David Gerard

Author: David Gerard

Are you feeling lucky, Prius?

My colleague Paul Fischbeck is in the news for calculating the incremental risks from driving a Toyota with an accelerator problem.  According to his press release:

In the U.S., there is a little more than one fatality for every 100 million miles driven. The average U.S. vehicle logs about 13,000 miles each year. Based on these averages, for the 2.3 million Toyotas being recalled, there are about 340 fatalities every year for causes unrelated to the accelerator. The accelerator problem is adding about six deaths every year to this total — meaning that the accelerator problem is increasing the driving risk by about 2 percent.

So there’s a meat-and-taters public policy question for you — do the benefits of fixing the problem justify the costs of a massive recall?   To put this in context, a 2 in a million chance is about the same as flipping a coin 19 times and getting heads every time.

See you in 240.

Are You Ready for Some Econ?!?

It’s come to my attention that many of you have not registered for Spring term.   You can’t be serious!

Here’s what’s in store:

  1. Professor Galambos: Econ 100: INTRODUCTORY MICROECONOMICS (Q) 12:30-02:20 TR
  2. Professor Karagyozova Econ 120: INTRODUCTION TO MACROECONOMICS (Q) 11:10-12:20 MWF BRIG 223 09:50-11:00
  3. Professor Galambos Econ 180: ENTREPRENEURSHIP IN THE ARTS & SOCIETY (S) 09:00-10:50 TR
  4. Professor Gerard Econ 240: POLITICAL ECONOMY of REGULATION (W) 03:10-04:20 MWF
  5. Professor Gerard Econ 280: ENVIRONMENTAL ECONOMICS 09:50-11:00 MWF
  6. Professor Finkler Econ 320: MACROECONOMIC THEORY (Q) 09:50-11:00 MW and  08:30-09:40 T
  7. Professor Finkler Econ 425: ENTREPRENEURSHP & FINANCIAL MARKETS 12:30-02:20 TR
  8. Professor Karagyozova Econ 460: INTERNATIONAL ECONOMICS (G,Q) 01:50-03:00 MWF

Count ’em, two courses on entrepreneurship, a new 400-level chance to take International, and my new writing-intensive course on the political economy of regulation.   If you are itching to take that one, signal your interest by getting on the waiting list.

The schedule for next year is up on Viking as well.  Start planning ahead if you need to fill those econ boxes.

Economics TBA — today at 4 p.m.

After a scintillating weekend up north, we are back for the home stretch of the second term.  And what better way to finish a Monday than TeaBA with the economics faculty and students?

Today will be the Oliver Zornow Tea, for his spectacular finish in the this weekend’s game theory tournament.  Today’s cookies are courtesy of Mr. Zornow.

We will also hear a presentation from a group in The Economics of the Firm (Econ 450), examining the role of the football coach in the division III schools.  Can we measure his performance in terms of wins and losses?  Or is it a multi-attribute principal agent model?

Should be a corker.  See you there.

Pareto Improvements, Film at 11

Tom Hazlett continues to beat the drum to auction off the spectrum.   What does that mean?

Professor Hazlett estimates that selling off this spectrum could raise at least $100 billion for the government and, more important, create roughly $1 trillion worth of value to users of the resulting services. Those services would include ultrahigh-speed wireless Internet access (including access for schools, of course) much improved cellphone coverage and fewer ugly cell towers. And they would include other new things we can’t imagine any more than we could have imagined an iPhone just 10 years ago.


What’s the downside?

Off to Björklunden

The faculty and students are headed to the great whitish north for its (first annual) departmental retreat, featuring presentations from Economics of the Firm (my personal favorite),  Game Theory, and Urban Economics courses.     It’s not too late to sign up.

Speaking for the economics of the firm course, there will be presentations on:

*** why Lawrence outsources its food service (can’t we do this ourselves?)

*** why Lawrence has its own campus security (why not use a professional security company?)

*** why Lawrence has its own vehicles for student use (why not use Enterprise?  They pick you up!)

*** why universities have endowments, and how reliant Lawrence is on its endowment (I’m not sure, and I don’t know… looks to be a good one)

    If you can’t make it this weekend, we hope to see you Monday for tea!

