Below you will find a feed of the economics-related web sites that I find particularly interesting, insightful, entertaining, etc. (In other words, you are getting pretty much an edited view of my Google Reader.) My purpose in doing this is to provide readers with a portal for a wider range of information than I can provide myself. I will add new sources here as I come across them, and feel free to email me with suggestions for sites that you think should be included. It’s not practical to have too many sites incorporated here, so I will keep a list below both of included sites and sites that are not included but worth checking out individually. (Some of these are sites that are great but are not updated frequently enough for them to make sense in the feed.)
I am still working on the formatting, so please bear with me. For now, the page displays the last 50 posts in round robin fashion from the following sites:
- Marginal Revolution
- Greg Mankiw’s Blog
- Freakonomics Blog
- NYT Economix Blog
- Slate’s Moneybox
- Nudge
- Megan McArdle
- Environmental Economics
- The Becker-Posner Blog
- NPR’s Planet Money
- EconomistMom.com
- EcoComics
- xkcd
- Indexed
- Dilbert
The following sites are not currently included in the feed below, but are interesting nonetheless:
- The Consumerist
- Think Like An Economist
- Slate’s Undercover Economist
- Above The Crowd
- The Daily Show Economics Forum
- Economic Policy Review
- Economic Deficit Disorder
- Piled Higher And Deeper
- The Sports Economist
- The PULSE Review
Marginal Revolution
Small steps toward a much better world.
What Ludwig von Mises really thought about economic policy
by Tyler Cowen
12 Mar 2010 at 10:31am
I guess I am a Misesian after all. Via Steve Horwitz, Richard Ebeling (who named his dog Mises, I believe) reports: What is also clear from reading Mises? policy writings from this period of his European career, is that if…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
GeoIP
11 Mar 2010 at 10:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
NPR disses the Pigou Club
by noreply@blogger.com (Greg Mankiw)
12 Mar 2010 at 8:26am
It is a rare opportunity when I find myself to the left of National Public Radio. But sometimes it happens.
A blog reader alerts me to this NPR story, which says:
economists frown on what they call “Pigovian taxes,” which are designed not only to raise revenue but put to governments in the position of trying to influence how people shop or behave.I don’t think economists are unanimous about this issue, but I believe most economists favor Pigovian taxes.
Moreover, the NPR story confuses Pigovian taxes with sin taxes. Pigovian taxes try to correct for negative externalities–that is, the adverse effects of certain behavior on bystanders. Sin taxes try to correct for behavior that some social planner deems as not sufficiently virtuous.
Click here for previous blog post on sin taxes.
Freakonomics
New York Times Blog
Time for the Kids? A Teaser and a Bleg
by By BETSEY STEVENSON AND JUSTIN WOLFERS
12 Mar 2010 at 1:30pm
Today’s parents are spending dramatically more time on childcare than their parents did. What’s more, this rise has disproportionately occurred among those with the most education.
Economix
Explaining the Science of Everyday Life
Stimulus Makes People Bad at Math
by By CATHERINE RAMPELL
12 Mar 2010 at 9:57am
In most of the last decade, there were around three million to five million math mistakes a year. But in years with federal fiscal stimulus efforts, math errors on returns soar, according to the I.R.S.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Choose you own adventure.
by Jessica Hagy
12 Mar 2010 at 9:05am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
We?ve moved to www.nudges.org. Come with us.
by nudgeblog
27 Feb 2010 at 12:08pm
Nudges.wordpress.com has been a great home for the Nudge blog over the past year and a half, but it’s time to move on. Where to? www.nudges.org. That’s right, we’re taking over our first home and revamping it for the future. We’ve added new social media capabilities that let you share our posts on facebook and [...]
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for March 12, 2010
12 Mar 2010 at 1:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis and Other Stuff
The Fed as CVM critic
by John Whitehead
12 Mar 2010 at 11:51am
From the inbox:
Moving quickly to put its mark on the Federal Reserve, the White House on Friday identified two economists and a lawyer as its choices to fill all three vacancies on the central bank’s board of governors.
