Tyler Cowen's Blog, page 135

*Finding Equilibrium*

The authors are Till Düppe and E. Roy Weintruab and the subtitle is Arrow, Debreu, McKenzie and the Problem of Scientific Credit.  I very much liked this book, which provides an inside look at the discovery of some key theorems in economics, with an emphasis on the problem of joint discovery.  McKenzie, by the way, is the one who received the least credit, an example of the Matthew Effect.

Assorted links

1. Why the super-rich aren’t leaving their fortunes to their kids.

2. Hou Yifan and four Norwegian girls (scroll down a fair ways for the photo, but not actually recommended).

3. Sheep rustling is up.

4. Do dogs and cows get that “Eureka!” feeling?

5. New and scary results on lead exposure.

6. Physicists create water tractor beam.

Has the religion-education gradient turned positive?

For those born in much of the 20th century, it was true that college graduates of all ages were significantly less likely than others to report any religious affiliation.

But research just published in the journal Social Forces (abstract available here) finds that, starting for those born in the 1970s, there was a reversal in this historic trend. For that cohort, a college degree increases the chances that someone will report a religious affiliation.

“College education is no longer a faith-killer,” said Philip Schwadel, author of the paper and associate professor of sociology at the University of Nebraska at Lincoln.

That is for belief, observance was not tested.  The full story is here.

The education premium for prostitutes

The Economist ran a long feature story, full of data on the world’s oldest profession.  Here is one bit of interest (WWBCS?):

A degree appears to raise earnings in the sex industry just as it does in the wider labour market. A study by Scott Cunningham of Baylor University and Todd Kendall of Compass Lexecon, a consultancy, shows that among prostitutes who worked during a given week, graduates earned on average 31% more than non-graduates. More lucrative working patterns rather than higher hourly rates explained the difference. Although sex workers with degrees are less likely to work than others in any given week (suggesting that they are more likely to regard prostitution as a sideline), when they do work they see more clients and for longer. Their clients tend to be older men who seek longer sessions and intimacy, rather than a brief encounter.

Are there general lessons here for the rate of return to education?  Here is another bit, when it comes to disintermediation one sex worker complains:

Moving online means prostitutes need no longer rely on the usual intermediaries—brothels and agencies; pimps and madams—to drum up business or provide a venue. Some will decide to go it alone. That means more independence, says Ana, a Spanish-American erotic masseuse who works in America and Britain. It also means more time, effort and expertise put into marketing. “You need a good website, lots of great pictures, you need to learn search-engine optimisation…it’s exhausting at times,” she says.

The full story is here.

Why do women pay more for some consumer goods and services?

Danielle Kurtzleben considers a few hypotheses:

…women develop “relationships” with brands and are more brand-loyal than men. If that’s true, it could explain why women might pay more for a razor that’s priced too high.

And in some cases, there are legitimate differences between men’s and women’s clothing. According to Kebba Gaye, a managing partner at The Press Dry Cleaning and Laundry in Washington DC, high-priced ladies dry cleaning has to do with actual differences in the clothing. Men’s dress shirts tend to be standard in shape and material — often cotton, with two long sleeves, one button-up front, maybe a pocket or two — and one machine can press all of them.

Women’s shirts, on the other hand, are far more varied — sleeveless, rayon, cap-sleeved, buttoned, silk, pullover — and can’t all be handled the same.

“The reason a woman’s shirt is $5 versus $1.85 for men is because of the different types of shirt,” Gaye says. But he says he does make exceptions: “If men wear a polyester like Hawaiian shirt, then they’ll have to pay more, too.”

Her main explanation however is based on the demand side (is there so much market power?):

Of course, there’s an obvious answer here: society expects women to look a certain way. Put into economics terms, there’s a higher return on investment for beauty for women. Beauty products are becoming more popular among men, it’s true, but expensive skin cream is still optional. For women, all those trappings are more necessary.

The full piece is here.

Santa Cruz, Bolivia bleg

I’ll be there soon enough.  Please tell me what to do, what to eat, and how to understand what I am doing.  I thank you all in advance.

