## Archive for May, 2011

Tuesday, May 31st, 2011

Professor Finkler will join Provost Burrows and our new women’s basketball coach Carr to cycle the the Scenic Shore 150  a two-day 150-mile bike ride along the shore of Lake Michigan on July 23-24th.  This year’s goal is to raise \$700,000 for the Wisconsin chapter of the Leukemia and Lymphoma Society to support research and to help patients with blood cancers live better, longer lives (http://www.lls.org/).

We invite you  to join our effort  this year. To contribute online, use the cumbersome link below and select any of the Mythical Beasts as the vehicle for your contribution.

If you would prefer to contribute by check, you can send a check, made payable to the Leukemia and Lymphoma Society, to any of the Mythical Beasts team members listed below.

Mythical Beasts – 2011

Andy Boryczka

Dave Burrows

Tara Carr

Marty Finkler

Kathy Greene

Teresa Leopold

Brock Spencer

Pablo Toral

Ruth Vater

Sue Vater Olson

### Math 300 Final Exam Help

Saturday, May 28th, 2011

Question: Prove that any sequence of the word “buffalo” of length n>1 is a valid English language sentence.

First, let n be odd. We start with n=3: “Buffalo buffalo buffalo”; that is, some buffalo do buffalo buffalo, i.e., some buffalo are buffaloed by buffalo. But of course the buffalo who are buffaloing may themselves be buffaloed by buffalo, so just as some cats that watch mice are chased by dogs, or as we say, cats dogs chase watch mice, buffalo that buffalo buffalo themselves buffalo buffalo, and we can say that buffalo buffalo buffalo buffalo buffalo. Anytime we have the noun buffalo, we can add the relative clause “who are buffaloed by buffalo”, or better, instead of the noun phrase “buffalo who are buffaloed by buffalo”, we may say simply “buffalo that buffalo buffalo”, then add the rest of the sentence, yielding “Buffalo that buffalo buffalo buffalo buffalo”, or even better, “Buffalo buffalo buffalo buffalo buffalo”. To a sentence consisting of n (odd) occurrences of the word, we can produce a sentence of n+2 occurrences.

Thus for any odd n, a sequence of n occurrences is a sentence.

But just as a dog that chases cats is a dog that chases, buffalo that buffalo some buffalo are buffalo that buffalo, so from one of our sequences of an odd number of occurrences, we can lop off the final direct object, producing a sequence of an even number of occurrences that is a grammatical sentence. For any n>1, odd or even, a sequence of n occurrences of “buffalo” is a grammatical English sentence!

Q.E.D.

### Rabbit Redux

Friday, May 27th, 2011

The weekly This is Lawrence segment is up, featuring the Rabbit Pop-Up Gallery.

Our own Ranga Wimalasuriya has a speaking part in the video talking about his role on the financial end of the project, and humbly omitting his own artistic prowess. Of course, Ranga says he doesn’t read this blog, so be sure to tell him congratulations for me.

Check out the video, and the gallery. Both look great.

### Weekend Football

Friday, May 27th, 2011

The Warch Campus Center Cinema proudly presents the Saturday Champions League Final between FC Barcelona and Manchester United, beginning at 1 p.m. and ending in a 0-0 tie and penalty kicks around 3:30. Ah, that was a cheap shot. Even so, I do find the lulls whilst the players writhe around on the ground an excellent chance to catch up on my reading.

Is it already two years ago that Barca beat down and humiliated Man U?  Well, you can kick all that out the window when these two get together.

You can bring refreshments, but please don’t leave a Messi.

### Hence the name “Excess Burden”

Thursday, May 26th, 2011

I will issue this notice, without comment, from the American Economic Association.

Job Openings for Economists has been published only electronically for the past decade. Starting with the August 2011 issue, the Association will resume publishing JOE in print format, in order to ensure compliance with Department of Labor regulations for obtaining work visas for non-citizen economists. Print issues will be distributed via the U.S. Postal System two to three weeks after they are published electronically.

Somehow the profession managed to slide by for 10 years without a print version, but now we’ll start printing them up again because, um… Right.  So, you’ll be getting that about a month after the job listing is posted just in case your internet connection is permanently disabled.

Okay, so I commented a little.

### The True Costs of Electricity

Thursday, May 26th, 2011

In Econ 100 this week we talked about external costs (and benefits) and the equivalence of carrots (prices) and quantities (sticks) in terms of the possible “optimal” equilibrium outcomes.  The elephant in the room in these types of discussions is the measurement of the so-called external costs.  As if on cue,  environmental economics superstar and sometime Presidential advisor Michael Greenstone and his co-author Michael Looney have upped a paper with their estimates of these costs associated with electricity and energy.

