Tuesday, October 31, 2006

NBER amd Economic Indicators

I just want to make a note that if anyone is interested on keeping their finger on the pulse of the economy, to subscribe to the NBER’s New Economic Releases Feed.

Today we saw the Employment Cost Index and the Consumer Confidence Index. Both indicators gave mixed signals.

In terms of consumer confidence, the indicator was down 0.5%. The key fact to the mixed signal is that there was an increase in both the amount of people who said conditions were good and the amount of people who said conditions were bad. However, the increase in the percentage of people claiming conditions were bad was greater (1.5% for bad v. 0.8% for good).

The employment compensation index increased in the past quarter. The report itself seems to me quite ordinary, although I’ll take this opportunity to highlight one thing the report mentioned:

…the sharp increases in benefit costs seen for civilian and private industry workers over the past several years slowed to a more moderate pace.

I was thinking that this might be in some way correlated to the fact that when AETNA realized its earnings last week, that they cited “premium and fee rate increases.”

Monday, October 30, 2006

Online Arguments

Just as I have been posting about Digg in all their glory, and as I love to talk about how people comment in pretty harsh ways sometimes, this Dilbert cartoon came across me this past week…

Thursday, October 26, 2006

More on Digg

So, part of why fights happen on Digg is because of one user accusing another of “gaming the system.” Peter Abilla explains this all very well. He also links to his previous articles on Digg.

Here is his conclusion:

Digg is an economy. Votes represent demand and articles
represent a non-infinite, but exceedingly large supply of articles. Incentives are important in any economy and explain human behavior very well. Incentives can also control behavior that is less desirable, as can be found on sites like Digg and Netscape. The invisible hand on Digg is crippled — the emphasis on being democratic is misguided, since democracies have problems, as is the case with Digg; because of the problems on Digg, hence, Kevin Rose has implemented regulation in the forms of Algorithms and Policies. But, such regulatory measures, in the long run, do not work. What will work, is to use the notion of incentives to curb undesirable behavior. As a consequence, however, here might be fewer votes, but the votes will truly count. Moreover, this might be another revenue model for sites like Digg, which currently rely on an ad-based model.

Economically, this sort of paradigm may make me a communist for my support of Google News.

(A tip of my hat goes to Stephen Dubner for pointing this out.)

Wednesday, October 25, 2006

Speaking of College

In relation to my post yesterday about college education, please read this article by George Will at The Washington Post. Not that it’s a homework assignment, but as usual George Will points out another specific inefficiency in America. This time, Will focuses in on college sports; most notably football and the peculiar fact that they get tax exempt status for a significant portion of their monies even though many of the goals that they state are never really accomplished.

To illustrate his point, George Will writes:

How does the NCAA fulfill its proclaimed purpose of maintaining "the athlete as an integral part of the student body"? Only 55 percent of football players and 38 percent of basketball players at Division I-A schools graduate. The New York Times has reported that at Auburn, a perennial football power, many athletes have received "high grades from the same professor for sociology and criminology courses that required no attendance and little work." Eighteen members of the undefeated 2004 team took a combined 97 hours of those courses while at Auburn. Who believes such behavior is confined to Auburn?

I hope one day to be as excellent a commentator as George Will is, or as excellent an economist as
Greg Mankiw, but for now I’ll let them do what they do best. Also, I’d just love to see somewhat try to refute the pose that Will makes in his column. I’m not good enough to do it, plus I agree with him.

Tuesday, October 24, 2006

Paying for College

Paul Basken at Bloomberg reports that college tuition is still increasing. While I understand that the yearly increases are obvious fact to anyone, the concerning part comes from the fact that “Pell Grants, the main federal subsidy, fell by an average of $120 per student, or 4.9 percent.”

So, there are two things working against each other right now. On one side, the College Board reported that

The data reported in Education Pays 2006 document increases over time in the earnings gap between high school graduates and college graduates. In 2005, women ages 25-34 with bachelor's degrees earned 70 percent more than those with high school diplomas, and for men the difference was 63 percent. For all full-time workers in this age group, the average earnings premium for a four-year college degree is almost $14,000.

