Coffee and Ennui

Sitting in the new La Madeleine in Silver Spring and have to say I’m a little bit disappointed and feeling ennui on a rainy day. My local Silver Spring advice is to head down Georgia Ave to Zed’s café, which is friendlier, has better coffee,  more comfortable chairs, and working wi-fi.  A larger thought on restaurants and coffee shops. They are good example of the third factor in production. The first two factors in any output model in economics are labor and capital. That is how many people work there and how many machines (eg cash register, grills, toaster, coffee makers)  there are.  The goal of a chain restaurant like La Madeleine is to create a model where the same capital can be bought, the same number of staff can be hired and you get the same production. As anyone who visited multiple locations of the same chain can tell you some are better than other [side note, I often pass the Starbucks in the Towson library to go to the Towson Starbucks on York road because of the better service]. These differences exists despite the same amount labor and capital. This third factor in production could include human capital (how educated the workers are), local norms (do people typically work hard) and local governance (management). Just like a bad Starbucks,  La Madeleine or any chain restaurant a country like Nicaragua might produce a lot less than Costa Rica even they have similar population sizes and land endowments.

A second thought. My favorite all time coffee shops include Saint’s Rest Grinnell Iowa,  Indie Coffee Madison Wisconsin and Java House Iowa City. I’m not ready to put Zed’s in that category yet, although the free piece of cake on my last visit didn’t hurt. What I think is that changes have a problem of making the truly special at a large scale. As Matt Yglesia points out today although many economic interventions work on a small scale very few can work on a larger scale (perhaps pills are one of the few) since scaling is so much easier. Starbucks has done a decent job of scaling the small coffee shop feel, and as evident by this Washington Post article its hard on a large restaurant too. 

Anyway food for thought.

Signal in a bottle, Reviewing Job Applications

I'm on the hiring committee for an assistant professor position in the economics department at Towson. We have a couple hundred applications to review and I know that many applicants apply to over 100 jobs. So how can I tell as a reviewer who is really interested in the job and who is just sending their application in. I care, because as part of the committee we will decide on a couple dozen people to interview in San Diego.

Luckily economists have devised a clever solution to help make sure candidates who really want a job can indicate it. Each job candidate is allowed 2 schools to signal. All that happens is the hiring school receives an e-mail of all the candidates who used their signal at their school.  The idea is that you can show you really care about a couple of jobs, but if a school doesn't receive a signal it doesn't show you don't care because you only can send 2. More info here

When I applied for my job at Towson, I sent one of  my signals to Towson. I'm not sure if it made a difference in me getting an interview. I sent the signal because I really wanted to move to the DC area to be with my wife and the job seemed like a really good fit given my research and teaching interest. I wasn't sure if my application would stand out enough given my background. On the other hand I did not send a signal to a job at a well known small liberal arts school in the midwest, because I thought my record with 1 year teaching at Beloit (a similar school) and an undergrad at Grinnell would be enough to get me an interview. I was right I did get an interview and an on campus interview with the well known SLAC (although not a job offer). The SLAC department chair did notice they didn't receive a signal from me, although this was more pointed out by the Dean and the Chair had explained to the Dean that I probably believed I had already shown enough interest in teaching at SLAC given my experience and didn't need a signal. I think the chair was right (given I got the interview).

In the past based on talking to my colleagues  a signal will give your application a little more attention. I think it might also help if departments are worried that a candidate won't take a job, this could also help.

I think signaling is good particularly since there is a non-zero change that it helped me get a great job.

Why Economists Should Love 138 points from Jack Taylor

Last night Grinnell's Jack Taylor scored 138 points in a basketball game shattering an NCAA record for most points scored in a game (previously 113) [see article here]

As an economist and Grinnellian I feel it is my duty to point out why economists should love this performance

Top 5 reasons Economists Should Love Jack Taylor's 138 Points

1. Economists believe in specialization. Clearly Jack Taylor has a comparative advantage in shooting three and not in playing defense.
2. Grinnell isn't maximizing wins with their system, the maximize utility. From what I have heard Grinnell basketball players have a ton of fun, get to play a lot of minutes, and shoot lots of shots. Plus Lebron James wouldn't be asking about Grinnell today if Taylor doesn't go wild.
3. Economists love crazy strategies in games. The rules of basketball don't say you have to play defense, they don't say you can't launch a ton of threes. If Grinnell wins by shooting threes and not playing D sometimes that's an optimal strategy.
4. Economists have the Taylor rule, so in honor of Jack Taylor let's have the basketball Taylor Rule. If Jack Taylor has the ball he should shoot it, if he doesn't you should pass it to him. This reduces uncertainty of who will score.
5. Productivity is key. In this case I measure productivity in terms of points per game played. Making Jack Taylor the most productive NCAA basketball player.
 

