An Economic Response to Vacation

The following is a letter I wrote to my close friend, Kevin, regarding the chances of me taking a vacation in the summer after my having just started a new job, needing a vacation to actually rest, and the other constraints that actually go into having a vacation.

Kevin,

Regarding the amount of time I would have accumulated for vacation by the summer. The answer to that question is multi-faceted.

Firstly, in terms of actual time, I will not have much. To say that I would have none would be a lie. However, knowing that I will probably not even have a full week, there still are other issues.

In my experience, and with other empirical research (Daniel Gilbert comes to mind), it has been shown that when together with the same person, or group of people, for a prolonged period of time (let us say about a week), one's level of happiness decreases. "Happiness" of course may be loosely defined; however, the relevant difference in happiness – and in this case, decrease in happiness – is significant and makes the point. The reason why honeymoons and married couples fair far better, and may actually have a good time is because they have a "psychological reset," otherwise known as sex.

Moreover, I believe it is time we all were honest with ourselves and understood that the large pitfall of vacations is that it is work in disguise. This is mostly the reason why when workers actually end up coming back to work, they are feeling refreshed only in the sense that the work they were doing during their vacation had the possibility to provide pleasure. Empirically, this can be seen easily with families because the parents have to work hard in order to make sure everyone is happy. Scott Adams once noted that it was like, "trying to solve a rubix cube 10 times a day."

Also, during the instances when vacations do not include much effort, they usually cost vast amounts of money. In the example case you have proposed to me, it will cost money. Money, which I am not sure I will have.

So, in summary:

- Time is a commodity that I don't know how much I have of.
- It will still take money to go do this.
- No sex.
- Friends may drive each other insane over the course of a week.

Remember to keep in mind that vacations are wonderful and necessary, but when we look at vacations from outside the box, we can see where the pitfalls of some "normal" vacations lie.

What the Economy Needs

I have been asked lately for my ideas on when the Fed would lower the funds rate, and essentially the effect it would have on the economy. I have no doubt that many people have been asked this question, however there a few main points to be considered and that a few economists have touched on.

In the simplest terms, the idea behind a lowering of the fed funds rate is for the incentive to hold money in the bank to be so low that many people (mostly investors, or rather, investment banks) will use the money. The use of said funds is then said to spur on spending for capital (jobs and the like) in the economy.

Does it work? My best guess, maybe. But, along with many others like Kevin Hall at McClatchy Newspapers, Milton Friedman – whom Hall mentions, and other economists always want to point out is that using monetary policy (the federal reserve and its funds rate) and fiscal policy need to be thought about simultaneously. That is not to say that one cannot use both of them at the same time, but merely to understand that they both have a probabilistic effect the economy.

Greg Mankiw posed that proper question just a few days ago. He wrote that if a reporter could ask any committee member on the fed any question, it would be:

If the economy now gets the fiscal stimulus being proposed (about 1 percent of GDP), does that mean that the Federal Reserve will cut interest rates less than it otherwise would?

My follow-up questions:

If the answer to the first question is No, then ask, Why the heck not? Monetary and fiscal policy are two tools available to increase the aggregate demand for goods and services. The goal here is to prop up demand sufficiently to maintain full employment without causing inflation. If the U.S. government is using fiscal policy more, it should use monetary policy less.

If the answer to the first question is Yes, then ask, How much higher will interest rates be kept as a result of the fiscal stimulus? And is it really better to have a fiscal stimulus and higher interest rates than a smaller deficit and lower interest rates?

But let us not forget that the economy has a way of doing what it wants to do no matter the coaxing (simply think of how irrational our partisan political hatred can be). Comedian, Lewis Black says that the economy goes up and down and no one knows why. Well, to some extent, he is speaking truth because many economists are willing to admit that we don’t know where we are economically until an event has already passed us, and we have enough time to research the economic past.

Right now, your best bet to figure it out may as well be to bet…on Intrade that is. Even as much as people want put behind them the sub-prime mortgage losses that larger banks have written down losses on, there may still be more ahead of us. As Paul Krugman and Robert Samuelsson have mentioned separately, the falling asset prices on homes is the event to really worry about because we may not be ready for the shock as to how much we were willing to pay just because someone on the other side of the desk said, “Oh, well, home prices will continue to rise, and you can always re-finance.”

I hate to say it, but Krugman’s doom and gloom scenarios may have some possibility to them after all, and if so, things may have to get worse before they can get any better.

F1 and WRC 2007 in Review

If you were missed both the 2007 WRC and Formula 1 season, then you probably missed the two most exciting season’s within the last decade. All be it, there have been exciting moments before.

What has happened in Formula 1 this year was a testament to what really is at the foundation of Formula 1. All questions that any one person could have in what is involved in an F1 season had those inquiries fulfilled this season. While many feel that they have more questions than answers, I can truly say that the sport uncovered itself finally into what truly lies underneath.

The fans had what they superficially always needed, which is a driver’s championship completed as closely as possible. Not only that, but the man who ended up becoming the least likely driver to win, did win. Of course, I’m speaking of Kimi Raikonnen. He, with his 110 points, defeated Fernando Alonso and Lewis Hamilton who each had 109 points.

On top of the close competition this season, the fans also were treated to something that they always salivate for, which is a rookie sensation. Luckily for those in Formula 1, most accounts have Lewis Hamilton as a well mannered young man with exceptional talent and grace. Hamilton’s disposition off the track is a true pleasure to witness and be a part of.

