Tuesday, January 18, 2005

It is real...I checked it out

A good question...

Would you have invested?

Where to start with this one?

This guy runs an interesting experiment that determines that showering uses a lot of water. He then suggests that he will turn the water off during lathering in order to reduce the "stress" on the system. He finally blames those who take baths of raising property taxes. Oh, but the killer is that he claims he doesn't pay directly for water anyway.

All of this is in response to 7.9% increase in the Saskatoon water bill.

Will Clinton ever tell the truth?

"Early reports claiming that over 100,000 had visited [the Clinton Library] in just the first six weeks have turned out to be bogus."

Go figure...

Not necessarily in any order of importance...

34 scandals from the first Bush administration.

Can we say sour grapes?

First a cheese sandwich

and now an oyster shell?

How many things will people find that "resemble" Jesus or Mary? Why not some "resemblences" of John the Baptist, Moses, or Job? Why no washed windows that resemble Jonah or Saul?

Hiding in plain sight doesn't fool the IRS

From The Smoking Gun:

JANUARY 18--Richard Hatch, the first winner of CBS's "Survivor," was charged today with failing to report his $1 million reality TV windfall to the Internal Revenue Service. The below two-count criminal information, unsealed today in U.S. District Court in Rhode Island, charges Hatch with filing a false 2000 tax return that omitted his seven-figure "Survivor" winnings. The nudity enthusiast, 43, is also charged with filing a false return for 2001 (he allegedly did not report $321,000 paid to him by a Boston radio station). If convicted of the felony charges, Hatch could face a maximum of five years in prison for each count and could be hit with a $250,000 fine. Hatch is scheduled to be arraigned on the charges in Providence federal court January 24. (6 pages)

Genius...

GAO to investigate long lines

for voting. The house minority committee on Government Reform, headed up by your good friend Henry Waxman, has pressed for the investigation.

I wonder why there were long lines. Let's see. A lot of people wanted to vote and there were (and always will be) only a limited number of voting booths. Quantity demanded exceeds quantity supplied - result is a line. One solution is to have no voting booth at all - oh, sh*t, maybe that's the plan. Imagine how fraud-free our votes would be then.

I hope Waxman will want to spend precious government resources investigating the long lines that will inevitably form for the next Star Wars movie, Rolling Stones concert, or NHL playoff game - oops, the latter may not be a big concern.

High quality public domain nature pictures

At the U.S. Geological Survey

Political Correctness and DDT

Junkscience.com has 109 FAQs about DDT.

One interesting tidbit:

Gas chromatography detected DDT in samples of wildlife and soil collected before DDT was even produced.

Man, that gas chromatography kicks arse...

Strangers from the deep

This site, in Russian, has pictures of strange sea creatures ostensibly dredged up during the tsunamis. I am sure that these species have been previously identified, but most of them are new to me.

More reasons to stay out of the water.

Some things are eerily beautiful

Like these photoessays of modern ruins. The train yard is especially compelling.

And then there are other things like the stuff posted at urban decay, such as this water slide in Bulgaria:

I don't think that would pass muster today.

Quick...name three things wrong with this picture

I'll give you a hint - it ain't the chow.

Is it in the water?

There must be something in the water in and around DC that makes people spend money like drunken sailors. Not only is our Federal government a bit out of control when it comes to spending money, so too is the DC city government (spending lots of money on education and stadiums), and, evidently, so too are the Nationals.

From the Washington Post:

In the past two seasons, Tony Armas Jr. has won a total of four games. Yet it is a mark of the state of the Washington Nationals' starting rotation that the club must have Armas overcome his recent injuries and have a stellar 2005 if the team is to be competitive.

Armas and the Nationals took the first step yesterday by agreeing on a one-year, $2.26 million contract, avoiding arbitration. Armas got a slight raise from the $2.1 million he made last year. Fellow right-hander Tomo Ohka is now the Nationals' only arbitration-eligible player whose case has not been resolved.

From baseballreference.com:

Tony Armas 

Antonio Jose Armas 



Bats Right, Throws Right 

Height 6' 4", Weight 205 lb. 

Debut August 16, 1999 

Born April 29, 1978 in Puerto Piritu, Venezuela 



Signed by the New York Yankees as an amateur free agent in 1994.



Year  W   L   G   GS  CG    IP     H    R   ER   HR  BB   SO  ERA 

+--------------+---+---+---+---+---+---+---+--+------+----+----+----

 1999 0   1   1   1   0    6.0    8    4    1   0    2    2   1.50 

 2000 7   9  17  17   0   95.0   74   49   46  10   50   59   4.36  

 2001 9  14  34  34   0   196.7  180  101   88  18   91  176  4.03  

 2002 12  12  29  29   0  164.3  149   87   81  22   78  131  4.44  

 2003 2   1   5   5   0   31.0   25    9    9   4    8   23   2.61  

 2004 2   4  16  16   0   72.0   66   41   39  13   45   54   4.88  

+--------------+---+---+---+---+---+---+---+--+------+----+----+----

 6 Yr 32  41 102 102   0   565.0  502  291  264  67  274  445  4.21  

So, Armas was able to stay in the big leagues long enough to become arbitration eligible and negotiate A RAISE over last year's salary? The Yankees aren't the best franchise in the game by keeping rag-arms like this around.

What can the Nationals expect from their re-acquisition? Given his career averages - 5 wins & 7 losses or $425,000 per win or $4000 per inning pitched, whichever measure makes you gag less. Granted that average "prices" are not necessarily good measures of player value, but these numbers really don't make any sense. I'm less amazed that the team and Armas came to an agreement than the fact that Armas is even pitching in the bigs after six years of doing basically nothing.

This story sends a loud and clear message to potential (and any actual?) Nationals fans - we value mediocrity! The Nationals figure a .438 lifetime winning percentage warrants $2.26 million per year and the number two starter position. It's gonna be great to be a Nationals fan for the next few years.

I know this will piss off the player's union, but I'll pitch for half the price.

Please put down the econometrics and step slowly away...

A "conversation" I found in a "new" econometrics group at Google Groups:

Quirk Dec 29 2004, 1:38 pm

Well, how can economic rent be calculated? What data is used, where can
it be obtained, what tools/formulas are used in its calculation, etc.

---

tunga Dec 29 2004, 3:48 pm

Hello Quirk,
I am still not clear what you mean by economic rent.
As far as I can remember know we have rent on labor which is wage and
rent on capital which is
the interest rate. Is this more or less what you mean by economic rent?
Or maybe I am not knowledgable enough about the notion 'economic rent'.
please correct me if I am mistaken.
Regards,
Tunga

---

Quirk Dec 30 2004, 2:10 am

Basicly, Economic Rent is a payment for privilege, i.e owning
something or holding a title, as opposed to doing something, being
productive.


Land Rent, in particular, is the clearest form, since land value is not
the result of any individuals productivity, incomes derived from land
rent are a burden on the market.

I don't know who these two (or the other six members) are and there is no activity on this particular Google Group. Kinda scary, though...

Who's really stingy with tsunami relief?

I remember a lot of jokes being made after France allegedly promised a mere $140k for tsunami relief while the UN and others were accusing the United States of being "stingy."

Well, it turns out that France has upped their tsunami relief contributions to about $55m. However, Bulgaria comes in with the lowest "official" contribution at $140k and Cyprus with $370k. Meanwhile, the U.S. is pretty low on the ranking of contributions per billion of GDP and per-capita contributions but we rank second in overall contributions (which include private contributions) [more here]

Do we not pick on the Bulgarians because it isn't as much fun? Is it because we implicitly understand that Bulgaria probably doesn't have a lot to offer in the first place? Or do we just make fun of the French because they often seem a little bit poopy about things?

Note: cross posted at Division of Labour

Time waster for the day

Nobel Word Search

One year anniversary

A year ago today I waded into the blogosphere with my first entry on Heavy Lifting.

One year anniversary statistics:

Total Page Views: 13,925
Total Unique Views: 8,810

Thanks for the support!! Here comes another year of the crazy, the mundane, and the insane.

Fun with photoshop...

Is it copyright infringement

to claim your fried chicken comes from a state other than Kentucky? In London there is a Mississippi Fried Chicken, not to mention the Tennessee Fried Chicken.

The interesting trait of the stores pictured is that none were located in the state from which the chicken recipe ostensibly "originated." Why? Because, as far as I know, there IS NO Georgia Fried Chicken, and I bet Utah doesn't have a state recipe either. To open a "Georgia Fried Chicken" in Georgia would run the risk of becoming a laughing stock. Better to open such a store in Trenton, New Jersey?