Vote Early and Often for Grinnell: Social Networks and Searchers

The people who brought you cupzza's are now asking for your help. The Social Entrepreneurs of Grinnell from my undergrad Grinnell College are in a contest sponsored by the White House. You can vote for them here. Why should you vote for them? First as I mentioned they helped create cuppzza's the combination pizza and cupcake, which was later picked up by Marginal Revolution.  More importantly they provide loans both in the developing countries and in their own backyard. I like the idea of providing start up funds for students to learn a business (see this Scott Adams article). If the Grinnell Social Entrepreneurs win they would get to go the White House and promote their organization on MTV.

More generally I thought this would be a good time to discuss these types of contest where the winner is determined by who can get the most people to vote for them online. If we assume voting is a proxy for the social capital generated by these organizations then the method for choosing the best proposal seems good. However, larger schools might be at an advantage since those schools have a larger network to draw on. Although per capita Grinnell has a very powerful network. By posting the vote info on Grinnell Plans (Grinnell's own social network), the Social Entreprenuers shot up from 5th to 2nd. You can vote for them here and I hope you will. I'm using my social capital with you (if I have any) to urge you to vote. Of course this type of thing is low cost to me and now we have all increased the knowledge.of this event with no cost to those organizing the event. That really is the beauty of these contest is they externalize the cost of promotion

However this post on the World Bank development blog post warns us of getting too wrapped up in the media surrounding the best ways to give the poor. Granted one of the things that the post suggests is the microfinance is overrated. This has been a recent theme of some works showing that microfinance has little short term impacts. I think the verdict is still out with only two or three studies.  However, I think having students learn about things work by directly involving them in projects and working locally is an excellent mission.

So again you can vote for them here

One Man's Tale of Deportation and Trillion-Dollar Bills on the Sidewalk

Before you read my post today on immigration, go read Dani Zamora's story of being deported. Dani is still in Mexico and trying to get back to the US. Dani graduated from Grinnell College in 2008 and is currently applying for MFA programs in the US. He is a friend of a friend, but as a Grinnellian, I consider him part of my extended family. Again, read his account. I'm not sure at this point what can be done to support Dani (unless you know a good immigration lawyer), but as I have more info I will pass it on.

Dani is not alone many people throughout the world could see significant improvements in their lives by migrating to richer countries. In a new paper by Michael Clemens in Journal of Economic Perspectives, he cites research showing by lowering barrier to immigration World GDP could increase by trillions of dollars. Compared to reducing trade or capital barriers which are substantially smaller. The paper is well worth a read and is accessible to even those without training in economics.

Entrepreneurship at College Grinnell Needs a Dilbert

I wanted to look at something else besides cupcakes, coffee, and condoms from yesterday's post. Bob's the coffee shop at Grinnell is student managed and as long as I can recall has had financial difficulty. From the article it sounds like things haven't changed much. “Bob’s is 12,000 bucks in debt and basically every semester Grinnell talks about shutting us down, but they basically forgive the debt,”

Contrast this with Dilbert creator, Scott Adams's college experience, described here . It sounds like he turned businesses at his school to profitability. But it is worth noting before he started there was no system of accounting at his school's business.

Perhaps students should start with smaller businesses. Like selling pizza cupcakes. I'm not sure as Adam's suggests every B student would benefit from learning about entrepreneurship, but there is something about the experience that I think students learn a lot from that they can use in their own future employment.

It is also worth thinking about the potential positive externalities to the college like Grinnell from having a coffee shop. I know Bob's was one of the things that attracted me to Grinnell.