    “the secret, multibillion-dollar systems that U.S. intelligence agencies use to monitor the communications, transactions, and associations of people in this country and around the world”

    Slate.com has an extended dialog with Shane Harris, the author of The Watchers: The Rise of America’s Surveillance State.   Here’s the prelude:

    The Watchers is really a book about [Admiral John] Poindexter, the visionary Ph.D., former national security adviser, disgraced Iran-Contra conspirator, and father of one of the most far-reaching and reviled surveillance initiatives of the post-9/11 era, Total Information Awareness. The Bush administration gagged Poindexter when TIA ignited a firestorm in Congress in 2003, and after being removed from his position at the Defense Advanced Research Projects Agency (the Pentagon’s R & D shop, known as DARPA), the admiral appeared to recede from the national stage. But he gave you unprecedented access—14 long interviews about his philosophy and career—and in your book, he emerges not as the caricature civil libertarians have come to know and loathe but as a nuanced, surprisingly sympathetic character.

    I’d imagine this is an interesting piece for folks interested in organizations or regulatory policy generally.   I look forward to reading this one.

    Checking Your Financial Plumbing

    At the recent Lawrence Scholars in Business banking summit, alumnus Rob Bearman suggested that a young person interested in a career in banking would do well to learn all s/he could about the recent financial crisis.   He suggested Andrew Sorkin’s Too Big to Fail as a good start.   Another place for a more academic flavor is the recent Journal of Economic Perspectives Symposium on Financial Plumbing.

    The list looks like a good place to start an independent study project.  I can’t speak for the quality of the articles, except to say that the JEP authors are generally recognized area experts, and the pieces tend to be very readable and heavily documented.

    Enjoy!


    Innovation & the World Economy

    That’s the title of Robert Litan’s speech from the Foreign Policy Research Institute, and it is a crisp and interesting read.  Here’s a taste:

    Entrepreneurs are vital to the economy not only because of the innovations they bring to the market, but also for the jobs they create. The Kauffman Foundation sponsored a study recently to look at the source of job growth in the United States since 1980. The conclusion is remarkable, or at least I believe it to be. Since 1980 until the recession, all net new jobs—net meaning gross jobs minus layoffs — have been created by firms under five years old. Think about that. That means all existing firms as of 1980 have not increased their employment since that year. In fact, if anything, the firms that existed in 1980, as a group, have lost employees. Using these data, we have made a rough estimate that at least 1/3 percent of our employment and a somewhat smaller fraction of our GDP since 1980 is due to young new firms that have since grown. These are amazing facts.

    The piece contains some nice blurbs about the difference between state-guided capitalism, managerial capitalism, and entrepreneurial capitalism.   These concepts seem to follow the Schumpeterian notion of innovation, which is why it’s important to understand Schumpeter (!)

    The Nature of the (Urban) Farm

    From our pals over in Environmental Studies:

    Does meeting with fellow students and faculty to talk about running a farm in the ghettos of Oakland, dumpster diving to feed pigs, and corralling runaway turkeys in downtown Oakland sound like fun?

    During the Spring term  Green Roots and the Environmental Studies program will be sponsoring a for credit campus read program.  The book is Farm City: The Education of an Urban Farmer, by Novella Carpenter.  Her work covers topics including sustainable agriculture, urban communities, and healthful eating.  As a special treat, the author will be in the Fox Cities in mid-April, just before Earth Day!

    Contact Andrew Knudsen knudsena@lawrence.edu or Jason Brozek jason.brozek@lawrence.edu for more information.

    The New Palgrave Encylopedia of Economics, Redux

    While dredging through Steven Landsburg’s excellent, yet interminable, chapter on perfect competition, we took a brief break to contemplate the Austrian critique paused to think about some of the Austrian critiques of the competitive model.   To wit:

    The trouble with the concept from the Austrian point of view… is that it describes an equilibrium situation but says nothing about the competitive process which led to that equilibrium. Indeed, it robs the firm of all business activities which might reasonably be associated with the verb ‘to compete’ (Hayek, 1948). Thus, firms in the perfectly competitive model do not raise or lower prices, differentiate their products, advertise, try to change their cost structures relative to their competitors, or do any of the other things done by business firms in a dynamic economic system. This was precisely the reason why Schumpeter insisted on the irrelevance of the concept of perfect competition to an understanding of the capitalist process.

    That passage, of course, is from The New Palgrave Dictionary of Economics, which is one of the fabulous economics resources offered through The Mudd.

    Having trouble with the Principal-Agent Model? Wondering about empirical work on the make-or-buy decision?  Need a quick primer on health economics or the ins-and-outs of the logit model?   This might be a good starting place.