Here’s their money chart.

The glaring purple associated with coal shows that the principal external costs are not from greenhouse gases, but from conventional criteria pollutants (e.g., NOx, PM). The external costs of coal, even new “clean coal,” are estimated to be higher than the actual operating costs.  Yikes.

It’s worth noting that both solar and wind have non-trivial carbon footprints, because the variability of supply requires ample natural gas plants to cover supply on days when the wind doesn’t blow and the sun doesn’t shine.  Certainly, developing battery storage technologies may well turn out to be the biggest environmental challenge of this next half century.

The results are probably worth quoting at length (after the break):    (more…)

### (Not so) Undercover Economist

Sunday, May 22nd, 2011

The Undercover Economist, Tim Harford, is all over the internets these days.  He has just come out with a new book, Adapt: Why Success Always Starts with Failure — a meme no doubt familiar to the Pursuit of Innovation crowd.  Beginning Monday, you can hear an extended discussion about the book over at our favorite economics podcast,  Econtalk. I have penciled this one in on my summer reading list.

Harford also recently named his top five books that give unexpected lessons in economic principles, a list that included Klein & Bauman’s Cartoon Guide to Economics (my intro textbook!), Charles Perrow’s classic, Normal Accidents, and Cory Doctorow’s For the Win, a book that should “appeal to any enthusiastic player of MMO [Massively Multiplayer Online] games.”  Huh.

Undercover. Unexpected.  Un for the whole family.

### Econ Picnic, Thursday 5 p.m. Hiatt Patio

Friday, May 20th, 2011

The year-end picnic, more affectionately known as the Econ-nic, is set for Thursday at 5 p.m. on Hiatt Patio. There will be pizza bread and soft drinks access to a water fountain for those who would like to dine with us.  We will be robo-mailing you and circulating a sign up sheet over the next week.

### Producers Still Hate Competition

Wednesday, May 18th, 2011

Tyler Cowen at Marginal Revolution thinks this story might be a parody.   Here’s the gist:  a Berkeley store has decided to compete with its fellow merchants.

The relationship between the new management and the community seems to have got off on the wrong foot soon after Fujimoto left. Before long, the small local merchants were hearing reports from customers that Monterey Market was selling the same specialty products as they were, but at lower prices.

“We only have a 30% mark-up”, said Ng, adding that she doesn’t understand how Monterey Market can sell the same products so much more cheaply.

So, are they saying that Monterey Market can’t sell the same product?  Not at all.

Asked why Monterey Market should not have the right to pursue a business model that includes selling what it wants, Ng said:  ”Sure, but they don’t have to carry exactly the same products. It’s not that there was no competition before — we carried some of the same items — but we had matching pricing,” Ng said.

And the story doesn’t end there.

The decision by Monterey Market to stay open on Sundays, which it started to do in November last year, has also had a direct impact on sales, according to Ng and Rosales. In the days of Bill Fujimoto, opening hours used to be coordinated among the merchants, according to Ng.

Same products, lower prices, greater convenience.  Sounds like competition to me.  And producers still hate it.

### Who is Dominique Strauss-Kahn? Why Should Anyone Care?

Wednesday, May 18th, 2011

Answers to the first question are obvious.  Strauss-Kahn is the Managing Director of the International Monetary Fund.  As undoubtedly you have heard, he was arrested recently for sexually attacking a maid in his luxury suite at a New York Hotel.  He also was expected to be a strong candidate for the Presidency of France.  His exit from the political scene is imminent.

Why should we care?  Martin Wolf in yesterday's Financial Times answers that question. I encourage you to read the full article but the operative words are as follows:

"Mr. Strauss-Kahn proved to be a bold decision-maker, an effective politician and a competent economist.  This combination is very rare.  None of the candidates under discussion is likely to do the job as well as he did during the worst of the global and then eurozone financial crises."

### Supply & Demand Mania Continues

Tuesday, May 17th, 2011

Don Boudreaux has assigned a Pop Quiz over at his blog, Cafe Hayek.

