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Retirement Calculator for Canadians

Here is a really simple and basic retirement calculator for Canadians.
It takes OAS and CPP into consideration, along with pension funds and RRSPs.

Topic: Economics

[Thanks to BenS for sending the link.]

Nobel-Prize Winning Research Rejected

Thanks to BenS, here is a link to a paper that chronicles all the research that was rejected by journals but which later, when published elsewhere, led to Nobel Prizes for the scholars.

Sadly, the author seems to see this as some deviation from the ideal.

[M]ost of [the] instances discussed above deal with genuine resistance to scientific discovery and it is illuminating to ascertain some of the reasons why such a resistance exists in the first place.

A possible explanation that could motivate peer resistance to scientific discovery lies in the fact that new theories or discoveries often clash with the orthodox viewpoints held by the referees.

... In other instances the problem is that referees did not appreciated the potential or the interest of the new discoveries. ... Something is wrong with the peer review system when an expert consider[s] that a manuscript is not of enough interest to be published and later the work reported in such rejected paper earn[s] the Nobel Prize to their authors.

A more positive interpretation is to see these errors of commission and of omission as part of a normal, evolutionary process.

I see them as something to be expected, given scarcity. More importantly, I see the results as evidence that the system works! It is a ringing endorsement of competition among academic journals: if one journal rejects a brilliant, path-breaking article, another has an incentive to publish and move up in the citation rankings. Without that competition, some of the break-throughs might never be published.

For what it is worth, I noticed that the author had no instances of early journal rejection of Nobel-Prize winning work in economics.

The Three-Inch Conspiracy, Inflation, and Money Illusion

What is the average difference between the true height of a basketball player and the height listed in the programme?

I had friends 40 years ago who used to laugh about being listed at 6'2" when they were really only 5'10" or maybe 5'11" with shoes on. This deception has been going on for decades; everyone knows it and everyone adjusts.

Here is more, buried in the comments section of this posting about Yao Ming. [h/t to Tyler Cowen's piece on Yao Ming for leading me there]. The consensus there seems to be that the average amount of over-statement of basketball players' heights is about 3".

Is the Three-Inch Conspiracy like simple inflation? Not quite, since inflation is usually represented as a rate of increase, not a specific amount of an increase. For the conspiracy to be be like inflation, it would have to be a 5% conspiracy or something like that.

Is the Three-Inch Conspiracy like money illusion? In some ways it is. While "everyone knows" the heights of basketball players are over-stated in the programmes, no one knows for sure how much each player's height is over-stated. And some people rely on official height data, even though the data are inaccurate. That seems a bit like money illusion to me.

Mutual Funds and MERs

Recently, I attended a social gathering where there were several fund managers for a firm that sells mutual funds. I commented with some question about the high management expense ratios [MERs] for their product and expressed a preference for passive, index-based funds with very low MERs (as I recall, this was after one of my acting gigs, and they knew me as an actor, not as an economist).

Their response was,

What does the "M" in MER stand for?
Management! We manage the fund so it does better.

I don't believe them. On average, especially in well-developed markets like the US markets, index funds tend to outperform managed funds, especially once all the fees are taken into account.

Now there is a calculator/analyzer available to help assess the fees and expenses involved with mutual funds. According to the Washington Post [reg. req'd]:

The online tool now contains up-to-date fee and expense information on practically all of the more than 18,000 mutual funds and 160 Exchange Traded Funds (ETFs)...

More than 50 million American households have money in mutual funds. What NASD has done is to go beyond just telling investors they need to scrutinize fees and expenses before investing in mutual funds. The regulator has provided a much-needed tool to help people put that advice to action.

Although Jeff Cosford has sent me some evidence that counters the theory, I still, in my blissful and rational ignorance, subscribe fairly strongly to the Efficient Markets Hypothesis.