    The Cartoon Introduction to Economics

    Well, the future of pedagogy has arrived in the form of The Cartoon Introduction to Economics. If you’ve ever wondered what economics would be like if someone with a sense of humor was teaching you, this might be the book for you. I have a copy if you are interested in coming by and taking a look at it.

    Professor Bauman will be on campus April 26 to promote his book and maybe to help us to understand economics a little better.

    Here’s a bit of his stand-up act. I find it laugh-out-loud funny in parts, but worry that he’s right about the Snickers bar.

    The Gales of Creative Destruction…

    Well, the good news is that the new site architecture is in place and it looks pretty fabulous  — thank you toschumpeter Jay Dansand and the gang for transporting the site.

    The bad news is that some of our pithy posts from last week have been vaporized.

    Overall, I judge the change to be Kaldor-Hicks efficient but not Pareto improving.   And, again, if you find this sort of joke amusing, you might consider subscribing to the RSS feed.

    On the right there, just because we can, that’s Joseph Schumpeter.

    EconOlympics, Cont.

    There’s another piece up at Slate.com about economics of the Olympics. This time, it’s Colorado College’s Daniel Johnson continuing research project — simple econometric specifications to predict medal counts. The explanatory variables are the number of country medals as a function of population (+), per capita income (+), climate (colder is better), political variables (openness not necessarily a good thing), and the host-nation advantage.

    The upshot? Canada 27, the US 26, and Bangladesh 0. The predictions are also broken down by gold, silver, and bronze.

    Here’s the Slate piece.

    Economics Tea with Corry Azzi, Today at 4 p.m.

    Rumor has it that Professor Azzi will be stopping by for tea and conversation.

    More than likely, “subtle” is one of the last adjectives that springs to mind when a description of economics professor and alumnus Corry Azzi is needed. In a world fashionably attired in grays, Azzi, ’65, prefers going through life dressed to the nines in blacks and whites.

    ….

    A willing combatant on the academic battlefield, he revels in the good fight. He doesn’t suffer fools easily and spouts sentences that sound like a talk radio host audition: “We’ve put such a value on open-mindedness that we think the uneducated and the ignorant are sophisticated.”

    Peek beyond the bluster, however, and you will find an award-winning teacher, loyal friend, and most importantly, a nurturing mentor.

    Who knew?

    We will also be discussing the Bjorklunden weekend, the winter Olympics, and whether 4 p.m. is too late for “morning thunder.”

    See you there!

    Internets Down in Briggs, Monday 9 a.m.

    The internet is down and so for those of us who spend time engaged in cyberspace, there has been a flight to [generally lower] quality. No word on it’s expected return except the always reassuring, “they’re working on it.”

    If you need an economist, you might be forced to go to Briggs 2nd and bang on a door. I’ll see my 300 class at 9:50.

    We will see you for tea at 4 p.m., somewhere on Briggs 2nd. Start at the Fish Bowl and then work from there.

    UPDATE: Never mind.

    Happy Valentine’s from The I & E Reading Group

    Early in life I had three ambitions. I wanted to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna. Well, I never became the greatest horseman in Austria.

    That, of course, is from Joseph Schumpeter, the subject of the first book in the Innovation & Entrepreneurship Reading Group.

    If you are interested in reading with us, let Professor Gerard know. You can usually catch him around the office, or at the Economics Tea, Mondays at 4 p.m. somewhere on Briggs 2nd.

    We will begin blogging about the book this week and plan to meet and discuss it at the Bjorklunden weekend and in early March.

    Watch this space.

    The Fourth Branch: Coming to An Administration and A Classroom Near You

    For those of you wondering what Economics 240, The Political Economy of Regulation is all about, it’s about stuff like this.

    With much of his legislative agenda stalled in Congress, President Obama and his team are preparing an array of actions using his executive power to advance energy, environmental, fiscal and other domestic policy priorities…. Any president has vast authority to influence policy even without legislation, through executive orders, agency rule-making and administrative fiat.

    Legislation gets all the attention, and regulation does all the dirty work.

    In Econ 240, we will study “the fourth branch of government” (a.k.a., administrative agencies), including the continuing evolution and growth of the U.S. regulatory system, the process by which regulations are proposed, written, implemented, and enforced, and the tools used to evaluate the costs and benefits of regulations.

    It’s designated writing intensive, and I couldn’t be more excited. See you in there.

    This Saturday, LSB Banking Summit, One Day Only!!!

    Don’t forget, tomorrow (Saturday) is the LSB banking summit. Looks like a solid lineup. Don’t worry if you haven’t already signed up, there should be plenty of space.