1.  Which group of persons would most likely benefit from rent control (i.e., a price ceiling or price cap) imposed in the city of Washington, DC?

a. landlords in Washington, DC

b. persons seeking to rent apartments in Washington, DC

c. landlords in the DC suburbs without rent control

d. renters in the DC suburbs without rent control

2.  Suppose that engineers at BMW invent a new machine that dramatically increases BMW’s efficiency at producing automobiles and, thus, causes BMW’s production costs to significantly fall.  As a result, BMW expands its output and lowers its prices.  But also, BMW patents this new machine; only BMW can use it.  What is the most likely consequence of this particular invention on the prices that General Motors, Ford, Toyota, and other auto makers charge for the automobiles they produce?

a. no change in the price of non-BMW automobiles

b. the price of non-BMW automobiles will fall

c. the price of non-BMW automobiles will rise

d. there’s insufficient information to answer this question

3. In the 1970s, the federal government imposed price ceilings on oil.  The goal was to make fuels such as gasoline and heating oil more affordable.  One consequence was

a. consumers ended up getting less oil (and oil products, such as gasoline and fuel oil) than they would have gotten without the price ceiling

b. gasoline shortages

c. higher costs to consumers of acquiring oil and oil products

d. all of the above

For answers, either work on them, or go check out the Cafe Hayek blog.

### Measurement Error

Monday, May 16th, 2011

Edwin Heathcote of the Financial Times asks, why is it that cities voted “most liveable” are not cities where people actually want to go live?

The most recent surveys, from Monocle magazine, Forbes, Mercer and The Economist, concur: Vancouver, Vienna, Zurich, Geneva, Copenhagen and Munich dominate the top. What, you might ask, no New York? No London? No LA or HK? None of the cities that people seem to actually want to emigrate to, to set up businesses in? To be in? None of the wealthiest, flashiest, fastest or most beautiful cities? Nope. Americans in particular seem to get wound up by the lack of US cities in the top tier. The one that does make it is Pittsburgh. Which winds them up even more.

So I moved away from the most liveable city to be with you guys?  Yikes.

via Marginal Revolution.

### Supply & Demand in The New Yorker this Week

Sunday, May 15th, 2011

As the waters surge southward towards the Gulf, The New Yorker reprints John McPhee’s classic “Atchafalaya,” about the Army Corps of Engineers’ handiwork on the Mississippi River.  McPhee is possibly the greatest American non-fiction writer of the past fifty years and is renown for his ability to describe natural phenomena. One of the key takeaways from the article is that New Orleans simply wouldn’t exist in the form that it does were in not for the Corps pinning the river in place some years back.

Also this week appears to be the innovation issue.   James Surowiecki kicks it off by exploring the role of “venturesome consumers” in the innovation process. If it wasn’t for you guys trying new, possibly crappy and buggy and high-priced things, how would producers ever figure out what you like and how to deliver it?

OG Mouse

We’re also blessed with another Malcolm Gladwell piece, this time examining the development of the Apple mouse.  Click the mouse on the right for an on-line slideshow of various prototypes. In what will certainly be music to Professor Brandenberger’s ears, Gladwell chooses some money quotes from psychologist Dean Simonton, including

“Quality is a probabilistic function of quantity.”

Meaning, roughly

“The more successes there are, the more failures there are as well”

We also get a report on how Pepsi is taking on the obesity epidemic (didn’t read that one yet) and an expose on Pixar.

So, that should keep you busy for a while.

### “Uncle Sam will save you from bad feng shui”

Saturday, May 14th, 2011

The “avuncular state” is one of  this week’s topics in the Comparative Economics Systems course. Should the state take a more paternalistic role? The Economist covers the topic fairly regularly, and you can probably guess which side they are on. This week’s issue has an entertaining (and worrisome) piece in the Schumpeter blog on the “Licence Raj.” As the quote in the title of this post says, even interior designers must be licensed in Florida. Requiring licensing raises wages by about 15% in a profession, the article says.

While The Economist sees licensing requirements as a weight pulling down entrepreneurship, others see that 15% wage bump as a perfectly good reason to require licensing. In Germany, for instance, the traditional and highly developed apprenticeship system ensures that students who do not go on to university end up with respectable, satisfying work as licensed craftsmen and women, for a living wage.

Listen to this recent OnPoint show for more on this.

### Rabbit Gallery off and running Saturday

Friday, May 13th, 2011

Well, not quite yet, but they have secured space in the Conkey’s building.

For those of you hiding under a rock, the idea of The Rabbit Gallery is to put art galleries in vacant shops, allowing artists to display their work and pay a lower commissions for display.  The intrepid entrepreneurship of Ranga and his brethren has secured the \$700 to get the gallery out of its hole and into Conkey’s.

The special VIP launch date (for those only who contributed!) is May 14th (tomorrow) at 4:30…. See you there.

The launch date for the general public is Tuesday, May 17th.