Monthly Archives: October 2007

_44197695_graffiti2_203 BBC producer – and a colleague on More or LessMukul Devichand writes:

On a crisp Welsh morning, I followed a man into a quiet country lane before he felt it safe to start our anonymous interview. We weren’t discussing mafia activity or official secrets. He was a public sector worker in Wales. The subject was language policy in the workplace. His opinion was that policies to promote the Welsh language had gone too far… But in Wales, such antipathy to the native tongue can be seen as tantamount to heresy.

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Mukul’s observations made me think. Is there a rational reason why many people in Wales are so keen to spend time learning Welsh – rather than, say, using the same time to learn Chinese or software engineering?
Economist Roland Fryer thinks so. Fryer is a young man with a big reputation – check out Stephen Dubner’s sensational profile of him – but one of his lesser known papers [pdf] is a game theoretic model of this. Fryer’s intuition is that a decision to learn software engineering rather than Welsh is a signal to the community that you are preparing escape options. Nobody likes to see their friends or colleagues with escape options, even if the options are never used. (Your nanny is studying law at night school – how long do you think she’ll stick around?)
Fryer applies the thinking to the phenomenon of acting white [pdf]; perhaps it also applies to learning Welsh. Expect to hear more about Roland Fryer – in my next book, but I have no doubt in many other outlets as well.

A signed first edition of a Harry Potter book has been sold for £19,700. I was once the proud owner of the first ever signed copy of Freakonomics. (Read the story of how I got it.)
Well, I sold it some time ago to raise money for Steve Levitt’s favourite charity, Smile Train. Levitt very generously doubled the proceeds. But we got just over $600 – pretty good, but not £19,700. Perhaps I should have held on a little longer? Freakonomics sales are now around three million copies…

Steven Landsburg offers a conceptual framework for thinking about climate change:

The moral of that story is not that economists can justify anything; it’s that assumptions really matter. Therefore you need to be clear about your assumptions, and you need to be prepared to justify them. If you’re not talking about discount rates and levels of risk aversion, you’re blathering. The most thoughtful assessment of climate change is the Stern Review, prepared in October 2006 at the behest of the British government. The Stern Review reaches conclusions generally compatible with Al Gore’s worldview, but only after laying out the underlying assumptions so clearly that skeptics like me can tinker around with them and see how the conclusions change. In other words, they’ve taken a hot-button issue and reduced it to its constituent pieces so that opposing parties can stop yelling at each other and say, "Let us calculate."

It’s a good piece for non-economists. A better piece for economists, though, in Martin Weitzman’s JEL review [pdf] of the Stern Report. Weitzman emphasises that Stern’s conclusions, if right, are right for the wrong reasons, and the model he uses misses the most compelling reason for acting on climate change – as an insurance policy.

I am still downloading Tyler’s talk, but Felix has a good discussion here.

So says Paul Krugman and he is almost certainly right.
Here is probably the most credible source on the number of World of Warcraft players.
Here is my view on the importance of online economies. Note that the typical online gamer earns very much less than the typical farmer, so it is sometime before these numbers translate into something of economic importance. I estimated a couple of years ago that the online economies are about the size of the economy of Bosnia and Herzegovina.

John Kay thinks the government-imposed daily schedule has it all wrong:

Enforced time-shifting is an intrusive yet effective piece of economic and social engineering. Next week, even people free to rise when they choose, such as retirees and newspaper columnists, will get up later and go to bed later. Who would believe they could be induced to do this by government decree?

Effects on farming and construction are no longer important, but gaining more daylight saves energy used in lighting and heating. This was the main rationale for the extension this year of US daylight saving, which next week will upset transatlantic flight schedules and old computers. Most people prefer more daylight, even if the price is having to rise more often in the dark. Natural light was once more important to work than to leisure, but now many farms are golf courses and hiking trails. Modern play needs daylight; modern business does not.

I have written about Dan Hamermesh’s work on the subject. Turns out that people will adjust not only to government decrees but to the timing of the David Letterman show.

Greg Mankiw has a fun post about how "facts" gradually appear; in this case, Robert Reich is his target:

In short, here is what appears to have happened:

  1. Gabaix and Landier make a modelling assumption for purposes of analytic convenience.
  2. I describe their model and its implications on this blog.
  3. Wessel quotes part of that description in the Journal.
  4. Reich reads the Journal and cites me as an authority using the partial quotation.
  5. As a result, a modelling assumption morphs into an established fact.

You might call that data-free empirics.

Professor Mankiw is also the founder of the Pigou Club. He signed me up without asking, but secretly I am pleased.

Slate columnist and economics prof. Ray Fisman has the scoop:

Hiscox and Smyth set up their shopping experiment at ABC Carpet and Home, an upscale department store in lower Manhattan. They picked two brands of towels and two brands of candles that had all been produced under fair labor conditions. First, the researchers recorded the weekly sales of the towels and candles without labeling any of them as fair-labor certified, measuring purchasing decisions based solely on taste. After a few weeks, Hiscox and Smyth spent the night at ABC sticking fair-labor labels on one brand of towels and one brand of candles. When the store reopened, sales of the now-labeled fair-labor towels jumped by 11 percent relative to sales of the unlabeled brand. For candles, the effect was even greater—an increase of 26 percent. A few weeks later, Hiscox and Smyth were back in the stockroom, marking up the prices on the labeled towels and candles by 10 percent. Quite remarkably, this increase made people buy even more towels and candles (a 20 percent increase for towels and 30 percent for candles).

The paper [pdf] is here. Now I feel bad about teasing Costa Coffee for charging a massive premium on fair trade coffee – something they no longer do, perhaps because I started asking them awkward questions about it.

Rapaciously running a poor country can be extremely lucrative:

Transparency International, the corruption watchdog, has estimated that Mohamed Suharto embezzled up to $35bn when he was Indonesia’s president, a figure that is in the same league as the entrepreneurial fortunes of Bill Gates and Warren Buffett.

But Mo Ibrahim, the hugely impressive Sudanese telecom entrepreneur, is trying to increase the returns to governing benevolently. Prospect’s blog reports:

Every year, the winner will be awarded $500,000 for the subsequent ten years, followed by a lifetime pension worth $200,000 a year. Yesterday, the first award went to Joaqium Chissano, former president of Mozambique.

File this one under "worth a try".

Seth Godin thinks so:

The Times’ list is completely fictional. Made up. Divorced from reality. The stated goal of the list is to find (and promote) books that Times editors want people to read, not books that are actually selling a lot. (The editor of the Book Review told this to me years ago). So, they make up ‘rules’ to appear consistent. When Harry Potter was selling like crazy, they invented a new list so that they could take JK Rowling’s books off the real list. When diet and other books started selling a lot, they made up a new ghetto (miscellaneous) for those books. When books started selling in places like Wal-Mart (thus driving the snootiness factor down) the Times penalized sales in chain outlets. And books like the Bible are banished because they’re not current enough.

He seems to have a point. Here’s the article that got him started:

Why does “Night” become an evergreen [and therefore dropped from the list] at 80 weeks when Malcolm Gladwell’s “The Tipping Point” remains on the list at 164 weeks?

Hm. That explains why "The Undercover Economist" never quite made the NYT. The British edition made the Sunday Times bestseller list, however, which I am sure is utterly beyond reproach.

Tim Harford’s blog

This blog is no longer updated but it remains open as an archive.

Tim, also known as the Undercover Economist, writes about the economics of everyday life.