The economists are Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, who is the top choice for vice chairman, and Peter A. Diamond, an M.I.T. economist who is an authority on Social Security, pensions and taxation [ed: and the contingent valuation method]. The lawyer, Sarah Bloom Raskin, is the Maryland commissioner of financial regulation.
The Obama administration stopped short of saying that it would formally nominate all three to the Senate, stating that Ms. Yellen was “a leading contender” and that Mr. Diamond and Ms. Raskin were “under consideration.”
For those of you too young to have lived through it, read this: Is some number better than no number?
All joking aside, shouldn’t the members of the Fed be experts in monetary policy? and economists?
Toxic TV
12 Mar 2010 at 12:36pm
Our Toxic Asset makes its TV debut.
Ecocomics
Where Graphic Art Meets Dismal Science
Artificial Evolution Achieved, Used to Kill Mutants and Not Cure Cancer
by Mark
12 Mar 2010 at 6:34am
Dark Reign: The List - Wolverine #1, cover by Esaad Ribic
A recent appearance of “The World” in the Dark Reign- The List: Wolverine reminded me of some misgivings I’ve had since “The World” was introduced in Grant Morrison’s New X-Men run.
To explain, “The World” is a dome structure created by the Weapon Plus Program (the original program Weapon X is derived from) to achieve artificial evolution. Within the confines the The World’s dome, Weapon Plus scientists are able to move time forward at an extremely accelerated rate. Based on this, the scientists in Weapon X are able to artificially manipulate the course of evolution and directly change the course of how organisms develop. They can selectively breed individuals to create new strains of DNA as they see fit. These are the kind of things that can be achieved when you are a secret evil organization with no concerns about morality.
Now I just think it’s interesting that with all this technology at their disposal, Weapon Plus decided to create a mutant-killing superhero team as their goal. This seems somewhat natural since mutant extinction is the entire goal of the program. Weapon Plus wants to create super-soldiers and murder mutants. But this seems somewhat short-sighted since artificial evolution has billions of uses. They could examine disease resistances, the origin of genetic disorders and traits, and cure every ailment that humanity has ever suffered.
But what does Weapon Plus actually use artificial evolution to do? Why, the decide to make an anti-mutant superhero team which will eventually murder mutants live on a reality TV show. Thank you writer Grant Morrison. At least the fine people at Weapon Plus decide they will use their discovery to make money (the action figure rights alone to a real life superhero team would be incredibly lucrative).
Ultimaton, one of the super-soldiers artificially evolved by Weapon Plus, art by Chris Bachalo
Furthermore, The Dark Reign: The List one-shot seems to suggest that since the X-Men last busted up the plans of Weapon Plus, “The World” has been sitting by unutilized by any forces. That’s right, not only has mankind achieved artificial evolution, they forgot they achieved it. Apparently an artificial biosphere has been sitting somewhere in the continental United States for the last 5 years and no-one thought to check up on it. Somewhere there is a scientific discovery with boundless possibilities for the future and it is being treated like a broken refridgerator.
Bravo Weapon Plus. Bravo. Someone needs to manage their assets a wee bit better.
The Becker-Posner Blog
A blog by Gary Becker and Richard Posner
The President’s Forthcoming “Jobs Summit”–Posner
by Richard Posner
30 Nov 2009 at 1:07am
On December 3 the President will convene a “jobs summit” to consider what if anything to do about the dismal employment picture. And dismal it is. The figure of 10.2 percent unemployment in October understates the problem because people who have given up on seeking a job, or who are involuntarily working part-time rather than full-time, are not counted as unemployed. They are, however, included with the unemployed in the statistics of underemployment, and the underemployment rate has reached 17.5 percent. These rates may continue to rise. And more than in previous downturns, employers have been cutting wages and benefits, which from a worker’s standpoint is a form of quasi- or partial unemployment.