However, the increasing cost in tuition puts obvious strain on those pursuing higher education.

In my own personal experience, I have a difficult time addressing these figures from the College Board. Not because I don’t believe them, but for the reason that I (and my single working mother) tried so hard to put me through college. With hard work, we both succeeded (I got my BS Finance degree in four years, and she’s helped 3 of her children through college). I find it unfortunate that those who are willing to work hard for this achievement may be hampered from doing so, whereas another student might be making it through college completely on his parent’s dime.

Now, a real good question to my feelings on the subject is, “If it’s a free market, then why care if the student who doesn’t give a crap -- and is there because his rich guardians are putting him through takes – five years to graduate?” Well, I think that’s where my argument and worries meet their demise. You see, colleges work in different ways than regular businesses do.

That is to say, if you’re paying a lot of money for college, you’re usually paying for a more prestigious education. And if you are getting a more prestigious education, then the school you attend must also have higher standards. So, obviously you can’t fail your way through. The point that I’m trying to make is that in the end, all the people around me who bullied me and drank a whole lot of alcohol deserve to graduate because of four things: either the education and tests were painfully easy (although I can vouch that they were in fact difficult), they had the knowledge to pass the examinations, they picked a less difficult major, or they cheated.

By the way, let me tell you that at my school I remember two people who did specifically cheat. Unfortunately I can’t out them here because I don’t remember there names due to the fact that I didn’t associate myself with them. Although other than the cheating, they seemed rather harmless. Well, harmless except for the fact that their cheating may have negative consequences on the value of the degree that I and my classmates earned.

So, let’s get back on track. Question: Is the market for college strong enough in the right way to correct itself? That is to say, will the middle class and low income prospects gain more strength to go to college? Or, will colleges simply price their education so that only those with a significant sum of money can go? Right now, there’s a bit of a nice medium because the highest level of education (e.g. Harvard) also has the premium that it deserves. Nevertheless, the College Board looks at more colleges than just Harvard, and it seems that colleges that right now seem attainable in attending, may be impossible to afford in the future even if they’re education quality doesn’t change.

Monday, October 23, 2006

Lost iPod

Is this your iPod? David Berlind is doing something cool on his blog, and I’m using my blog (and the two people who read it) to help out.

If this isn't a test for how the blogosphere can get things done, I'm not sure what is. As a part of this test, if you happen to read this blog entry and you have a blog, please spread the word and let's see if the viral nature of the blogosphere can help this iPod find its owner.

If any of this means something to you and you've recently lost your iPod, contact me at david.berlind@cnet.com. The photos on this device clearly have some sentimental value. So, it would be great if we (the blogosphere) can help it find its way home. Of course, you'll need to prove to me that it's yours which shouldn't be too difficult.

Friday, October 20, 2006

The Pigou Club

I’m not sure if Greg Mankiw has made Robert Samuelson a member of the Pigou club (a club that calls for taxes on gas and other carbons to correct for all the negative externalities that these fuels cause), but I think Samuelson’s latest article allows him proper distinction to be in the club.

I’d like to think of myself in the club, but I highly doubt that “Yes, I agree” warrants enough qualification to be part of Mankiw’s list. Although, I would like to imagine that if they all got together, they’d let me in the party. The only problem is that for everyone in the group to get together, we’d use a lot of fuel.

Wednesday, October 18, 2006

No More Tag

There are too many ways to make fun of this and comment on it, but I’ll try anyway.

First, I wonder how politicians will see this. On the one hand, they’ve been more than happy to
take away certain liberties of ours for our own safety. So, I could try and say that they’d be happy in proclaiming that they’ve just made our kids safer.

