Monday, December 31, 2007

How Much Will You Put on the Line for Your New Year’s Resolution?

As anyone who has made New Year’s resolutions knows, making them is easy but sticking to them is difficult. One method to keep resolutions is to offer yourself a reward if you stick to them. However, that does not seem to work either. Dean Karlan an economist at Yale came up with a method that works for him, if he did not meet his goal of losing a pound of weight a week he paid his friend $1,000 (link). He lost the weight and kept the cash. While, Tim Harford the, Undercover Economist, continue his regiment of 200 sit-ups and pushups under threat of the $1,000 loss.

Let me know if you need me to hold any $1,000 checks. Or you could sign up with Karlan’s new company to enforce these types of goals.

hat tip and further discussion on marginalrevolution.

Friday, December 21, 2007

Ending the Year

I'll be taking the next week off from all things Econ to clear my head. I know there is still a lot of room to grow on the blog, but thanks for reading. Check back after New Years.

Some year end awards:

In the category of best upward sloping demand curves: The Washington Post
"The company cited a decline in the paper's circulation and advertising revenue as the reason for the increase."

In the category of most bills it takes to purchase a beer (From Center for Global Development: Zimbabwe

In the category of place to get cheapest meal without nutrition constriants: The Bodega.

Thursday, December 20, 2007

A Game Theorist Take on No Snitches

There is a classic economics example called the prisoner’s dilemma. Picture an episode of Law and Order or the Wire, two criminals in separate interrogation rooms. They are asked to confess to a crime, if they confess they’ll get less jail time, but if somehow they can both manage not to confess both will be better off.

The example is used to show that confessing is better for each individual, but when they both do confess they are worse off. In response to this situation a “stop snitchin’” movement has started up (basically snitchin’ is implementing others in crime). In an economic sense if the “stop snitchin’” movement is powerful enough then confessing may no longer be best for a given individual. The movement includes t-shirts and DVDs. Including the recently released Stop Snitchin’ 2 video, which is being critized by the media and police, here is a link to a youtube preview (the video contains adult language).

Unfortunatly the stop snitchin' movement has a negative effect on members of the community too (article).

Wednesday, December 19, 2007

Blogging for Beer

Other then opportunity cost this blog is free for you. Other then an occasional link or a kind word from a friend I do not receive any payment from the blog. Basically I use it as a tool to work on my thinking as an economist, and next semester I’m going to try to integrate some post with my classes.
I was thinking the other day about money and blogging, as Trent over at Thesimpledollar has decided to remove Google ads from his blog. Thesimpledollar is an excellent basic personal finance and frugal living blog, and I have watched it grow and it now receives something like 16,000 hits a day (a few thousand times more than my blog). Trent’s decision to remove ads was based on their conflict with his advice for example he discusses the problems with payday loans and there are ads for them put up by his advertising service.

Some websites have moved to donation buttons. I’m particularly fond of this one, which asks readers to buy them a beer or coffee with a link to a $3 PayPal donation. Will asking for donations actually provide a decent amount of income? This blog entry says only if you already have a loyal readership and continue to provide an excellent product.

Just like people make money writing for magazine and newspapers, I think there will continue to be opportunities for people to earn a living blogging. However, given how writers are typically paid through subscriptions or ads, donations are likely not a sustainable way. Donations will probably only work for some or those who do not need a full time income.

Tuesday, December 18, 2007

Make Your Own?

Over the weekend I brewed a clone of a 60 minute Dogfishhead beer. I purchased the ingredients and recipe from Xtremebrewing. The brew supply company was started by the brewers of Dogfishhead so that homebrewers like myself could brew their own versions of Dogfishheads own products. Although, I doubt in a blind taste test my brew will taste better than the original, I still brew anyways. It is slightly cheaper so that is one reason, but really the savings is only about $5-10 for fifty beers and about 4 hours of my time.

As the Freakonomics blog pointed out a while back there is a rise in knitting, gardening and other similar hobbies that produce something of use. The rise in part is due to the fact we work fewer hours. Another reason might be an evolution of the hobby industry, making it relatively easy for someone like me with little expertise and $100 worth of equipment to brew tasty beers. As our hobbies become more productive in terms of their output we want to do them more.

Now can I wait 6 weeks until my brew is ready?