Cupcake, Coffee and a Condom for $4

Bob's the coffee shop at Grinnell College has a new offer a cupcake, coffee and a condom for $4. Sometimes goods are bundled so that people will buy more. For example suppose half of people at Grinnell will pay $2 for a cupcake and $1 for coffee and the other half will pay $1 for a cupcake and $2 for a coffee. If Bob's sells coffee or cupcakes for $2 a piece it will only sell each to half the students. If it bundles a coffee and a cupcake in a single value meal for $3 then everyone will buy it.

Now back to offering condoms as part of a bundle. Freakonomics has talked about a store that offers free condoms to anyone buying diapers. I also remember in the late 80s or early 90s a brand of hats that included a condom tucked in a pocket.

Now the problem at Grinnell is that we all learned in first orientation that condoms are free at the health center. However, Bob's is open hours the health center is not so willingness to pay goes up. If I recall though there are condom vending machines in the laundry rooms, so there is competition.

Of course the best part of crazy bundles is the press you get. Although I'm not if my post will increase sales at Bob's.

Is This Restaraunt Worth My Time?

I like to read Todd Kliman the Washingtonian's food critic's weekly chat about places to eat in the DC area.

This week in answering a question about a local restaraunt Kliman said
"For years my wife and I have assigned "minute-marks" to restaurants as a way of rating them -- not stars.


"In my book, I would drive an hour-and-twenty minutes to dine at Komi. Nooshi, on the other hand, I would consider a 6-minute restaurant.
The Source: a 45-minute restaurant. Sonoma: a 15-minute restaurant.
2 Amys: a 40-minute restaurant. Dino: a 20-minute restaurant."
(link to chat)

I love this method. Economists favorite example is the free lunch. Whenever we eat out one place we give up eating at another place, so even if we get free sushi we give up eating Indian food.

Now if I set a minute rating on local restaraunts several things should be taken into account.

1. Obviosally how good is the restaraunt in terms of food quality and service. The highest drive time on Kliman's list is also a restaraunt he ranks in the Top 5 in his yearly dinning guide. I haven't been to Komi yet but I have been meaning to do it.
2. Second is price. There is an Indian restaraunt a 10 minute walk from where I live. But I always seem to spend 20% more than I think I should.
3. Other available restaraunts play a factor. When I lived in Grinnell, Iowa in undergrad the Indian restaraunts 1 hour away in Iowa City were rated 1 hour restaraunts. Indian restaraunts of the same quality as those in Iowa City would be much lower as now that I live with in 10 minute walk of at least 2 (Indian Thai, Vietenemess, Ethopian, Italian, Peruvian Chicken, Sushi)
4. There ability to not put cilantro in my take out order. This may not factor into your ratings but my wife really hates cilantro. So that Indian restaraunt within 10 minute walk of my house I never go to (well that and see #2). Instead I drive 15 minutes to another place, which is really good.


Final thought when recommending restaraunts I don't know if Silver Spring where I live and has a lot of good places to eat has any restaraunts I would say are 30 minutes or more places for people in the DC area.

I would like to give a thought that my favorite place in Silver Spring right now 8407
is getting close to a 30 minute place. So Bethesda and Rockville should try it, Arlington I'm not sure it is worthy of getting on the beltway.

Grinnell Founders Day, Wedding Procession Dance, and Glee

When people ask where I went to undergrad I say a small school in Iowa, because if not the next question is where the hell is Grinnell?

Today is Grinnell founders' day. On this day in 1846 James J Hill laid a silver dollar down on a table and started Iowa College which a few years later would become Grinnell an awesome school with over 1 BILLION silver dollars in their endowment.

My favorite Grinnell Economics fact is that we are number 3 in economics PhD per student graduated. (link)


About a year ago a Grinnellian became an internet sensation as a bride in the famous J&G wedding dance. For those of you who don't remember it here is a previous post. In short her video used a song (Chris Brown's Forever) that was copyrighted. Instead of taking the video down they worked out an agreement with the song's copyright owners and the video stayed up and more people bought "Forever" on Itunes.

I was thinking about this when I read a recent Salon article on the show Glee. The article points out that the performances in Glee (a show about a high school show choir) would all be copyright violations or that the school would have to spend tons of money to get the rights to perform such classics as "Don't Stop Believing" & "Push It".

