Likelihood of Government Run Health Insurance

I'm not one to claim blogging will replace the mainstream media, but here's something TV regular fails to cover, prediction markets. I've talked before about the accuracy and problems of markets like Intrade.com, but there is a lot of evidence they are accurate. Despite all the media coverage of government health care reform, the possibility of anything actually passing is pretty small. The current chance of reform with a public option passing by June 10th this summer is 20%:


So next time you hear about the future, check the markets.

Don't Get Organized, Get Simplified

Now that Thanksgiving is over I can post on a Christmas related topic. In about a month we are all going to get a lot of stuff and as someone who participates in gift exchanges, I think it is mostly a good thing. But for some reason, some people allow their stuff to burden them. The Freakonomics Blog recently linked to the Happiness Project's 11 Myths of De-Cluttering. It's mostly about how desires for organization are just excuses to keep your house cluttered. When I moved to North Carolina last year I realized how much stuff I had that I don't use regularly. Stuff is great, but we should buy things that relieve the stresses of everyday life, not add to them. Our stuff should allow us more free time to spend with people we care about, not replace the people we care about.

Bloggers Should Link to Wikipedia

One of my favorite things about writing online is that I can link old ideas to news ones. That is why throughout posts you will find links to old posts. Another benefit of online writing is that I can link my ideas to others' ideas. Instead of fully explaining some economics term or historical event, I just assume you know what it is and link to it just in case. But a problem arises when deciding which site to link to. There are plenty of choices, so which do you use? I say Wikipedia. Not only is it currently accurate (old post), it is also adaptively so. Information is always changing and wikis have the ability to chance with it. It is also a reliable down the road. Nothing is more frustrating than clicking a dead link (here's a site to check if you have any). And finally, Wikipedia is concise and familiar. Quick summaries at the top with details outlined below and best of all, no ads. So if I ever want to tell you about the least famous famous American, I'll probably link Wikipedia.

Last Names and Academics

I have seen this trend in my own classes; students with names near the end of the alphabet generally do worse. This reminds me of the classic correlation vs causation problem (my comments at the bottom). So here are my attempts at explaining this phenomenon:

1) Business owners with last names near the end of the alphabet are more likely to be in the back of the yellow pages (or at the end of a bookshelf), more likely to be less successful, and more likely to have less money to spend on their kids education.

2) Whether it's lining up for lunch in elementary school or handing out papers in high school, people with last names near the end of the alphabet may have a more contentious relationship with the educational system.

3) When put in alphabetical order, they may be more likely to be in the back of the class, which has a negative effect on learning.

4) Being at the end of the alphabet puts you later in class registry for college, which could decrease grades, which could decrease income, which could decrease the money spend on children's education.

5) Perhaps last names starting with X, Y and Z are harder to pronounce, which I can imagine has a negative impact on career.

I'm grasping at straws, anyone else have a better explanation?

Thankful For Health Improvements

The Wall Street Journal recently 20 recent health advances, here are the highlights:

• Fewer Americans died in traffic fatalities in 2008 than in any year since 1961 (whew)
• Life expectancy in the U.S. reached an all-time high of 77.9
• Death rates dropped significantly for many leading causes of death: cancer, heart disease, stroke, hypertension, accidents, diabetes, homicides and pneumonia
• The proportion of undernourished children world-wide under five declined to 20% in 2005 from 27% in 1990.
• The U.S. divorce rate dropped by one-third from 1981 to 2008, and is at its lowest level since 1970 (though this may be because people are marrying less).

Happy Thanksgiving everyone.

Beware of Passion Fatigue

Sacrifice is a good thing, but too much of it can hurt you. I've talked before about how all relationships are part give and part take. I've also cautioned about having too many friends that take more than they give. Humans have their limits and when we try to push past them, it can cause huge mental and emotional distress. One example are judges who hear asylum cases for potential immigrants. Everyday they hear first hand the most horrifying stories from around the world. This has resulted in some of them developing secondary post-traumatic stress syndrome. Not only does this decrease the quality of their life, it also inhibits their ability to hear refugee cases without bias. If it is true in the extreme, it is probably marginally true for the rest of us. I've trying (and often failing) at taking more responsibility for those around me, but it is good to remember I have limits.

