This interesting blog post by market designer Al Roth of Harvard University summarizes an economics paper that links the preponderance of boys in China to the high Chinese savings rate. On the other hand, women are clearly in the majority on US college campuses. (No, this doesn’t explain the US savings rate, but it has other interesting consequences.)
Category: Uncategorized
Don’t Forget the Monday Economics Tea, 4 p.m.
Following the success of the inaugural Economics TBA, we will be breaking out the hot beverages and cookies once again this coming Monday at 4 p.m. (Caffeine available upon request).
This should work out splendidly for you with classes running until 4:20, as I’m certain that both the water and the conversation will be heated by that point.
See you there!
Microsoft’s Self-Destruction
It isn’t news that innovation at Microsoft has been lackluster, as this article from Fast Company put it in 2007. Alumni of the In Pursuit of Innovation course know Clayton Christensen’s teaching: large companies are in danger of suppressing innovation just by trying to do well what made them successful in the first place. This op-ed piece from the New York Times by a former VP gives a few startling examples of a corporate organization that seems to strangle innovation. Where did the 9.5 billion dollars go that Microsoft spent on research and innovation last year?
Shine a Light… Life After Lawrence Edition
It’s never too early to think about what you are going to do after you leave Lawrence. In fact, thinking about what you might do after graduation could well open up some exciting opportunities whilst you are still here in the friendly confines of Appleton.
A week from Sunday, February 14, St. Valentine’s Day, and the last day of the reading period, 25 alumni will be on campus for the Shine Light, More Light on Your Future conference. I strongly recommend that you seize the opportunity to meet our alumni and discuss their career paths and experiences. They are here because they love Lawrence and want to help folks just like you.
Looks like a really solid lineup, including my mentor, Alan Parks! And, there’s probably free food, too.
Creative Destruction:Car Dealership Edition
What happens to old car showrooms after auto dealerships shut down? They turn into catwalks, galleries, schools, theaters, churches and yoga studios.
This Time is Different (NOT)
Last year, economists Ken Rogoff and Carmen Reinhardt published what will become (and may be already if that were possible) a classic. The book is entitled, This Time is Different: Eight Centuries of Financial Folly. It traces the history (both recent and ancient) of a plethora of failed attempts by countries to borrow their way to prosperity.
In his January 29th newsletter, John Mauldin selects some of the juicier pieces for citation. They make for sobering reading. Enjoy (or maybe not.)
Econ Bloggers Outlook for the Economy
The Kauffman Foundation has just published its first survey of leading economics bloggers regarding the near future. Go to the site below and see whether your views line up with others.
There’s No “I” in “Normative Codes of Coduct”
On the heels of our 450 test, there is an interesting post over at Organizations and Markets about some empirical work on Alchian & Demsetz’s team production problem. The issue at hand is, of course, how to enhance cooperative behavior.
We find that neither verbal framing with company cues nor the recruitment test have a significant effect on cooperation enhancement whereas the introduction of normative codes of conduct significantly boosts cooperation. This effect is even stronger when codes of conduct are combined with the recruitment test.
Looks like an interesting piece and a potential future classroom experiment.
No mention of the effects of firing the grocer, however.
Give Me a “TEA”
Don’t forget, the Economics Tea kicks off today at 4 p.m. in Briggs 217. “Free” cookies and discussions of maximizing behavior. If you are reading this, presumably your attendance indicates a well-specified objective function, whereas your absence is due to high marginal costs rather than an information problem.
If you find that amusing, then this will definitely be your kind of crowd.
The Rise and Fall of Investment Banking: Theory of the Firm Edition
For those of you taking a break from trivia to study for a 450 Exam, Daniel Gross gives a broad brush account of the importance of ownership structure and agency issues. Here’s the basic argument: (1) investment banks go public (i.e., allow members of the public to buy ownership shares); (2) raising equity capital allows banks to expand and compete with international considerations; (3) growth in size correlated with a growth in clout, whereby banks effectively “captured” regulators; (4) growth in size led to acute agency problems, whereby management plundered shareholders a la Berle and Means.
Whew, that was fast.
Market Failure and Drug Approval
Here’s a question for you true believers out there, is there a market failure rationale for FDA approval of pharmaceuticals and medical devices? And, if so, what is it?
Well, that’s exactly the question that Daniel Klein and Jason Briggeman of George Mason University asked more than 300 economists with expertise in health economics, the FDA, information and uncertainty, and regulatory policy.
They asked you, too, and you can check it out by participating in this 25-minute interactive exercise.
For those of you without 25 minutes, here’s a snippet:
Due to pre-market approval, drugmakers face costs, delays, and uncertainties that suppress the development of new therapies. Famous studies of the introduction of beta-blockers showed that many tens of thousands of American deaths could be attributed to the delay between approval in Britain and in the United States. Scores of other drugs have been delayed that plausibly would have saved many other lives. But pointing concretely to delays in the approval of well-known drugs can only illuminate a potentially larger problem: the extra costs and uncertainties imposed by the pre-market approval process may prevent the development of many drugs. Those losses–of not-developed drugs, of wouldhave-been benefits–are impossible to identify or quantify, but they are no less real.
