Every year about this time I like to remind our students to be careful crossing the street. Some back-of-the envelope calculations we did once upon a time suggest that the time change is a very dangerous time for walkers at dusk. (It is also true that it is now safer in the morning, but I’m not sure I want to counsel you to be less safe in the morning).
“The change that’s going to occur on Sunday is going to have some pronounced effects on your risks of walking between 5 p.m. and 7 p.m.,” Dr. Gerard said last night. “Basically, these are the hours when it’s just getting dark. Next week at this time, it will be pitch black. But people walking and people driving won’t have adjusted. The baseline risk for getting killed is almost tripled.”
Their study of pedestrian fatalities from 1999-2005 shows that there is an average of 37 more U.S. pedestrian deaths around 6 p.m. in November compared to October. That amounts to an increase of 186 percent.
No such jump was seen for drivers or passengers in cars.
“It’s astonishing,” Dr. Gerard said of the data. “It’s particularly worse right at the switch date, [when the average increases] two people a day for the next couple weeks, until the adjustment is made.”
In yesterday’s Economix blog, former Reagan and GHW Bush administrator Bruce Bartlett addressed the possible options. Below is a crisp summary of the details. Read his full post for more.
1. The debt limit is public law.
2. Appropriations (passed by the Congress) are also public law.
3. Entitlement programs (such as Social Security and Medicare) are public law.
4. The Prompt Payment Act, which requires that obligations be paid when they come due, is public law.
Result: something has to give.
5. Treasury can’t easily determine which bills to pay or not pay. It does not have sufficient information to determine priorities. Various departments and agencies would need to set such priorities. This, however, would be difficult since it would take time to do so and many staff members required to provide input have been furloughed.
6. To enable prompt payment, Treasury has established processes “to make payments when they are due, whether the cash is there or not.”
7. As a result of point 6, obligations are likely to be paid in order of due date as cash becomes available.
8. If 7 holds, some bondholders will experience a delay in receipt of payment, but this means the security would be classified as “non-performing.” As Bartlett puts it.
Treasury would now be in default, and defaulted securities cannot be traded, accepted by the Federal Reserve as collateral, or held by money market funds. In a note published on Oct. 5, Goldman Sachs said money managers are forced to dump Treasury securities before October 17 to avoid being stuck with securities that could not be traded.
9. Section 4 of the 14th Amendment to the Constitution provides a rationale for the president to override debt limit legislation.
10. President Obama has said, on numerous occasions that he will not use the authority granted by the Constitution to get around the debt limit set by Congress.
Result: At best, uncertainty predominates. At worst, Treasuries are not accepted as collateral by many financial managers and organizations. I’m not sure which game theory structure applies – Help, Professor Galambos. Some have characterized the situation as a game of chicken – who will give in first. My conclusion is that it is a negative sum game in which the magnitude of the losses in the resultant payoff matrix swamps the few available positive results.
Conclusion: This is a game that should be avoided. Will it be avoided? I hope so.
Those of you out-of-staters venturing into Wisconsin for the first time perhaps have noticed a few things — the verdant landscape, the ubiquitous beer-drinking establishments on and around College Avenue, people wearing green and mustard yellow clothing as if that were a normal thing to do, and, of course, the Wisconsin dairy culture (so to speak).
Indeed, Wisconsin dairy farming is second to none (well, second to California, but California is really big) and the locals here embrace the cheese culture in ways that Californians could only dream. Firstly, of course, the locals actually call themselves cheeseheads, and will go so far to wear cheese-themed headwear.
We also have something else the median Californian doesn’t see much of — winter. As you might expect, the cheeseheads are busy looking for innovative ways to defray the considerable costs of combating roadway snow and ice. And, as it turns out, they need look no farther than the cheese on top of their heads.
The [Milwaukee] Department of Public Works will go ahead this winter with a pilot program to determine whether cheese brine — a liquid waste product left over from cheesemaking — can be added to rock salt and applied directly to the street…
Tiny Polk County, in the northwest part of the state, has been using cheese brine since 2009. According to the city report, Polk County saved approximately $40,000 in the first year by using cheese brine as a pre-wet agent to salt or a combination of salt/sand.
It seems they spray the cheese on the ground as a primer and then dump the rock salt on top of that. Rock salt is more expensive than cheese brine (generally, I guess) so it seems to make sense. Except the cheese is kind of stinky, it seems.
I really liked the writing in the story and the somewhat comical undertones (though my spell check doesn’t seem to recognize the wordcheesemaking, it seems to flow quite naturally in the Journal-Sentinel prose). Perhaps the most interesting aspect is that cheese wasn’t the first choice — the city has been toying around with salt-brine, molasses, and beet juice as supplements to defray the cost of rock salt.
