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, November 12, 2005

Most Popular Pet Names

The most popular pet names, according to a recent article in the New York Post are [the quotation below is from this source].

Buddy, Max and Jake topped the list for male dogs, while Daisy, Molly and Sadie were most popular for females, the New York Post reports of a new survey of 9,000 animal shelters nationwide conducted by

Among cats, Smokey and Max were the most used names for males, and Molly, Angel and Lucy were favorites for females. "For real pet lovers, a pet is just another member of the family, so a human name seems totally appropriate,"'s president, Betsy Saul, told Post reporter Heidi Singer.

Our favorite names for pets haven't changed much in the past three years. In May 2002, the American Society for the Prevention of Cruelty to Animals (ASPCA) surveyed veterinarians to find out the most popular pet names. According to the Learning Network, the top 10 names were: Max, Sam, Lady, Bear, Smokey, Shadow, Kitty, Molly, Buddy and Brandy. Rounding out the top 30 list were: Ginger, Baby, Misty, Missy, Pepper, Jake, Bandit, Tiger, Samantha, Lucky, Muffin, Princess, Maggie, Charlie, Sheba, Rocky, Patches, Tigger, Rusty and Buster.

I feel so unoriginal. We have a cat named Maxwell, and we once had a dog named Sadie.

If You Have More than Two Remotes,
You're Hired

The Future Shop, a Canadian big-box electronics/computer/appliance store has business card-shaped ads on their check-out counters that say

If you have more than two remotes, you're hired.
Does that mean I qualify to be a senior manager? I have lost count, but I think we have as many as 25 remotes in our home. We have added at least two more to this list.

In consumer theory, we'd say that I am willing/eager to trade off some dollars worth of other stuff for having more remotes conveniently placed around the house.


Friday, November 11, 2005

Armistice Day

It is called Veteran's Day now.

But it sure means a lot to me, especially after the events of the past five years.

Back in the late 60s and early 70s, when I was a pacifist and strongly opposed to the War in Vietnam. I despised celebrations of all things military.

I don't any more. I am grateful for the veterans who defended the way of life we enjoy.

I am in a community band that will be playing at the local ceremony in Goderich, Ontario. I will be wearing a poppy.

Retirement and Interdependent Utility Functions

A few days ago, I was speaking with a colleague who is nearing retirement. I told him I am planning to teach until I'm 90.

His reaction was,

"Why? We have a good pension plan (defined contribution), and you can't take it with you. I want to retire and spend it."
He has no children and he expects his wife to die about the same time he does.

Contrast his decisions with those of someone who has a spouse who is expected to live a long time and who has children and grandchildren, to whom s/he would like to leave a sizeable financial legacy (or on whom s/he would prefer not to become dependent, financially and otherwise). The latter person is much more likely to work longer.

I don't know the literature in this area, but I would predict that ceteris paribus, people without children and grandchildren retire earlier than people with children. Here is one study with results supporting this prediction, though my argument depends heavily on the assumption of interdependent utility functions [I get utility from my children's and grandchildren's happiness and would like to leave them some money after I die] and depends less on whether the children are under 19 years of age.

The concept is the same one I wrote about yesterday:

The answer quite clearly is that I care about my children, my grandchildren, and others; I have an interdependent utility function. The utility of these people enters into my utility function in such a way that I am willing to trade-off some of my utility over the next ten or so years in exchange for improving their chances of avoiding an asteroid collision.

... There is probably an analogy to caring about what happens to the Social Security programme in the U.S. If you think it is doomed and disaster will ensue in 30 years, you might not care if you're an executive with AARP/CARP, but you are more likely to care if you worry about the lives of your children, grandchildren, and others.

Thursday, November 10, 2005

Worlds in Collision:
Asteroid Armageddon?

Nearly a year ago, there was a minor to-do about Asteroid 2004 MN4 and the odds that it is on a course to hit the earth [or be deflected from hitting the earth]. Revised estimates now suggest the probability that the asteroid (now named "99942 Apophis") will hit the earth in 2029 is near zero. But it might swing around, reload, and refire in 2036 (figuratively speaking).
In 30 years, there is a 1-in-5,500 chance that a smallish asteroid will land a bull's eye on our planet. At 360 yards wide, it could take out New York City and much of the surrounding area.
I have had a lot of weird thoughts about this.
  • What a way to go! Being hit by an asteroid!
  • What an exciting time to be alive that would be! The preparations, the hand-wringings, the challenges!
  • But that's 31 years from now.... what are the odds I'll live that long? [not very high, even though Jack says he'll do everything he can to keep me alive until then].

