The tricky issue of fairness

A few days ago there was a news report about a girl whose parents were suing to allow her to play high school baseball, which in Indiana is a male sport.

An IHSAA rule prohibits girls from trying out for baseball if their school has a softball team on the basis that the sports are comparable. But the lawsuit filed Friday in U.S. District Court in Indianapolis argues that baseball and softball aren't really the same sport, so girls should be able to try out for baseball.

The suit seeks to have the IHSAA rule thrown out based on the equal protection clause of the 14th Amendment to the Constitution and Title IX, the federal law that mandates equal educational opportunities for boys and girls.

I wonder if those who think this suit has merit would also think that a suit asking that a boy be allowed to compete on a volleyball team or that a boy be allow to compete on a softball team would have equal merit.

How bad was it?

We may or may not have hit the bottom of the bear market. If we have, it is worth asking, "How bad was it?"

There are a variety of ways of computing the decline in the stock market. There are different indexes and there are different ways of measuring the same index. Using data I could readily find on the Internet, the monster bear market was the 1929 to 1933 bear market, which saw stocks decline about 89%, Stock prices did not get back to 1929 values until the mid 1950s.

In the past hundred years there have been three other serious bear markets. In 1919-21 stocks declined 46.58%. In 1937-38 they declinded 49.10%. And in 1973-75 they declined 46.98%. (There were also two bear markets between 1900 and 1908 that were in the 45-50% range.)

Using a different series (from yahoo.com), I compute the 2007-08 decline as 46.66%. This is from the Dow Jones Index, with a peak of 14164.53 (Oct 9, 2007) and a low of 7552.29 (November 20, 2008).

So a few of the old men on Wall Street have seen a bear market equally bad as this one, but none of them have really seen anything worse. We live in interesting times.

(I consider the S&P index a much better measure of stock prices than the Dow Jones Industrials. The S&P 500 fell from 1565.15 on Oct 9, 2007 to 752.44 on Nov 20, 2008, a drop of 812.71 points, which is a 51.92% decline. [Ouch! No wonder my pension fund looks so bad.] That decline is more than 10% larger than the drop in the S&P from Jan 11, 1972 (120.24) to Dec 6, 1974 (65.01), a 45.59% drop. So based on that measure, and assuming there are no nonagenarians actively trading there, no one on Wall Street has ever seen a bear market as severe as the current one.)

See an update here.

Excellent economists

In a November 28th 2008 opinion piece, Karl Rove praised the Obama economic team, and may have really meant it. I have been impressed: Geithner, Romer, Summers, and Volcker are all-stars either academically or in economic policymaking. Plus there are other excellent economists at the next level down. The market seems also to have been impressed, as the S&P rose from its close of 752.44 on November 20 to 896.24 on November 28, a 19% gain. That gain may simply reflect a rebound from its lowest level in over eleven years, but the case can be made that it reflects what is happening in the political world.


Update 4-13-09: The Obama administration seems to have wanted to use only the Volcker brand name, not the actual Volcker product.

In praise and damnation of freegans

I kind of like the freegans, the people who want to get everything free. I too want to get everything free. And if I cannot get it free, I like to get it without paying money for it. (There is, of course, a huge difference.) I do not seek out yard sales, but when I happen upon them, I stop and check them out. I would rather visit a Goodwill or other thrift shop than go to a shopping mall. I ride a bike so I do not have to pay for gasoline. Rummage sales are fun, and I have even done my share of dumpster diving. I appreciate the saying that one man's trash is another man's treasure.

But I do not think I could ever be a real freegan because they write such embarrassingly stupid things. They see themselves as anti-capitalist and do not seem to realize that their lifestyle depends on the abundance that capitalism creates. Freeganism could not work well in a socialist country--there is not enough wealth to allow it. Their vision of the market is one of production and accumulation (which is also the view of a lot of non-freegans). They would probably even agree with the statement, "Consumption is the sole end and purpose of all production," or the statement that "consumption and leisure, not accumulation and hard work, are what Life is really all about."

