Monthly Archive for February, 2012

Frankly Speaking

Here’s something curious about this year’s political rhetoric: The Republican candidates claim that President Obama has made things worse, while he claims he’s made things better.

You might not think that’s a hard thing to explain. If so, I conclude that you are not Robert Frank, who keeps reminding us via his New York Times column (this one for example) that in many circumstances people care less about their absolute economic well-being than about their place in the pecking order. According to Frank, we buy big homes and fast cars not because we like big homes and fast cars, but because we like our homes and cars to be bigger and faster than our neighbors’. This in turn calls for a tax increase to tamp down that wasteful arms race.

But here’s the thing: Each of us has pretty good information on how we ourselves are doing. When politicians say the economy is doing poorly, they’re mostly informing us that other people are doing poorly. If Frank is right, we’ll consider that good news and (if we believe the news to be accurate) reward the incumbent who brought everyone else down. In other words, is Frank is right, then President Obama’s best strategy is to take credit for a disastrous economy, while his Republican opponents should argue that in fact we’re in the midst of a strong recovery.

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A Tale of Two Cities

The London subway stations have NO trash receptacles. The tracks look like this:

The New York subway stations have more trash receptacles than I can count. The tracks look like this:

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Who Expected THAT?

Suppose you go around taking extremely close-up black-and-white pictures of randomly chosen natural and unnatural objects (rocks, trees, streams, buildings, etc.). What do they look like?

Well, each one looks like a patch of varying shades of gray, of course. But do some patches arise more than others? If each of your close-ups is, say, three pixels by three pixels, Which would you expect to see more of:

This? Or this?

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What Is It Like to Talk Batty?

Sometimes I think we should license economics writers.

Thomas Nagel is a prominent philosopher (author of the provocative and widely anthologized essay What is it Like to be a Bat?) who’s just reviewed Daniel Kahneman’s new (and excellent) book in The New Republic. (Fun fact: When I stepped off an airplane at Heathrow last week, the first thing I saw was a limousine driver holding a sign that said “Daniel Kahneman”. This, incidentally, was my final issue of The New Republic, due to their criminally evil subscription practices — more on that, perhaps, later this week. ) Here is how Nagel describes what he seems to think is orthodox economic theory:

Most choices, and all economic choices, involve some uncertainty about their outcomes, and rational expectations theory, also called expected utility theory, describes a uniform standard for determining the rationality of choices under uncertainty…

The standard seems self-evident: The value of a 50 percent probability of an outcome is half the value the outcome would have if it actually occurred, and in general the value of any choice under uncertainty is dependent on the values of its possible outcomes, multiplied by their probabilities. Rationality in decision consists in making choices on the basis of `expected value’, which means picking the alternative that maximizes the sum of the products of utility and probability for all the possible outcomes. So a 10 percent chance of $1000 is better than a 50% chance of $150, an 80% chance of $100 plus a 20% chance of $10 is better than a 100 percent of $80 and so forth.

AAAAGGGHHH! Even on the Internet, it’s rare to see quite so much ignorance packed into so few words. Where to begin?

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Live From Warwick

Apparently my Saturday talk at the Warwick Economics Summit (like several of the others) will be streamed live over the Internet here. I go on at 8:55AM eastern standard time, but don’t feel like you have to set an alarm clock; there will be video available after the fact.

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Your President Hopes You’re Stupid

When an ideologically diverse roomful of economists, upon hearing the announcement of a new presidential policy, bursts into unanimous laughter, you can be pretty sure the president is trying to pull a fast one.

A couple of days ago, I happened to arrive a little late for our department’s regular Friday 10AM bagel hour, where a heated discussion of the original contraception-for-all policy was in full swing. I was able to report that I’d just heard on the radio that the president was “backing off” by transferring the mandate from employers to insurers. Hilarity ensued.

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Pro and Contra-ception

I’d been planning a blog post on the birth control mandate, but it turns out that John Cochrane has already said everything worth saying.