Think product placement in movies is bad?

Here is the 2004 American Brandstand analysis of product placement in top 20 hip-hop. Cadillac had 70 mentions, U Haul had 3, and Coca Cola had 1.

I think that you think that I think that you think...

I missed this when it came out last year, but it is still worth a chuckle or two.

Larry, y'gotta have a website...

Why? Because otherwise people won't know about L&M Phillips 66 in Lyons, Kansas.

Hit their site and turn up the speakers. I'm from Georgia, and the site should be banned for the midi file alone.

One interesting tidbit:

For the week of April 29, 2002 to May 6, 2002 our special is:

Lube Oil Filter (LOF)
For $16.95
This includes a 29 Point insepction

a) It looks like they didn't run the spell check, and
b) It looks like they lost the password to the site.

Found via one of the best time-waster blogs I have come across: Gas Station Websites

The dot-com craze really got to these gas station folks, and a bunch of other small businesses too, I bet. There's a masters thesis in estimating how much "false" GDP was attributed to cyber-sites that were essentially sunk costs.

Note: Cross posted at Division of Labour

C.U.D.D.L.E.?

An association for everyone.

They do explain what "once removed" means, however.

One of the JOYs of Affluence

is having free time to come up with a "new paradigm" called JOYology. What, pray tell, is JOYology?

JOYology is a new revolutionary field of study of extremely healthy, happy, grateful and optimistic individuals who have learned to celebrate life in all the circumstances of daily living. It is a new paradigm shift in thinking about the world. It is choosing a different way of thinking, speaking and behaving. It is a willingness to access JOY especially in the face of adversity.

Now that that is cleared up, go hire Canada's premier JOYologist.

Sometimes I wonder...

Think Janet Jackson's Wardrobe Malfunction was a Mistake?

The figure above plots the ranking of the search term "Janet Jackson" on the Yahoo! Buzz List, which reflects the top twenty search terms for a given week. The figure comes from this First Monday article which looks at the length of time search words stay on the Yahoo! Buzz List. Turns out the Buzz List has a lot of turnover: "[o]nly two terms persist for all 45 weeks studied ? Britney Spears and Jennifer Lopez."

Given the almost instantaneous, yet short-lived, notoriety the malfunction gave Janet, it is hard to imagine that it was a mistake. It is also clear that celebrities, and especially those who need a boost to their notoriety, will be more prone to "mistakes."

Good things happening at my Alma Mater

UGA President Michael Adams suggests that academic standards at the University of Georgia are going to increase and tuition hikes are likely.

This is exactly what I had hoped for from this president (at least in terms of academics, we won't discuss the athletic program decisions). I came to UGA in 1987 and left in 1996, matching the incoming and outgoing of previous president Charles Knapp. Knapp was a pretty good president and managed to get the ball rolling on the academics at UGA, especially after the Jan Kemp affair d'football. The upshot was that my undergraduate years were full of partying - the way UGA had been for the previous thirty years - and my graduate years were on the leading period of the ramp up to better quality - HOPE scholarships were instituted during my graduate teaching years.

Hopefully, one day UGA will be up there with Virginia and other high quality state schools - and the value of my degree will increase even as the human capital underlying the degree depreciates (slowly, I hope!!).

Economist engages in irrational consumption?

Yep, I did it this morning. Buying the morning coffee I asked the clerk to give me two quick picks for tomorrow night's lotto drawing. Okay, so we are already in the world of the second best if Depken is buying lottery tickets, but remember De gustibus non est disputatum (there's no accounting for taste)!!

The clerk asked me if I wanted my picks for the Mega Millions drawing and I immediately said "No, Lotto Texas." Immediately after saying that I opined out loud that it really didn't matter because I wasn't going to win either lottery - why should I have a preference for one over the other. Notice that I had no idea of the jackpots or even how many numbers are involved in Mega Millions, I just chose Lotto Texas. In essence, I revealed my preference to myself.

Anyway, the lady standing at the counter counting out stacks of four from her baggy full of quarters asked me why I would play the lotto if I wasn't going to win. I then suggested that I knew I wasn't going to win if I didn't play, but my two quick-picks gave me a shot at least (I know, the second quick pick was overkill but I justify it by giving the second number to Baby Campbell and the first number to Linda and I).

I didn't go on to explain to her that spending fifty dollars on lotto tickets wasn't the best use of at least 49 of them, but then again I am a big fan of De Gustibus.

So, was my gut reaction a good one? Other than the ex post justification that the Lotto Texas dollars go to the Texas Education Fund and Mega Millions contributions are split amongst a number of states, I really didn't have a good reason for picking Lotto Texas other than having never played Mega Millions (fear of the unknown?). I got to the office and checked out the two lottos.

Mega Millions is a 5+1 format with numbers from 1-52. The first five numbers are chosen without replacement and without ordering, the last ball is chosen from 1-52. Odds of matching all six numbers is 1 in 114,354,240. The current jackpot is $111 million. Assuming that I would win the whole shooting match (a stretch, I know, because you might have to share the pot) the expected dollar value of the ticket is $0.971.

Texas Lotto is also a 5+1 format with numbers from 1-44. The odds of matching all six numbers here is 1 in 47,784,352. Tomorrow's jackpot is $46 million yielding an expected value of the ticket (assuming again I was the only winner) of $0.963.

Going with only the expected dollar value of the ticket, I should have gone with the Mega Millions, but not by much. I do get some consumption value out of firing up the computer and seeing how many numbers I didn't match from the previous night's drawing. I would put the consumption value somewhere near $0.50 for the entire deal. But this would be true for either lottery. Therefore, while I have lost a little by buying into Lotto Texas, I am not losing too much, and I can sleep well knowing that my irrational behavior has added about $1 to the Texas education fund.

I don't think the lottery is necessarily a tax on stupidity - after all your odds of winning increase infinitely when you buy your first ticket - although some people probably spend a little more than they "should" just like people eat a few more french fries than they should. As long as you aren't betting the mortgage or the baby food money, have at it.

It was an interesting experience, however, to discover that I actually do have a preference for Lotto Texas when I didn't realize that before this morning.

Why the future is sometimes in doubt...

It doesn't get much better than this:



(More here)

Oh my...

This is the concept Jeep Hurricane (more). It has two Hemis and four wheel independent steering.

Blogging to expand

I have been asked to contribute to a great blog called Division of Labour which has some great economists as contributors. It is an honor to be included with them.

I have verbally agreed to three or four posts a week at DoL and will continue to post here at Heavy Lifting.

Principals and Agents in DC

Yesterday the D.C. mayor signed legislation to provide $524m in public funding for a new baseball stadium. The voters didn't get a say in the matter, but what the hell? The politicians know a good deal when they see one. As the Washington Post points out, the locals won't pay for the stadium anyway:

Under the terms of the stadium package, the city will implement a gross receipts tax on large businesses and a utilities tax on businesses and federal buildings, while continuing to seek 50 percent private financing. A tax on concessions and an annual rent payment by the team also will provide revenue to pay off the bonds.

It is not clear if the DC politicians have convinced themselves that this plan will work or if the reporter is singing his own tune.

How long until large businesses relocate across the "tax border?" We know the federal government can't avoid the taxes, at least by relocating, so that means the rest of us will be paying for the DC stadium. Why doesn't the city impose a one million dollar per year tax on 534 federal buildings and get it over with? Perhaps Congress should pass a law prohibiting the city of DC from imposing taxes on federal buildings for the purpose of building stadiums.

The business tax is "brilliant." If businesses start to relocate out of the city, or decide not to relocate to the city, property values will decline (everything else the same) and property taxes will follow along. Unemployment might actually increase in the city proper if big businesses start to relocate out of the city. If businesses don't relocate, the franchise tax increases average cost, reducing profitability and imposing the cost on shareholders and firm owners nationwide or worldwide - including those who may never attend a game in the stadium. Perhaps big business (code word for government contractors?) will not have to relocate or suffer reduction in profits if they pass the cost on to the Federal goverenment. Yet, if this is the case then, again, the rest of us are paying for DC's stadium. When did I vote for that?

The annual rent payment by the team might come to $2 million a year (I haven't seen a hard figure yet) and will provide perhaps 5 percent of the annual debt service. The concession taxes (say 10% of 15 million per year) might yield another million or so to assist with debt service. Again, every little bit helps but it is a long way from being able to cover even a reasonable percentage of the debt service.

Finally, why would anyone agree to pay fifty percent of the stadium costs with private money when the city has already agreed to pay 100 percent of the stadium costs? That provision of the legislation makes no sense, but then when it comes to publicly built stadiums not much makes sense.