It is almost a certainty, though, that they would not recognize the sources of those quotations. The first is from Adam Smith's Wealth of Nations and is a foundation of economics. The point of production or having a job is not to produce, but to be able to consume. Work is a means to an end. The second is from the amusing book by Steven Landsburg, The Armchair Economist. In it he describes his computer game of life, a computer game to teach people about economics. He says the most important point to teach is that consumption is the goal of economic activity. Landsburg is a libertarian who thinks environmentalists are religious wackos.

Exchange is positive sum--both sides of the exchange must benefit for the exchange to take place. It is the positive-sum nature of a market society that allows it to generate wealth. In contrast, theft is at best zero-sum. What one person obtains, the other loses. Theft is one example of what economists call rent seeking. Rent seeking can also be legal--trial lawyers are the ultimate rent seekers, taking without giving anything back. How about freeganism, which also takes without giving back? If freeganism is honest (they seem to be ambivalent about shoplifting), it is positive-sum. The freegan gains but no one loses. People who understand conventional economics should have no problems with the freegan lifestyle. What people who understand conventional economics should have problems with is the attempts of some to present it as the embodiment of a profound philosophy of life. It is OK to be cheap and want to consume without paying, but do not pretend that makes you better than other people.

When I was a graduate student at the University of Wisconsin-Madison during the heyday of student radicalism, a popular slogan of protesters was that we should produce for people's needs, not for profit. Many really believed that that they were uttering something profound instead of something incoherent. I think my distaste in reading the freegan justification of what they are doing is closely related to my distaste for the campus radicals back in the late 1960s and early 1970s.

Am I being too harsh? At the bottom of the page which explains the freegan philosophy is this:

"If you lack a printer or are reading this at a library with no printers, etc, and want paper copies, send a dollar to them...."

Is that a test? If someone actually sent a dollar, would it prove the person does not deserve to be a freegan? Or is this just another example of the confused freegan thinking?

A stimulus plan?

Much of the economy is struggling, but gun sales are booming. Maybe we could save the big three auto makers by threatening to ban the purchase of cars in six months, and people will respond by buying now.

Expectations matter.

Maybe she needs a better business model

A "unique Seattle store" is going out of business because the owner cannot pay her rent:

A shop that lets you pay what want is becoming another casualty of the sagging economy.

Being unique in this case is not be a good thing--there is a good reason successful enterprise do not let the customer set the price. Why would a reporter write that the sagging economy is the source of the problem?

Getting ready for Thanksgiving

Sarah Palin was back in the news last week because some people were horrified that she gave an interview with turkeys being slaughtered or bled (I could not tell which) in the background. The commentary seemed to divide into two camps: the horrified and those who said that if you eat meat, you should not be afraid to see how that meat gets to your plate.

In our society we have managed to separate ourselves from a lot of unpleasantness that is necessary for life. An attraction of a show like Dirty Jobs is that it reminds us of that fact. Older societies were not so far away from those facts (unless you were very rich, in which case you could say things like, "Let them eat cake"). Primitive man was uncomfortable killing animals for meat, and as a result the whole process was sanitized with religious ritual. The main point of animal sacrifice in the Bible or in the Greek epics was not to waste animals, burning them for the gods or God, but to slaughter them for human consumption.

One of the troubling things about hunting is that some hunters do not seem to be troubled by the taking of life, but rather seem to be quite delighted by it. I have no problem with people hunting for meat. But some have no interest in the meat--they hunt for sport, and I do not respect that, even if their hunting is necessary to preserve a balance given that we have eliminated natural predators (especially wolves).

One of the comments I saw (I do not remember where) was from a farmer pointing out that farming itself centered on killing. He said that nature took care of the growing, and what the farmer spent his time doing was killing the competition: the weeds, the insects, the rodents, and anything else that threatened the crop. If you think of farming in that way, then there really is no escaping animal slaughter even if one becomes a vegan. Not only plants but also animals died for your whole wheat bread, your soybean tofu, and your three-bean salad.