This last point raises some interesting questions about inter-generational transfers. If I figure I will be dead before then, why should I worry? And mostly, why should I want to spend money on research about the expected path of the asteroid? Why should I want to spend money on research about asteroid deflection/destruction programmes? Especially when such programmes are being promoted by people with clear vested interests in the programmes.

The answer quite clearly is that I care about my children, my grandchildren, and others; I have an interdependent utility function. The utility of these people enters into my utility function in such a way that I am willing to trade-off some of my utility over the next ten or so years in exchange for improving their chances of avoiding an asteroid collision.

Here are two related books of interest. I read Worlds in Collision by Velikovsky many decades ago and Lucifer's Hammer by Larry Niven back when it first came out.

. . . . . .

There is probably an analogy to caring about what happens to the Social Security programme in the U.S. If you think it is doomed and disaster will ensue in 30 years, you might not care if you're an executive with AARP/CARP, but you are more likely to care if you worry about the lives of your children, grandchildren, and others.

Wednesday, November 09, 2005

More on the Situation in France

My prediction:

Soon the French will begin building a security fence around the rioting suburbs.

Only they won't call it a security fence.
But that won't stop them from hiring Israeli consultants.

Empiricism and practicality are strong motivators: [h/t to BenS]

The Russian government is mulling the construction of a security barrier along the border with Chechnya similar to Israel's West Bank security fence as part of its efforts to combat Muslim terror, The Jerusalem Post has learned.

Prime Minister Ariel Sharon and Internal Security Minister Gideon Ezra met on Monday with Dmitry Kozak, head of counterterrorism in Chechnya and the Kremlin's envoy to southern Russia, for talks on the effectiveness of the security fence and Israel's overall success in fighting Palestinian terror.

Search Engines

After posting about changing the name of this blog before noon yesterday, I wondered how long it would take for different search engines to pick up the word "econoclectic". As of 7am today, Google, Yahoo, and Ask Jeeves still could not find the word. Dogpile did.

The Situation in France

One of the best analyses I have read about the situation in France (rioting young Muslims, generally from Africa) is offered by The Emirates Economist, who contrasts the situation there with the conditions under which guest workers live in the United Arab Emirates.

4. In France discrimination is claimed as a reason for rioting. Discrimination is least costly to the discriminator when there is unemployment and an employer has the choice amongst many qualified job applicants. Why is there such high unemployment in France? Because of excessive government regulation of the labor market.
He has five points in all. It is worth reading his entire posting. In his brief outline, I learned more than I did from either of today's editorials in the NYTimes (reg. req'd; see here and here).

Update 1: also see this by Kip Esquire.
Update 2: Rondi Adamson sees the situation only slightly differently. Check out her blog and the links there.
I don't think any of the disagreements she might have with me or with John Chilton about whether it is appropriate to contrast 3rd and 4th generation immigrants with guest workers go against his hypothesis that labour regulations have contributed to the situation. Indeed, she sees the longer term solution to be twofold:
... freeing the market, and assimilating different cultures, in as much as they can be assimilated.

The Enormity of It All

When I was young, I had no difficulty conceiving of an infinite universe. But I think my intuition is still limited to Newtonian physics of the most amateurish sort. I certainly find it a struggle to wrap my feeble mind around such concepts as bulk universe, the big bang, black holes, 'branes, super strings and the like.

And now we learn that there is probably a black hole, a super-massive one at that, half the size of the diameter of the earth's orbit, smack dab in the centre of our very own galaxy.

"These observations provide strong evidence that Sgr A is indeed a black hole, and afford a glimpse of the behavior of the matter that is about to flow into it," said Christopher Reynolds, of the University of Maryland in the United States, in a commentary in the journal.

He described the findings as a further step toward capturing an image of the shadow around the edge of a black hole, which would be a classic test of Albert Einstein's general theory of relativity.

The theory predicts that massive bodies -- planets, stars or black holes -- actually twist time and space around as they spin.

Black holes may twist time and space, but the concept twists this poor, feeble mind, as well.

That's Funny, You Don't Look Anti-Semitic

In 1984, Steve Cohen published a little book called That's Funny, You Don't Look Anti-Semitic. I have been reading it on-line over the past few days. He has a very unusual perspective, in that he is a utopian socialist and strongly opposed to statism in any form. These views led him to be strongly anti-Zionist.

