Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Saturday, January 22, 2005

What Do the Kia Rio and Lincoln Navigator Have in Common?

Both are included in this list of the ten worst cars. There are lots of things I'd rather do with my money than buy any of the cars on this list.
[thanks to Jack for the pointer]

When All Else Fails, Sue the Gubmnt

These cases from Overlawyered, are sadly amusing fodder for an economic analysis of law course. Short-answer quiz: who is the least-cost bearer of the risk in these two suits against the gubmnt of the City of New York?
* The alleged wife-beater who, on being arrested by police, stumbled drunkenly down the stairs and broke his ankle, though he got nothing from a Manhattan jury;
* The legally blind Bronx man who "drove his car into a
concrete barrier" and sued arguing that better lighting might have prevented the accident
There are more here.

"Airport" Novels

Most of my fiction reading is what I call "airport" novels -- the kind you buy in airports (recall my support for the Philistine Liberation Organization).

My current favourites are the Stephanie Plum novels by Janet Evanovich and the Kidd computer geek adventures by John Sandford, although I don't much care for his other series.

Friday, January 21, 2005

Do Food Stamps Cause Obesity?

You may have seen this already. It is a summary of a U.S. Dept. of Agriculture report showing a strong correlation between being on food stamps and being obese. It is worth a look.

The reaction of friend BenS is that "correlation doesn't show causation." But what might explain the correlation?

One possibility is that people on food stamps choose cheap carbos over expensive protein sources. Another is that cheap carbos taste a lot better than cheap nutritious food, and only as incomes increase do people spend money on more expensive nutritious food.

Yet another possibility is lack of information (or will-power?) which, after all, provides the underlying rationale for the food stamp programme in the first place. If we thought people who receive food stamps could (and would?) make "good" choices (by whose criteria?), we would just give them money and let them choose. The food stamp programme, in addition to being a sop to farmers, reflects a lack of trust in the decisions made by the aid recipients.

If you don't think food stamp recipients are capable of making good choices allocating cash, there is good reason to question whether they can make good choices allocating food stamps. In that case, if it weren't for concerns about (1) paternalism in general, and (2) the capture of the programme by various agricultural lobbyists and rent seekers, the use of specialized food stamps might make sense. But then, so might continued education.

[Link courtesy of Marginal Revolution]

In Case You Missed It:
The Internet was the #1 Innovation

It was pretty much a foregone conclusion. CNN declared "The Internet" to be the #1 non-medical innovation of the past 25 years.

As I said in previous post, in my mind it was a toss-up between the internet and microwavable popcorn.

What Is the Marginal Physical Product of Alcohol?

There have been numerous studies showing that having a drink each day is good for your health. The typical result is that a glass of wine (usually red, but some studies suggest either will do) each day reduces your risk of heart disease.

This article (registration required) reports on a study of women showing that a drink a day, no matter what the form of alcohol, promotes better memory and reasoning as people age.

Those who consumed half a drink to one drink each day for at least four
years were about 20 percent less likely to have an impairment in their thinking abilities and about 15 percent less likely to experience a decline in their mental powers over the two years they were studied, regardless of what type of alcohol they preferred, the researchers found. On average, women who drank moderately tended to have the memory and reasoning agility of someone about a year and a half younger than those who abstained.
Well, if one drink is good, would two be better? What about three? More? At what point do these benefits from drinking level off (i.e. have a marginal physical product of zero) or turn negative?

Unfortunately, the results showed that

No benefit was seen among women who drank more than that [one
Please note: I titled this posting "marginal physical product" for a reason. I am asking only about the incremental effects of alcohol on brain power. I realize full well that there are other ways in which additional drinks might confer benefits and that a decision as to the optimal amount of drinking would also take into account the expected marginal costs.

Thursday, January 20, 2005

Sperm from Members of Parliament

In the state of Victoria, in Australia, a child who is the biological offspring of a sperm donor has the right, upon reaching age 18, to learn the identity of the sperm donor. Understandably, potential donors have responded to this incentive by reducing the supply of sperm. They are concerned not only about possible patrimony support payments, which can be banned legally fairly easily, but also about the moral obligations they might feel 19 or more years down the line, or the possible disruptions to their lives, as someone they have never met knocks on the door and says, "Hi, Daddy".

To deal with this shortage, Members of Parliament are being asked to step up, do their duty, and donate some sperm to the sperm bank [thanks to BrianF for the tip and amusing side comments]. As quoted by the BBC:

"We hope that if some of the leading role models within our community
become donors, others may follow suit,"
MPs? Nothing like really lowering one's expectations and standards (with apologies to Rodney).

