Wednesday, December 19, 2007

Speed Read This!

Earlier this week I was reading a book called The Art of Speed Reading People: How to Size People Up and Speak Their Language [amazon]. It's about the 16 personality types and explains how you can improve communication with someone after figuring out their type. I'm a sucker for relevant-to-real-life psychology (almost) as much as I am for relevant-to-real-life economics so I thought it would be interesting. After taking the test, I learned that I'm an introvert-intuitive-feeler-perceiver (INFP). The subsequent description fit astonishingly well. (I wondered if it was like astrology in the sense that all of the descriptions might fit. Nope. Color me impressed.) However, I also realized that, as an intuitive, I generally focus on the big picture and miss lots of small details. You know, the kinds of details that you have to pick up on to "speed read people." Wonderful.

In all seriousness, I never expected the book to be useful for anything more than entertainment. However, wouldn't it be nice if the book practiced what it preached? Should it not take steps to "speak my language" after it has "sized me up"?

Sunday, December 16, 2007

Last Minute Gift Idea + Best Movies of the Year

My favorite movie of the year comes out on DVD this Tuesday. In the true spirit of the holidays, I've informed my family that someone *must* get it for me for Christmas.

The movie? Once [amazon]. Anyone who's the tiniest bit romantic should love this movie along with anyone who likes music similar to Damien Rice. It's hard to explain beyond that. It's a romantic musical but it's not a typical romance nor a typical musical. It's just a great story about two people meeting and developing a relationship. (Sort of in the documentary-style spirit of my favorite movie, Before Sunrise, but less romantic.) Very simple and realistic yet amazingly beautiful, along with great musical performances. (Bonus movie gift recommendation: Collector's Editions of Blade Runner come out on Tuesday in DVD, HD-DVD, and Blu-ray!)

This seems as good a place as any for a "Best of the year" list, so here's the cream of the crop for films this year. I chose to do a top 3 because no other films I've seen come very close to these picks.

1. Once
2. Away From Her
3. Enchanted

Once was a joy to watch and kept me thinking about it for weeks after seeing it. Away From Her, about a man dealing with the onset of Alzheimer's in his wife, is one of those difficult to watch movies that truly deserve to be watched. Lastly, we have Disney's Enchanted. This is a perfect "desert island movie" that you could watch over and over and never get bored. Amy Adams is funny and cute as the princess-to-be while James Marsden is surprisingly hilarious as the prince.

Two musicals on in my top 3 movies of the year? I'm surprised myself. I'm definitely not a fan of traditional musicals but these films show that the genre can be much more broad than we usually see. (By the way, my favorite pre-2007 musical is The Umbrellas of Cherbourg.)

Lastly, let me say that I have seen No Country for Old Men and it's not the best movie of the year despite what many others have said. It's interesting, for sure, but Stephen Hunter's review hits the nail on the head. It's an amazing display of skill but the joke's on us and it's not that funny.

Saturday, December 1, 2007

From the Comments

Renee Denfeld, Who wrote this book, All God's Children, IS SEVERELY MISINFORMED!! Where the hell did you get your information? Did you make it up for a more interesting story? I am an original member of NGP and sickboys, (i was a sick chick) and the stuff you wrote in your book is so off that it makes my blood boil. You are putting out slanderous info about a very vulnerable and lost group of people. Shame on you. You should find a way to right your wrongs.

Hazel 5150

This comment was in response to my previous post on Denfeld's claim that increasing initiation costs increased the demand for street family affiliation. Just to be clear, the "you" is most certainly referring to Denfeld and not myself. It isn't surprising that her book [amazon] wasn't well received by the street family community. I also wouldn't be surprised if it contained inaccuracies. (Although it was pretty compelling for the most part and didn't seem to confuse speculation for facts all that much.) In any case, I've followed up with Hazel and will report back if I get a response.


Wednesday, November 28, 2007

Stay Tuned

The lack of posts lately is because I've been busy trying to finish writing a paper, preparing a presentation for another paper, and dealing with the regular end-of-quarter workload. Sometime in the next few days I may post a small piece of investigative journalism. I have a strong bit of evidence of price discrimination by a major online "player."


Tuesday, November 20, 2007

Bklog #4

The Tipping Point by Malcom Gladwell

Definitely as good as advertised. Gladwell describes the process through which social phenomena goes from non-existent to the cool kids doing it to everyone doing it. In making his case, we get a wonderful tour through all sorts of interesting empirical studies in psychology, epidemiology, marketing, education, and sociology. In my favorite chapter, he explains the psychological tests that influenced Sesame Street and Blues Clues. How anyone could not enjoy that sort of discussion is beyond me.

Also, the book is amazingly well-written. It might be fun (not to mention useful) to spend some time analyzing his writing style to figure out what makes it so effective.


Monday, November 19, 2007

What's up with that?

Last night I played tennis with a friend. It was after dark but the courts were well lit. Adjacent to the tennis courts was a basketball court. No lights. This isn't the first time I've noticed such a design. Why not light those as well?

Is the bouncing of a basketball so loud that it's a nuisance? I'm inclined to think this isn't the answer since the park was a good distance from any homes. Is there greater demand for tennis at night than basketball? Are they trying to keep away the types of people who would play basketball after dark? Is there something else I'm missing?

Friday, November 16, 2007

Why didn't I realize the absurdity before?

#1: Balance budget multiplier. An introductory and intermediate macroeconomics concept. If you raise lump sum taxes and government spending by equal amounts, GDP will increase by that amount. (Then why not just have a command and control economy? To clarify, much of introductory and intermediate macroeconomics has always seemed absurd to me--but it is especially so in this case.)

#2: "You're so vain, you probably think this song is about you." (But by addressing "you" it is about "you." Yes, I realize the absurdity may be intentional which would make it ironic, I suppose.)

Wednesday, November 14, 2007

An Idealistic Thought On Teaching

You spend God-knows-how-many-years working to get a Ph.D. in your field. Clearly you believe it's important. How can you not convey this enthusiasm to your students? Your students may never take another course in economics (or Math/English/Whatever). Do you keep this in mind when developing a class or lecture?

On a related note, you have to appreciate Mankiw's enthusiasm as indicated by his personalized license plate.

Tuesday, November 13, 2007

Chicago Trip: Wrap Up + Index

All in all, we've had a pretty touristy trip. That's okay because there's a reason such places are so popular.

Favorite Place (by far): The Art Institute of Chicago
Most Overrated: The Field Museum (The Darwin Exhibit was one of my very favorite things but it's not a part of their permanent collection.)
Biggest Convenience: really good affordable food all over the place
Thank Goodness (Kyle and Richard): we had a place to stay so we could afford the trip

Things to do when I have more money:
-Fancy restaurants
-Sporting events

Things to do when I have more time:
-Kingston Mines blues club
-Museum of Science and Industry
-Wrigley Field
-Tour Eli's Cheesecake Factory

Index of Chicago Trip Posts:
Arrival + Day 1
Day 2
Day 3
The Chair Table
Day 4
Day 5

More on the Happiness Externality

Tyler Cowen alludes to the happiness externality:
Poor, poor Tyrone. No wonder he is so unhappy. He thinks he is surrounded by so many other unhappy people.
As I suggested in my previous post, I think it's important to appreciate that Tyrone only needs to be surrounded by a few to become unhappy himself.

