A blog about economics, politics and the random interests of forty-something professors
I can relate to this.
For most of history, almost everything people did was forgotten because it was so hard to record and retrieve things. But this had a benefit: “social forgetting” allowed us to move on from embarrassing moments. Digital tools have eliminated this: Google caches copies of blog posts; networking sites thrive by archiving our daily dish. Society defaults to a relentless Proustian remembrance of all things past.
From an article in Wired.
Central Square has gentrified since my days living on Harvard Street. There’s a Starbucks (whoopee). There’s still a range of eclectic stuff left over from the dodgy past – the Middle East is still there and the Toscanini’s. They’ve been joined by some high-end restaurants. One of them, Central Kitchen, was recommended to us with the caveat that those of us in the sunrise of our forties might be able to bear the background music better than those approaching the sunset. They were right- I hardly noticed the music. I did notice the food.
Closest I’ve come to Mussels from Brussels are Jean Claude van Damme movies. So, my reference point for the best mussels I’ve eaten is the Hopleaf in Andersonville on the North side of Chicago. And I prefer them cooked in beer rather than cream and wine. Central Kitchen does them in some kind of herb butter. They plonk some frites on top with aioli. The mussels were soft and delicious, bless their little hearts. The broth was wiped up with stellar bread. Jacques Brel on the stereo and a Chimay in my hand would have completed the picture. No need for beer – I was happy with the pinot noir.
The main course was very good but couldn’t live up to the moules. And it was too big and too expensive – I felt bloated at the end. Next time, a salad for the appetizer and the moules for the main course.
We shared the cinnamon beignets for dessert. They were stale. The falling down chocolate cake has to be ordered thirty minutes in advance. Next time.
Extremely simple and good. You need corn tortillas, some kind of meaty fish, some kind of salsa. I like guacamole. I wouldn’t use anything more than this. Store bought corn tortillas are dry but you can steam them and then keep them in a damp kitchen towel and they will work great. Or you can try making your own. It takes some practice, but it pays off.
Mahi Mahi works great. Just squeeze some lime on it, then coat with light oil and let it marinate for about 15 minutes. (Much longer and the acid in the lime will make the fish too flaky and the next step won’t work.) Cut into small pieces and grill. Get yourself a cast-iron grill pan and you can do this indoors.
Put it all together and eat. With store-bought tortillas the whole preparation takes no more than 1/2 hour.
James Surowiecki of the New Yorker describes and analyzes a price war for Stephen King:
Wal-Mart began by marking down the prices of ten best-sellers—including the new Stephen King and the upcoming Sarah Palin—to ten bucks. When Amazon, predictably, matched that price, Wal-Mart went to nine dollars, and, when Amazon matched again, Wal-Mart went to $8.99, at which point Amazon rested. (Target, too, jumped in, leading Wal-Mart to drop to $8.98.) Since wholesale book prices are traditionally around fifty per cent off the cover price, and these books are now marked down sixty per cent or more, Amazon and Wal-Mart are surely losing money every time they sell one of the discounted titles. The more they sell, the less they make. That doesn’t sound like good business.
We have a few answers to avoid this. But if tell you, I have to redo large chunks of my class…..
Sex is a puzzle for evolutionary biologists. It seems to be a waste of reproductive output. A population of a fixed size which requires two members to produce offspring reproduces, and therefore grows, at half the rate of the same sized asexsual population (which requires only one member to produce one offspring.)
So to explain the prevalence of sexual reproduction in nature we need to find some advantage to offset this so-called two-fold cost of sex. There are two prominent theories. The first is that sexual reproduction allows a species to shed disadvantageous mutations. Sexual reproduction thus ensures that offspring loses any harmful mutation with probability 1/2 (we are assuming that the parents do not have mutations of the same gene, a good approximation when there are many genes.) But with asexual reproduction, these mutations just accumulate.
Another theory is that sexual reproduction, by mixing around genes, ensures genetic diversity which enables a species to survive changes in the environment.
Not Exactly Rocket Science reports on an experiment designed to test these theories.
Like humans, C.elegans has two sexes but unlike us, they are males and hermaphrodites (with males making up just one in every two thousand individuals). Equipped with both sets of genitals, hermaphrodites worms can fertilise themselves without male help – far from being rude, telling C.elegans to go &$&! itself is a feasible lifestyle suggestion. Hermaphrodites could also mate with males, but they do that on less than one in 20 occasions.