Update. You might think you can avoid the slaughter by going organic. I doubt it. I garden organically, but when I saw the critter in this picture, I killed it. I did not eat it, though I think it is edible. Any gardener who does not kill the insects that feed in the garden will not have much to harvest.

Interesting times

Looking at the price-to-earning ration of the S&P 500, it appears that stocks are now cheap.

On Thursday the yield on the two-year Treasury note fell below 1% and the yield on the 3-month bill was .02, as low as it was in September. The data are from a Bloomberg article.

The stock market seemed reassured with the announcement that Geithner would be the next Treasury Secretary closed up on Friday. It would be nice if Thursday was the low. Maybe it will be, but predicting is hard to do.

In late October I had a little contest in one of my classes in which students were supposed to answer four questions:

Question 1: What will be the lowest value at closing for the S&P 500 in the present market panic, which for the purposes of this contest is between September 1 and November 28? (It might have happened already, it may still be coming. You decide.)

Question 2: On what date did or will the S&P hit the low before the end of November?

Question 3. What will the S&P close at on November 28?

Question 4. Will the S&P rise or fall on November 5?

Four entered. At least two thought the lows were reached on Oct 27, 2008 at 848.92. They all thought the market would rise Nov 5. And they were all predicted a S&P value of about 1100 on Nov 28. At the time, I thought those were very reasonable predictions.

We live in interesting times.

Starving in Zimbabwe

Angus Shaw writes for the Associated Press about starvation in Zimbabwe:

"There's nothing here. People are dying of illness and hunger. Burial parties are going out every day," said Michael Zava, a trader in Mhangura.

The hospital that serves the district is closed, and so is its small morgue, so there's no way of telling how many are dying, Zava said. Children's hair is discoloring, a sign of malnutrition. Adults are wizened and dressed in rags — they have no cash for new clothes.

Zava said he has seen villagers plucking undigested corn kernels from cow dung to wash and eat. A slaughtered goat is eaten down to everything but hooves, bones and teeth. Crickets, cicadas and beetles also can make a meal.

The food crisis began after 2000, when Mugabe launched an often violent campaign to seize white-owned farms and give them to veterans of his guerrilla war against white rule over the former British colony.

Confirmation Bias

Michael Shermer uses this anniversary of the Jonestown massacre to write about confirmation bias:

[Confirmation bias] is when we look for and find evidence to support what we already believe, and ignore or rationalize away evidence that does not. And because we are so tribal by nature, we employ confirmation bias with extra vigor when it comes to defending the groups we belong to.

Research on confirmation bias has found that when subjects are presented with evidence that contradicts their deeply held beliefs, they dismiss it as invalid, while other subjects treat the same information as valuable when it confirms what they believe.

I have written several posts that highlight confirmation bias, though with different names. See here and here. It is something we all suffer from and that we probably cannot overcome, but acknowledging it may lessen the problem.

Why McCain lost

http://www.businessandmedia.org/articles/2008/20081120093001.aspx

xmas gifts

In an e-mail discussion of Christmas gifts, one of my sons (who must have way to much time on his hands) found the Slingshot Flying Cow With Moo Sound. It is described in this way:

They work like a slingshot and scream while flying. They are approximately 9" long and fly well over 50 feet. The harder you pull back, the further they will fly. Slingshot Cow flies with a mooing sound!

The Slingshot Flying Cow is nothing short of outrageous! The Cow can be shot long distances using his elastic arms. Put one finger in each of the hands' pockets, pull back and let go. The soft, furry Cow is funny with its big head and bulging eyes. As an added bonus, every time you shoot him, he lets out three loud mooing sounds. We don't know why he does this, he just does. If your office or home needs some seriously funny props, you'll love the Slingshot Flying Cow.

There are also slingshot frogs, chickens, pigs, ducks, and monkeys. I wonder who will be getting one this year.