In fact, to my mind the closest thing to a slanderous remark I can recall Hamilton making is during the press conference after qualifying, in which he was held up by teammate Fernando Alonso for refueling, therefore costing Hamilton the ability to complete one more timed lap. When Peter Windsor asked how much time Hamilton needed in order to start another timed lap, Hamilton replied, “Probably the amount of time I had to wait behind in the pit lane.” And no one could discount the rookie for his feelings in that situation.

However, this season, fans and pundits have become critical on much of the business of Formula 1. Despite your opinion, and which constructor you cheer for, this season and the legal cases behind it have shown much more about how the FIA governs Formula 1.

Firstly, the application of punishments continues and will most likely forever be Draconian. When I and the rest of the world found out about the punishment against McLaren (loss of manufacturer points and a fine of $100 million), and its grandiose nature, I was appalled, but not in the least bit surprised. For those of us who hoped that the publicity of the decision would bear much stronger scrutiny onto the FIA in terms its future decisions in such matters, we were disappointed in the case and ruling for Renault F1 who was embroiled in a scandal much like McLaren was.

Renault’s case was at best, similar to Renault’s, and at its worst, a true espionage scandal. However, practically no penalty was assigned.

Also coming to light this season was the internal strife that many teams face with their drivers. Such problems are not new, but once again, I am surprised that the fans have been taken aback so much this season. As well, the espionage case against Coughlan and McLaren is not exactly something new either. Many engineers when they leave take knowledge with them. This is why when Mike Gascoyne left Toyota in 2006 he placed himself on gardening leave for the rest of the season. Therefore, when Gascoyne joined Spyker (now Force India) in 2007, Toyota could not excuse him of using information that was the property of Toyota.

Op-eds from GrandPrix.com have shown that there is now a consensus forming that when an engineer leaves a team, he may not take anything with him except for what he or she has in their mind.

In the World Rally Championship this year, it was a close driver’s championship. Albeit, both drivers streaked and showed the impact of what happens when a driver does not finish a rally. (It can be argued that Hamilton’s DNF this season cost him the driver’s title in F1.) The story was that as Grönholm’s luck changed near the latter part of the season, Loeb and Citroen struck back and one yet another World Rally Championship. In the constructor’s battle though, Ford easily clinched the title over Citroen.

Also in the news was the sensational driving of Grönholm’s teammate, Miko Hirovonen, and yet another Finnish driver piloting a Ford Focus, Jari Matti Latvala. Latvala performed so well, that he will be taking Grönholm’s seat in the 2008 season; as Grönholm is retiring.

For Subaru, it was yet another year of underperformance, bad luck, and intermingling reliability issues. They will have a completely different vehicle to work with in the 2008 season as the Impreza has been completely redesigned from Subaru.

Algorithms for Dating

Tim Harford helps explain.

Political Fans and Sport Fans

I believe when David Kuo replied to criticisms of his post in which he called the New England Patriots “cheaters,” he also made a parallel in terms of the paradigm that many citizens have with their own political party and politics in general.

My surmise at the connection is to relate the studies which show that when speaking in terms of politics, most people will simply forego rational responses, and as brain scans have shown, political thoughts deal more with emotional responses. Considering that all one would have to do to see the parallel with sports it to simply attend a sports bar, or go to a friend’s house to see a football game, then I think the point with associating sports and pure emotional thought is a very simple and obvious one to make.

So, when David Quo remarked that the Patriots are “cheaters,” he ticked off a few people. However, consider that their coach did illegally record the other team’s play signals. Is that not cheating?

I think what might be an important exercise is to understand the definitions of what certain parties are accused of. What is a “cheater?” What is a “war criminal?” Unless the definitions have changed, then aren’t the participants guilty?

Part of the reason as to why the rational section of the brain gets taken over is because of the perceived cost of and benefit of being a fan and taking a position. Consider that an individual’s ideological preference has more of a benefit than the cost for holding that belief. Bryan Caplan calls this rational irrationality. That is to say, there is a benefit to the person for holding an irrational belief.

One example I thought of was this: Since the probability of dying in a terrorist attack is so small, then holding a strong pro-torture position - which most likely creates anti-American sentiment that breeds more terrorists and terrorism – holds relatively little cost to the internal benefit of holding that ideological perspective. Therefore, since the ideological position holds so much weight for the individual, any effort to disagree with, or demerit the position will anger that person.

The hope is that with time, more and more people become aware of how emotional and irrational some of their paradigms can be. This is why even though I may not always agree with another economist, holding a conversation with them does not usually end in fistfights.

Of course, I may be wrong about mending these trends with sports. For some reason, people hold on harder to what they believe when it comes down to their local sport team. As Americans, we should simply be thankful for not having full-blown soccer riots.

Vocal Religious Fundamentalism

The following is an email I sent to my close friend and psychological expert, William. His thoughtful and eloquent response to this email is here.

Hi Will,

This afternoon, I would like to follow up on my statement as to the sorrow that one should feel after watching Tuesday's Nova: Judgment Day. You said that you felt "revved up" in watching the law bring back a very controversial topic in terms of teaching Intelligent Design within the Dover, PA school district, however I ordered caution because of the locality and numeration of what I anticipated would be a very harsh reaction.

As I have rightly anticipated, there was a very strong reaction to the negative towards PBS, as seen by the latest Ombudsman column.

Yet by about a three-to-one margin, the long compilation of letters from viewers that appears below were critical of the program, charging a one-sided treatment, a bias toward evolution colored by the producers, and that it was insulting to believers.

Here is just one of the many emails sent in to Michael Getler, the Ombudsman for PBS.