Emptying the Bottle: Late-November '09

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

• I generally support payday loans as a helpful way to get quick money, but apparently giving a clear description of the loan reduces applicants by as much as 10 percent.
• Listen to people who hate you and other great advice on taking advice.
• Ayn Rand was not a Libertarian and didn't really like them.
• When offered credit or debit at the register, choose credit.
• Way for bloggers to know what the popular links are, not sure if it's useful.
• When your plane is delayed, it might be Federal Aviation Administration's fault
• Trying to get Al Gore to debate global warming (I'm torn).
• Clear explanation of how companies take over other companies.
• I'm skeptical of "are you happy?" questionnaires, but these observations are fascinating.
• The landmark Supreme Court case that once gave government the right take away private land for private use has fallen on its face.

Talk Faster, Listen Faster

One of the complaints I hear from the classes I teach is that I talk too fast. I've tried to work on it, but maybe I shouldn't:

The average person talks at a rate of about 125 – 175 words per minute, while we can listen at a rate of up to 450 words per minute

Even if that second number is half what the research says it is, we should all be talking faster.

Mister Diplomat Blog: A World Without Oprah

I've recently become a contributer to the Mister Diplomat comedy blog. Here's my first post:

In 1984, Oprah Winfrey became the host of a morning talk show that in less than a year became so popular that it was renamed The Oprah Winfrey Show. That means I have never lived in a world without Oprah on TV, but this is about to change. Last Friday Oprah announced that she will be ending the show next season. From a ridiculous interview with Tom Cruise to pulling a Radio Flyer wagon full of 67 pounds of fat that she lost, who knew a woman with misspelled Bible character’s name could go so far. Even worse, with Oprah not giving away cars, boosting book sales or starting new television shows, we may just fall back into a recession. But don’t fret middle aged housewives, there is some silver lining to this daytime storm cloud. Perhaps Chicagoans who used to devote their time to Oprah will now leave their homes and go see some great improv. And now maybe now she’ll finally have time to take us up on our Diplomat guest offer.

Subscribe here to see me get my comedy writing feet wet.

Don't Tell My Students, Sleeping Helps You Learn

This could be a guest post from most high school students I know:

There’s nothing like a good nap. It can refresh your mood—and possibly your memory. Because a new study in the journal Science shows that a quick snooze after a mental workout helps to consolidate learning. And that sounds heard during sleep can trigger associations that sharpen memory even more.

Here's the full story.

Economics of "I Want One Too"

We've all seen children playing in a room with dozens of toys only to end up fighting over one. Most would explain this away with irrationality or jealously, but those reasons rarely satisfy me. A better explanation is that playing with a toy signals that it is valuable. When a child sees another child playing with a toy, it is evidence that the other toy is fun. When they try and take it and their friend resists, this only confirms what they suspected. This also helps explain the strategy used by parents to distract fighting children by showing them how fun other toys are. They are trying to signal that other toys are just as fun and aren't already being used. Speaking of adults, how are we like this too?

Combat Is Not the Only Threat

I stick by my statement made last year about letting sovereign nations decide for themselves whether they want American occupation. Here is a shocking statistic I recently heard about US deaths in Operation Enduring Freedom: So far in 2009 there have been 292 American combat deaths in Iraq and Afghanistan. During that same time there have been 140 active duty suicides. I hate war, but I respect men and women who are willing to die while serving in the American military. The more I hear stories like this, the more I think the best way to honor them is by bringing them home.

Yet Another Reason for Men to Get Married

Not only are wives smart, funny, educational, and a good investment, they're also good for you're health:

Swedish scientists have discovered that long life and good health have nothing to do with a man’s education and everything to do with his wife’s. Men married to smart women live longer — simple.

By improving our nutrition and keeping us from being too risky, educated women help their husbands live longer. They also help them die less:

The mortality rate among single men under 34 is about 2½ times higher than that for young married men. Widowed and divorced men over 80 have a mortality rate one third higher than married men.

