Monday, January 31, 2011

If You're Reading This In America, You're Rich

One of my favorite posts in my first year of blogging was titled If You're Reading This, You're Rich. It mostly focused on how much better the world is compared to historical standards. Here's the same message, but with global standards:

You may notice that inequality increases. Nobel laureate Gary Becker has some interesting thoughts on how all inequality isn't bad.

Worst Case Scenario For US Economy

Becoming like Japan:
In 1995, Japan's economy was seven times bigger than China's. Since then, China's economy has grown a lot — it's now bigger than Japan's. And Japan's economy has actually shrunk a bit.

As its economy was shrinking, Japan's government spent like mad. So its debt is now twice as big as its GDP. There is one country in the world in worse debt shape: Zimbabwe. The highly indebted countries you keep hearing about, like Greece and Ireland, have much smaller debt burdens than Japan.

The future does not look bright. Japan's population is tilted towards older people, so they have to think about huge pension payments in the coming decades.

Investors are still lending lots of money to Japan at reasonable rates. The country does not seem on the brink of an acute fiscal emergency. At the same time, it doesn't seem likely to break out of its long term chronic economic illness.
The primary reason for this lack of growth is bad government decisions. The good news is that means this is avoidable. The bad news is we need our politicians to make good decisions. I won't be losing sleep over this, but it is a possible future for America.

Sunday, January 30, 2011

Poor Parents Matter More

I've been advocating for an accurate depiction of parenting for quite a while now. I've mostly focused on how parents have less influence than they think and that there are many practical reasons to have kids. However, I certainly admit I see problems caused by bad parenting my classroom all the time. So which is it, does parenting really matter that much or not? Well that depends on how wealthy you are:
For a paper in Psychological Science, researchers at the University of Texas at Austin and the University of Virginia looked at 750 pairs of American twins who were given a test of mental ability at the age of 10 months and then again at the age of 2. By studying the performance of identical versus fraternal twins, the scientists could tease out the relative importance of factors such as genetics and the home environment. Because the infants came from households across the socioeconomic spectrum, it also was possible to see how wealth influenced test scores.

When it came to the mental ability of 10-month-olds, the home environment was the key variable, across every socioeconomic class. But results for the 2-year-olds were dramatically different. In children from poorer households, the choices of parents still mattered. In fact, the researchers estimated that the home environment accounted for approximately 80% of the individual variance in mental ability among poor 2-year-olds. The effect of genetics was negligible.

The opposite pattern appeared in 2-year-olds from wealthy households. For these kids, genetics primarily determined performance, accounting for nearly 50% of all variation in mental ability. (The scientists made this conclusion based on the fact that identical twins performed much more similarly than fraternal twins.) The home environment was a distant second. For parents, the correlation appears to be clear: As wealth increases, the choices of adults play a much smaller role in determining the mental ability of their children.
There are diminishing returns to good parenting. If kids are already playing musical instruments, having intelligent conversations, and taking improv classes, the extra effort has minimal effects. Pretty good argument for some kind of universal early intervention.

Saturday, January 29, 2011

Complicated Foreign Policy Gets Complicated

When I called for a less complicated foreign policy, this is why:
That's because, in the final analysis, the US needs a friendly government in Cairo more than it needs a democratic one. Whether the issue is Israel-Palestine, Hamas and Gaza, Lebanon, Iran, security for Gulf oil supplies, Sudan, or the spread of Islamist fundamentalist ideas, Washington wants Egypt, the Arab world's most populous and influential country, in its corner. That's the political and geostrategic bottom line. In this sense, Egypt's demonstrators are not just fighting the regime. They are fighting Washington, too.
For more on the complicated Egypt story, here's a regularly updated article.

Friday, January 28, 2011

Economics of Leno vs. Conan

Or, why Leno's 10 o'clock show didn't stand a chance:
In 2009 key demographic group ratings for network 10 P.M. shows were just half of what they had been five years earlier. And a reason for that was that some 40 percent of households now had the technology of digital video recorders, allowing people to easily program their own TV schedules.

And a habit many people had apparently gotten into was to use the 10 P.M. hour to catch up on programs they had recorded either earlier that night or even earlier in the week. So Leno at 10 wasn’t just up against alternative network programming. Thanks to consumer technology, he was up against millions of people’s personal programming options, too. 

Thursday, January 27, 2011

Argument Against Drug Legalization

You know where I stand. But some disagree:
I couldn't have gotten so stinking rich without George Bush, George Bush Jr., Ronald Reagan, even El Presidente Obama, none of them have the cajones to stand up to all the big money that wants to keep this stuff illegal. From the bottom of my heart, I want to say, Gracias amigos, I owe my whole empire to you.
That's apparently from billion drug lord Joaquin "El Chapo" Guzman Loera.

Tuesday, January 25, 2011

Economics of Bail

We mostly think about prisons and courts as the few things the private sector can't private. But bail bondsman are a unique American solution to a universal problem:
Bounty hunters and bail bondsmen play an important but unsung role in a legal system whose court dockets are too crowded to provide swift justice. When a suspect is arrested, a judge must make a decision: set the suspect free on his own recognizance until the court is ready to proceed, hold the suspect in jail, or release the accused on the condition that he post a bail bond. A bond is a promise backed by incentive. If the suspect shows up on the trial date, he gets his money back; but if he fails to show, the money is forfeited. We don’t want to deprive the innocent of their liberty, but we also don’t want to give the guilty too much of a head start on their escape. Bail bonds don’t solve this problem completely, but they do give judges an additional tool to help them navigate the dilemma.