The biologists manipulated the genetics of a population of these worms so that half would always mate with themselves and the others would always mate sexually. Next, they exposed the worms to a chemical that raised their rate of mutations. As the theory predicts, the sexually reproducing worms were more successful.
Next, they exposed the worms to a deadly bacterium. Consistent with the second theory, the sexually reproducing worms also fared better in this experiment.
Now the big puzzle. If sexual reproduction is beneficial, why do all sexually reproducing species in nature do it in pairs? This paper by economists Motty Perry, Phil Reny, and Arthur Robson proves that, at least with respect to the harmful mutation theory, a particular form of tri-parental sex dominates bi-parental sex. In the Perry-Reny-Robson world, reproduction requires two males and one female. The offspring receives genes with half-probability from the mother and 1/4-probability from each of the fathers.
(With this particular menagerie, in every reproductive cycle each female gets two partners per encounter but each male gets two encounters. Not only does this ensure that the “cost of sex” is again two-fold and not three-fold, but it also maintains equity in the gettin’ busy department. Only fair.)
Pronounced ‘Ely’ (unless Marciano corrects me.) They are expanding their ‘Artisti del Gusto‘ program in the US in which
Illy supplies shops with Italian espresso machines, coffee cups, artwork, drink recipes and intensive training, after which the cafe becomes a certified Illy purveyor. In return, the shop must agree to serve only Illy coffee for at least three years.
This can’t be bad, but I would guess that Illy coffee is too light for American tastes. I have tried the Illy in vacuum sealed cans and it is never fresh enough to be worth buying. Will the coffee sold in the Artisti del Gusto shops be shipped from Trieste?
He is a political scientist at NYU who uses spreadsheets to predict how conflicts will be resolved. He consults for the CIA, earns $50,000 per prediction, and uses his brand of game theory to offer wisdom on questions like “How fully will France participate in the Strategic Defense Initiative?” and “What policy will Beijing adopt toward Taiwan’s role in the Asian Development Bank?”
To predict how leaders will behave in a conflict, Bueno de Mesquita starts with a specific prediction he wants to make, then interviews four or five experts who know the situation well. He identifies the stakeholders who will exert pressure on the outcome (typically 20 or 30 players) and gets the experts to assign values to the stakeholders in four categories: What outcome do the players want? How hard will they work to get it? How much clout can they exert on others? How firm is their resolve? Each value is expressed as a number on its own arbitrary scale, like 0 to 200. (Sometimes Bueno de Mesquita skips the experts, simply reads newspaper and journal articles and generates his own list of players and numbers.) For example, in the case of Iran’s bomb, Bueno de Mesquita set Ahmadinejad’s preferred outcome at 180 and, on a scale of 0 to 100, his desire to get it at 90, his power at 5 and his resolve at 90.
His model is a secret but it seems to be some kind of dynamic coalition formation model. He has predicted that Iran will not obtain a nuclear weapon owing to the rising power of dissident coalitions. In August,
He spent that morning looking over his Iranian data, and he generated a new chart predicting how the dissidents’ power would grow over the next few months. In terms of power, one category — students — would surpass Ahmadinejad during the summer, and by September or October their clout would rival that of Khamenei, the supreme leader. “And that’s huge!” Bueno de Mesquita said excitedly. “If that’s right, it’s huge!” He said he believed that Iran’s domestic politics would remain quiet over the summer, then he thought they’d “really perk up again” by the fall.
A long profile appeared in The New York Times Magazine.
So long, anonymity — it’s been swell. For nearly ten years now, I have done my job incognito. Now I am joining the ranks of no-longer-anonymous restaurant critics. Last Friday, I gave a lecture to the students and faculty of the Texas A&M Meat Science Center without the usual hat and sunglasses. I didn’t wear a disguise on Sunday when I appeared at the Texas Book Festival either. Soon you will be able to Google grainy photos of me to your heart’s content. I also have given my publishers an author’s photo to use for publicity.
So writes Robb Walsh, the no-longer-anonymous food critic for the Houston Press. He is the latest critic to shed his anonymity since the google-able Sam Sifton took over the job at the New York Times. Before that, professional food critics were expected to visit restaurants anonymously and indeed the presumption was that anonymity was required for a critic to provide a useful review. But there are arguments either way.