This is yet another motivator for me to keep my promise to treat my wife well.

Politics in Football

Here's some drama to get me into sports. Patriots have the ball, 4th down, 2 yards to go on their own 28 yard line. They're currently up by 6 with a little over 2 minutes left. Should they punt or go for it? The answer depends on what you want:

Economist David Romer studied years worth of data and found that, contrary to conventional wisdom, teams seem to punt way too much. Going for a first down on fourth and short yardage in your end zone is likely to increase the chance your team wins

If you goal is victory, go for it. But is that the coach's goal?

Even though going for it increases his team’s chance of winning, a coach who cares about his reputation will want to do the wrong thing. He will punt, just because he doesn’t want to be the goat.

This story was particularly interesting because of it's parallel to politics. The goal of a elected officials isn't to create good policy, it's to get votes. This should make us at least skeptical, if not outright pessimistic, of politicians.

Diminishing Marginal Utility of Wealth

Don't get scared by the title. Here's the vocabulary: diminishing: increasing at a decreasing rate, marginal: counting each increment, utility: happiness, and wealth: how rich you are. Or to put it plainly, Diminishing Marginal Utility means the more you consume of something, the less you enjoy it. The first bite of your dinner is better than the last. You'd pay one price for the first ride on a roller coaster, but you'd pay less for the 10th ride. Personality quirks can be charming on the first date, but get irritating by your one year anniversary. The same hold true for money.

Diminishing Marginal Utility of Wealth means the more wealth you have, the less happy each incremental dollar makes you. A dollar means a lot more to someone in third world, than it does to Bill Gates. I say this as a challenge to what I say regularly on this blog. Sure people are richer they than used to be, but does that mean they are happier? The general consensus seems to be that once humans get above the minimum wealth needed to support life, then the happiness brought about by each dollar gets smaller and smaller.

One possible explanation for why is happy amnesia. We forget how bad we used to have it. It could also be because happiness comes from relative comparisons of wealth. A keeping up with the Joneses mentality. A final reason could be the wealth/time constraint I've talked about before. That said, though they are diminishing, the benefits are not zero. There is still a strong correlation between measured happiness and wealth. We should continue pursue human progress, but not idolize it.

Update: The diminishing marginal utility of wealth begins at $40,000.

Sports as Reality TV

Since I can remember, I've never really been into watching sports. Don't get me wrong, I like participating. At my peak, I was playing basketball three times a week. But watching sports for entrainment never really appealed to me. Sure I went to football games at my high school, but that was more a social activity. Even in college, though I went to most home Clemson football games, I was always a fair weather fan. This weekend I went with my older brother Austin, who is a true sports fan, to watch Clemson trounce NC State 43-23. It was there that I finally understood the attraction of sports entrainment. My brother said it best: "sports are like reality television."

It's an unscripted documentary of real events featuring non-actors. People like sports for the same reason I like my favorite reality TV show, Survivor. The more you know about the players, the more relatable they are, the more interesting the show is. Committed fans know the back story. Whether it's the new up and coming coach or the possible Heisman winner, it's the drama that brings the audience in. That said, my sports apathy probably isn't going way. It's the same reason I didn't start watching Lost until after they announced how many seasons there were going to be. Time is scarce and I won't give sports the attention required to be engaging.

Emptying the Bottle: Mid-November '09

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

• Good summary of what I want in health care reform, more choice
• Earmarks were less than 1/2 of 1% of all Federal spending last year, but they still suck
• What the inside of a Redbox looks like [picture]
• Teachers should suggest more education, but what if college "a drain on our economy"?
• Apparently food is a gateway drug [audio]
  
• Then again, the unemployment is heavily dependent on education
• Personal debt could also be genetic
• Great video series from ABC's 20/20 [video]
• A nice shout out from a fellow blogger
• How insider trading is good for all investors
  

The Only Strategy is Not to Play the Game

I did this bid last semester to convince students to take my AP Economics class and it worked perfectly. Sadly my class got canceled for budgetary reasons (the economics of economics?), but this video shows how an all-pay auction would be a good sell AP Political Science too:



Via Marginal Revolution. This is how the online auction site Swoopo.com works. They sell a flat screen TV for $12, but make hundreds on sale. Find a product and watch the bidders countdown, as long as you're the one watching, not bidding.