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Rock On

rockI don’t trust rocks. Rocks keep fooling me. They sit there looking all solid until you examine them more carefully and find out they’re mostly empty space, with a smattering of charged particles here and there. Then you look a little deeper and find out those charged particles are nothing like they first appeared. They don’t even have locations. Rocks, and their constituents, are nothing at all like they first present themselves. But at least they’re real. I think.

Now here’s what genuinely baffles me: Apparently there are people in this world (and even, occasionally, in the comments section of this blog) who haven’t the slightest doubt about the existence of rocks, galaxies, squirrels, and the rest of the physical universe, but who suddenly turn into hardcore skeptics re the existence of mathematical objects like the natural numbers. (Many of these people, I suspect, are in fact affecting skepticism because of a badly mistaken belief that it makes them look sophisticated. But that’s speculation on my part, so let’s put it aside and take their positions at face value.) I just don’t get this. Why on earth would, say, a scientist, commit to the belief that there’s a physical universe out there but not a mathematical one, when we know that our perceptions of the physical universe demand constant revision, whereas our perceptions of the mathematical universe are largely eternal. My conception of the natural numbers is very close to Euclid’s; my conception of an atom bears almost no resemblance to Demosthenes’s.

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Why Jews Don’t Farm

I’ve been a little swamped lately and my daily blogging has fallen off. Until things get back to normal, I think I’ll fill the breach by reprinting a few of my old columns from Slate. Today’s entry is on “Why Jews Don’t Farm”.


In the 1890s, my Eastern European Jewish ancestors emigrated to an American Jewish farming community in Woodbine, N.J., where the millionaire philanthropist Baron de Hirsch provided land, tools, and training at one of the nation’s first agricultural colleges. But within a generation, the family had settled in Philadelphia where they became accountants, tailors, merchants, and eventually, lawyers and college professors.

De Hirsch had a vision of American Jews achieving economic liberation by working the land. If he’d had a better sense of history, he would have built not an agricultural college but a medical school, because for well over a millennium prior to the settlement of Woodbine, Jews had not been farmers—not in Palestine, not in the Muslim empire, not in Western Europe, not in Eastern Europe, not anywhere in the world.

You have to go back almost 2,000 years to find a time when Jews, like virtually every other identifiable group, were primarily an agricultural people. Around A.D. 200, Jews began to quit the land. By the seventh century, Jews had left their farms in large numbers to become craftsmen, artisans, merchants, and moneylenders—the only group to have given up on agriculture. Jewish participation in farming fell to about 10 percent through most of the world; even in Palestine it was only about 25 percent. Everyone else stayed on the farms.

(Even in the modern state of Israel, where agriculture has been an important component of the economy, it’s been a peculiarly capital-intensive form of agriculture, one that employed well under a quarter of the population at the height of the Kibbutz movement, and less than 3 percent of the population today.)

The obvious question is: Why? Why did Jews and only Jews take up urban occupations, and why did it happen so dramatically throughout the world? Two economic historians—Maristella Botticini (of Boston University and Universitá di Torino) and Zvi Eckstein (of Tel Aviv University and the University of Minnesota)—have recently been giving that question a lot of thought.

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Laugh of the Day

It’s been a while since I laughed out loud quite this hard.

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Where to Find Me

A few upcoming events:

I’ll be at the Warwick Economics Summit February 17-19, speaking on the 18th.

I’ll be speaking at the Adam Smith Institute in London on February 20.

On February 23, I’ll be at the off-Broadway Soho Rep Theater, moderating a panel discussion on “The Economy of Beauty” following a performance of the hot German playwright Marius von Mayenburg‘s new play The Ugly One. My fellow panelists will include the sociologist Ashley Mears, author of Pricing Beauty: The Making of a Fashion Model and a former fashion model herself.

On March 9, I’ll be speaking at the Laboratory for Laser Energetics in beautiful Rochester, New York.

I expect to be speaking at the University of Maryland on a date still to be negotiated in April or May.

And from July 29 through August 3, I’ll be giving four lectures and hobnobbing with the other participants at Cato University. (Yes, I know the link is to last year’s Cato U.; this year’s page seems not to be up yet.)

If you’re in any of those neighborhoods, do join us.

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