Gone Fishing!

I’m leaving for a trip with my wife and in-laws in Oklahoma, which will include some bass fishing!

I thought I would post some bass fishing related economics analysis.
Just like other sports there are pro-bass fishers. In fact by 2007, 17 anglers had career earning of over 1 million dollars. However, unlike major team sports salary as I understand it these pro fisherman have to pay their own way to tournaments and buy their own equipment or get sponsorships.

One pro-angler (and University of Oklahoma Economics Graduate), Jeff Kriet, who was fifth in the Bassmaster 2007 angler-of-the-year points list. Discussed the difficulties of making a living as a pro-bass fisherman in this article (here).

"The past four years, Kriet said, he earned $200,000-$300,000 a year from winnings and sponsorships. “You need to win $150,000 to put money away,” he said. “This sport is expensive.”

Or as Skeet Reese one of pro bass fishing legends describes bass fishing:
“It’s no different than wanting to become a neurosurgeon. It takes a lot of time and schooling, time on the water, to become proficient”

So what have we learned? When considering wages or profits you cannot just take into account earnings you also have to look at costs. When there are a limited number of jobs and that job is also reasonably enjoyable people will work hard to get those jobs making the competition tougher.

As I have only fished a handful of times, I’ll stick to the pro-economics circuit, where I have a better chance at $1 million dollars in career earnings. If you are thinking of going pro, here’s what it takes.

Can’t Someone Else Do It? Best Stata Command Ever!

To perform my research I use a statistical software package called Stata. Stata is a great program, but I have always had this problem where I run a regression and get a bunch of output. I then want to put this output in a particular format that is standard to the economic literature, so I have to cut and paste the output into Excel. Then I have to spend 10 minutes or so reformatting what I have pasted into Excel so I can put the results into a paper. This may not sound like a big deal, but I would say on average I probably spend at least ½ to 1 hour a week doing this. I thought to myself……

Can’t Someone Else Do It?

The answer is yes, I have two great graduate student co-authors who often put together results for me (although I do a lot myself, particularly when I’m working with my advisor). But I would rather have my co-authors working on improving the paper than making pretty tables. So I asked google…

Can’t a Computer Do It?

The answer is yes! Thanks to John Luke Gallop. He wrote a wonderful little program that with one line of extra code that takes 30 seconds to write saves minutes. The command put the results directly into a word document, cutting out the formating step.

The command is called outreg (for those of you who use Stata type “help outreg” in your command prompt.)

So what does this teach us. Tasks that can be automated, require a fixed cost. I’m sure Dr. Gallop, spent a while writing the program. But once that task is automated others can use the knowledge gain through conversion to make the process easier for themselves. There is a large economic literature on this idea typically referred to as spillovers. As knowledge grows productivity increases, just like once I learned outreg, I taught it to my two co-authors. Now we are all more productive.

Thank you John Luke Gallop!

Save Abe!

A college friend asked for my take on the penny. I’m one of those people that practically throws them away, although I once sold 17 lbs of Canadian pennies on Ebay for my father-in-law (that’s a different story.) Currently it cost about 1.7 cents to make a 1 cent penny (link). In part the rising cost is due to increasing cost of the materials used to make them. It is currently illegal to melt pennies for profit.

So if millions of dollars could be saved by getting rid of the penny, why not do it. First as the US Treasury Secretary points out “it’s not politically doable” since people have an attachment to pennies. I agree a smart move may be to make pennies out of cheaper metals.

Here is another thought. It might be a good idea at some point to get rid of the penny. Now is not the time. Because if we got rid of the penny there would be a cost to converting prices to the nearest nickel. Restaurants would have to print new menus and all super market products would have to be relabeled. There would be a cost to changing these prices (economist call this cost menu costs). When most of Western Europe converted to the Euro, the inflation effects were small 0.12 - 0.29 % (according to this paper). Given the current state of the US economy and other possible inflationary problems, if we are going to do away with the penny let’s wait until a good economic time.