Bail might be a rich man’s privilege were it not for the bail bondsman. (Many bondsmen are women, but “bondsperson” doesn’t have quite the same ring, so I’ll use the standard terminology.) In return for a non-refundable fee, usually around 10 percent of the bond, a bondsman will put up his own money with the court. A typical bond might run $6,000. If the defendant shows up, the bondsman earns $600. But if the defendant flees, the bondsman potentially can forfeit $6,000. Potentially, because when a fugitive fails to appear, the court gives the bondsman a notice that essentially says, “Bring your charge to justice soon or your money is mine.” A bondsman typically has 90 to 180 days to bring a fugitive back to justice, so when a defendant jumps bail, the bondsman lets the dogs loose.
So what does it take to be a successful bounty hunnter? Not what you'd expect:
What it takes to be a successful bounty hunter is mostly persistence and politeness. On most days your leads don’t pay off, so you need to visit and revisit the fugitive’s home, work, and favorite hangouts. Waiting is a big part of the game. Why politeness? Well, where do the leads come from? From people like Chrissy’s aunt—relatives and friends who might not talk to the police but who will respond to a kind word. Bounty hunters are polite even to the fugitives who, after all, are also their customers, and sadly, bounty hunters rely a lot on repeat business. One customer of a firm owned by the same family that runs the one Dennis works for told him proudly, “My family and I have been coming to Frank’s Bail Bonds for three generations.”

Most fugitives don’t fight, and Dennis is eager to avoid confrontation. Cowboys don’t last long in this business.
What about the skechtiest clients, what are they afraid of?:
If at all possible, bail bondsmen get a friend or family member to cosign the bond. The reason is simple. A defendant whose bond is cosigned is less likely to flee. As Dennis told me, “In my line of work, I deal with some mean people, people who aren’t afraid of me or the police. But even the mean ones are afraid of their mom, so if I can get Mom to list her house as collateral, I know the defendant is much more likely to show up when he is supposed to.” A defendant whose bond is cosigned is also more likely to be caught if he does flee, because the bondsman will remind the cosigner that if the fugitive can’t be found, it’s not just the bondsman who will be left holding the bag.
So what's the difference between a bounty hunter and a police officer?:
Bounty hunters have robust rights to arrest fugitives. They can, for example, lawfully break into a suspect’s home without a warrant, pursue and recover fugitives across state lines without necessity of extradition proceedings, and search and seize without the constraint of the Fourth Amendment’s “reasonableness” requirement. Just like everyone else, however, bounty hunters must obey the criminal statutes. A bounty hunter who uses unreasonable force or mistakenly enters the home of someone who is not a bail jumper is subject to criminal prosecution.
How did we get this uniquely American system?:
The prerogatives of bounty hunters flow from the historical evolution of bail. Bail began in medieval England as a progressive measure to help defendants get out of jail while they waited, sometimes for many months, for a roving judge to show up to conduct a trial. If the local sheriff knew the accused, he might release him on the defendant’s promise to return for the hearing. More often, however, the sheriff would release the accused to the custody of a surety, usually a brother or friend, who guaranteed that the defendant would present himself when the time came. So, in the common law, custody of the accused was never relinquished but instead was transferred to the surety—the brother became the keeper—which explains the origin of the strong rights bail bondsmen have to pursue and capture escaped defendants. Initially, the surety’s guarantee to the sheriff was simple: If the accused failed to show, the surety would take his place and be judged as if he were the offender.

The English system provided lots of incentives for sureties to make certain that the accused showed up for trial, but not a lot of incentive to be a surety. The risk to sureties was lessened when courts began to accept pledges of cash rather than of one’s person, but the system was not perfected until personal surety was slowly replaced by a commercial surety system in the United States. That system put incentives on both sides of the equation. Bondsmen had an incentive both to bail defendants out of jail and to chase them down should they flee. By the end of the 19th century, commercial sureties were the norm in the United States. (The Philippines is the only other country with a similar system.)
So is this private system better than a public bail-bond system? If I'm asking the answer's probably yes:
Our research backs up what I found on the street: Bail bondsmen and bounty hunters get their charges to show up for trial, and they recapture them quickly when they do flee. Nationally, the failure-to-appear rate for defendants released on commercial bail is 28 percent lower than the rate for defendants released on their own recognizance, and 18 percent lower than the rate for those released on government bond.

Even more important, when a defendant does skip town, the bounty hunters are the ones who pursue justice with the greatest determination and energy. Defendants sought by bounty hunters are a whopping 50 percent less likely to be on the loose after one year than other bail jumpers.

In addition to being effective, bail bondsmen and bounty hunters work at no cost to the taxpayers. The public reaps a double benefit, because when a bounty hunter fails to find his man, the bond is forfeit to the government. Because billions of dollars of bail are written every year and not every fugitive is caught, bond forfeits are a small but welcome source of revenue.

Monday, January 24, 2011

Last Names and Academics, Part III

Two years ago I posted an observation I'd had in my classroom; that students with last names near the end of the alphabet tend to do worse in my class. I gave a handful of reasons, not that seemed to really satisfy. Then last year I tried to explain it again, with just as much success. Well, perhaps the third time's a charm:
People waiting in line for days for the latest must-have product are probably a bunch of Zimmermans, Youngs, and, yes, Wilkinses, according to a truly bizarre new study. It's apparently all the fault of elementary school teachers overusing alphabetical order.

This is one of those studies that seems way too ridiculous to be true, but let's at least consider the facts. Researchers tracked consumer patterns in a variety of situations. They consistently found that people whose last names came later in the alphabet tended to buy items far more quickly than those earlier in the alphabet, and the effect got stronger and stronger the later a person's name appeared in the alphabet.

Intriguingly, for married women, the name that mattered was their maiden name, suggesting that the underlying cause for this is created earlier in life. The researchers speculate that the use of alphabetical order during people's childhoods creates a sense in later alphabet kids that, if they want to be first in line for something, they're going to have to make it happen themselves. That explains the later tendency for impulsive consumption, according to the researchers:
The idea holds that children develop time-dependent responses based on the treatment they receive. In an effort to account for these inequities, children late in the alphabet will move quickly when last name isn't a factor; they will 'buy early.' Likewise, those with last names early in the alphabet will be so accustomed to being first that that individual opportunities to make a purchase won't matter very much; they will 'buy late.'"
Now, obviously people's surnames aren't the only determinant of their shopping patterns, and this only speaks to an overall trend in consumption habits. This is the sort of genuinely weird discovery that, while it certainly shouldn't be just dismissed, does need a lot more evidence before it's something we buy into. After all, my last name Wilkins is right at the end of the alphabet, and I remember being at the end of lots of lines back in my school days, and my shopping habits are completely norm...ooh, a sale on backpacks! Gotta go!
If it makes you less patient, and patience is extremely important for life success, perhaps this minor detail can have a big impact.