Monday, November 12, 2007

Income and Happiness: A Theory

To my knowledge, there is very little evidence that shows that happiness increases with income. The evidence tends be the following:
  1. People in rich countries are not happier than people in poor countries.
  2. There are lots of stories of people who have gotten rich and remained/become very troubled.
  3. Within countries, there is a little-to-no relationship between income and happiness.
  4. Economic growth doesn't make people happier in a given country.
Many take this as evidence that there is little to no relationship between income and happiness. Yet this is completely counterintuitive since everyone thinks they'd be better off if they had more money. Daniel Gilbert, in Stumbling on Happiness, explains this inconsistency by arguing that humans are terrible at making predictions. I think Gilbert's story is a subplot to the main story.

As an undergrad, a psychology professor told my class about an experiment in which someone in a bad mood was inserted into a room full of other people. The room was infected very soon afterwards. Even those who didn't interact with this person were adversely affected. The punchline? There are happiness externalities. Further, the negative happiness externalities are more powerful than the positive ones. It's easier to destroy happiness than to create it.

Also, think about the times you've tried to cheer up a friend who was feeling down. More often than not, I'd bet the night ends with you both in a bad mood. Also, think about the last time you walked through a rough area of a city. I bet, like most folks, you kept a solemn expression on your face. Think that didn't affect your mood?

This idea can explain why getting rich doesn't make people that much better off. They still have just as many poor (independently unhappy) folks around bringing their mood down.

This also explains why rich countries aren't happier than poor countries. Or why economic growth doesn't bring happiness. With economic growth comes greater inequality. That is, rich countries still have lots of poor (independently unhappy) people.

Is this idea consistent with the fact that relative income matters? I think so. Just because I want to have a rich happy neighbor doesn't mean that I don't want to be even richer than he is.


Related Links:
Update: I didn't realize it at the time, but this post is totally influenced by Malcolm Gladwell's The Tipping Point which I had just barely started reading the night before. Now that I'm further in the book, the influence is obvious.

Chicago Trip: Day 5

Today we started by visiting the University of Chicago. (The trip there was not fun, by the way, with the university located in the middle of a pretty rouch area.) It was nice to just stroll around and enjoy the beautiful buildings. Especially the gothic style buildings of the main quadrangle. In addition to the quadrangle, we checked out Bond Chapel, Rockefeller Memorial Chapel (pictured below), and Regenstein Library.

Right off campus, we visited Robie House which was designed by Frank Lloyd Wright. The amazing exterior has recently been renovated but the inside still is in pretty poor condition. Our tour guide said they're aiming to have everything finished by 2010. Interesting bit of trivia: As you may know, Wright is famous for using long horizontal lines to make his buildings appear organic. To accomplish this goal, he used pigmented mortar for all the vertical spaces between bricks.

Next we headed to the 95th floor lounge at the John Hancock building for its great view of the city.


For dinner, we went to Lou Malinati's Pizzeria. I think it wins the battle versus Giordano's. The best thing, though, is that they had Eli's Cheesecake! The original was stellar.

After dinner we planned to go to Kingston Mines, a blues club. That plan was dashed when we (Jenise) lost our keys. We never found them. A few hours later, we were able to get in but were too fatigued to go out again. Since Jenise's brother doesn't have an extra set of keys and his roommate is going to be gone during the day, we're home ridden for our last half-day here. Oh well. I think we've done plenty in a relatively short amount of time.

Chicago Trip: Day 4

Today we intended to complete the museum campus trifecta. We went to The Field Museum of Natural History on our first day and today we had The Adler Planetarium and the Shedd Aquarium on the list.

First up was The Adler Planetarium. They had a great exhibit on the history of the theory of the universe beginning with the flat Earth that was the center of everything and ending with the idea that the universe is expanding. At each stage there was a list of how the new theory improved on the previous one. It made me realize how little about this stuff that I know.

We also saw a pretty amazing show called Black Holes: The Other Side of Infinity. Visually it was stunning (and you have to love watching a flick leaned back in your chair and staring at the ceiling), the sound was great (with narration by Liam Neeson), and the content fascinating. It went by a bit too fast for me so I'll have to see it again sometime. There's a link to the trailer on this page.

A neat bit of trivia: "The Earth's natural radioactive decay releases as much energy in one second as the amount of energy used by the United States in about four-and-a-half years.

There was also a nice exhibit on the history of US space travel. I think the rest of the planetarium was skippable with lots of mediocre interactive learning tools.

After taking a quick rest, we headed to the Shedd Aquarium. Interesting observation: they actually have a pretty cheap basic admission ($8) but the cheapest package they advertise is $23. Anywho, the aquarium was nice. Fish are pretty amazing creatures. They also had a newborn beluga whale. And sharks. And a komodo dragon. There were two standouts for me. First was an Australian lungfish who has been in Chicago since the 1933 (!) World's Fair. Second were the sea dragons.


In the evening we went to Twin Anchors, an old neighborhood restaurant off the beaten path (but still packed), for some delicious ribs. Falling off the bone with a nice tangy sauce, they were worth the long wait.


Saturday, November 10, 2007

The Chair Table

Also known as "The Most Underappreciated Piece of Art at The Art Institute of Chicago."


Imagine the poor sap who brings this home enthusiastically seeking his wife's approval:
"Honey, I know you've been wanting a nice place for us to eat our meals together in a proper fashion."
"Yes," she responds eagerly while staring at the solitary chair in the corner.
"You'll never believe what I found! It's a chair and a table all in one! A chair table! You just fold it right here and it's a table. Fold it back and, voilà, it's a chair! Combined with the chair we already have, it'll be perfect!"
"Yes, dear, but where will you sit if I'm sitting in the old chair?"
"I'll be sitting in this chair, of course."
"Then where will we put our plates?"
"On the the table!"
"But the table is a chair. And you're sitting in it."
"Then I'll just fold it over, like so, and we have our table!"
"But, then the table is no longer a chair and...."
"I know. Blows your mind, doesn't it?"
"Yes, dear."


Chicago Trip: Day 3

Today we had an ambitious day planned: The Art Institute of Chicago, Oak Park, and and Navy Pier.

Before heading over to the art museum, we checked out Millenium Park, home of the amazing Cloud Gate (or the "The Bean") which is fully deserving of two pictures.



The Art Institute of Chicago was my favorite place so far and I doubt that anything else will surpass it. The most famous piece there is probably American Gothic or The Old Guitarist. Both exceeded expectations.

