Tyler Cowen's Blog, page 571
January 4, 2012
Larry Kotlikoff is running for President
Of the United States. Here is his web site for his campaign. Excerpt:
But You Have Never Run for Office or Run a Major Company!
True enough. But I have run Boston University's Department of Economics and presided over its transformation from one of the worst to one of the best economics departments in the country. I also have run and continue to run a small company called Economic Security Planning, Inc., which produces personal financial planning software. This software was ranked #1 by Money Magazine and has been acclaimed by a long-list of other top publications and media outlets.
Hat tip goes to Peter Coy.
[image error]
What would Grossman and Hart say?
After a lengthy legal battle between a black South Carolina church and members of the Ku Klux Klan, a judge has ruled that the church owns a building where KKK robes and T-shirts are sold.
A circuit judge ruled last month that New Beginnings Baptist Church is the rightful owner of the building that houses the Redneck Shop, which operates a so-called Klan museum and sells Klan robes and T-shirts emblazoned with racial slurs.
That is near Columbia, and the story is here. It is temporary, yes, but does this count as vertical or horizontal integration?
Why is there uniform pricing for movie tickets?
So how come we're still stuck with $12 tickets for both blockbusters and indie flicks? A few theories:
1) Theaters do price discriminate already, kind of, but they do it with space. At the multiplex, not all theaters are alike. Bigger movies get more theaters with better technology. Smaller movies get older theaters with smaller screens.
2) You can't consistently cut prices after a successful opening weekend. If people knew that ticket prices would fall after a big opening, many more would wait until the second or third weekend to see it, which would, ironically, destroy the meaning of opening weekends.
3) Price can repel as easily as it attracts, because it's a signal of quality. If your a theater showing one movie for $6, one movie for $10, and another for $12, perhaps fewer people will see the $6 movie because they assume it's garbage.
4) Cheaper tickets lead to higher policing costs. I'm a cheapskate, so I might buy a ticket to see cheap, cheap Iron Lady and sneak into Sherlock Holmes. This would create a fascinating incentive for art-house studios to release smaller, cheaper films the same weekend as blockbusters, knowing that thousands of canny consumers might buy fake tickets to their show to sneak into the more expensive blockbuster.
5) Price discrimination offers more opportunities for other movie theaters to steal each others' audience. Once again, I'm very cheap, so I don't mind taking the metro way across town to see Sherlock Holmes for significantly less money if one multiplex starts to mark up its blockbusters.
That is from Derek Thompson. A related research paper is here (pdf). I would rephrase the question to be a little more specific. Especially in the days of robust DVD sales, why did they not offer first weekend modest coupon bonuses — as distinct from price discounts — for the most popular movies? That would drive up attendance, without damaging the gross (as a lower p would), and boost "advertising" for the DVD and the subsequent foreign openings. Movie markets have changed a bit since then, but that to me is the biggest puzzle. I would expect some unpopular but cultish movies to have higher prices, not lower prices, much like Edward Elgar books.
Addendum: Here is my 2005 post on same, and Alex's brother.
No-give, No-take in Israel
In Entrepreneurial Economics I argued for a "no give, no take" system for organ donation–people who signed their organ donor cards would be given priority over non-signers should they one day need an organ. The idea has an element of justice to it but the primary goal is to increase the incentive to sign one's organ donor card.
Israel recently adopted this policy by giving extra points on the allocation system to people who previously signed the organ donor card. In the case of kidneys, for example, two points (on a 0-18 point scale) are given if the candidate had three or more years previous to being listed signed their organ card. One point is given if a first-degree relative had signed and 3.5 points if a first-degree relative had previously donated.
It's early but so far the policy appears to be very successful:
Due to the population's surge of interest in obtaining an organ donor card, the Adi-National Israel Transplant Center has extended through March 31 the deadline to register as a donor and receive special benefits.
…During the past few weeks, Adi's phone system has collapsed several times due to the high demand.
Since Adi decided to give preferential treatment to those registering as a potential organ donor, tens of thousands of people have registered, raising the number of potential donors to over 600,000. Until last year, the rate of registration was among the lowest in the Western world.
Hat tip to David Undis whose excellent group Lifesharers (I am an adviser) is implementing a private version of no-give, no take in the United States.
Here is my piece on Life Saving Incentives and here are previous MR posts on organ donation.
The culture that is Norway?
The UK's 2011 bestseller lists might have been dominated by cookery, courtesy of Jamie Oliver, and romance, courtesy of David Nicholls, but Norwegian readers were plumping for another sort of book last year: the Bible.