At the end of the summer there was some hope for a rapid economic recovery, but that has faded. Recovery from a recession or depression precipitated by a collapse of the banking industry secondary to a housing collapse tends to be slow. Weakened banks are hesitant to lend, and because housing is a big part of household wealth a collapse of housing prices tends to inhibit spending, or alter spending patterns, and especially to inhibit borrowing: debt is a fixed cost, so when household wealth declines people find themselves overindebted. With the supply of and demand for credit weak, economic activity slows. The banks’ reluctance to lend, which expresses itself in stricter credit standards, is especially hard on small business, which depends on bank loans for credit; small businesses unlike big cannot finance themselves by issuing bonds or commercial paper or using retained earnings in lieu of credit. And small businesses in the aggregate are big employers. The Administration’s ambitious health-care reform is inhibiting hiring by small business by creating uncertainty about the health-insurance costs that employers will bear. Mounting concern with our rapidly growing national debt is a further damper on investment and hence employment.
There is even concern that we may be in a trap in which rising unemployment feeds on itself. Credit defaults are highly correlated with the unemployment rate, so as unemployment rises, defaults rise, and defaults impair bank capital, causing a further tightening of credit, which by hurting small business pushes unemployment up.
All this is speculation and for all I know the unemployment rate will start falling soon and rapidly. But most forecasters think not, and so it is understandable that the Administration would like to do more than it is doing to curb unemployment. But what is there to do? In part because of mistakes in the design, implementation, and explanation of the $787 billion stimulus program enacted last February, and in part because of concern with the rapidly growing federal deficit, the stimulus has become extremely (I think undeservedly) unpopular, and Congress will not enact another stimulus program as urged by left-wing economists.
What then can be done? One possibility, which has been tried in Europe recently, apparently with some success, is to pay employers, through tax credits or otherwise, to hire workers. This is fiscal stimulus–Keynesian deficit financing–by another name. It is like the government’s paying a construction company to build a highway, which will require the company to enlarge its workforce. All that might seem to distinguish the job subsidy is that the link between funding and jobs is more direct, which increases its political appeal.
A common objection is that it will encourage fraud–employers will fire workers and then rehire them, to obtain the subsidy. Or, less transparently, it will fire workers and hire replacements, again in order to obtain the subsidy. But a bigger objection, which is also an objection to the original stimulus program, is that it’s not targeted on industries or areas of above-average unemployment. Even in an area of low unemployment. an employer will have an incentive to hire workers in order to obtain the subsidy, but he may do this by hiring workers who already have a job, and the net effect on unemployment will therefore depend on what the hired worker’s former employer does–maybe just pay him to stay.
There are other ways of stimulating employment, at lower cost and probably with greater impact. One would be to reduce the federal minimum wage, which over a three-year period beginning in 2007 will have risen from $5.15 to $7.25 an hour–a 40 percent increase. As time passes, unemployment becomes less a matter of layoffs and more a matter of failing to provide jobs for new entrants to the workforce, and a reduction in minimum wage would make these new entrants–inexperienced workers with modest wage expectations–far more employable.
Another way to reduce unemployment would be to amend the stimulus law to redirect the remaining unspent funds to areas and industries of high unemployment. Another would be to reduce payroll taxes, including the unemployment-insurance tax and the employer’s share of the social security tax; for payroll taxes are part of the cost of labor. The effect on the employer would be similar to that of a wage cut, and would increase the demand for labor. Since social security and unemployment benefits (as opposed to taxes) would be unaffected, the reduction in the taxes would not reduce the employees’ full wages and so induce a demand for higher wages. So the employer’s net labor cost would fall and his demand for labor rise. The problem is that the government’s deficit would increase, but that would also be true of a subsidy for hiring, though it would not be true of a reduction in the minimum wage.
EconomistMom.com
…where analytical rigor meets a mother’s intuition
Perhaps They Should Call Health Care Reform Another ?Jobs Bill?
by economistmom
11 Mar 2010 at 8:23pm
The Senate “jobs bill” passed on Wednesday contains nearly $60 billion in (obviously-jobs-related) extended unemployment benefits. (Here is the CBO cost estimate.) But it also includes $34 billion in extended tax cuts, none of which are brand new (they’re “expiring” provisions, after all) nor uniquely designed to get us out of this particular recession. These [...]
Marginal Revolution
Small steps toward a much better world.
