Is Canseco Robust?

Jose Canseco was a muscle bound slugging outfielder who currently is the self proclaimed poster boy of steroid use. His recent book Juiced describes how he helped several players access and use steroids throughout his career.

A popular belief is that steroids are the cause of the increase in home runs baseball saw during the late 1990s and early 2000s. If steroids increased home runs and Canseco helped players get steroids then we would expect players who played with Canseco to hit more home runs once he became their teammate. A study by two economists Eric Gould and Todd Kaplan in their analysis of Canseco's teammates found this very result. (see this slate article for a summary)

On reading the paper I felt the results seemed too good to be true. I'm not accusing the authors of faking the data, but I was curious how the results would hold up if they changed a few things that didn't seem typical in the way player performance is typically estimated. It looks like I wasn't alone JC Bradbury examined how the results would hold up if some things in the way the Canseco impact on his teammates' home runs were changed (link). In short Bradbury used only the years Canseco played 1985-2001 instead of all the years Canseco's teammates played 1970-2003. Bradbury made some other changes that I tend to agree with. When he makes these changes, Canseco no longer has a positive impact on his teammates home runs, if anything it's negative.

It's not clear if the Canseco effect via steroids exists or not, but Bradbury's analysis caste doubt on it. I think finding the Canseco effect doesn't exist could be almost as interesting.

The Kaplan and Gould paper was discussed in both slate and Freakonomics. On the one hand it shows economists can get a little too excited about a paper that has not been vetted. On the other hand within a few days or less, a new analysis was posted and our understanding was increased.

Flight Insurance 25 Cents

I was at the Smithsonian Air and Space Museum this weekend and they had an exhibit with an old vending machine that used to be in airports that for one quarter would sell you $7,500 worth of life insurance that would cover you in case your plane crashed (pictured here). A quick calculation shows that for the insurance company to make money planes would have to have fatal crashes in less than 1 in 30,000 cases. This source suggests in the 1960s crash rates were 1.2 out of 100,000 when these machines were popular.

However, this assumes that someone buying insurance will not influence the probability of a fatal crash. In researching these machines, I found the story of United Flight 629, which was bombed by the son of one of the passengers who had purchased extra insurance at the airport for his mother's trip.

So perhaps that's why we don't see these machines much anymore, although I have read they are still around.

Fording the River: Go West and El Norte

As a kid I loved to play the game Oregon Trail. If you haven't played the game before, it simulates migrating from Independence, MO all the way to Oregon in the mid 1800s. The game involved a lot of economics, at the beginning you had a limited budget to purchase your supplies (ox, bullets, spare parts, food, clothes). You also have to decide how to allocate your time (keep going on the trail, hunt, rest). The trail also presented dangerous diseases and river crossings. In short like the families that actually traveled the trail in your game shows you spending almost a whole year and a few thousand dollars making a dangerous trip all in the hopes of a better life.

Although the trip may be shorter, it many ways the economic analysis that most families make in Mexico to travel the trail up to the United States isn't much different. There is an upfront cost in some ways on a similar scale to those on the Oregon trail, there is chance of death or deportation, all in the hopes of higher incomes in a different place.



This post was inspired by the below video, which any Oregon Trail fan will love.

Were You Raised in a Barn?

For those of you who haven't been asked "Were you raised in barn?" it's a popular saying with parents of children who leave doors open. I wonder if some parent is shouting it now at store owners across the US who leave their doors open in the summer to let the breeze of AC entice customers into their stores.

Well one man from Bowie Maryland made a video of several stores at his local mall that left their doors open on a 100 degree day(see the Youtube video below or read this Washington Post Article)

Under most circumstances whenever people consume more of something the price is going to go up, so by fining stores that leave doors open, we might be able to lower electricity prices although the impact is likely to be small.

Another reasons that it might be better for stores to close their doors is that using energy creates pollution as power plants have to burn more coal and natural gas to provide the extra AC. This pollution impacts even people who don't shop at the Bowie mall (we call this an externality) many economists even relatively conservative ones think this is a bad result. For example Greg Mankiw a former economic advisor to Bush has long been a proponent of the Pigou Club, which proposes creating taxes on gas and electricity use to put the cost of the pollution on the user.

I'm agree with the Pigou Club, but I also like shout "Where You Raised in a Barn?". The good news is I can do both.

Finally, I apologize if I offended anyone who was actually raised in a barn, I hope this video will show that I actually think barn folk are great people.