Assorted links

1. Appelbaum on the Admati capital requirements campaign.

2. How much can we save with a guaranteed annual income in lieu of current welfare programs?

3. My interview with El Pais (in Spanish).

4. The Santa Fe minimum wage experiment.

5. Does probability theory plus noise explain our judgments?

6. The new NCAA decision may not actually change so much.

7. The driverless motorbike?

8. Was Shakespeare a conservative?

Paul Krugman on libertarian fantasies

He writes:

…the cost of bureaucracy is in general vastly overestimated. Compensation of workers accounts for only around 6 percent of non defense federal spending, and only a fraction of that compensation goes to people you could reasonably call bureaucrats.

And what Konczal says about welfare is also true, although harder to quantify, for regulation. For sure there are wasteful and unnecessary government regulations — but not nearly as many as libertarians want to believe. When, for example, meddling bureaucrats tell you what you can and can’t have in your dishwashing detergent, it turns out that there’s a very good reason. America in 2014 is not India under the License Raj.

In other words, libertarianism is a crusade against problems we don’t have, or at least not to the extent the libertarians want to imagine.

And:

And what all this means in turn is that libertarianism does not offer a workable policy agenda. I don’t mean that I dislike the agenda, which is a separate issue; I mean that if we should somehow end up with libertarian government, it would quickly find itself unable to fulfill any of its promises.

You can read his further points here.  In fact I agree with many of Krugman’s observations in what I thought was overall a useful post.  It’s just that I think a lot of other viewpoints are living in a fantasy world too.

That said, Krugman grossly underestimates the costs of government regulation.  For one thing, government regulations are a major obstacle to the infrastructure improvements which Krugman is so keen on.  To use Krugman’s own pick of the cherry, he wrote another post defending the DMV for its on-line service and reasonable wait times.  It was not always so, but on top of that let’s not forget the Virginia DMV just tried to put Uber and other ride-sharing services out of business (Krugman himself wrote rapturously about Uber a few weeks ago and how it held out the promise of a society with diminished car ownership in some locales.  I say bring it on.)  Fortunately the regulators were temporarily overriden in this case, although they may reemerge as an obstacle in a subsequent bargain.  More generally, taxi license and medallion requirements are a disgrace in many places, and who is in charge of that?  Typically the DMV.

You might also ask whether DMVs underregulate where they ought to regulate more.  The number of road deaths in the United States each year is so high as to be scandalous.  I am not sure how much this problem can be pinned on the DMV (how easy is it to get very bad drivers off the road through legal/constitutional means?), but still it is hard to argue that in absolute terms these agencies are overseeing a successful regime of road safety.

Animals suffer under food nationalism

The more than 6,000 animals in Russia’s largest zoo have been caught up in the worst fight between Russia and the West since the Cold War. A wide-ranging ban on Western food announced this week by the Kremlin has forced a sudden diet change for creatures that eat newly forbidden fruit.

The sanctions against meat, fish, fruits and vegetables from the United States, the European Union and other Western countries were intended to strike a counterblow to nations that have hit Russia over its role in Ukraine’s roiling insurgency. But the measures will also have an impact on stomachs at the zoo.

The sea lions crack open Norwegian shellfish. The cranes peck at Latvian herring. The orangutans snack on Dutch bell peppers. Now the venerable Moscow Zoo needs to find politically acceptable substitutes to satisfy finicky animal palates.

“They don’t like Russian food,” zoo spokeswoman Anna Kachurovskaya said. “They’re extremely attached to what they like, so it’s a hard question for us.

The penguins still live in a Cobdenite world:

The penguins eat fish from Argentina — whose food sales to Russia have not been blocked and are politically in the clear.

But the Ramsey rules are relevant for some of the primates:

Orangutans, gorillas and monkeys are particularly finicky eaters at the zoo, but Kachurovskaya said they would eventually adapt.

“In the wild, they eat what they have, not what they want,” she said.

The story is here.

Tocquevillean sentences to ponder

“There are two things which a democratic people will always find very difficult – to begin a war and to end it.”

– Alexis de Tocqueville