Sunday, January 23, 2011

Charitable Impact of Religion

Recently came across this essay describing the differences in giving between believers and non-believers:
The differences in charity between secular and religious people are dramatic. Religious people are 25 percentage points more likely than secularists to donate money (91 percent to 66 percent) and 23 points more likely to volunteer time (67 percent to 44 percent). And, consistent with the findings of other writers, these data show that practicing a religion is more important than the actual religion itself in predicting charitable behavior. For example, among those who attend worship services regularly, 92 percent of Protestants give charitably, compared with 91 percent of Catholics, 91 percent of Jews, and 89 percent from other religions.
And this has nothing to do with income or political ideology:
Note that neither political ideology nor income is responsible for much of the charitable differences between secular and religious people. For example, religious liberals are 19 points more likely than secular liberals to give to charity, while religious conservatives are 28 points more likely than secular conservatives to do so. In other words, religious conservatives (who give and volunteer at rates of 91 percent and 67 percent) appear to differ from secular liberals (who give and volunteer at rates of 72 percent and 52 percent) more due to religion than to politics. Similarly, giving differences do not disappear when income is neutralized. This should not be particularly surprising, however, because the sccbs data show practically no income differences between the groups.
Not only are they donating more often, the religion are donating more total:
The average annual giving among the religious is $2,210, whereas it is $642 among the secular. Similarly, religious people volunteer an average of 12 times per year, while secular people volunteer an average of 5.8 times. To put this into perspective, religious people are 33 percent of the population but make 52 percent of donations and 45 percent of times volunteered.
And this isn't just a measure of relgious giving to religious charities:
Religious people are more generous than secular people with nonreligious causes as well as with religious ones. While 68 percent of the total population gives (and 51 percent volunteers) to nonreligious causes each year, religious people are 10 points more likely to give to these causes than secularists (71 percent to 61 percent) and 21 points more likely to volunteer (60 percent to 39 percent). For example, religious people are 7 points more likely than secularists to volunteer for neighborhood and civic groups, 20 points more likely to volunteer to help the poor or elderly, and 26 points more likely to volunteer for school or youth programs. It seems fair to say that religion engenders charity in general — including nonreligious charity.
The article closes with this:
Houses of worship might teach their congregants the religious duty to give, and about both the physical and spiritual needs of the poor. Simply put, people may be more likely to learn charity inside a church, synagogue, or mosque than outside. If charity is indeed a learned behavior, it may be that houses of worship are only one means (albeit an especially efficacious one) to teach it. Secularists interested in increasing charitable giving and volunteering among their ranks might spend some effort thinking of alternative ways to foster these habits.
Hat tip to Justin Scott.

Saturday, January 22, 2011

Toronto's Human Library

Earlier this month I praised the efforts of fellow blogger Justin Wehr for offering his expertise free on Craigslist. Similarly, reader, commenter and old friend Cheryl recently pointed me towards this:
On Nov. 6, 2010, over 200 Torontonians checked out a "human book" from Toronto Public Library's inaugural Human Library collection.

The one-day pilot event was held at Toronto Reference Library, North York Central Library, Bloor Gladstone Branch, Lillian H. Smith Branch and Malvern Branch.

The library's 60 "human books" came from all walks of life. They spoke about a wide range of life experiences - from living in poverty or living with a disability, to immigrating to Canada, to serving in war, and much more.
It seems like most of them were something like non-fiction novels. Is there no room for a "human book" on introduction economics?

Friday, January 21, 2011

Emptying the Bottle: Late-January '11 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
As always, feel free to email me anything interesting you come across.

Economics of Ego Surplus, An Economics Novel

Last month I got an email from economist and freelance writer Paul McDonnold. He was contacting "leading economics bloggers" (his words, not mine) to see if they would read and review his new book, The Economics of Ego Surplus: A Novel of Economic Terrorism. I happily agreed.

The sub-genre of economics fiction is small to say the least. This novel takes a couple of its sections (it doesn't really have chapters) and devotes them to a little economic history. Intermixed with meeting the main character, grad student Kyle Linwood, is a short history of Adam Smith (and later Keynes and Marx). Instead of teaching the economic way of thinking, instead this book shows what it's like to be a person who thinks like that. Everything from debates about free trade at dinner parties to the idea that teaching is on a reverse farming schedule, which means during the best weather you have the time off. Rarely do I meant a person, or especially a character, who's economic presuppositions are similar to mine.

It tells a story of financial manipulation, with short economic summaries along the way. Mention the Federal Reserve? Well you also get a little bit of history about it. Rationality? Behavior economics? Same thing. I even learned about a type of financial fraud called spamming. It's where a spammers buy a lot of cheap stock, driving the price up. Then email people telling them the stock will continue doing well, and as the price rises, the spammers sell. The plot moves fast. One minute he's simply a college instructor, next he's recalling his own kidnapping by terrorists, then not to much longer he's stealing a car in Dubai and setting himself up for another terrorist kidnapping. The book really takes off when the plot (that is the terrorist plot) is revealed. The idea of economic terrorism is fascinating. Why blow up a building or a bus when you can shut down the gears of the economy? Hopefully I'm not spoiling anything, but here's the ingenious terrorist plot:

Raise a huge amount of capital. Enough to influence a $60 trillion global market. The main villain is a terrorist who runs a hugely profitable bank, in part, by bank rolling and investing for the world's huge black market (another reason to legalize drugs). The plan is to use an advanced computer system and wait for an economic bubble to rise. Put your own money in, furthering the problem. Then, right before the bubble pops, you sell all of your assets making it crash faster and farther. Finally, begin rumor that trillions of counterfeit US dollars are about to be released into the world market, causing a worldwide fear of inflation and abandonment of the dollar. US banks are abandoned and fail. While the more stable Islamic banks, that is, loans without interest, survive. All with the goal of bringing the Middle East back to the prestige it once had while Europe was in the Dark Ages. The appreciatively not-that-evil bad guy interestingly claims that "the West's problems aren't policy, their culture".

