Friday Special X-mas

by mendoza | Friday, December 25, 2009
  | 0 comments | | Friday Special X-mas @bluematterblogtwitter

Driving is better than walking for the environment

If you walk 1.5 miles, Mr. Goodall calculates, and replace those calories by drinking about a cup of milk, the greenhouse emissions connected with that milk (like methane from the dairy farm and carbon dioxide from the delivery truck) are just about equal to the emissions from a typical car making the same trip. And if there were two of you making the trip, then the car would definitely be the more planet-friendly way to go.

Mr. Goodall is a member of the Green Party in Britain and a devout environmentalist — he says he has ceased air travel because of its emissions. But he also questions how much good is being done by eliminating short trips by car.

Elizabeth didn't believe me when I mentioned this a few months ago, so I'm finally getting around to posting the details and my sources: TierneyLab via Freakonomics, almost a year ago. I'm also wondering whether Mr. Goodall actually underestimates the amount of CO2 emmitted by humans: he only takes emmissions during food production and transportation into account. But we are not that dissimilar to a car: we burn fuel (food) and emit C02 as we breathe - the more active we are, the more burning of calories, and the more CO2 we emit via breathing. And legs - unlike wheels - are not built for maximum fuel efficiency when moving from A to B.

Beth doesn't have a car, but she's going one better by cycling lots and never consuming any animal products. You can listen to her beautiful music, and you can see a video of a live performance at the legendary Jazz Cafe in London. She also blogs and tweets.

Explaining Bernanke's answer

In case you missed it, here is the question, answer and various links. So, what's going on?

Bernanke, the preeminent economist, has turned banker. (Or, to be more precise, he is acting banker because this is what is expected of him. I read his answer as 'I know better, but I operate within constraints'. Time man of the year or whatever, Bernanke does not single-handedly set monetary policy - far from it.)

The distinction is simple. The economist wants to return the economy to trend growth and reduce unemployment. Inflation is important, but it's no holy grail.

The banker, on the other hand, just wants inflation to be low so that the real value of debt does not fall. And that's basically it.

The Fed is completely captured by bankers. Forget about bonuses, bankers are screwing the economy by controlling the intellectual climate and policy apparatus so that inflation stays low - too low.

And by the way, a very similar question was put to the Governor of the Bank of England about a month ago - scroll down to question 49.

CNN everywhere

At the Taj Palace in Delhi.

by datacharmer | Sunday, December 20, 2009
  , | 0 comments | | CNN everywhere @bluematterblogtwitter

Off to India

Flying out to India in a few hours for a friend's wedding, so little or no blogging over here in the next 10 days. See you all then.

Justin and Jacqueline - sorry, haven't had a chance to reply to you yet, but will be doing so when I'm back.

by datacharmer | Friday, December 04, 2009
  , | 1 comments | | Off to India @bluematterblogtwitter

Lehman revisited

The blame-it-on-Lehman story leads to a dangerous complacency. If we can persuade ourselves that the fault was just one policy mistake, forced on the feds by silly legal restrictions and not enough bailout power, everything can go back to the cozy way it was before.

This is a convenient story for large banks that dominate the lobbying and communication effort. And it absolves the Fed and Treasury of facing up to their long string of policy mistakes.

We don't pretend that we could have done any better. That's the point: A system with so much power vested in so few people, with so few rules, in which crises are managed with 2 a.m. conference calls, cannot possibly do better no matter how good the people at the top. Repeating the Lehman story lets us all ignore the fact that this system cannot go on.
Cochrane and Zingales on the lessons of Lehman.

by datacharmer | Monday, November 30, 2009
  , | 1 comments | | Lehman revisited @bluematterblogtwitter

A visit to a West Bank settlement, part 2

A few months ago I recorded a discussion with a Palestinian friend who had recently returned from a trip in the West Bank, where he visited an Israeli settlement. Before reading this post, make sure you read part 1, and the disclaimer.

Part II

About the wall. What they did, they said because we want to protect ourselves from suicide bombers, we are going to build a wall around Palestinian territories. And they told the world that it's around the West Bank only, you know, just to protect Israel from suicide bombers.

Apparently, the wall is not only around the West Bank - it's like, they don't like this village, there is a wall circling it all over. It's more like small prisons rather than a single wall identifying one country from another. It's going all the way according to their, you know - it's disconnected. It's not like one single wall.

I was telling you at the beginning about the settlement. So I told him [Asad's cousin], I want to go see a settlement. And he said, yea, I know a settlement next to Ramallah, they sometimes allow Palestinians to go. I said, how come they allow Palestinians to go into this settlement - he said yea, it's good business for them - not any Palestinian, they know that you are going to buy food or clothes or something. Right now it's calm, there isn't much tension, so they might just turn a blind eye and let you in. So I said OK, let's go and check it out.

And he goes, for him, you know -- 'it's the best supermarket you'll ever see in your life, it's out of this world, the supermarket is huge, you can find anything you want'. I mean, it was definitely like a 7-Eleven, or a Tescos or Sainsbury's - but my cousin, you know, compared to the standards they have in the West Bank - for them, it's something out of this world. [Asad's cousin lives in Nablus]

So, anyway, we were stopped outside the settlement - all the other cars are passing, but the soldier at the checkpoint in front of the settlement says 'you come this way'.

My cousin is very cynical, you know; when he speaks, he says everything as a kind of joke or something. So he tells the soldier - 'Why, everybody is passing through here, and you are telling us to stop'. And the guy with the rifle [the IDF soldier] says 'You are Palestinian'. And my cousin says 'But we are the best people!' [Asad laughs at this point] And he asks the soldier 'Why, where are you from?'; by the way, the guy with the rifle was speaking in Arabic. And he says 'I'm Israeli' - so my cousin tells him 'Ah, you are also the best people!' [Asad laughs again].

So the guy smiles, you know, and he told us 'OK, guys, since you are Palestinians, do you have any guns hidden, or rifles, or bombs' - so my cousin looks at him and he tells him 'But you are carrying the gun! It's not me carrying the gun'.

[Asad and the other friends in the room are all laughing] And the whole scenario is just so funny, because of the stereotype you get that we are meant to be trying to attack them, and here's the guy holding a gun and asking us if we have weapons.

So he [the soldier] said 'OK, open the boot of the car'. So we opened the boot, we had a few bottles of arak that I got from the duty free when I arrived in Nablus, and he looks and he goes 'Tsk, Haraam, Haraam - Muhammed, this is Haraam!' [Asad laughs again]. And we told him, 'ah, we are just having fun, and we are going out, for a night out in Ramallah, so we stocked for that'. So he goes, 'OK, good luck, go in'.

So we went into the settlement, and we were trying to park. The settlers, of course, they are all carrying weapons - it's a very nice family, you know, you get to see little girls, kids; each settler has - these guys they make babies much better than the Palestinians, I have to admit that. [Asad laughs]. You see them walking with five-six kids and the dad carrying a big M-16, a nice family.

Of course they can tell from the plate that we are Palestinian, trying to park - nobody's letting you to park. He's coming with the trolley, you know, and his family; he sees that this car, Palestinian car, wants to park, it's like against his religion you know [laughter]. He looks at you and goes 'no, no, you can't - I'm not leaving'. So we stayed there for thirty minutes maybe, and we are trying to find a parking spot.

