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NY Times columnist Paul Krugman writes, in the introduction to his new blog:
The story of modern America is, in large part, the story of the fall and rise of inequality.
Note that he says “fall” and then “rise”, not the other way around. A graph in the post illustrates his point nicely.
Surprisingly, we find few tangible social or political impacts of the Klan. There is little evidence that the Klan had an effect on black or foreign born residential mobility, or on lynching patterns. Historians have argued that the Klan was successful in getting candidates they favored elected. Statistical analysis, however, suggests that any direct impact of the Klan was likely to be small. Furthermore, those who were elected had little discernible effect on legislation passed.
The full paper is available on Fryer’s web site. (via mr)
Steven Levitt notes a passage from Edward Conlon’s Blue Blood about the difference in pay between the police and homeless panhandling heroin addicts. The answer might surprise you.
The personal lives of CEOs have come under scrutiny lately because what a CEO does in his off-hours seems to have a bearing on how well his company’s stock performs. “It found that on average, the stocks of companies run by leaders who buy or build megamansions sharply underperform the market. The researchers don’t claim to know why. They theorize that some of these executives might be focused more on enjoying their wealth and less on working hard.” (via mr)
Also, I loved that the WSJ published the nickname of “Frederick E. ‘Shad’ Rowe Jr.” Shad Rowe!
Over at Marginal Revolution, Alex Tabarrok is advocating a game show called So You Think You Can Be President? instead of debates to better educate voters about presidential candidates. “Presidential candidates have 12 hours to get a bitterly divorcing couple to divide their assets in a mutually agreeable manner. (Bonus points are awarded if the candidate convinces the couple to stay together.)” Awesome.
Chart of the price of cocaine in countries around the world. Cheapest price is in Colombia ($2/g) while New Zealanders have to pay ~350 times that.
A Brief History of Economic Time. “No 18th-century politician would have asked ‘Are you better off than you were four years ago?’ because it never would have occurred to anyone that they ought to be better off than they were four years ago.” (via migurski)
Crime in the three biggest American cities (NY, Chicago, LA) is down…and up almost everywhere else. In part, this is due to the aging of the population in those cities. “Together they lost more than 200,000 15-to 24-year-olds between 2000 and 2005. That bodes ill for their creativity and future competitiveness, but it is good news for the police. Young people are not just more likely to commit crimes. Thanks to their habit of walking around at night and their taste for portable electronic gizmos, they are also more likely to become its targets.” Young people, your gizmos are hurting America!
Adding sushi to the ever-growing list of everyday consumables as economic indicators: steak, Big Macs, Starbucks coffee, Coca-Cola, and cigarettes.
Can the health of the high-end steakhouse business predict the future health of the overall economy? See also: the Big Mac index, the Starbucks index, and the Coca-Cola index.
Are the USPS’s “forever” stamps a good deal for the consumer? “Absolutely not.” Stamp prices increase more slowly than the inflation rate so stamps are continually getting cheaper.
The price of a bottle of Coca-Cola remained a nickel for more than 70 years, until 1959. “The price of sugar tripled after World War I before falling back somewhat; over the past six decades, the price of coffee has gone up eightfold. Coke itself was taxed first as a medicine, then as a soft drink, and survived sugar rationing. All the while, the price stayed at a nickel.”
Stephen Dubner and Steven Levitt (aka the Freakonomics guys) on the first-world phenomenon of doing menial labor as a hobby. Examples: knitting, cooking, gardening, lawn care. More on the Freakonomics site.
Graphs of the US minimum wage from 1938 to the present. If you take inflation into account, it’s been falling pretty steadily since 1968. But also note that number of people directly affected by the minimum wage has declined as well to just over 2% of workers. (via rb)
Compared with Snapple, whiteout, and Pepto Bismol ($123.20/gallon), gasoline is surprisingly inexpensive. “$21.19 for WATER - and the buyers don’t even know the source. No wonder Evian spelled backwards is Naive.”
Update: Rob Cockerham did a more extensive analysis of liquid pricing a few years ago.
In a money game with anonymous rich and poor players, rich players will give up some money to help the poor but poor people are more likely to spend their money to make the rich players less rich. Reminds me of the ultimatum game in which people reject free money when they feel like they’re getting a raw deal in comparison to someone else.
Short interview by James Surowiecki of Nassim Taleb about his new book, The Black Swan. “History is dominated not by the predictable but by the highly improbable — disruptive, unforeseeable events that Taleb calls Black Swans. The effects of wars, market crashes, and radical technological innovations are magnified precisely because they confound our expectations of the universe as an orderly place.” Malcolm Gladwell wrote an article on Taleb for the New Yorker in 2002, which Taleb said “put too much emphasis on the far less interesting, more limited — and rather boring — applications of my ideas to finance/economic, & less on the dynamics of historical events/philosophy of history, artistic success, and general uncertainty in society”. See also an interview in New Scientist, a NY Times op-ed, and a long piece on the Edge site about the black swan idea.