Glee has been quite successful as the Salon article points out selling over 4 million songs online. So if we go back to the J&G video we see that you can get around copyright problems if you are awesome.

And truth be told I've really been enjoying the first four episodes of Glee they really are good, although not as good as my four years at Grinnell.

Dollar Dance: The Economics of the JK Wedding Video

On Friday and Saturday nights during my college years at Grinnell we would all head over to the Harris Center for dance parties. As Grinnellians grow older they don’t have as many places to bust a move, but when a wedding comes for a Grinnell alum the old Harris dance moves come out again. Jill Peterson who graduated one year after me and her husband, Kevin Heinz, took it to a worldwide level with their JK wedding dance video, which has been a Youtube sensation.

If you haven’t seen it, the video is along with this post. Now here is where the story could have turned sad. They used Chris Brown’s song “Forever” for their processional number. Many YouTube videos have been pulled off because of use of a copy righted song. But who ever controlled the rights to “Forever” realized that by posting the JK wedding video with links to iTunes for “Forever” more copies of the song will be sold. As the Google blog (which owns YouTube) documents this strategy has worked with “Forever” jumping to the top of the internet charts.

h/t to newmarksdoor

Congratulations Graduates! Words of Advice from an Economist.

The semester got to me and I lost momentum on blogging, but I’m back. It is summer time and I’m off to see Towson College of Business 2009 Graduates walk the stage along with me in my University of Maryland Librarian Science attire (thanks Jennie for lending me the robe until I can find a used one ).

I’ve been meaning to write this post about my advice to people who are still looking (or just starting to look for jobs). With the recession you are going to find lower paying jobs, when you find them. This Wall Street Journal article discusses how even ten years later, people who graduated during the recession had lower wages.

The secret to beat this problem is to take a job in the field you hope to wind up in. By doing this you lower your future wage gap. So taking a lower paying job in the field you want to work in you get both the benefit of continuing to pursue what you want and possibly a longer higher term payoff. This not to say finding a job in this economy is going to be easy, I know several smart well qualified people still looking after a few close calls to getting a job. As Robert Reich said at my graduation at Grinnell College in 2002:

"Gaining self-knowledge often comes from failing—crashing headlong into the wall of your character. And please have no doubts about it: You will fail, in some way, at some time. In fact, you will keep crashing into that character wall again and again until you finally realize its there, and that you have either got to knock it down or figure out how to get over it."


Welcome to the real world graduates!

(Actually, let me know what it is like in case I ever quit academia)

Economic Stimulus 101

Let’s start with what you know: The economy is not doing so well. The government is trying to do something to help the economy get going. The options are cut taxes, spend money, or buy bad assets.

What’s the debate? Which method is best.

How do Economists determine which method is best? They look at the multiplier.

What is the multiplier? It is the number of dollars the economy increases for each dollar extra spent by the government.

Can you give an example? Imagine the government sends you a check for $100.
Typically, you would go and spend some of that $100 (let’s say on a massage and save some. Let’s say you buy an $80 massage, the masseuse takes that $80 then uses it to buy a nice meal at a restaurant let’s say for $64 (he saves the other $16). Now $144 (=$80 + $64) dollars have been spent from that first $100. Imagine the waiter at the restaurant gets another hair cut (after saving some) then the barber buys some books….ect. Each time some of the money is spent and some is saved.

So what is a typical multiplier in an Intro to Econ textbook? Greg Mankiw's NY Times OP ED (here) points out that for government spending a typical multiplier is 1.4 (for every dollar spent 1.4 dollar increase in GDP). He also points to a paper by Obama Economic adviser Christina Romer, who showed that decreasing taxes has a multiplier of around 3.

But is this a typical time? No

So do we have an idea what the multiplier is under the current conditions? Maybe, an idea but who knows.
OK so no one knows, but where can I follow the debate? I’m reading (Greg Mankiw, Marginal Revolution, Brad DeLong, Megan McCardle, and Paul Krugman)

So why not instead pay off people’s credit card bills and mortgages, isn’t this also a credit crisis? (suggestion from the Daily Show via Grinnell friend Paul Carlson) Yes it is a credit crisis. But the goal of the stimulus is to increase spending. Paying off debt, probably has a lower impact (smaller multiplier) than the other options.