It doesn't take a "Rocket Scientist" to figure out that if we, as humans, evolved from monkeys . . . THEN WHY? . . . Are there STILL Monkeys??? We were "Created" by God!!! Pull up AOL now and you'll notice the Gov. of Georgia praying for rain, (No Doubt to GOD). When 9/11 happened what did every good neighbor do? PRAY. Not to monkeys . . . To our "Creator"!!! It shouldn't take tragic and desperate circumstances for people to realize this fact!!! GOD BLESS AMERICA!!! In GOD We Trust!!!

Sonya L. Johnson, North Port, FL

Once again, I, like Sam Harris, must ask you why you feel revved up about the Dover, PA decision while such a strong constituency has goals of turning our country into a theocracy. What is more, is that while fundamentalist Christianity can be argued as being a minority, many have admitted that the religious moderates are as much to blame for their lack of confrontation fundamentalism, and thereby allowing it to control the discourse of the U.S. public image.

Also, of an ironic nature, those who would so quickly take the United States to war against the theocracy of Iran would also just as quickly make our country a theocracy, just Christian, not Muslim.

I put the question to you, how do you think we will avoid war? Who are those of "cool" disposition, and how much of our discourse do they control, as opposed to war hawks and religious fundamentalists? I would like to hear how the U.S.' current theory of presidential powers prevents one of those of vocal minority to do as he pleases? Does our current theory of presidential power prevent anything?

The Achievement Gap, The NCAA, and Us

A few weeks ago, over at Science Blogs, Chad Orzel wrote:

Is it a good thing that only 52% of Maryland's black male athletes graduate? No. But the real tragedy is that only 54% of Maryland's black male students graduate. We should fix that problem first-- by improving public education so that students from poor and minority backgrounds come to college with the tools they need to succeed-- and see if the athletic graduation rates don't take care of themselves.

But it's easy to write self-righteous editorials blasting high-profile sports programs for their academic failings, while fixing the class and race problems of American education will cost real money, and require actual work. And nobody wants that.

I spent some time thinking over the reports that Orzel used to make his point. I make no claim to disagree with them whatsoever. Moreover, I do not disagree with Orzel on his point either. I myself have written in regards to the black-white achievement gap multiple times. The achievement gap is real, and is a cause for wage disparities and other socio-economic issues that impact our country.

However, I still stand by the piece of George Will wrote on the NCAA a few months ago. If the goal of the NCAA would be to further encourage the mission of the student athlete, then I would find it dishonest for anyone to think the 55% graduation rate that Will cites as anything worth of a passing mark. That is to say, I still believe the NCAA to be coming up short of its mission.

Nevertheless, the black-white achievement gap is and still should be the priority to eliminate.

Perhaps Chad Orzel felt that the attention has started to shift away from the achievement gap. With that most likely being his motivator, then Orzel’s post is commendable. Yet, I believe that it is still important to note that a graduation rate of “55 percent of football players and 38 percent of basketball players” is deplorable (taken from George Will’s op-ed).

Since the percentage of NCAA black athletes that participate in the “revenue sports” (football and men’s and women’s basketball) has usually hovered around the 50% mark (the literature and statistics for that can be found at www.ncaa.org), then there is a possibility that the numbers cited by George Will can be affected by the black-white achievement gap. With that in mind, perhaps the NCAA could soon garner some motivation and support to help tackle the black-white achievement gap for itself.

In any case, the achievement gap is real, and I think for the NCAA to continue to laud the student athlete is dishonest when the statistics behind it show that there’s room for improvement.

Orzel hinted at something else when he closed his blog post. He noted that there may be unwillingness for the public to address the achievement gap, and I believe Orzel to be right. There are cultural implications at stake here. Even over at the Freakonomics blog, Steve Levitt will mention his colleague, Roland Fryer, who continues to work on socio-economic issues, such as the black-white achievement gap. Again, Fryer has surveyed students who denote that being smart is “acting white.” Even recently, Levitt reported that Fryer found the latest euphuism to be “acting Asian.”

When anyone talks about having gender roles or seeing stereotypes forced upon others, then perhaps racial roles and stereotypes are themes peddled on by corporate marketers who choose to make products and profit based on those roles, which our culture accepts.

As someone with libertarian leanings, I hope that people will continue to step out of their own stereotypes, and the stereotypes imposed upon them by others. My hope is that with time, people can choose to be smart for themselves, rather than seeing the roles as fixed.

Revolt!

A friend from my college years is teaching in France, and had this to comment on a current student strike:

I think the best thing that I saw today though was the group of students who have started an anti-protest protest! I was handed a flyer when I walked onto campus and thought it was an announcement about the newly blocked buildings, but it actually read something more like this:

The Committee of the fight against the strike

Any student, French of foreign, has the right to go to class.

Whether for or against the university reforms, attending class is a non-negotiable liberty.

This LIBERTY must be respected.

The anti-strike group is protesting against the hostage of students by a small group of agitators.

This is why I have a deep seeded respect and love for France. They will have a revolution over anything. If I were to provide a pop culture metaphor to describe the French’s political activity, I would say that there democracy amplifiers have been turned to “11.”

Whether their paid for schooling yields better results than American college counterparts, I think that matter is up to debate.

A University's Secret Curriculum

A friend emailed me this link that shocked my libertarian leaning conscience, where we find that my alma mater, and former employer, had been trying to “educate” students through the University’s Residence Life Staff. Since the current president of the University made a statement declaring that the program would be shutdown, I believe it safe to assume that the program was in effect to some degree.

Now, what do we mean by, “Educate?” Essentially, Residence Life staff members, and most likely Resident Assistants – which is the position I held, and furthest down on the totem poll – were given a curriculum base for their residents. That’s right, while they are students at the University and already take classes all day, now the RAs had to administer new curriculum for the residents to learn.