Attention, Canadian Male Students!
Free two-week holiday in Australia?

I don't know if the programme is still in place, but from the same source:
In December, 2004, an Australian fertility clinic in Albury, south-west of Sydney, offered students in Canada a free two-week holiday in Australia in return for sperm.
So why just students???

One possible solution to the shortage might be to recruit sperm from 80 - 90 year-old males. With proper legal protections so that the offspring would have no legal claim to the males' estates (unless explicitly provided for by the males), many of them would not be too concerned about having some young adult progeny show up 20 years later.

Or, as I suggested before, why not just let supply and demand work to get rid of the shortage -- raise the price offered "donors" and let market forces work?

Does it mean anything that this is the second story I've mentioned on this topic by the BBC?

update: I couldn't resist linking to
this headline in today's NYTimes.

An Interesting Conference at UWO

How many of you will want to attend or possibly present papers at This Conference:
On Pornography, Obscenity and Spectacle
Programs in Comparative Literature, Theory and Spanish
APRIL 7-10, 2005University of Western Ontario
Call for PAPERS:

We invite proposals (500-750 words) for 20-minute presentations on literature, literary theory, visual arts, cinema, music, science, philosophy, social sciences, linguistics, media studies, etc. ...

Points of DEPARTURE:

Scandal… scopophilia… Narcossism… OBSCENITY… onanism… Snuff Wars… softwear & hard-c drives… DILDONICS… ennui décor netiquette... Pearl divers… comics stripped… pornology… speech-acts… Le Dernier Cri… Happiness… Pink Flamingos… shoes… rouge… RISK… Naked Lunch… cut&paste… flâsheur… private eye… DISGUST… toys R’ us… propaganda… slut machines… speed… Comstock… rigid canon… Bang BANNED… clinical eye… Venus in Furs… confession books… celestinas… heresy… secret museums… asepsis… divino furore… sin-optics… catoptrics… albur(del)… words 4-play… rape in wrappers… funk punk hippyhop… fun-house… peep-show... schlock shock plush KITSCH itch trash Abash lash cash sash SHhhhhhhhhhhh… ADD-gimmick. ®

If you are going to submit a proposal, it is due by January 21st. Check the website for details.

Prawn Taxes

If gubmnts in Europe and North America really want to help people in SE Asia who were hurt by the tsunami, they should reduce or eliminate the tariff on prawns. [link via Luskin]. In fact, trade liberalization in general, even without the prompting from tsunamis or other disasters, would really help developing countries.

PERC reports - a great resource on property rights, resources, and the environment

I first heard of PERC [Property and Environment Research Center] about a decade ago. Shortly after that, I worked with Jane Shaw, of PERC, teaching a small group of working journalists some of the fundamentals of environmental economics.

One of their recent publications is Rescuing Water Markets:Lessons from Owens Valley By Gary D. Libecap. You can see a blurb about it here or download the pdf file here. Here is what it is about:

In the early 20th century, did Los Angeles really buy up a bunch of farm land in Eastern California with the express purpose of gaining access to the water from there? If so, was the Coase Theorem at work?

From his conclusion:

Owens Valley holds lessons for today. Given the booming cities in the semiarid West and the increased demands for water for wildlife and
the environment, there is no doubt that water will be reallocated away from agriculture. The question is how to facilitate those transfers in the smoothest, least-costly, and most timely manner.

Water markets are an important option. But as the experience of Owens Valley shows, water markets do not develop seamlessly, even when the gains from trade are huge. Specifically, transaction costs stemming from valuation disputes, bilateral monopoly, and third-party effects can stymie trade.

It's worth looking at.

Wednesday, January 19, 2005

Rampant Anti-semitism at The University of Toronto

The Institute for Women s Studies and Gender Studies (IWSGS) at the University of Toronto recently announced its sponsorship of an Israeli Apartheid Week starting January 31. The entire collection of speakers and contributing organizations have a rabid anti-Israel bias. My guess is they will not be discussing realistic alternatives for a country when foreigners try to kill its citizens at random via suicide bombers. You can see the announcement, along with a discussion of it, at this site.