I was most pleased that they had a large number of Monet's. I'm pretty confident in saying that no other artist consistently comes close to his level. Maybe Van Gogh but I prefer Monet. Okay, now for a list of highlights:

Favorite Artist I Didn't Know Before: Kawase Hasui
Random Favorite: Road Near by Twachtman
Most Underrated: Stay tuned...this one is going to get its own post
Best Piece By An American Artist: American Gothic or Winged Figure
Favorite Renoir: Young Woman Sewing
Favorite Monet: Sandvica, Norway
The Sexiest Painting I've Ever Seen: Woman at Her Toilette

The museum took up most of the day but, with an hour and a half of daylight remaining, we headed to Oak Park which contains the world's largest collection of buildings designed by Frank Lloyd Wright including his own home. They were pretty neat. Next time, I'd like to take a guided tour to make sure I see them all and to get the background info.


Lastly, we went to Navy Pier for a bit of touristy shopping. It was just what you would expect.

Chicago Trip: Day 2

Woke up in the morning with my back in major pain but I wouldn't let that hold me down. We spent the morning and afternoon at the (free!) Lincoln Park Zoo.


It was pretty cold out but it was worth it. Thankfully, there were a number of indoor viewing areas. My favorite was definitely the Regenstein Center for African Apes--I could have spent all day there. The other highlights included the Regenstein African Journy (starring hippos, rhinos, giraffes) and The Lion House. I didn't realize it at the time but, apparently, there was even a mini-lion that tried to jump in my coat!


After finishing at the zoo, we decided rest for the rest of the day. My back needed it. And we had lots of plans for the next day.


Thursday, November 8, 2007

Chicago Trip: Arrival + Day One

What was the first thing we did after arriving in Chicago yesterday and dropping our bags off at Jenise's brother's place? Deep dish pizza from Giordano's. It was delicious. It was pretty late afterwards so that was it for our first day here.

Today we spent the day at The Field Museum. The featured exhibition was Darwin. The neatest thing I learned was that he was sitting on The Origin of Species for over 20 years. He was hesitant to publish it for various reasons but he had no little choice after finding out that a fellow scientist was going to publish his version of natural selection.


We had planned to visit the aquarium or planetarium as well but we ended up spending hours in the Darwin exhibit (I had to read everything because it was all so good) and there was lots more to see in their permanent collections. Their most famous piece is Sue, the "largest most complete T-Rex in the world."

Once the museum closed up on us, I talked Kyle and Jenise into going somewhere we could watch the Major League Soccer Eastern Conference Championship. Good food, good drinks, and a good game. Unfortunately the wrong team won as New England beat Chicago. Ah well, neither of them are going to be able to beat Houston anyways!


Wednesday, November 7, 2007

Another puzzle?

There are far more children born every year with fetal alcohol syndrome than are born with autism or Down syndrome. Fetal alcohol damage is the leading cause of mental retardation, with an estimated forty thousand babies born with the syndrome annually. And yet, the condition receives far less attention and support than other disabilities.

I wonder why. (Kidding. I'm convinced that it's because it's perceived as a poor folks problem.)

Once again, the quote is from the excellent All God's Children by Rene Denfeld. I'm looking forward to reading the second half on my trip to Chicago today but I think it's safe to say that it's a great book. I admire and appreciate the author's ability to remain purely descriptive. The book is written as a series of interconnected vignettes--each street youth's story is well researched and fascinating. (If you were wondering about the context of the quote, one of the girls had FAS.)


Sunday, November 4, 2007

I know it's a bit early but...

today I'm thankful for realVNC.

For quite a while now, I've had a bit of a problem. I do and store all my work on my home computer. This makes it difficult go to campus, or anywhere, and do work. My usual solution has been to put files on a flash drive and take my laptop. Of course, this is a pain and I usually forget something.

Many of my colleagues just store all their work files on department servers which can be accessed from anywhere. I have a psychological hangup that has kept me from doing this--I want *everything* to be in one place. On top of that, UNIX is a pain.

Enter realVNC. With this nice program, I can access my home PC using my laptop from anywhere with internet access.

EDIT: Before I was having some problems connecting with my current laptop. It appears to only be a problem when I connect from home which, obviously, is not necessary. Yay!

A novel solution to the SS crisis

Stephen Colbert's I Am America (And So Can You!) has a novel solution to the SS crisis.
I'm not going to win any awards for saying this, but the elderly are like rude party guests. They came early, they're always in the bathroom, and now they just won't leave. I say we do the same thing to them that I do with stragglers at my shin-digs. Put them to work cleaning the place up...Let's use 'em to shut down our porous Southern Border. One thing Old People have a knack for is keeping kids off their lawn...Plus they're suckers for heat.
As for the book on the whole, I never expected it to live up to the greatness of the show. Nevertheless, it's hit and miss. If you have a bit of time to kill in your local bookstore, chapters on old people, religion, and homosexuals are definitely the hits, in that order.

As for the misses, you quickly learn which parts you should skip: "Stephen Speaks for Me, A Chance for Average Americans to Agree With What I Think" and everything written in the margins. It really drove me nuts that every page had about 3 "parenthetical comments" in the margins (in addition to footnotes.) In general, these were the jokes that weren't funny enough to make the main text. After awhile I knew I should skip them but they were distracting.


Wednesday, October 31, 2007

Street kids and the internet

In the 1990s, street youth shelters began offering free computer access, and a number of Web sites either created by street kids or catering to them quickly appeared... On digihitch.com, a portal claiming five thousand members, a query about New Orleans can run to pages of answers from street kids, complete with tips on how to find good squat (ask in Jackson Square), the rules of the street (don't panhandle your first day), and how the police react to street kids (be careful "flying a sign," or using a cardboard sign to beg). A post on hippy.com about Venice Beach includes the local menus (a church that gets donated pastries from Starbucks, a cafe that delivers hot soup and cookies to the street youths)....

More great stuff from All God's Children.



"It's not you, it's me"

I think an economist is forced to both agree and disagree with this standard breakup line.

The false part (that everyone knows is false) is the "it's not you" part. Clearly rejection is less likely if one is more attractive (in whichever way you like to define it), all else equal.

That said, the "it's me" part is true! One only breaks up with their partner if they believe their outside options are more attractive than sticking together. Ones outside options are a function of their own qualities. Thus, one can be rejected because their partner has really good alternatives (opportunity costs). This implies that rejection need not lead one to change how they feel about themself.

This analogy translates to all sorts of rejection. And this is not a bad outlook to have. It's better than thinking "the line" is completely false, anyways.

Monday, October 29, 2007

In which competition fails to lower prices?