At some level the market economy is based on faith. Faith that I can specialize on one thing and get everything else through trade. If that faith is shattered, it can have huge implications. The&historical skepticism surrounding capitalism is also it's greatest weakness. The reason an attack like this could work, is because people have such a hard time understanding economics in the first place. That's one of the main things economists are trying to do, increase faith in the market.

Full of nice snippet of wisdom, like "you can't study something without changing it" or "the stock market is a rational reflection of all publicly available information". The villain even describes the fallacy of voting in American culture, something I've done myself. If you want to understand how economists talk to each other, this is a great book. This quote, from one economist to another, is just like something you might hear in a Econ101 class: "economists want to understand the economic universe like physics wants to understand the physical universe." In fact, I may add that to my first day lecture.

Interestingly, the main character has a similar ideological change that I have experienced over the last couple of years. Though I am certainly still a "hard-core libertarian", I've grown to understand the many irrationalities we all have. Though I came to that conclusion with a lot less trauma than the main character of the novel. Perhaps there are two ways to change our worldview, slowly over time through deliberate thought or quickly through traumatic experience. In many ways that seems to be the lesson of the book. Beware of the confidence to which you hold your beliefs, large egos can be dangerous. It's doesn't really have a happy ending, just an introspective one.

Not sure if I would recommend it, because I don't really recommend any books. Though I believe there is a place for fiction in convincing people of truths. It's just been so long since I've read fiction, so the dialogue felt a little awkward. Just seemed unnatural. All these adjectives describing things that didn't really happen. Perhaps it's my own lack of attention to detail that makes me weary of descriptive novels. Or perhaps my weariness of the power of fiction has my brain pulling some Inception security to ensure I'm not unduly influenced. However, the extensive details have convinced me that if I ever have to write a novel I will visit the places in the story and just describe what I see.

Though with the main character as an economics instructor and short little chapterettes, I couldn't ask for much more. In end it didn't really raise my concern for economic terrorism, though I don't think it was trying to. After all, with the estimated assets of $4 trillion the terrorists had, I wonder if they could have done more damage by setting off nuclear bombs in major American industrial cities. I guess I'm not setting myself up very well for another chance at a complimentary book.

Thursday, January 20, 2011

Practical Solution to Panhandling

A while back I posted my explanation for why you shouldn't give money to panhandlers. Sadly the conversation about the post was moved to Facebook (don't get me started). I'll summarize by saying a stranger threatened to beat me up and friend came to my rescue and assured everyone I'm too easy to beat up. Nonetheless, I wanted to follow up on the topic and offer a practical solution. I've always been weary of problems when the solution is to act better or smarter or more rational. To really change actions you need to change situations. Here's what I mean:

That's a donation meeter in Denver, CO. Here's the explanation from the mayor:
The donation meter program is designed to increase awareness about Denver’s Ten-Year Plan to End Homelessness, and it is also an effort to redirect the money given to panhandlers into initiatives that provide meals, job training, substance abuse counseling, housing, and other programs for those in need. This grassroots campaign is projected to raise roughly $100,000 per year giving the general public a constructive way to help Denver’s homeless. “The donation meter demonstrates yet another innovative way in which this community is responding to Denver’s Road Home and our commitment to ending homelessness”
As of September 2007 Denver has eighty-six meters downtown. Within the first month they raised $2,000.

Wednesday, January 19, 2011

Obama Loves Me, Obama Loves Me Not, Obama Loves Me

Here's an op-ed from our president that played with my political emotions:
For two centuries, America's free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.
Well said. And then then he goes and says this:
But throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.
And then makes up for it:
Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs.
And now some clarification:
Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It's a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.
Then he gets a little distracted:
Where necessary, we won't shy away from addressing obvious gaps: new safety rules for infant formula; procedures to stop preventable infections in hospitals; efforts to target chronic violators of workplace safety laws.
And finally he wins me over:
But we are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.

For instance, the FDA has long considered saccharin, the artificial sweetener, safe for people to consume. Yet for years, the EPA made companies treat saccharin like other dangerous chemicals. Well, if it goes in your coffee, it is not hazardous waste. The EPA wisely eliminated this rule last month.

But creating a 21st-century regulatory system is about more than which rules to add and which rules to subtract. As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs. This means writing rules with more input from experts, businesses and ordinary citizens. It means using disclosure as a tool to inform consumers of their choices, rather than restricting those choices.
Then Obama takes it home:
This is the lesson of our history: Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.

Don't Forget About India

I talk a lot about China on this blog. It's economy is growing and that's good for everyone. It's political power is growing, with a less clear outcome. China even "won" the last summer Olympics. But there's another growing nation that's not getting enough attention:
But talk of India as a future great power is unavoidable, and some Indians predict a tri-polar world, anchored by the US, China, and India, by mid-century. India’s population of 1.2 billion is four times that of the US, and likely to surpass China’s by 2025. Vijay Joshi of St John’s College, Oxford, argues that, “if we extrapolate present trends, India will have the world’s third largest national income (after the US and China) within 25 years.”
And it's got a couple advantages China doesn't. It's an English speaking, it's democratic, and Bollywood. India has a ways to go, but not as far as you might think. And while we're on the topic, don't forget the other-up-and coming super-economy, Brazil.