At the same time, Cohen points out the persistent anti-Semitism of the left:

It is not difficult to construct a catalogue of grotesque statements and actions by socialists with respect to Jewish people. These are bad enough in themselves and should be opposed from any anti-racist perspective. However, the purpose of this book is to show that Left anti-semitism cannot be understood empirically, merely as a series of unrelated descriptions or examples: rather there is a pattern, a methodology, of Left anti-semitism.
No kidding. I completely disagree with Cohen's utopian socialism. I mostly disagree with his anti-Zionism. But his book(let) does an excellent job of exposing the virulent anti-Semitism of the left.

Tuesday, November 08, 2005

Houston (Actually Dallas), We Have a Problem

Back in January of this year, I received a registered letter from The Econoclast, an economics consultant in Dallas, Texas, who was concerned that I was blogging under the same name and, hence, infringing his trademark. So on January 11, 2005, I changed the name of this blog from "The Econoclast" to "The Eclectic Econoclast". [big hat-tip to Ms. Eclectic for the suggested adjective; I had experimented briefly with "Canadian Econoclast" and "Global Econoclast" but didn't really like either of those.]

I sent the Dallas consultant an e-mail explaining the change and letting him know that I had no intention of infringing his trademark, even though I had been using the name in my e-mails and in a newsletter for journalists for quite some time. I changed the name attached to my e-mails, and I had stopped publishing the newsletter years ago.

I thought the matter was settled, but I guess it wasn't. Today I received another letter from him, threatening legal action. I can understand his concern. If you Google "econoclast", the first reference or two are to this blog, not to his website. It is likely that the reason for this outcome is that I post regularly, and I average over 250 visitors per day to this site.

I am undecided as to what to do.
  • I could just keep blogging under the present name at this site until I am forced to make a change.
  • I could see a lawyer and fight the issue; I am not persuaded that I am infringing his trademark. But I have no ill will toward him, and I am not spoiling for a fight.
  • Now might be a good time to make a change to Powerblog, which Kip Esquire highly recommends and make a name change at the same time.
  • I could just change the name but not the url for this blog.
  • Or I will could start a new Blogger blog with a different name.
If I do make a change, I will be happy to entertain suggestions for sites and names. The name that presently appeals to me is "Econoclectic". Google that!

The only problem with "Econoclectic" is that it sounds like an adjective instead of a noun, and I'd prefer a noun as a title [digression: I've always had trouble accepting "chiropractic" as a noun, though "eclectic" as in "He is an eclectic," is grammatically acceptable.] Maybe "An Econoclectic" would work. Or possibly "An Econoclectic Perspective".

As I said, feedback is welcome!

More on Avian Flu

There is growing evidence that avian flu is spreading (see here for example). I have a friend who is a semi-retired physician. He recently sent me three interesting and potentially useful articles about avian flu.

The first article and the ensuing discussion, suggest, in his words,

[W]e are working with a fairly small death reduction in the best of circumstances, and this will likely require twice the usual dose for twice as long. Grave implications for government 'stockpiling' programs.

... It seems that it [Tamiflu] might be helpful but might require a longer duration of treatment, hence reducing the number of effective doses stockpiled.
i.e. hoard TWO paks of Tamiflu per anticipated episode ;-)
One of my concerns with gubmnt stockpiling of tamiflu is that I am skeptical about the criteria to be used to determine who gets the medication.

The second article reports on two studies, both of which indicate that Tamiflu has positive benefits in treating patients with flu-like symptoms [My friend say, "While the duration of symptoms are reduced only by an average of 1.3 days, the real concern is the reduction in serious complications especially death. The following is more reassuring for the possible impact on avian flu."]:

The first study, using data from a large US health insurer, investigated the incidence of pneumonia, heart attacks and death during the month following influenza diagnosis in patients who either received no medication (136,799) or who were prescribed Tamiflu (39,202). [Note: no double-blinds, no placebos] Tamiflu treatment was associated with a significantly reduced risk of pneumonia, death and possibly heart attacks, compared to untreated patients.

... The second study, using data from the Toronto Invasive Bacterial Disease Network, found that Tamiflu treatment in hospitalized influenza patients was associated with a significant clinical benefit and a reduced risk of death in patients treated within three days of symptom onset.

For details, read the entire article and its references.

The third item he sent is a link to, which appears to have some good information; he refers to it as a "useful public education tool." It is apparent from that site and the many links provided there that chicken-catching could become a much more risky occupation in the future. If so, look for the wages to rise and the price of chicken meat to increase, too.

Maybe even us omnivores will start eating less meat during the next couple of years...

For continued analysis and information about avian flu, be sure to bookmark the avian flu blog.
And for a related piece about the economics of flu shots, see this.