"In Portland, the first major street family came into being in 1998 with the Nihilistic Gutter Punks....The NGP family soon claimed between seventy and a hundred members. The family grew too large to squat together, and smaller families began to splinter off the main group....As the youths split into smaller factions, the families developed increasingly severe initiation rites. New members of the Sick Boys were beaten into the family and, at times, were told to inject eighty units (a large syringe) of methamphetamine into the neck, a shot that is now known as a Sick Boy. The female members of the Sick Boys were called Sick Bitches, and they had to commit assaults and robberies in order to earn the right to wear "Bitch Bangs," or the short fringe of hair that female street youths sometimes keep when they shave the rest of their hair off. If they wanted to tie objects in their Bitch Bangs, the Sick Bitches had to commit more assaults. The harsher the initiations, the more the street kids clamored to join...."

This excerpt (with emphasis added) is from the very interesting and well-written All God's Children (which is currently 80% off at amazon.)

The first bolded sentence is interesting. Thinking about the street families as suppliers in a service industry trying to attract customers (kids) we would expect increased competition to make prices (initiation) fall. But the opposite happened. Now, it's obvious that the suppliers would want to increase their price but it's harder to explain how they could get away with it. Why wouldn't a no cost family spring up and attract all the kids who have yet to join a family?

I can think of two explanations that I think are plausible. One, street families are an example of a mythical (?) giffen good in which demand increases in price. This is the position the author takes in the second bolded sentence. I don't really buy it. I think correlation is being mistaken for causation. Demand for street families was already booming. That kids continued to join after the initiations became more severe does not mean that the harsher initiations caused demand to increase. That said, it's plausible since street families are clearly about status. Nevertheless, I think another explanation is more likely. That is, despite the increase in the number of firms (the splintering of the street families), market power of the suppliers was actually increasing due to increasing demand.

Both of these hypothesis seem testable with the right data. Perhaps the world needs an economics of street families to accompany the economics of drug-running gangs? Interestingly enough, one of the experts on street families, Bill McCarthy, is here at Davis in the sociology department. Perhaps I'll have an opportunity to ask his opinion at some point.

This is not the first time this month I've thought sociologists may hold the answers.


EDIT: A Rambling Grad Student has thoughts on this puzzle.

Sunday, October 28, 2007

My favorite quote

For land that’s dry and unfruitful will give you good crops, if you put enough manure…I mean, your grace’s words have been like manure spread on the barren ground of my dry and uncultivated mind.

Oh how I wish I could take a week off to reread this book. It's been too long and the details have faded. Yet the memory of my emotional response remains clear as day.

Thursday, October 25, 2007

The determinants of fanatical product support

  1. Price: The big ticket items are more likely to develop fanaticism - works for trucks and electronics, but furniture costs a lot, too . . . why does no one even claim LaZBoy roks and Pottery Barn sux?
  2. Social visibility: Maybe people are more likely to be fanatical with high profile visible goods - but that kind of fails when it comes to computers and video game systems.
  3. The people that buy them: Maybe people that consume these particular goods are just the kind of folk that feel the need to identify themselves with one side or the other (or at least the type that are willing to broadcast their product choice and publicly berate all other choices)
  4. Longevity: Maybe the longer timeframe investments warrant more fanaticism to justify purchase . . . but the cycle time on electronics is far too short for that rational.
  5. Amount of user interaction: Electronics and trucks both have high user interaction time. Maybe items with a lot of product/user interaction require greater mental justification, and thus support higher amounts of fanaticism.

#5 is by far the most interesting and clever hypothesis.

Nevertheless, I think the answer is a twist on #1. That is, fanatical product support is driven by price relative to income. I imagine that those who are fanatical about trucks first purchased their truck when its cost was a large share of their income. More generally, it's probably stronger for people with low income. The same for videogame systems and computers--it develops for young folks with little disposable income. This also explains why no one cares about couch brand names. When it comes time to buy a couch, it tends to be a drop in the bucket.

I'm sure you have many personal counterexamples to this explanation. I also know plenty of folks who are well-off yet fanatical product supporters. This is easily explained by a gravity-type model. Once a bunch of people have sorted into their respective camps, there is pressure for others to join rather than to remain agnostic.

Should I be writing shorter sentences?

This post about writer's sentence length and sales has been making its way around a few of the blogs I read. Highly recommended. The conclusion (based on a rather small sample) is that shorter sentences sell more books.

Since I've been in the writing process of paper writing lately, I wondered if I shouldn't be writing shorter sentences. Of course, writing for economic journals is different from popular writing. At the same time, the same principles might apply. A quick google search turned up this paper by Laband and Taylor. They look at the impact of a number of quality measures, including words per sentence, on subsequent citations for a sample of articles from The Journal of Political Economy and The Review of Economics and Statistics. They found almost nothing. The one characteristic that matters is paper length--longer papers are cited more. You might think that, even if it doesn't matter within journals, writing characteristics may make a difference to what journal a paper gets published in. The linked paper cites another paper by Laband who looks at submissions to JPE and finds no effect. Still, it might matter at other journals and the sample is small and from over 20 years ago. Nevertheless, I'm inclined to believe the results until something better comes along. And it's too bad--I prefer (to write and read) short papers.

Monday, October 22, 2007

What I've been up to lately...

Working. That's just about it. Hooray for grad school! Things are particularly crazy right now because I'm pushing to finish a paper. Starting is easy. Finishing is hard.

Despite a sometimes heavy workload, the flexibility of academic life is undeniably sweet. I'm taking a trip to Chicago in a few weeks. It'll be my first time there. What should I do? I was thinking about forgetting all the sights and stalking Gary Becker. Don't they say that's the sincerest form of flattery? Seriously, though, all the work has kept me from looking into things to do while we're there. Any suggestions?

Friday, October 19, 2007

In Transition

As you probably notice, I've decided to make this an anonymous blog. I enjoy the blog for what it is--a scrapbook for ideas and experiences. I've long worried that the informal nature of the blog might make me appear less serious as an economist. When the question why should good economists blog requires an answer, it's a signal that it's a risky venture.

In general, I'm a very cautious person. Further, when it comes time to get a job, I'd like potential job market committees to focus their attention on the body of work that I've put years of work into. And I think they would like that as well. That said, putting myself in their shoes, it would be tough to resist looking at an applicant's blog that turned up from a google search.

Wednesday, October 10, 2007

Post-talk thoughts

Today I presented my work for the first time since my oral exam in June in our department brownbag series. Surprisingly, I was more nervous for this one than my oral exam. Probably because I feel like the paper is now close to being finished. More specifically, I've been working on it for long enough that I've done most of what I can think to do--this means I can rarely respond to questions with "I haven't gotten to that yet."

Despite my nerves, the presentation went really well. I got a lot of positive feedback and a lot of suggestions that I think will improve my paper a great deal. That said, I thought I would feel a great relief after it was over but I don't. I still feel the same anxiety since all the good suggestions mean I still have a lot of work to do. But I'm excited to dive back in. I hope to have a draft ready to "go public" soon.

Tuesday, October 9, 2007

Crazy fan, crazier goalkeeper

This clip has been showing up on all the soccer blogs lately:



So, why did he fake the injury? Well, some would argue that it's natural to soccer players. But the situation is a bit different when it involves a fan. He was probably hoping that the home team would be forced to forfeit due their fan's behavior.