I am truly disgusted that presumably educated academics would and could sponsor such clearly one-sided politicized events. I wonder how this U of T Institute for Women's Studies feels about the dramatic abuse of women in Palestine. Here is what Lisa, of London Fog has to say about it:
Unfortunately, there have been no scheduled speakers to discuss women’s equality issues either in the workplace or before the courts in Palestinian society. There will be no discussions on honour killings; and no one will update the crowd on how the battle goes to end the barbaric practice of female circumcision. Finally, don’t look for anyone to discuss the lack of rights and brutal treatment meted out to the Christians, Druze, Domi or homosexuals in Palestinian society.

What she said!

The Future of K-8 Education?

In the future, parents will be able to home-school/virtual-school their children; the only question is when, not if. The economies of scale in the provision of education will move away from the brick schools and local school boards toward more centralized provision of education via the internet.

One good result will be that parents will have much more choice in the type of education offered their children. But one phenomenon inhibiting a move in this direction is that so many families count on schools to provide baby-sitting while both (or single) parents work. Member of Parliament, Rodney Hide of New Zealand, seems to like the idea of virtual home-schooling. I do, too; and I like that it makes clear there are two functions at work in most schools these days: education and babysitting.

But since I'm no socionomologist, I cannot speak for what will happen to the social skills development of youngsters who are home-schooled via the internet.

This I GOTTA see: Numb3rs

CBS has been advertising the premiere of "Numb3rs", a television show in which FBI agent Don Epps recruits his younger brother Charlie, a brilliant mathematician, to help him solve crimes. In one of the ads for the show, Charlie says,
It's all in the numbers.
I love it already, partly because one of my best friends from long ago is named "Charlie", and he is really smart. In the show, they use math, probabilities, and statistics to solve crimes. I wonder how long it will last. The increasing use of biology and chemistry to solve crimes on tv shows has caught on really well, with all the CSI shows; maybe, just maybe, it's time for math. After all, people are finally beginning to recognize the importance of statistical analysis in sports, as in Moneyball, or as exemplified in many sports blogs (e.g. The Sports Economist or Sabernomics).

But why did they have to get so cutsey and use a "3" instead of an "E"?

Doing Research on Polygamy

Are you interested in doing research on polygamy? If so, the Canadian gubmnt has some money to fund such research. In fact they have issued an urgent call for proposals.

It turns out that the arbiter of the funding is Status of Women Canada [sic]. Here is an excerpt from its call for proposals:

Status of Women Canada (SWC) believes that good policy depends on
good policy research. Any debate regarding polygamy, religious freedoms and the Criminal Code and related policies should be centered on finding policy solutions which fully respect gender equality.

Little independent research exists that has been published on polygamy and its effects on participants and on our wider society.
In order to best repare [sic] for possible debate surrounding Canada's polygamy policy, critical research is needed. It is vital that researchers explore the impacts of polygamy on women and children and gender equality as well as the challenges that polygamy presents to society.

As a male who would likely have risked being left without a partner in a society that permitted polygamy, I am understandably opposed to polygamy out of pure self-interest. It strikes me that in a society of free choice, permitting polygamy only increases the demand for women as potential marriage partners, thus making women better off relative to men, in comparison with the situation under monogamy. Do you think the funding committee would fund a research project along these lines?

For more on the economics of polygamy, see this chapter in David Friedman's Price Theory text, especially the first portion of the chapter.

[Thanks to BenS for the pointer to the call for proposals]

Tuesday, January 18, 2005

Posner and "Blink"

Here is a fun review by Ann Althouse of Richard Posner's review of the hot new book, Blink, referred to earlier in my posting about student evaluations of instructors.

Despite what Althouse (and the New Yorker) have written about him, yes, I still think Posner should win the Nobel Prize in Economics. I see that New Zealand MP, Rodney Hide, agrees.

Would You Like to be in a Movie?

If you are an instructor, just keep talking about your political views in class, especially if those views and topics bear little or no relation to the course subject. Students are being encouraged to report you. They are being told:
Based on your reports, we will be visiting a number of schools to see what the administration's official position is on political advertising in class. If you help us, you could end up in our movie!
If the socialist/interventionists were doing this, I might upset. But it's probably not a bad idea overall to try to rein in some of the professoriate who abuse the notion of academic freedom.

[Thanks to BenS for the pointer; SCSU Scholars also has a posting on the topic]

The Rational Non-Voter

As an economist, I often take great delight in pointing out that the expected marginal benefits of voting are greatly outweighed by the expected marginal costs. Most of the time when people vote, they have little-to-no expectation that their vote will affect the outcome, they have little-to-no expectation that their vote will have an impact on the policies of whomever is elected, and they have a reasonable expectation that they could have done something else of positive value with their time, transportation expenses, etc.

