Bank or cracker box?

A few days ago a story hit the wires about someone who found $10000 in a box of crackers. It turned out that an elderly woman had put the money there, and then in a mix up somehow the crackers had been returned to the store and put back on the shelves. The line that struck me was this:

The Lake Forest woman, whose identity was not released, had lost faith in her bank and decided the box would be a safer place for the money.

Everyone knows that a box of crackers is a much safer place to keep money than in a bank, right?

The story reminds me of another incident, but one that did not have a happy ending. In the little town that I called home half a century ago, there was an poor old lady noted for her holiness. After we moved away, she became ill and had to go to the hospital. Her fellow parishioners thought they could do a good deed by cleaning out her tiny house and buying her a new bed, which they did. When she came home, she got very agitated when she saw what they had done. It took a while for the do-gooders to come to the conclusion that the little old lady had put her life savings in the old mattress which they had burned.

Religion and self control

An article in the New York Times yesterday says that two psychologists have reviewed eight decades of research and concluded that religion is good for self control.

The rituals that religions have been encouraging for thousands of years seem to be a kind of anaerobic workout for self-control.”

Religious people have been arguing that for a long time, but now there is some science to back it up.

Benjamin Franklin was not religious but supported organized religion because he thought it socially useful. I wonder if he also had the insight that religion contributed to self control.

The Minneapolis Fed

Under strange and unexpected circumstances I met a VP from the Federal Reserve Bank of Minneapolis two days after Christmas, and I asked him why the Fed Bank of Minneapolis had abandoned the building it had built in the 1970s. The building had received praise for its unique architecture. The feature that attracted the most attention was its use of the principle of a suspension bridge to support the structure. Despite its striking architecture, the Fed occupied the building for less than thirty years before moving to a new facility.

He said that although the building looked great, it was not people friendly. For example, the corridors were on the outside along the windows, so there were no offices with windows except for those of the top officials. Further, the building was long and narrow (like a bridge), which did not give it a good flow for people.

There were also some serious design problems with the building. It had used asbestos as insulation for the steel beams, but the windows were not watertight. (I think the suspension bridge architecture had something to do with this.) Asbestos insulation is not supposed to get wet, but this did. So after twenty years, the Fed was faced with a choice, to build a new building or to renovate the old one. The estimated cost of each was roughly the same, but the risk of the renovation option was larger because of the possibility of serious cost overruns.

The Fed sold the building and the entire city lot for a mere $500,000. However, the appraised value of the property was negative $15 million, so the Fed did pretty well in disposing of the property.

The buyer totally renovated the building, gutting the interior down to the I-beams. The process may have bankrupted the original buyer--my source was not sure. Then the developer widened the tower so that the suspension bridge construction is no longer visible from the front of the building.

The 1970 building was designed with the assumption that checks would soon be obsolete, but they continued. The newer building was designed with the assumption that people would continue to write checks, and checks are now a rapidly declining way of making payments.

I checked the Internet to see how much of this account I could verify. I found that what Wikipedia has is consistent with it.

Economics and college presidents

My colleague Michael sent me a link to an article by an economist who is now a college president explaining how economics shapes the way he does his job. He argues that it is important to understand economic concepts such as comparative advantage, incentives, price discrimination, and sunk costs to make good decisions.

Update: I finally read the whole article with care. The part that interested me most was his discussion of price discrimination. The author writes:

Strategically, the findings suggest that more-selective institutions will be better able to price tuition and grants at relatively high levels. Less-selective colleges would be better off with a low tuition and grant strategy.

I work at a less-selective college that tries to do a high-tuition, high-grant strategy and is frustrated with the results, so his statement makes sense to me. (I once told a director of financial aid that what he was doing was what economists call price discrimination. He was horrified and denied it. I knew then that we would be having problems with admissions for a long time.)

Fiscal stimulus skeptics

Greg Mankiw had a post a while back that quoted part of an AP story identifying him as the only skeptic of a planned massive Obama stimulus package. He then followed up with a couple of other posts. There are, of course, many more skeptics than Mankiw. Skepticism seems in order partly because the evidence is that the Keynesian multiplier is low, and even more because of public-choice considerations, some of which are discussed in a Wall Street Journal commentary. For me the highlight of this commentary was its discussion of feedback, the possibility that bad economic results lead to bad policy, leading to even worse results.

Something free

From my e-mail:

If any of you still need/want a TV converter box, the last day to apply for the government coupon is Dec 31 https://www.dtv2009.gov/. You can redeem it for a free box (including free shipping and no taxes) at https://secure.freetvsignal.com/viewAll.php.

Lucas on the Fed

Robert Lucas approves the Fed's monetary policy in The Wall Street Journal.

a creek circle

Here is a very strange natural phenomenon, a creek circle. Check out the youtube video.

Death of creative destruction?

Is entrepreneurship dying? This opinion piece in The Wall Street Journal by Michael Malone says it is being strangled with government regulation and new accounting rules.

Rent seeking

Donald Boudreaux writes about the size of government, Blagojevich, and rent seeking. His commentary is in the Christian Science Monitor, but he blogs frequently at Cafe Hayek. Speaking of which, Russell Roberts had a couple of good posts there: a good piece on the source of the housing bubble, and a link to a video from 1933 arguing that inflation was a way to cure the Depression.