Fed Balance Sheet V

It has been a while since I wrote about the Fed's balance sheet. On Nov 6 I noted that reserve balances with the Fed were an astonishing $493,633 million. Somewhat earlier, on Oct 21, I noted that the three-month T-bill rate had risen above 1%.

I expected a month ago that the situation would improve, but there is little evidence in the numbers that it has. Today, Nov 19, short-term interest rates were again extremely low. The three-month rate was a mere .07 percent, which was actually lower than the one-month rate of .09%. Still, that beats the .03% of Sept 17, 2008. People are interested only in safety and do not care about return.

Reserve balances with the Fed have increased further, to $592,144 million for the week ended Nov 13, 2008. How high will they go? I have no idea.

Meanwhile the stock market continued to sink, with the S&P 500 Index ending at 806.58, its lowest level since March 12, 2003. How low will it go? Again, I have no idea. It is an interesting time to be an economist, but not an enjoyable time to be approaching retirement.

Spam

I recently noticed a drop in my spam mail. Here is the reason why.

Gold coins

A column in the New York Post reports that there is increased demand for gold coins even though the bullion price of gold has not risen. Gold is an asset that becomes attractive when there is fear of inflation, so my presumption is that more people throughout the world are now worried about potential inflation. (I remember the 1970s too well to dismiss the possibility of future inflation.) The column explains the failure of gold prices to rise in this way:

"Gold should be moving up," Murphy says. "How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?"
His answer? "Today the public is buying gold like crazy, but the US government and the banks that hold bullion are intentionally keeping the price down."

I do not know enough about what is happening to be able to judge whether that answer makes sense or not.

Rational ignorance

Economists argue that it is usually rational to be ignorant, and that it is rarely rational to be well informed. This conclusion is simply the result of cost-benefit reasoning. There is a vast amount that a person could know, but a very limited amount of time to learn, so what we know is tiny compared to what we do not know. Further, most people will be poorly informed with regard to political matters because there is no clear benefit from knowing them.

Someone who does not like President-elect Obama has posted a video that is both funny and also an excellent example of rational ignorance. The site acknowledges that interviewing a few people is hardly evidence of anything, so it commissioned a Zogby telephone poll to ask its questions. The results showed that 57.4% could NOT correctly say which party controls congress (50/50 shot just by guessing), but only 6.2% failed to identify Palin as the one with a pregnant teenage daughter. The site is http://howobamagotelected.com/.
Update: More information about the poll is here.

Two stories of overpopulation

Indiana has had a problem with the deer overpopulation in the state parks and forests. When the deer, which no longer have natural predators here, become too numerous, they destroy the vegetation. The solution has been to close the state parks for a few days and allow hunters to kill deer.

Meanwhile areas of the west have a problem with horse overpopulation on public lands. When the horses (and burros) become too numerous, they destroy the vegetation and habitat. The solution has been to round up the horse and let people adopt them. Some that cannot be adopted become wards of the state.

Some obvious questions: Why not have a horse hunt? Does it make sense to protect horses in the wild given that they are an invasive species, not native to the habitat? Does it good policy to spend $38 million a year managing a "wild" horse population of 30-35 thousand? Why should it be illegal to butcher horses for meat? Why do we seem to demand different treatment for animal species that we view as pets?

Iceland

Here is a report from Iceland, the nation that has been most severely hit by the financial panic.
http://www.ft.com/cms/s/0/66c87994-aec1-11dd-b621-000077b07658.html?nclick_check=1

Unintended results

I am not sure where the economics are in this story from Nebraska, but I am sure there must be some. Nebraska may alter their safe-haven law that allows parents to abandon children at hospitals. More than half of the children abandoned have been teenagers.

If people find it necessary to abandon teenagers, maybe there is a serious problem that needs to be addressed. The article concludes:

"These are largely families at a point of incredible desperation," said Wayne Sensor, chief executive of Alegent Health. "They aren't bad parents or bad kids. They simply don't know what services are available out there."