Facing these expected costs and benefits, in North America we see turn-out rates at the polls of somewhere between 30% and 80%, even though the expected costs outweight the expected benefits.

Now consider the expected costs of voting in Iraq's election, with potential candidates and poll watchers being assassinated, who knows what will happen to the actual voters? Given that the expected costs of voting are quite high for that election, it should not surprise people if the turnout is low. And given the very high voter registration of Iraqis in North America, it is possible that absentee voters from North America could determine the outcome of the election.

Would you vote if you lived in Iraq? I don't know that I would, but since I'm old, the expected costs are lower for me; and generalizing from this, we should expect higher voter turnout in Iraq among the old and others with similarly low expected costs of voting.

Goon Suspended From Semi-Pro League

From ESPN.COM: [Thanks to BrianF for the tip]

Philadelphia Flyers enforcer Donald Brashear has been suspended for the remainder of the season by a semi-pro league in Quebec for repeatedly punching a player in the face while he was lying on the ice.

Brashear was one of three Radio X players suspended Thursday by the Ligue Nord-Americaine de Hockey following violence during a Dec. 7 game in Thetford Mines.

Radio X has appealed both Brashear's ban and a 12-game suspension to former Montreal Canadien Sylvain Blouin. The league also suspended Quebec's Chad Richards for the rest of the season, but the team opted not to appeal his suspension.

Richards, a 6-foot-6, 235-pounder from Anchorage, Alaska, was
suspended for the remainder of the season for a violent crosscheck to the head of Thetford Mines' Hugo Poulin. Richards continued to apply pressure to Poulin's neck and left the player unconscious on the ice.

Blouin received an automatic three-game suspension for leaving the penalty box and the additional 12 games were assessed for hitting a player lying on the ice.

Brashear, who is reportedly being paid $300,000 to play for Quebec while awaiting a settlement of the NHL lockout, was suspended indefinitely following a fight with Glen Kjernisted of the Thetford Mines Prolab.

What intrigues me about this story is that a semi-pro league paid this player, well-known for his proclivity for fighting, so much money mostly to attract fans. Even though there have been studies indicating that goons might have marginal revenue products that justifies hiring them, one of my students (thanks, TH) noted that goons systematically do not get nearly so much playing time during the playoffs. That finding leads me to suspect that goons contribute to drawing fans during the regular season, but their contribution to wins is not so great. I expect that says a lot about regular season fans.

Thetford Mines Prolab? Radio X? $300,000? I really have to wonder about our assumption of rational maximization sometimes.

Monday, January 17, 2005

Does Eating Too Much Red Meat Cause Cancer?

The answer from Canstats is "maybe". The MSM [main-stream media] were full of reports during the past week about a recent JlAmMedAssn study on red meat ingestion and colo-rectal cancer. Here is a better presentation of the results:
It is true that the initial analysis of the data indicated a
significant positive association between high consumption of red meat and the risk of cancer of all parts of the colon (large intestine). But what the news writers didn't point out is that when other factors that could influence the appearance of colon cancer were taken into account, the association with high red meat consumption was no longer significant. These other factors included body mass index, cigarette smoking, physical activity, aspirin use, and alcohol consumption.

So does that mean there's nothing to the story of a connection between red meat and colorectal cancer? Not quite. The researchers did find a significant link between high red meat consumption and cancer of the distal colon (the part closest to the rectum) in people who reported the highest consumption in both 1982 and 1992 and 93: the risk was increased by 50%. In addition, people who had the highest intake of red meat in only the later questionnaires had a 70% increased risk of developing rectal cancer.

The report continues that "high intake" of red meat could be taken to mean 2 pounds/wk for men and 1.5 pounds/wk for women, which is well-below what most people eat.

Geez, that's only 4 double quarter-pounders per week!
I guess I'll have to cut back on those. 8-(
Thanks to BenS for the pointer.

Warning Stickers on Textbooks

I won't say, "for once", but here is something the ACLU did that I agree with: they successfully sued to get warning stickers removed from Atlanta's biology textbooks. The stickers insisted on by creationists challenging evolution said, in part:

This material should be approached with an open mind, studied carefully and critically considered.
[Thanks to Lisa at London Fog for the pointer; Dave Friedman has some additional links.]

I love the part of the warning sticker that I quoted above. I wish publishers would put a sticker like that in nearly all textbooks.