At that moment, to be honest, I was scared. Because they can easily lock you up, or hit you, and what's gonna happen? At the end of the day, you are nobody. They will fuck you up and say, well, he's in a place that he shouldn't be. So I told him [Asad's cousin], 'man, it's OK, I don't want to see it, let's leave'. And he said ' no, no, don't worry, you'll get used to it'.

So in the end we managed to park and we walked to the supermarket. Because we were late for half an hour the guys [the IDF soldiers at the checkpoint] had already spoken on the walkie talkie to the guys inside the settlement asking if we had showed up, so they were looking around for us; when we showed up they came to us and said hello. Because, anyway, they can't tell by looking at someone's face that they are Palestinian - in the settlement you get people that are Moroccan-looking, Iraqi-looking, British-looking, French-looking, all sorts. So they can't tell that someone is Palestinian just by looking at them.

I'll be posting the final part soon.

A visit to a West Bank settlement, part 1

A few months ago I recorded a discussion with a Palestinian friend of mine who had recently returned from a trip in the West Bank. Asad is from a well off family, he is UK-born and holds a British passport. He grew up in Nablus in the West Bank, and he has spent more than 10 years in the UK where he went to boarding school (from the age of 15) and university. He currently lives and works in Jordan.

Before continuing, a disclaimer: I am not a journalist, and the text below is not meant to be a fair and balanced depiction of reality, or even a statement of my own views. If you have any objections to anything you read, especially concerning facts, comments to this post are open and (respectful) contributions welcome.

What follows is a verbatim transcription of the discussion. Whenever anyone other than Asad speaks the text is in italics (I remained silent throughout, but other friends - all Europeans - were also taking part). Here goes:

Part I

The West Bank, politically, is Palestinian land - under UN law it is for the Palestinians. Now you get a Jewish guy coming from Russia, and they all have a station car or a four-wheel drive. And he's allowed to go anywhere - you know, it's his country - so he goes at the top of a mountain for example. He camps there, first with a tent. Then a few friends come along. It's just a tent - by law that's all right.

By the way, by the law they are not allowed to build anything; if the soldiers know they are meant to stop them. In the beginning, there will just be tents; then after a while you see a single house has appeared. If you complain about it, nobody shows up to check the house. After a few months, after the house has been there for a while, practically it's his - even though it's your land. The guy has a weapon, you cannot go in, and that's how it starts.

So we went to this settlement that's next to this Palestinian village. My cousin is a distributor for [a big Israeli company], so they've given him identification so he can move around the West Bank, including the settlements.

- So, normally Palestinians are not allowed to visit the settlements? 

No, and not just settlements, there's no way you can move around in the West Bank; you come from this village, you stay in this village; you come from this town, you stay in this town. You get people who haven't left their village or town for ten years now.

-So from Nablus you can't go to, say, Bethlehem.

Man, you get people in Nablus who haven't been outside Nablus in ten years now. Never seen anything outside Nablus for ten years.

- So is the wall covering the whole of Nablus?

Actually, there is no wall next to Nablus, but on the main streets there are three checkpoints. The checkpoints, I'll tell you about them.

We went out of Nablus, and he [an IDF soldier] said please walk, get out of the car. I told him we have the license and stuff, he said no - walk. They are like an international airport these checkpoints, it's not a checkpoint per se; you have a rotating door, and this is for the car, and several guns pointing at you from several directions; I got scared at that point. Why is he asking me to walk when I have the permit to leave?

So I walked out of the car and the guy said, well, he started speaking to me in Hebrew. I tell him no; only speak Arabic or English. One of them then goes, 'hold on, you speak English you said'? And I said yes, I do speak English. And he said - in Arabic - 'how is it to curse?'

And I thought, shit, this is gonna - because you hear stories, of them making fun, taking the piss. The guy is bored at the checkpoint and he wants to insult you basically so he tries to insult you in any way he finds. So I think, fuck, I'm not going down this route, you know.

And he said 'you know, bitch, fuck, how do you curse?' And I said 'I don't know these words man; I just learned English in school, they don't teach us these words'. And then he goes - in Arabic - 'no, you know, sharmuta, manyak - speak some Arabic swear words. I want you to curse'. And I spoke a few swear words in Arabic. And he said 'OK, come with me'.

So I went into that room, and they had a guy, they took out his shirt, put it on top of his head and two guys are kicking him. Apparently, on the check point, after he left, he cursed at them. And they did the whole thing, they made everyone wait for an hour, with so many cars behind you know, and they are beating this guy and waiting for someone to come and tell him that they are beating him because he is cursing on them. And most of the time of course they can speak full arabic. But it's just - you know, setting an example. So, in this case, the whole thing was for me to see what's happening so they can set an example - the guy [the IDF soldier] spoke perfect Arabic, they didn't need me to tell the guy anything. [pause]

At checkpoints, you cannot move unless he [the IDF soldier] tells you to move. And with these guys, you know, it's random; he can tell you 'wait for an hour and after one hour I'll let you guys move'. They don't need a good reason to do that.

- Where was that? 

In Nablus, going out of Nablus.

- How could you go out of Nablus? Because you have a UK passport?

No, because there is the permit which allows you to go. Personally, I had my British passport on me so, I wanted to use it, in case - but also, man, for them it depends on your face and whether they buy your story, it's all judgmental...

- So, the people who haven't been able to go out of Nablus for 10 years, they can't get the permit?

Yeah, some of them can't get the permit. And some of them when they go to the checkpoint - they ask you questions you know, 'where are you going?' - and if he doesn't buy your story, well, OK - go back. So you have to have a good reason [to move]- you go to the checkpoint, he'll ask you for your permit.

- So why can't they apply for the permit?

Well, most of them [Palestinians in the West Bank], they'll either not get it or not try to apply.

- So how come you got one? Was it because of your passport?

No, no, I applied normally - most people can exit and leave. But man, you end up paying £200 for the journey, you know over there some people just can't afford it. And most importantly, there are no guarantees that the town won't be blocked and then you can't come back; you know there's all these logistics. If you are going on holiday and you are not well off, and you know there is this a slight chance that Nablus will get locked for three weeks, I mean, this is not something you risk.

I will be posting parts two and three once I get a chance to transcribe them, hopefully later this week.

Krugman and Mankiw spin the data the exact same way! Who would have thought the day would come?

Wow: For the first time ever Paul Krugman and Greg Mankiw spin the data in exactly the same way! If I had the time and inclination I’d produce a photoshoped image of the two hugging. (let’s just hope Mankiw doesn’t post a reply refuting Krugman (and himself) by showing a 'debt is too high' graph).

And glad to see Krugman went one better than Mankiw (they don't hand out them nobel prizes for nuffin) by following my advice:
The econonerd also missed the killer point here: why not compare US Federal debt with Italian public debt? (do I have to do your work for you?)
Btw – Krugman is right; the notion that US public debt (current and projected) is 'unsustainable' in any way is frankly ludicrous. It is criminal that US monetary policy is so tight and fiscal policy so restrained, and I find it difficult to understand how people can argue otherwise. Get some inflation and serious spending going, people.

But no time for a serious exposition today, so I'll say more on this soon.

Goldman Sachs

"People are wondering why Goldman is making such bumper profits... What they don't realize is how little competition there is left in certain areas...