The curriculum was based on the following (further explains and opinion can be found here):

• A re-education of students on various social issues.
• A mandatory participation basis. (While I would not see that expulsion from dorms as a possibility for a resident not attending, the RAs were in a sense being forced to make residents by means of performance reviews and such. Although, new testimonials are heading more towards the threatening possibility.)
• Essentially, the outcome would lead to a view of society that sees whites as privileged, and all minorities (based on race, sexual orientation, or gender identification) as marginalized.
• By changing the student’s paradigm, the University’s goal would be students who were more egalitarian.
• Also, those goals included having students who would end up making pledges for whatever causes the complex in which they lived set out.

If you are not sure where to begin with what is wrong in the program, don’t worry because I am not sure where to begin either. To put it differently, the University of Delaware essentially played the old, “My house, my rules,” card. There are a few things wrong with that, firstly which is that the University is not the parent of any of these students, and most of the students are over 18.

Why would a university hide its own curriculum? Even in some of the supporting documents, this is described as a curriculum. So, why is it coming out of Residence Life? You would think that being that there are so many other students in the University, maybe there could be some sort of requirement for a class on the brief sociological history of the U.S. and the world, which could cover topics ranging from sexuality to socio-economic, and racial concerns. Of course with that, the problem would be that the classes were mandatory. We have to remember that people are paying for this. As well, with that said, they are not paying for re-education on social issues from the University’s Residence Life apparatus.

Even then the point of this curriculum was not for education sake, but for making students conform to a paradigm that was already set by the University’s Residence Life arm.

Another problem with the curriculum is that Residence Life decided what the answers to the problems were, and based the education around that. Normally, especially in a higher education background, when ideological problems are given, it is up to the individual to make up their own mind on what they think is right or wrong, and what they want to do about it.

At the core of this, and apparently at the cause of FIRE.org, is the topic of personal liberty. It is a right of every citizen in our nation to espouse whatever stupid, false, and distasteful sentiment they wish. Forcing the students to go through a re-education is the sort of Orwellian doomsday that we all think laughable, but was apparently under way.

Such a program may as well be the affirmation of theocracy and in this case, a secular theocracy. The lack of individual liberty with regards to people’s opinions (however misinformed) is the antithesis of a liberal democracy. At least Jerry Falwell’s college is honest about the misinformation it portrays. And by the way, I still resent the fact that he chose the name, Liberty University.

This is probably the most secretive, and yet seemingly unsubtle form of manufacturing consent I have ever seen. In my experience, college students for the most part live and operate in a bubble that envies President Bush’s. Again, why was this made curriculum? Why was this kept secret in the sense that it was unannounced to residents for what it really was? Why was there such a strong effort to mandate that residents participate? This is at best, disturbing, and at its worst the plot of some sort of Bond villain.

And while I write this article, something of actual substance, that could of deserved the support of such an “open-minded” Residence Life Staff at the University of Delaware, actually hit the floor in the House a few nights ago, and passed. Up until the bill was passed, homosexuals were not protected from discrimination in the workplace while other minorities were. Please listen to someone who really cares about the topic, as opposed to having someone “re-educate” you.

(If you click on the link and follow towards Barney Frank’s speech, take note that he is trying to expose a tactic that the Republicans were using. At the time, Republicans were trying to tie in marriage issues into the bill - whereas the bill was really about work discrimination - in an effort so that bill would not be passed.)

Subsidizing Calories

Rob Hotakainen reports for McClatchy Newspapers that most of the money that goes towards farm subsidies goes for the foods that are not good for us.

What perplexes my logic is trying to figure out why on earth we would subsidize a product, or commodity, that we purchase the most of. You want to complain about subsidizing, or giving tax breaks to oil companies, then what about subsidizing our calorie consumption?

One of the possibilities that come to mind of why we would subsidize something that so many people purchase is for the need to smooth out price shocks that may come within the industry. The only real problem with that is when the industry that is being subsidized makes continuous profits.

Republican Senator Pat Roberts is right though – I never thought I would say that – the real fault of obesity lies within the person making the choice. To argue about farm subsidies in terms of how it could make people obese is really sort of a stretch. Especially when there are much better arguments for reducing or eliminating subsidies.

Tim Harford mentioned something just last week regarding our choices and how the government or firms intervene in our lives.

For example, in many places of work, you have to opt out of the 401k savings plan. That is to say, you are automatically enrolled. What have we seen since? People like it. They are doing something good for themselves – saving money for future retirement - that would otherwise not have been done because the choice was pre-made for them.

Harford used other examples, including smoking in England, and the possibilities of the English government providing more incentives for people to quit. Of course, couldn’t we think about that similarly in the US with what we eat?

I guess the argument could go both ways. Maybe we could subsidize more nutritional foods, and then have people pay higher (less subsidized) prices for other fatty foods. I believe Tim Harford called this paternal libertarianism – he was not advocating it, but simply educating his readers on the term for what we are seeing. Essentially, there is still a strong prevalence for choice, but just that the choice is priced for the ideal of common good.

In the end though, I still have to ask why we subsidize all those foods? Where is the evidence of price shocks? Oh well, why buy the cow when the milk is subsidized?

Spotting the Trend of Online Social Networking

This past week I have been quite busy in my day job, and the trend looks to continue this coming week most certainly.

Although, speaking of trends, I would like to use one of my more favorite segments from The Daily Show to further what I feel are the intricate issues of online social networking. What better way to make a point, other than satire?

Demetri Martin explains:



I'll get back with another column later next week.

Connected

For those who read Economic Principals by David Warsh, every so often Warsh will show in his pieces an ability to construct the semantic connections that show how relevant something can be. I will be honest and say that it is a fancy way of playing the “Degrees of Separation” game.