Monday, December 17, 2007

How to Interview At a Non-Research 1 School

This is the second installment in my advice to job market candidates. For background information I got my PhD from Wisconsin in the Ag & Applied Economics department. I was on the job market twice. The first year I landed a visiting position at Beloit College and now I have a tenure track job at Towson. I think non-research school interviews are a bit different. Some helpful hints that are not in the Cawley piece or need to be emphasized

1. The interviewers are probably tired of being stuck in a room and traveling. Imagine they are your students who are little tired, because last night was pub night. Be enthusiastic and excited. But not manic or your students or interviewers will not take you seriously. You will also get bored with talking about your dissertation. Pretend you are the guy from the movie Memento, erase your memory each time and think instead “have I told you about my condition” --- “have I told you about my dissertation”
2. Open with some small talk. Do not be afraid to talk about the weather, the conference, your travel. Try to keep it positive so you put people in a good mood.
3. Practice explaining your research to other grad students particularly outside your field. As my father who has been at a small liberal arts school for nearly 30 years, points out smaller departments might not have someone in your area and that is why they are hiring you.
4. Talk about what classes you can teach. Make an argument if you have not TA’d or taught them you could do either intermediate micro/macro or econometrics. Give some thoughts to what might be a good text book or key concepts. This is particularly key in the class you would teach your field.
5. Try to convince them you love to teach, particularly if you are worried they might think you are not interested in a non R1 job.
6. At small liberal art schools creating your own class is encouraged. I thought up a couple of ideas like the Economics of Ebay and the Economics of Immigration. I tried to show how it would be interesting for an interdisciplinary audience.
7. The set up of the room will be weird no matter what. Try to make sure you talk to everyone even if there are 5 people. Make sure to take a quick glance at CVs of the people who are interviewing you, this also helps create better small talk.
8. Small liberal arts and other non-R1 do care about research. They might also worry about you making the transition away from grad school, discuss projects with co-authors other than your advisor or potential collaborators you may know if you are moving across the country.

Good luck in New Orleans job market candidates. If you are interviewing with Towson, I’m sure you’ll have a good time.

Take the Money and Run to Punjab and Back

England is trying something a little outside the box to decrease the number of immigrants in the country, paying them to return to their home country. As described in this article, the British government is providing free plane tickets and cash incentives of £500 ($1000) when the immigrant gets on the plane, and £500 ($1000) when they return to help start a business. The government points out this is cheaper then £11,000 on average it costs to forcibly deport someone.

The problem is that people are gamin the system from the article “… asylum seekers were playing the system. I met several asylum seekers who had applied for the IOM’s financial assistance programme and were already planning their return to Britain once they got their business established in their country of origin.”

This type of program would seem to have little potential in the United States particularly for Mexican migrants, since about ½ of migrants to the US return to Mexico anyways within the year and there is lots of going back and forth between the border.

Friday, December 14, 2007

Exams are Over Except for Professors

I gave an exam yesterday in Principle of Microeconomics. For the first question I asked to students to name an opportunity cost. The most common answer was by taking this exam my opportunity cost is sleeping, watching tv, and playing guitar. I also asked my students for an example of an externality. In class I gave an example of a dog food factory that produces a terrible smell that bothers non-dog owners. This actually happens in real life too, Muslims protest over pet food factory that could 'rain down' pork.

Another problem I gave was on pollution permits at London Heathrow airport. Due to noise and CO2 emissions there is a call to reduce the number of flights (link).
Now unfortunately the opportunity cost of me providing more on the blog today is grading exam

Thursday, December 13, 2007

The Economics of Homebrewing

This weekend I’m extremely excited to brew a 60 minute Dogfishhead IPA clone. The beer is known for its awesome amount of hops. A couple of thoughts on homebrewing and beer economics. My Vanilla Porter also just matured and it is one of the best I have brewed.

1. In DC even with shipping cost homebrewing saves you about 0.20 a beer over similar store brand beer. To brew 50 beers you have to purchase $30 worth of ingredients, plus some bottle caps and sanitizing supplies. There is also an initial fixed cost of about $100 for a fermenter. To recoup the $100 fixed cost for equipment you would have to brew 500 beers. I’m actually getting close to that after 6 years of brewing. We might also think about the opportunity cost of the time spent brewing, but I have too much fun brewing to worry about that.