Lots of banks just want to get rid of 'funny' assets at whatever price to please their freaked-out shareholders. Goldman operates under no such constraint, and there's no end to golden opportunities to make money."

by datacharmer | Tuesday, November 17, 2009
  , | 3 comments | | Goldman Sachs @bluematterblogtwitter

House M.D. on being an atheist

Dr. Gregory House: I choose to believe that the white light people sometimes see, visions this patient saw, they're all just chemical reactions that take place when the brain shuts down
Dr. Eric Foreman: You choose to believe that?
Dr. Gregory House: There's no conclusive science. My choice has no practical relevance to my life, I choose the outcome I find more comforting
Dr. Cameron: You find it more comforting to believe that this is it?
Dr. Gregory House: I find it more comforting to believe that all this isn't simply a test.

From "House M.D.: Three Stories (#1.21)" (2005)

by datacharmer | Sunday, November 15, 2009
  | 0 comments | | House M.D. on being an atheist @bluematterblogtwitter

Friday Special 129

Venezuela criminalizes video games

Apple objects to politician caricatures in the app store

F my life

by mendoza | Friday, November 13, 2009
  | 0 comments | | Friday Special 129 @bluematterblogtwitter

What should you do if you are entering the job market for the first time in this unemployment climate?

If you don't desperately need the money, wait a bit longer. The real cost of doing a PhD or taking a year off to travel the world is not just what you have to pay for it, but also the income you forego by not working. With so few jobs to go round, investing in your future or pursuing that crazy dream of yours has never been cheaper - so go for it!

If you don't have a college degree at all, this is an absolute no-brainer. College graduates earn so much more over the course of their careers that getting a degree is wise even in a booming economy. In times when finding a job is so hard, it's an offer you can't refuse.

Now, if delaying getting a job is not an option, there's a few tricks that can help you get there:

1. Overall unemployment figures mask a lot of regional variation. Don't be afraid to move city, state or even country to where there is the highest demand for your skills. Apart from increasing your chances of landing a job, getting to live in a new place is fun, you'll learn things you never would have back home, and you'll earn lots of brownie points for your future resume.

2. Get some work experience, even if you have to put up with lousy pay or if it's not exactly the kind of job you eventually hope to get. Internships are great (and often culminate to a full job), but there are other options too - volunteering is an obvious one, and so is helping out at your uncle's small business. Whichever route you follow, make sure you take on as much responsibility as possible: dealing with the public or customers, helping with the accounts, coming up with ideas to do things in a better way, contributing to management decisions. You should be able to do all of these in a small charity or business, and they will offer you invaluable skills and experience that you can showcase when you are applying for a ‘proper’ job.

3. Work your contacts. Your biggest problem when trying to get a job for the first time is that, at least on paper, you look exactly the same as thousands of other job-seekers. People you know can help you get past this problem by informing you of hardly-advertised job opportunities in their industry, vouching for your skills and trustworthiness to other employers (especially if they happen to be their customers or partners), and even by offering you a job themselves – but you have to ask! It sounds obvious, but it’s not: after months of unsuccessful applications, a friend recently landed a job via a contact who noticed his –just updated- ‘looking for a job’ facebook status. Another friend simply asked her dad for some help – and it turns out he knew somebody, who knew somebody, who happened to want to fill a vacancy quickly with someone he could trust.

Thanks to Sharon Gitelle and Carl Lavin of for suggesting the topic.

Dodging the Vietnam draft

What percentage of draft eligible men did not, or would not, join the US military despite being drafted? How many men's enlistment in the military ultimately depended on the outcome of the lottery? I will let you ponder these questions for a moment, and put the answer under the fold...

Are double-blind trials underestimating drug effectiveness?

In a double-blind trial, patients exhibit the placebo (and nocebo) effects because of the expectation they might be on a real drug.

If expectations are so important, could it be that patients being administered the real drug don't react to it fully due to the expectation they might be on the placebo?

Addendum: Steve Waldman (of Interfluidity and Naked Capitalism) posts in the comments:

@llimllib on twitter - Bill Mill - posted a cite (in response to a tweet on this post) that seems like a nice confirmation of your conjecture. Almost perfect.

New developments in econometrics, by Wooldridge and Imbens

Jeffrey Wooldridge (a hero of mine) and Guido Imbens delivered this excellent 3-day cemmap masterclass a few months ago, with yours truly in attendance.

The lecture notes and presentation slides are now available online. If you were looking for a book offering an overview of developments in econometrics in the past decade or two, you've just found it - and it's absolutely free, so get downloading.

You can also find more cemmap goodies here (make sure you go through the different years, and navigate a bit around the site). Their seminars and masterclasses are consistently excellent, so if you are interested in econometrics this is a little treasure chest waiting to be discovered.

Corruption explained

Most corrupt acts don't take the form of clearly immoral choices. People fight those. Corruption thrives where there is a tension between institutional and interpersonal ethics. There is "the right thing" in abstract, but there are also very human impulses towards empathy, kindness, and reciprocity that result from relationships with flesh and blood people.

I've been an occasional visitor to Interfluidity, but after reading these four sentences I'll never miss another post.

by datacharmer | Friday, November 06, 2009
  | 0 comments | | Corruption explained @bluematterblogtwitter

The making of a significant object

A talented, creative writer invents a story about an object. Invested with new significance by this fiction, the object should -- according to our hypothesis -- acquire not merely subjective but objective value. How to test our theory? Via eBay!

This is the idea behind the Significant Objects project, and I really like it. At last count, the cost of objects stood at $112.02, with sales 'post-Significance' at $2,857.22.

Tip o' the hat Justin Wehr.

Has there really been a housing boom?

The answer is no. There has been a boom all right, but it has been a land price boom. This is not semantics - the fact there was no housing boom has a stark implication: society does not need to move resources away from construction in the long-run as has been suggested or assumed time and again (see for example this related discussion). We - meaning most of the western world - have not been building too much.

Development is generally severely constrained by the planning system,  so the returns to developing land to the landlord are way above normal. Unless the price of housing falls below construction costs (impossible in Europe, extremely unlikely in most of the metropolitan US), landowners that offer their land for development will keep enjoying a pure windfall gain, albeit one that is smaller the lower
house prices go. The point is that whether the windfall gain is small or large is irrelevant; in both cases there's profit to be made (and societal gains to be reaped) by developing the land. Keep in mind that agricultural land (the alternative use) is next to worthless - in the UK it's £7k/hectare on average, and this is probably amongst the most expensive in the world - while land carrying planning permission is worth more than 15 times that.

The reason you don't see development now is that landowners are holding back for higher prices in the future - it is fundamentally a short-term thing. If expectations about future prices adjust, there will be a renewed supply of land offered up for development. Unless land prices reach zero, no resources should move away from construction in the long-run.

Henry George's thinking on optimal taxation is also related to this observation.

Google's broken hiring process

From Google's director of research:

One of the interesting things we've found, when trying to predict how well somebody we've hired is going to perform when we evaluate them a year or two later, is one of the best indicators of success within the company was getting the worst possible score on one of your interviews. We rank people from one to four, and if you got a one on one of your interviews, that was a really good indicator of success.

Ryan Tate uses this as evidence that Google's interview process is broken.

Craig Newmark sets the record straight.

On related news, I was surprised by suggestions that Larry Page still reviews CVs personally, and half-surprised to find out that lots of Google employees struggle with bureaucracy within the company.