For students of economics, this is a prime example of the principal-agent problem. Principals (tax payers) get screwed while the agent (DC politicians) feather their nest.

Why do academics plagairize?

It seems like an incredibly risky move to copy someone else's work. I have heard of a few famous episodes in economics, but most of the stories you hear come from other departments on campus. Perhaps this is a cognative dissonance problem on my part.

Nevertheless, the Chronicle of Higher Education has some amazing examples and some valuable reading for students and faculty alike. For example:

In 2002 Judy Tzu-Chun Wu came across a newly published anthology on the American West. Ms. Wu, then an assistant professor of history at Ohio State University's main campus, often wrote and taught about the American West, so she began flipping through the book. She was surprised when she saw a chapter on Margaret Chung, the first U.S.-born female Chinese doctor, who also happened to be the subject of Ms. Wu's 1998 dissertation.

"I remember thinking it was odd that someone else was working on Margaret Chung," says Ms. Wu. "I thought, How does this person's take compare to mine?"

This person -- Benson Tong, then an assistant professor of history at Wichita State University -- had a similar take. Very similar. In fact, as she read, Ms. Wu's curiosity turned into anger: The chapter was nothing more than a condensed version of her dissertation, she believed. There were phrases and descriptions that seem to have been lifted nearly verbatim, along with unattributed facts Ms. Wu had spent long hours pinning down.

Why would someone risk using such an obscure person in a book when they must have some confidence that the scholar they are ripping off would read the book? Mr. Tong even disputed the fact that he had copied the material. Willful plagiarizing should be punished with dismissal from the academy, but that is because I don't plagiarize.

Absolutely amazing. This is a lesson for students, especially graduate students. The academy is populated with the same percentage (if not more) of jackasses than the regular population. Just because someone has a PHD doesn't make them smart - a painful reality lesson we all go through after our degrees are conferred and we attend our first faculty meeting.

Main article
Examples

The future of the Democrat party?

Yesterday, Ted Kennedy gave a speech at the National Press Club outlining the future of the Democrat Party. What is it? Spend, spend, spend...

Streaming video here
Transcript here

The list of the ideas:

1. every child in America, upon reaching eighth grade, be offered a contract. Let students sign it, along with their parents and Uncle Sam. The contract will state that if you work hard, if you finish high school and are admitted to college, we will guarantee you the cost of earning a degree.
2. We should make tuition in graduate school free for needy students in those disciplines. And we should make undergraduate tuition free for any young person willing to serve as a math or science teacher in a public school for at least four years.
3. We should reduce our dependence on foreign oil - not by drilling in the priceless Arctic National Wildlife Refuge in Alaska, but by investing in clean energy.
4. We should invest in new schools and modernize old ones, to make schools the pride of their communities again.
5. We should invest in research and development, to pave the way for innovation and growth.
6. We should invest in broadband technology, so that every home, school, and business in America has easy and comprehensive access to the internet.
7. We should invest in mass transit, to reduce the pollution in our air and the congestion on our roads.
8. We should... start demanding immediate action to reduce global warming, and prevent the catastrophic climate change that may be on our horizon now.
9. require all employers to give employees at least seven days of paid sick leave a year.
10. we must act at long last to raise the federal minimum wage.
11. I propose that as a 40th birthday gift to the American people, we expand Medicare over the next decade to cover every citizen - from birth to the end of life.
    
12. For those who prefer private insurance, we will offer comparable coverage under the same range of private insurance plans already available to Congress.

Brother Ted offers a bunch of other general spending programs, including child care, more spending on early education, more spending on high school education, civil unions, more radical income redistribution, etc. Does this all sound familiar? So the future of the Democrat party is not to change their old ways but to extend them. Instead of proposing the federal and state governments to collect and redistribute thirty percent of national GDP the Democrats haven't been ambitious enough and should seek to collect and redistribute fifty or sixty percent of GDP.

I am not sure this is the road to success for the Dems.

Stepping back in time...

The only time I have been to Boston has been in early January when the economists hold their convention there and grub for cheap rooms. I have not seen the city to any great extent - although I have walked around Harvard a little bit.

Here is an archive of pictures of Boston from the 1890s. It actually looks like a very beautiful city at the time. Perhaps one day I will be able to actually see modern Boston.

Weird Law and Order Episode...

Anyone catch the end of Law and Order tonight? What a weird exchange at the end.

Who would have thunk that of Sabrina?

If you didn't see it, ask around.

So Americans are the Jerks of the World?

What a bunch of jackasses...



More here

Analyze This...

Face Analyzer found via Jacqueline Mackie Paisley via Marginal Revolution analyzed this picture:

and determined that I am 55% Southern European and 45% Anglo Saxon, I am a male, and that I have

Intelligence	 5.8 	Average Intelligence	

Risk	         3.7 	Low Risk	

Ambition	 6.0 	Average Ambition	

Gay Factor	 1.3 	Very Low Gay Factor	

Honor	         5.1 	Average Honor	

Politeness	 5.5 	Average Politeness	

Income	         6.4 	$30,000 - $50,000	

Sociability	 6.3 	Average Sociability	

Promiscuity	 2.9 	Very Unpromiscuous	

YOUR ARCHETYPE: THETA ACADEMIC

Personality Profile:

You are a long-term planner, diligent worker and avoid risk as much as possible. You are of above average intelligence and have the ability to focus on tasks that seem unimportant at present, but can lead to greater things in the foreseeable future. You are not keen to interact with others or make social connections. You would rather gain material wealth before putting yourself in a position to be judged. You are not confrontational unless someone directly opposes your intellectual beliefs. You are highly concerned with your social status. You are keen to avoid risks that could jeopardize your long-term plans. You take a calculated approach to life, working hard to control all aspects of it in order to not leave anything important to chance.

You tend to be a perfectionist and quite self-conscious. You sometimes wish you were less reserved and more like some others you see who are more bold and outspoken in social situations. But as much as you try to be like them, you cannot, because you care too much about the future to ever be comfortable taking risks in social situations.

Your view of other types

Academic types can end up rich but it will take longer than with a Boss type. You see Boss types as potential business clients and as great resources to expand your contacts. Therefore you treat them with respect. For the most part you do not respect Artist types, however there are some Alpha Artists that you give some credit to. You look down upon Blue collar types as you consider them ignorant. You see White collar types as unsuccessful versions of yourself, but because of work situations you may have to interact with them often. You have very little in common with Charmers, therefore you avoid them. You consider Gambler types to make foolish decisions, and for the most part you do not interact with them. At times you feel sorry for Drifters.

Other types' view of you

Boss types consider you to be a valuable resource of advice. They constantly interact with you to make better decisions and they often respect your opinion. For the most part Artist types do not interact with you for they rather take it easy. They however may like you because of your knowledge of subjects that they find interesting. Blue collar types find you boring and uptight, they have very little in common with you. White collar types may respect your accomplishments and ambition. Charmer types regard you as mostly withdrawn from life and too uppity to hang around with. Gambler types think that because you play so safe you miss out on great opportunities. Drifter types have no regard for you, because your repetitive routines seem boring to them.

Let's see. Right on the gender, wrong on the racial breakdown, wrong on income, right on promiscuity. I don't look down on Blue Collar types, I do avoid charmers, I do sometimes feel pity for the (involuntary) drifter. Those who know me would not call me reserved.

Overall, not too bad. Not spot on, either...oh, what fun on the internet.

Remember Mexico?

Remember the "giant sucking sound" that Perot claimed would be the result of NAFTA. Well, Mr. Perot might have to do some explaining about this graph:



There are lots of explanations for why China has a larger share of U.S. imports, but none of them, I think, have to do with NAFTA.

From this Dallas Fed article

A great explanation of adverse selection...

Adverse Seleciton is a perplexing issue for many professional economists, so I have sympathy for those who don't understand the fancy term thrown about by pundits and academics. Nevertheless, the idea is simple and if couched in the right words, relatively easy to understand. I found this explanation in a recent Dallas Fed article on health insurance in the United States.

What Is Adverse Selection?

An overwhelming proportion of Americans obtain their health care coverage through their jobs. Understanding why involves grasping the concept of adverse selection, which affects the market for most insurance products.

Adverse selection was propounded by Nobel Prize winner George Akerlof in his seminal article "The Market for 'Lemons.'"[1] Imagine that insurers lack the ability to determine the exact health status of individuals and set an average price for a particular group of individuals. The average price would be most attractive to people who face the highest health risks. If the group consists of an above-average number of unhealthy individuals, the insurer would be forced to increase the price. The healthy individuals would then opt out, driving up the price even further. This can lead to a never-ending spiral of rising prices and market instability. In the worst form of adverse selection, a market may not even exist.