Midwest Economics Meeting Wrap Up

This weekend I was in Chicago for the Midwest Economics Association meetings. While the rest of the city was drinking and kissing Irish people, a bunch of economists were in the Hyatt on Wacker discussing their research. For those of you who have not been to an academic conference, typically there are 4 two hour sessions each day. Each session has four papers, where the author gives a 15-20 minute talk, then a discussant who has read their paper (hopefully), comments on the paper for 5 minutes.
At Economic conferences results are typically preliminary so it wouldn’t be right to cite any presentation specifically, but two interesting results I saw. First, I saw two presentations on the impact of Mexican wages, be they immigrants to the US or staying in Mexico. Both presentations suggested that Mexican workers were not bringing down US wages. George Borjas a leading immigration economist, who was not at the conference, suggests that in the short run migration to the US will bring down US wages, but in the long run this immigration will lead to growth. Below is a table of his estimates of impacts of migration on wages (from Econlog).


Impact of Mexican Immigration on US Wages
Short Run Long Run

All native workers -3.4% 0.0%

High school dropouts -8.2% -4.8%

High school graduates -2.2% +1.2%

Some college -2.7% +0.7%

College graduates -3.9% -0.5%

The other topic that seemed popular at the conference was childhood obesity. Patricia Reagan, Prof. at Ohio State, as President of the MEA gave a talk on her own work on the causes of childhood obesity. Her general conclusion is that “that overweight prevention may need to begin before pregnancy and in early childhood.” In particular she suggests that attention should be paid to the movement of puberty to earlier years, which has been associated with obesity and other health problems.

Externalities 101: Cigar Smoke

To demonstrate a point in class today I brought in a cigar (not just any cigar, but a Dutch Masters Grape Flavored one, retail price $1.25). I told the class how I wanted to pay $2 for the cigar, but bought it for $1.25, so I gained 75 cents worth of surplus. So to enjoy the surplus I needed to light the cigar and smoke it. I took out my matches and asked if anybody cared.

Apparently, my students do not like the smell of Dutch Masters Grape Cigars. These negative effects experienced by students are called negative externalities, that is they didn’t buy or sell the cigar yet it had a negative impact on them.

In many places of work including my University, Towson, it is illegal to smoke. Standard economic theory suggests that instead of bans we should allow people the right to pay off other people to smoke (or pay people not to smoke). This works well if there are low cost to these types of payments. But, there is a benefit to these bans. Some NBERs papers suggest that smoking bans, lower smoking rates (here), which may improve public health, although it may increase teenage smoking (here), and certainly improves the odor fellow bar partons.

Even Fidel Castro is behind smoking bans.

Luckily, this being a fictitious example I did not have to smoke the grape cigar, but it still left a grape taste in my mouth. What I do for my students.

No NPR in Silver Spring, that’s OK.

NPR was proposing to move its head quarters from downtown DC to Silver Spring the DC suburb where I live. The chose to stay in DC instead. Although it would be great to see Karl Castle at the local Chipotle, I’m always a little weary of big tax breaks used to lure companies. As the Silver Spring Penguin a local blog points out

“Montgomery County offered NPR about $32 million in permanent property-tax breaks and would have flipped the bill for an $18 million garage, The Washington Post reports. ”
So Montgomery County where Silver Spring is located would have been losing out on 50 million dollars. Granted some of those tax breaks might be from taxes that would not be collected if the current site sits empty. But as the Penguin also points in another article Montgomery County is facing a 300 million dollar budget shortfall next year.

Given that NPR has about 600, that’s about $83,000 per job for what they are spending. I would like to see a more indepth economic analysis (can’t find one on google), but my gut tells me Silver Spring is better off keeping the money.

Update on previous posts

The New York Times and Salon have picked up on the surrogate parent in India story: my take here.


Some more thoughts on the median wage from Brad Schiller via Greg Mankiw. In short perhaps the median wage is greatly effected by immigration. I'm less sure of my previous posts (here and here) on median wages, but the issue needs a closer look