Russian butter, Greek potatoes and Chinese cigarettes

The Russians, the Greeks and the Chinese choose what to consume.

I've wondered the same thing so many times

But are the Brits really so productive?  If so, why can't they get both hot and cold water coming out of the same tap?

Friday Special 128

Best wildlife pictures

Excellent interactive graphic that helps explain the scale of small things

by mendoza | Friday, October 30, 2009
  | 0 comments | | Friday Special 128 @bluematterblogtwitter

How will history judge the Almost-Depression of 07-09?

In 20 years time, the concensus amongst economic historians will be that the prime reason behind the Almost-Depression was central bankers' reluctance to pursue aggressive enough monetary policy, either by generating some inflation so that real interest rates can come down, or by other means.

They will argue that a few percentage points additional inflation would have worked wonders in softening the recession, and they will dismiss arguments that long-term central bank credibility would have suffered as a result. They will marvel at how anyone could have let below target inflation (let alone deflation) take hold, and they will label as disingenuous claims that the tools available to central bankers and policy makers at the time were insufficient to generate the required degree of inflation at will.

They will comment extensively on the shocking lack of international co-ordination, both amongst central banks and governments. Finally, they will have some rude things to say about using fiscal policy, with all its adverse effects on public finances, when a small tax on monetary assets (i.e. inflation) could have done a better job, and much more neatly.

In other words, the consensus in 20 years' time will be what Scott Sumner is already saying today.

Global poverty and inequality 1970-2006, by Sala-i-Martin and Pinkovskiy

Maxim Pinkovskiy and Xavier Sala-i-Martin have an important new NBER paper out parametrically estimating the world distribution of income. Some highlights on poverty:

  • Defining poverty as less than $1/day, world poverty rates fell by 80% from 27% in 1970 to slightly more than 5% in 2006.
  • The corresponding total number of poor fell from 403 million in 1970 to 152 million in 2006.
  • Similar findings apply if other poverty measures are used ($2/day, 5$/day, etc)
  • These estimates are much lower than what is suggested in other research.

The paper is an obvious must-read. I haven't yet had more than a quick look at the methodology, but it all looks decent enough for this sort of thing and even impressive at parts, and of course Sala-i-Martin's name is a gold seal of quality.

People doing crazy stuff with a football

I don't even know who these people are, or how american football is played, but this video is impressive. (Thanks Keiju)

Friday Special 127

Why once-wealthy Argentina has performed economically so poorly in the past century

by mendoza | Friday, October 23, 2009
  | 0 comments | | Friday Special 127 @bluematterblogtwitter

Give condoms, save the world

One of the cheapest ways to curb emissions in coming decades would be to provide access to birth control for tens of millions of women around the world who say they desire it.

U.N. data suggest that meeting unmet need for family planning would reduce unintended births by 72 per cent, reducing projected world population in 2050 by half a billion to 8.64 billion.

The 34 gigatons of CO2 saved in this way would cost $220 billion. However, the same CO2 saving would cost over $1trillion if low-carbon technologies were used.

Dot Earth has more, and here's the link to the numbers (pdf).

Wonders on sand

Kseniya Simonova performs Germany's invasion of Ukraine by drawing with sand on a lightbox. You have to see it to believe it, this is simply awe-some.

HT Kottke.

by datacharmer | Thursday, October 22, 2009
  | 0 comments | | Wonders on sand @bluematterblogtwitter

Aleka's shoes

One of my parents' good friends is a very successful (and rich) lawyer in her late fifties who grew up near Nafpaktos in western mainland Greece.

Back in the 60's when she was graduating from primary school, pupils needed to pass a challenging set of exams if they were to proceed to high school. Aleka almost didn't make it, and the reason was this: her father was dead worried that, if she failed the exams, the family wouldn't have any use for a girl's pair of shoes - and he refused to make the investment up to a few days before the exams. Aleka had no shoes up till then, and shoes were necessary to be allowed in the exam hall.

Going further back to the 1930's, my grandfather also passed his high-school exams, one of only two people in his entire (very large) village to achieve the feat that year. To get to the school, he had to walk 40 kms (a full marathon) every Sunday to get to the city, and 40 kms every Saturday to get back to his village. My great-grandfather made sure shoes were provided, but there was never any thought of my grandfather wearing them during his twice-weekly marathon: that would wear them out, and with no shoes there would be no school.

Fast-forward to the present, and I'm tutoring 15-year olds in economics. The subject turns to economic growth (shockingly, not part of the syllabus), and I ask them whether they think people today are better off in material terms than they were 40 or 60 years ago. They usually hesitate to answer economics questions, and they often disagree with each other. This time, there was no need to pause for thought: they all confidently told me that people today are much, much poorer.

by datacharmer | Wednesday, October 21, 2009
  , , | 1 comments | | Aleka's shoes @bluematterblogtwitter

Charter cities

This economist thinks that Paul Romer's charter cities are an amazing idea, one that is very likely to speed up the process of eradicating poverty across the planet. I also think that they they will be easier to establish, politically, that perhaps even Romer believes. I may be naive, but I can very easily picture a Nobel-Peace-Prize-winning Obama ceding control of Guantanamo to the Canadians or the Norwegians for a limited time period before it is returned to Cuba. (for background on Charter cities and the US-Canada-Cuba scenario, see after the jump at the end of this post)

Chris Blattman disagrees:

Fundamentally, I think this is a problem not of economy, but political economy. Even if we know what an ideal Charter City looks like, have we mapped out how to get there amidst the lobbyists, big business, and international interests?

I think the crucial thing Chris is missing here is that, unlike say health-care reform, there really isn't any powerful constituency that would oppose Charter Cities. Lobbyists of all and any colours have no reason to fight them. Big business - all big business - has much to gain and nothing to lose. I find it hard to think of many scenarios where 'international interests' take offence.  There are gains from Charter cities that can be split between stakeholders so that everyone's happy.

Even if you think there are cases where some interest group objects, Charter Cities are small enough to ensure no-one stands to lose so much that they can't be brought around. 

Maybe it's time someone started tracking membership of the Charter City club (modeled along the lines of the Pigou club). In that case, count me in.

by datacharmer | Wednesday, October 21, 2009
  , | 1 comments | | Charter cities @bluematterblogtwitter

The Brawn fairytale

Andrew Benson chronicles a remarkable year for Brawn GP. Apparently (although not in the track), the car was 'a botch job':

[The Brawn car] was the fastest thing in the field by a mile, and Jenson Button went on to win six of the first seven races, the foundation for the championship he finally clinched on Sunday.

What is less well known, though, is that the car is, in the words of my source, "a botch job".

It was designed for a Honda engine, and it was not until December that the team knew they would be using a Mercedes. That necessitated some pretty crude changes.

"The chassis had the back six inches cut off to fit the engine in - the sort of thing you wouldn't normally do even with a test car," says my source. "And the gearbox was in the wrong place because the crank-centre height is different. There's a massive amount of compromise in the cars."

by datacharmer | Tuesday, October 20, 2009
  , | 0 comments | | The Brawn fairytale @bluematterblogtwitter

Never buy insurance for small things

You should never buy insurance for anything you can afford to replace, and you should always buy insurance for those things that you wouldn't be able to cover yourself (healthcare and fire insurance are good examples).