What Is the Value of a Human Life?
Between $5.3 Million and $6.7 Million

It is difficult and painful to have to estimate, ex post, the value of a human life, as when someone is killed in an accident and compensation is being sought.

Fortunately, it is possible to make some inferences, probablistically, based on the types of jobs people take and the risks of death associated with the jobs. Some people take riskier jobs but are well-compensated for assuming the risks; others take lower-paying jobs, in part because those jobs are safer. Implicitly, those in this second group are paying an insurance premium to reduce their personal risk of an early/accidental death. The techniques for using these data to estimate the value of a statistical life [VSL] are fraught with approximations and always subject to refinement.

The latest on the subject is a paper by Thomas J. Kniesner, W. Kip Viscusi, Christopher Woock, James P. Ziliak.

Worker heterogeneity has played a prominent role in the compensating differentials literature. There could be heterogeneity in tastes where workers differ in willingness to accept risk for a given set of market opportunities. There could also be heterogeneity in productivity affecting the worker’s safety-related productivity or market productivity more generally. We examine econometrically the implications of individual heterogeneity for estimates of the value of a statistical life (VSL) and in the process establish that some key anomalous results in the literature disappear when panel data and appropriate econometric estimators are combined to estimate VSL. Our panel estimates also resolve an ongoing theoretical debate regarding the direction of bias in labor market estimates of VSL, indicating that the Shogren and Stamland (2002) assessment of the effect of differences in tastes and safety-related productivity is the dominant empirical influence.

After all their refinements, they conclude:
Whereas previous studies using the Panel Study of Income Dynamics have often yielded extremely high VSL estimates, earlier research did not control for fixed effects. The first-difference estimates most closely paralleling the models in the existing literature range from $5.3 million to $6.7 million, which are at or below the median value of the estimates in the literature. Our estimates call into question the very high published VSL estimates, which may reflect the influence of omitted unobservable effects.


Monday, November 07, 2005

Gasoline Prices Revisited

Gasoline prices have plummeted by 35 - 50% from their peak in the past two months.
Would everyone who thought the gubmnt should "do something" about high gasoline prices two months ago be willing to recommend that the gubmnt do something about low gasoline prices these days? E.g., if they wanted gasoline taxes lowered in early September, would they want gasoline taxes raised now?

Here, courtesy of Phil Miller, is a link to a site that charts some gasoline prices of interest. At this site, you can choose from many different jurisdictions and from many options about the time span covered. It is interesting just to play around there for a few minutes, exploring different price charts.

With apologies for the poor resolution, here is a chart I generated at that site last Friday, showing average gasoline prices over the past three months in Canadian cents per litre for Ontario (green), Alberta (red), and Michigan (blue). This chart shows that current average gasoline prices in all three jurisdictions are lower than they have been at any time during the past three months.

The effects of Katrina and Rita are readily apparent. I see, too, that average prices in Ontario were much higher during the Katrina and Rita spikes, but are now lower than the average prices in Alberta, something we noticed when we were in Edmonton two weeks ago. But also note that gasoline prices today are lower than they were in early August, before Katrina was even on the map.

As a matter of fact, this nine-month chart below shows that current average gasoline prices are now lower than they have been for most of the past five or six months:

Surely, the gubmnt ought to do something about these plummeting prices.
Phil Miller has more here.


Stagflation, Here We Come!

Stagflation refers to both rising unemployment rates and rising rates of inflation. It occurs only when the short-run Phillips Curve shifts to the right. We had a serious case of it during the late 1970s and early 1980s, and we are going to experience it again, but probably just to some minor extent, over the next year or so.

The unemployment rate in Canada is at a 30-year low. At 6.6%, the unemployment rate is well below the natural unemployment rate (roughly between 7 and 7.5% in Canada) and is bound to rise as people's job search expectations adjust to the new reality.

Meanwhile, the growing aggregate demand that has heated up the Canadian economy will continue to put upward pressure on the rate of inflation. The money supply in Canada has been growing by nearly 10% per year for quite some time; eventually all that liquidity will lead to growing pressure on aggregate demand and, in turn, on prices.

Sure, the Bank of Canada is trying to reduce the inflationary pressure, but they do not want to put the brakes on too hard. The result will be a gradual slowing over the next year and a half, but with the rate of inflation growing until the tighter monetary policy takes hold.

Also, see Steve Poloz' column about stagflation.


Sunday, November 06, 2005

Magic Eye Images

I love these pictures. They have an Image of the Week, too.

Hint: If you are doing some gift shopping, these books make great gifts.
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