France: The Ted Bundy of European Nations

From Vile France, by Dennis Boyles (h/t to BenS) [I quoted the first part of this material earlier] :

In very large numbers, the French don’t like us…What we mistakenly see as a craven, anti-Semitic, insecure, hypocritical, hysterically anti-American, selfish, overtaxed, culturally exhausted country, berefit of ideas, fearful of its own capitualation to Islam, headed for a democraphic cul de sac, corrupted by lame ideologies, clinging to unsupportable entitlements, crippled by a spirit-stomping social elite and up to its neck in a cheesy soufflé of multilayered bureaucracy is actually worse than all that. It’s vile.

… In just the last half-century or so, France has been guilty of eagerly abetting the Holocaust; perpetrating more postwar anti-Semitic acts than any other country in Europe; enabling and supporting state-sponsored genocide and slaughter in Africa and Asia; attacking unarmed civilians on foreign territory; arming enemies of Western democracies; treating its young with disain and its elderly with a neglect that is often fatal; suppressing conventional human rights, especially the right to free speech; protecting murderers and war criminals from justice; pursuing a foreign policy in which mendacity is a strategy used against both friends and enemies; polluting the earth while rhetorically demanding planetary hygiene from others; pursing illegal trade activities; engaging in massive, systematic corruption and greed; worshiping self-seriousness; and undermining American foreign policy wherever possible, no matter how many lives that costs. France looks great and seems swell but it acts hideously. It’s the Ted Bundy of European nations. (Denis Boyles, Encounter Books, 2005, p.5).

I don't know whether the London Public Library has ordered the book, yet [here is my earlier post on the subject].

Co-mingled Recycling at UWO

Several (many?) years ago, The University of Western Ontario embarked on a massive recycling programme. There were

• Blue boxes for fine paper only
• Blue swing-top cans for glass bottles
• Blue swing-top cans for aluminum cans
• Blue swing-top cans for plastic bottles
• Blue swing-top cans for newspapers, and
• White cans for other waste

That is a lot of receptacles! The hallways in some places seemed completely lined with recycling containers for different types of waste.

Something has changed. Maybe people at the university were not sorting properly, thus making the recycling more expensive (are literacy levels of incoming students deteriorating that badly?); or perhaps the sorting was not very beneficial relative to its costs. At any rate, most of the blue cans now have big, supremely and pretentiously redundant labels:

Co-mingled
Beverage Containers
Glass, Plastic, Tin

Co-mingled? C0-mingled???

Why didn't they omit that unnecessary word and use "aluminum" instead of "tin"?

When is the last time you saw a tin beverage container, even a tin-coated one?

And when was the last time you used the self-redundancy, "co-mingled"?

Here is a piece I wrote about recycling many years ago.

How Much of a Worry is Global Warming?

Not much, if you accept the research reported by Joseph Bast in a report put out by The Heartland Institute. (also see Taken by Storm).


Here is a summary of just a few of the points made by Bast in his commentary on Michael Crichton's State of Fear:

... [T]he message of State of Fear has serious public policy consequences:

Most of the environment and health protection regulations in the U.S. ought to be reformed so they address real rather than imaginary risks, and concentrate on what works instead of the liberal orthodoxy of big government solutions to every problem.

The U.S. is quite right to stay out of the Kyoto Protocol--the global warming treaty--and ought to be doing more to persuade other countries of the world that the protocol is unnecessary, premature, and unworkable.

For more on global warming, in addition to the books shown below, I recommend this recent post at Cafe Hayek and this one by the ever-vigilant group at London Fog.

For more, see the new site for this blog.

Self-Serve Check-outs

I had never seen or heard of "self-serve" check-outs until I visited my son in Houston a couple of years ago. To use one, you scan your own merchandise, scan your credit or debit card, bag your own groceries, and away you go.

My first reaction was, "Geez, I wonder what the inventory shrinkage (shop-lifting) is with this system."

Don Boudreaux of Cafe Hayek wondered the same thing. He attributes their success to trust and honesty.

The fact that the number of self-checkout lanes is increasing tells me that these lanes are proving to be successful — proving to be worth their costs. In turn, this fact tells me that the people who shop in these stores are generally honest. The number of cheaters, although surely positive, is not great enough to make the provision of self-checkout lanes a losing proposition for retailers.

