Tyler Cowen's Blog, page 205

Flex-price markets in everything, cable TV edition

 Time Warner Cable customers looking to lower their bills would be able to hire “professional negotiators,” to squeeze discounts out of the cable provider under a trial service being offered by Yipit, a New York-based daily deals startup.

Yipit sent out an email on Thursday to a small group of people on its distribution list directing them to a link to submit their Time Warner Cable account information. Then Yipit said it would have employees who are “professional negotiators” try to haggle for better rates with the cable company.

The service is being tested as consumers are being hit with cable bills rising faster than the rate of inflation and as cable companies find it harder to hold onto customers who are defecting to newer entrants such as Verizon FiOS.

Yipit was founded in 2009 and offers an email newsletter roundup of top daily deals from websites such as Groupon and Gilt Groupe.

A representative from Yipit verified the authenticity of the offer but declined to comment further. A Time Warner Cable spokeswoman said “there’s no need for our customers to pay someone to call us on their behalf.”

The website cites potential savings of $564 per year. Yipit will not charge customers if it is unable to extract better rates but customers do have to pay a 20 percent cut of savings if it succeeds, according to the offer on its website.

There is more here, via the excellent Daniel Lippman.

Assorted links

1. Why computers find it hard to win at Go.

2. “The Clovis paradigm is finally buried.”

3. How has the mining boom changed Perth?

4. Did childhood obesity really decline?  And NYC receives its first cupcakes ATM.

5. Propagating confusion about money creation.

6. History of European border changes (short video).  Many lessons in that one.

Rampage is on a rampage (the most expensive schools are art schools)

After a mere week or so at work, it can no longer be said that Catherine Rampell is the most underrated force in economics writing and journalism (or can it?).  Here is her post on which are the most expensive schools.  It is art and music schools, when you take all relevant costs and financial aid into account.  Excerpt:

Now here’s a list of the top 10 most expensive four-year private nonprofits, after subtracting the average amount of government and institutional grant/scholarship aid at each institution:

1. School of the Art Institute of Chicago

2. Ringling College of Art and Design

3. The Boston Conservatory

4. Berklee College of Music

5. California Institute of the Arts

Do see the earlier MR post “Artists grew up in households w/typically higher incomes than doctors did.”  What does this imply about the competitiveness of the sector?  About our models of child-rearing?

What happens when the unemployed retire?

They become much happier, or so it seems in a new paper by hetschko, Knabe, and Schoeb, “Changing Identity: Retiring from Unemployment.”  (Ungated versions here.)

Catherine Rampell reports on the research here.  Part of her summary is this:

The paper is based on German survey data and finds that self-reported “life-satisfaction” increases by around 0.3 points on a scale from 0 to 10 for people who transition from unemployment to retirement. That’s about twice the increase in happiness that newlyweds experience. The average person who transitions from employment to retirement, on the other hand, does not experience a bump in life satisfaction.

And:

Rather ironically, it is hope that keeps people unhappy while unemployed…

A simple theory of college, elites, parties, women, and fraternities

Harry from Crooked Timber writes:

The authors lived for a year in a “party” dorm in a large midwestern flagship public university (not mine) and kept up with the women in the dorm till after they had graduated college. The thesis of the book is that the university essentially facilitates (seemingly knowingly, and in some aspects strategically) a party pathway through college, which works reasonably well for students who come from very privileged backgrounds. The facilitatory methods include: reasonably scrupulous enforcement of alcohol bans in the dorms (thus enhancing the capacity of the fraternities to monopolize control of illegal drinking and, incidentally, forcing women to drink in environments where they are more vulnerable to sexual assault); providing easy majors which affluent students can take which won’t interfere with their partying, and which will lead to jobs for them, because they have connections in the media or the leisure industries that will enable them to get jobs without good credentials; and assigning students to dorms based on choice (my students confirm that dorms have reputations as party, or nerdy, or whatever, dorms that ensure that they retain their character over time, despite 100% turnover in residents every year).

The problem is that other students (all their subjects are women), who do not have the resources to get jobs in the industries to which the easy majors orient them, and who lack the wealth to keep up with the party scene, and who simply cannot afford to have the low gpas that would be barriers to their future employment, but which are fine for affluent women, get caught up in the scene. They are, in addition, more vulnerable to sexual assault, and less insulated (because they lack family money) against the serious risks associated with really screwing up. The authors tell stories of students seeking upward social mobility switching their majors from sensible professional majors to easy majors that lead to jobs available only through family contacts, not through credentials. Nobody is alerting these students to the risks they are taking. So the class inequalities at entry are exacerbated by the process. Furthermore, the non-party women on the party floor are, although reasonably numerous, individually isolated—they feel like losers, not being able to keep up with the heavy demands of the party scene. The authors document that the working class students who thrive are those who transfer to regional colleges near their birth homes.

The post is interesting throughout.  The book he is discussing is Paying for the Party: How College Maintains Inequality, by Elizabeth A. Armstrong and Laura T. Hamilton, which I have just ordered.

Did Bitcoins just become less fungible?