Are economics students happier? One estimation from Germany
by Tyler Cowen
12 Mar 2010 at 7:55am
Michael Tamada sent me notice of a recent study, by Justus Haucap and Ulrich Heimeshoff: A pair of German economists note that while scholars in their field have vigorously begun analyzing the economics of happiness, no one has studied the…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
Single Ladies
9 Mar 2010 at 10:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
My Visit to Oberlin
by noreply@blogger.com (Greg Mankiw)
10 Mar 2010 at 5:57pm
I will be talking at Oberlin College tomorrow evening.
Freakonomics
New York Times Blog
Today in Aptonyms
by By FREAKONOMICS
12 Mar 2010 at 12:00pm
A well-named plant scientist recently weighed in on the European Commission’s decision to “to allow genetically modified potato varieties to be grown in some European Union countries.”
Economix
Explaining the Science of Everyday Life
To Control Health Care Costs, Trace the Spending
by By UWE E. REINHARDT
12 Mar 2010 at 4:56am
The government can keep track of waste in the American health care system by keeping better track on how doctors choose to treat their patients, an economist writes.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Fantasy League.
by Jessica Hagy
11 Mar 2010 at 9:14am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
Auto-suggest suggests how far behavioral economics has come, and how far it s…
by nudgeblog
24 Feb 2010 at 7:30pm
In terms of recognition and respect, behavioral economics has certainly come a long way in the last 25 years. But it is still a Hibernian outpost in the great Roman Economics empire. One of the newest metrics for evaluating its impact is the auto-suggest feature in many search engines that has become quite popular since [...]
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for March 11, 2010
11 Mar 2010 at 1:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis and Other Stuff
3.14159265358979…
by Tim Haab
12 Mar 2010 at 11:13am
The sound of meditation for some people is full of deep breaths or gentle humming. For Marc Umile, it’s “3.14159265358979…”
Whether in the shower, driving to work, or walking down the street, he’ll mentally rattle off digits of pi to pass the time. Holding 10th place in the world for pi memorization — he typed out 15,314 digits from memory in 2007 — Umile meditates through one of the most beloved and mysterious numbers in all of mathematics.
Pi, the ratio of circumference to diameter of a circle, has captivated imaginations for thousands of years — perhaps even since the first person tried to draw a perfect circle on the ground or wondered how to construct something round like a wheel. Approximately 3.14, the number has its own holiday on March 14 — 3-14, get it? — which also happens to be Albert Einstein’s birthday.
via www.cnn.com
On a related note, one of my favorite books of recent years is Yann Martel’s Life of Pi.
OK, that’s not a related note. The book’s not about pi.
OK, it is about a character named Pi, but not pi the number.
So, I guess it is related.
Sort of.
It would really be related if Pi’s birthday were 3/14.
Anyway…
Have good weekend.
Meet Our Toxic Asset
12 Mar 2010 at 10:01am
By Jacob Goldstein It’s a big day for our toxic asset. She makes her national radio debut in a story on Morning Edition, her movie (above) opens on screens everywhere, and her finances are laid bare to the world in a full-page graphic. We’re still trying to name her; please send us your suggestions. Also: Find answers to your toxic asset questions and listen to our toxic asset podcast.
Ecocomics
Where Graphic Art Meets Dismal Science
Madison Avenue VILLAINY!
by Mark
8 Mar 2010 at 6:38am
Cover to the Captain America: Secret Empire Trade Paperback, art by Sal Buscema
While paging through the Captain America: Secret Empire trade paperback, I noticed an interesting plot point.
The main focus of the story involves an underground organization called the Secret Empire trying to discredit Captain America as America’s #1 hero and replace him with their candidate, Moonstone.
So how does the Secret Empire go about discrediting Cap? They use a Madison Avenue advertising firm. And they choose correctly. The fictional ad firm belonging to Quentin Harderman frames Cap for murder and theft and makes Moonstone a hero for beating the tar out of Cap. And throughout the book, the Madison Avenue suits are only too happy to assist the Secret Empire in taking over America (and eventually, THE WORLD)! In fact, when the frame is revealed to different characters in the story (namely The Falcon, Professor Xavier, and Nick Fury) no one is surprised that Madison Avenue Ad Executives would stoop so low.