We do not tolerate the intolerable

A few days ago I saw a story about a lawsuit at a nearby college (Depauw University) that had the quotation, "We cannot tolerate the intolerable." The thought struck me that what we tolerate is always limited, that everyone draws a line somewhere and will not tolerate things beyond that line. The interesting question is, "Where does one draw the line?"

The politically-correct folks like to think of themselves as tolerant and others as intolerant. That thought is an illusion that blinds them to their own intolerance. For many of them, any idea that can be labeled as racist, sexist, or homophobic becomes intolerable and no longer has to be taken seriously. Milton Friedman was one of the great intellectuals of the 20th century, but many on the left have decided they can ignore him because he once talked to Pinochet who they have decreed is intolerable, and hence Friedman is intolerable.

It is best to realize that we are all intolerant of some things. Often those who think they are the most tolerant are in fact the least tolerant.

Testing a new camera

My old camera has become a bit unreliable, so I recently purchased a new one. The new one has more megapixels and 4x zoom instead of 2x zoom. I wanted to know what that meant in practice, so I took the test shots below. I took the first pictures with my old 3.2-megapixel camera, and the second with my new 8-megapixel camera. I have selected only the center of the picture, so this is what the camera actually captured. Clearly there is an advantage in image quality in the 8-megapixel picture.


Then I zoomed as much as each camera would zoom and retook the picture. The 2x zoom with the old camera is about the same as the non-zoomed image of the 8-megapixel camera. To see what the 4x zoom did, you have to click the second picture below to see the actual result. I am disappointed with it. Maybe with the settings I am using the camera is also doing some digital zoom, because the resulting quality is poor, though it is very big. Or maybe the results would be better on a sunny day rather than on a dark, gloomy day

Here is some information about the building in the picture. It was built with good intentions, and the Catholic Church recently canonized the founder. The goal of the school was to pull Indian boys away from their culture and teach them the culture and ways of the European Americans. Today this goal is usually condemned. We think we are wiser and smarter than our ancestors were. One wonders how much of what we are doing today with the best of intentions will be condemned by future generations.

Freegan meat

From the Rensselaer Republican newspaper of November 14, 2008 (A-10):

Road Kill
The Jasper County Sheriff's Department has a road kill list, where interested parties can sign up to be notified if a deer is killed on the highway... You must provide your name, phone number and areas you are willing to go pick up the animal carcass. A deer kill slip will be provided to recipient. There are no fees for this process. Also, the deer will not count toward the hunting limit for the year. The recipient is responsible for his or her own deer processing.

If I knew how to process a deer, my name would be on that list. The locker plants in the area charge $50 to process a deer. (Also, we just purchased a quarter of a steer, so we probably would not have room in the freezer even if I did know how to process it.)

Nigerian scam finds a victim

The story is at http://www.katu.com/news/34292654.html
An Oregon woman was suckered for $400K by the Nigerian scam.

She wiped out her husband’s retirement account, mortgaged the house and took a lien out on the family car. Both were already paid for.

For more than two years, Spears sent tens and hundreds of thousands of dollars. Everyone she knew, including law enforcement officials, her family and bank officials, told her to stop, that it was all a scam. She persisted.

Should we feel sorry for people like this for their loss, their stupidity, or both?

(This episode and the many others like it show that when we desperately want to believe something, we will believe it.)

Beware the blogs

Our perceptions are shaped by our expectations. We believe what we want to believe and disbelieve what we do not want to believe. Hence, rumors that people want to be true can spread very quickly on the Internet and are hard to stamp out. Gullibility on the Internet wasexploited by a couple hoaxers who created a fictitious character, Martin Eisenstadt, to spread false rumors.

They say the blame lies not with them but with shoddiness in the traditional news media and especially the blogosphere.

Mr. Gorlin, 39, argued that Eisenstadt was no more of a joke than half the bloggers or political commentators on the Internet or television.

Change we can believe in?