Adam Levitin writes:

The IRS ruled that Bitcoin and other virtual currencies are property, not currency.  This means that they are subject to capital gains taxation.  And that means that Bitcoins are not fungible.  The price at which a particular Bitcoin was acquired (and this is traceable) determines the capital gains on that particular Bitcoin when spent.  If I spend Bitcoin A, which I bought at $10, but is now worth $400, I’ve got a very different tax treatment than if I spend Bitcoin B, which I bought at $390. (Poor Satoshi–he’s got a lot more capital gains than most…)  This means Bitcoins are not fungible, and that makes it unworkable as a currency.  If I have to figure out which particular Bitcoin in my wallet I want to spend and what the tax treatment will be, Bitcoin just doesn’t work as a commercial medium of exchange.  Bitcoin still works as a speculative medium, but Bitcoin’s claim has always been to being more than the latest iteration of the trading sardines–it aspired to be a commercial medium.  I don’t see that happening now.

The article is here.

Assorted links

1. Charles Mann on China and clean coal.  Excellent piece.

2. Tokyo fashion icons.

3. Why Wu Tang will release just one copy of its special album.

4. Very good five minute video clip about the building of 17th century Amsterdam and the origins of liberty.

5. Behind the scenes at the robot Olympics.  And how robots and drones are transforming wildlife documentaries.

6. Generic brand video (pretty awesome, hat tip Yana).

How do Olympic gold medals influence longevity?

I was intrigued by the new paper by Adam Leive, called “Dying to Win? Olympic Gold Medals and Longevity.”  The main results are these:

This paper investigates how status affects health by comparing mortality between Gold medalists in Olympic Track and Field and other finalists. Due to the nature of Olympic competition, analyzing performance on a single day provides a way to cut through potential endogeneity between status and health. I first document that an athlete’s longevity is affected by whether he wins or loses and then detail mechanisms driving the results. Winning on a team confers a survival advantage, with evidence that higher mortality among losers may be due to poor performance relative to one’s teammates. However, winning an individual event is associated with an earlier death. By analyzing the best performances of each athlete before the Olympics, I demonstrate that an athlete’s performance relative to his expectations partly explains the earlier death of winners in individual events: on average, Olympic Gold medalists expected to win, but losers exceeded their expectations. Conversely, athletes considered “favorites” but who fail to win die earlier than other athletes who also lost. My results are robust to estimating a range of parametric and semi-parametric survival models that make different assumptions about unobserved heterogeneity. My central estimates imply lifespan differentials of a year or more between winners and losers. The findings point to the importance of expectations, relative performance, surprise, and disappointment in affecting health, which are not highlighted by standard models of health capital, but are consistent with reference-dependent utility. I also discuss potential implications for employment contracts in terms of a trade-off between ex post health and ex ante incentives for productivity.

The paper is here, and for the pointer I thank the excellent Kevin Lewis.

Gunshot Victims to be Put into Suspended Animation

A hospital in Pennsylvania will soon begin clinical trials to put gunshot or other accident victims into a state of suspended animation while their organs are repaired. By all measures the people suspended will be dead for hours but with luck many will be brought back to life.

The first step is to flush cold saline through the heart and up to the brain – the areas most vulnerable to low oxygen. To do this, the lower region of their heart must be clamped and a catheter placed into the aorta – the largest artery in the body – to carry the saline. The clamp is later removed so the saline can be artificially pumped around the whole body. It takes about 15 minutes for the patient’s temperature to drop to 10 °C. At this point they will have no blood in their body, no breathing, and no brain activity. They will be clinically dead.

In this state, almost no metabolic reactions happen in the body, so cells can survive without oxygen. Instead, they may be producing energy through what’s called anaerobic glycolysis. At normal body temperatures this can sustain cells for about 2 minutes. At low temperatures, however, glycolysis rates are so low that cells can survive for hours. The patient will be disconnected from all machinery and taken to an operating room where surgeons have up to 2 hours to fix the injury. The saline is then replaced with blood. If the heart does not restart by itself, as it did in the pig trial, the patient is resuscitated. The new blood will heat the body slowly, which should help prevent any reperfusion injuries.

The technique will be tested on 10 people, and the outcome compared with another 10 who met the criteria but who weren’t treated this way because the team wasn’t on hand. The technique will be refined then tested on another 10, says Tisherman, until there are enough results to analyse.

No one knows how long people can be maintained in suspended animation before revival is impossible. We know from accidents where people drown in icy lakes that suspended animation can work for at least half an hour and experiments on pigs suggest no cognitive defects from revived animals suspended for up to an hour, mice have been suspended for up to six hours and roundworms for up to 24 hours.  If the initial trials are successful, further experiments will likely discover ways to lengthen the period of suspended animation in humans and perhaps suggest improvements to current cryonic techniques.

Hat tip: Noah Smith.

Average is Over

New technologies are transforming the structure of the US economy but creating only modest numbers of jobs, according to the biggest official survey of businesses, conducted only once every five years.

The 2012 economic census shows how technology is creating a boom in output for new industries – such as shale gas and internet retail – but only a modest increase in their payrolls.

It highlights concerns that recent innovations in information technology tend to raise productivity by replacing existing workers, rather than creating new products that demand more labour to produce.

The FT link is interesting throughout and I believe these numbers vindicate what many of us have been arguing.  It also stresses the oft-neglected point that mining and drilling are relatively capital-intensive sectors:

Drilling is capital intensive, however, so even though the industry’s sales rose by $142bn, its annual payroll was up only $20bn to $61bn in total.

It also turns out that online retail is not very labor intensive at current margins.