You might think that the job of a critic is to distinguish the great chefs from the merely good ones. A conspicuous critic would get special treatment and this biases the test. But as long as the critic (or the reader) accounts for this and can “invert the mapping,” essentially factoring out the extra effort, this is not really a problem.
We may only want a relative ranking of chefs and adding a constant to each chef’s baseline quality won’t change that.
Noise in the signal can complicate the inversion but this could go either way. One theory is that the effect of extra effort is to reduce variance in the quality of the dish. If so, a conspicuous chef gets a better signal. Alternatively it could be there is a uniform upper bound and any competent chef can hit that upper bound with enough effort. In this case, anonymity is required.
An anonymous critic generates other welfare gains. Every diner has a positive probability of being Ruth Reichl and so every diner gets a slightly better meal than otherwise. Once critics out themselves, we are all 100% nobodies again.
We may not care who is the most talented chef but instead we want to know where we (nobodies) are going to get the best meal. As long as these are sufficiently correlated, again not much is lost from going conspicuous. But in any event it is not clear that a single critic provides much more information about this than could be had from data on popularity alone. If we want critics to break herds, then they should be anonymous.
Maybe we want critics to start herds. Critics are most influential for tourists and locals prefer to avoid tourists. Conspicuous critics enable efficient market segmentation where restaurants wishing to cater to tourists give special treatment and get good reviews. A good review can destroy a restaurant that caters to locals so all parties benefit if the critic is conspicuous ensuring he is given a bad meal.
(Arising from conversations with Ron Siegel, Mike Whinston, Jeroen Swinkels, Eddie Dekel and Phil Reny.)
As the cliche goes, “The More Things Change, the More They Stay the Same.”
David Brooks has an excellent column on the way texting has influenced dating. It is based on an even more interesting article by Wesley Yang in New York magazine. The magazine has been posting sex diaries of New Yorkers online. There is a wealth of information and here is one snippet, a quote by a Diarist followed by an implication of his predicament:
12:32 p.m. I get three texts. One from each girl. E wants oral sex and tells me she loves me. A wants to go to a concert in Central Park. Y still wants to cook. This simultaneously excites me—three women want me!—and makes me feel odd.
This is a distinct shift in the way we experience the world, introducing the nagging urge to make each thing we do the single most satisfying thing we could possibly be doing at any moment. In the face of this enormous pressure, many of the Diarists stay home and masturbate.
Technology has taken paradoxes of choice to a new level of frequency but the essential idea remains unchanged. It is the paradox created by Buridan’s Ass – I should hasten to add that this is an animal not a body part. The poor Ass, faced with a choice of which of two haystacks to eat, cannot make up its mind and starves to death. The option the Ass “chose” may seem less pleasurable than the option that comes to hand to the diarists but the point is the same: a decision maker facing a wealth of great choices cannot make up his mind and ends up with a poorer default option.
The paradox has important implications for choice theory. I first learned about one possible implication from Amartya Sen many years ago. Sen’s point was that the revealed preference paradigm beloved of economists does not fare well in the Buridan’s Ass example. The Ass through his choice reveals that he prefers starvation over the haystacks and hence an observer should assign higher utility to it than the haystacks. Sen, if I remember correctly (grad school was a while ago!), says this interpretation is nonsense and an observer should take non-choice information into account when thinking about the Ass’s welfare.
A second interpretation is offered by Gul and Pesendorfer in their Case for Mindless Economics. Who are we to say what the Ass truly wants? To impute our own theory onto the Ass is patronizing. Maybe the Ass is making a mistake so its choices do not reflect its true welfare. But we can never truly know its preferences so we should forget about determining its welfare. This story works a little better with the masturbation scenario than the Buridan’s Ass example. This view is a work in progress with researchers trying to come up with welfare measures that work when decision makers commit errors.
So, we have no final answer and maybe we never will. Aristotle first discussed the paradox of choice the modern want-to-be-promiscuous texter faces. It is easy to give advice to all such asses (“make up your mind already!”) but if they continue to choose indecision how can we ever reach an unambiguous conclusion as to their welfare? The more things change, the more they stay the same.