Don't Put All Your Eggs in One Basket Producer

I've written generally about my long term financial plans, but here is some simple, but good advice on how exactly to invest. It's a graphic from a recent addition to my blogroll, VisualEconomics.com. The main idea is diversity. Not only do you want to invest in a variety of companies in different industries, but also in in different countries. It might also be a good idea to put some money in businesses that actually do better in hard economic times.

Another idea mentioned is not investing in the company you work for. Even if you are getting a employee discount on the purchase, you are putting yourself at incredible risk. If your company goes bust, then you not only lose your savings, but your current income. For the same reason, it is probably not a good idea for breadwinners in the family to work for the same company. "But my company is a secure staple of the American economy." Tell that to the laid off employees of General Motors or Jim and Pam from last night's episode The Office.

"Economics of" Roundup

Economics of

• acting out in school
• illegal downloading
• better to have love than lost
• pink ribbons for cancer
  
• foreign aid agencies
  

Search Item Biography

Came across a quote recently about how we are most honest in our search box. Well, here are my search topics for yesterday (go here to find yours):

7:34pm: poop as a fuel source: wanted a funny comeback to a blog comment
6:22pm: gay celebrity: wondered if Ellen Degeneres would be the first result, she wasn't
1:52pm: spanish mission: wanted to show a picture to my students
1:07pm: o magazine: my wife must have been on my username
9:16am: us map in 1850: also for a class
9:04am: dark horse: read this in a text book and wasn't sure what it meant
8:55 am: stephen austin: always get him mixed up with Sam Houston
8:43am: davy crockett: trying to figure out if he survived the Alamo, he didn't
8:21am: bad in school if your name is at the end of the alphabet: upcoming blog post idea
7:43am: harrison brookie: apparently I searched my own name first thing, can't remember why

Not as interesting as I would have thought. Maybe blogs should have a side bar of what the writer searched for that day. It has the potential to be either really boring or really weird. I found an RSS feed for the "hot trends" on Google, but it updates every hour. Anyone know where I can find a daily version?

Work Comes Back Home

Friend, fellow improviser, and the World's Best Presenter two years running, Jeff Brenman, recently posted another interesting slide show. It's about the increasing trend of working from home. Thanks to increases in communication technology, jobs that were created only a decade ago, are already be homesourced. However, the title of the slide show, The Future of Work, misrepresents world history. Working from home isn't the future, it's the past. Before the Industrial Revolution in the mid-1800's almost all people worked on the family farm. It wasn't until the birth of factories that men left the home to work. Perhaps the last two centuries may be the exception to the long term trend of working from the home. As someone that commutes a lot, I look forward to that.

I'm Not a Special Interest

I take it back, I'm not one to lobby government to help me out at the expense of other citizens. Since I bought my car last year, I've put 30,000 miles on it. That's 82 miles a day, or about an hour and a half of driving. Despite my long commutes to work (45 mintes), theater (25 minutes) and church (20 minutes), I not only denounce consumer price bullying, but support a gas tax. Here's why:

After adjusting for inflation, Americans now spend some 35 cents less per gallon of gasoline than they did in 1950.

Don't worry there's more:

Increased gasoline prices would have spurred more rapid development of fuel-efficient automobiles and alternatively fueled vehicles such as electric cars.

and more:

Air pollution would have been reduced significantly

and it's not just for hippies:

The Federal treasury would have received more than $250 billion over the past 12 years [with a 30 cent tax]. These funds could have been used to reduce the deficit or to address other critical needs, such as rebuilding America's transportation infrastructure.

There also the reasons I've mentioned before of less behavior distortion and reduced traffic deaths.