2. In my intro to economics class, I often give an example that some product is found to prevent cancer, which increases demand for that product. It appears hops help prevent cancer, I just learned that the day I prepare to make the most hop filled beer I have tried.

3. I think I have finally figured out how to allocate my brewing resources so that I never run out of home brew beer. I can drink and give away about a 6 pack a week, so I brew a batch of 50 every two months.

Wednesday, December 12, 2007

Economist Job Market

Yesterday our department met and sent out invitations for interviews for two tenure track positions. For those of you have not had the pleasure of being on the economics job market. Here is how it works.

1. By December 1st applications are received, this year we received about 200 for 2 positions.
2. In early December the department selects its top 25 to interview at the Econ national meetings just after new years.

Now a bit about how this selection goes. Personally to pick my votes, I looked at publications and research potential based on letters of rec. Teaching awards or high evaluations went a long way. I was surprised to see how few people had done anything other than change a name to their cover letter to distinguish there letter to Towson from another letter. This may be because many econ PhD’s apply to 75-100 schools (I applied to about 30 both times I was on the market).

To sort out the noise of 200 applications the American Economics Association also lets candidates send out two signals to jobs they want. These signals are sent to the search chair. Since candidates only have two signals not receiving one does not really provide information. Receiving one tells you they are seriously considering your job, but feel their application might need another look to stand out among 200. For what is worth I and few other people signaled Towson last year. Signals did make me give candidates a second look, but only in one case did I recommend a person to interview who I would not.

After my colleagues interview 25 people, we will select a handful of candidates to fly out sometime in February. All I can say is it is much more fun to be on the other side of the market.

To Those Applying for a Job at Towson

First, let me say I have only been at Towson for 3 months. So far I have found the department to be extremely collegial, there is a good mix of pre-tenure and older faculty. People seem really willing to help me. I also already have begun collaborating on a research project with one other faculty member.

In terms of the college. There is a 3/3 teaching load, but classes are generally 30-35 for intro (you will have two sections) and 25 for upper level classes. Teaching schedule is flexible you can even teaching an evening or two. With the smaller class sizes and one night class I have had reasonable amount of time for research. Also given our proximity to DC, I have also been able to continue some work at the World Bank.

I’m really happy here so far and would highly recommend Towson to any job candidate. As the process goes on if you are a candidate feel free to e-mail me with your questions.

Tuesday, December 11, 2007

IMF layoffs

I have been a bit busy with finals week and the end of the semester. I’m surprised I have not seen much discussion of the proposed layoffs at the International Monetary Fund. In short, the IMF will face yearly deficits of 400 million dollars a year. So the director has proposed cutting around 15% of the Funds work force. Although it is unclear if part of this press release is to allow the IMF to sell off some of its gold reserves.

Why is the fund running deficits? Well as best I can tell it is making fewer loans with many developing countries now having their own sovereign wealth funds they no longer need the help of the IMF.

Monday, December 10, 2007

Tigers made in Venezuela

Over at DailyKos a posts ask today why are Major League Baseball (MLB) jerseys and hats made abroad. The author, Mooncat, points out that although the uniforms worn by the players are made in the USA the same merchandise sold to the public is made in China, Honduras, and Vietnam.

The author then points to several outfits that several similar hats and shirts without baseball logos made in the USA sell for similar amounts and would only raise the price of a hat a few dollars. If the US is capable of making these jersey for only a few dollars more, why wouldn’t MLB have everything made in the US…..simple profits. The author of the post is suggesting that readers make their voice heard that they prefer American made jerseys and hats, which would suggest to MLB that more profits might be possible if they made some or all items in the US. This raises some questions in my mind.

1.Suppose that MLB closed all Chinese apparel factories and opened up new factories in the US. Is it really better to put those Chinese workers out of a job at the expense of giving Americans jobs.

2.How much are the Dailykos readers willing to pay for the privilege of purchasing made in America goods?

3.Could having American made jersey sold as a more expensive product (sold separately), actually make MLB more money?

4.If some of my favorite Detroit Tigers were made in Venezuela (Miguel Cabrera, Magglio Ordonez, and Carlos Guillen) are they taking away American baseball jobs, should MLB move to systems where the number of foreign players are limited as was/is the case in some soccer leagues.