Sunday, October 7, 2007

Should schools teach kids how to talk?

Lately I've been reading selected articles from The New Education Reader: Leading Educators Speak Out. One of the articles pointed something out that is completely obvious that I have never thought of. Phonics is less likely to be effective for children who don't speak "properly" since they may not associate the "right" sound with letters.

This may explain why some kids have trouble learning to read. Especially kids from disadvantaged backgrounds. Also, this suggests that kids must be taught how to speak "properly" to teach phonics. I wonder if people are comfortable with this.

(You might argue that, more generally, teaching reading necessitates teaching how to speak properly but I don't think this is the case. Not in the sense that reading is word recognition anyways.)

Tuesday, October 2, 2007

Why aren't prostitutes paid like stadium vendors?

Tonight I watched a documentary called American Pimp. It was fairly interesting although it was difficult to watch the pimps talk so easily about manipulating women. I think I was made most uncomfortable by the fact that I sometimes felt that they were kind of charming. (That was an awkward sentence. Unintentional symbolism? Yup, that's it.)

Anyways, the most interesting thing I learned was the percentage that prostitutes get of their revenue. Zilch. (I'm not sure how exactly they're paid but that much was clear.) This seems like a bad business plan since it gives little incentive to the women to generate additional revenue. That is, in theory the pimps could make more money by giving the prostitutes a cut so that they work harder. Stadium vendors, for example, get paid based on how much they sell. What is different about prostitution so that this business model doesn't apply?

Perhaps the answer is that it's not different and the industry is due for a shake-up from an economics savvy pimp. But street prostitution has been around so long that I doubt a flawed strategy has persisted. Especially when the alternative is so obvious. Thus, I do think it's correct to ask why the commision-based model doesn't apply.

I'm tempted to relate the situation to the one described by Levitt and Venkatesh of crack dealers working for peanuts in hopes that they can work their way up the organization. But there is no up for these women. Or perhaps "up" is an occasional night out with their pimp. (Okay, I'm getting more depressed now.)

Alternatively, pimps may not need to offer a carrot (percentage of revenue) if their sticks (psychological and physical punishment) are effective enough to get their prostitutes to work as hard as they can. I think this is more likely the case. The pimps can easily monitor their prostitutes effort and punish them if they don't seem to be working hard. Both the cost of monitoring and the cost of punishing are probably low. Monitoring is cheap since the pimps don't have much else to do and the cost of punishing is cheap since the women lack other options. (Well, they could go to another pimp but I wouldn't rule out oligopoly behavior amongst the pimps as far as this is concerned.)

Turning the question around, why aren't stadium vendors paid like prostitutes? I think it's likely that monitoring and punishment are relatively expensive. (And, obviously, punishment is limited.) So, anyone have the data to test this hypothesis? (Perhaps a better question is: what data would you need to test this hypothesis?)

Monday, October 1, 2007

Riding the Wave

One of the reasons I started this blog was to help me stay current/connected to the outside world. Of course, this is a relative statement because "the outside world" might mean world of economics outside of the specific papers I'm working on as much as it means the outside world outside world. In any case, I think it's been helpful for both. And it has helped me generate a few research ideas I may pursue in the future.

At the same time, it's my nature to be a very streaky person and lately I've been focusing my energy rather exclusively on writing up a paper. I've learned to embrace my streakiness. When a wave of energy/focus/enthusiasm comes along, I go with it as long as I can. This includes activities like cooking and reading along with the academic stuff. Pacing oneself is overrated--doing less today probably will not make one do any more tomorrow.

As for the paper, I'm eager to finish it and I think I'm fairly close. I started working on it a little less than two years ago. The process has been a roller coaster. I've wanted to burst into my advisors office with the latest exciting results many times. I've wanted to throw my computer out the window many more times. That said, I'm happy with how it's shaping up. And I'm pretty sure my next/other papers will go more smoothly and more quickly with this one under my belt. (Why? First of all, mean reversion. Second, this is the first paper I started.)

Anyhow, I guess this is to say that the recent post drought is likely to continue for awhile. Then again, perhaps this post signals a blogging streak.

Tuesday, September 18, 2007

What I want for Christmas

My favorite blogs with longish posts to be podcasted. Mostly The Becker-Posner Blog. Also Dani Rodrik.

Jason's Law of Pickup Soccer

In any pickup soccer game with at least six people, there is always someone who takes it way too seriously.

Now, back to icing my face.

Mini Vacation!

Jenise and I took a quick trip to LA this weekend. We spent our first evening visiting friends. They just had a baby boy two weeks ago which made it extra fun.

The main thing on our agenda for our full day there was to see a soccer game but that wasn’t until the evening. In the morning we went to Hollywood Boulevard to check out the Kodak Theater, Hollywood Walk of Fame, and Grauman’s Chinese Theater. Stars names in the ground aren't particularly exciting to me but I was curious to see which stars drew the most attention. On the Walk of Fame, it seemed to be Bruce Lee. At Grauman's, the stars of the Harry Potter films were easily the main attraction.

Next we went to Venice Beach and walked the boardwalk. There was a bunch of "interesting" characters there. We saw at least 10 fortune tellers, a "bushman" posing with tourists as if he were attacking them with his spear, and, of course, the musclebound dudes lifting weights on the beach. I also saw Paddle Tennis for the first time. I really want to try it--it's like tennis but with the tempo of racquetball.

After playing on the beach for awhile, we were off to Home Depot Center to watch the LA Galaxy play my team, the Houston Dynamo. (Why is that my team? They were formerly the San Jose Earthquakes which was my local team. Next year I’m going to have to balance my allegiance as the San Jose Earthquakes rejoin the MLS.) The Home Depot Center is a pretty sweet place to watch soccer. Even with a smallish crowd, the atmosphere was really good. Too bad their team is terrible. (Their general manager, Alexi Lalas, traded away all their decent young talent to acquire players who "could withstand the pressure" of playing with Beckham.) The pic below gives a good look at the HDC.


The game was pretty exciting. As you probably know, Beckham is out the rest of the season due to injury but it was US international Brian Ching's first game back for the Dynamo after an injury. Once he came on, slightly before halftime, they were running circles around the Galaxy. In the end, the score was 3-1 for Houston.


Monday, September 17, 2007

Bklog #3

1984 (George Orwell)
Yup, it lived up to the high expectations.


Maus (Art Spiegelman)
Stop reading. Go pick it up right now. You won't regret it.

Not convinced? Okay, let me tell you a bit more. This two volume graphic novel is about the author's father, a Polish Jew, and his experience of WWII. The structure of the story is self-reflexive in the sense that it's also about the author learning about his fathers experience so he could write this memoir. The father's story is haunting stuff as you would expect. The courage with which he protects and tries to keep contact with his wife throughout it all were especially moving. One of the interesting things the author does is in depicting the Jews as mice and the Nazis as cats--I think it would have been too much to bear to see human faces attached to these events. The author describes himself, his father, and their relationship with amazing honesty--it's definitely not always flattering but its rawness makes the emotions and insecurities resonate. The second volume had me watery-eyed throughout for a wide range of reasons. I wish it didn't have to end.