Loyal reader “Mr. H” points us to some recent improbable research from the Journal of Economic Behavior and Organization (JEBO*) that analyzes the classic prisoners’ dilemma game. The big story here is that the authors ran the experiments using actual prisoners! Specifically, they surveyed about 92 women from a prison “für Frauen” along with 90 college students as a control group, and they found that prisoners were actually more likely to cooperate (keep their mouths’ shut) in some situations.
Here’s from the abstract:
We compare female inmates and students in a simultaneous and a sequential Prisoner’s Dilemma. In the simultaneous Prisoner’s Dilemma, the cooperation rate among inmates exceeds the rate of cooperating students.
In the conventional setup, of course, cooperation means not ratting out your criminal partner. So what do the differential rates tell you — snitches get stitches?
Relative to the simultaneous dilemma, cooperation among first-movers in the sequential Prisoner’s Dilemma increases for students, but not for inmates. Students and inmates behave identically as second movers. Hence, we find a similar and significant fraction of inmates and students to hold social preferences.
Now what does that tell you? I’m not sure.
* For those of you keeping track, that’s pronounced “Gee bow”.
Slate.com points us to a (possibly) interesting U.S. map that lists locales by the literal meanings of the underlying name. For instance, my own hometown of Champaign, Illinois, comes from a French word, not for the delicious bubbly (via the grapes of the Champagne region), but rather for a flat, open area of land — a plain plane, so to speak.
The headline of the Slate piece takes us up I-57 to Chicago, a word derivative of a French term meaning stinky onions, evidently the defining characteristic of the Second City before it was the First City. I actually knew of Chicago’s secret onion heritage from reading Rodman Paul’s classic, Mining Frontiers of the Far West, where he tells us about the early audacious stature of Galena, Illinois:
The Fever River District, as it was called, boasted a boisterous population, and was fully equipped with saloons, dance halls, vigilance committees, and daily mayhem, while the site of Chicago was still an onion swamp.
Chicago is now the biggest city in the state of the Land Where People Speak Normally (well, at least in Normal they do, I suppose), whereas Michigan means Big Lake and Wisconsin meansRed River.
Contrary to popular belief, Fond du Lac does not mean “fondness of lactose products,” but actually means font (founding, or, in this case, bottom) of the lake. And, of course, Appleton is not a tribute to this region’s prolific apple output, but instead is named for Amos Lawrence‘s presumably lovely wife, Sarah Elizabeth Appleton.
One of my favorite features at the Cheap Talk blog isConsider the Equilibrium, where, as you might expect, the authors consider the equilibrium outcome in scenarios ranging from bike sprinting to inferring the quality of Asian restaraunts.
The now annual Economics Open House for prospective majors is coming Monday, April 8, at 4:30 in Briggs 217. The economics faculty will be on hand to discuss the once and future of the economics department, answer questions, and just generally provide a pleasant ambiance.
We encourage current majors and minors to stop by and feast both on the complementary snacks and the delicious conversations that will undoubtedly spontaneously emerge. Tell your friends and see you there.
No, that’s not me introducing Professor Galambos at a recent Economics Colloquium; it’s George Lucas hashing out his initial vision of the Indiana Jones character with Steven Spielberg and Lawrence Kasden.
We hope that you are enjoying your break and recharging your batteries for the final third of the 2012-13 academic year. Rest assured, we here on Briggs 2nd are making the necessary preparations for the academic homestretch.
And we couldn’t be more excited, if not a little edgy.
The Hungarian version of Soviet-style economy was often referred to as “goulash communism“—it was a more permissive, generally more prosperous variant than what existed in several other Warsaw Pact countries. If the unique capitalism that Hungary is creating is to be “goulash capitalism,” it’s going to be a low-fat version. This will give yet another reason for some older folks wistfully to declare that “at least in the good old days, goulash used to be goulash.”
(This seems like a good time to point out that goulash is a soup, and a very good one. It has beef, potatoes, paprika, sometimes beans, and other things. It is not some kind of a stew, or, worse yet, ground meat with some sauce.)
Hungary rarely gets on the front page of the New York Times, but the new Hungarian tax on fatty, sugary foods was such a bold step towards a healthier Hungary that even American journalists took notice. While the justification for the tax is the national need for a leaner populace, the real reason is probably the government’s need for a fatter treasury. Those of you taking Comparative Economic Systems are probably crying “soft paternalism!” right now. Or “hard paternalism.” As to the financial consequences: if the tax really cuts down on the consumption of unhealthy foodstuffs, not only will there be little revenue generated form the tax, but the very low Hungarian life expectancy will rise, costing the state more in health care expenditures. Continue reading Goulash capitalism?