A solution to adverse selection in the private health insurance market is to cover groups of individuals not selected on the basis of health.[2] Workplaces, it turns out, are a very efficient mechanism to pool health insurance risk, so employer-sponsored insurance has come to dominate U.S. private health coverage. Nongroup or directly purchased health insurance cannot guard against the adverse selection that can be devastating for insurance markets. As a result, the cost of obtaining nongroup insurance is substantially higher than that available through the employer.

Notes
1. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," by George A. Akerlof, Quarterly Journal of Economics, vol. 84, no. 3, 1970, pp. 488–500.
2. Another solution to the problem is to induce individuals to self-select into an insurance plan based on their health type.

My note: The "lemons" market is easily understood in the case of used cars. Assume two types of cars, lemons and non-lemons. Which are most likely to be sold in the used market? The lemons, because the non-lemons are worth holding onto.

Hitchiker's Guide to the U.S. Current Account

Owen Humpage has a good article on the current account deficit and it's possible implications for the U.S. economy. For the uninitiated, the trade deficit that lots of people are concerned about is related to the current account.

Tsunami Before and After Pics

The best I have seen so far

Alas, the devestation...

The Beneavolent Imperialist?

This timeline of U.S. intervention around the world might help explain the rest of the world's view of our beneavolence.

Interesting...

Because I am sick of looking at it...

I post a paper on anti-ticket scalping legislation. I am not convinced of my modelling skills, and therefore humbly accept comments.

Another Look at Anti-Scalping Laws: Theory and Evidence

This paper investigates the impact of anti-scalping laws on the face value of tickets to entertainment and sporting events such as professional football and baseball. Previous theoretical models have suggested that scalpers might cause an increase in prices at the ticket window because they represent an increase in demand. A recent theoretical contribution by Courty (2003) suggests that anti-scalping laws might not impact the price of tickets in the primary market. In this paper, the theoretical model extends that of Courty and shows that it is possible for scalping to cause a reduction in prices relative to a market in which scalping is not allowed. Empirical evidence from professional football and baseball suggest that in cities with anti-scalping laws the average per-game season ticket price increases approximately $6 in football and $1.00 in baseball. These increases would increase team revenues by approximately $1.5 million per year, which might provide sufficient incentive for team officials to tacitly or explicitly support anti-scalping legislation.

Adobe Version here

ITT Techincal Institute and Homeland Security?

From the ITT Techincal Institute's homepage:

ITT Technical Institute, Indianapolis, may also enroll students into the on-line programs from all foreign countries except: Afghanistan, Angola, Burma, Cuba, Iran, Iraq, Libya, North Korea, Sierra Leone, Sudan, Syria and Yugoslavia

Hmmm...

Elasticity of demand in the real world

Students often get confused about the concept of elasticity, which is defined as the relative change in one variable due to the relative change in another variable. One of the most basic elasticities used in basic economics is the price elasticity of demand, which indicates the relative change in quantity demanded caused by a relative change in price. Often, determining elasticities is difficult for the outside researcher because of limited information.

However, today's mailbox contained a message from American Airlines about the lower fares the airline has initiated in response to Delta's fare reductions.

Airport:	Previous Lowest AA Walk-Up Fare	New Lowest AA Walk-Up Fare	Percent Reduction
Minneapolis/St. Paul, MN (MSP)	$752	$499	34%
Nashville, TN (BNA)	$636	$499	22%
Newark, NJ (EWR)	$1,095	$499	54%
New York LaGuardia, NY (LGA)	$1,095	$499	54%
Philadelphia, PA (PHL)	$941	$499	47%
San Diego, CA (SAN)	$1,021	$499	51%
San Francisco, CA (SFO)	$732	$499	32%
Seattle, WA (SEA)	$1,109	$499	55%
Washington Reagan Natl., DC (DCA)	$880	$499	43%

If AA fare reductions are revenue neutral, then the price elasticity of demand is equal to -1 or the percentage increase in demand in each city is equal to the percentage change in price.

Is it reasonable for the number of people flying out of Nashville on the walkup fare to increase by 22%? This might sound impossible, after all a 22% increase in overall traffic would swamp the airlines' capacity. However, these fare reductions are only on the walkup fare, which is the price paid by the business traveller who has to get across the country overnight and has no other alternative travel options. If only 10 people a week buy a walkup fare then a 22% incrase would reflect 2 or three extra people a week. This does not sound unreasonable. If the fare reductions are revenue enhancing, then the percentage increase in walkup fares sold will be greater than the percentage decrease in prices.

Hopefully the folks at AA know what they are doing.

More Compensating Differentials in Being an Economist

How about Dr. Gary's Jive Decoder? Looks good to me.

What d'ya think?

This would have been an interesting bracket. Perhaps replacing Utah with Virginia Tech or Texas would have been okay. Regardless, I'm a big fan of ONE MORE GAME!!!

Nature vs. man (Part II)

Nature wins again. More here

Why we are running the joint

There are reports that animals avoided the tsunamis, either confirming their sixth sense or that their five senses are much more sensitive than ours. I tend to believe the latter explanation - animals have not dedicated as much to developing the brain and rational thought and therefore maintain a higher level of "instinct" and "sense" response.

Notwithstanding the animals ability to sense subtle changes in their environment, here is another reason why mankind is running the joint:



Here's what this is all about.

Nanoscale polymer capsules could one day be used to deliver chemotherapy direct to tumours, leaving adjacent tissue unscathed. The capsules would be designed to rupture when heated by a low-energy laser pulse, delivering their payload right where it is needed.

Anti-cancer drugs would be more effective, and the side effects less severe, if they could home in on a tumour and be delivered in a single burst. This would allow the drug to reach the concentrations needed to kill cancer cells, while minimising damage to surrounding tissue.

Not too shabby...

Compensating differentials of being an economist

Economists tend to be paid a little less than other professors in the business school. Therefore, we look for compensating differentials to justify our lower wages.
here is a good example:


Okay, perhaps it is only funny to an economist.

More graphic and heartbreaking tsunami pictures

Not for the squeamish.

Fun at the 2005 Chicago Auto Show

From Autoblog.com comes the announcement that Chrysler will build an indoor track for the show, and it looks cool:

The track will be a half mile in length and allow visitors to test drive Chrysler, Jeep and Dodge products. There will be a Trail Rated course for Jeeps that will demonstrate off-road capabilities and a separate track to test Dodge trucks off-road.

Tale of two producers...

The new Saturn Sky


versus

The new VW Jetta


I am a fan of the Germans, but VW can't seem to leave well enough alone. If I was in the market for a two-seater drop top the Saturn Sky has a beefy look to it that sets it apart from the Miata and makes it look a little closer to the Boxster, but for half the price.

I think we are leaning towards the Chrysler Pacifica, if I can find anyone who has anything good or bad to say about Chryslers:


although the new 300C (convertible) is pretty nice:

Cool link...

Create a photo montage from a google keyword.

Here was what came up using "depken":

Cocaine cheaper than Coffee?

In Britain, this is evidently the case (Story here). Now, in class we preach that prices send very important and clear signals to both consumers and suppliers. If the price of drugs is falling over time, what can be the cause?

First might be a decline in demand. If demand is well behaved (in an economic sense) than a decline in demand, everything else equal, will cause a drop in price. If supply doesn't change and demand drops then we see less quantity sold in the market. Second might be an increase in supply. If supply is well behaved (in an economic sense), then an increase in supply, everything else equal, will cause a drop in price. If supply increases and demand does not change then we see more quantity sold in the market. The third possibility is an increase in supply coupled with a decrease in demand, which would cause a decline in price but an ambiguous change in quantity sold/consumed.

Unfortunately, the story doesn't indicate how the quantity of drugs sold in the market has been changing over time, although the story hints that more people are using drugs today than in the past. If this is the case, then it must be the case that the supply of drugs is increasing faster than demand. Even if demand for drugs is increasing, a sufficiently large increase in supply will cause a drop in price. On the other hand, if the demand for drugs is falling, a sufficiently large increase in supply could actually increase the quantity of drugs sold.


On the demand side, dropping prices tend to increase the quantity of the product consumed, everything else the same. What about the supply side? In a principles of economics class, we preach that as prices fall, everything else equal, the quantity supplied will fall. We also preach that as the price of one good falls the supply of substitutes in production should increase as producers switch production to higher priced products.