Friday, September 14, 2007

Bad Bias: Handwriting and Student Evaluation

While I'm not as huge a propononent of overcoming bias as these folks, I think this case deserves wider recognition and some action....

There have been a ton of studies going way back (to at least 1927) that show student handwriting impacts teacher's evaluation of their work. To me, the most obvious explanation for this phenomenon is that good handwriting is a signal of intelligence (or high achievement) which teachers use as a shortcut to evaluate the work.

It is potentially very easy to rule out this explanation. If handwriting is not related to intelligence or school performance as measured by a computerized test, then we can rule out the above explanation. Of course, if it is related to these measures, it doesn't mean we can rule out competing hypotheses that may play a role in the story.

As far as competing hypotheses are concerned, it's possible that good handwriting signals something else (or something more) than intelligence or high achievement. Based on my experience grading plenty of university-level homework and exams, the most likely candidate is gender and, to a lesser degree, race. That is, female and Asian students tend to have the nicest handwriting. So one possible explanation is that teacher's behavior is biased by gender and/or racial attitudes.

Regardless of what exactly is driving the bias, the costs are potentially severe. In addition to the possibility that this bias can affect a child every time he/she turns in a piece of handwritten work is the fact that the single most important test that most students ever take is also subject to the bias. The SAT is supposed to be a great measure of ability because it's standardized and because the scores are objective. But how can these tests (in which cursive essays score higher than printed essays) be truly objective while maintaining a handwritten writing section?

What does all this mean for you? You should put effort into improving your child's handwriting. This is unfortunate because it really seems like a waste of time. (That is, it's unlikely to improve their real productivity as adults.)

What does all this mean for us? Given that this problem has been well known for so long, it's a wonder that no direct efforts have been made to deal with it (that I know of.) Perhaps remedies weren't so easy when a lot of this research was done in the 70s and 80s. In any case, today there are a number of low cost measures that can be taken immediately to mitigate the problem. First, we can spread the word about the bias and commit to not succumbing to it ourselves. Second, student evaluation can be more focused on multiple choice type questions. (Cheer on fellow TAs!) Of course, the extent to which multiple choice questions can test understanding is limited. For this reason, term papers (in which the identity of the students are masked prior to evaluation) are a good option. Fully computerized work by students seems to be the ultimate solution--perhaps this is coming anyways.

As far as research goes, as I said before, much work has been done on this topic. At the same time, based on the limited amount of reading I've done, the quality leaves much to be desired. Here's the experiment I'd run:

1. Have a collection of students write a page of random words.
2. Give students an answer to a question and have them write it in their own handwriting.
3. Randomly assign samples from #2 to teachers to evaluate.
4. Randomly assign samples from #1 to teachers. Have them evaluate the quality of handwriting on a 1-10 scale. Also have them evaluate how confident they are that the sample is from a boy/girl on a 1-10 scale.
5. Make sure to collect demographic data on students and teachers.

There are two main innovations of this experimental design. First, the evaluation of the handwriting quality is separated from the evaluation of the "work." Second, and more importantly, is obtaining data on the teachers impression of the child's sex. With this data we could to separate the sex signal from the handwriting signal. And we could also test the initial hypothesis I posed above (by collecting data on the kids prior academic achievement.)

Too bad this would probably be a lot of work. Anyone want want to do the heavy lifting?

Tuesday, September 11, 2007

A trip to the movies

I know I'm not alone in being irritated by people talking during a movie. But I *really* hate it. For me, going to the theater involves strategy to minimize the likelihood that someone talking will bother me. The most important thing is to make sure no one is sitting directly behind you because their whispers and popcorn-chomping will usually carry forward. Here are some strategies I have tried:

1. Get to the theater at the last minute so no one is likely to come in after you and take the seats behind you.

I don't like to get anywhere at the last minute so this one's a no go for me. Plus you might end up with really bad seats.

2. Get to the theater early enough to get seats in the very back.

This is my personal favorite. I'm usually willing to pay an extra 10-15 minutes so that I don't have to deal with annoying people or I don't have to engage in #3.


3. First, find seats no one is sitting behind. Second, make people think sitting behind you might be a bad idea.

I'll often rest my hands on top of my head and shift awkwardly in my seat. Nothing too blatant. On a related note, to incentivize people away from sitting in front of you, you can always rest your feet against the seat in front of you. (On the other hand, they may choose to sit in behind you as an alternative. And putting your feet *on* the seat in front of you comes off as rude if there's some possibility that someone would want to sit there.) Of course, interfering with someones experience once they've sat down is unacceptable.


4. If all of these have failed, you can always move to more attractive seats once the movie has started.


The only problem with this solution is that you may not have very good options to move to.



If you're wondering, I went to see Two Days in Paris this weekend. It didn't meet my expectations based on its high (89%) tomatometer score. It wasn't funny enough to make its cynicism bearable. Plus it was weird because the story was told from Julie Delpy's character's perspective while the conflict was centered around her costar's character. Strange choice although maybe not surprising since she was also the director.

Monday, September 10, 2007

Bklog #2

A Farewell to Alms (Gregory Clark)
Much has already been said about the content (see the Marginal Revolution discussions) so I won't say anything more on that front. Instead, a personal anecdote. As an undergrad, I often finished economics courses thinking "wow, economists sure know a lot about X, Y, and Z." I was convinced by these classes that economists usually thought about problems "in the right way" but there was already so much that had been done I wondered how I could ever contribute. When I took Prof. Clark's class (as an undergrad about 4 years ago), and he made many of the arguments in this book, I thought "wow, there's still so much interesting and important work to do!" I felt that excitement again reading the book.

The Game (Neil Strauss)
Yes, the book about pickup artists. Yes, I started it after watching the VH1 show The Pickup Artist which is the most entertaining thing on TV the past few weeks. (The star of the show is a lead character in the book.) Yes, the behavior is nauseating. But that's why the show and the book are so interesting--it actually seems to work. The book is worth recommending from a purely intellectual perspective. Of course, it's also interesting for the shock value of the "exploits" that are described (quite vividly, I might add.) The unexpected highlight was learning about the inner-workings of the *community* of pickup artists. Seriously. They have online discussion groups and whatnot. And many of the leaders would fly around the world to teach "the art" in workshops that cost over $1500 a person. Who knew?


Wednesday, September 5, 2007

Feed Test: Video



EDIT: Well, looks like that one worked through the feed. I don't know why the TeacherTube videos don't. Anyways, it's amazing how much Amy Winehouse can sound like Lauryn Hill. That's a good thing. They're both awesome.