So this has me thinking: what evils does advertising have in store for us in the future? Is the marketing of the iPhone and the Snuggee some sort of harbinger for the doom to come?
Is Madison Avenue working against us right now?
The Becker-Posner Blog
A blog by Gary Becker and Richard Posner
How to Increase Employment- Becker
by Gary Becker
29 Nov 2009 at 10:08pm
During this “Great Recession”, unemployment has risen from under 5% at the beginning of the recession in December of 2007 to more than double that rate to reach its highest level so far in October of 10.2%. This is the second highest unemployment rate in the postwar period, surpassed only by the 10.8% rate in December of 1982. In light of such rather dismal employment figures, it is not surprising that the President will have a “jobs summit” in a few days to consider how to improve the employment market.
Posner correctly indicates that the unemployment rate understates the employment problem since some men and women have left the labor force after giving up finding work, or they are working part time when they would like to work full time. The so-called “underemployment” rate is estimated to be 17.5%, much higher than the unemployment rate. Note, however, that the underemployment rate is far harder to estimate accurately than is the unemployment rate, which itself is difficult to measure.
I have responded to Posner’s emphasis on the underemployment rate in previous posts that apples have to be compared with apples. If the underemployment rate, not the unemployment rate, is used to measure the severity of this recession, than the underemployment rate also has to be used for past recessions. Not surprisingly, underemployment was also considerably higher in these recessions than was unemployment. The underemployment rate for December of 1982 is estimated at about 17.1%, also much above the high unemployment rate at that time. Yet while the unemployment rate has not yet reached the rate obtained in 1982, for the first time the estimated underemployment rate has slightly surpassed the rate for that earlier recession.
In addition, while this recession ended during the third quarter (I believe), unemployment usually lags any pickup in the overall economy, so that the unemployment rate is likely to continue to rise further. However, there are signs of a pickup beginning in the labor market: hours worked of those working have been rising, and wage rates rose by about 2% during the past year. The rise in wages-which is uncommon during recessions- also casts doubt on claims of extensive wage cutting during this recession. Yet it is an unusual combination: workers who still have a job are doing better than in other serious recessions, but the underemployment rate has grown to its highest level since the Great Depression.
Keynes and many earlier economists emphasized that unemployment rises during recessions because nominal wage rates tend to be inflexible in the downward direction. The natural way that markets usually eliminate insufficient demand for a good or service, such as labor, is for the price of this good or service to fall. A fall in price stimulates demand and reduces supply until they are brought back to rough equality. Downward inflexible wages prevents that from happening quickly when there is insufficient demand for workers.
The usual suggested remedies are either to stimulate demand for labor, or to reduce the real cost of workers to employers. The stimulus package has tried to stimulate demand. While I believe this package has failed to stimulate demand to any significant degree (see the discussion my earlier posts on January 11, 18, and November 1, 2009), and that the claimed employment effects of the stimulus are vastly overstated, I concentrate my discussion, as Posner does, on reducing the real cost of labor to employers.
If rigid nominal wages were the culprit, inflation would reduce the real value of labor costs, and hence stimulate demand by companies for workers. But deflation rather than inflation is the greater worry now, so this approach does not seem feasible at this time. The alternative is to cut the cost of labor to employers. A frequent suggestion by economists and others is to give employers subsidies for each unemployed person that they hire, but I believe this approach has many problems of implementation. Clearly, companies would have an incentive to fire some employees and replace them with subsidized unemployed workers.
Moreover, if the unemployed hired under the subsidy program received higher pay because companies compete for the subsidy, some workers might remain unemployed rather than accepting jobs now because they expect to do better when the subsidy program is introduced. Others might even quit to become unemployed, so that they can then become employed at better wages through this program. Many other adjustments would make such a subsidy program both extremely difficult to enforce in a net job-creating way, and highly intrusive into the employment decisions of companies as the government tries to close various loopholes that are bound to be discovered.
