Crap!

The sting in the tail is that by paying less attention, we are less able to counter-argue what the ad is communicating. In effect we let our guard down and leave ourselves more open to the advertiser's message.

Interesting.

One Awesome Sentence

From Reuters:

Older people like reading negative news stories about their younger counterparts because it boosts their own self-esteem, according to a new study.

Two good sentences

From Economix (Was the Alaska Purchase a Good Deal?)

The West, that is from Oklahoma on up to Alaska, was settled with a large and expensive boost from the federal government, subsidies that often continue to this day. All of which complicates the Western (and Alaskan) self-idealization of themselves as craggy and libertarian individualists.

Graph of the day

Is it any wonder middle class folks have so much displaced anger?

An interesting analysis of MPCs

Krugman's take on how the MPC might be higher in a recession (and a liquidity trap) as opposed to "normal" times.

So whereas someone who can borrow and lend freely will spend very little of a temporary rise in income, someone who is liquidity-constrained — wanting to spend more right now, but unable to borrow — will spend all of that temporary rise.

The graphs in the link help illustrate why this can be true. Also note that he is using a dynamic model - usually the tool of the neoclassicals - and not some trumped-up "in the long run we're all dead" argument. It also says a thing or two about why tax cuts (or, equivalently, transfers) to the lower segments of the income distribution might have a greater macroeconomic impact.

A thing or two on the Bush tax cuts here.

One good sentence

It seems feasible that a strategy of ignoring debt and focusing on growth could be as effective as ignoring growth and focusing on debt in breaking the debt-growth relationship.

From Free Exchange.

Participation Constraints, Incentive Constraints, and Weaning

As with most Monday nights, last night I was home with the kid while Jane had an evening group meeting. This meant I was in charge of dinner (no big deal), but this week was different because we are trying to wean our son off the bottle, so, instead of a bottle after dinner, he had to drink milk out of a cup. Things went fine to start - cheering him on seemed to work just fine (as it had the couple of previous nights we had done this). But then, things changed, and the crying began.
OK, so most of you know where things are going here, but indulge me; there's some interesting economics behind the strategy. If any more milk was to be drunk, I needed an incentive scheme. What I came up with had two parts:
(1) About a half a handful of Cheerios (kids like the Cheerios!) to start with to get him back on-board; and
(2) A few Cheerios after every 2-3 drinks of milk.
In Mechanism Design (a branch of economic game theory) (1) is intended to overcome the Participation Constraint (get the kid to stop crying and play ball); (2) is intended to overcome the Incentive-Compatibility Constraint (keep the kid drinking the milk after the first offering is eaten). I'm surprised how well it worked, and I'm thinking that I may have overpaid on the participation constraint. By the time we got into it, all I really had to do to get a second or third drink was open my hand and show him the reward (as long as I remained credible with my payouts!).

Some Links: The Census, Online Gambling, and College Consumerism

The census: Not just enabling taxation anymore (Economist)
Online gambling: End prohibition, begin regulating it... and taxing it (Economist)
Trade: (1) Freight costs on the decline (Economist); (2) should we fear offshoring? (Economist) A couple of good sentences (in response to a claim that the US will have "little left in the comparative advantage department"):

The idea underlying comparative advantage is that a country always has one. The brilliance of the theory is that even when one nation is better at every last type of economic activity than another, it will still be advantageous for both nations to produce and trade. China isn't going to do everything.

Supersize me, Wal-Mart (Working paper)
Taxing "capital" - the devil is in the details (Economix)
Climate Change Reform (Economist)
The old joke is true: Colleges are becoming bars with a $100,000 cover charge - the country-clubification of colleges. (NY Times)

Fiscal Localism and Inflation Taxes

Heard this on the way back from the pediatrician today...


(Link here for the script-impaired.)

One interesting part is how the published exchange rate for these local currencies is 1:1 with the Euro, but that they depreciate at a fixed rate. Then, you can purchase stamps from the local government to "re-charge" the value of the notes. This is quite literally an inflation tax, although it is somehow seen as a positive thing for the local residents because they can see and connect with the public goods and services those taxes purchase.

The Deficit Effect of a Tax Cut

Neat Picture via Krugman:

Making the right conlusion with the wrong data

I think there's good reason to extend unemployment benefits (but not make them more generous per week), but this was the wrong data to use.








Here's an interesting discussion on NPR with Ken Rogoff.