TeacherTube!

First of all, innovation is needed in education. There's simply no way that computers have been integrated into teaching quickly enough. As a start, I think pretty much all K-6 teachers should have blogs/websites so parents can keep track of what's going on in the classroom without digging through their kid's backpacks. And I'm all for using videogames like Brain Age to help kids learn. Heck, I say do whatever you have to do to get kids to learn with some enthusiasm. Even stuff like this.

Anyways, the main reason for this post is to share a few videos I found on TeacherTube. As expected with this sort of site, few of the videos are great but you have to love the spirit of everyone involved. Especially from Mrs. Burk!



The following video makes a great argument for having kids blog. (Blogs can be made private if that's a concern.)



Sorry I can't figure out how to get the videos to show up through the feed to those of you on Google Reader or the like.

Monday, September 3, 2007

Teaching Hacks: Class Participation

I'm organizing a course on teaching for first-time economics department TAs in the fall so I've been thinking more about teaching lately. Besides getting over the initial nerves, I think the biggest challenge is in getting undergrads to participate. Here are a few scattered thoughts on the issue:
  1. Try to start getting participation beginning with the first class. It's a lot easier for students to join in after their peers have already done so. And it can be hard to recover if a non-participatory environment is the status quo.
  2. I find it helpful to ease the class into participating. For example, I usually begin the first meeting of the quarter by asking about their background. "Raise your hand if you're a first year. Raise your hand if you've taken such-and-such level math. Raise your hand if you're from out of state." I often use this approach on a class by class basis as well. For example, I'll begin the class with "raise your hand if you think minimum wages always reduce employment. Now raise your hand if you disagree" to start the class before moving on to open-ended questions later on.
  3. Reward participation with enthusiasm.
  4. When someone gives a wrong answer, move on quickly so they don't feel bad and so others aren't intimidated. I like to give the correct answer right away. I understand why some may disagree with this approach because it takes the challenge away from other students.
  5. The 10 second rule. After you ask a question, be patient and look the class over while waiting for a response. It will get uncomfortable if no one answers. Stick to it. Before 10 seconds are through a student will likely break the silence. Now that you've committed to getting feedback, they will usually answer subsequent questions more quickly. Second, now that (at least) one person has participated, others will feel more comfortable joining in. If the 10 seconds pass without an answer, it's probably time to move on. Try again with a different question after a few minutes.
  6. Don't ask questions that are too easy. If you do and your students give you the "are you serious?" stare, just give the answer yourself and move on.
I'd love to hear your thoughts/suggestions in the comments.



Friday, August 31, 2007

Depressing that this is news

This headline is about the latest game for one of the best US soccer players playing abroad:

Beasley Booed But Not Racially Abused By Red Star Fans

Studying pays off in college

Todd and Ralph Stinebrickner find that being assigned a roommate with a video game system reduces first semester GPA by 0.2 points! OLS estimates show that an extra hour/day of studying is only associated with a 0.049 increase in GPA. Exploiting the fact that being assigned a roommate with a video game system reduces time spent studying, they estimate that studying an extra hour a day improves GPAs by 0.356 grade points.

The first result is hard not to accept since roommates are randomly assigned. The last result relies on the usual instrumental variables assumptions. We should be concerned that being assigned a gamer roommate might affect GPAs for reasons other than less time spent studying and the authors do a number of checks to lessen this concern. Also, the sample is only is only about 200 which leads to imprecise estimates. That said, what a neat paper! Major bonus points to the authors for all their shoe-leather. They themselves began the Berea Panel Survey which included the time-diaries.

Paper links: NBER, non-gated version.

(h/t The Borjas Blog)

Thursday, August 30, 2007

Seth Godin on PowerPoint

This post on PowerPoint is too good to quote. There are only a few blogs where I read every word of every new post. Seth Godin's Blog is probably the only one on the list that isn't written by a friend.


3 Most Influential Blogs

To me, personally, in no particular order:

The Becker-Posner Blog
When I first started reading The Becker-Posner Blog, I was amazed by their insights. After a while, I realized that they are simply applying neoclassical economic theory time after time. But they wield it powerfully. If one had no previous knowledge of economics, this may be the best place to start learning. The posts are well thought out and tackle big issues. Sometimes the positions they take are somewhat predictable but I always take this as a good signal about my own economic insight. Think about it this way--if you're writing a paper, for example, it's probably not a bad idea to wonder "what would Becker and Posner think about this?"

Art de Vany
This one has had the biggest impact on my day to day life. Most of the posts deal with how to eat and exercise in a way consistent with the conditions under which humans evolved. For about nine months before I started reading, I had diet hopped--I had lost 20 lbs but stagnated for the previous few months. Then I started following Art's suggestions when eating at home--lots more vegetables and fruits and no more starches. Another 10 lbs fell off pretty quickly. The great thing is that it's not like "being on a diet" at all so I don't have much of a desire to stop. That said, I haven't implemented the advice on exercise and I don't hesitate to indulge every now and then.

Marginal Revolution
While this blog is great for daily entertainment and economic insights, it's best for its "life hacks." My favorites include:
  • The game to keep a museum exciting. In every room you visit you pick which piece you'd take if you were a burglar.
  • Stop reading that book if you're not into it! (Perhaps this is common sense but for many, myself included, it's hard to do. I think people tend to view reading books as an accomplishment which makes not finishing books seem like failure. Or perhaps people like to be able to definitively say they didn't like something. Neither of these is a good argument for continuing to read something you're not excited about.)
  • Don't try to eat healthy in restaurants. They specialize in unhealthy food. Make up for it by eating healthy at home.
EDIT: Gabriel weighs in with his three most influential blogs.

Friday, August 24, 2007

You know grad school has taken over your life when...

your initial instinct when you wake up at 4 in the morning is to check your computer to make sure your program is still running.

(Last night, my computer decided to restart itself due to a software update. A half a day lost!)

Everything Levitt Ever Wanted From His Children

My 4 year old has figured out how to read an opponent and take advantage of them.
Levitt on his 4 year old daughter "destroying" his other daughter in rock-paper-scissors. Seriously, though, I would be proud too.

Thursday, August 23, 2007

Quick Thoughts on A Farewell To Alms

The most striking thing about the book to me is how much is done with a lot of a little. By that I mean that Prof. Clark has amassed a huge variety of bits of data to make his various cases. While it's frustrating that the little bits aren't bigger bits, it's hard to complain considering how far back in history we're looking at.

After arguing against a number of the conventional theories of the industrial evolution [edit: I swear I meant to write "revolution"], he argues modern growth came about because the characteristics that generate economic success were propagated throughout society by the relatively high fertility rates of the wealthy. The main piece of evidence for this hypothesis is from English wills which show that men with more surviving children tend to have more assets to bequeath. He admits that the rich are more likely to have wills but argues that this isn't a large concern since many men with modest occupations are found in the data too. But that's not quite the main concern. Kids are expensive, right? Then men with lots of kids are probably less likely to have assets to bequeath in a will. But this is probably a larger issue for poor men than rich men. So it seems like the poor men with lots of kids are most likely to be missing from the data. Put them back in and the positive relationship between wealth and children might shrink or disappear.