Monumental Economics: How Many Pennies is the Lincoln Memorial Worth

I once had a conversation with someone where they complained economists can put a price on anything, even a tree (see problem 5.5 in your workbook). This weekend my brother and his foster daughter are visiting and we'll be touring DC monuments, including the Lincoln Memorial. Can we put a value on the Lincoln memorial? Like a tree the value of the Lincoln Memorial includes both the raw materials, land, and the joy it brings to those who visit it and for those who like to know it's there.

First sometimes economists use travel costs as a way to proxy for value. If someone spends $500 to visit the Grand Canyon, then we might say the Grand Canyon is worth $500 to them. One way to figure out the value of a place is to add up the value of all the trips people took to visit it.

If something is free like the Lincoln Memorial you might ask people how much they would pay to visit it. You might also ask how much would you pay to keep the Lincoln Memorial. For example I might never again visit the Wailing Wall in Jerusalem, but I might be willing to donate $5 to save it. Surveying people about their value of how much they would pay to visit or protect something to estimate its value is called contingent valuation. Just this morning NPR did a story on the value of a Pelican.

I could not find a study on the value of the Lincoln Memorial. But I did find this quote from Robert Solow "it makes perfectly good sense to insist that certain unique and irreplaceable assets should be preserved for their own sake; nearly everyone would feel that way about Yosemite or, for that matter, about the Lincoln Memorial, I imagine”

Power and Economic Development

Sunday night along with 300,000 other Montgomery County residents our house lost power. We hope to have power back sometime on Thursday. The power outage has impacted my productivity. I do normally spend a lot of my day at the library or coffee shops, but with my local coffee shop lacking AC right now, Panera lacking outlets, and the library closed for a couple of days due to the power issues, my productivity for the last week has been reduced. It's more the frustration of trying to find a place to plug in and get online that takes up a few hours than anything else. Although perhaps the extra coffee will counter act this.

My power will be back on soon (hopefully). But loss of electricity can have an impact on economic development. Attracting manufacturing is a key part of most countries development strategy, companies are unlikely to want to open up shop in countries with unreliable electricity grids.

The problem is that utilities are large enough that they create a natural monopoly (an industry with high fixed costs that creates a situation where a monopoly will likely form). Natural monopolies are usually taken over by the government or regulated in some fashion. The problem is that many developing countries also lack good governance meaning the countries electric grid gets even less out of their inferior equipment then they could have.

Infrastructure development has long been a part of the World Bank's and other development agencies mission. But it's hard work given the high costs and governance issues. The impacts are also hard to measure, since unlike education or health programs individuals aren't targeted.

At least the store down the block has electricity to fuel their beer cooler!

Public Intellectuals and Tenure

The NY Times had a recent forum on tenure for university for professors. Of the five people who wrote pieces for it, I think all five are tenured. If you look around economic blogs, most of the top academic blogs are written by tenured faculty.

I think it's worth contemplating tenured prof. Tyler Cowen's thought experiment in response to the article.

Take a 53-year-old professor, at a moderate quality university, who goes from publishing three articles a year to one article a year, and in somewhat lesser journals than before. His teaching evaluations slip steadily, though he never becomes a disaster in the classroom. In the no-tenure world, does that person get fired?

Looking at Cowen's CV, that might be close to the truth on the research side for him, although his CV also reveals he's a few years younger. I don't know about the teaching side. What it misses is that Cowen has produced a textbook and I think some decent selling books, plus a really well read blog.

Most of the public intellectuals in economics (Cowen, Mankiw, Krugman, DeLong, Becker, Levitt ect.) have tenure. It could be that tenure professors have more experience so are better writers and have gained a larger audience.

But I think back to the two stars of the year I was on the job market: Emily Oster and Jesse Shapario. When they were on the job market they were in quite a few articles and seemed to try to participate more in the public discourse. But I haven't heard much from either of them lately except press releases of their research. My guess is that they are working as hard as they can to get tenure by publishing articles. In a few years I wouldn't be suprised to see them more in the public discourse.

Without tenure the people I've named would still be at top schools. But professors at smaller schools make contributions at a more local level in OP-EDs and speaking to local groups.

I see the obvious arguments that some professors with tenure will slack off and not be very productive. But I think without tenure many professors would decrease their contribution to the public discourse.

From a personal standpoint, I don't have tenure. I'm not sure how my effort in research, teaching, and blogging will change once I get it. My guess is not very much, but I hope I get to make that choice.