Friday, October 23, 2009


An interactive map showing foreclosures by state. Indiana starts high and never changes color.

Thursday, October 22, 2009


This is amusing. It may even be true:

Victoria University professors Brenda and Robert Vale, architects who specialise in sustainable living, say pet owners should swap cats and dogs for creatures they can eat, such as chickens or rabbits, in their provocative new book Time to Eat the Dog: The real guide to sustainable living.

"If you have a German shepherd or similar-sized dog, for example, its impact every year is exactly the same as driving a large car around," Brenda Vale said.

Friday, October 16, 2009

Intrade political market

It is very early to be betting on what will happen in 2012, but some people want to do that. The Intrade market is now open for bets on the 2012 Republican presidential nominee. It is hard to get an exact price because there is a gap between bid and ask, but Romney seems to be leading the field with a last sale of 27. Palin is by far the most active contract, with a last price of 21.7. The high volume suggests that there are a lot of people who think she has a very good chance and a lot of people that think she has very little chance. Pawlenty is the only other with a recent price above 20 at 24.9.

Another neat dynamic graph

Here is a graph showing job losses over the previous 12 months by standard metropolitan statistical areas. You can see the effects of Katrina, the on-going disaster that is Detroit, and at the end, the current recession.

Thursday, October 15, 2009

Protecting the president

What are the presidents of the U.S. really like? The Secret Service agents who guard them know, and some of them apparently have shared their stories. A new book says tales from the bodyguards reveal that Kennedy and Johnson chased skirts, Nixon was weird, Ford was cheap, Carter was a hypocrite, Reagan, Bush I and Bush II considerate, and Bill Clinton was OK but Hillary a monster. Obama is reported to be a decent man, but Al Gore was obnoxious.

I never have understood why someone would want to be a bodyguard for the president, but I am glad there are people with that preference.

Wednesday, October 14, 2009

Those crazy Brits

There always seem to be stories out of the UK line this one:

A poet lured her husband into woodland for a drug-fuelled sex session and then slit his throat, a court was told yesterday.

Joanne Hale, 39, left him for dead so she could see a man she had met on the internet, a jury heard.

Hale gave her 43-year-old husband Peter a dose of a natural aphrodisiac called 'horny goat weed' before she blindfolded him and led him into local woods to act out her fantasy, it was alleged.


Hale publishes her poetry on the internet and, according to her website, likes to write verse about 'people, animals, love and everything that people care about'.
The Hales were said to have been affected by stress after Mr Hale 'totally messed up' his PhD studies.

And then there are stories with headlines like "Scammonden farmer fined for keeping cows in the dark."

The importance of cost and tradeoffs

From an article about an old speech given by Robert Reich:
The student audience, which at first clapped enthusiastically as Reich started to tell his unspeakable “truths” stopped clapping by the end. Reich had uttered the fundamental heresy. You really can’t have something for nothing. Pulling in one direction meant giving way in another. He went on to say that America was hopelessly addicted to fantasy; that anyone who got up on stage and reeled off the points he had made was politically dead.
Read the whole thing.

On the excellence of public schools

The public schools are in the very best of hands. Clearly the people who run them know what they are doing:
Zachary’s offense? Taking a camping utensil that can serve as a knife, fork and spoon to school. He was so excited about recently joining the Cub Scouts that he wanted to use it at lunch. School officials concluded that he had violated their zero-tolerance policy on weapons, and Zachary was suspended and now faces 45 days in the district’s reform school.

Monday, October 12, 2009

The end of e-mail

I was at a conference in August of 2007 and was told that e-mail was old fashioned, and that the young no longer used it much. It was being replaced by social networking. Now it is not just the young that are dumping e-mail according to an article in The Wall Street Journal.

Saturday, October 10, 2009

The future of education

At Pajamas Media Richard Fernandez looks at the problems of Hollywood and then wonders if higher educations is next:
The current woes of higher education have been ascribed to declines in endowment and a much more competitive market for intellectual capital. People just aren’t willing to pay huge amounts of money for a credential that doesn’t give them real marketable skills any more.

Those are serious factors, but there’s a bigger threat. The process of knowledge exchange and mentoring is rapidly going online, not only through posted documents but over collaborative platforms. People are learning skills for which no degree granting course exists and without going to universities. I’ve seen projects formed, software built, meetings held and mentoring proceed apace without the participants ever meeting each other once in person. Sooner or later this process will reach a critical mass and begin to rival the formal schooling system, at least in certain spheres. How much longer before students begin wondering whether the Ivy League model will be ripped apart by the digital revolution?