Phil Miller has additional intriguing insight: Employee theft is generally a much more serious problem than shop-lifting.

While I was working on my Master's degree, I worked as an assistant manager for a well-known pharmacy chain and in terms of theft prevention, our number one focus was employee theft, not customer theft. My fellow managers and I went to seminars where we watched surveillance camera films showing various employees stealing from their stores. We also heard stories about employee theft. The cameras that were installed to identify theft were installed over the cash registers.

Employee theft takes lots of forms. Employees can steal cash, merchandise, credit card numbers etc. They can also help their friends steal stuff by placing unscanned merchandise into bags with paid-for merchandise.

By substituting capital for labor at the checkout stands, retail stores can help combat employee theft. With the self-service stations, I'd argue that since there are fewer employees handling transactions, many stores are actually preventing theft from occuring.

At least two questions linger for me:

1. How do the stores deal with merchandise that has the electronic theft protection embedded when it goes through the self-serve checkout?
2. We don't have them in Canada, yet. Why not? Is the relative price of labour (compared to capital) lower in Canada than in the U.S.? If so, not much. Or is Canadian retailing irrationally and inefficiently behind the times?

A Terrific Gadget, bordering on being a necessity

Last week, I bought one of these: an iRiver AFT-100 FM transmitter.
I use it to listen to podcasts through my car's sound system from my MP3 player while commuting to and from the university. It works really well, is easy to figure out, and has considerable flexibility (including three different, user-selectable, FM pre-sets, which come in handy if you have several different places on the dial that are clear at different parts of a long commute). Playing back music or interviews from an MP3 player through the car's stereo system works much better than driving with headphones (and is safer, too)!

I know there are many different devices on the market that do the same thing, but this one does the job really well for me.

Spider Stalemate

Some time ago, I posted a question about what happens in Spider solitaire when you run out of cards in the piles across the top, and the game won't let you deal any new cards because each column or slot must have at least one card in it. Some of the commenters did not understand what I was asking, but Chris (one of my brighter intro students) did. Furthermore, he sent me this graphic to show that, indeed, the game does essentially lock up or stalemate:


Those of you who are familiar with the game will see that in this play, Chris used the single-suit version and played nearly all of the cards from the piles across the top, leaving him with only nine cards plus an empty slot. The box in the middle says, "You are not allowed to deal a new row while there are any empty slots." But he doesn't have enough cards left in the piles to fill all the slots.

I'd call that a stalemate, not a loss.

Thanks, Chris!

Stroke Recognition: More Information Beyond the 3 Basic Questions

Last March, I wrote about stroke recognition. We have printed this information and posted it on our fridge:

The warning signs of a stroke are:

• Sudden numbness or weakness of the face, arm, or leg, especially on one side of the body.
  
• Sudden confusion, trouble speaking, or understanding.
  
• Sudden trouble seeing in one or both eyes.
  
• Sudden trouble walking, dizziness, loss of balance or coordination.
  
• Sudden, severe headache with no known cause.

The three easy questions are:

1. ask the individual to smile.
   
2. ask him or her to raise both arms.
   
3. ask the person to speak a simple sentence.

If s/he has trouble with any of these tasks, call 911 immediately, and describe the symptoms to the dispatcher.

But there is much more that is worth knowing. From Jack:

There is an additional bit of information to be aware of: the possibility of reversing the impact of a stroke if one gets proper medical treatment within three hours of symptom onset. This applies to the majority of strokes which are caused by blockages in blood supply to part of the brain. It does not apply to those caused by bleeding into the brain. The steps required for possible stroke 'reversal' are:

1/ Get to a major hospital emergency department as soon as possible, and certainly within three hours of symptom onset.

2/ Bring up the possibility of administering clot-busting drugs to the emergency MD immediately; if he/she is on the ball and facilities permit, an emergency CT scan should follow very quickly. The CT is necessary to detemine if the stroke is caused by a blockage /clot (good) or a bleed (bad). If it is the former, then you should receive a clot busting drug intravenously. All of this ideally transpires within a three hour time frame of symptom onset.