Importance of the Economy on Human Life

To celebrate the 20th anniversary of the fall of the Berlin Wall and the successive end to the Cold War, I'd like to make a brief comparison on the impact communism and capitalism have had on human life. According to the Black Box of Communism, direct governmental take over of a national economies has resulted in 100 million deaths. That is equal to the number of dead from World War I and World War II combined. However, the impact of capitalism is not one of destruction, but of creation. The emergence of the free market, which in turn allowed for the Industrial Revolution, brought about the largest increase in prosperity ever seen in human history. The population of the world had been relatively constant, at about half a billion, until this increasing wealth has brought another 6 billion people into the world. I not only thank unhindered human industry for more life, but also for a better life.

DISH, Texas

Here's the story behind the name of the town:

The municipality was previously named after its founder, Landis Clark, who incorporated it in June 2000 and served as its first mayor. Clark was beaten by one vote in the Spring 2005 election by Bill Merritt.

In exchange for renaming the town, all residents of the town have received free basic television service for ten years and a free DVR from DISH Network. There was no formal opposition to renaming Clark; twelve citizens attended the council meeting to support the measure.

Don't tell Ed Helms, but I didn't pay anything for Harrison, Ohio.

Love Your Spouse as Your Neighbor

Recently I heard some good advice from a friend's Google shared item (are you still not sharing?). It was about how married couples often treat strangers better than they treat the one person they have vowed to love. My first instinct is to say I think that's bad, but my actions are probably a better measure of my true beliefs. I need to understand why I in my head, which seems to be stronger than my heart, I act this way.

After a fun show at the theater last night, I got the chance to talk with some audience members and I really enjoyed it. On the ride home, I felt the need to continue the conversation, but my wife was busy watching Rihanna's interview with Diane Sawyer (she loves human interest stories). Then it hit me, I selfishly love interacting with strangers, especially ones that want to interact with me. For the low low price of a couple minutes of polite questions, these people will walk away with a positive opinion of me. My wife on the other hand, has a lot more information. One conversation with her has less impact on her opinion of me because it is one of many.

But don't worry, this is a confession, not a justification. If it's inexpensive to gain the approval of strangers, then I'm probably getting what I paid for. Random people forget me as quick as they met me. My wife's admiration, because it is based on many interactions, is more valuable. Her opinion of me is not based on the me I want people to see, but the real me who puts his dirty clothes on the back of the couch, rarely does dishes, and probably spends too much time blogging. The solution is to recognize that cheap praise, is just that, cheap.

Emptying the Bottle: Early-November '09 (II)

Here is a summary of the Google shared items from worthwhile sites I've found lately:

• free trade keeps you from spending $10,000 on a crappy suit [picture]
• decreasing importance of physical labor strength and its impact on families
• house flies carrying banner ads [video]
• the trade off between murders and suicides
• neat way to tell comic book stories [videos]
• local improv over the radio
• being a complainer makes you more perceptive
• the value of hiring ugly people
• dolphins understand scarcity
• sneezes make people afraid of everything
  

Phillies Lose Globally

Just a few minutes ago the New Yankees beat out the Philadelphia Phillies in game 6 of the World Series. After the game I noticed the players were wearing championship merchandise with their logo on it. This got me thinking, what would happen if this was game 7 and they didn't know who would win? Answer: they would make two versions and shred the products of the losing team. Seems like a waste to me and apparently to the NFL:

They will be shipped Monday morning to a warehouse in Sewickley, Pa., near Pittsburgh, where they will become property of World Vision, a relief organization that will package the clothing in wooden boxes and send it to a developing nation, usually in Africa.

Sadly, even in third world countries, the Phillies still lost.

Supply and Demand for Husbands

Surprisingly, some women in Russia are lobbying their government to legalize polygamy because "half a good man is better than none at all":

"Friends of mine in Siberia told me that their friends were lobbying parliament to legalise polygamy," she says. "I always knew that there were men who like the idea of polygamy, but what I found fascinating was that women were also in support."