Mamihlapinatapai (sometimes spelled mamihlapinatapei) is a word from the Yaghan language of Tierra del Fuego, listed in The Guinness Book of World Records as the “most succinct word”, and is considered one of the hardest words to translate.[1] It describes “a look shared by two people with each wishing that the other will initiate something that both desire but which neither one wants to start.”
Comcast is in talks with GE to buy NBC Universal which would give Comcast all of NBC’s television and movie assets. According to the Wall Street Journal we should know in a matter of weeks if agreement is reached but any deal would certainly be given a lengthy review by anti-trust authorities. A concern often cited is the motive of vertical foreclosure: a merged Comcast-NBC would use their alliance to gain advantage over competitors for content provision. This issue also foreshadows those that would arise with internet content provision should net-neutrality be abandoned.
Comcast is a monopoly provider of access to content. Think of Comcast as the guy at the door charging you a fee to get into the party. You want to get in because inside there are people providing various services, perhaps for an additional fee. The best structure of all for Comcast would be to take ownership of all the service-providers inside and act as a joint monopoly collecting entrance fees and selling the services inside.
What would such a monopoly do to maximize profits? It would maximize the value of the services offered inside and then extract that value in the form of an entrance fee.
But this same outcome is achieved with the structure in which the services inside are provided competitively. Competition among service providers maximizes the value of the service thereby enabling the monopoly gatekeeper to earn the same profits as if it owned the entire enterprise.
So if you think that content is provided competitively (in my opinion its pretty close) then you shouldn’t worry too much about vertical foreclosure. On the other hand we should still wonder why Comcast is interested in NBC. Are there any plausible efficiency gains from a merger?
Merger review is based on looking for likely anti-competitive results or motives and if there is no clear anti-competitive motive then the merger is approved. But it’s worth considering a different standard here (and in the net-neutrality debate as well.) If there are no clear efficiency gains and a merger enables anti-competitive behavior even though that behavior may not have any clear rationale, then the merger should be rejected.
Allowing the merger would be like leaving scissors within reach of my (then) three-year-old. No good will come of it, and if I trust that she acts in her self-interest no harm would come either. But she is hard to predict:
I once linked to something like this. But that didnt hold a candle to this one:
Did you notice that when the song starts to go in the right direction his voice has an Eastern European accent? I have no idea whether this guy is a native English speaker. If he is then this is an artifact of singing backwards. If he really is Eastern European then it says something about language accents that they appear even when singing a foreign language backwards.
Don’t go here. It’s expensive, the food is good but not great, the atmosphere is corporate and the service is poor.
We’ve been looking for a good Italian food and Rialto got “Best of Boston” so we thought we’d give it a shot for a wedding anniversary dinner. At first, we were happy to be put in a quiet area but a few minutes later a large table nearby was filled by management consultant types and the room became distinctly louder. It also slowed down the food service. Our server forgot to bring my wife’s wine and had to be reminded. When the pasta finally arrived, my wife’s dish was a little cold and my pasta was congealed and overcooked. Fresh pasta is often sticky and gooey but this was over the top. It tasted good but for the price it was hardly transporting. Then, someone at the consultants’ table stood up and started making a speech. Fine if you have a private room but rude when there are fifty other people who are trying to have a civilized meal. It would never happen in a really classy restaurant.
The much cheaper Anteprima in Chicago dominates and, if I could afford it, I would go to Spiaggia for an excellent if even more expensive meal. La Summa in the North End is still the best Italian restaurant we’ve found locally.
I came across this simple theory of overoptimism recently (though it was published years ago). Suppose an agent has at least two actions from which to choose. An action gives either a payoff one or zero. For each, the agent has a subjective probability that the action gives a payoff of one. The probabilities of success are drawn independently from the same distribution G. Agent A then chooses one his actions, the one with the highest mean, according to his subjective beliefs. How do his beliefs about this action compare to those of an arbitrary observer?
Here’s where it gets interesting. The observer’s beliefs are different from agent A’s. They are drawn from the same distribution G but there is no reason that the observer’s beliefs are the same as agent A’s. In fact, the action agent A took will only be the best one from the observer’s perspective by accident. Actually, the observer’s beliefs will be the average of the distribution G which is lower than the belief of agent A since agent A deliberately took the action which he thought was the best. This implies that the agent A who took the action is “overoptimistic” relative to an arbitrary observer.