How to make a basic model of household decisions

This past weekend I went to New York City for my five year anniversary trip, had a great time! When I got back I was catching up on my reading of Grinnell’s intra-blog system (plans), which was having a fierce discussion of the tradeoffs of being a stay at home parent.
There is a lot of economic discussion of the decision, I still think of the decision in the context of a model I learned in graduate school.

The model, suppose we have a typical household with a male and female who split their time working outside the home to earn money or can do housework. Money can be used to buy things like food, clothes, cars, ect., while housework can produce output for the house (meals, cleaning, child rearing) too, although it may need some of the good purchased with money (you can make dinner with the food you bought). Money can also be used to replace housework, you can go out to eat, get someone else to clean your house or watch your kids.

Really, the goal of any household is to do outside work, household work, and leisure in the amounts that produce the best outcome for the household. I'm of the opinion that this is different for every family, so what ever you want to do go for it.

So what complicates the decision? Men and women sometimes have different preferences, one person might want a cleaner house or have a preference for home cooked meals. Men and women sometimes have different earning abilities, which may influence who works inside and outside of the home. Finally, some have argued that biological difference particularly for breast feeding may make it easier for the woman to specialize in housework if it includes child rearing.
The model does fail to take into account societies beliefs (although, it could). If men or women gain/lose status for being stay at home, then this could also influence decisions. All the above can be adjusted in a more complex model.


I feel the standard model really fails when I ask myself the question would I still work if I had 10 million dollars in the bank, and I think I would quit my job. So happiness may in part be derived from work for me, maybe not for you.

Luckily, my wife and I agree generally on the balance of work and producing goods at home.

Now who’s turn is it to clean the bathroom?

Why Housing Prices Will Keep Rising Compared to Food Prices

On an internet forum I participate on associated with my under grad (Grinnell College), people were talking about how much people spent on various things (rent, food, entertainment ect.) To get a better idea of how my fellow alumni spend their money I created a simple expenditure survey (you can take it and add to my data by clinking the link). The survey proved popular enough that 130 people took it. I shared more results within the community, but I thought one result demonstrates an important economic concept. Income elasticity:

On the graph above, post tax take home pay is on the X axis and two type of goods on the Y axis (Groceries and Rent/Mortgage Utilities). To me there appears to be little relationship between income and grocery spending (note food out is another category). I'm typical of this result. My income has gone over the last couple of years, my rent has gone up by about the same percentage (in part due to a move to DC) while my grocery bill hasn’t increased that much (I eat lunch out a little more, but buy slightly better food at the grocery store). For most Americans we might be at a point where the income elasticity of our grocery bill is zero, that is even if we get pay raises we won’t really increase are spending on food. But it’s not the same for housing. As we get richer we tend to live in better (i.e. more expensive) neighborhoods.

This has an interesting long term impact. As the country gets richer over time, we all will continue to demand better housing, causing an increase in the price of housing. This can be partly offset by new building. But as our income grows we are not going to eat that much more (really can Americans eat any more).

There might be better surveys to demonstrate this, but since many Grinnellians read my blog I thought you might find this interesting.

Markets in Everything: Cupzzas (Pizza in the form of a cupcake)

What happens when you give $27 to group of students at Grinnell College (my undergrad) and get them to run a “business” for 10 days to raise money for charity?

Cupzzas, a pizza baked in cupcake form. Asa Wilder ’09 one of the founders is quoted in an article in Grinnell College's newspaper, the Scarlet and Black.

"We just really wanted to shatter the cupcake-pizza dichotomy. It's just existed for too long."

The Grinnellian entrepreneurs are also capital constrained, more from the article about how they made pupzzas, mini cupzzas.

"[A] lot of our ideas come from just not having the proper materials," Wilder said. "Like the pupzzas came from not being able to find the large tins."

Price of a Movie Ticket Compared to a Video Game

Today on Grinnell plans, someone asked why in comparison to movies tickets are video games so expensive. For example you can see the new Indiana Jones movie for $10-$12 or you can purchase the Lego Indian Jones video game for $40. As the person who asked the question points out the budget for top video games is about 1/10 to 1/5 that of a top movie.