So is the recession going to turn the good burghers of Tunbridge Wells into polygamists? It's unlikely. But it remains the case that the reasons why men – and, even more interestingly, women – are advocating polygamy in Russia and Mongolia are as much about economics as they are about sex. The critical issue is demography. The Russian population is falling by 3% a year – and there are 9 million fewer men than women. Nationalists, such as the eccentric leader of the Liberal Democratic party, Vladimir Zhirinovsky, claim that introducing polygamy will provide husbands for "10 million lonely women" and fill Mother Russia's cradles.

As a libertarian Christian this is one of those tough issues for me. I want to give people the freedom to chose their best life, but I wonder if they know what their best life is.

Get Rich Slowly

As of yesterday my wife and I are 100% debt free. In one year we paid 30% of a teacher and social worker's income to knocked out my student loans. Now we can start working on the rest of our financial plan:

• 2009: pay of student loans
• 2010: fund 3 months expenses emergency fund
• 2011: buy a townhouse with 20% down
• 2011: have some babies
• 2012: begin savings for college/pension supplement
• 2020: move into house to fit all 3.5 kids
  
• 2030: begin handing out college tuition
  
• 2050: pay off house completely
  
• 2050: retire, collect Social Security (or not), play with grand kids
  
• 2070: sell the house and move with my old lady to a "home" that can wipe our drool
  
• 2085: die driving a motorcycle on the open road while smoking a Cuban cigar in Brazil
  

With all this talk of savings it got me looking into how much I'll actually have to set aside, especially once Traci starts to stay home with the kids. I've talked before about how the stock market is so complex that it is essentially random. What this means for the average person is that stock market is for long term, not short term saving. Historically there’s an 55% chance that the stock market will give a 10% return over one year. There’s an 85% chance over a decade. But, there is a 100% chance of earning that return over a 30 years. Here's a resource for calculating how much you have to save/invest each month to reach your goals. For example, you have to only have to invest $442.38 a month in the stock market at 10% over 30 years to reach a million dollars! I'm looking forward to sitting down with a professional financial adviser in the near future to see if my opinions, which are a combination of my economics background and financial radio talk show host Dave Ramsey, make sense in the real world.

Emptying the Bottle: Early-November '09

Here is a summary of the Google shared items from worthwhile sites I've found lately:

• majority of the executives whose salaries were to cut have left already
• President George Washington stopped this little known almost revolution
• scientific support for the hard tests I give and the time spent going back over it
• common cup communion during the flu season, what's a Christian to do?
• murderer/kidnapper sues victim from prison
• French court convicts Church of Scientology of fraud
• how to deal with "too much choice"
• my old church gets featured in a photo blog
• the grass is always greener, even when you can pay someone to mow it for you
• why the public option is not the answer
  

The Market Knows Best

One of the main complaints against capitalism is the unwieldy power "the market" has. Stocks go up or down seemingly at random, speculative bubbles burst affecting even those not investing, businesses distort prices to victimize consumers, etc. These all too often misunderstandings of the free market forget that "the market" is simply a result the combined preferences of consumers and relative scarcity. Gold is more expensive than iron because the collective preferences of buyers prefer the attractiveness of gold. Anytime the government tries to regulate these prices (taxes, subsidies, minimum wage, etc) they confuse the information embedded in them. What's most amazing is the combined wisdom of market agents can give us a lot of information even before we know what it is. Here's a great example from an old college professor of mine:

We provide evidence on the speed and accuracy of price discovery by studying stock returns and trading volume surrounding the crash of the space shuttle Challenger. While the event was widely observed, it took several months for an esteemed panel to determine which of the mechanical components failed during the launch. By contrast, in the period immediately following the crash, securities trading in the four main shuttle contractors seemingly singled out the firm that manufactured the faulty component. We show that price discovery occurred without large trading profits and that much of the price discovery occurred during a trading halt of the firm responsible for the faulty component. Finally, although we document what are arguably quick and accurate movements of the market, we are unable to detect the actual manner in which particular informed traders induced price discovery.

In other words, the market was able to figure out what went wrong before the scientists did.