I’m not sure this has anything to do with economics, but given the cross-disciplinary spirit that exists here on campus I thought I would post it anyway:
Would you rather fight 100 duck-sized horses or one horse-sized duck?
That was a question that was posed to President Obama (he declined to answer) that I read about at the Kottke blog. And, as per usual, Mr. Kottke has way more on the topic than we could reasonably hope to expect.
A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars…
Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs from the 24 trips, worth between 50 cents and $1 each, which they can then sell on to oil companies that haven’t met the EPA’s renewable fuel requirements.
It’s like a children’s joke: why did the train cross the border? As the man says, if you pay people to do something, you’ll get more of that something.
I wonder if this type of thing goes into the life-cycle analysis of biofuels?
Although most of LU is closed today due to the blizzardy conditions, the Lawrence Economics Blog trudges ahead. And, what better way to celebrate the snowfall than to look ahead to the holiday gift-giving season? As last year’s economists’ buying guide went over so well, I’ve decided to repost it here. So here we go…
It’s that time of year where we bid you Happy Holidays from the Economics profession.
Up first, we have a truly heroic figure, Joel Waldfogel, author ofScroogeonomics.* I don’t know your preferences as well as you do, so whatever I give you is probably sub-optimal, unless you tell me exactly what you want. And even then, wouldn’t you rather just have the cash anyway? For those of you intermediate micro students, you know that kids prefer cash over any in-kind equivalent.
Kudos to Professor Waldfogel for willing to be “that guy.”
In this whole world, there is nobody more generous than the miser–the man who could deplete the world’s resources but chooses not to. The only difference between miserliness and philanthropy is that the philanthropist serves a favored few while the miser spreads his largess far and wide.
If you build a house and refuse to buy a house, the rest of the world is one house richer. If you earn a dollar and refuse to spend a dollar, the rest of the world is one dollar richer–because you produced a dollar’s worth of goods and didn’t consume them.
Ah, I just feel all warm and fuzzy inside.
Moving on to The Atlantic, where we have “The Behavioral Economist’s Guide to Buying Presents.” Now this is some truly indispensable advice. Like Waldfogel above, the money point is to just give money. But, for the true romantics who feel compelled to give a gift, the behavioralists recommend this:
Buying for a guy? Get him a gadget. Buying for a girl? Get her something expensive and useless.
The gadget I get.** The expensive and useless? That’s from Geoffrey Miller’s, The Mating Mind. Here’s a brief explanation of courtship:
The wastefulness of courtship is what makes it romantic. The wasteful dancing, the wasteful gift-giving, the wasteful conversation, the wasteful laughter, the wasteful foreplay, the wasteful adventures. From the viewpoint of “survival of the fittest” the waste looks mad and pointless and maladaptive… However, from the viewpoint of fitness indicator theory, this waste is the most efficient and reliable way to discover someone’s fitness. Where you see conspicuous waste in nature, sexual choice has often been at work.
This presents something of a conundrum because “expensive and useless” seems to be at odds with Waldfogel’s hyper-utilitarian cold, hard cash suggestion.
Last year I suggested that we could solve the puzzle by giving her Euro!, but it seems that the EU keeps plodding along. Perhaps a holiday shrub?
* The book is a follow up to the classic, “The Deadweight Loss of Christmas.” Clearly, the book title Scroogonomics can be chalked up to the value-added of the publishing house.
**Conceptually, that is. I generally get ties and socks.
We previously told you about The Chaney Tapes — a chronicle of emeritus Professor William A. Chaney’s time at Lawrence. Among the things of interest to us is his particular his affection for some of the LU economists, and today we give you a quote on William McConagha:
“I would say that, of all the faculty I have known in my half century here, Dr. McConagha was the most beloved. A very gentle but firm-minded man. A real gentleman and scholar — soft-spoken but a ramrod when it came to integrity. He made the first public denunciation of Senator Joseph McCarthy in Appleton, not exactly the popular thing to do. He gave a public lecture in which, among other things, he simply told the McCarthy record, how McCarthy had accepted Communist support when he was running in Milwaukee. He told the facts of McCarthy’s record and talked about principles, about integrity. He was the first person to do that on campus.”
McConagha won the University Teaching Award in 1960, two years before it went to legendary political economist, William Riker. Wow.