There are two further points. If there is just one action, this phenomenon does not arise. If agents have the same beliefs (a common prior), it also does not arise. So it relies on diverse beliefs and multiple actions. The paper is called “Rational Overoptimism and Other Biases” and is by Eric Van den Steen.
Thanks to Tyler and Alex for their good nature. They know that this was the sincerest form of flattery.
It is extremely easy to parody MR, especially Tyler because there is so much output and it is all part of his characteristic style. I think that being easy to parody is a great sign of success.
My favorite post was the one about Swedish meatballs because I think of the enumeration style of reasoning as being quintessential Tyler. Little known fact: Tyler Cowen is the reason I am an economist. 20 years ago as an undergraduate adrift I was inspired by his microeconomics course and he convinced me to go to grad school. In that course we learned the enumeration style via his “thought questions” and in fact, looking back, I think we were learning to be bloggers before the channel for that existed. Our final exam question was “Write down a thought question and answer it.” I owe Tyler Cowen a tremendous debt.
Tyler’s reading habits are obvious fodder for parody. I have no doubt that Tyler reads as much as he claims and, while easy to make fun of, his approach to books should be taught to children at an early age. (Start reading everything that might be interesting. Stop as soon as it isn’t. Skip over parts that are boring.) I never was much of a reader before, now I read quite a lot.
FYI, I copied MR’s look by switching to a generic wordpress theme (andreas09) and then modifying the css to get the colors, fonts, and look/feel right. I didnt know anything about css (and the normally helpful Kellogg support team didn’t see this as falling under their job description, not surprisingly) so I had to figure it out on the fly. If anyone is interested I can send you what I did.
And now back to our regular programming…
As Jonah Goldberg points at NRO:
As many as 20,370 low-income households in Sangamon County could qualify for a free cell phone and 60 minutes of free monthly talk-time, according to a spokesperson with TracFone Wireless, Inc., a national prepaid cell phone provider.
Jose Fuentes, TracFone’s director of government relations, announced earlier this month that the company would add Illinois to the list of 17 states that offer SafeLink Wireless — a new extension of Lifeline, a government program that has provided affordable landline telephone service to low-income families for 25 years.
“There’s never been a jump into 21st century communications,” Fuentes says. “TracFone came up with this device to bridge that gap.”
The Federal Communications Commission created Lifeline in 1984. SafeLink Wireless will now take the service a step further by offering free cell phones and service for a year to any household that receives federal public housing assistance, food stamps, low income home energy assistance, supplemental security income, temporary assistance for needy families or Medicaid.
I wonder what analogous slippery slope healthcare reform will create.
Ventilation mine in desired are which air movements regular, slow with the intefere seriously would which currents strong produce tunnels and subways in trains of movements the but different with dealt be to impurities the are only not.
That’s from The Air and Ventilation of Subways. What does it mean that I was bored by page 5, then skipped to page 97, read every odd-numbered page after that and then realized that the best way to appreciate what this book has to offer was to read it backwards starting from chapter 10?
Here is Bryan Caplan on getting dates.
Jane Austen updated: It is a truth universally acknowledged that it is easier for an older man to marry a second wife that for an older woman to meet a second husband. Women on the prowl can join this symposium to get some tips.
Amos Poitvein, a loyal MR reader, asks the following question.
I am a longtime reader of MR and there is a question I have been wondering about for a long time. I was hoping you could share your thoughts on meatball heterogeneity. My girlfriend made dinner for me and the entree was Swedish meatballs. I never knew how small their meatballs are. It seems inefficient to roll all that meat into such tiny balls. Wouldn’t it make more sense to roll them into big balls like we do in the US?
A few points:
The bottom line: I think the most likely explanation is some combination of #5 and #14.
What topics would you like me to write about? I have a few minutes of spare time today, I promise I will answer your first 50 requests.
A mere Youngling yes, she has just completed the 7th grade, but she will not be under-appreciated for long. She has just won the “Picture is Worth a Thousand Words” contest at the Illinois Council of Economics Education. Her work may well be the most significant advance on the subject of specialization since von Mises. There is too much here that trying to excerpt from it would not do it justice so you should read the whole thing.