Tuesday, January 18, 2011

Dirty South Heads to Charleston

Having already performed at New York's Del Close Marathon and the North Carolina Comedy Arts Festival, my Harold team, The 708, is heading to the Charleston Improv Festival this weekend. Recently I was interview by the Charleston City Paper about the team. Here's an excerpt:
North Carolina's Dirty South Comedy Theater, a comedy training center and theater in Chapel Hill's sister city of Carrboro, boasts a company of 45 performers and a national network of almost 100 professional comedians. DSI resident act the 708 is heading to the Charleston Comedy Fest for a wild session.

The current 708 team roster features four original players — Harrison Brookie, Jeff Brenman, Juan Mojica, and PT Scarborough — plus four relatively new participants, including Bryan Barnes, Kennedy Gates, Zannie Gunn, and Shane Smith.

The group's name refers to a broken clock in a room where they initially practiced on the UNC campus. "The thing was stuck on 7:08, so our 7 p.m. rehearsals always seemed to start late somehow," Brookie says. "Inspired by that, we often break clocks." Brookie is the lanky, tall, bespectacled guy in the troupe, famous in the Research Triangle for his physical work. "I try to heighten what is already established by other players in the scenes."

The scenes start with an invocation that becomes a "larger-than-life experience" that inspires the scenes that follow.

"It's been a transforming beast," says Brookie. "It's always been based on a quick style of play — very game-based, which is a very DSI format. It didn't take a lot to get off the ground, but it's been a slow-growth process.

"I don't know if the audience will consider us to be polite," Brookie adds. "I mean, we do come from a place called the Dirty South. But I don't think 'dirty' quite describes our style either. We have more of a reputation for being fast and fluid. I think what separates 708 and the DSI style from other long-form improv around the country is its fast pace and clear aim. It kind of plays out like an episode of Seinfeld that really ramps up at the end."
We'll be performing at Eye Level Art this Saturday at 8 p.m.

Classroom Game Theory Experiments

Today is exam day for my AP Microeconomics students. Many of them I also had for AP US History. That means they've been in my class a year and half, five days a week, an hour and half a day. So on our last day of instruction I asked them to give me some anonymous feedback. Along with a variety of positive and negative comments, one thing mentioned was how much they enjoyed our in-class game theory experiment done earlier in the semester. Since they enjoyed it so much, I figured you might too.

The first half of class was spent discussing rationality, utility-maximization and, human selfishness. Then the students were divided into partners to complete a series of economic experiments. All experiments were done during the lunch periods that coincided with our class. There were 8 experiments total, 2 different versions of 4 basic game theory strategic situations. I gave each pair of students a sheet of paper with quotes around what they should say to each participant. Because of time and candy constraints, the sample size for each experiment is ten. Here they are the descriptions and the results:

Experiment #1 (Dictator Game):

"You are taking part in an experiment. You are one of two players. You will not know the identity of the other player nor will they know your identity. There are 20 M&M's in this bag and you are responsible for proposing how it should be divided between you and the other player. The second player has no option but to accept your proposal. The game will only be played one time. Do you understand?" "How do you propose the M&M's be split?"

Average division: 11/20 taken by the decision maker.

Interpretation of the data: A perfectly selfish and rational person would take all 20 candies. The fact that this only happened once implies many desire to be "fair".

Experiment #1.5 ((Dictator Game with Friend):

The students were given similar directions above. The two differences were it should be done with a partner of their choice (offerer chosen at random) and tell them the game will be repeated.

Average division: 8/20 taken by the decision maker.

Interpretation of the data: Again, a perfectly selfish and rational person would take all 20 candies. The decrease in the amount taken by the decider implies their desire to be fair increases when the eyes of their partner are on them. Also, by telling them the game will be repeated, they have hopes their partner will be fair in the future.

Experiment #2 (Ultimatum Game):

"You are taking part in an experiment. You are one of two players. You will not know the identity of the other player nor will they know your identity. There are 20 M&M's in this bag and you are responsible for proposing how it should be divided between you and the other player. The second player can then either accept or reject your proposal. If it is rejected neither player receives anything. If the second player accepts, the money is split according to the first proposal. The game will only be played one time. Do you understand?" "How do you propose the M&M's be split?"

Average division: 11/20 taken for the decision maker.

Interpretation of the data: I expected the amount taken by the decider to decrease out of fear their partner might reject their decision. Interesting, the incentive made very little difference. Perhaps psychologist Barry Schwartz is on to something in his critique of economics in this TED Talk.

Experiment #2.5 (Ultimatum Game with Friend and Repeated):

The students were given similar directions above. The two differences were it should be done with a partner of their choice (offerer chosen at random) and tell them the game will be repeated.

Average division: 9/20* taken for the decision maker.

Interpretation of the data: As expected, the close proximity of the partner and the threat of future games decreased the amount taken.

Experiment #3: (Earned Credit/Steal or Give Game):

"You are taking part in an experiment. You are one of two players. You will not know the identity of the other player nor will they know your identity. To begin the experiment you and the other player must first earn each of your bags of 10 M&M's (20 total) by both of you completing the maze below.

The student should now complete the maze.

You are now responsible for proposing how it should be divided between you and the other player. You can choose to keep your ten or give or steal any amount to or from the other player. The second player has no option but to accept your proposal. The game will only be played one time. Do you understand?" "How do you propose the M&M's be split?"

Average division: 16/20 taken for the decision maker.

Interpretation of the data: This resulted in the largest amount taken by the deciding partner. My explanation is that the earning of the bag of M&M's gave them the authority to take more. Their moral math was changed when they asked to do the puzzle. The fact that the candies were split into two bags, one supposedly earned by another player, didn't seem to matter.

Experiment #3.5: (Earned Credit/Steal or Give Game with Friend and Repeated):

The students were given similar directions above. The two differences were it should be done with a partner of their choice (offerer chosen at random) and tell them the game will be repeated.

Average division: 11/20 taken for the decision maker. 

Interpretation of the data: Yet again we see having the partner nearby changes the decision. Like a bird responding to a scarecrow, watching eyes make a difference.