It is wiser to cut labor costs in other ways. I fully endorse Posner’s suggestions to cut the minimum wage, but I do not see that happening with the present Congress. My favorite approach it to try to stimulate the economy by cutting income taxes, especially corporate income taxes and other taxes on capital, both physical and human capital. Such tax cuts will stimulate investments in the economy, and in this way increase the demand for workers.
Of course, tax cuts at this moment would add to the deficit and increase the size of the government debt at a time when the debt has already grown rapidly. Tax cuts may also take time before they raise investments and jobs. On the other hand, tax cuts that add significantly to the growth rate of GDP will have only modest, and possibly even negative, effects on the ratio of the debt to GDP while they increase investments and the demand for workers. This seems to me to be an attractive way to approach solutions to the unemployment problem at the jobs summit this Thursday.
EconomistMom.com
…where analytical rigor meets a mother’s intuition
What Else Can We Legalize to Help the Economy?
by economistmom
10 Mar 2010 at 6:34am
A front page story in this morning’s Washington Post explains why DC’s legalization of gay marriage has been good for the DC economy: As the first same-sex couples married in Washington on Tuesday, the city is in the national spotlight as a pioneer in the gay-rights movement. But local officials say the historic event also has [...]
Marginal Revolution
Small steps toward a much better world.
The Mystery of Sudden Acceleration
by Alex Tabarrok
12 Mar 2010 at 5:01am
Here is Ted Frank on the Toyota sudden acceleration problem. The Los Angeles Times recently did a story detailing all of the NHTSA reports of Toyota ?sudden acceleration? fatalities, and, though the Times did not mention it, the ages of…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
Seismograph
7 Mar 2010 at 10:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
The Problem with Deficit Neutrality
by noreply@blogger.com (Greg Mankiw)
9 Mar 2010 at 7:28am
Imagine you have a friend who has a budget problem. Every month he spends more than he earns. His credit card bills are piling up. He is clearly on an unsustainable path. Then one day he comes to you with an idea.
Friend: I am going to take off a few days from work and fly down to Bermuda for a quick vacation.
You: But isn’t that expensive? Won’t that just add to your growing debts?
Friend: Yes, it is expensive. But my plan is deficit-neutral. I have decided to give up that half-caf, extra-shot caramel macchiato I order at Starbucks twice every day. I really don’t need that expensive drink. And if I give it up for the next three years, it will pay for my Bermuda trip.
You: Well, then, how are you going to solve the problem of your growing debts?
Friend: I am going to figure that out as soon as I return from Bermuda.
You: But in light of your budget problem, maybe you should give up Starbucks and skip the Bermuda vacation. Giving up Starbucks could be the easiest way to start balancing your budget.
Friend: You really aren’t any fun, are you?This conversation is meant to illustrate why claims of deficit-neutrality in the healthcare reform bill should not give much comfort to those worried about the U.S. fiscal situation. Even if you believe that the spending cuts and tax increases in the bill make it deficit-neutral, the legislation will still make solving the problem of the fiscal imbalance harder, because it will use up some of the easier ways to close the shortfall. The remaining options will be less attractive, making the eventual fiscal adjustment more painful.
Freakonomics
New York Times Blog
Should Fashion be Protected by Copyright Laws? A Guest Post
by By FREAKONOMICS
12 Mar 2010 at 10:00am
Last week, Kal Raustiala and Chris Sprigman took us behind the scenes of fashion copycatting, and explained why the practice is actually good for the fashion industry. This week, they explore historical and current efforts to protect fashion from copycatters.
Economix
Explaining the Science of Everyday Life
Greece, the Latest and Greatest Bubble
by By PETER BOONE and SIMON JOHNSON
11 Mar 2010 at 4:44am
European leaders are only putting off disaster by talking up the steps Greece has taken to address its debt crisis, two economists write.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
And oceans.
by Jessica Hagy
10 Mar 2010 at 9:15am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
Millionaire athletes hate handing over $20 cash for being late
by nudgeblog
23 Feb 2010 at 7:39pm
UCLA economist Matthew Kahn picks up on a neat little story about Los Angeles Lakers coach Phil Jackson’s use of psychology in his NBA locker rooms. Ever the behavioralist, Jackson fined his players tiny amounts – $10 and $20 – for being late to games by a few minutes. Jackson has found that players are more [...]