This way, you won't have to pay the insurance premium (moral hazard, adverse selection and overheads go away), and you will save money in the long run, even if stuff breaks from time to time. If you want some more solid numbers, Tim Harford suggests in an excellent Slate piece that by doing this you could save more than 90%* of what you would pay on buying insurance from third parties.

Whenever a retailer offers you an extended warranty, simply transfer that amount of money into a dedicated savings account.

When problems arise, you can simply pay for the repairs (or replacement) out of your warranty fund. And once the fund builds up to a sufficiently healthy size, you can back off on your contributions.

Remember… These warranties are designed to be profitable. Thus, more often than not, you’ll come out ahead by skipping them entirely.

Fivecentnickel has more, HT Argmax.

*More than 90%, because the profit insurers make only reflects their overheads, and does not take into account the additonal efficiency generated by solving the moral hazard and adverse selection problems.

Modern women

Man, you gotta understand - they are in a hard place. On the one hand they are hardwired to want kids, and on the other there are all the stimuli of modern society, and the two don't mix easily. It's all a bit of a mess, really.

The wisdom of Frag. The analysis is spot on for the 22-38 demographic.

by datacharmer | Tuesday, October 20, 2009
  | 0 comments | | Modern women @bluematterblogtwitter

Mad Men creator Matthew Weiner on consuming culture

I met this guy who was creating software where you could watch Mad Men and you could chat with your friend while you're watching it, and things would pop up, and facts would pop up, and I said, "You're a human battery. Turn the fucking thing off! You're not allowed to watch the show anymore. You're missing the idea of sitting in a dark place and having an experience."
He is Tyler Cowen's nemesis - Tyler walks out of almost every movie and leaves most books unfinished. A small part of me wants to be more like that, but in the end I can't really bring myself to disagree with Matthew Weiner.

And by the way, here's an (unrelated) excellent interview at Vulture (it starts getting interesting 4-5 paragraphs in).


Picture taken at Technorati today about 30 seconds before posting (1:44am UK time).

I'm sure they'll fix it shortly, but I really want to say: Thanks Technorati, you made my day.

by datacharmer | Monday, October 19, 2009
  , | 1 comments | | Technorati @bluematterblogtwitter

It scares me

Milgram redux, and I'm not at all surprised by the results. I observe this trait every day, everywhere, and it scares me to bits. I have never personally witnessed it culminate to brutal violence, but no violence is needed; I have seen much evil come of it at my workplace, in public debate, and even amongst my friends. All that is needed is blind loyalty to authority, to prevailing moods and cliches. A willingness to take a mental shortcut even though someone's welfare or dignity is on the line.

There are too many Hanna Schmitz; and the thought I may unwittingly become one myself - even in a much smaller way - horrifies me.

I think about Milgram's experiment almost every day. My desire to be someone who refuses to continue may define who I am, or would like to be, more than anything else.

by datacharmer | Sunday, October 18, 2009
  | 0 comments | | It scares me @bluematterblogtwitter

Friday Special 126

Cranberry harvest in Wisconsin and more fall 2009 scenes from around the world

by mendoza | Friday, October 16, 2009
  | 0 comments | | Friday Special 126 @bluematterblogtwitter

Funny graphs

Dave sent those via email - I've seen some of them before, but they are still hilarious (note: there's more graphs under the fold).

by datacharmer | Friday, October 16, 2009
  , | 0 comments | | Funny graphs @bluematterblogtwitter

Google: comfortable with our true nature since 1996

First, disable any filters (moderate safe search and the like) you may have on google search - I think these should be off by default anyways.  If no kids have access to your computer and yet you prefer to self-censor google search results, I suggest you take a long, hard look inside your soul and ask whether you really want to be one of those sorry people who think it makes sense to expend energy in avoiding accidentally reading the word 'fuck' or seeing an uncovered breast or two. In other words, get a life.

Now type 'my girlfriend' on google and check out the search suggestions it gives you. As of writing, these include 'cheated on me', 'is fat', 'hates me' (most search results by far), and 'is a virgin'. A martian trying to understand human nature in a hurry would be wise to use google search suggestions over any treatise on the subject I can think of.

And if you thought that was revealing, try typing 'my girlfriend won't', for suggestions such as 'shave'. Absolutely brilliant, absolutely spot on.

Edgar Allan Poe gets second funeral

The city of Baltimore has given writer Edgar Allan Poe, the master of macabre, a funeral service 160 years after his death; only seven people attended his funeral in 1849.

If it was ever fitting for anyone to have multiple funerals, it would be for Edgar Allan Poe. People can say what they want, but he still is one of my favourites.

Friday Special 125

Emma Maersk - Among the largest container ship in the world

The art of making footballs

by mendoza | Friday, October 09, 2009
  | 0 comments | | Friday Special 125 @bluematterblogtwitter

Question for Alex Tabarrok and Tyler Cowen

What do they think when they see ads like this on their blog? 

Do they think that editorial control of ads (beyond sex and vulgarity) is not a suitable thing for a blogger to do? Does it bother them but they think the money is worth it? Are they of the same mind or is one more inclined than the other to reject it? Have they even thought about it, or do they feel that ad space is not a real or integral part of MR? I am not being critical, I am honestly curious. I find this question particularly intriguing, because I think I can predict pretty accurately what their stance would be on almost every other issue I can think of.

In any case, I would love to know. Marginal Revolution readers out there, what do you think?

UPDATE: Thanks to Justin Wehr, we now have a (disappointing and predictable) answer from Alex Tabarrok:

        Markets in Everything!  :)

By the way, for context see for example here, here and here.

A crazy, yet comprehensive solution to high healthcare costs, involving less government in the aggregate

1. Reduce the period for which patents for drugs and medical equipment are granted. There will then be fewer expensive treatments coming to market, and their price will be falling quicker. This is much neater than regulation or voluntary agreements, and it more or less leads to the same outcome. The crucial difference is that it involves less 'government' and more 'freedom', so people on the right shouldn't have any objections.

2. Do what Milton Friedman advocated and abolish occupational licensing for medical personnel. If you can't stand that much less government, relax rather than completely abolish.

3. Use the savings generated to publicly fund 100% insurance for the poor, and taper that off as you go up the income/wealth scale. On top of that, create a fund to provide public co-funding of treatment in 'catastrophic' cases, defining catastrophic as treatment that a patient can't possibly afford by a mile. Insurers then don't have to worry about extreme cases and premia can come down, while those that rationally choose to utility-maximize by not insuring will now face a somewhat lower-stakes gamble: if they fall ill they will suffer a massive blow to their finances, but no-one will be dying in the streets. (if you don't see the relevance of protecting insurers from catastrophic scenarios, remember how Kenneth Arrow back in the day couldn't find any insurer who would assume unlimited liability - he wrote about this in his classic paper on healthcare)

There, I solved US healthcare in a blog post written on my mobile phone.

And for those of you philosophically inclined, note how point 1 in particular demonstates how utterly silly it is to bring in 'freedom' and 'markets v government' ideology to a debate involving reform at the margin.

Keynesian economics: the basics

If you are are looking for a simple, jargon-free explanation of Keynesian economics and the debate on what government should do about the recession, you've come to the right place. It will still be hard work if you haven't studied this stuff (it's not the easiest concept in the world), but you certainly don't need an economics degree or advanced training to understand any of it.