As coffee is a substitute in production to cocoa, wouldn't cocoa farmers switch production to coffee? We would expect this to happen if the farmers actually sold cocaine and coffee to the end consumer, but they don't. Coffee farmers sell their beans to coffee processors, who have formed a fairly good cartel in recent years and have pushed down the price that coffee farmers receive for their product, even as the price of coffee increases for the end consumer (here is an MSNBC story, although I remember a story in the Wall Street Journal discussing the same issue).

The cocoa farmer does not receive the full value of cocoa converted to cocaine - the drug cartel and drug dealer take the majority of the profit - they bear risk and are able to bid farmer-prices down. Similarly, the coffee farmer does not receive the full value of her coffee beans - the cartel bears some risk and is also able to bid prices down. Evidently, the coffee cartel has been more successful in driving its price down than the drug cartel.

Thus, for an increasing number of coffee farmers it is more profitable to produce cocoa. Therefore, contrary to what the simple demand-supply model would predict, as long as the drug and coffee markets are structured as they are (especially the coffee market), the price of drugs to the end user will continue to fall and the price of coffee to the end user will continue to increase.

This is a lesson for students of economics. It is important to recognize the power and the limitations of the supply-demand model. Supply and demand, as we teach in principles courses, assumes perfect competition on both sides of the market. While consumers are likely competitive agents (that is "price takers") in both the market for coffee and the market for drugs, the supply-side of each market is not perfectly competitive. Therefore, while the model helps conceptualize some aspects of both the coffee and drug markets, it is not completely appropriate and requires a bit of "tweaking."

Buzzword of the Day

pajamahadeen: The new media watchdogs.
Bloggers who spend their days surfing the
Net, challenging and fact-checking the
traditional media.


To see the full Buzzword Compliant Dictionary, just
click here.

For Simpsons fans...

A map of Springfield

Uh oh...

As a wise man once said: "Iceberg right ahead!!!"



The MODIS instrument on NASA's Aqua and Terra satellites captured 13 images of the shifting B-15A iceberg between November 9 and January 2, 2005. The Iceberg is also compared to the size of Long Island, New York.

It is an event so large that the best seat in the house is in space: a massive iceberg is on a collision course with a floating glacier near the McMurdo Research Station in Antarctica. NASA satellites have witnessed the 100-mile-long B-15A iceberg moving steadily towards the Drygalski Ice Tongue. Though the iceberg's pace has slowed in recent days, NASA scientists expect a collision to occur no later than January 15, 2005.

MPEG here

More from NASA here

I am sure that global warming and the Bush Administration's refusal to sign the Kyoto Protocol are to blame. It will be interesting to see the video and hear the audio of this collision - if and when it occurs.

How Now Cloned Cow?

From BEEF Cow-Calf Weekly:

First Cow Cloned From Carcass Births Healthy Calf

"It's never over till it's over," Yogi Berra used to say. University of Georgia (UG) animal scientist, Steven Stice, took that one further. On Dec. 15, a healthy calf, named Sunshine, was born in Stice's UG research facility by natural birth from a mother, named KC, cloned from the kidney cell of a processed cow.

More here

We used to poke fun at the Poultry Research labs (located a little off the main UGA campus) as making very large, genetically altered chickens. Now, those "jokes" made in the late 1980's are reality, at least in the beef industry. If these animals are taken to market and processed, will we be informed of the type of beef we are buying?

Nevertheless, it is nice to see that there is more going on at my alma mater than football!

Back in the Saddle

I didn't blog over the past week or so as I spent some R-n-R with family in Stockton, New Jersey, and went to Philadelphia for the annual economists convention.

Now, two weeks of email and snail mail, graduate advising, and co-author demands have piled up and require my attention. However, blogging in earnest will begin later today and tomorrow.

Those wacky MIT kids...

Commonly called "hacks" on the MIT campus, the dome and other buildings on campus are regularly modified by students.

Here is a list of hacks going back to 1989. Some of them are mighty clever.

UT-Arlington's closest thing to what the MIT kids do was a "handle" on the side of the Little Theater on campus:



Unfortunately, the Little Theater is now subsumed in the Fine Arts Building and therefore cannot be hacked:

Story Here

Multiproduct firms

In introductory classes in microeconomics, firms are assumed to have a single product sold at a single price. But most of the firms in the modern economy are multiproduct firms that charge multiple prices.

These gals figured to combine hot dogs with sex. I am not sure whether they are complements in production or consumption, but it is an interesting business model.

Unfortuantely for them, they got pinched - and not for selling hot dogs.

Markets in Everything II

I have never heard of a Neti Pot before, and the picture makes the item seem rather innocuous


But the the instructional video for the Neti Pot shows what it is really for.

Yes, Virginia, they do exist

Here's a longer video from SinuCleanse.

Okay, okay. So the product is pitched from the point of view of "clean your sinuses without drugs." However, if I saw someone in the public restroom using a Neti Pot, I think I might just turn around immediately.

Markets in Everything

Economists claim that side payments, when possible, will lead to a reallocation of scarce resources to those who value them the most. We preach these concepts in class and yet most of the time students fail to grasp the significance of the idea - my claim is they don't understand because they don't (overtly) see the practice on a daily basis.

Enter the case of Clinton Portis, traded to the Washington Redskins from the Denver Broncos during the previous off-season. While in Denver, Portis wore number 26 but this number belonged to Ifeanyi Ohalete who was already on the Redskins team. The two agreed on an exchange - number 26 for $40,000. Problem seems that Portis paid $20,000 and then Ohalete was cut from the team. Portis has failed to cough up the rest of the dough and Ohalete is "suing."

Portis and Ohalete made the deal following Portis' offseason trade from Denver to Washington. Portis wore No. 26 during his two seasons with the Broncos, but Ohalete already had the number from his three seasons with the team.

The two signed a contract June 4 stipulating that Portis would pay $40,000 for the number, according to Ohalete's attorney, John Steren. Steren said Portis paid $20,000 but did not make two subsequent payments of $10,000 due during the season.

If Portis and Ohalete had a verbal agreement I would suspect that reneging on the contract would be more feasible. However, a signed contract over a jersey number means that Portis really wanted the property rights to that jersey number. I have a feeling that Mr. Portis is gonna' have to pay up.

Markets are cool...
Story here

Possible NHL Rules Changes

Assuming the team owners and players can come to an agreement so that an NHL hockey game will be played before 2007, it is possible that the NHL will consider several rules changes to help the offense and increase scoring. Most leagues change rules for one of two reasons - to make the games go faster (shot clocks, etc) or to help the offense (NFL's new pass interference interpretation, etc).

Here is a run-down of the possible changes according to today's Dallas Morning News:

1. Goaltenders get no-handling zone behind their goal line and in the corners
2. Tag-up rule returns
3. No-touch icing
4. Goal lines moved back two feet
5. The shootout replaces overtime/ties
6. Lines are one foot wider

The explanation of the rule changes is offered here. Some of the rules are interesting but I am skeptical that these rules changes will prove a panacea for hockey's television woes. Nevertheless, they are interesting to think about.

How to throw a slider?

Nice animation from the Dallas Morning News

Confusion over the role of government?

Okay, my libertarian streak does not run so deep that public libraries should be 100% privatized. I think public libraries provide sufficient public good that they deserve to be subsidized a bit - at least they should take priority over other non-sensical things that local governments insist on funding, say stadiums and such.

In Salinas, California, voters rejected a half penny sales tax increase with the repurcussion now being that the city's libraries will be closing. The city will be the largest city in the country without a public library (at least Arlington doesn't hold that title).

What's the big deal? Salinas, California, was the home town of John Steinbeck - Nobel winner and author of Grapes of Wrath, East of Eden, Winter of our Discontent, Of Mice and Men, and a bunch of others.

So how would Steinbeck have reacted to the news that the cash-strapped city is closing its libraries in the spring?

"He'd obviously be upset. He knew that literature can lift and elevate the spirit and enable humans to rise above any situation," Ms. Gamble said. Facing record deficits, the City Council voted Dec. 14 to shut all three of Salinas' libraries, including the branches named after Steinbeck and labor leader Cesar Chavez. The blue-collar town of 150,000 could become the most populous U.S. city without a public library.

Nice touch...
Story Here

A less advertised tragedy...

The Aral Sea in Uzbekistan was once the size of Lake Michigan but over the past fifty years 70% of the sea's water has been pumped into the desert. Now, the dry seabed is littered with abandoned ships and once sea-side fisheries are now miles inland. As Pres. Bush claimed when debating Al Gore in 2000, "Everyday is Earth Day when you own the land," and "public" ownership of natural resources has almost universally led to ecological disaster.