People cruising the streets for parking meters do so because meter pricing is too low. “Underpriced curb spaces are like rent-controlled apartments: hard to find and, once you do, crazy to give up. This increases the time costs (and therefore the congestion and pollution costs) of cruising.”
Ben Stein on “what’s new and hot and exciting” in the world on money: “The most sought after jobs in the United States now are jobs in finance in which basically almost no money is raised for new steel mills or coal mines, but immense sums are raised to buy companies, recapitalize them — which means pay the new owners immense special dividends and other payments for going to the trouble of taking over the company. This process results in fantastically well-paid investment bankers and private equity ‘financial engineers’ and has no measurably beneficial effect on the economy generally. It does facilitate the making of ever younger millionaires and an ever more leveraged American corporate structure.”
Advertising Age reports (via gulfstream) that despite having spent as much as a reported $100 million on advertising and promotion, the (RED) campaign has raised only $18 million to fight AIDS in Africa. (RED) CEO Bobby Shriver responds by saying that the amount will soon be $25 million, they’re in it for the long haul, and that there are non-monetary benefits to all of the advertising — “A phenomenal benefit is that Gap, Apple, Sprint and other sales people are meeting Americans and explaining that 5,500 Africans dying daily of AIDS is preventable”.
The (RED) campaign strikes me as part of a larger trend in the US (and perhaps elsewhere too): the idea that if you, the consumer, spend normally (or even increase your spending), it is possible to break the law of conservation of energy and somehow save more money or lives. Other examples of the spend-to-save trend include the Discover Card Cashback Bonus program, the Bank of America Keep the Change program, and hundreds of retail promotions where, golly, if you spend another $20 on something you don’t need, you get a free something that you really don’t need.
It seems to me that if The Gap really cared about stopping HIV/AIDS in Africa, they would just donate the $7.8 million they spend on (RED) advertising to the Clinton Foundation. If Discover really cared about saving you money, they’d lower their APR to prime + 1.
I realize that the entire US economy is a house of cards kept standing by the escalation of spending and credit card debt by American consumers, but the sad fact is that to save money, you need to cut spending or increase income. And if you really want to help fight AIDS in Africa, instead of buying that (RED) Gap t-shirt for which Gap will donate 50% of its profit to The Global Fund, buy a cheaper one at American Apparel and send the $13 difference to the Global Fund yourself.
Video of a standup economist translating the 10 principles of economics into something a little funnier. Here’s the guy’s web site. (thx, barry)
The WSJ reports on economist J.C. Bradbury’s new book The Baseball Economist, which sounds Moneyball-ariffic. Contrary to popular belief in “protection”, Bradbury found that “a weak on-deck hitter makes a batter more likely to get an extra-base hit”. Bradbury is also the author of the Sabernomics blog. (via biourbanist)
Joel Kotkin argues that the “superstar cities” (New York, LA, Chicago, Boston, San Francisco) are overrated and overpriced and that the real economic and social action in the US is happening in the more affordable cities (Charlotte, Houston, Las Vegas, Phoenix). This article contains a wealth of buzzwordy phrases…in addition to “superstar cities”, Kotkin refers to a “Bloombergian luxury product”, “trustafarians”, the “Vailization effect”, “neocon anti-urbanism”, and “Mayor Bloomberg’s luxury calculus”. (via biourbanist)
A paper by Linda Bilmes of Harvard’s John F. Kennedy School of Government concludes that in addition to the stated cost of the wars in Iraq and Afghanistan by the Bush administration, it will cost $350 - $700 billion for the US gov’t to provide health benefits and care over the lifetimes of soldiers who served there. More from the Christian Science Monitor. (thx, marcus)
A 3-D world map that depicts economic activity. (via mr)
Long audio interview with Michael Lewis by economist Russ Roberts on “the hidden economics of baseball and football”. “Michael Lewis talks about the economics of sports — the financial and decision-making side of baseball and football — using the insights from his bestselling books on baseball and football: Moneyball and The Blind Side. Along the way he discusses the implications of Moneyball for the movie business and other industries, the peculiar ways that Moneyball influenced the strategies of baseball teams, the corruption of college football, and the challenge and tragedy of kids who live on the streets with little education or prospects for success.”
David Pennock on the steep rise of Apple’s stock after announcing the iPhone: “Jobs’s speech could not possibly have revealed over $8 billion in previously undisclosed information”.
Update: On the other hand, analysts think that Steve Jobs’ mere presence at the company is worth $20 billion.
James Surowiecki discusses the waste of holiday giving. “Waldfogel’s main finding is that, in general, people spend a lot more on presents than they’re worth to those who receive them, a phenomenon that he calls ‘the deadweight loss of Christmas.’” This is one of my big problems with the whole Christmas thing. Related: gift cards worth billions of dollars are left unredeemed each year.
Muhammad Yunus, who came up with the idea of microcredit, received his Nobel Peace Prize yesterday. His Nobel lecture is available in text and video formats.
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