The price difference is caused by a couple of things. First, there is a strong
connection between both movies and video games in the type of good they are. In some sense a movie studio or video game company has a monopoly on any movie or game, but there are many movie and video game choices so it is not quite a monopoly. Economists call this monopolistic competition, which just means at some point a video game company or movie studio has to worry about competition if they price the product too high.

So now how is price determined? Prices will be influenced by the number of people willing to buy it at a given price (demand) and the cost of production. However, for movies and video games most of the cost are up front. Once a video game is developed another copy can be produced for the cost of the packaging and the CD, probably a couple of dollars. A movie at a movie theater is a little different in that there is the cost of running a theater and the employees, but once a theater is running the cost of one more patron is low. Video games companies will maximize the difference in the money coming in from sales and the cost of making another CD. As long as they make profits the game’s development cost should not impact price.

On the demand side I think there is another factor at play. Although I have not played video games regularly, since a brief minor addiction with Grand Theft Auto and MLB 2006. I do know that someone who buys a video game will likely play it for more than the couple hour run time of a movie. In that sense the price per hour of enjoyment may be lower than the movie.

Economics of Disaster Relief: How to Recover from the Floods and Lessons from Katrina

I have been trying to follow the flooding stories in Iowa. I went to undergraduate in Iowa (Grinnell College), which has managed to avoid the floods, but I have fond memories of visiting Des Moines, Cedar Rapids and Iowa City during my time in Iowa. Those three cities have been hit hard. To get an idea of the damage see the Gazette, Cedar Rapids local newspaper.

Over the weekend I began to think about how best to help people recover from a flood. Should government assistance be offered and if so what kind? I’m not experienced enough to give a good answer to that question, but I do have some thoughts.

First, I think most people's inclination would be to provide government help. But from a federal level that would mean FEMA would probably be leading it and after the New Orleans recovery (or lack thereof), I’m guessing people are a little more wary of having the government try to help.

So why has FEMA failed in New Orleans, and what might be learned for Cedar Rapids? A policy brief, which is a short and good read, by Emily Chamlee-Wright and Dan Rothschild* from George Mason’s Mercatus Center suggests five things.

• Make only commitments that can be kept, and do them so as soon as possible.
• Minimize revisions to land use plans, and make these plans both simple and transparent.
• Encourage flexible commercial solutions to housing problems by suspending onerous regulations in the aftermath of disaster. Such regulations are appropriate for everyday conditions, but they often hamper redevelopment after a major disaster.
• Allow for the suspension of some employment regulations to make it easier for jobs to return to disaster stricken locales.
• Unless absolutely necessary, avoid providing goods and services that the private sector can supply.

The fifth one is interesting and not something I had thought about. As the paper says, FEMA came in after Katrina and hired a lot of the local worker and provided substantial unemployment benefits undercutting the ability of local businesses to recover by raising wages.

It is worth noting these lessons as Iowa goes forward with its recovery.
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* disclosure I taught at Beloit with Emily and I'm friends with Dan

Grinnell College Reunion 2008 and Some Economic Thoughts

So this past weekend was my college reunion. I’m six years out of undergraduate, but Grinnell College where I attended does their reunions with three graduating classes at a time so it was like 5 year reunion.

With my new position at Towson University, I have been thinking a lot about comparisons between Grinnell and Towson. The two schools are very different. Grinnell’s student population is less than 1/10 the size of Towson’s. Grinnell is located 1 hour between Iowa City and Des Moines in a town of about 10,000 people. Towson is located in Baltimore. Grinnell is private small liberal arts school with one of the largest per capita (student) endowments of any school in the US. Towson is public and generally dependent on state resources.

One other difference is the price tag Grinnell’s listed tuition is $35,000 a year, while in state at Towson it is $5,000. The Grinnell is misleading though since 90% of students are on financial aid and loans are capped at $2,000 per year.

In terms of outcomes for students. I believe the finding of Krueger and Dale that post graduate income isn’t really dependent on which school you attend, but incomes from different schools vary based on the quality of students who attend these schools. This relationship is well described in an Atlantic Monthly piece “Who needs Harvard?”