I have written earlier about the tremendous joy of Obama supporters. That joy has not lifted prices in the stock markets. After a rise on the day of election, the stock market has declined on five of six days, as the closing S&P averages show:

Nov 3 966.30
Nov 4 1005.75
Nov 5 952.77
Nov 6 904.88
Nov 7 930.99
Nov 10 919.21
Nov 11 898.95
Nov 12 852.30 (preliminary)

A 15% decline, which is what these numbers show, is huge. The best case for Obama is that these results reflect the ongoing financial panic and are totally unconnected to what is happening in the political sphere. Certainly they show limits to the magic he can work. I will leave it to the reader to figure out the worst case for Obama.

Gas prices fall

Gasoline prices finally fell below $2.00 per gallon in Rensselaer today after many months of being above $2.00, and sometimes being over $4.00. I may have helped raise them, but I can claim no credit for their fall. (Except that I ride my bike to work, thereby lessening the demand.)
Some people worry that gasoline prices are set by a monopoly. I am unaware of any theory of monopoly that yields prices with as much volatility as we have with gasoline prices. They rarely are the same from one day to the next. In contrast, cigarette prices hardly ever change.

The war to end all wars

Happy Veterans Day. World War I was the war to end all wars, and just to make sure that people in the future would remember what the sounds of war were like, someone had the foresight to record them. Read the account and get the link to the recording here.

Arbitraging the Obama inauguration

Maybe we can put some very rough estimates on Obama joy. The government has printed 250,000 tickets for his inauguration that will be distributed through congressmen and senators a week before the inauguration. However, there are people, including legitimate ticket brokers according to CNN, already scalping those tickets and they claim that they will be able provide them. "Ticket brokers act as middlemen, selling inaugural tickets they say they purchase from Capitol Hill employees and people who get them from members of Congress." A Bloomberg article reports, "Someone paid $21,716 for a pair of tickets on EBay Inc.'s Stubhub.com, spokeswoman Vanessa Daniele said in an interview. The average price for tickets is currently $1,419, she said. "

It is unlikely that all the people who get them will value them as much as these early buyers, but if the average value is $1000, then just this bit of Obama joy would be worth at least a quarter of a billion dollars. Someone who specializes in cost-benefit analysis could probably do a lot more with these numbers than I can.

I like free. I wish I could get some free tickets. Long live arbitrage!

Back to the great depression

Discussion of the Great Depression is back in the news, and it has prompted a couple of posts at marginalrevolution.com by Alex Tabarrok. I thought the second was clever. Tabarrok notes the neo-Keynesians argue that fiscal policy was at best only mildly expansionary during Roosevelt's first two terms because higher taxes largely counteracted the effects of increased government spending. Tabarrok suggests that if we take into account the supply-side and the uncertainty effects of changing tax policy, the net effect of New Deal policy would have been contractionary. The view that the bulk of the New Deal did little to get the economy out of Depression and may have actually prolonged it is not a popular view on the Left.
Update: Here is another post at marginalrevolution.com about the Great Depression.

Moral hazard and me

On Mondays I give my class a handout with problems that we will also use on Wednesdays and Fridays. Because some students miss on Monday and others forget their handouts, I come prepared on Wednesdays and Fridays with extras. Last week when we were discussing moral hazard, I realized that my handout policy was an example of a situation that created moral hazard.

A stash of cash

One of my students sent me a link to an article about a dispute concerning found money. A contractor discovered $182,000 of Depression-era cash while remodeling a house for a friend. Their initial excitement turned into dispute as they could not agree on how to split the find. Eventually they ended in court, and the publicity brought in heirs to the person who had stashed the cash. The end result was that neither ended up with much, and that they both could have been much better off if they had been able to settle privately. It is hardly an original story line--a number of movies have been built on this theme.

The story could be used to illustrate a number of economic concepts. It illustrates why there is no predictable solution in bilateral monopoly. It is an example of transactions cost. And it shows the importance of fairness in a situation much like the ultimatum game.

If you are so smart...