But on the other hand, if you’re a glorified pundit who is homophobic, this could be a minor blow to you, or not. I mean, on one side the lack of tag and touch football might make our kids serious pansies. On the other side, as a homophobic pundit, you’d probably want to make sure that boys touch boys as little as is humanly possible (which could then be a great reason that baseball is our national pastime). In that case, getting rid of tag to that pundit would be a literal Godsend.

Also, from my memory of recess, if there wasn’t tag, there wasn’t much else to play. So, now our kids might start getting fatter. I know that might be a stretch what with playing with friends after-school and other activities, but for me – as a child – if it wasn’t for school I wouldn’t have had the exercise and activities that made school fun and kept me active physically. Also, in my experience, gym class didn’t come into effect until 6th grade.

As a kid, tag was awesome because I could only get so much soccer, and I wasn’t all that great at tennis yet. Tag filled in a great void of the need for running around for a purpose. Therefore, naturally, I would have distraught if I would not have been allowed to play tag.

How about you? Matt, did you ever play tag? I know you want to comment.

Tuesday, October 17, 2006

Even Better

In case anyone thought that people had given up on improving Wikipedia…don’t fear. According to CNET, co-founder Larry Sanger is coming out with a rival site called, Citizendium. Sanger said, said. "There are a number of problems with the system that can be solved, and by solving those we can end up with an even better massive encyclopedia."

Well, if it’s going to be even better, I can’t wait. Although, I can only imagine the kind of incentive someone would have trying to change an article (it will be much harder apparently in Citizendium) so that it can portray the truth that they wish it to.

Thursday, October 12, 2006

Did They?

I was just “wowed” last night watching a commercial. Now, if I have you wondering what cool commercial this was, I need to tell you that the commercial was not that cool. It was for the 2006 Mercury Milan; a car that itself I’m not sure is even all that “wow” worthy.

However, the song that they used for the commercial was from the band,
Morningwood. The song in particular was “The Nth Degree.” Now, thankfully, they used the right part of the song and edited the right parts because otherwise the commercial would allowed for the song to continue to spell out (if you haven’t listened to the song, to literally spell out) “M-O-R-N-I-N-G-W-O-O-D.”

Now, mind you, I personally love the song, and I really dig the band since I saw them open for Kasabian and The Music a year go. I also don’t mind the song being used in the commercial. Even if they let all the wrong words flow, I’d still be okay with it, but they’d probably have to give the commercial a PG rating, but it could still be shown with Girls Gone Wild commercials. Nevertheless, I still can’t believe they actually used the song. Now, whenever I see a Mercury Milan, I’m going to think about Morningwood, and I can’t guarantee that it will always be about the band of same name.

Another Way to Think About Dating

Tyler Cowen has another way to think about dating. From the previous comments I’ve seen here, I would venture to guess that for a few people out there, the question would be whether people want any intimacy right now and would then date many people hoping to find the right one (English Auction).

Also, as I previously saw from the commenters who called me “whiny,” to them I would then fall into the “Dutch Auction” category. According to their observations, I set the “bar” high, and then work my way down taking the first bidder that bites. While I practically have no intimacy ever, I do like not having to go through breakups.

I really have to thank Tyler for giving me (and hopefully some of you) a different way of looking at dating. I’m also sorry I didn’t come to think of it on my own.

Wednesday, October 11, 2006

A Worthy Cause

Last weekend’s Bike to the Bay Tour was brought to my attention by an old friend who participated. What a wonderful effort and a worthy cause. If you’ve been a reader of mine since the beginning then you’ll understand that I enjoy when people themselves participate for awesome causes. It’s always a wonderful reminder of how citizens can always pull together and make a significant contribution to benefit others.

And so, to my friend Mike Beris, way to go!

Tuesday, October 10, 2006

Why Not to Vote for Raj

The simple demeanor of his campaign shows how frivolous this candidate is. I’m sorry but a campaign blog that devotes two separate posts for football simply demonstrates how insincere his intentions are.