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for March 10, 2010
10 Mar 2010 at 1:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis and Other Stuff
Alan Randall?s top 3 reasons why civilized people avoid the company of econom…
by Tim Haab
12 Mar 2010 at 8:26am
Since he is responsible for determining my raise each year, and he sent this to me under the title 'Another one for the blog,' [I would've posted it anyway] here are:
Alan Randall?s top 3 reasons why civilized people avoid the company of economists:
3. Failure of foresight. Economists seem always to greet proposals for change by explaining smugly that there are good and potent reasons why things are exactly as they are.
2. Tone-deafness to reality (and to the concerns of ordinary people). A major recession with unemployment and under-employment running around 17% is hardly the time to worry out loud that extending America?s meager and grudging unemployment benefits will create disincentives to work.
1. Overweening* arrogance. A reasonable statement of the law of unintended consequences is ?Any intervention in a complex system may or may not have the intended result, but will inevitably create unintended and unanticipated outcomes.? Compare this to the economists? version ?Policy and management actions commonly have effects that are unintended and undesired but, to economists, obvious and predictable. The rest of you never catch on!?
*Ed. Note: I had to look 'overweening' up. It means: presumptuously conceited, overconfident, or proud. Does that make someone who is overweening an overweenie? Just wondering.
Repo 105: Lehman’s ‘Accounting Gimmick’ Explained
12 Mar 2010 at 9:55am
By Jacob Goldstein The big Lehman post-mortem released yesterday spills a lot of ink on a complicated accounting trick with an awesome name: Repo 105. Here’s the story. As the financial crisis grew in 2007 and 2008, Lehman knew it needed to reduce its reliance on borrowed money. But it was a bad time to sell stuff off and pay back debts. So Lehman made special use of something called the repo market. Investment banks use the repo market all the time. It’s basically a way for banks to borrow money from big companies that have extra cash sitting around. To make the loan safer for the big company, the bank “sells” the company some asset — like a bond. That way, if the bank goes bankrupt before it repays the loan, the big company can sell the bond and get its money back. As part of the deal, the bank agrees to buy back the bond at the end of the loan, minus some small amount that the company gets to keep as interest. (”Repo is short for “repurchase.”) The deals are short term — the bank often buys back the asset just days after it sells it. During the boom, there was about $12 trillion (with a t!) loaned out in this market at any given time, Yale’s Gary Gorton told me. Everybody knows the bank isn’t really selling the bond to the big company — it’s really borrowing money. So under accounting rules, the assets a bank uses in repo deals stay on the bank’s balance sheet. But when Lehman Brothers wanted to make it look like it wasn’t borrowing so much money, the company used a special technique to get around this rule. It did repo deals where it took slightly less cash than the asset was worth. For example: If Lehman owned a bond that was worth $105, it would “sell” it on the repo market for $100. (The “105″ in Repo 105 refers to the fact that the assets were worth at least 105% of what Lehman was getting for them.) This gap allowed the company to record the transaction as if it had been a true sale of the bond — despite the fact that, under the agreement, the company would repurchase the bond just a week or so after it had sold it. Lehman would take the money it got from selling the bond and pay off some of its debts. Then, after it had issued its quarterly report, the company would borrow more money to repurchase the bond. Lehman went big on this technique: In the second quarter of 2008 it used Repo 105 to move $50 billion off of its balance sheet, according to the Examiner’s report. “Lehman did not disclose its use … of Repo 105 to the Government, to the rating agencies, to its investors, or to its own Board,” the report said. One senior official inside the company warned that the use of Repo 105 would present “reputational risk” to the company if the public found out.
Ecocomics
Where Graphic Art Meets Dismal Science
Ecocomics in the Christian Science Monitor
by ShadowBanker
5 Mar 2010 at 10:38am
Dear Ecocomics Fans,
First of all, we wanted to apologize for not posting so much over the past week. This is a busy time for us, but we assure you we will get back to posting on a more frequent basis soon.