I teach more economics on-line than I do in the classroom.

Wednesday, October 7, 2009

Mark Perry on when unemployment will go down

Here. A look at the past suggests it will be more than a year after the end of the recession before we see the unemployment rate falling.

Tuesday, October 6, 2009

This isn't good for US

A few weeks ago I reviewed The Euro at Ten: The Next Global Currency?. It asked if the euro was ready to challenge the dollar as the global currency, and answered, "No." One of the problems for the euro was that an established global currency had network externalities, and only serious mistakes by the country issuing that currency could dislodge it. Another weakness of the euro was that Europe is not a military power, and military power is an important complement to economic power in determining global currency status.

The world may think the US is making serious mistakes because there are reports of a concerted effort on the part of many nations to move away from the dollar.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

One of the huge advantages of having the global currency is that other countries give us an interest free loan of about $500 billion by holding dollars that earn no interest. It is good to be king, or have the king currency.

Update: Some people are fretting over the embarrassment coming from the rejection of Chicago's Olympic bid, especially since the president personally intervened. It is an embarrassment for President Obama but not much else. The Olympics are a politician's dream but a taxpayer's nightmare. The rejection of the dollar as the global currency would be much more than an embarrassment; it would have important and real economic and political consequences. Pundits should worry more about it and forget the Olympics. The charge of being unpatriotic would makes sense if people cheered about this matter. It does not for the Olympics.

Update 2: A denial:
Big oil producing nations denied a British newspaper report on Tuesday that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.

Update 3: More here, asking who was trying to destabilize the dollar with the original story, and also noting that the story has become believable. A few years ago no one would have paid attention to it.

Monday, October 5, 2009

A Challenging college contest

(cross posted at Renssselaer Adventures)

College kids do some strange things--or at least they look strange to those of us who are well beyond college age--but sometimes those strange things are part of the romance of college life. This past weekend some students at Saint Joseph's College took part in a competition for a 32-inch television. It was not a contest of strength or quickness, but of endurance and ability to conquer pain and sleepiness.

To stay in the competition, the students had to keep a hand on a school van. There were some scheduled bathroom breaks, but other than that, the contestants just stood next to the van and kept a hand on it. Initially there were either 17 or 19--I got both numbers when I asked how many had started-- but 14 hours into the competition, when I stopped by, only two remained.
It struck me that this competition seems to be a form of the entrapment game, which is normally explained as a type of auction. In a normal auction, only the winner pays--the losers pay nothing. In the entrapment game, everyone who bids pays whatever they bid whether or not they win the auction. Imagine such an auction for a $20 bill:
Suppose that anyone who bids at the auction of our $20 bill must pay the amount of the bid whether he wins or not. Someone will open the bidding low at $.50 in hopes of getting a real bargain. Someone else will top the bid with a $1 bid. Bidding will usually proceed up to about $10 and then pause. The second bidder must now decide whether to lose his $8 or $9 bid, or continue. If he continues, the bidding will usually advance up to $20 and then pause again. The second highest bidder now realizes that he is not going to gain anything on this auction, but has the potential for a substantial loss, so he has a strong temptation to up his bid beyond $20. Here is how Frank and Cook describe this game:
"One might be tempted to think that any intelligent, well-informed person would know better than to become involved in an auction whose incentives so strongly favor costly escalation. But many of the subjects in these auctions have been experienced business professionals; many others have had formal training in the theory of games and strategic interaction. For example, psychologist Max Bazerman reports that during the past ten years he has earned more than $17,000 by auctioning $20 bills to his MBA students at Northwestern University.... In the course of almost two hundred of his actions, the top two bids never totaled less than $39, and in one instance totaled $407."
Can you see how this competition with the van is similar? There is no payment in money, just time. Some of those who entered probably enjoyed the camaraderie of being in the contest for a few hours before they went home. When you are 14 hours in, it is no longer much fun, and each additional hour probably is more and more unpleasant. All the time that is spent is lost, whether or not you win the contest. The total value of the time spent by all those entered in probably is greater than the value of the prize.