The central Keynesian insight is this: when you decide to hoard some extra cash rather than spend it, income in the rest of the economy goes down by the exact same amount, which then has a knock-on effect on your income. A recession ensues: a period when we work and produce less than we would like, and as a result get paid less too.

To illustrate the point while keeping things simple, let's say there are just two people in the world - me and you. This is an unrealistically small economy, but as we will see, the basic lesson applies to economies of any size.

In this make believe world, I make £100 a week by selling bread to you at £1 a loaf, and you make £100 a week by selling chocolate to me at £1 a bar.  The total income in this economy (its Gross Domestic Product or GDP) is £200, which corresponds to 100 loaves of bread and 100 bars of chocolate.

Now, let's say that one fine day you decide to save £20 out of your £100 and keep it in cash. As a result, my income falls to £80, and the total income in the economy is now £180 - with the economy producing 20 chocolate bars fewer than before. In the following week, I only have £80 to spend, which means that your income also falls to £80, and you end up buying fewer of my loaves. 

In the end, both our incomes are lower, and we produce and consume less than our potential. Our economy is in recession.

How does this carry forward to the real, larger, economy? Just think of me and you as blocks of people: essentially, when too many individuals decide to increase their cash holdings simultaneously - perhaps because they turn pessimistic about the future - a recession ensues.  As Paul Krugman puts it beautifully (in mild economese):

The key to Keynes’s contribution was his realization that liquidity preference — the desire of individuals to hold liquid monetary assets — can lead to situations in which effective demand isn’t enough to employ all the economy’s resources.

So, this is how a recession starts; the question is, how can we climb back out of it?

Our first option is to do nothing. If you paid close attention to the story above, you will have noticed that despite the slump in demand (you now only demand 80 loaves of bread rather than 100), I kept my price fixed at £1 per loaf. But I would really like to sell more bread to you because I can then have more income. Eventually I will start lowering my prices so that I can go back to selling all 100 loaves I can produce.

By exactly the same logic, you will do the same and we will be back where we started - producing at our full potential of 100 loaves of bread and 100 bars of chocolate. Recession kaput.

And here's where the difference between neoclassical and Keynesian economics lies.

The former school of thought assumes that the adjustment process is instantaneous: if you decide to hold £20 extra in cash, neoclassical economics assumes that we both immediately lower our prices to £0.80 so that nothing real changes: the economy keeps producing (and consuming) 100 loaves and 100 bars of chocolate, and there's never any recession.

(This is not strictly true. Neoclassical economics doesn't say GDP can never fall - to stick with our example, you might fall sick and not be able to work, or decide to work less because you want to spend time with the kids, leading to less chocolate, bread and incomes all round. What you can't have with neoclassical economics, however, is a demand-driven recession: a fall in economic activity simply because too many people decide to increase their cash holdings and consume less at a point in time)

Recessions, then, are generally self-correcting: prices will eventually adjust, and the economy will go back to producing at potential. And while this offers some consolation, we would still like to lessen the pain by either avoiding or speeding up the process of adjustment.

In our simple example, there is an obvious solution. Let's say that when you first made your decision to hold £20 in cash rather than spend it to buy my loaves, the government printed an extra £20 and used it to buy my unsold produce. My income at the end of that week would be £100 just as it was before, and because my income is your income (remember, I spend my income on your chocolate bars and you spend yours on my loaves) the economy doesn't go through a period of under-producing at all. There is no recession, there is no need for a lengthy period when prices adjust, and we happily keep producing at our potential.

This is as far as our simple story will take us. Recessions can ensue for as silly a reason as people wanting to hold more cash, and the government can in principle take action to correct the situation.

If you found this post worthwhile, let me know and I will build on this basic story to cover the action government can take (fiscal and monetary policy), the complications that arise in practice, and the role of banks and financial markets.

Safer data mining

Machine learning department members from Carnegie Mellon protest at the recent G20. Hat tip (and more pics) Social Science Statistics blog. 

by datacharmer | Monday, October 05, 2009
  , | 0 comments | | Safer data mining @bluematterblogtwitter

George Soros on markets, reflexivity and the future

The law of one price: there's an app for that

This is amazing: RedLaser on the iphone will instantly scan any barcode and look up the product on amazon and google product search, showing you where you can get the best price. The entire process takes less than 2 seconds, and it works flawlessly. This is not simply a must-have app; it's a reason to buy an iphone.

And of course finding the lowest price is just one of the things you can do: you can check for book and dvd reviews, put together a shopping list by scanning stuff in your fridge - the possibilities are endless. The developer has even made the SDK available to other application developers, which means that this is just the beginning.

Take me to the next level.

Friday Special 124

50 People questioned and responses filmed:

1) Where would you wish to wake up tomorrow? Answers from Brooklyn.

2) At the end of the day, what would you wish to happen? Answers from New York or New Orleans

Please leave your own responses as a Bluematter comment. Thanks!

by mendoza | Friday, October 02, 2009
  | 3 comments | | Friday Special 124 @bluematterblogtwitter

The Soloist

Just don't bother.

by datacharmer | Wednesday, September 30, 2009
  , | 0 comments | | The Soloist @bluematterblogtwitter

Econometrics versus calibration

Some macroeconomists use calibration, some use econometrics, and some use both. There’s no real methodological debate left in the field on this issue.

What is true is that most people outside of macro do not like calibration. I don’t know why. I spent seven years of my life thinking about whether econometrics was better than calibration … and pretty much decided that the answer is: “it depends”.

That's N. Kocherlakota, from his essay on the state of modern macro. He's absolutely right, and keep in mind that I am an econometrician.

Part of the reason is that macroeconometrics is, well, dodgy - and that's 'at best'. A lot of macroeconometrics is outright bonkers.

Another issue is that econometrics is generally misunderstood; most of the 'data' on any issue usually resides on the researcher's head, meaning that in most cases the informational contribution of hard-coded data is much less important that that of theory ('soft-coded data'?). There's no such thing as 'letting the data speak for itself', but the notion sounds appealing so people keep pretending there is.

And if you take issue with the previous sentence, good luck discovering the next Phillips curve, deciding whether GDP has a unit root, and estimating any elasticity with a non-laughable degree of precision.

Rich people make you miserable, happy people make you happy

Chris Dillow has the details.

The Polanski equation

p(General Moral Outrage At Your Being Arrested When Having Committed A Serious Crime)=
f( artistic contribution, funny international politics, time from incident, age)

By these standards, Bono is free to commit armed robbery, Jasper Johns has a license to kill, and Shakespeare could have gotten away with a small genocide if he felt like one.

I seem to be in the minority (at least judging from the MSM) in finding it a tad bit improper that the French and Polish political elites have condemned the arrest of a fugitive self-confessed paedophile, that the Swiss have had to more or less say 'sorry', and that so many show-biz people feel morally outraged about the incident. I'm not saying the guy should be hanged and quartered, but is it really so bad to expect the law to apply to everyone regardless of their achievements and artistic contribution?

Kieran Healy rounds up some of the comments out there, and adds interesting insight.

by datacharmer | Tuesday, September 29, 2009
  , | 0 comments | | The Polanski equation @bluematterblogtwitter

Probability brain teaser of the day

Over at Andrew Gelman's, a reader emails:

I read the abstract for your paper What is the probability your vote will make a difference? [...] I'd note that the abstract prima facie contains an error. Your sentence in the abstract, "On average, a voter in America had a 1 in 60 million chance of being decisive in the presidential election." can not be correct. If we assume that this sentence is correct that means that given the actual turnout of 132,618,580 people the sum total probability of voters being decisive is larger than one. This of course [sic] is impossible. The total amount of decisiveness must be at most one.