Read Ecocide in the USSR: Health and Nature Under Siege by Murray Feshbach and Alfred Friendly for a well detailed litany of ecological disasters wrought by the command economy of Soviet Russia and how command economies in general will fail to live up to their utopian ideals. Also, there is a new book Chasing the Sea by Tom Bissell (Dallas Morning News Review here) which deals with Uzbekistan history, including the tragedy of the Aral Sea.

Something fishy with Google library project

Interesting points offered here such as:

"At Stanford, Google hopes to be able to scan 50,000 pages a day within the month, eventually doubling that rate, according to a person involved in the project."

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

50,000 pages a day is 2,083 pages per hour.

Let's double this rate, as Google will do "eventually," and call it 4,167 pages per hour. How many years will it take to do 8 million x 200 pages per volume?

8 million x 200 = 1,600,000,000 pages to be scanned.

1,600,000,000 / 4,167 = 383,969 hours to scan Stanford's library at the speed they hope to attain "eventually."

Let's run 24-hours a day (three shifts of temp workers at minimum wage!) and assume that the wizards at the Googleplex will never have any down time. How many days is this? 383,969 / 24 = 15,999 days.

How many years is this? 15,999 / 365.25 = 43.8 years.

Oops...

Disturbing tsunami aftermath picture

The television media has been understandably reluctant to show how bad things really were after the tsunami of last week.

Entensity.net has a single (very graphic!!) picture.

Videos here

Tsunami animation

Lots of Tsunami information at Columbia University

Before and After Pictures

What would you do without the net?

This was evidently the focus of a study by OMD and Yahoo! (link here).

Here's the "survival guide" to life without the net.

According to the research report, the average survey respondent (US adult) claimed to require:

$152 to go without the internet for two weeks;

$100 to go without television for two weeks;

$46 to go without radio for two weeks;

$23 to go without movies at home for two weeks;

$10 to go without the newspaper at home for two weeks;

$9 to go without movies in theaters for two weeks (page 5).

So, if the respondents are telling the truth then the price of Internet access is considerably lower than it could be.

I like this statement from one participant (page 10):

Went to work, had to buy a paper for my news. Not only was the cost of a paper involved, but felt very inconvenienced by having to carry around the paper which can be cumbersome and annoying to read at work.

Isn't work supposed to be work - and not reading the paper?

The best, however, was the list of substitutes for the internet and new activities that were taken up without the net (page 17):

SUBSTITUTES Conference Calls. Buying newspaper. Postal mail. Shopping Malls. Text messaging. Family Time. Long Telephone Calls. Asking for directions. Faxing documents. Priority Mail. Looking in the phone book. Reading old magazines. Pulling out the roadmap. Offline videogames.

NEW ACTIVITIES Discovering the pool. Outdoor activities. Board Games. Bike. Getting out of the house. Physical activity. Social gatherings. Sporting events. Visiting the neighbors. Bowling. Garage sale-ing. Boating. Staying home. Weekend excursion. Getting on tread mill.

So, without the internet, people went back to doing things as they had done them before, like buying a friggin' newspaper. Folks also figured out that there are other things that can occupy free time - including "physical activity."

One interesting graph was the relationship between social distance and using the net to communicate (page 30):

Is this because mom and dad don't use the internet or because internet communication doesn't require face-to-face or voice-to-voice communication?

Overall a pretty interesting study although I wonder about it's generality.

posted at 1/02/2005 01:06:00 AM (0) comments

Saturday, January 01, 2005

Top 20 Sports (Economics) topics of 2004

Here is my top 20:

1. Red Sox World Series Win - I don't like Boston, but good on 'ya laddies
   
2. NHL lockout - Hicksian Paradox in spades
   
3. Pat Tillman
   
4. 2004 Olympic Basketball Dream Team?
   
5. Pistons-Pacers Brawl
   
6. Clemson-South Carolina Brawl
   
7. Roger Clemens (Cy Young) and Randy Johnson (Perfect Game)
   
8. Lance Armstrong's Six Straight Tour de France wins
   
9. UConn Men's and Women's Basketball Championships
   
10. Janet Jackson's Wardrobe Malfunction
    
11. Atlanta Braves 13 straight division titles
    
12. Arlington, Texas votes for a Cowboys Stadium
    
13. Baseball tentatively agrees to relocate Expos to Washington, DC
    
14. Vijay Singh takes No. 1 golf ranking from Tiger
    
15. NASCAR revamps points system
    
16. 2004 Summer Olympics put Greece in record debt
    
17. FIFA World Cup tournament awarded to South Africa
    
18. Steroids in Baseball and doping in track and field
    
19. Basketball 101 at my alma mater UGA (exam here)
    
20. Mike Williams's attempt to be reinstated by the NCAA

posted at 1/01/2005 09:02:00 PM (0) comments

Back in paradise

I have finally made it back to DFW after ordeals through O'Hare and lost baggage. Spent my travel time reading Steinbeck and thinking about the past year in sports, especially, but also all things economic. I will have a list up tomorrow - fellow sports economists feel free to pipe off on my top 20 list.

Coming back from Chattanooga - the boyhood home and home of the first Coca Cola bottling plant, I always find this graphic of interest...I have a story about asking for Coke in Brooklyn - to say the least my inquiry did not go over very well.



Happy New Year everybody!!

posted at 1/01/2005 12:03:00 AM (2) comments

Thursday, December 30, 2004

For all the bitchin' and moanin'...

about how the government should spend our money, it turns out that the bitching really is on the margin.


This picture just about says it all. Approximatley 70% of the federal budget is tied up in "human resources" which I interpret to mean salaries, social security, medicare and medicaid. Less than 10% of the "other functions" is what the majority of the griping (spend more on stem cell research, and such) is focusing on. Of course, 8% of $2 trillion is a lot of money - no doubt - but the big issues have already been decided (unfortunately) and by this graph the ability to rein in federal spending looks difficult.

(Hat tip to Solution Spaces)

posted at 12/30/2004 09:16:00 AM (0) comments

Wednesday, December 29, 2004

Post Tsunami Stress Disorder

Okay, so I am in Chattanooga, TN, attempting to stay off the grid by unplugging from the matrix for a few days, visiting family, old haunts, the farm, and this tsunami has to happen right in the middle of it all.

My over-under prediction on the number of dead from the tsunamis alone: 150,000. Another 100,000 will die of disease, etc. Why? Is it because they did not get the early warning that those in Hawaii and in Japan would have received? Perhaps. Is it because a sea wall and outer barriers had not been built? Perhaps. Is it because the nations affected do not have adequate transportation for large scale evacuations? Perhaps.

The real reason this disaster has had such unbelieavable human cost is that the governments of many of the countries impacted by the event are among the most corrupt in the world (here's a map). By corruption I mean those in the government ensure their own enrichment at the expense of basic infrastructure - running water, sufficient supplies for an emergency, outer-barriers and sea walls, and, yes, early warning systems that cost only millions (not billions) of dollars.

From Transparency International The 2004 Corruption Perception Index (10 = very clean, 0 = very corrupt) listed:

Bangladesh: Tied 145 out of 145 CPI=1.5

Indonesia: Tied 133 out of 145 CPI=2.0

India: Tied 90 out of 145 CPI=2.8

Sri Lanka:: Tied 67 out of 145 CPI=3.5

Thailand: Tied 64 out of 145 (with Mexico) CPI=3.6

Malaysia: Tied 39 out of 145 (with Tunisia) CPI=5.0

Somalia: Not ranked

Maldives: Not ranked

To put these values in perspective, the United States came in at CPI=7.5 and Finland at 9.7.

One overarching problem I have with the "we are poor, you are rich, and therefore you are obligated to help us" argument is that most of the things that would have saved a lot of lives are not expensive endeavors. The countries involved have GDPs in the billions of dollars per year and government expenditures in the millions if not billions of dollars per year (CIA World Factbook Information). Therefore, it is not impossible for these governments to fund the types of safeguards that would have saved lives.

I understand, and empathize, with the argument that such tsunamis had not happened before and therefore any safeguarding against the unforeseeable future was unlikely to appeal to the local populace as they had more immediate needs. But these governments are all too often not looking out for the everyday needs of their population and are instead enriching a previleged elite. The brother-in-law of the local prefect could be enriched by building an outer-barrier instead of digging ditches and filling them in.

It is a shame that thousands die in situations like this, but three Category 4 hurricanes in the country of Florida did widespread damage but not widespread death. On top of that, the country of Florida didn't put their hand out to France - albeit it did to the countries of California, Texas, etc. Sen had it correct when he argued that public corruption is by far the worst enemy of mankind, especially in developing countries.