In order to retain and gain some sort of relevancy with my friends, and acquaintances whom I think should want me to be great friends with them (that’s a joke), I will try and do the same sort of semantic construct that David Warsh does, but instead of economics professors or old newspaper firms, I will be using bands and individual music artists (hey, it’s the weekend). I imagine that this exercise will feel a lot like the lyrics to LCD Soundsystem’s “Losing My Edge.” In fact, as the lyrics of the song go, I will also be stating this knowledge as a show of my relevancy. Whether this attempt at musical elitism will pass or fail however, I think is a matter for Picthfork, or my good friend, Will, to decide (again, joking here).

To start, we’ll leap from the line with The Breeders, whom are probably best known for their album Last Splash, which contained the single “Cannonball.” The Breeders have had lineup changes galore, however, Kim Deal has been the main catalyst of the group and its leader. Now, while Kim herself is famous – even The Dandy Warhols wrote a song about her called “Cool as Kim Deal” – I will go with Tanya Donelly, who apart from having a solo career (I always dug the track “Night You Saved My Life”), was in the group Belly.

Belly was another alternative rock band in the early 90s, which by the way, my favorite track of theirs is “Feed the Tree” from their 1993 album, Star. Donelly left Belly in 1996, after which the band disassembled, as well. Fast forward to 2005, and Tonya Donnelly was working with Mark Eitzel. Eitzel has released many albums with the band American Music Club, as well as some solo albums, his latest being Candy Ass in 2005, which contained one of my favorite tracks, “Make Sure They Hear.” Prior to Eitzel’s 2005 release, in 1998 he worked on an album with the assistance of James McNew from Yo La Tengo.

Yo La Tengo once did a music video for “Sugarcube” that featured comedian, David Cross (you may remember him from the show, Arrested Development). David Cross also worked in a music video with another of my favorite bands, The Black Keys. In 2003, The Black Keys toured with one of my favorite Washington based indie rock bands, Sleater Kinney. Sleater Kinney once toured with the Blues Explosion and were mistaken as groupies, when obviously, in fact, they were one of the acts to perform on stage.

By the way, The Blues Explosion and Sleater Kinney had somewhat similar formats: two guitars, drums, and no bass player.

The Blues Explosion through all their years of releasing albums worked with many people. In their 1998 album, Acme, the track “Blue Green Olga” featured backing vocals from Jon Spencer’s wife, Cristina Martinez, as well as Jill Cunniff, from Luscious Jackson. For those who weren’t living under a rock in the 1990s, we can remember that Luscious Jackson had many hits and transcended a genre or two during their tenure.

And what will finally bring us back to the beginning is that Vivian Trimble, of Luscious Jackson, left the group in 2001 to do an album with Josephine Wiggs, of…you guessed it, The Breeders.

Back to economics and politics next week, enjoy the weekend.

More than a Minute

Last time, I wrote about what influences there are in what we purchase on how we work, but have we ever thought about how we write, or express our thoughts?

In today’s society of 24-hour television news, 10-second online social quizzes, as well as social networking sites themselves, it’s a wonder how any observer learns of a situation, or a person for that matter, in a manner that is not merely shallow. Even in our emails, in business we have been taught that the proper etiquette is to keep things short and simple.

In the end though, the person who really has the interest has to keep prodding for more information. Why, even recently, I sent an email to a co-worker, and then had a reply telling me about policy of which I already knew. The email tried to explain to me that needed to see and sign the attached documents first. Well, those managers were on the distribution list, so there is the rub. And I find it quite disingenuous when you send something that is within policy guidelines only to have to read a reply to that very same message telling you that what you just sent has to be within policy guidelines.

Uhhh? Well, if what I sent was not within the guidelines, you could just tell me explicitly. Then again, they were within guidelines, so what would we even discuss? But people like their high horses, so let them ride.

But what if there was a different way? What if there was a better way socially, politically, and businesslike? What if thorough writing was first priority leading to encouraging – you do not have to require it – full responses that contain context?

The 24-hour news networks suffer the most. Since their goal is to keep everyone up to date almost every hour, they have to reiterate the same news pieces all day, with barely any addition to the story. And in case you thought that wasn’t bad enough, those stories get old. This situation is essentially what is meant by the phrase, “24-hour news cycle.” So, when these stories get old, they are discarded.

With that in mind, you can imagine how easy it can be for warrant-less wiretapping to lose its flavor for the average news viewer. And when you have an executive branch that can delay comment, action, and investigation, and can on top of that tell you that their executive privileges allow them do circumvent what we know as the law, or tell you that you are letting the terrorists win, I would be surprised for the story to go anywhere.

In fact, usually when news stories on warrant-less wiretapping do go somewhere, it takes a long time to come up with a report. When the report comes along weeks, or even months later, will anyone who is used to 30 second news clips bother to pay attention? Moreover, do they even know the report will be broadcast? What are the Neilson ratings for PBS’ Frontline? How do PBS’ ratings fair against NBC when it airs “To Catch a Predator?”

Some stories, no matter how important, lack the tangibility for people to provide the time out of their busy lives in order to make a difference. It may be because of this that some college students take up the cause. Unfortunately, some students are less educated then others, and you have the possibility of someone yelling obscenities for what seems to be absolutely no reason whatsoever.

So, instead of answering 10 second interviews for online social networking sites, write an essay about a topic important to you. Or, write an essay-autobiography describing what is important to you. If the paradigm were changed on what is required for giving people complete answers, we might actually get to know each other just a little better.

Influences

As I discussed in my last piece, race does not look like it will subside anytime soon as a hot button issue With so many people accusing each other of racism for taking certain positions (e.g. many citizens don’t like affirmative action), it’s a wonder how anyone even dares to explore any topics regarding race.