In that same year, Riker published The Theory of Political Coalitionsand left Lawrence (College) to become head of the political science department at the University of Rochester:
WILLIAM RIKER WAS A visionary scholar, institution builder, and intellect who developed methods for applying mathematical reasoning to the study of politics. By introducing the precepts of game theory and social choice theory to political science he constructed a theoretical base for political analysis. This theoretical foundation, which he called “positive political theory,” proved crucial in the development of political theories based on axiomatic logic and amenable to predictive tests and experimental, historical, and statistical verification. Through his research, writing, and teaching he transformed important parts of political studies from civics and wisdom to science. Positive political theory now is a mainstream approach to political science. In no small measure this is because of Riker’s research. It is also a consequence of his superb teaching–he trained and influenced many students and colleagues who, in turn, helped spread the approach to universities beyond his intellectual home at the University of Rochester.
You can check out Professor Riker’s photo and short bio in the Government Department’s display case. I believe he has had some influence on at least one of our colleagues in Government (note where he earned his Ph.D.). My own dissertation advisor cites Riker as one of his intellectual heroes.
Professor Galambos points us to The Chaney Tapes — a chronicle of legendary Professor William A. Chaney’s life and times here at Lawrence. Of particular interest to this blog is the very high profile of Lawrence economists. Here’s a taste of Professor M.M. Bober:
Some of Professor Chaney’s fondest memories are of his faculty colleagues in the 1950s and 1960s. M. M. Bober, professor of economics, is a particular favorite. His witticisms provide Chaney, himself the master of anecdotal enlightenment, with endless tales.
When discussing an art history professor’s latest attempts at painting, Professor Bober is reported to have said, “Hanging is too good for them”…
Bober’s sharp commentaries even warranted national attention when Time magazine published some of his more notable lines in a review of the retirement of several of academia’s greats in 1957: “If God were half as good to us as we are to Him, we’d be living in paradise,” “Businessmen have as much competition as they cannot get rid of,” and “When you leave this room I want you to feel that you have learned something. Don’t go out and just develop a personality.”
Hanging is too good for them. I’m going to use that one.
Welcome to winter break. One of the great things about returning home is that your family and friends can share not only in the new, colorful personal habits that you’ve picked up on campus, but also in the fruits of the valuable analytic skills that you have developed here at Lawrence.
Economist Jean-Jacques Dethier gets us started. Here — right on schedule — is a taste of analysis of the evil scheme of one Christopher Walken in A View to a Kill:
Plot: Max Zorin (Christopher Walken) wants to secretly trigger a massive earthquake that will destroy Silicon Valley. This will then allow him and his investor allies to monopolize the microchip manufacturing market.
Plausibility: “As far as I know, microchips aren’t actually manufactured in Silicon Valley,” says Dethier. “They’re made all over the world, in China and other places, though the guys who commission the work may be in Silicon Valley.” Therefore, while taking out Silicon Valley would obviously be cataclysmic for the tech industry, he notes, it also wouldn’t entirely remove your competitors, and wouldn’t ultimately affect manufacturing that much.
The Chronicle of Higher Education reports that the state has decided to crack down on free education, notifying California-based startup Coursera that it is not allowed to offer its online courses to the state’s residents.
Alert reader “Mr. C” alerted me to this as an example of “rent seeking,” whereby the purveyor of market power erects a barrier to entry as a means to maintain its preferred status. I wouldn’t really call this rent seeking in the conventional sense, as the state itself is simply kicking online providers in the teeth. The state itself runs several non-online operations. It would be rent seeking if one of the many fine private institutions went to the state to enforce the policy.
As for the policy itself, Slate online has a comical clarification.
It later was clarified that online education was okay, but the provider had to register with the state, and have its registration renewed annually.
So, what is the rationale for this?
George Roedler, manager of institutional registration and licensing at the Minnesota Office of Higher education, clarifies that his office’s issue isn’t with Coursera per se, but with the universities that offer classes through its website. State law prohibits degree-granting institutions from offering instruction in Minnesota without obtaining permission from the office and paying a registration fee…
The law’s intent is to protect Minnesota students from wasting their money on degrees from substandard institutions, Roedler says. As such, he suspects that Coursera’s partner institutions would have little trouble obtaining the registration. He says he had hoped to work with Coursera to achieve that, and was surprised when they responded with the terms-of-service change notifying Minnesota residents of the law.
The thing is, no one is wasting their money on Coursera courses, because they’re free. (Yes, says Roedler, but they could still be wasting their time.)
So the state is in the business of protecting its citizenry from wasting its time.