Not only do I hope those who perished rest in peace, but there should be a serious reflection on the local governance that allows for the conditions in which such disasters have such tremendous effects.

Finally, for those that seem to want to equate Sept. 11 with this disaster, please stop. Sept. 11 was unmeasurably worse because it was premeditated human vs. human murder whereas the tsunami disaster of 2004 was nature vs. man, with no malice aforethought.

Until later...

posted at 12/29/2004 06:20:00 PM (0) comments

Friday, December 24, 2004

Even I didn't get the memo...

While I am sitting here killing some more time...

December 9 was world-wide anti-corruption day. Colleague Courtney LaFountain and I have a forthcoming paper investigating the impact of public corruption on state bond ratings - look for this barn-burner sometime next year. Second colleague Roger Butters gets into the act with international bond ratings, so we are gearing up for another bite at the apple.

Even with all my reading on the subject - and my collegues - I totally missed the memo on the UN's attempts to crack down on corruption...kinda like the dry-run they attempted in the Food for Oil program?

The clever UN program logo:



More information here

posted at 12/24/2004 10:59:00 PM (0) comments

Adventures at the Dollar Tree

Yesterday we went to the Dollar Tree to pick up things that you should really only pay a dollar for - wrapping paper (but not tape) and silly things for Xmas day games.

In the office section for $1 was an LCD lamp that plugs into your USB port. I had seen these advertised in other magazines for considerably more than a dollar, so I took a flyer on it.

Plugged in and clipped on my laptop and I type away at 11:53 pm with the missus snoozing beside me. How cool is that? For $1 the LCD lamp is made, sold, the Dollar Tree folks make money (as does the manufacturer) and I get lots of consumer surplus.

Markets are so cool...

posted at 12/24/2004 10:52:00 PM (0) comments

Merry Christmas, er Kwanza...er, you know what I mean

Fired up the laptop tonight to get some work done on a couple of empirical analyses burning fire for my coauthors and find that someone in my in-laws neighborhood has a wireless lan up and running and gifted to the world...how cool is that.

Thanks, whoever you are.

I had hoped to have put the finishing touches on a paper dealing with anti-scalping laws in order to post it here as a little Christmas present for the regular readers of the blog. Alas, they haven't been completed and perhaps it will be another week or so until I have them done - me and the missus and the little one are on a Southeastern tour - Greenville, SC to York, SC to Chattanooga, TN - then back to DFW in order to turn around and head off to Philly for the national economists convention - yes, the hookers will likely take the weekend off.

A shout out to the people I have met over the past year blogging and to my friends who are regular readers...you know who you are.

We are almost a year into blogging and have just surpassed 12,000 hits...not too shabby I suppose. Thanks to those who read regularly.

caio

posted at 12/24/2004 10:44:00 PM (0) comments

Tuesday, December 21, 2004

A couple of neat videos...

F-18 flight - Deck to Deck

B-2 Bomber

posted at 12/21/2004 02:30:00 PM (0) comments

A hundred million here, a hundred million there...

From the Indy Star:

One day after Mayor Bart Peterson triumphantly announced a deal to keep the Colts, details showed a new stadium project could cost nearly $190 million more than anticipated, and key state lawmakers began picking apart the mayor's financing plan.

That's what I call hyperinflation...

Here is another little tidbit:

Under the stadium plan announced Sunday, the Colts would contribute $100 million, but only after the city pays the team $48 million to terminate the current RCA Dome lease, making the team's net contribution $52 million. To pay back bonds funding the bulk of the stadium, the city would rely on taxes from new slot machines to generate $46 million a year for the next 30 years.

And I thought we are getting screwed here in Arlington. The good folks of Indianapolis are paying fines, fees, and interest all over.

Finally:

According to the Minnesota Vikings, a team lobbying for a new stadium, public dollars have, on average, paid just under 70 percent of the cost of all new stadiums built since 1992.

Indianapolis will pay more than 90 percent of its stadium's cost, after the Colts' net contribution. But, Peterson said, the city will own and operate the venue. He said the facility will be a key part of the city's convention business.

The Vikings are speaking the truth - cities have foolishly spent too much on stadiums and then leased them to their teams.

I'm thinking the reverse would actually be better in ensuring incentives go in the right direction. The team should build the stadium and then the city will sign a long-term lease with the team. The city will pay the team to stay in the city instead of the other way around. If the city gets tired of having the team, the city can quit paying and either the team makes money on its own or it bails to another city. The fact that the team had to build the stadium will make it less likely that the team will relocate as it owns a highly specialized piece of capital - the stadium.

Team owners might not go for it, but in the end the cities probably hold more negotiating power than they believe. Even though Los Angeles looms as a possible city of relocation, the reality is that LA is doing just fine without a team and likely no team will move to LA - they have had two teams and both left voluntarily.

posted at 12/21/2004 02:04:00 PM (0) comments

A multipurpose single-purpose stadium

The Indy stadium proposal probably faces an uphill battle, but I predict the stadium will ultimately be built with a vast majority of the bill being paid by the public.



An artist's rendition of the interior of the stadium with the seating arranged for an NCAA final four tournament. Building the arena this way, you might think that Indy plans on hosting a lot more NCAA tournaments in the future, but I thought that Arlington was going to get into the mix. Indy is also rumored to seek a Superbowl, but I thought Arlington was going to get Superbowls.

posted at 12/21/2004 01:58:00 PM (0) comments

Monday, December 20, 2004

I like contestant 12093...

The only time American Idol is worth watching is early on when those who are tone deaf give it the old college try.

Americans aren't the only ones with a penchant for making asses of themsleves. Enter Malaysian Idol

posted at 12/20/2004 07:00:00 PM (0) comments

Why mathematics is important...

Doug seems to have missed the day in math class during which inequalities were discussed - as in, this bungee cord is longer than the drop from the bridge.

Ouch!!

posted at 12/20/2004 06:55:00 PM (0) comments

The future of mid-tier universities?

At Arkansas State University they are training line-men for the local utility company. Why? Because it is cheaper than the utility training the person - public universities are pretty heavily subsidized by the state and federal governments.

Classes began this fall for Odom and 11 other students, covering everything from pole climbing and driving a bucket truck to handling wires and transformers. Students attend for two semesters, and can use the credit toward an associate degree.

Young trainees like Odom are becoming increasingly valuable in Arkansas, Pennsylvania and other states as utilities face a wave of retirements of linemen and power-plant workers in the next four to five years. To train replacements faster and cheaper than traditional in-house apprenticeship programs, many utilities are turning to colleges and universities for help.

Is this what we as a society want mid-tier universities to be doing? Isn't this something that DeVry institute is more suited to doing? ASU is a Division I-A football school and it is giving credits that will go towards an Associate's Degree?

Story here

posted at 12/20/2004 01:55:00 PM (0) comments

More on Washington Stadium

Still digging around on the parking proposal for a DC stadium and came across this at
The Washington Post:

One proposal from the Gates Group, a Cleveland-based private equity firm, would give the city $100 million in exchange for revenue generated from a special parking district around the stadium. Another proposal would allow developers to build larger buildings near the stadium in exchange for a payment to the city. And a third plan would have the city sell space on the ballpark's first floor to retail stores that would face the street.

I am not sure if all three of these proposals would yield the $18 million or so a year needed to service $250m in debt.

But then the "we have no other options" ploy is played:

Baseball sources said Norfolk is considered a primary alternate home for the former Montreal Expos franchise if the Washington baseball deal falls through. Sources said Norfolk is attractive because it is in the same time zone as Washington and is more easily accessible to other National League East division cities than such other candidates as Las Vegas and Portland, Ore.

Good friend Trisha Bezmen lives in Norfolk and suggests that if the Tidewaters cannot sell out once every three years that a big league ball park is probably out of the question. Why isn't Charlotte thrown around? It too is on the East Coast and has more than a million people. What about Orlando? Oh yeah, Floridians only care about baseball in February and March.

posted at 12/20/2004 01:03:00 PM (0) comments

Let them eat cake...

From another Indy Star article:

If he had his preference, Olgen Williams said he would take the money being spent on the project and use it to help poor and minority residents. But, Williams added, he also realizes the Colts are an important component of the Central Indiana economy.

"I'm a fan, even though I've never been to a game," said Williams, executive director of the Christamore House community center on the Westside.

"I believe there is a lot of value in attracting people and businesses. And they do create some jobs," he said.

"As long as they don't raise taxes or take money away from programs that help people who need assistance, I'm fine with it."

posted at 12/20/2004 12:58:00 PM (0) comments

Pay attention young man...