However, the fear of being accused a racist has yet to take hold of Kerwin Kofi Charles, Erik Hurst, and Nikolai Roussanov, who wrote a paper entitled “Conspicuous Consumption and Race.” From their abstract:

Using nationally representative data on consumption, we show that Blacks and Hispanics devote larger shares of their expenditure bundles to visible goods (clothing, jewelry, and cars) than do comparable Whites….[W]e emphasize instead a model of status seeking in which conspicuous consumption is used to reflect a household's economic position relative to a reference group.

Should we get out the pitchforks and start storming university research centers? No, of course not. Remember that even though we are all American, a cornucopia of cultures exists. For one culture to be into cars or jewelry more than another should not come to a surprise.

So, Kofi et al. describe what they are observing as status-seeking. Or, as I have interpreted it, the disparity in consumption is a form of signaling.

But what leads to the disparity? Coming up with a hypothesis, I think this is part of a peer effect manufactured by the general media and black media to black culture. Using the music industry as an example, a lot of material from the rap genre glorifies and tantalizes about an excess life style. Within that life style are the visible goods that Kofi et al. describe.

An important note is to remind ourselves that to call these expenditures good or bad is judgment call that I think hardly anyone qualifies for. For example, a financial advisor may not look too highly upon such goods that hold very little equity and depreciate rather quickly. On the other hand, people’s own utility functions operate in such a manner that almost all of the time the purchases they make are for goods and services that they really want.

So, while my hypothesis above shows that a peer/media effect may explain the reasoning for what some could describe as fleeting purchases, the peer effect for work and co-workers may be an entirely different story.

In fact, according to a paper by Jonathan Guryan, Kory Kroft, and Matt Notowidigdo, the people with whom we work may not affect our productivity. Now, we are not talking about a team project, or anything of the sort, but rather simply who works around you. The study the authors organized revolved around the pairings made at a golf tournament. Their results show that player’s scores did not falter even if paired with a player who had a considerably larger scoring handicap.

So, while trying to showcase lifestyle may be a product of observing and imitating culture (life imitating art), it seems that when it comes to making money, our influences are constrained only to what works, and in that sense, getting the job done.

Forces of Habit

Recently ESPN’s Jeff Perlman wrote a piece on the University of Delaware’s reluctance, refusal, awkward excuses, and non-responses to play Delaware State University

Perlman’s piece regards the incident as purely regarding race. However, the situation may be even more nuanced than Perlman lets on.

The school came to be in 1891 only because the men running the First State wished not to allow blacks into their grand university. Under the Morrill Act, a state either could open its public educational facilities to all peoples, or start a separate-but-equal school for blacks. Hence, Delaware State.

In the ensuing 116 years, Delaware has treated Delaware State not as academic/athletic brethren, but as a piece of gum affixed to the bottom of its loafer. Del. State is where the scary black people congregate, where "those" types of folk go to college.

The problem is UD v. Del State is more socio-economic than it probably is racial anymore. Yet, so many tragedies like this start out as misguided racial solutions (starting Del State in order for UD to remain an all white institution) only to become these habitual stances on how one regards another race and its institutions.

Moreover, a large part of UD’s 6% black student body is separated by the income gap from whites and blacks. To the point, Del State’s tuition rates are far less than the University of Delaware’s. So, unless we decide to subsidize more blacks to go to college, the numbers will stay the same. Situations like these are most evidently the reason why economists continue to study the black-white achievement gap with fervor.

Perlman’s article is wasted on football. Luckily for him, that is why he writes for ESPN. The bigger issue is the admissions department of the University of Delaware. Why is higher education only for some blacks, yet most whites? What are the separating factors? Surely couldn’t the University of Delaware release some of its decision making critiques?

Other questions that I have pondered before, but Perlman did not raise himself are: If the University of Delaware’s student body is only 6% black, how many students is that actually (keeping in mind Delaware State’s student body is smaller)? How many of those students are in-state students? And consequently, the same questions can be asked for Delaware State University. Since in-state students pay less, it is quite possible that the income disadvantage minorities face makes them less apt to attend the University of Delaware, especially when other schools may be financially equal, and with a better educational reputation.

If we want to argue about racism, fine, but maybe we should really be honest about what college football is about. Along the way, some of us have to stick to our principles, and I hope that at some point in the future, it won’t only be George Will. The white – black achievement gap is bigger than football because this involves the futures of many young students. If Perlman really wanted to focus on something in football that should be changed, what about the goals of the NCAA as George Will has discussed before?

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?

My point is that the fate of Pearlman’s article was sealed before it was written. So much of what separates schools is in the price tag, and until we effectively reduce the black-white achievement gap, we will continue to bear witness to the University of Delaware’s racial composition and surreal attitude of playing Delaware State University as a…how did they say it back in the day…a peculiar institution.

Thinking Through Green

Despite this political appeal, we argue that the standards have a cost in terms of efficiency and effectiveness. In particular, we show that an LCFS [Low Carbon Fuel Standard] limiting carbon emissions per unit of energy (the energy-based LCFS) can achieve the first best outcome only under unrealistic assumptions. Moreover, we find that, contrary to the stated purpose, an LCFS can actually raise carbon emissions. Additionally, we show that the second best LCFS—from a regulator’s perspective—“under-taxes” all fuels and may require a nonbinding standard, i.e., the optimal standard may be no standard at all.

That is an excerpt from a working paper by Stephen P. Holland, Jonathan E. Hughes and Christopher R. Knittel. Reading through the simulated economic effects of environmental policy ideas becomes a difficult exercise. On one side, most everyone admits the externalities from carbon emissions exist and most likely harms long-term global climate. However, dealing with such global issues hardly warrants a “magic wand” approach to the problem.