Greg Mankiw finds data that says economic graduates are almost as smart as phyics and mathematics students.

Joy to the world

I am an old realist who sometimes envies the idealism of the young. The joy of Obama supporters is much greater than the sorrow of McCain supporters, which is remarkable because behavioral economics says that the emotional impact of loss is greater than the emotional impact of gain.

If net joy (Obama joy minus McCain sorrow) could be turned into dollar amounts, would it raise GDP for the fourth quarter enough to keep the U.S. out of recession? Citizens of other countries share this joy. Is this joy currently our biggest export? Because we cannot charge for it, can we consider it part of our foreign aid? If we did, would we be the largest donor country in the world in per capita terms? On the other hand, what if there is buyer's remorse and the joy dissipates? Then would we have to deduct from future GDPs? And if the foreigners decide that the Obama presidency is not all they expected, would our foreign aid go negative? Or should we expect the joy to remain because expectations partially determine our perceptions, so that those who are heavily invested in the Obama story will approve actions by him that they would damn if done by Bush? (Isn't the expectations-perception link the reason it took Nixon to go to China?)

I have so many questions, but maybe time will answer them. (However, I am not sure that time answered my ponderings from eight years ago.)

A letter to the Teaching Economics Group

I just replied to a thread on the teaching economics mail group (tch-econ@elon.edu).

I do not think a shortage of bank reserves is a problem right now. Check

http://www.federalreserve.gov/releases/h41/Current/

Reserve balances with the Federal Reserve are $493,633 million. That is up somewhat from a year ago. Well, a bit more than somewhat. It is up by $484,992 million.

The Fed has started to pay interest on reserve balances. I have not followed this very closely, but it seems the Fed wants the banks to hold excess reserves because it allows them to control the Fed funds rate better.

http://www.federalreserve.gov/newsevents/press/monetary/20081006a.htm
and
http://www.newyorkfed.org/markets/ior_faq.html

R Schenk

I need to update my Fed Balance Sheet series. Maybe I will get to it this weekend.

The stock market has had two days of large losses. I sure hope that is not because the market is worried about the economic policies of the president elect.

A cola taste test

I am using Don Ariely's book, Predictably Irrational, in a class. We recently finished his chapter, "The Effect of Expectations, Why the Mind Gets What it Wants." In the chapter he discussed the Coke-Pepsi taste tests, so one of my students decided we should do our own taste test.

All of us were given two cups, one with Coke and the other with Sam's Cola, the Wal-Mart brand, but we did not know which was which. Three out of five said that they preferred the cup that was actually Coke, but only two of five correctly identified the Coke sample. Two of them said that there clear differences, that the Coke was smoother and the Sam's Cola was sharper. The other three did not see much difference.

Ariely presents evidence that taste tests done when people know the brand turn out very different than when people do not know the brand. Expectations do affect our perceptions. "That is what marketing is all about--providing information that will heighten someone's anticipated and real pleasure."

Not postpartisan yet

I was reading the news last night and stumbled on an article about McCain and Palin returning to life after the election on an abcnews blog. Palin was trying to be gracious in defeat:

And God bless Barack Obama and his beautiful family and the new administration coming in. It is time that we all pulled together and worked together and America’s going to reach her destiny.

Most of the comments were from Palin supporters and expressed their appreciation for her efforts. But there were also a lot of comments from Palin foes that surprised me with their ungraciousness. Here are some examples:

What a slimey greasy low life piece of trailer trash SHE turned out to be. Opportunistic, hateful, devisive, deluded.....everything that is wrong with the GOP. It's a real treat to watch the destruction of the repuglican party....and it happened from inside!

good riddance

Palin, don't let the door hit ya' where the Lord split ya', wink...wink

Maybe her plane will crash on the way back to Alaska. "YES WE CAN!"

Make sure she takes that white trash family back with her.

Great!!! now she can go back to palling around with her seperatist husband and new found right wing nut buddies in Alaska. I feel bad for Alaska. They actually got a raw deal. I suspect she will appoint herself in the senate to be Stevens replacement when she throws him under the bus.