If you got to reading this far in this entry and you are not related to me, chances are you went to Grinnell. Most of the readers from this blog come through a Grinnell on line community. The thing that small liberal arts schools like Grinnell do best is foster social capital. But unlike the traditional social capital measured by Putnam or economists, I don’t think it translates into higher income. However, happiness research generally shows spending more times with friends makes you happier. Most of my closest college friends live a plane flight away now. But through Grinnell’s online community I have gotten a lot closer to people who were anywhere from on the fringes of my social circle to I didn’t even know their name at college.

Perhaps the US News and World Report needs a new way to rank colleges. I propose they add a category, percentage of alumni who maintain close friendships to people they met in college or through college networks post graduation. Also although it might be a can of worms, the percentage of alumni who are married/domestic partner with another alumni.

Being able to say yes to both I think tells you a lot more about a college than the percentage of alumni who give.

USA Steady Prices Since 1981!

Beloit College where I used to teach annually puts out a mindset list of things people entering college that year have not experienced. If they didn’t do it a few years ago may I suggest students entering college now have never experienced an inflation rate of more than 5.5%. The last time inflation for the year was above 10% the year was 1981 and this economist couldn’t even say the word inflation. This Washington Post article highlights some kids learning about inflation as food prices go up. A friend from Grinnell, Courtney Sherwood, asks some good questions to consider in the face of inflation on her blog:

“Is there any value in saving money, when its purchase power declines with each passing day? What should I spend on now, with the knowledge that it will cost more tomorrow? What is the best way to plan for my future when I don't know what the future holds? I've never been through this before.”

So here is a simple inflation primer.
What is inflation? It is a measure of the increase in prices between years

How does the government measure inflation? Basically they have a set of typical goods called a basket and they see how much the price of that basket changes.
Sometimes reports talk about inflation without food or energy prices in the basket (core inflation), why not include food and gas in inflation? These prices are volatile to weather and political shocks, so they might not reflect well the overall changes in prices.

Why is inflation bad? Some inflation is not necessarily bad, the problem is when it gets too high people realizes prices will soon be going up again so they should buy things sooner, causing more short term inflation. If it gets too out of hand people will have to continually run to the store as soon as pay day hits, causing long lines and a real problems.

So what to do? As Simpsons news anchor Kent Brockman might ask "Professor, without knowing precisely what the danger is, would you say it's time for our viewers to crack each other's heads open and feast on the goo inside?"

No I don’t think it is time to panic. I have heard a few grumblings of worries about inflation from economists, but there seems to be little worry about prices increases in the US, although there may be greater problems internationally. To hedge yourself against inflation you can always buy stuff sooner, but if you want to be part of the solution and not part of the problem consider investing in Ibonds. These are bonds offered by the US government that pay a fixed interest rate plus inflation. If inflation goes up you get a greater return. I own some Ibonds, they probably didn’t do as well as some of my other short term cash investments, but they are now beating my money market account.

Grinnell Recap: A look back at conditional cash transfers

I have returned from a visit to my alma mater, Grinnell College. On Thursday I commented about the improved dining hall conditions at many colleges, Grinnell has entered a new era. It was probably the made to order Thai beef stir fry that sealed the deal. I loved talking to my professors and the current students who were doing international internships, field work, and applying to grad schools and still partying like it was 1999 (i.e the way my friends and I used to).

Anyways I wasn’t just back at Grinnell to eat, I gave a talk on my own research and had a chance to speak with a global development studies class. In the talk I really just did an overview of my own dissertation, which focused on schooling in Honduras and Nicaragua. It was good to look back over things and I’m still left with this basic thought:

Sending a kid to school (assuming there is a school to go to) in a developing country comes down to a choice of giving up income from work. If the family needs money that child is more likely to go to school. If the rate children get paid is higher than children go to less school. The impact of anything on the schooling decision should take into account these two forces.

So to combat this Mexico and Brazil have national programs that pay households if their children go to school, called conditional cash transfers. Here is a good short description of the program and their success stories from the economist.

My other work has focused on how these successful programs vary in their impacts
depending on characteristics particular to a household or community. Looking back I think what is missing is the differences between where the programs continue to thrive (Brazil and Mexico) and where they have not become a budget priority of the national government (Honduras and Nicaragua).

Comparing these countries there is not only a difference in size large versus small, but also in terms of economic well being. Can the successes of these programs really be translated?