Some more trade & migration links

Mobile phones and remittances (Economist, here; DNAIndia, here)
Migration the crisis (People Move)
Remittances vs. private capital flows (People Move)
Protectionism: Deadly but Tasty, especially during depressed times (Free Exchange)
    Also: Did trade restrictions lead to the depression (as Hayek asserted) or vice versa? (Paul Krugman)
Ruminations by Menzie Chinn

A few links on Trade and Migration

A very good articulation of why "Fair Trade" is a bogus (and what does "fair" mean, anyway?)
Should Ghana win a World Cup (if it can stop its soccer "brain drain")? 
Remittance reforms in the Financial Reform Bill

Hoarding vs. Saving...

... and Keynes vs. Hayek. More on the debate from the Economist, here.

Some Links on Parenting and Teaching

Kids won't make you "happy".
How does parent gender matter?
Ending teacher tenure? Crap, now that I might actually have the security of tenure, some other a-hole with tenure wants to pull it out from under me!
Is academic freedom dying?
Stephen Colbert makes fun of grade inflation, education budget cuts, and Wal-Mart on-the-job college credit.

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
I's on Edjukashun - Loyola, Texas Textbooks & Wal-Mart<a>
www.colbertnation.com
Colbert Report Full Episodes 2010 Election Fox News

Absolutely Awesome

Some kid apparently is not sufficiently challenged by his differential equations exam...

Law of One Price Fail

I'm sure it was a signage mistake, but today I was driving down US11 into Lexington, and the Texaco just north of city limits had gas for 2.549 per gallon. Soon afterward I realized I needed something from home and as I was driving the other direction, and the same gas station had gas for 2.599 per gallon. This didn't seem too strange at first - they just changed the price, right? Wrong. On my way back into town, the southbound price was still 2.549. I couldn't help turning back to check - the northbound price was also still 2.599. Probably just an oversight in operation of the manual price sign, but funny to me...

The Hubbub about Teaching Evaluations

There is some interesting debate (Mankiw, Cowen, and Jeff Ely) going on about measuring teacher quality at the postsecondary level. A couple of good sentences from this article, which recently appeared in the Journal of Political Economy (ungated version here).

In primary and secondary education, measures of teacher quality are
often based on contemporaneous student performance on standard-ized
achievement tests. In the postsecondary environment, scores on student
evaluations of professors are typically used to measure teaching
quality.

A lot of us question why this should be the case, and some of us actively doubt the competence of students when it comes to evaluating teacher quality. My own view is that these evaluations are a signal of some things the professor might be doing well and certain other things that the professor might improve, but they do a poor job of measuring how well the instructor did at teaching the actual material. Sometimes they measure little more than popularity (which is not altogether unimportant!). But here are some interesting results:

[O]ur results indicate that professors who excel at promoting contemporaneous student achievement, on average, harm the subsequent performance of their students in more advanced classes.

In other words, students of harder professors for introductory courses (who may struggle and give lower evaluations of that professor) do better in subsequent courses. Higher rank and experience (and thus lower pressured to get good evaluations for tenure) are negatively correlated with current "value-added" in introductory coursework, but positively correlated with value-added in subsequent courses.

Subprime Lending and Lobbying

Funny. Lots of "government failure" advocates for explaining the housing bubble point to all sorts of things that the democrats did in the 1970s and before (in addition to the horrible, horrible greed of poor people) for somehow precipitating the sudden rise in subprime loans. Few point to this (note the bill's sponsor), and even fewer likely want to see this (full, but gated, article here).

Some Links, Featuring Tourette's, Dilbert, and a Baseball Mystery

Advantages to Tourette's (British Psychological Society HT: TC @ MR)?
Dilbert, "cheaper" copies, and teaching managers about opportunity cost (Freakonomics).
Why are there so many power-hitting middle infielders these days (Economix)?
A couple of links on "cap and trade" vs. the carbon tax (Economix and Economist)
Libertarianism explained: a review of Jeffrey Miron's "Libertarianism, from A to Z." (Economix). Here is an interesting excerpt:

Professor Miron writes that “antipoverty spending is the most defensible kind of redistribution,” because “the goal of this redistribution – helping the poor – is reasonable and the costs of a well-designed limited antipoverty program (e.g., a negative income tax set on a state-by-state basis) are modest.”

Another interesting quotation on libertarianism (From Raj Pate's "The Value of Nothing"; HT to Atin Basu and Greg Lippiatt):

"There are two novels that can transform a 14 year old kid's life: The Lord of the Rings and Atlas Shurgged. One is a childish daydream that can lead to an emotionally stunted, socially crippled adulthood in which large chunks of the day are spent inventing ways to make real life more like a fantasy novel. The other is a book about orcs."