Listen to "Raj's" campaign rhetoric:

America was born through immigration, though today too much of our immigration is illegal and unchecked. Both the Democrat and Republican parties are ignoring America’s border security crisis. Republicans don’t want to anger big business and stop the flow of cheap labor, while Democrats don’t want to turn away potential voters. Astoundingly, five years after 9/11, we do not have an immigration policy to meet our security needs. More security fencing along the border and a more stringent visa policy for those coming from terrorist states are badly needed. In Congress, I will fight to see that this is done.

He doesn’t even answer the question his own rhetoric is supposed to deal with. In fact, he uses the immigration issue (which becomes an issue every even numbered year along with gay marriage and flag burning) to segue into terrorism. Not even a position, just an excuse to employ a scare tactic to try and churn up the base that votes Republican.

Even if you don’t believe me, just read
this post by Tyler Cowen in which he states:

The North Korean crisis helps the Republicans. Even the botched war in Iraq helps the Republicans. No matter how badly the Republicans do, people (rightly or wrongly) trust the Democrats with national security even less.

I think it’s time that real conservative Republicans
take back their party.

Monday, October 09, 2006


I just recently read this paper from Wesley Yin at The University of Chicago. Before I started reading Arnold Kling, my opinions on healthcare were quite stagnant. However, after many of the posts Kling makes on healthcare, I found myself interested, and my views on healthcare changing.

Yin’s paper reveals a by-product of the Orphan Drug Act (ODA); an act that was supposed to (and has) help develop drugs for rare diseases. Yin calls the unintended effect of the ODA “balkanization.” Essentially balkanization is when a drug company creates a new rare disease that is actually just a derivative of an already well-established disease.

Here’s Yin:

I find that 25-percent of all clinical trials induced by the ODA represent balkanization. While limiting off-label drug use may be impractical, reducing balkanization by imposing a fee when an orphan drug reaches a trigger level of off-label sales may be viable. Extending the moral hazard analogy, the fee or tax repayment can serve as a “co-payment” to reduce the incentives to balkanize. At the same time, co-payments also create a disincentive for firms to develop drugs for previously unconsidered alternative uses (true R&D externalities). More creative solutions may be able to limit social waste without extensive cost to innovative activity.

If you care about economics and/or healthcare, this paper might be worth your time. Or at least, just giving a couple minutes to think about “balkanization” could be worth your time.

Friday, October 06, 2006

Why we Blog

My inspiration for starting a new blog was about trying to emulate one of my new personal heroes, Greg Mankiw. Mankiw’s blog has become for me an inspiration that what I studied for so long has so many real world applications. Obviously, economics is a study of the world and the trade-offs we make in this world.

Today I took a walk back to all the time I spent becoming educated on these various topics that encompass finance and economics. I took time off from my job so I could visit a professor at the University of Delaware. On the walk to his office, I saw something that illustrated to me the unique environment that a school provides (fortunately or unfortunately depending on anyone’s personal experience).

On Main Street I saw a car parked with its hazards – or four-way flashers if you prefer – parked in a metered area. Right as the “meter maid” (in my last six years I have never seen this lady do any other sort of “police work”) was starting to give a ticket, the owner of the vehicle came rushing out, as he was ready to leave. The meter maid coerced the owner of the vehicle to stay in order so she could write the ticket out and give it to him. Now, realize, the owner was going to move the car, but was forced to wait in order to receive his ticket. But wait, there’s more. In giving the ticket, the meter maid parked her vehicle beside the vehicle getting ticketed, which if you know Main Street in Newark, DE, you realize that she double parked and blocked an entire lane of traffic. So, please someone, tell me the efficiency in that.

Why I blog, why many other people blog, and why economists like
Greg Mankiw blog I believe is an answer that can be described in the unique environments or situations that people find themselves in. For me – and possibly others – it’s a reaction to the questions that come up in our observations. And in my opinion, because universities and colleges are such unique environments, it’s no wonder that academics have so many things to blog about.