During my college years one of my favorite comic strips was Calvin and Hobbes. The kid was constantly getting into trouble and driving his parents batty. If there was ever a kid who qualified for the "better living through chemistry" racket that seems to be taking over it would have been Calvin.

But what would the strip have been like if Calvin was riding the cosmic wave?



My kid has ADD, but then she's not quite 7 months old. Starting out on this parenting thing, I am not a fan of the medication and this strip is a good example of why. It might be quiet but it sure looks boring.

(found at Waxy.org)

posted at 12/20/2004 12:53:00 PM (0) comments

A little on the DC stadium issue

I haven't piped off about the anti-stadium subsidy victory in DC last week. I think it was genius for the DC city council to call MLB's bluff by requiring 50% private funding for a new baseball stadium in the city. At first the league (that is the other team owners who own the Expos at the moment) cried foul and insisted that it had to be all public funding or the Expos would go play in Portland or some other city.

But in the end, MLB team owners might have figured out that some public funding is better than no public funding and they have softened their tone. According to the USA Today, MLB officials now say "[a]s long as the money's there with the same assurances as public financing, we don't care. We've never had a problem with private financing." Right, as long as the private funding does not come from the pockets of the team owners.

How to raise private funds?

Late last week several possibilities for private financing have been suggested, including a plan to raise $100 million by charging for curbside parking near the new stadium, which is hoped to be open in 2008.

This is similar to what they are trying to pull here in Arlington - pay off the stadium with a $3 per parking spot tax. If the full price of premium parking went to the stadium, and let's say there were 2000 curb-side spots - it would take a price of $20.50 for each spot, selling them all for each of 81 games, for thirty years to raise $100m. I am not sure that this is feasible...

In the end, the DC council called MLB's bluff and if it works other cities should take note - Arlington (oops, too late), Indy, New York...

Not much good comes out of DC nowadays, but this stadium "victory" is a welcomed development in my eyes.

For more on this topic see recent posts by Skip Sauer over at The Sports Economist

posted at 12/20/2004 12:45:00 PM (0) comments

You spin me round...

A while back we had some give and take about revolving stadiums. It turns out that in Brazil there is a building with revolving apartments. Cool.

posted at 12/20/2004 12:38:00 PM (0) comments

Insanity in Indy

Last night the Mayor of Indianapolis announced "a deal" with the Colts ownership to build a new $500m retractable roof stadium, with the city kicking in $400m to be financed through "slot machines." Story here

Talk about taking a gamble on being able to pay off stadium debt.

The traditional reasons for building the new stadium have been trotted out in the first article about the stadium. The RCA dome is too small and therefore the team suffers from too low revenue (with a salary cap, I am not sure why that is terribly important for competitiveness), the team might move to Los Angeles, the new stadium will anchor the downtown convention center, the new stadium will make it possible for Indianapolis to host a Superbowl, the new stadium will ensure that Indy continues to host NCAA Final Fours, the only way to maintain Indy's "Major League" status is to keep the Colts in town.

It seems at the outset that the city-team deal might face some uphill battles, but given our experience here in Arlington (and notwithstanding the major victory in Washington, DC), I am confident that the stadium proposal will eventually be approved.

Some interesting tidbits from the story:

The proposal calls for the city to build a 63,000-seat stadium, which could expand to seat 70,000, in time for the 2008 NFL season. The team will sign a new 30-year lease.

According to Munsey and Suppes, the RCA Dome holds 60,272 - so the RCA dome is too small and the answer is to build a stadium thatholds ten thousand more?

But it gets better:

Senate Tax and Financing Policy Chairman Luke Kenley, R-Noblesville, said he has asked city officials to make as many as 6,000 tickets to each Colts game available at prices of $25 or less to help win legislative support for their financing package.

"I want Joe Sixpack to have a price he can afford to pay for a ticket," Kenley said.

If this guy gets his way, the team only has 4,000 extra tickets with which to make extra revenue (the team will charge more for the other 60,000 tickets as well). Joe Sixpack hits the lottery by buying a $25 ticket and selling it for $100..genius.

So, why do we need to build a new stadium? After all, the RCA dome is only 20 years old:

In addition, details to be released today could include a provision reducing the city's obligation to make annual payments to the Colts beginning in 2006 to keep them playing here. Under the team's existing contract, the city could owe the Colts payments totaling at least $36 million through 2008, when the new stadium would open.

This is why the cities should be out of the sports buisiness as much as possible. What mayor or lawyer or city council actually thought that it would be a good thing to buy $18 million per year for the "privelege" of hosting an NFL team. A new stadium will cost about $25 million in bond payments, so maybe the net difference of $7m makes it worthwhile to someone. I'd wager that Indy would survive without a football team - and it could save $25m per year.

The insanity doesn't stop there, though. How to pay for the stadium bonds?

Some of those briefed told The Indianapolis Star that the stadium would be paid for with borrowed money bankrolled by taxes imposed on yet-to-be-authorized slot machines in Marion County, as well as a contribution from the Colts and the NFL totaling about $100 million.

Late Sunday, Peterson spokesman Steve Campbell confirmed the financing plan would include roughly $400 million from pull-tab machines, which are similar to slot machines, and the remainder would come from the team and the league. He said further details would be released today.

but

"A Downtown casino would be controversial because it's a clear expansion of gambling," he said. "I'm sure the riverboats would fight it."

Do you think the boats will fight on-land gambling? Unless the boats are given the right to run the on-land casinos, in which case they might go along for the ride.

And the local economic impact:

Sunday, Jillian's on South Meridian Street was filled with a sea of blue-clad fans in the hours before the kickoff. When asked about the effect the Colts have on his business, general manager Jim Brown looked at the crowd.

"Do I really need to answer that?" he joked.

Brown said the bar's business on the day of home games is nearly double what it normally is.

So let's see. Indy needs to build a new stadum to save downtown businesses. The local bar claims that ten days a year they do double their normal business, so perhaps revenues are approximely 20% greater than if there were no football Sundays - and this is what happens with an older stadium. What is supposed to happen to local bar revenue with a new stadium? The bar's business on football Sundays will likely still be double what it is the rest of the time. Net gain to the local bar-owner from a new stadium? Zero.

Remember what Nancy told us..."Just say No."

posted at 12/20/2004 12:18:00 PM (0) comments

Sunday, December 19, 2004

Think you got moves?

These kids have some sick moves. How much time invested in practicing that?

posted at 12/19/2004 01:50:00 PM (0) comments

If it were only this funny...

Doping in sports might not be all bad if something like this were to happen on a Sunday afternoon.

posted at 12/19/2004 01:46:00 PM (0) comments

When does something "deserve" to become public domain?

Should these speeches be subject to copyright restrictions that preclude posting them on the Internet?

 Amelia Earhart - On The Future Of Women In Flying.mp3

 Astronaut Frank Borman - Christmas Greetings From Space.mp3

 Astronaut Neil Armstrong - The Moon Landing.mp3                  

 Babe Ruth - Farewell To Baseball.mp3                           

 Casey Stengel - Address To Congress.mp3                          

 Hank Aaron - Address To Congress.mp3

 Lou Gehrig - Farewell To Baseball.mp3     

 Lt. Col. John Glenn - The First American In Earth Orbit.mp3

 P.M. Winston Churchill - Address To The Nation On The R.A.F.mp3

 Pres. Dwight D. Eisenhower - Farewell Address.mp3       

 Pres. John F. Kennedy - Inaugural Address.mp3

 Pres. Ronald Reagan - Address To The Nation On The Berlin Wall.mp3

 Princess Elizabeth & Princess Margaret - Greetings To The Children Of England.mp3

 Rev. Dr. Martin Luther King, Jr. - Address To Civil Rights Marchers in Washington, D.C.mp3

 William Jennings Bryan - The Ideal Republic.mp3                    

These speeches evidently were available here but were taken down because of copyright concerns.

I know the King Center in Atlanta sometimes goes over the top in protecting Dr. King's "legacy" but I always viewed that with a bit of skepticism - the King Center is likely really interested in protecting the rents generated by Dr. King's speeches.

But is the Kennedy Inaugural Address something that must be put under copyright lock-and-key or is it a bit more than the normal speech. Isn't the "Tear Down This Wall" speech by Reagan really part of the public domain?

What I am getting at is not that copyright law is useless - hell, I am writing a book right now and I am glad for copyright law - but that for some things the traditional justification for a "copyright" seems a bit of a stretch. I wonder if social welfare is really enhanced by not allowing us to (freely) hear the words of Dr. King or William Jennings Bryan.

posted at 12/19/2004 12:50:00 PM (0) comments