Saturday, December 8, 2007

We want a buyers market

As someone who is currently saving for a down payment for a house. I was pleased to see this article in the Washington Post about how some of those like me who have avoided the risk of the real estate market and are working to save a down payment might be hurt by the recent proposed sub prime bail out.

Actually the housing market won't really determine when I buy, just like I do not try to time the stock market. I have been given the advice that now is a great time to buy since the market is at a low. As an economist I know the future of the market is a known unknown.

Thursday, December 6, 2007

Feeding Your Inner Economist at the Tapas Bar

Yesterday Tyler Cowen over at Marginal Revolution linked to a NY Times article about the death of the entrée. Not only is Prof. Cowen a prolific blogger/economist he is also known locally as the author of a local DC dining ethnic guide. In his recent book, Discovering Your Inner Economist, Prof. Cowen suggests some ways to maximizing your dining experience. Including “appetizers are often better than main courses (145)” and “order more dishes than you plan to eat (146)”

My wife and I have often noted the first, as we often prefer to order 3-4 appetizers instead of an entrée or go to one of Jose Andrés tapas joints such as Oyemel or Jaleo. As the New York Times article point out you can avoid diminishing returns to one entrée and get lots more variety while ordering more types of food.

Suggestion 2 is a risk averse strategy, if you order 3-4 dishes just enough to eat perhaps one will dish will not be good. I’m not big on leftover food from restaurants though so I’m not as sure it is worth the money. Although I have been having success with the strategy at restaurants where I’m not as familiar with their menu.

I support the death of the giant entrée, but unfortunately the article suggests it is at the expense of the massive salad or appetizer. I hope you will join me in going to restaurants with properly sized delicious portions. See you at Oyemel!

Tuesday, December 4, 2007

Economists' Chanuka

I wrote a song for all those Economists Out There Who Celebrate Chanuka
The Econ Chanukah Song: (With Apologies to Adam Sandler)

Put on your yarmulke
Here comes Chanukah
Lots of Economica
Celebrates Chanukah
Chanukah is the festival of lights
Avoid diminishing returns with eight crazy nights

When you feel like the only kid in town without Christmas utility
Here’s a list of economists who are jewish just like you and me
Paul Samuelson lights the menorah in the evenin’
So do Solow, Stiglitz and the late Milton Friedman

Guess who eats together at the Fed reserve deli
Alan Greenspan and Chairman Ben Bernanke
Akerlof’s part jewish, Herb Simon’s part too
Bundle them together, what a fine econ jew

You don’t need jingle bell or a yule log
cause you can spin a dreidel at the Becker/ Posner blog- both jewish

Put on your yarmulke
It's time for Chanukah
the author of Freakonomikah
Celebrates Chanukah

Robert Mugabe, not a jew! Or an economist!
But guess who is? Nobel prize winners Ken Arrow and Simon Kuznets too
We got Herb Stein and his son’s Ben’s money
David Ricardo was born jewish- but went Quaker for his honey

Some people know that Paul Krugman is
He hasn’t won a Nobel prize
but three others did --- This YEAR!
So many jews are econ wiz kids
Greg Mankiw isn’t, but I heard his book agent is

So study your Economica
It's time to celebrate chanukah
I hope I get published in Econometrikah
Oh this lovely, lovely chanukah

So find your equilibriah
And check your heteroskedisticas
If you really, really wannakah
Have a happy, happy, happy, happy chanukah
Happy chanukah!


Monday, December 3, 2007

Fertilizer in Malawi

Developing countries like Malawi are beginning to turn away US aid, (previously discussed here). In part because much of it comes in the form of free food that makes it harder for farmers within the country to make enough to live, since they compete with free food.
To address mass hunger issues Malawi has gone against the advice of the World Bank and other economists and reinstated a fertilizer subsidy program. The program seems to have been a success (according to this NY Times article). The $70 million investment yielded an extra $120 million in corn production, although the returns may have been helped by good weather conditions.

I think the article might be a bit hard on the World Bank here. I tried to find places where the World Bank recommended ending the subsidy program, but all I found is a positive review of the program (here) and a report (here) that suggests some success, but problems with distribution to the poorest farmers.

Are subsidies a long term solution to development? Perhaps not if development require moving away from agriculture. But the described impact against hunger makes it hard to argue with the results.