Experiment #4 (Competitive Ultimatum Game):

"You are taking part in an experiment. You are one of 3 proposers and there is also 1 responder. You will not know the identity of the other players nor will they know your identity. There are 20 M&M's in this bag and you are responsible for proposing how it should be divided between you and the responder. If the responder accepts your offer, you wil receive the portion you suggested. If the responder rejects your offer, and takes someone elses, you will receive nothing. You are eseentially competing with the 2 other proposers to get the responder to accept. Do you understand?" "How do you propose the M&M's be split?"

Average division: 9/20 taken for the decision maker.

Interpretation of the data: When asked to bid against other decision makers, the number taken drops. Interestingly, it doesn't drop to 1. My guess is no one 1 M&M and so the risk is worth it.

Experiment #4.5 (Competitive Ultimatum Game with Enemy):

The students were given similar directions above. The two differences were it should be done with partners of their choice (offerer chosen at random) and tell them the game will be repeated.

Average division: 7/20 taken for the decision maker.

Interpretation of the data: Even though the bids were made privately on a sheet of paper, the sheer fact that their competitors were nearby made this the lowest amount taken. I believe the inherent victory (think bragging rights), led to lower amount taken.

For homework the students were asked to answer the following questions for each experiment:

1) What would you do?
2) What would an economist say you should do?
3) What would Jesus (or your preferred deity) do?

*In Experiment 2.5, there was an outlier who offered all of his M&M's. After I found out that the decision maker was a school administrator, my first explanation that they didn't want to seem selfish in front of my students. However, it turns out for health reasons they are not allowed to eat chocolate candy. So my initial question of "Do you like M&M's" (to ensure it was something they would desire) didn't work. They liked them, they just couldn't have them.

Monday, January 17, 2011

End All Energy Subsidies

Not only to save money. Not only to see which sources of energy are self supporting. But also because it might be good for the environment:

I might change the bottom left key to negative externalities/no negative externalities, but the chart still shows the mismanagement of taxpayer funds.

Sunday, January 16, 2011

Bottlenecked Blog Goes National

One of fun things about writing online is following who's reading. Google Analytics is great way follow when, where, and how many people are visiting your site. One of the items I follow closely is where in the country (and sometimes world) are people viewing my site from. For the longest time I've wanted to have at least one view from each state. As of last week, the last hold out Montana, finally arrived:

Saturday, January 15, 2011

Why Most Political Assassinations Happen

I'm coming around to the idea of President as Comforter-in-Chief in times of terrible violence. But that doesn't explain why these man-made tragedies happen. There has been a lot of speculation on the reasons for the recent shooting in Tucson. Whether it's guns and mental health or the problems with media and politicians, none ring true or have much factual support. That is until a recent NPR story pointed to a study done in 1999 by the Secret Service. Here's how they got their information:
In the Secret Service Exception Case Study Project, they identified 83 people who had completed assassinations or made assassination attempts since 1949 — some cases known to the public, some not — and collected every document they could find. Fein and Vossekuil also went to visit many of these people in jail.
Seems direct enough. Here's what they concluded:
"It was very, very rare for the primary motive to be political, though there were a number of attackers who appeared to clothe their motives with some political rhetoric," Fein says.

What emerges from the study is that rather than being politically motivated, many of the assassins and would-be assassins simply felt invisible. In the year before their attacks, most struggled with acute reversals and disappointment in their lives, which, the paper argues, was the true motive. They didn't want to see themselves as nonentities.

"They experienced failure after failure after failure, and decided that rather than being a 'nobody,' they wanted to be a 'somebody,' " Fein says.
And here's the craziest part, they aren't crazy:
"There's nothing crazy about thinking that if I attacked the president or a major public official, I would get a lot of attention. I would get a lot of attention. My goal was notoriety," Fein says. "That's why I bought the weapon."

And most of the assassins and would-be assassins weren't totally disorganized by mental illness, either.

"They were quite organized," Fein says. "Because one has to be organized — at least to some extent — to attack a public official."
So why not just kill any celebrity?
And one thing Borum and Fein say about choosing a political figure — as opposed to choosing a show-business celebrity — is that the would-be assassins are able to associate themselves with a broader political movement or goal. That allows them to see themselves as not such a bad person. In this way, Borum says, assassins are basically murderers in search of a cause.
I'm not sure if this is more or less comforting than what I previously thought.

Friday, January 14, 2011

Walk Faster, Live Longer

I recently got moved into a new wing of our school. It a newer room and it's got a Smart Board. The only problem is, it's much farther from the teacher work room where I make copies and eat lunch. I don't mind walking, but there one thing that keeps high school hallways slow moving, students. It's become a regular problem of getting caught behind a herd of slow students. Perhaps they should take this out-of-class lesson from me, walk faster:
Predicted years of remaining life for each sex and age increased as gait speed increased, with a gait speed of about 0.8 meters [2.6 feet]/second at the median [midpoint] life expectancy at most ages for both sexes. Gait speeds of 1.0 meter [3.3 feet]/second or higher consistently demonstrated survival that was longer than expected by age and sex alone. In this older adult population the relationship of gait speed with remaining years of life was consistent across age groups, but the absolute number of expected remaining years of life was larger at younger ages.

Thursday, January 13, 2011

President as Comforter-in-Chief

The tragic shooting in Tucson has so far been the biggest story of 2011. Like the Gulf Oil Spill, I greatly underestimated how important an event this would turn out to be. Although I did not really feel very effected events that seemed so far and distant, many people, my wife included, understandably were. Here's the Google Trends of the word Tucson for the last 30 days:

President Obama even spoke at the memorial service for the victims of the shooting. I normally don't watch those types of events, but after hearing so many good things about the speech, I couldn't resist watching the video. I was impressed. It was inspirational. It was personal. It was even Biblical. It convinced me that as much as mass media has made politics more about refining politicians than policy, there is a place for uplifting speeches. They shouldn't distract, but for the first time I'm convinced that could add.