    Banking Summit

    The next Lawrence Scholars in Business event is the Commercial and Investment Banking Summit, and it will take place on Saturday, February 13th from 10:00 to 12:00 in the Hurvis room in the Campus Center. If you come for the event, join our guests for lunch right afterwards–just go through the line as usually, and then go to the Parrish/Perille dining room.

    Our guests will be

    Rob Bearman ’75 — managing director, Barclays Capital, Inc., (investment banking division of Barclays PLC); formerly at Goldman Sachs for 20 years;

    Hugh McLean ’80 — former executive managing director and president, The PrivateBank & Trust Company (suburban Chicago offices);

    Dave Naunheim ’77 — president and chief lending officer, United Missouri Bank (UMB)-St. Louis.

    These three alumni have a deep knowledge of the banking world, so this is a great opportunity to learn about careers in banking, or just to learn about the financial world, the linchpin of the economy. Our panelists will specifically discuss the financial crisis from an insider’s perspective. In addition, they will talk about interviewing strategies generally and for banking jobs specifically. This is an opportunity to learn something about the economy that you don’t get in a course, and it is an opportunity to make connections with well-placed alumni who are ready to help you.

    I strongly encourage you to attend, if you are on campus during reading period, and you might even change your plans for the weekend so that you are able to join us. Sign up in the career center or email careercenter@lawrence.edu.

    Kudos to Professor Shober

    This looks interesting. The best way to foment effective policy outcomes is to allow administrative agencies to do their thing unfettered. How do they solve the agency problem? I guess we’ll have to read the book and find out.

    Order now!

    Splintered Accountability: State Governance and Education Reform

    Arnold F. Shober

    The No Child Left Behind Act declared that improving education in every school in the United States was a top national priority. However, this act did not acknowledge how state departments of education have successfully constructed reforms for the past few decades, despite the power struggle between governors, legislators, school districts, and state boards of education. Drawing upon archival sources, state budget documents, interviews, and statistical analysis, Splintered Accountability amply demonstrates that sustained education reform is best left in the hands of the relatively autonomous state departments of education in order to maintain curriculum standards, school finance, and teacher licensure systems. Comprehensive and successful education reform originates from within state education agencies, propelled by savvy state superintendents.

    Looking for a Talented Innovation Research Fellow

    If you are interested in topics on innovation, let one of us know. The Skran Fellowship applies broadly to students with interests in innovation, including students of economics and policy. The deadline is right before we adjourn to Bjorklunden.

    Here’s the announcement:

    DALE L. SKRAN, SR., SUMMER RESEARCH FELLOWSHIPS IN SCIENCE, TECHNOLOGY AND INNOVATION

    Two student research fellowships at Lawrence University, created in honor Mr. Dale L. Skran, Sr., reflect Mr. Skran’s strong endorsement of “hands-on” research and engineering involving faculty/student research collaboration. Mr. Skran was a graduate of the General Motors Institute and the Advanced Management Program at Harvard, and he enjoyed a 40-year engineering career in the auto industry, retiring in 1981 as the manager of Quality Assurance for Front End Brakes at Chevrolet Saginaw Manufacturing. During his tenure in this position, his factory won many awards for the safety of its brakes and other products.

    Awards: The Dale L. Skran, Sr., Summer Research Fellowships at Lawrence are awarded on a competitive basis to two students each year who complete an application to conduct summer research in collaboration with a member of the Lawrence faculty. Each fellowship will consist of $5,000, $3,500 of which will constitute a stipend for a student, $500 will cover any ancillary costs of the project, and the remaining $1,000 of each fellowship will be awarded to the supervising faculty member either in the form of a stipend or reimbursement for costs associated with the fellowship.

    Selection Criteria: All Lawrence University students are eligible for these fellowships with preference being given to rising seniors. These funds are awarded without consideration of race, gender, religion, sexual orientation, or international student status.

    Guidelines and Selection Process: Possible areas of focus will relate in most cases to physics, applied physics, engineering, or innovation and entrepreneurship ventures. The selection committee for these fellowships will be chaired by Professor John Brandenberger or his designee. At least one member of the selection committee will represent the innovation and entrepreneurship program at Lawrence; another member is to represent the Department of Physics.

    Applications: Interested students should consult with the chair of the selection committee (currently Mr. Brandenberger in Youngchild-116) to collect the application forms, part of which will call for a research proposal. The deadline for applications is February 26, 2010.