Don't assume this will automatically happen. [There are instances when it hasn't.]

This link is an older statement for the public, but still applies.

And this link gives a broader context to treatment.

Christmas-nomics

Two totally unrelated items about economics and Christmas:

1. Daniel Gross writes in Slate that Christmas tree sales are a good concurrent indicator of consumer spending during Christmas.
   
2. Christmas lights and timers. With the invention of the little LED Christmas lights that use very little electricity, it probably makes no sense to buy a $30 outdoor timer that will turn the lights off during the day. I haven't done the calculations, but I can readily imagine that leaving even 120 of these lights on for 24 hours a day for a month adds no more than a few dollars to the electricity bill. So why bother with a timer? In fact, if the prices represent the opportunity costs of using the scarce resources in various ways, it would downright anti-social and inefficient to buy a timer for these lights.

Update: There's more here, at the new site for this blog.

How to Attract a Mate

This advice is for males.

I recently listened to the podcast interview of Donald Cox by Russell Roberts. Near the end of the podcast, they agreed there are only three ways for men to show they have the financial wherewhithal to sire large, healthy clans:

1. Laminate your income tax return and flash it around. Failing that,
   
2. Buy an expensive car or
   
3. Buy an expensive watch [reg. req'd, h/t to BenS for the link].

While the list is amusing ($1.5m for a watch!!??), I can think of several other possibilities.

• Buy expensive gifts for prospective partners.
  
• Make huge donations to specific charities (Bill G appears to have learned this well).
  
• Wear expensively tailored clothes.
  
• Alternatively, wear a military officer's uniform.
  
• Order only the best wines.
  
• Snub the PLO.

I'm sure there many more. Feel free to add to the list.

Since I would lose any of these competitions, I'm delighted to live in a monogamous culture.

Might Israel Try to Destroy Iran's Nuclear Weapon Capability?

With the recent hostile speeches by Iranian President Mahmoud Ahmadinejad, Israel must take a very cautious stance. On the one hand, he sounds like someone who might very gladly use nuclear weapons against Israel just to get rid of the Jews, in which case a pre-emptive strike is called for. On the other hand, he might be attempting to provoke an attack by Israel, with the hope of cementing other Muslim support against Israel.

Stratfor has an interesting take on how Israel might attack Iran, should they decide to do so. [subscription req'd; h/t to JP]

Iranian President Mahmoud Ahmadinejad's latest inflammatory statements, in which he called the Holocaust a "myth" and suggested that Israel's Jews be relocated to Europe or even Alaska, are part of a series of provocations that have severely escalated political tensions between Iran and Israel. Furthermore, Israeli military officials have said that Iran is within months of being able to produce nuclear weapons. Because of its extreme vulnerability to a nuclear attack, Israel's threshold for using the military option to prevent Iran from acquiring nuclear capability is lower than the United States'. Should Israel decide to attack Iran's nuclear facilities, the operation would be risky, difficult and politically delicate -- but not impossible.

The major problem would be forming the political alliances that would free up some air space for the IDF to fly through.

Then again, consider this by C. Hart of WorldNewsDaily:

Most media attention has focused on when Iran might have nuclear capability and if Israel should act against Iran independently. Little attention has been paid to the possibility of an Iranian pre-emptive strike against Israel, despite the fact that this remains a major concern of Israel's military advisers.

Worried About Avian Flu? Don't Try to Stockpile Tamiflu via the Internet

It seems that many people are not only concerned about the possibility of an Avian Flu pandemic, but they are trying to prepare for it by stockpiling Tamiflu, despite repeated warnings (see here and here) that it may not be very effective in most instances.

But of course stockpiling Tamiflu through regular channels is difficult. The gubmnt has indicated it will commandeer much of the supply for whomever it deems most in need. And at current, gubmntly-induced artificially low prices, there is an excess quantity demanded. Not surprisingly, many people wishing to hedge against the possibility of an avian flu pandemic are turning to the internet to order and stockpile Tamiflu. Let's hope it has some placebo effect because much of the vaccine ordered over the internet turns out to be counterfeit, with possibly no more than vitamin C as its main ingredient [h/t to Jack for the link].

