You Have the Right to Remain Silent: Mime Patrol

According to Fisman and Miguel, the mimes had a noticeable impact on compliance with traffic laws. The mayor reported that traffic fatalities fell by more than 50 percent between 1993 and 2003.

From Bogota Colombia. The article on Mayor Mockus and his city policies that include mimes to make fun of jaywalkers and bad drivers, rewarding good cab drivers, and ladies night.

Many times when people act in their own self interest they make things worse for everybody else (bad drivers, litter bugs, and D’Uriner). By encouraging social norms of good behavior people have the incentive to do the right thing.

Now if only we could import some of those mimes to make fun of tourists standing on the left of the escalator of the metro.

Can't Decide There is an App for That

Standard economic models assume that people can make decisions. Sometimes life gives us too many decisions to make and we can't decide what to do.

Behavioral economics tries to take into account that people are irrational and sometimes can't choose what they want to do. Dan Ariely is one of the leading behavioral economists and he is trying to help you make choices. He had one of his students create an Iphone App that will list the choices you are trying to make. It allows you to set a deadline for each choice (see his blog post here). If you don't decide before then, it makes the choice for you at random

Only $1.99, if you are having trouble deciding to buy it as one commenter on his blog did. Ariely provides one free decision suggestion for you, he recommends you the buy it (I'm guessing that recommendation wasn't random.)

Are Randomized Evaluations Out of Control

In the developing world thousands of aid programs have been created with the aim to fight poverty. Do we know if these programs actually work? The most popular way to evaluate these aid programs is through a randomized trial. Take 1,000 people and split them into two: 500 people get help (treatment group) and 500 get nothing (control group). Compare the groups before your program to make sure they are the same. If they are then you can compare the two groups after the program has been running a few years then see the results. If the group that got helped is healthier, goes to school more, or has higher income then it is good evidence the program worked.

Esther Duflo is one of the leading champions of randomized trials. I like this 15 minute TED talk she gave below.



So what about the pitfalls of randomized evaluation. First what works in one country or region may not work in another. Second the evaluations are expensive.

Finally, in a blog post yesterday Alanna Shaikh argues that by focusing too much on randomized trials researchers and development agencies focus too much on immediate results that can be measured.

I think there is validity to all these criticism. However, I still do a lot of work with experiments where treatment is randomized. In part this is because of publication bias, it's much easier to get a randomized experiment published, because you don't have to argue as much what caused the effect you found.

My favorite thing to do is to take experiments and see how different conditions influence how the programs work.

99 is Quite All Right: extending unemployment benefits

The Senate is looking like it will extend unemployment insurance payments to 99 weeks (link). As the chart below from Greg Mankiw's blog shows the median time people have been unemployed is nearly twice as long as anytime since 1965 (link). I do think in some circumstances giving people unemployment insurance payments decreases the chances they will get a new job. In fact just a week ago I had an unemployed person tell me they didn't take a job because it didn't pay enough compared to unemployment insurance.

However, given the high unemployment rate and length of people's job search extending benefits seems to make sense. It also is a reasonably good economic stimulus, since people receiving unemployment checks are unlikely to save much of it.

In terms of the budget, unemployment insurance payments will go down when (if?) the economy recovers. I also think congress has a better record of pulling back long term unemployment benefits, then tax breaks or other spending.

So that's why I think 99 is quite allright.

Should Wine Kiosks Make You Smile?

Want to buy wine in Pennsylvania, there is a new way a wine kiosk. Two Giant supermarkets have added large wine vending machines as part of a trial run to put 100 throughout the state (NPR link). To get the wine purchasers have to swipe their state ID and smile for the camera to be id checked remotely by a state worker. On top of that you have to blow a breathalyzer to show you have no alcohol in your system.

Why can't you just put wine in shopping cart and check out? Because the state has a monopoly on wine sales and hard liquor (it looks like you can buy a six pack in a independent grocery store). Maryland has somewhat similar rules, except you can actually buy wine, but only at independent stores (so no two buck chuck).

So does this kiosk make economic sense. I'm guessing probably not. Although it's interesting the company that makes the kiosk provides them free of charge in exchange for advertising space. The grocery store might attract more people, since it cuts down on a trip to another store to get your bottle of wine or two for dinner.

The only people that are losing are the wine loving citizens of Pennsylvania who still have few options as to where to buy their wine. Ben Franklin would clearly be opposed.

If You Want a Nice Rap It's $7 More

I was listening to the Podcast Too Beautiful to Live and Rap Master Maurice was being interviewed. People hire Maurice to send both revenge raps and non-revenge raps to anyone they have a beef with or want to send a friendly message to.

An interesting thing about the Rap Master's pricing scheme is that friendly raps are $7 more than revenge raps. The Rap Master prefers sending revenge raps, in part because they help keep up his "cred" with his friends, but for a price ($7) more he's willing to send a friendly rap.

Also it seems in the past few years the Rap Master has increased his prices from $7/$14 for revenge/friendly to $12/$19 and the price might even go up $17/$24. Is it from an increase in demand for revenge raps?

Want to see what $12 gets you watch the clip below.

Increasing Returns to Lebron

I'm a little late to the party talking about Lebron "taking his talents to South Beach", but Planet Money recently did a podcast on Lebronomics that I think over simplfied the concept diminishing returns.

So in short Lebron James went to Miami so he could play with Chris Bosh and Dwyane Wade two other super star free agents. Alex Blumberg the show's host said that the impact of Lebron on happiness of local fans was smaller because Miami already had a superstar. He made the analogy to chocolate bars. If you are hungry the first chocolate bar is awesome, the second one is Ok, and the third makes you sick.

This demonstrates the concept of diminishing returns. That is the additional happiness from another player or a chocolate bar decreases which each subsequent one you add. However, diminishing returns don't necessarily start after the first player.

Players have the biggest impact on the probability of winning championships if the team already has some good players. For example teams close to making the playoffs will often trade for more expensive players. The Texas Rangers just added ace pitcher Cliff Lee, because they have a good chance to make the playoffs, they got him from the Seattle Mariners who have almost zero chance of making the playoffs. Cliff Lee provides more value to Texas than Seattle.

At the sports economics conference I went to last week one economist pointed a flaw in one presentation was that it assumed that a players value is constant for all teams. I agree, Lebron's value to the team may be higher in a place with another superstar in place.