni search for students they want to lend to. Alumni pledge as much or as little money as they are willing. At 0% interest, these loans represent the best offering in the student loan market. Students form lasting relationships with their alumni lenders. Alumni can put a face to their contribution. Students pay back the loans after graduation.
So it's a non-profit now, but there's no reason this same idea can't work with positive interest rates. But who would want to invest in students? How about me? Not just because I'm some delusional free marketeer, but because I'm a teacher. Who has better information on these investments than educators. Heck, this could even be a form of incentive pay for teachers:
What if teachers were paid based on the future income their students make. For example, student A grows up to make 100k a year. We look at the records and find the 20 teachers that taught student A and compensate them based on that. Compensation could be based on number of months spent with student.

Saturday, August 08, 2009

100 Things Your Kids May Never Know About

Here are my favorites from this Wired article:
  • Scanning the radio dial and hearing static between stations
  • 3-D movies meaning red-and-green glasses
  • Watching TV when the networks say you should
  • Blowing the dust out of a NES cartridge in the hopes that it’ll load this time
  • Having to delete something to make room on your hard drive
  • Recording a song in a studio
  • Newspapers and magazines made from dead trees
  • Not knowing exactly what all of your friends are doing and thinking at every moment
  • Pay phones
  • Remembering someone’s phone number
  • Actually going down to a Blockbuster store to rent a movie
  • Neat handwriting
  • Swimming pools with diving boards
  • Having to manually unlock a car door
  • Writing a check

Friday, August 07, 2009

Education as a Placebo

Here's a terrifying conclusion from blogger Ben Casnocha:

At graduation, you walk off the campus toting the armor of self-confidence that comes from being told you are now "an educated adult." Self-confidence is extremely important.

Perhaps at some point it doesn't matter what actually happens during those four years; if the song-and-dance is elaborate enough, you will be convinced that education happened, and you will carry intellectual self-confidence with you into the world.

Does this phenomenon sound familiar?

If you want your headache to go away, it doesn't matter if you take real Advil or just something that looks and tastes like Advil -- the outcome is the same. The Placebo effect works. Why doesn't the same hold true for education?

In his new book, which I review here, Tyler Cowen writes:

Placebo effects can be very powerful and many supposedly effective medicines do not in fact outperform the placebo. The sorry truth is that no one has compared modern education to a placebo. What if we just gave people lots of face-to-face contact and told them they were being educated?

He reluctantly provides the terrifying conclusion: Maybe that's what current methods of education already consist of.

Thursday, August 06, 2009

Wait Until You're Married, But Not Too Long

From my favorite woman on the web, Penelope Trunk:
one of the most dramatic issues facing Generation X is infertility. No generation of women has had more trouble with fertility than this generation, who received the terrible baby boomer advice, "Wait. You have time. Focus on your career first."
When I tell people my wife and I are thinking about kids in the next couple of years I rarely get a positive reaction. I'm not saying kids are for everyone, but if you want them, timing is something to think about:
There is plenty of evidence to show that the quality of your eggs takes a nose dive at age 35. And about 20 percent of pregnancies end in miscarriage, which means you have almost a 50 percent chance of having to go through three pregnancies to have two children. And it's recommended that you breast feed, which decreases your ability to get pregnant, at least while you're breast feeding. So be realistic: You can't count on getting pregnant three times in three years. You can't control fertility. Waiting until your midthirties to start a family, if you want to carry the babies yourself, is a risky endeavor. Which means, of course, you probably want to find a partner by the time you're 30.
I've been surprised that so many of my married and unmarried peers have no imminent plans for children. This worries me for two reasons, societal problems and personal benefits. With most of the industrialized world under replacement and the rest of the world industrializing I see underpopulation as a future problem. However my main fear is people not realizing the personal benefits for having kids (or selfish reasons as stated by Bryan Caplan). Although children probably have a short term (20 years) negative effect on happiness for parents, the long term benefits are most likely positive. A 2003 Gallup study finds that 2/3 of childless people over 40 wish they had kids. I bet people with children don't regret their decisions that much.

If you don't want children then don't feel pressured into having them. People who don't want to have children know their own preferences much better than I do. However, if you do want children, especially multiple children, there is a time table. Careers can happen when you're 50, children cannot. And remember there are ways to make the hardships of parenting less hard. Finally, let me say that I cannot imagine the heartbreak of struggling to have children. It is because of those stories that I want to encourage those of us that can and want to, to have kids.

Wednesday, August 05, 2009

The Queen Asked: Why Did Economists Fail to Predict the Crisis?

British economists gave her a three page answer. The Guardian wants to see if its readers can answer it in three sentences. Here's my attempt:

Predictable financial crises do not occur because it is profitable for private businesses to act on any information that may lead to a financial crises. Whether it's recognizing there is a surplus of housing or that borrowers and lenders are overburdened, the lack of information is what caused today's problems. Governments can remove the uncertainty they bring and economists can improve their ability to predict market crises, but then again if they did prevent anything you would never notice.

