Healthiness is Happiness Research

Happiness economics has become a growing study as people realize that life satisfaction isn't all about wealth. However, there are still a lot of complaints about the research. The two major problems I have with the science: 1) How to compare happiness throughout time? For example is a peasant is the 1500's less happy because they don't have anesthesia or vaccinations, things they've never dreamed of? 2) How accurate is self reported satisfaction? So instead of relying on how people feel they feel, let's measure how they actually feel. If happiness equal healthiness, then use it as a form of measurement. Don't resting heart rate, body mass index, and blood pressure seem like better measures than "are you very happy, fairly happy, or kinda sorta happy"? Speaking of, here are some interesting things the current research says about that little thing called happiness.

Causes of and Responses to Recessions

In case you haven't heard the news, the "Great Recession" ended sometime over the summer. All that means is Gross Domestic Product (a sum of everything we produce) is no longer shrinking. That doesn't mean unemployment and company profits are back to normal. That's the good news, the bad news is that we, as in the general public, still don't fully understand what causes recessions. As a free marketeer that doesn't necessarily scare me (we don't need to understand it for it to work), but as a voter it worries me. There is historical trend that government power increases in times of uncertainty (Civil War, Great Depression, 9/11). The more we understand economic hardships, hopefully the less fear mongering.

The definition for a recession is when GDP decreases for at least two quarters. That means for 6 months we produced less stuff than we used to. But why? We have the same people, the same buildings, the same machines. The most simple explanation is that recessions aren't economic losses, because nothing is lost that can't be gained back, but are instead economic shifts. In this most recent example, we had a housing bubble. This is due to government subsidies (predicted in 2003) and a general lack of information in the housing market (or tulip market in the 1600's). After the boom busted, houses were plentiful, decreasing housing prices, sending a shock wave into investment and banking. All of a sudden construction workers, realtors, mortgage lenders, etc. are out of work, not buying as much as they would normally and now everyone is hurting. While the unemployed look for new jobs during that transitional period, production is lost. It's important to note, recessions start with loss of production (or mis-production), not loss of spending.

So if that's what causes recessions, how should nations respond to them? Bush and Obama both followed the ideas of John Maynard Keynes. Among other things, he proposed using government spending to counteract the loss in private spending. The idea seems logical, but ignores the fact that any government money comes from present (or future) taxes. Not to say that large government spending can't increase GDP, but that any increase it causes will have at least an equal decrease later. Also, public money is subject to the wills of political officials, with all the inefficiencies and special interest that come along with that. The main opponent of these ideas was Milton Friedman (here's a good rap about the debate). As an advocate for free markets, he proposed waiting through the transitional period and letting things get better on their own. Though he did support government lowering the interest rates to encourage scared investors to come back sooner.

But Keynes is not stupid. If he read this blog post he would agree that in the long run the market would self correct. But he famously said, "in the long run we are all dead". What he forgets is that our children are not. It seems very plausible that Bush's and Obama's stimulus packages increased production and helped some people, in the short run. But our children will be left to pay the bill (but maybe that's not all bad). Yet I must admit, even in a perfect market prices and wages are sticky, which means people don't like to see them change. Much like unemployment benefits, this only makes the transition period longer. Hopefully as time moves on, recession length should shrink due to ease of transportation and internet connections like Craigslist. I personally support allowing the billions of individual decisions of the market to eventually get us back on the road to more prosperity, but I also realize that a government stimulus out of fear is better than electing the next Hitler out of fear.

Read All Legislation Aloud

Whether it's watching the Democrats push reform that ignores market ideas (individual tax exemption, cross state purchases, and HSA's) or watching Republicans become no robots (nobots?) doing everything they can to halt any reform, I haven't been enjoying the health care debate. However, a recent Republican tactic has given me a great idea for future legislation. A Vermont Democrat withdrew his amendment after a Republican called for all 767 pages to be read aloud, which would have taken 17 hours. With the average length of congressional bills getting longer over time (this one is about as long as the Bible), the likelihood of Congress actually reading the bill gets smaller. I propose that all laws have to be read aloud by one of the authors (no clerks allowed). This might not increase knowledge about the bill, but my hope is that it will shrink them or at least discourage wasteful additions. If I'm lucky, it may even increase the opportunity for fast talkers to run for Congress.

Most Popular Christmas Toys Since 1960

Guess for 2009 is a Kindle, iPhone or maybe Snuggie. Either way it's good to live in 2009.

Graphic from Permuto Discoveries.

Emptying the Bottle: Mid-December '09 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• The total number of Wikipedia articles tagged in each country [map].
• Genius idea for scamming the credit card companies out of frequent flier miles.
• 56 newspapers in 45 countries printed this climate change editorial.
• For a group of states' rights advocates, the Confederacy looked a lot like socialism.
• My worst economic fear is the end of social cooperation.
• Fair Trade is mostly a marketing gimmick.
• The original RedBox.
• Apparently the diminishing marginal utility of wealth begins at $40,000 (earlier).
• Time flies and you're having fun.
• I figured out way too late that the key to interacting with people is asking questions.