Wednesday, January 12, 2011

Influence of Belief

Recently I mentioned how keeping your identity small allows new information to inform your beliefs. Actress and vaccine-autism mountain maker, Jenny McCarthy, gives a perfect example of this. The debate over the casual connection between vaccine and autism has finally and completely been discredited. Yet, for someone who's spent several years promoting a now debunked theory, it's not over:
This debate won't end because of one dubious reporter's allegations. I have never met stronger women than the moms of children with autism. Last week, this hoopla made us a little stronger, and even more determined to fight for the truth about what's happening to our kids.
Writer on everything from dreams, to emotion, to commuting, Jonah Lehrer reminds us that:
that everyone is vulnerable to cognitive dissonance, that we all recoil from information that contradicts a deeply held belief. We live in a world overflowing with information and yet we’re still saddled with a brain that knows exactly what kind of information it wants. When the information cuts against our desires, we can’t help but double-down. We will believe almost anything to keep our beliefs from being wrong.
This is beliefs are so dangerous. They're clay when we create them, but they harden quickly. Here's where some wise words from Justin Scott can clarify the idea:
First, have few beliefs. Second, hold these few beliefs dearly, passionately, and with as much conviction as you can muster. Choosing these beliefs is mighty difficult. I know Christ died and was resurrected to free us from sin. I know we must love our neighbor. There are a few others. I used to cast this net wider, but the humility I hope God is teaching me has shrunk it. Thank God for that. For those beliefs which I have given holding as unquestionable, perhaps the fear I feel at the instability of doubt will move me to rely on him.
By describing your core understanding you allow the other, less important beliefs to mold. So here's my current motto: I believe we're all inherently self-obsessed and that it takes work to consider others. But it makes for a pretty good world.

Tuesday, January 11, 2011

Learning Hard or Hardly Learning

From a recent paper about learning:
Previous research has shown that disfluency – the subjective experience of difficulty associated with cognitive operations – leads to deeper processing.
And here's the study:
Study 1 found that information in hard-to-read fonts was better remembered than easier to read information in a controlled laboratory setting.
Hat tip to the Frontal Cortex.

Worthwhile Sentences on Defense

From the Boston Globe:  "It seems sensible to make every effort to enlist the body's own ability to heal itself—which is what, at bottom, placebos seem to do"

From Doug Bandow: "Indeed, today the military does almost everything except defend the United States."

From Nassim Taleb: "Your reputation is harmed the most by what you say to defend it."

From Billy Graham's wife when asked if she had ever considered divorce: "Divorce? No. Murder? Yes."

From long dead economist Frederic Bastiat: "When goods don't cross borders, soldiers will."

Monday, January 10, 2011

Emptying the Bottle: Mid-January '11 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
As always, feel free to email me anything interesting you come across.

Sunday, January 09, 2011

China Becomes a Political Power

I've discussed before about how I don't fear China's growth, China's US investments, or China's domestic subsidies. However, China as a global political figure does give me pause for thought. Although I don't support most of the United States' foreign policy, I believe that or global intervention has mostly been attempts to do good. With a hand full of exceptions during the age of imperialism, our military has mostly been a force for more peace and more prosperity. America's unilateral global leadership began after World War II as Europe recovered. In fact, America's post-war aid to Europe, the Marshall Plan, was one of our first acts as the global leader. Now, China is doing something similar:
Citing government sources, the paper reported that Mr. Li said “China is willing to buy as much Spanish bonds as Greek and Portuguese combined, that is, around 6 billion euros.” The Chinese financial support is so welcome that El País referred to Mr. Li as a new "Mr. Marshall"
And here are the political string attached:
China’s goodwill also comes attached to European willingness to open up its markets to Chinese companies and to relaxing restrictions of technology transfers.
So far it seems China's goals are similar to the United States, more trade and interdependence. It's important to remember that these have not always been the goals of other global leaders. Rome, Great Britain, Japan, and Germany come to mind. China, who was a global power before the Industrial Revolution in the West, is now moving up the ranks and I'm optimistic, but unsure, what their political aspirations are.

Saturday, January 08, 2011

Mountains Out Of Molehills Graphic

click picture to enlarge or click here for the interactive version
Hat tip to Justin Scott.

Friday, January 07, 2011

Why Employment is Low and Profits are High

The story runs as follows. Before the financial crash, there were lots of not-so-useful workers holding not-so-useful jobs. Employers didn't so much bother to figure out who they were. Demand was high and revenue was booming, so rooting out the less productive workers would have involved a lot of time and trouble -- plus it would have involved some morale costs with the more productive workers, who don't like being measured and spied on. So firms simply let the problem lie.

Then came the 2008 recession, and it was no longer possible to keep so many people on payroll. A lot of businesses were then forced to face the music: Bosses had to make tough calls about who could be let go and who was worth saving. (Note that unemployment is low for workers with a college degree, only 5 percent compared with 16 percent for less educated workers with no high school degree. This is consistent with the reality that less-productive individuals, who tend to have less education, have been laid off.)

In essence, we have seen the rise of a large class of "zero marginal product workers," to coin a term. Their productivity may not be literally zero, but it is lower than the cost of training, employing, and insuring them. That is why labor is hurting but capital is doing fine; dumping these employees is tough for the workers themselves -- and arguably bad for society at large -- but it simply doesn't damage profits much.
That's from Tyler Cowen in Foreign Policy Magazine.

Thursday, January 06, 2011

This is Your Brain on Improv

Here's a new TED Talk on what it looks like when [musical] improvisers play inside an MRI machine. Not only is the experiment itself interesting, what is has to say about spontaneous creativity fits with my own experience. Here's Musician and researcher Charles Limb:

It's a bit long, so here's my favorite part:
Really consciousness is seated in the frontal lobe. But we have this combination of an area that's thought to be involved in self-monitoring, turning off, and this area that's thought to be autobiographical, or self-expressive, turning on. And we think, at least in this preliminary -- It's one study. It's probably wrong. But it's one study. We think that at least a reasonable hypothesis is that, to be creative, you have to have this weird dissociation in your frontal lobe. One area turns on, and a big area shuts off, so that you're not inhibited, so that you're willing to make mistakes, so that you're not constantly shutting down all of these new generative impulses.