Tuesday, August 04, 2009

5 Sets of 10 Facts

10 Outrageous Facts About the Income Tax, from the Cato Institute:
  • The U.S. "tax army" is bigger than the U.S. army in Iraq.
  • With the number of tax forms going from 402 to 526 in 12 years, there's almost a tax form for each special interest.
  • Double-tax on dividends: 60 years and still not fixed.
  • Congress promotes discrimination through the tax code.
  • Congress' talk without action is to blame for the tax complexity.
  • the alternative minimum tax designed to catch 155 taxpayers 40 years ago will soon catch 37 million.
  • Even though the Treasury calls it "our voluntary tax system", it's clearly not.
  • Congress can't figure out how to measure "income."
  • Family saving shouldn't require an advanced math degree.
  • Income taxes were a bad (unconstitutional) idea that got worse.
The Top 10 Interesting Facts about Dating & Marriage, from a professor of psychology at the University of Michigan
  • The divorce rate among couples where the woman makes more than the man is 50% higher than among couples in which the husband earns more.
  • There are 25,000 to 35,000 polygynous (more than one wife) marriages in the U.S., mostly in western states.
  • The #1 cause of divorce worldwide is infidelity
  • The #2 cause of divorce worldwide is infertility.
  • The #3 cause of divorce worldwide is unkindness.
  • Worldwide, wives who are less than 20 years old are more than twice as likely as women who are more than 20 to be killed by a husband in a jealous rage, regardless of the age of the husband.
  • 33% of women who have extramarital affairs consider their marriages to be happy, while 56% of men do.
  • Worldwide, women prefer to marry men who are older than they are and vice versa.
  • For the lifetime, men on average would like to have 18 sex partners, and women, 4 or 5.
  • Remarriage after death or divorce? In the US, 76% of women aged 14-19 remarry; 56% of women aged 30-39; 32% of women aged 40-49; and 12% of women aged 50-75.
10 Myths in America, from The Futurist Blog:
  • School Teachers are Underpaid in America
  • Women Earn Less than Men in America
  • Whites Prevent 'Minorities' from Achieving Economic Parity
  • Healthy Foods are Expensive, and Unhealthy Foods are Cheap
  • America's Foreign Policy is the Reason for the 9/11 Attacks
  • Leftists are 'Liberal' and 'Progressive'
  • Republicans are Less Intelligent than Democrats
  • Democrats Have a Better Record on Racism than Republicans
  • Houses Always Rise in Value
  • High Oil Prices Will Create Permanent Long-Term Poverty
Top 10 Reasons Why The BMI Is Bogus, from NPR (HT to Justin Scott)
  • The creator of the BMI (200 years ago) said explicitly that it could not and should not be used to indicate the level of fatness in an individual.
  • It is scientifically nonsensical: There is no reason to square a person's height or ignore waist size.
  • It makes no allowance for the relative proportions of bone, muscle and fat in the body.
  • It gets the logic wrong by assuming its measure is correct.
  • It's bad statistics because averages measure entire populations and often don't apply to individuals.
  • Because the BMI is a single number between 1 and 100 (like a percentage) that comes from a mathematical formula, it carries an air of scientific authority.
  • It suggests there are distinct categories of underweight, ideal, overweight and obese, with sharp boundaries that hinge on a decimal place.
  • Insurance companies sometimes charge higher premiums for people with a high BMI. Among such people are all those fit individuals with good bone and muscle and little fat, who will live long, healthy lives.
  • Reliance on the BMI means doctors don't feel the need to use one of the more scientifically sound methods.
  • It is embarrassing for one of the most advanced nations in the world to base advice on how to prevent one of the leading causes of poor health and premature death on such a bad measure.
Top 10 Amazing Facts About Dreams, from Listverse:
  • People who become blind after birth can see images in their dreams, but those born blind do not.
  • You forget 90% of your dreams
  • Everyone dreams (except in cases of extreme psychological disorder) but men and women have different dreams and different physical reactions.
  • Dreams prevent psychosis
  • We only dream of what we know
  • 12% of people dream exclusively in black and white
  • Dreams are not about what they are about.
  • People who quit smoking have more vivid dreams
  • External stimuli invade our dreams
  • You are paralyzed while you sleep
*I don't necessarily agree with everything said, but found it all very interesting. Also, take into account who created the lists.

Monday, August 03, 2009

Why I'll Be a Good Teacher and Improviser

Here's a from a local economics blog by Justin Wehr:
Unless a person wants to pursue the difficult path that leads to the development of talent, neither innate potential nor all the knowledge in the world will suffice.
Not only do I like teaching, I like learning. Not only do I like performing, I like practicing.

Sunday, August 02, 2009

Good News for a Change

If you watch the news, read the news, or listen to the news, you probably hear a lot of bad news. In fact I've heard a lot of complaints (and would love to see some data on it) that this trend has been going strong for the last couple of decades. So here is some good news to balance it out:

1) The average years in retirement has gone from 0 in 1950 to 13.5 in 2005.

2) Time spent with their kids has been increasing since the mid-90's. This may be partially responsible for increasing IQ about 3 points per decade for the past century.

3) Americans spent over 20% of their disposable income on food in the 1930s and 1940s. Now we spend just 9.6%.

4) Large scale war may be over.

5) The US economy has never been so competitive. Meaning large companies have never had so little power.

Saturday, August 01, 2009

God and Social Studies

A recent study from the University of Michigan:
Being a humanities or a social science major has a statistically significant negative effect on religiosity -- measured by either religious attendance and how important students consider the importance of religion in their lives. The impact appears to be strongest in the social sciences.
Not all have a negative effect:
Students in education and business show an increase in religiosity over their time at college.
As a Social Studies Education major at Clemson University, a school with above average religious attendance, I noticed this difference within the departments. I wonder if it's the old divide between what explains human behavior, science or scripture. I've never understood that debate since I think both are valuable.