I would be very interested to hear your thoughts both before and after your take the survey.
What Should We Expect of Our Central Bankers?
Ben Bernanke’s reappointment as Chair of the Federal Reserve Bank remains in the hands of the U.S. Senate. Many are calling for a negative vote. I (and Ed Glaeser in the linked piece below) beg to differ and would like to point out that central bankers are not and should not be in charge of solving all the ills of the economy nor can they create all such ills.
http://economix.blogs.nytimes.com/2010/01/25/in-defense-of-bernanke/#more-49539
Boom and Bust Rap
You beat me to it. The video is both fun and illuminating.
The Citizen Kane of Macro Battle Rap Videos
Do you find that your friends lose interest when you start discussing the nuances of Keynsian and Hayekian views on boom-and-bust cycles? Well, this might be just the video to help you get your point across.
The messages seem to align with my admittedly-limited understanding of macro theory, and I’m pretty certain Russ Roberts knows more about these issues than I do. And it has received critical kudos from Alex Tabarrok.
Catchy, too.
I’ll look forward to hearing this blaring in 120 and 320 in the coming years.
Enjoy!
The Times, They Aren’t a Changin’
Speaking of the New York Times, you might have heard the buzz that they are going to begin charging for content. Will that save them? Well, as one critic put it, “Do you like getting pecked to death by ducks?”
It’s a pretty interesting piece, integrating some aspects of market structure, competition, innovation, and, yes, organizational adaptation.
Apple doesn’t even announce its tablet, and suddenly Amazon flips the deal on Kindle royalties to comport with Apple’s app world. Yup, yesterday Amazon said publishers would get 70% of revenue instead of 30%. Sure, there are caveats, you can read the fine print, but the point is Amazon could see the Apple juggernaut coming and adjusted. Where’s the adjustment at the “New York Times”?
Check it out. You might learn something along the way.
America, the Unbalanced
Uwe Reinhardt, in today’s New York Times Economix Blog argues that Americans do not have a good sense of balance in terms of understanding the role of government. In short, they want incredible security, especially with regard to health care, but want someone else to pay for it.
Just Think How Much They’d Be Worth With Tasteful Uniforms
Have you ever wondered how much a sports team is worth to the community? Many people think about direct benefits in terms of jobs, sales of novelty headwear, Economists typically find that on net, such benefits aren’t very big, or are even negative.
One thing that has been tough to measure is the value that individuals place on having the team, and a recent piece in the Southern Economic Journal has done just that for the Minnesota Vikings. According to a piece in the Wall St Journal,
Sports teams sell their facilities as economic-development projects that create jobs and generate tax revenue. But a slew of studies have shown that publicly subsidized stadiums–usually paid for by selling bonds and paying the cost and interest with tax revenue-rarely return the money governments put into them. Teams continue to argue, often successfully, that they are worthy of subsidies because they are a source of civic pride and purpose.
But what is that worth? Economists Aju Fenn and John Crooker tried to answer the question in a study published in July 2009 in the Southern Economic Journal.
The two used “contingent valuation methodology,” which is a nerdy way of saying they surveyed people and used statistical models to turn the answers into an average price Minnesotans place on the Vikings.
The result: The Vikings’ “welfare value” is $702,351,890– $530.65 for each of the roughly 1.32 million households in Minnesota.
The study was conducted in 2002, and the figures are not adjusted for inflation (or for the recent acquisition of quarterback Brett Favre)
The contingent value method was pioneered by environmental economists, trying to get at the value of non-market amenities, from clean air to a day of fishing to preserving the Arctic from oil development. It relies on, of all things, estimates of the compensated demand curve. So for those of you laboring through Econ 300 right now, this is one application of that whole “prices rise and we give you just enough income to keep you on the same indifference curve” business.
One of the major criticisms of the method is that it’s easy to talk the talk about what you’d be “willing to pay,” but it’s a much different thing to actually plunk down the cash.
What Went Wrong? The Financial Crisis Revisited
Big Think’s “What Went Wrong?” is a series of interviews with a number of key members of government, business, academia, and media on the subject of the financial crises.
Talk to us!
The Economics Blog is now accepting comments on some posts. You just need to click on the “Comments” link, such as the one below. Your comment will not be immediately visible, but it should be in a day or so. We are looking forward to reading your responses–so talk to us, comment to your heart’s content!
Eco-bling
This article in The Times reports on a study by the Royal Academy of Engineering, claiming that
Roof-mounted wind turbines and solar panels are “eco-bling” that allow their owners to flaunt their green credentials but contribute very little towards meeting Britain’s carbon reduction targets.
I guess if one were to engage in conspicuous consumption using eco-bling, this might work a lot better.