A competition that would be more similar to a regular auction would be to have the television won by a waiting line or queue. If you begin the line and stay there until the deadline, you win. If you leave the queue, someone else can replace you. In this case there would be an incentive to become second in line only if you thought there was a good chance that the person first in line would drop out. The person who would be first in line would tend to be the one who valued the television most in terms of time.

When the price of the item is time rather than money, there is a social loss because no one else gets the money--the time lost by those waiting is not gained by anyone else.

I asked the two guys still standing and the judges about what had happened in the contest. They said that a couple of the people had been eliminated when they got careless. One girl dropped her cell phone and stooped over to pick it up. taking her hand off the van. Another girl had a blanket for warmth, and it slipped. She reached to stabilize it and took her hand off the bus without realizing what she was doing. A few had dropped out in the very early morning, probably because they decided they needed some sleep.

I suppose all those who took part in it will have a story to tell their kids and grandkids about the stupid student stunts that they did when colleges were real places and not just destinations on the Internet.

Update: The contest ended early Saturday afternoon, 18 or 19 hours after it started. The end came not by one of the contestants dropping out, but by an error. One of them was making some changes in his iPod music selections, and then reached down to grab an umbrella, momentarily taking his hand off the bus.

There is always next year.

Friday, October 2, 2009

Changes in employment

The unemployment report for September was released on October 2, and what was notable in this one was the large number of people who withdrew from the labor force. Unemployment rose by 214,000, but the number of people in the labor force shrank by 571,000, which means that the number of people working shrank by 785,000. Graphs which show changes in the number of unemployed suggest that we are getting close to some good news. I wondered what the graph would look like if instead we looked at changes in the number of employed. Below is the graph.

The graph begins with the Jan-Feb 2006 change and ends with the Aug-Sept 2009 change. The data were found at The series chosen was the series Civilian Employment (Seasonally Adjusted) - LNS12000000. In January of each year, data are affected by changes in population controls, so the Dec-Jan changes may be erratic.

This graph seems much less encouraging concerning the end of the recession than graphs showing changes in unemployment. Below are the month-to-month changes in employment used to construct the graph.

Jan-Feb 2006 . . . 295
Feb-Mar 2006 . . . 289
Mar-Apr 2006 . . . 50
Apr-May 2006 . . . 329
May-Jun 2006 . . . 266
Jun-Jul 2006 . . . -111
Jul-Aug 2006 . . . 397
Aug-Sep 2006 . . . 162
Sep-Oct 2006 . . . 483
Oct-Nov 2006 . . . 298
Nov-Dec 2006 . . . 402
Dec-Jan 2006/7 . . . -6
Jan-Feb 2007 . . . 9
Feb-Mar 2007 . . . 275
Mar-Apr 2007 . . . -620
Apr-May 2007 . . . 268
May-Jun 2007 . . . 142
Jun-Jul 2007 . . . -85
Jul-Aug 2007 . . . -240
Aug-Sep 2007 . . . 471
Sep-Oct 2007 . . . -336
Oct-Nov 2007 . . . 798
Nov-Dec 2007 . . . -371
Dec-Jan 2007/8 . . . 23
Jan-Feb 2008 . . . -242
Feb-Mar 2008 . . . -52
Mar-Apr 2008 . . . 234
Apr-May 2008 . . . -283
May-Jun 2008 . . . -236
Jun-Jul 2008 . . . -142
Jul-Aug 2008 . . . -323
Aug-Sep 2008 . . . -244
Sep-Oct 2008 . . . -372
Oct-Nov 2008 . . . -513
Nov-Dec 2008 . . . -806
Dec-Jan 2008/9 . . . -1239
Jan-Feb 2009 . . . -351
Feb-Mar 2009 . . . -861
Mar-Apr 2009 . . . 120
Apr-May 2009 . . . -437
May-Jun 2009 . . . -374
Jun-Jul 2009 . . . -155
Jul-Aug 2009 . . . -392
Aug-Sep 2009 . . . -785

Update: Below is a graph showing total employment from January 2006 until September 2009.
In November of 2007 the number employed was 146,665,000. In September, 2009 the number employed was 138,864,000. Employment has dropped by 7,801,000 in that time. A couple of interesting sub-periods: since November 2008 employment has dropped by 5,280,000 and since January 2009 it has dropped by 3,235,000.

Drop in employment = jobs lost.

Update here.