What I don't love, is the part that preceded it:

This textbook contains material on evolution. Evolution is a theory, not a fact, regarding the origin of living things.
Let's extend such warnings to other textbooks. Here are some that might be reasonable:

  • Warning! This textbook contains arguments that gubmnts do good things. That is just a theory, not fact.
  • Warning! This textbook teaches socionomology. That is just a theory (in the loosest sense of the definition), not fact.
  • Warning! This textbook teaches "rational maximization". That is just a theory, not fact.

Also, see this New Yorker Cartoon.

Update: Tom Hanna thinks the warning sticker quoted at the beginning of this post should be placed on a banner for every school!

Isoquants: Chemistry and Physics teachers as Inputs

Suppose students are told that their overall grade in the physical sciences will be a composite of their chemistry and physics grades. Suppose further that hiring physics teachers is very expensive and very difficult, compared with hiring chemists (or even biologists) to teach the combined syllabus.

If these suppositions are even close to correct for a given educational system [e.g. in the UK], it should come as no surprise that their school boards would hire fewer physicists and teach less physics, yet students would still do "okay" in their combined grade for the physical sciences.

For the school boards, the higher effective price of employing physicists (compared with chemists or biologists) would lead to their hiring fewer physicists. And given this effect, the teachers, tooling up to teach students enough to get them to a given threshhold can be done, on average, with lower cost to the teachers by covering less physics and more chemistry. Not surprisingly, for students taught under such a system [thanks to JC for the tip],'s generally possible to get a grade C - the benchmark for league tables - with a score of roughly 30-35%, which means that you can pass double science quite easily while knowing next to no physics...

Well I'll be...., people respond to incentives.

Ohmygosh... The Guardian got something right?

p.s. My younger son, Adam Smith Palmer, gave up teaching physics for a non-teaching job: "Dad," he said, "I'm working only 40 hours/week now instead of 80, and I'm earning lots more."

Virtual Markets for Wet Nurses

In previous centuries, if mothers were unable to or didn't want to nurse their children, they could hire wet nurses to do it for them. Nowadays there are markets for breast milk itself, including milk banks and the internet.
The practice of women sharing breast milk is nothing really new. It's been going on for centuries -- dating back to the era of wet nurses. What is new is a phenomenon in which women, often perfect strangers, exchange breast milk through the Internet, in mommy chatrooms, and even through mainstream sites like Craig's List and eBay.
Established organizations question the safety of the milk distributed through the newly-developing internet markets (surprise, surprise).
Some mothers believe they can do their own screening process since it's more expensive to buy through a milk bank, but others say private screening is still not enough.
It will undoubtedly take some time for liability rules to be established, but technology will clearly help with efficient exchanges.
[Thanks to JC for the pointer; I have no idea how or why he found that site]

Sunday, January 16, 2005

Michael Moore Rejected by High School

Moore has been nominated four times to the Hall of Fame of his former high school in Davison, Michigan, but has been turned down each time.
"Would you want him as a role model? Would you want your son or daughter to be like him?" asked Don Hammond, a member of the Hall of Fame selection committee. "I haven't talked to anybody yet who's for him. The word to describe Michael Moore is embarrassing. He embarrasses everybody."
It's good to learn I'm not the only one who feels this way about the king of the non-sequitur.

[link via Drudge]

The Importance of Property Rights

An important extension of the Coase Theorem for economic policy makers is that the creation of well-defined and easily enforced legal entitlements is crucial for economic growth.
When shareholders have more rights, people are more likely to invest in markets, because they have more protections against dishonest executives. When creditors have more rights, they are more likely to lend money, which spurs markets to grow. And when countries are free from corruption, investors put more money into them.
That quotation is from Legal Affairs, which summarizes research showing that economies based on the Common Law tend to have high growth rates than economies based on the civil or Napoleanic Code.

It seems pretty clear that the stability of legal entitlements is of paramount importance, regardless of the type of legal system. The study cited by Legal Affairs seems, however, to show that legal entitlements are more likely to be stable for longer periods of time in Common Law jurisdictions.

Sparky at SCSU Scholars has a superb post making a similar point: that for the long-run, an important form of aid for those stricken by the tsunami, is improved definition and enforcement of stable property rights.

Over-worked Interns

Alex Tabarrok, of Marginal Revolution, refers to a recent article about the dangers of over-worked interns. Not only do they tend to create more medical mistakes, they have more traffic accidents as well. He concludes with a quote from Kevin Drum:

Would you want your mother to be looked after by a trainee who's been on her feet for 30 hours? I wouldn't.
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