Why do boys love sweets so much? When 6-year old Joey uses his allowance to buy a Clark Bar, this raises demand for sugar. Brazil is a major exporter of sugar so this raises wages for sugarcane farmworkers in Brazil, diverting Brazilian youth away from their next-best employment as footballers. Because Brazil is dominant in international soccer, this levels the playing field and makes soccer more exciting internationally thereby raising the demand for soccer balls. Most soccer balls are made in China where labor and resources in China are now diverted to the production of soccer balls away from other uses. Hannah Montana CD’s are also produced in China and the resulting drop in supply makes it too expensive for Joey’s sister Clara to buy *The Best of Both Worlds* and Joey gets a kick out of that.
That’s the opening of Chapter 3 “Comparative Advantage and International Trade” in our new textbook Modern Principles: Microeconomics which we are excited to announced has just been published this week. We want to teach you to see how everyday decisions like Joey’s can have important consequences for the world you live in. And our book breaks the mold for principles textbooks in microeconomics:
You can learn more and order the book at SeeTheInvisibleHandTakeYourPoorStudentsMoneyYearAfterYearWhenWeReleasePointlessRevisions.com
How do you like our costume? Check back later in the day for more fun 🙂 Readers using rss will want to click through to the main site to get the full effect.
Via The Sports Economist comes a report that Las Vegas bookmakers are seeing big losses on NFL games this year owing to the large number of very bad teams and the difficulty of getting the point spreads right.
The Golden Nugget sports book, for instance, opened with St. Louis getting 12.5 points (the half to help with ties). That way, if you bet the Rams and the actual game ended 21-10 Indy, you’d win the bet with a score of 22.5-21 St. Louis.
A betting line is fluid though and will correct itself as money pours in for the favorite or underdog. Despite the Rams getting all those points, at home no less, the money kept going to Indy. The line reacted by moving all the way to 14 points at kickoff.
Still 90% of the money was on the Colts at game time and the Colts won 42-6. Perhaps the problem is that there is a large variance in the market’s estimate of the likely point spread. The bookmaker has to make a good guess the first time becuase too much adjustment of the line allows arbitrage. And a bad guess can be costly.
Here is an experiment that as far as I know has not been done. (Please correct me if I am wrong.) Offer contestants the choice of two raffles. Raffle A pays the winner $1000, Raffle B pays the winner $1000+x where x is a positive number. Contestants must pick one of the raffles and can buy at most one raffle ticket. They choose simultaneously. There will be one winner from each raffle and the winners will be determined by random draw.
In equilibrium the expected payoff in the two raffles should be equalized. This means that more people should enter raffle B to compete away the extra $x prize money. My hypothesis is that in fact too many people will enter raffle B so that raffle A will have a higher expected payoff. I am thinking that the contestants will inusfficiently account for the strategic effect of free entry and will naively assume that B is the better choice. And I believe this effect will be large even when x is very small.
If this is true then it has important consequences for markets. Suppose two job market candidates are almost equally qualified but candidate A is a little better than candidate B. Candidate A will get too many interviews and candidate B will get too few. Candidate B’s slight disadvantage will be amplified by the market and will go too often unemployed.
In the economics job market for new PhD’s, economics departments are often asked by potential employers for rankings of their candidates. Departments are often unwilling to give more than coarse rankings and I believe that the effect I describe is the reason.
Larry David is a good source of material for this blog (though hbo may force youtube to delete the clip!):
Apple is opening a new retail store on a neglected chunk of land in the middle of a gentrifying part of the North side of Chicago. Before moving in they will tidy up a bit by landscaping an adjacent lot and refurbishing a run-down CTA subway station entrance and underground train platform (the North and Clybourn red line station) with a total cost of up to $4 million.
Over the years, the CTA’s building has fallen behind on maintenance. The paint is peeling, the windows are filthy, an electrical sign has dangling wires, and metal framing is rusting. Inside the building and underground, the station features white tile walls and fluorescent lighting, with hallways leading to two narrow platforms underground.
In the agreement approved at an August 19th Chicago Transit Board meeting, in exchange for the improvements the CTA will lease the bus turnaround to Apple at no cost for 10 years, with options on four, five-year extensions. The CTA will also give Apple “first rights of refusal” for naming the station and placing advertising within the station, if the CTA later decides to offer those rights.
Memo to Steve Jobs: you will probably also want to take care of the crater-sized potholes on North Avenue just West of your new home. Thanks.
Via Mac Rumors.
Cheap Talk 