What is going on here? Can the probabilities sum to more than one? Take a minute to think it through, and then read the rest of the entry to find out the answer...

Escher in LEGO

 More, including construction details, here.

by datacharmer | Monday, September 28, 2009
  | 0 comments | | Escher in LEGO @bluematterblogtwitter

How to write a short story, by Kurt Vonnegut

In his book Bagombo Snuff Box: Uncollected Short Fiction, Vonnegut listed eight rules for writing a short story:

1. Use the time of a total stranger in such a way that he or she will not feel the time was wasted.
2. Give the reader at least one character he or she can root for.
3. Every character should want something, even if it is only a glass of water.
4. Every sentence must do one of two things—reveal character or advance the action.
5. Start as close to the end as possible.
6. Be a Sadist. No matter how sweet and innocent your leading characters, make awful things happen to them—in order that the reader may see what they are made of.
7. Write to please just one person. If you open a window and make love to the world, so to speak, your story will get pneumonia.
8. Give your readers as much information as possible as soon as possible. To hell with suspense. Readers should have such complete understanding of what is going on, where and why, that they could finish the story themselves, should cockroaches eat the last few pages.

From his wikipedia page. And here's an audio recording of Vonnegut reading from Breakfast of Champions for the first time, three years prior to publication.

Push Gmail finally available on the iphone

Here. Tested it and works great, takes about 30 seconds to set up.

The disturbed but brilliant Mark Ryden

Ryden's web-page has more images and goodies. Ryden is also responsible for 9: The Last Resort, a 1996 adventure computer game produced by Robert De Niro and Jane Rosenthal, and featuring voice performances by Cher, James Belushi, Christopher Reeve, and Aerosmith amongst others.

Pro Bono economics - volunteer!

If you think that charities could do with better economic analysis and programme evaluation and would like to help, Pro Bono Economics might be what you are looking for.

Pro Bono Economics is a new charity whose aim is to broker economists into the charitable sector to help on short and medium-term assignments, typically addressing questions around measurement, results and impact.

PBE seeks:

* To improve the effectiveness of the charitable sector, in particular when evaluating the wider impact of its activities and when presenting these results effectively to an external audience; and
* To provide a mechanism by which the economics profession can contribute to a well-functioning charitable sector of society, both as an end in itself and as part of professional development for economists.

Thanks to Al for the pointer.

by datacharmer | Friday, September 25, 2009
  | 0 comments | | Pro Bono economics - volunteer! @bluematterblogtwitter

Leap seconds

Did you know that 2009 is one second shorter than 2008? And you thought leap years are cool.

On related news, I find it astonishing that I have to manually set the time on my mac and iphone - and to top it all up, I have a nagging suspicion that both clocks are actually slow.

by datacharmer | Friday, September 25, 2009
  , , | 2 comments | | Leap seconds @bluematterblogtwitter

Friday Special 123

Living In America: Visual representation of data on Google maps.

Rare tongue-eating parasite found

by mendoza | Friday, September 25, 2009
  | 2 comments | | Friday Special 123 @bluematterblogtwitter

Friday Special 122

The seven deadly sins.

Sin #7: Sloth - Expenditures on art, entertainment, and recreation compared with employment. Surprisingly Idaho, Montana and Wyoming top the rankings

vox - Research-based policy analysis and commentary from leading economists

by mendoza | Friday, September 18, 2009
  | 3 comments | | Friday Special 122 @bluematterblogtwitter

Norman Borlaug, Rest In Peace

It’s said variously that 250 million people have been saved from death by his life’s work or that 1 billion people have been saved from starvation.

By Mr. Toenniessen’s calculation, about half the world’s population goes to bed every night after consuming grain descended from one of the high-yield varieties developed by Dr. Borlaug and his colleagues of the Green Revolution.

The New York Times obituary is here. HT Tim Worstall.

by datacharmer | Thursday, September 17, 2009
  , | 0 comments | | Norman Borlaug, Rest In Peace @bluematterblogtwitter

Small steps towards single-payer

What happens when the insurer market becomes less competitive?

We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer.
The results seem genuine:
Estimated enrollment effects are much larger for drugs with therapeutic substitutes, and virtually zero for branded drugs without therapeutic substitutes.
And there's also this interesting bit:
We also present evidence that most insurer savings are, on the margin, passed on as lower premiums.
The authors also put the results in perspective:
Naturally, the optimal degree of competitiveness faced by manufacturers depends
both on efficient drug pricing, and the provision of sufficient incentives to innovate. Therefore, it is not clear whether policies to increase competition among manufacturers would harm future welfare by more than they enhance current welfare.
It's interesting how discussions on healthcare reform have focussed almost exclusively on the financial costs of health-care, the bulk of which represent transfers from consumers to health providers and big pharma, with very little discussion of deadweight losses beyond overheads, or any serious attempt at quantifying them.

We spend more time discussing how much we spend on health-care than how much we waste. For economic thinkers, this is very out of character.

And another random observation: I may be wrong here, but I feel like the (non-articulated) current concensus in policy discussions is more-or-less that dynamic effects are not important, and that spending has little to do with innovation and improved health outcomes in the future. Going further out on a limb, I think I can trace this change to Robin Hanson's campaign and his popularisation of the RAND study, but of course this is just a gut feeling.

by datacharmer | Thursday, September 17, 2009
  , | 0 comments | | Small steps towards single-payer @bluematterblogtwitter

Economic growth

Between 1950 and 2000, the price of […] long-distance passenger air transport fell by 2.6 percent annually, and of trans-Atlantic phone calls by an astounding 8 percent annually.
From the Concice Encyclopedia of Economics, at the Library of Economics and Liberty.

by datacharmer | Wednesday, September 16, 2009
  , | 0 comments | | Economic growth @bluematterblogtwitter

Striking numbers

[...] women (physicians) spend 20% to 25% less time in practice than men.
These are dangerous statistics to quote without having checked the methodology, but the numbers make sense. You can find some earlier blogging I did on statistical discrimination here.

by datacharmer | Wednesday, September 16, 2009
  , | 1 comments | | Striking numbers @bluematterblogtwitter

Roads would be safer without traffic signals

Via Kids Prefer Cheese:

Can you imagine having no traffic lights or signs or any other way of keeping cars and people apart? The results would be dangerous chaos, right?

Well, they have a lot a faith in human nature in the small Dutch town of Drachten. Its main intersection is a busy place, where cars and trucks compete with people on bicycles, and others on foot.

The normal civic response - here and elsewhere - has been to put in more traffic lights, divide the roadway into lanes - control things. But the response in Drachten has been the opposite - they took the controls away.

A funny thing happened. The accident rate around the intersection went down - way down, from more than eight a year to fewer than two. [...]

There have been a few small collisions, but these are almost to be encouraged, Mr Monderman explained. "We want small accidents, in order to prevent serious ones in which people get hurt," he said yesterday.

"It works well because it is dangerous, which is exactly what we want."