Tuesday, August 21, 2007

Levitt In Trouble Again?

Yesterday, he posted the following:
This is What Happens to People Who Listen to Too Much AC/DC...

They grow up to write economics papers like this one, which looks at whether participants in lab experiments get closer to efficient outcomes when exposed to one lead singer of the rock band AC/DC versus another.

I hope for this guy’s sake he has tenure.


Levitt didn't realize that the paper was a joke. The professor who wrote the paper emailed him with the real story. Here's Levitt's correction:

There Is Hope For Economics: The AC/DC Paper Was a Joke

I am delighted to report that the economics paper on AC/DC I blogged about yesterday was meant as a joke. It takes a lot of work to run an experiment on real people, just for a gag paper. It turns out they meant to play the same AC/DC song in both treatments, but made a mistake and accidentally played two different songs. Thus the genesis of the joke paper.

I still think this leaves Professor Oxoby with a bit of explaining to do as to why they were playing AC/DC as part of an experiment in the first place, however.


The comments on this second post, including one by Oxoby who posts the email he sent to Levitt, show that some aren't happy with the correction. Is Levitt in the wrong or are the people leaving comments too uptight?

A very short while back, Levitt blogged about "what [he] would do to maximize terror if [he] were a terrorist with limited resources": Part I, Part II, Part III. People didn't like that one very much either.

Bklog

Tournament Poker For Advanced Players by David Sklansky
I have not played very much and am not at all an advanced player. But I enjoy learning about the strategy. The biggest lesson I took from it: you need a better hand to call than you do to bet. I might have kind of known this before but Sklansky does a nice job explaining it.

Liar's Poker by Michael Lewis
This one is not about poker. It's about the crazy world of investment banking in the 1980s. Not as spectacular as Moneyball but that's to be expected since Moneyball was about sports, statistics, and valuation--I mean, it was practically written for me! Liar's Poker was still great, though. I found one passage particularly interesting in relation to Moneyball. Discussing the key to Michael Milken's success with junk bonds:
The ratings services [for bonds], like the commercial banks, relied almost exclusively on the past--corporate balance sheets and track records in--in rendering their opinions. The outcome of the analysis was determined by the procedure rather than by the analyst. This was a poor way to evaluate any enterprise, be it new and small, or old, large and shaky. A better method was to make subjective judgements about the character of management and the fate of their industry.
Milken sounds a lot like the foolish scouts who are described in Moneyball. They'd look at things like power, speed, and body type to value prospects while Billy Beane was able to beat the market by focusing exclusively on past performance and placing an immense value on on-base-percentage. So, what's the best way to beat the market?

Off the Books: The Underground Economy of the Urban Poor by Sudhir Venkatesh
Venkatesh is the sociologist who (along with Steven Levitt) wrote about crack dealers living with their parents. I started this book quite a while ago and it has been sitting on my "currently reading" pile of books for some time now a little less than half-read. Well, it's time for this book to go back on the shelf. Unfinished. The subject matter was actually pretty fascinating but the writing was really repetitive. I'd love to read a nicely edited second edition.

Monday, August 20, 2007

REJECTED

A few days after I sent the following letter to The Washington Post, the topics of published letters included how hot it is in Iraq compared to Washington, 1950s rock and roll, and how bad of a movie critic Stephen Hunter is. Ouch. Here's what I sent in:

-------------------------------------------------------------------------------

Dear Editor,

"High School Seniors Test Well in Economics" (8/9/07, Page D01) cites Bruce Damasio, who trains secondary teachers at Towson University, as writing "most students understood that if the going rate for babysitting increased, people would spend more time babysitting." A pretty basic concept in economics is that price (or wage) changes have both a "substitution effect" and an "income effect." If the wage for babysitting increases, it becomes relatively expensive to not babysit so people want to babysit more. This is the substitution effect that Damasio has in mind. At the same time, those who are already babysitting are all of a sudden made richer by their increased wage which makes them want to enjoy more leisure time and less babysitting. This is the income effect. The total effect on babysitting is actually ambiguous since we don't know which effect dominates. Much worse than Damasio missing this point is that such a flawed question may have made its way onto the national test past so many people who should know better.

-----------------------------------------------------------------------------------

I actually had my students read the newspaper article in class last week. Sure enough, they spotted the mistake.

Also, I should note that it's not clear that such a question did make it's way onto the test--Damasio might just have been using a (bad) illustrative example. It's also probable that the income effect is beyond the scope of high school economics which raises the obvious question "what's up with that?" And I mean that completely seriously--empirical estimates show that hours worked are not very sensitive to wage changes, suggesting that the income effect is indeed important.

Greg Mankiw, Craig Newmark, and Arnold Kling each have some things to point out about these test results.

Thursday, August 16, 2007

Baseball discrimination estimates

Will comments on my previous post and does some math to argue that the level of discrimination estimated in this paper is too small to fuss about. (Of course, I'm sure he would agree that a small amount of discrimination is worth stomping out if the cost is small enough so let me focus on the magnitude.)

The paper finds that a pitcher is 0.34 percentage points more likely to get a strike if the umpire is the same race. Yes, this is a small number. Relative to the probability of getting a strike when the umpire is a different race, the gain is a bit over 1%. Still somewhat small but I don't think that's quite the right comparison.

It's important to keep in mind that more often than not, the strike/ball call is obvious. How many pitches in a game are really "close calls" that "could go either way?" My point is that the small estimate is expected since there so few times in a game when the umpire really has an opportunity to discriminate. He's discriminating a lot more on the margin than he is on average.

I'm sure you get the picture but here's an example. Think about a team that only uses pitchers that match the race of the umpire. How much more likely are they to get a strike on marginal pitches? Assume 150 pitches and 20 close calls. Further, assume that the umpire only discriminates on the close calls.

Increased probability of strike = 0.34 =
(# close-calls / total pitches) * (increased prob. of strike on close calls)
+
(# obvious calls / total pitches) * (increased prob. of strike on obvious calls)

Filling in the knowns,
0.34= (20/150)*(increased probability of strike on close calls) + (130/150)*(0)

Solving, we get that the increased probability of a strike on close calls is 2.55 percentage points. If you think there are less close calls per game (which I think there probably are), then the impact on the margin is greater.

EDIT: It's important to note that the 0.34 estimate is barely statistically significant at the 5% level and that they haven't clustered their standard errors. They should probably be clustering on the umpire. And if they did, my guess is that the estimate would probably no longer be statistically significant. So, despite the fact that I think this magnitude can be meaningful, I'm with Will in the skeptics camp as far as the overall effect is concerned. But the non-questec stadium (where umpires aren't monitored so closely) results are quite compelling.