[A]gents have seized 51 separate packages, each containing up to 50 counterfeit capsules labeled generic Tamiflu.

The fake drugs had none of Tamiflu's active ingredients, and officials were running tests to determine what the capsules did contain. Initial tests indicated some vitamin C in the capsules, said David Elder, director of the Food and Drug Administration Office of Enforcement.

... Agents became suspicious because Tamiflu is produced by Swiss pharmaceutical manufacturer Roche, and there is no generic version available.

This is to be expected. When the gubmnt sets a price ceiling, black and grey markets develop, and it is much more difficult to assess quality and reliability, and to enforce contracts, in these markets.

How to Attract a Mate

This advice is for males.

I recently listened to the podcast interview of Donald Cox by Russell Roberts. Near the end of the podcast, they agreed there are only three ways for men to show they have the financial wherewhithal to sire large, healthy clans:

1. Laminate your income tax return and flash it around. Failing that,
   
2. Buy an expensive car or
   
3. Buy an expensive watch [reg. req'd, h/t to BenS for the link].
   

While the list is amusing ($1.5m for a watch!!??), I can think of several other possibilities.

• Buy expensive gifts for prospective partners.
  
• Make huge donations to specific charities (Bill G appears to have learned this well).
  
• Wear expensively tailored clothes.
  
• Alternatively, wear a military officer's uniform.
  
• Order only the best wines.
  
• Snub the PLO.

I'm sure there many more. Feel free to add to the list.

Since I would lose any of these competitions, I'm delighted to live in a monogamous culture.

Advice for IT Start-up Companies

Many people seem to have the notion that the way to get rich in the information technology industry is to start a company and then sell it to Yahoo, Microsoft, or Google. That kind of thinking is a clear example of the ex post, ergo propter hoc fallacy. Just because some entrepreneurs have made money by doing this, it does not follow that (a) this was their goal, or (b) setting out to build a company that you can sell is a good strategy. Generally speaking, the biggies won't want to buy your company unless it is successful and could make a lot of money on its own anyway.

Here is Paul Kedroski on this topic:

If you are building a startup solely with the intent of flipping it to one of the majors then you are playing Russian roulette using a gun with five full cylinders, and one cylinder containing a bullet that flits in and out with 50% probability. It is, in other words, a stupid game, one that ex post looks more rational than it would truly be to have done ex ante.

The best way to get purchased by anyone -- GYM included -- is to build a great team, find a large and growing underserved market, build a great product/service for which people will pay more than it costs to provide, grow faster than the market, and stay paranoid that a hundred other companies are gunning for you all the time. If that sounds a lot like the path to building a company, not merely one that is built to flip, it isn't just a coincidence.

Building companies to flip is a dumb exercise, one that more often than not produces neither a company nor flipping.

One possible exception to this strategy emerged in the comments (I recommend you read them all): If part of the plan for obtaining venture capital for a startup must include the possibility for a sell-off to GYM, then by all means it is worth thinking about and planning for that possibility.

Trade Restrictions and Disaster Relief

What is the best way to amplify the damaging effects of a natural disaster? From The Emirates Economist:

Use the strong arm of the government to prevent foreign suppliers from rushing in when domestic supplies are disrupted.

Who loses? The consumer.

Of course, if foreign suppliers rush in, domestic suppliers will scream about "carpet-baggers" and "foreigners" ripping them off and exploiting them. But these complaints will be smoke to disguise their attempts to protect their local market power.

It is sad, but politicians will tend to respond to the arguments of domestic suppliers, not consumers, and the effects of the disaster are made all that much worse as a result.

As an example, EmEc links to this item, which points out that hurricanes Katrina and Rita severely damaged the U.S. sugar crop, thus shifting its supply curve to the left and nearly doubling the price of sugar. Opening the borders to imported sugar could help reduce the size of this effect...