The statistics are weak, but the theory has merit. Nonetheless, I would expect some restrictions to be beneficial. When you drive you take into account the risk to yourself, but you only partially consider the risk to others; hence you are not careful enough and some additional incentives are needed (e.g. fines).

Even if these numbers can be replicated, they may mostly reflect a short-term response until people adjust back to their optimal speed/risk ratio. In other words, right after the change risk-averse drivers will be over-cautious until they learn how to drive in the new conditions; the price of speed is high. As time passes and they manage to squeeze more speed out of a set amount of risk, they will probably converge back to their old speed/risk ratio.

And of course the prevalence of accidents is not the relevant metric: a lot of traffic signals serve to co-ordinate drivers rather than make them go safely, and it's a safe bet that stop signals help people go faster on average. The objective is to balance speed with safety, not to minimise the accident rate.

Count me as intrigued but not convinced.

Increase labour taxes, reduce capital taxes

Trabandt and Uhlig have a well-crafted new NBER working paper:

For benchmark parameters, we find that the US can increase tax revenues by 30% by raising labor taxes and 6% by raising capital income taxes. For the EU-14 we obtain 8% and 1%. Denmark and Sweden are on the wrong side of the Laffer curve for capital income taxation.

With predictable implications:

[...] lowering the capital income tax as well as raising the labor income tax results in higher tax revenue in both the US and the EU-14 (DC: EU-15 sans Lux), i.e. in terms of a “Laffer hill”, both the US and the EU-14 are on the wrong side of the peak with respect to their capital tax rates.

These results match my priors almost exactly, and I would think those of the mainstream economist too. This makes their model a good model. But I'm afraid they perfectly match the authors' priors too; this makes it a not so informative model.

I will now believe these numbers with ever-so-slightly increased certainty.

How fast can you type?

TypeRacer is a free online game where you compete against a group of friends or strangers in real-time, with the person who can type the fastest winning the race - I can see this being a massive hit in the blogosphere! The excellent choice of quotes adds a nice touch.

I loved this game, and I finally figured out how many words per minute I can churn out.

by datacharmer | Tuesday, September 15, 2009
  | 0 comments | | How fast can you type? @bluematterblogtwitter

Modern publishing

Via Kottke, book titles if they were written today:

Then: The Gospel of Matthew
Now: 40 Days and a Mule: How One Man Quit His Job and Became the Boss

Then: Crime and Punishment
Now: Confessions of a Axe Murderer: How Killing An Old Woman Showed Me the Truth About Life, Love, and Morality

Then: The Lion, The Witch, & The Wardrobe
Now: Harry Potter and the whatever the fuck

They are even more funny collectively than in isolation.

by datacharmer | Tuesday, September 15, 2009
  , | 0 comments | | Modern publishing @bluematterblogtwitter

Michael Jordan reality check

That's a real quality of Michael Jordan, and something we can all use in our regular daily lives.

He saw just about everything as an excuse to work harder. He didn't make his varsity team ... so he worked harder. He didn't make the playoffs, so he worked harder. He couldn't beat the Pistons, so more work.

Public service announcement: You can work all you like, but you will never be Michael Jordan.

by datacharmer | Monday, September 14, 2009
  | 0 comments | | Michael Jordan reality check @bluematterblogtwitter

The Global Competitiveness Report 2009-2010

The World Economic Forum's latest ranking of competitive countries sees the US fall to second place behind Switzerland, while Singapore moves up to third.

The World Economic Forum (WEF) released The Global Competitiveness Report 2009-2010 in which it ranks countries across the world on how competitive they are, with Switzerland, the US and Singapore taking the top three spots. The report was released ahead of an annual WEF meeting being held in Dalian.

Top Ten Rankings 09/10
Full rankings (PDF)
Full rankings (Excel)

The GCN's flagship publication is The Global Competitiveness Report  (GCR). It is the most comprehensive and authoritative assessment of the comparative strengths and weaknesses of national economies, used by governments, academics and business leaders. The GCR was first published in 1979 and its coverage has expanded each year since, now extending to 134 major and emerging economies. Further expansion of coverage is planned.

Deworm the world

Deworming is the most cost-effective way to improve school attendance and performance in developing countries:

The simplest and least costly of these programs is deworming. Nearly 2 billion people around the world are affected by parasitic worm infections, with children disproportionately affected.

Harvard economist Michael Kremer has studied the impact of mass deworming in Kenya and India. Delivering deworming medication costs 50 cents per child per year in Kenya but yielded a 25 percent increase in school attendance; a similar program in India cost $4 per student per year and yielded a 20 percent attendance gain. "This is a simple, cost-effective and yet tragically not-done program. It's a scandal that [deworming] hasn't been addressed," Kremer says. There are spillover effects as well. "The most surprising thing about the study in Kenya was the widespread impact," Kremer says. The program drove down infection rates for several kilometers around the schools, he says, and there were significant improvements in attendance for untreated students, in the treatment schools as well as in nearby schools not in the program.

by datacharmer | Sunday, September 13, 2009
  , | 0 comments | | Deworm the world @bluematterblogtwitter

Facebook strikes back

The short story: Techcrunch messes with Facebook, Facebook gets back at them with style - who would have thought corporations can have a sense of humour? HT Popehat

by datacharmer | Sunday, September 13, 2009
  , | 0 comments | | Facebook strikes back @bluematterblogtwitter

The very poor and rich consume the most healthcare

It’s not generally appreciated that health care expenditures for people in the lowest 15% of income are 50% to 100% greater than for people of average income. There’s also a difference at the high end. The wealthiest 15% also consume more, but only about 20% more. So there’s greater utilization at both ends of the income spectrum, but for different reasons and with different outcomes.

More spending at the high end improves outcomes, not simply for a specific condition but across the board, because the care consists of a broader spectrum of beneficial services. More yields more. But among the low-income patients, outcomes are poor despite the added spending. In fact, the added spending is because of poor outcomes – more readmissions, more care for disease that’s out of control.

That's Richard Cooper, and the numbers sound plausible. The interview is interesting throughout.

Friday Special 121

The mobile phone evolution between 1983-2009

Company names with their name origins explained

Virtual Stan

by mendoza | Friday, September 11, 2009
  | 0 comments | | Friday Special 121 @bluematterblogtwitter

Brick Lane humour

I'm warming up!

by datacharmer | Sunday, September 06, 2009
  , | 1 comments | | Brick Lane humour @bluematterblogtwitter

Friday Special 120

The art of timeless logos

by mendoza | Friday, September 04, 2009
  , , | 1 comments | | Friday Special 120 @bluematterblogtwitter


Bluematter is being revamped, so funny things will be happening to the layout over the coming days. Regular blogging service of the type not seen around around here for months will also be starting in a couple of weeks, so check back soon.

by datacharmer | Tuesday, September 01, 2009
| 1 comments | | Maintenance @bluematterblogtwitter

Friday Special 119

The world's coolest tennis court

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More the the same marvelous landscape pictures

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Peter Funch's stills on people of New York

PlanBA: Personally tailoring your time in Argentina

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The longest solar eclipse of the century

Free Online Documentaries

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25 Stunning Pictures Of Bora Bora – Most Beautiful Island on the Planet

The unnamed project

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Tana Umaga demonstrating how to intimidate an opponent with the Maori Haka dance

Disney Star Wars Weekend Posters

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Make my mood with further People Sayings

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