No one policy can solve all problems. Moreover, having one policy simulated in best-case scenarios with maximum restrictions in place is not only improbable, but also unrealistic. Not even environmental regulations are always efficient. This is where policy fails us.

Once again, what we are seeing in the Low Carbon Fuel Standard is an attempt to affect the free-market. We try to adjust the market so that people favor low carbon fuels, but this essentially makes the price of low carbon fuels so low, that the public uses the fuel to the extent that we end of polluting just as much as we were before.

There is a caveat however. Fore example, giving a corporation a tax break that realizes record profits is not necessarily a logical maneuver economically, albeit logical politically. Luckily, if you did not know, congress has rescinded on those tax breaks. Such tax breaks are of the same ilk as subsidizing already profitable farms.

And if you think policy is the only place where we can get it wrong on the environment, you might need to think again. As Warren Brown recently wrote in the Washington Post, what do we do when the time comes to dispose of the large batteries that come in hybrid vehicles? What are the real costs of the entire hybrid vehicle from its length of life, to its ability for salvage and/or disposal? Rather, would it not be more efficient to simply purchase a small economical gas engine vehicle?

Instead of having these questions of policy and “green” life style externalities answered, and instead of having facts and numbers discussed, the public sees a grandiose delusion about how to “help” the environment. What happened to the good old days where reducing, reusing, and recycling were key elements in not only helping the environment, but also being efficient?

If you read Warren Brown’s article, you’ll understand what he, many others, and I have been saying for quite some time now. The public is simply not ready to discuss the real costs of reducing our use of oil, which would best come by the way of a gas tax.

Education for Whom?

Have you ever stopped to consider why so many of our nation’s teachers go back to school to receive elaborate graduate degrees and even in some cases doctorates?

Well, whether they like it or not, Charles T. Clotfelter, Helen F. Ladd, and Jacob L. Vigdor have answered that question by asking another question, what effect does having a graduate degree have on student achievement?

From the August NBER Digest, Linda Gorman summed the paper on graduate-degree teacher credentials and their effect on students educations. In the end the effect was put simply as, none.

According to Linda, the authors, like many before them, have gone through the statistics and found what their predecessors have found. What matters is not whether you have a graduate degree or not, but rather on your experience. (My apologies to all my friends who have become new teachers; I can only hope that you are the outliers in the data field.)

However, dare not think for even a moment that a teacher’s credentials are not correlated with how students perform in their classes. The authors have found that teachers whose credentials are weak have received disadvantaged students. This condition then leads to a further widening of the achievement gap that had been created by the students’ socioeconomic circumstances.

By asking the question as to what the effects of the teacher’s graduate education, the authors find that the motivations for attaining a graduate are plentiful. I believe increases in pay and better students/classroom environment would head the list for motive.

Is this truly the efficient manner to be taught? Should our most disadvantaged teachers consistently receive the most disadvantaged students? I emphasize consistently because there may be a need to provide incentives for teachers to take on these particular students. Quite possibly, the incentives may be misaligned. Perhaps more incentive should be provided to a teacher who takes on students who fall on the bad side of the achievement gap.

Conversely, the data suggests that teachers most likely receive incentive to attain a master’s degree so as to be pampered in how their future classes will be composed. That is to say, they go back to school not become better teachers, but rather, to get better students.

Economists have always spoken out on misaligned incentives, and this may yet be another case of such askew system. I am reminded of Arnold Kling’s feelings on the purchase of carbon offsets. The offset system in hardly efficient, and is an example of trying to eat a salad just because you are feeling guilty for eating cheesecake. That is to say, you are eating more and wasting resources all for the sake of one’s conscience.

Maybe it is time that the incentives for teaching were realigned so that taking on the students who need the help ends up being the fiscally rewarding. According to the data, whether a teacher has a graduate degree or not does not affect the student’s performance, so the other students would hardly be mal-affected since each teacher has to be qualified anyway. John Stossel may in fact be right; a more competitive, incentive driven education system could put the right teachers in the right places.

Games and Perception

Dating has many variables in which each person plays in different ways whether we think about those decisions consciously, or sub-consciously. One specific type, I have linked to before thanks to Ben Casnocha.

What Casnocha did not know at the time was that his observation and reading of The Game: Penetrating the Secret Society of Pickup Artists, by Neil Strauss would gain more notoriety even to the point where Stephen Dubner at the Freakonomics blog would make mention of it as well.

Dubner wrote entirely on the concept of “negging,” which Casnocha mentioned, but did not go too far in depth because he was writing an entire book review. Negging essentially is Neil Strauss’ term for providing what is not exactly an insult or a compliment per se, but rather an accidental insult, or a back-handed compliment. I dare anyone who is not a practiced pick up artist to try that.

According to Strauss and others, negging works. In fact, in the post Dubner wrote, he also cited research that showed many males will flat-out insult their partners in what is described as some sort of “mate-retention.” That is to say, the men make derogatory comments or insults so that their female counterparts will not (or never) have the confidence to leave them.

We can assume that any sane woman (please, don’t start writing me that there is no such thing; that joke has been done ad nauseum) would proclaim that “negging” is not something she would enjoy having done to her. On the other hand, the problem with that assumption possibility is that women like playing the game as much as men do, and would therefore want to be disarmed and “negged” to a certain extent.

As much as you can try, the game is never ending.

Also, how we look, and how we see ourselves concerns almost everyone. This post from Megan McArdle describes that we are not as hot as we think we are.