The first Norwegian translation of the Bible for 30 years topped the country's book charts almost every week between its publication in October and the end of the year, selling almost 80,000 copies so far and hugely exceeding expectations. Its launch in the autumn saw Harry Potter-style overnight queues, with bookshops selling out on the first day as Norwegians rushed to get their hands on the new edition.
I've been wondering what the new religion of Europe (is Norway Europe?) is going to be. The article is here.
Sentences to ponder, on globalization's 2nd unbundling
…as the Thai versus Malay auto sector experiences show, thinking about localisation policies without putting global value chains at the heart of the economic logic can lead to some very misguided policies. Today's nations might do better to look at Thailand starting from the late 1980s, rather than Korea and Taiwan.
That is from Richard Baldwin and the paper is here. For background, Baldwin suggests that Malaysia failed to become a major auto producers because it tried to commandeer the entire supply chain, whereas Thailand was content to fit in with the broader Japanese supply chain. I found this an excellent read, interesting throughout, though I wish Baldwin had spent more time discussing the rather limited nature of economic progress in Thailand, including relative to Malaysia.
The paper has the title "Trade and Industrialisation after Globalisation's 2nd Unbundling: How Building and Joining a Supply Chain are Different and Why It Matters." It's the first good paper I've read this year, but there are more to come. It is also a good paper for Arnold Kling to comment on; Baldwin asks for instance how South Korea will deal with the international unbundling of the national supply chains the country has created and used to back its growth.
January 3, 2012
Krugman's response to Alex
You'll read it here, see also various (mostly weak) responses in the comments to Alex's original post. Most of you, including Krugman, are missing Alex's point. The issue is not that Krugman changed his mind (I've done that plenty, Alex too). The issue is that Krugman a) regularly demonizes his opponents, including those who hold Krugman's old positions, and b) doesn't work very hard to produce the strongest possible case against his arguments.
Krugman's response shows that he has changed his mind on debt, and explained why, but Heritage has not. It's an "I am better than they are" response. That is beside the point, which is about elevating the views of others not oneself. The need to show all the time that one is better or more right than the others is itself harmful to depth, and responding with "but I really am better than them" is just falling into the trap again.
Krugman calls himself a Humean but has he studied and internalized the lessons from Hume's Dialogues Concerning Natural Religion? Is it easy to imagine the current Krugman writing rich multi-voiced dialogues which extend both his points and those of his intellectual opponents? Can you imagine the current Krugman writing something sufficiently multi-faceted that you might come away thinking — because of the piece itself — that the opposing point of view was the better one?
Krugman has shown a remarkable and impressive capacity to reinvent himself, more than once. He could reinvent himself again — in a truly Humean direction — and become the most important American public intellectual — and perhaps intellectual — of his time. Or he could keep his current status as a sharp and brilliant someone who has an enormous number of followers but relatively little influence over actual events, and perhaps, like most of us, won't be read much fifty years from now.
The reality is that neither the early nor the more recent Krugman is especially convincing on debt, and if anything the conjunction between the two shows that switching sides isn't quite the same thing as changing your mind. The odds are that government spending cuts are not literally budget balance destroyers on net. How about writing a NYRB essay that lays out the short-run negative output gradient to austerity, presents why austerity is considered a serious option nonetheless, discusses catch-up and bounce back effects and their relevant time horizons, analyzes what kinds of policies are actually possible in a 17 (27) nation collective, engages with the best public choice arguments (including Buchanan and Wagner) on a serious level, ponders the merits and demerits of worst case thinking, and ruminates on the nature of leadership in a way which shows some tussling with Thucydides and Churchill? Surely that is within Krugman's capabilities and if it still comes out Keynesian or left-wing, great, at least someone will have seen those arguments through. Such an essay would stand a far greater chance of influencing me, or other serious readers, or for that matter President Obama. We should hold Krugman to the very high standard of actually expecting that he produce such work. Not many others are capable of it.
There is a kind of hallelujah chorus for Krugman on some of the left-wing economics blogs. The funny thing is, it's hurting Krugman most of all.
Addendum: Here is a response from Krugman; note he has turned my description of "regularly demonize" to "always demonize."
Who are the most searched-for economists?
The list is here, and #1 not surprisingly is Paul Krugman. Singh and Draghi are second and third respectively, followed by Bernanke and Sen. I am pleased to have come in at #26.
For the pointer I thank David Friedman.
Tyler Cowen's Blog
- Tyler Cowen's profile
- 844 followers