Sarah Palin is an ignorant and a raving maniac.... I heard she had temper tantrums with her staff.. I am ashamed that she didn't stop the hateful rallies when the crowd started chanting terroist! She DOES NOT HAVE FAMILY VALUES! She is a cutthoat and a despicble human being with a shrill voice. What was McCain thinking?Go home Sarah! You are full of yourself and I can't stand her!

Palin is such airhead! Can you imagine if that retard had gotten in?

Could we be lucky enough to never hear of her again or hear that awful voice.

Now all we have to do is impeach her & then I'll be happy. Not scared of her - just annoyed that such an imbecile had the audacity to think that could wing her way into the big leagues.

Good Riddance Caribou Barbie. Maybe the French president Sarkosy will give you a ring.

Dear Sarah Palin, You are on minute 16 of your 15 minutes. Please, get on your chopper, shoot some wolves and be on your merry way.

Good riddance to the nasty old man and the little girl moron from the great backwater of Alaska.

What a mistake McCain made was evident the first time Sarah opened her mouth. She proved she was not really intelligent about the world and her use of the english language was like one would use in a bowling league. Too bad, so sad the Republican heirarchy made such a mistake with McCain.

There were quite a few comments about the inappropriateness of these kinds of comments, including these:

Seriously, fellow Obama supporters. Let's show a little more class. Yeah, she may not have been ready to be vice president. But she won't be vice president, so relax. She was gracious in defeat; let's be gracious in victory.

"We are the change we have been waiting for." I read the many ungracious and vicious comments here, and I am very afraid of the change that "we are." The press said McCain and Palin stirred up hate--but what stirred up the hate and bitterness that is so evident among the Obama supporters here?

Finally, I do not understand why ABC quotes her in this way:

"Alaska can lead this effort, and as governor I wanna be there on the forefront helping to make this nation more secure."

They do not do that to other politicians.

Happy and Sad

A most interesting election campaign is coming to an end. If we lived in a better world, I would feel this way: I will be happy if Obama wins, but also a bit sad because McCain will not have the opportunity to be president. And I will be happy if McCain wins, but also a bit sad because Obama will not have the opportunity to be president.

Although I do not live in that world, I will have both happiness and sadness on Wednesday morning. If Obama wins, I will be sad that Obama has won but also happy that McCain lost. And if McCain wins, I will be sad that McCain has won but also happy that Obama has lost.

I will vote for the one whom I think is the lesser of evils, but I am aware I may be wrong. The best-laid plans of mice and men often go awry, and sometimes that is a good thing.

Promotion

Glenn Reynolds at pajamasmedia.com/instapundit/ points to an article in The Wall Street Journal reporting that many young Japanese are reluctant to take promotions because the additional pay is not worth the additional work.

He then quotes an e-mail from a reader:

It's not just Japan. I work for one of the big 3 aerospace/defense companies at a Los Angeles area location, and though I wouldn't say it's nearly as evident as in Japan, young workers in our industry are asking the same questions. We have no hope of achieving the same standard of living as the droves of retiring Boomers and Silents, and the 2% raise differential afforded by a promotion simply isn't enough of an incentive to work 20-30% more hours a week.

If the industry paid overtime, or offered significant bonuses to rank and file employees (bonuses are only available to upper management), a lot of young engineers would respond enthusiastically. In fact, we've asked the company to do these things in recent employee forums. We'd all like to buy homes in the area and raise families here, but the older workers own all the real estate, and most of us assume that we'll give things a few years, but get out of the area once we need to settle down. It's simply too expensive to live in a metro area like L.A. Since the incentive structure doesn't offer us hope of achieving the same lifestyle as the older employees, we don't see much reason to devote our lives to these companies. As I said, the 2% differential doesn't make a whole lot of difference, so why bother with the extra stress?

Does prosperity contain within itself the seeds of its own destruction?