A cognitive scientist at the University of Chicago explained why to me last winter. When we look at ourselves in the mirror, in any given session we tend to anchor on the time slice image that makes us look our best. That, we decide, is the "real" us.

…

You're also biased by the fact that no one ever tells you you're ugly. It's not merely that people inflate what they tell you (they almost certainly do); it's also that people who think you're ugly tend to drop out of the sample. They may not cultivate an acquaintance with you, and those that do will probably not spontaneously let you know that they find you kind of repulsive.

You're stuck in a web of cognitive biases and a positive feedback loop. It's a wonder anyone does get married.

This phenomenon, believe it or not was discussed by musician, Mike Doughty, while looking at some self-portraits. He wrote that while he eyed over the photographs he wondered what had happened to the man whom he saw in the mirror.

Within our relationships, the differing perceptions and games played that come from you or other people continue to play pivotal roles no matter what their intended lasting value.

Defining Pro Market

By now, most everyone knows of China’s recent toy making deficiencies. One of the stories from McClatchy newspapers cites President Bush as saying that he chose not to enforce stiffer production standards in China for the reason that such enforcements would not be pro-market.

“The overall philosophy is regulations are bad and they are too large a cost for industry, and the market will take care of it,” said Rick Melberth, director of regulatory policy at OMBWatch, a government watchdog group formed in 1983. “That’s been the philosophy of the Bush administration.”

However, considering that the regulations to be applied on China would be for the sake of safety, it is important to realize the parallels that could be shown to our president in order to illustrate how he may have missed the point of what “pro-market” really is.

Taking a close look at the automotive industry, many regulations have been enforced for the sake of safety. Yet, no one makes any claims that making seatbelts and air bags mandatory stifles competition. In fact, now auto manufacturers boast about the amount of safety their vehicles carry.

Pro-market competition really was not what President Bush’s comments were about. In reality, Chinese manufactures have to deal with the fact that they will have an increase in production costs in order to make sure their goods are in fact, good enough to be sold. Even if there were no regulation about lead content, then the free market is working anyway due to the fact that no one would buy the product. If it just so happens that people are afraid of China’s products; then China will have to deal with it.

In the same manner, home building, mortgage, and financial firm shares have suffered in the past month. Is the market being held hostage by some unnecessarily gloomy outlook on short to near term future? Well, you will not hear me say that it is not. However, it is in these conditions where those with a sane frame of mind calm themselves and look for opportunities where firms are now being undervalued.

With Chinese toys, with financials, and with homebuilders we are seeing a correction in market pricing, and a complete re-thinking of how the market prices risk. When China threatens retaliatory tariffs on the U.S. we have to remind them that their products are to blame, and that it is the consumer who will ultimately forgive them.

Making sure products are safe is in no way defeating competition so long as the rules and regulations are the same for everyone. Ideally, if consumers had information about all the products and their contents, then the free market would provide roughly the same outcome as a watchdog group taking products off the shelf.

However, sometimes people are not shown the contents of items, and as I have stated before, market failures are sometimes best fixed by an entity whose purpose is not profit. In this case, consumers may not have as much a voice in other countries as a U.S. trade representative.

At the Crux of College Diversity

Vocal critique against bureaucratically sponsored diversity initiatives that come from most college campuses finds its motivation from events such as this linked by Andrew Sullivan, and further questioned by Ben Casnocha. In this instance, the college bureaucracy has lead to an organization taking three years to change its name to be more “inclusive.” Bureaucracy of this sort, and the amount of time wasted on a matter that most people consider trivial is what motivates George Will to continue his op-ed writing. The more government bureaucracy, the more reason George Will - and any person who believes in less government - has to write.

At the crux of college diversity, and whether diversity should be forced upon us with mandatory acceptance quotas, is the gap between achievements of blacks and whites (which I have discussed previously). Essentially, the idea is that the gap comes from a cyclical problem within children’s beginnings and the resources that they may or may not have at a young age. Of course, those circumstances are provided by the parents who most likely had the same, if not less, resources. Therefore, in order to fix the gap, the admission departments of institutions subsidize how many blacks go to college, thereby hoping they will be better off, as well as their children.

But the long road of college diversity does not end at admissions. Once we are in the door, trying to find a social/peer group is another story. For those thinking of fraternities and sororities for answers, Stephen Dubner, from Freakonomics, asked Sudhir Venkatesh, “How do you define a gang?” His response:

Great question. There are a few important legal cases where prosecutors tried to prosecute college fraternities as “gangs.” They suggested that the fraternity was an organization that existed to promote criminal behavior, such as the abuse of women and underage drinking. Most judges threw these cases out because they thought that fraternities were not, by definition, “gangs.” But judges rarely gave a logical reason for excluding (typically white) fraternities from the “gang category.”

Indeed, by any valid social scientific definition of a gang — “an established organization whose members come together for solidarity reasons and who engage in delinquent and/or criminal activities” — a fraternity most certainly qualifies. But race, as we know, can be a factor in shaping judicial outcomes.

What Vankatesh implies in the last sentence is that even in college (and assumingly all throughout life); race places a huge role, which certainly no one would dare argue. The recent studies that have gone on in the black-white achievement gap have important implications. By researching the gap, the goal is to start eliminating the gap early on in children’s educations, thereby eliminating the need in the future for blacks to “need” subsidies in order to receive admission into institutions of higher learning.

Even if the achievement gap is narrowed in the future, it’s unfortunately unknown if racial barriers will be completely eliminated. Nevertheless, showing that, all variables equal, blacks are just as capable as whites - without the kinds of subsidies that are provided by affirmative actions admissions - is crucial. As well, it seems that the mass public’s recognition of this may come in the same time that predominantly white fraternities will also finally be seen as gangs.