Wednesday, January 05, 2011

The Only Way to Peace?

A while back I suggested that the most profitable way to peace was mutually beneficial trade. Nations that rely on each other don't fight each other. A newly created mathematical model predicts that it only takes small changes within small groups to get complete peace or complete war. From the Scientific American:
Consider a relationship triangle. Arthur and Carl don’t like each other. But Bill is friendly with them both. Bill will probably try to convince Arthur and Carl to get along. But Arthur and Carl are telling Bill that the other guy’s no good. You don’t need to be a math whiz to see that, as time goes on, either everyone will be friends or Bill is going to have to pick a side.

Now picture a big network made of these triangles. Which is what scientists did in their computer model. And they found that this theoretical social network produced either global harmony or all-out war, depending on the initial triangles. The model even predicted almost exactly the identities of all the Allied and Axis forces during World War 2. So one way to prevent global war may be to forge friendships between enough Arthurs and Carls.
Puts a new spin on "love your neighbor".

Tuesday, January 04, 2011

Old Enough to Know Better

A student asked me an interesting question today. "When you were 17, how would you rate your understanding of politics and economics?" My answer was that my content knowledge was close to zero. I didn't read, I didn't write, and I certainly I didn't blog. And honestly, I didn't really care. The student went on to explain that the source of the question was from a conversation he recently had with an adult who didn't take his ideas very seriously because he was young. The man said that my student didn't have enough experience to fully engage in the conversation. He gave him the old "you'll understand when you're older" line.

I'm not sure whether this insulted me as a teacher of teenagers or as someone who looks like a teenager himself, but that phrase really bothers me. It's a cop out. It's not that the young person is too young, it's that you're not good enough at explaining what you have to say. This line tells your listener that it would take more effort than you're willing exert. That you didn't really care about learning, just showing that you're right. I certainly understand the limited understanding of youth. I spend all day with them. But don't tell someone they need life experience to comprehend. Use that conversation to give them the life experience they require or don't engage at all. Come on, you're old enough to know better.

Monday, January 03, 2011

Everything in Economics

Check out other the interactive scientific diagrams at

Sunday, January 02, 2011

An Hour with an Honest Stranger

Last week I got the chance to have lunch with fellow economist, blogger, and friend Justin Landwehr. One of the things I most appreciate about Justin is his ability to give and take honest feedback. In fact, I originally met him through his "call to all missionaries". We met, talked about God (and eventually economics). In our last lunch we got on the topic of how beneficial an hour with him or me might be for someone we don't know. Would we be better than average at improving their life? I concluded that outside of celebrities and professional counselors I could improve the lives of people more than the average person (I am a teacher after all). Justin, in true form, took it seriously. Here's an advertisement he recently created on Craigslist:
Do you know someone who could desperately use an hour with a tech-savvy 25 year old?

Or maybe you want to learn more about how you can use the Web for managing your finances, finding the cheapest airline deals, keeping a calendar, managing files and receipts, etc.?

My mission is to open people’s eyes to the potential of the Internet in their personal lives, and to help them find the services that best meet their personal needs.

What you can expect: I will come to you (provided you live reasonably close to me) and sit down and ask questions about what you are currently using your computer for and listen to how you would like to use it and address any questions or concerns you have. Then I will walk you through some of the services that I think will be most useful to you to make sure you feel comfortable using them. I do not expect to accomplish much in an hour, so I will leave you with a sheet providing useful tips for better browsing and keeping your computer healthy, and a list of recommended services by category.

I will accept payment in the form of cookies or a simple “thank you”.

I have a full-time job in RTP, and I am just doing this as a side hobby. As a result, I cannot promise to fulfill all requests. Please send an email stating why this would be useful to you (or someone you know) and what kind of help/advice you are looking for.
If this sounds worthwhile to you I suggest you take him up on it. Also, I wonder if he would do more good if he just promised honest feedback, not necessarily any expertise.

Saturday, January 01, 2011

Diversified New Year's Resolutions Redux

Last year I attempted five different New Year's Resolutions and pretty much failed on all of them. Even though knowing when to quit is important, I'm not yet convinced to give up. The main reason I've decided to give it another go is because my goals haven't really changed much. If I still think they are a good idea, then they must be. Just to remind you, here are the goals:
1) Moderate exercise for 20 minutes a day, 3 days a week. From what I have read this is the minimum time needed to remain nominally healthy. Hopefully I will work my way up from here, but it's good to start small.

2) Drink 0-1/2 soft drink daily in my home. Again, the plan is to work down to zero, but there's a good chance I'm addicted to caffeine.

3) Read the Bible every weekday. Not many exact parameters on this one yet, but I would like to open and read a portion of the Bible 5 days a week. I claim to believe it's valuable, but my actions say otherwise. (update)

4) Pray regularly. Same details as the previous one.

5) Allow my wife to pick one for me. She knows my flaws better than anyone and I trust her more than anyone. Who better to help me improve? (update)
The only difference is this year I'm going to put my economics skills to work. This year I'm going to try a very specific commitment device. I hope to put in place a future incentive to keep my future self just as motivated as my current self. Last year a reader recommended that I put money on the line using the website The only problem with that is my wife is cheaper than me, so she would be punished more for my failure. Not a recipe for a happy household. Instead, I've made her my commitment device. One of our big financial debates is whether I got out with friends after improv practices and shows. So here's what we've agreed to:
For each of the five goals completed, I will earn $1 to go out with friends every week.
It's not much, but maybe it will be that little nudge I need.

Emptying the Bottle: Early-January '11 Links

Here is a list of the worthwhile sites I've Bookmarked recently:
As always, feel free to email me anything interesting you come across.