The Decade's Counterintuitive Ideas

In case you haven't noticed, I like ideas you have to think twice about (there are too many examples to link, so just click on random post under Subscribe and you have a pretty good chance of coming across one). New York magazine recently collected a list of ideas from the last 10 years that may blow your mind, here are the highlights:

1. Amateurs are better than experts.
2. Boys are the biggest victims of sex discrimination.
3. Hard work is more important than intelligence for success.
4. Breast-feeding's benefits are more correlation and causation.
5. Car seats are less safe than just a seatbelt.
6. Global cultural homogenization is good.
7. Drug dealers don’t make more money than the working poor
8. Gay marriage is good for Conservatism.
9. New Orleans shouldn't be rebuilt.
10. Obesity is not an epidemic, but America's obsession with it is.

This is just the top 10, the rest are worth looking into as well. As usual, this was shown to me by the internet's great hunter-gatherer, Tyler Cowen.

Men, Women, and Humor

Women like funny men, but men like women who think they're funny. I find this true in my own experience and apparently the research agrees:

I found that women were more attracted to humourous men, but men's mate choice was uninfluenced by women's humour production. I also found that women were most attracted to a partner's production of humour, while men were most attracted to a partner's receptivity to their own humour. Men and women also differed in the extent to which they reported producing humour in the presence of the opposite sex; men reported a greater increase in their use of humour around the opposite sex than did women.

This must be at least part of the reason women are underrepresented in comedy improv, even at the theater I perform with. There is little doubt that women have the ability to be funny (I can name plenty of examples), but it seems men are socially groomed for it.

My Christmas Audio Wishlist

As I mentioned last year, Christmas is a tough time for people who like efficiency. 'Tis the season to give and receive more gifts then we would have otherwise bought without the social pressures of December 25th. Even worse, many of those gifts cost more than the person receiving them would have ever paid (creating a loss of wealth). Now before you call me Grinch, let me state that the increase in happiness people get from spending time with other people most likely outweighs the loss from gifts. That said, what I most want most from my loyal blog readers is not something I can buy myself, but something only you can give me. We all come across lectures, sermons, talks on different topics that we found interesting, but we don't always share them. This is your chance to make my daily commute more interesting with your favorite TED talk, NPR interview, or even local sermon. After all, I'm not afraid of the intangible gift. Please post the links in the comments and thanks in advance.

Economics of Menus

Restaurant menu makers use incentives to nudge customers in the most profitable direction. The more you understand them, the more you can avoid them:

1. The Upper Right-Hand Corner
That’s the prime spot where diners’ eyes automatically go first. Balthazar uses it to highlight a tasteful, expensive pile of seafood. Generally, pictures of food are powerful motivators but also menu taboos—mostly because they’re used extensively in lowbrow chains like Chili’s and Applebee’s. This illustration “is as far as a restaurant of this caliber can go, and it’s used to draw attention to two of the most expensive orders,” Poundstone says.

2. The Anchor
The main role of that $115 platter—the only three-digit thing on the menu—is to make everything else near it look like a relative bargain, Poundstone says.

3. Right Next Door
At a mere $70, the smaller seafood platter next to Le Balthazar seems like a deal, though there’s no sense of how much food you’re getting. It’s an indefinite comparison that also feels like an indulgence—a win-win for the restaurant.

4. In The Vicinity
The restaurant’s high-profit dishes tend to cluster near the anchor. Here, it’s more seafood at prices that seem comparatively modest.

5. Columns Are Killers
According to Brandon O’Dell, one of the consultants Poundstone quotes in Priceless, it’s a big mistake to list prices in a straight column. “Customers will go down and choose from the cheapest items,” he says. At least the Balthazar menu doesn’t use leader dots to connect the dish to the price; that draws the diner’s gaze right to the numbers. Consultant Gregg Rapp tells clients to “omit dollar signs, decimal points, and cents … It’s not that customers can’t check prices, but most will follow whatever subtle cues are provided.”

6. The Benefit Of Boxes
“A box draws attention and, usually, orders,” Poundstone says. “A really fancy box is better yet. The fromages at the bottom of the menu are probably high-profit puzzles.”

7. Menu Siberia
That’s where low-margin dishes that the regulars like end up. The examples here are the easy-to-miss (and relatively inexpensive) burgers.

8. Bracketing
A regular trick, it’s when the same dish comes in different sizes. Here, that’s done with steak tartare and ravioli—but because “you never know the portion size, you’re encouraged to trade up,” Poundstone says. “Usually the smaller size is perfectly adequate.”

Via Marginal Revolution

Worthwhile Sentences on Bad Government

From Tyler Cowen: "China uses American spending power to enlarge its private sector, while America uses Chinese lending power to expand its public sector."

From Milton Friedman: "The minimum wage is a law saying that employers must discriminate against workers with low skills." or "We regard the minimum wage law as one of the most, if not the most, anti-black laws on the statute books."

From the Tax Foundation: "Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined."

From USA Today: "The marketplace doesn't determine how many doctors the nation has, as it does for engineers, pilots and other professions. The number of doctors is a political decision, heavily influenced by doctors themselves." (and also the government)

From Bryan Caplan: "In the thirties, governments had Four Year Plans. Today, they have Four Year from Now Plans - big policies that basically don't kick in until the next election."

*Past worthwhile sentences.