Second, posts from this blog will henceforth be featured in the “Money” section of the Christian Science Monitor, along with many other amazing economics blogs. What does this mean for you? Just about nothing. Posts will appear both at this address and over at the Monitor’s domain. So if you’re already following us here or subscribing to our RSS feed, then you can (and should) keep coming back here.
Anyway, we wanted to thank all of you for reading, especially the lot of you who continue to comment on our posts, both engaging us intellectually and tickling our funny bones.
Finally, in light of the occasion, we thought it would be fun to finally reveal what we look like. I present to you, Shadowbanker and Mark!
Left to Right: Mark, Shadowbanker. Please do not share this with any supervillains.
The Becker-Posner Blog
A blog by Gary Becker and Richard Posner
Should China Allow its Currency to Appreciate? Becker
by Gary Becker
23 Nov 2009 at 4:06pm
By all accounts, President Obama’s visit to China last week was pretty much a failure on all the major issues, which include China’s contributions to climate change, nuclear weapons, and various aspects of the world economy. I will concentrate my discussion on two of the most important and closely related economic issues: the valuation of the Chinese currency, the renminbi, and the huge assets accumulated by China that are mainly held in the form of US Treasury bills and other US government assets.
The Chinese central bank held the value of the renminbi fixed relative to the US dollar at a little over 8 renminbi per dollar during the 1990s, and until 2005. It then allowed the renminbi to appreciate gradually to less than 7 per dollar until 2008, when it again fixed the rate of exchange between these currencies at about 6.9 renminbi per dollar. This exchange rate is considerably above a free market rate that would be determined in a regime of flexible exchange rates. So there is no doubt that China is intentionally holding the value of its currency below the rate that would equate supply and demand.
The dollar has depreciated substantially relative to other currencies since May of 2009. Since the renminbi is tied again to the dollar, the renminbi has depreciated by the same amounts, including 16% against the euro, 34 % against the Australian dollar, 25% against the Korean won, and 10 % against the Japanese yen. This substantially depreciation of the Chinese currency has made many other countries angry at China’s policy of locking it to the US dollar.
President Obama apparently complained to Hu Jintao, President of the People’s Republic of China, about the low value of the renminbi, and urged China to allow it to appreciate substantially. The US and other countries worry that the undervaluation of the Chinese currencyi increases the demand for Chinese exports, and reduces China’s demand for imports from countries like the US because China keeps the dollar and the currencies of other countries artificially expensive relative to their currency. America and other countries hope that greater demand from China for their exports resulting from a higher value of the renminbi will help these countries resume sizable economic growth as they recover from this severe recession. They especially want to help reduce the high levels of unemployment found in many of these nations.
Indeed, in good part due to the low value of its currency, China has run substantial surpluses on its current trade account as it imports fewer goods and services than it exports. The result is that China has accumulated enormous reserves of assets in foreign currencies, especially in the form of US government assets denominated in dollars. As of September of this year, China had the incredible sum of over 2 trillion dollars in foreign currency reserves, such as US Treasury bills. This is by far the highest reserve in the world, and it amounts to the enormous ratio of more than one quarter of China’s GDP of about $8 trillion (purchasing power parity adjusted).
I am dubious about the wisdom of both America’s complaints about China’s currency policy and of China’s responses. On the whole, I believe that most Americans benefit rather than are hurt by China’s long standing policy of keeping the renminbi at an artificially low exchange value. For that policy makes the various goods imported from China, such as clothing, furniture, and small electronic devices, much cheaper than they would be if China allowed its currency to appreciate substantially in value. The main beneficiaries of this policy are the poor and lower middle class Americans and those elsewhere who buy Chinese made goods at remarkably cheap prices in stores like Wal-Mart’s that cater to families who are cost conscious.
To be sure, US companies that would like to export more to China are hurt by the maintenance of the Chinese currency at an artificially low value relative to the dollar. As a result, employment by these companies is lower than it would be, so that this may contribute a little to the high rate of US unemployment. But I believe the benefits to American consumers far outweigh any loses in jobs, particularly as the US economy continues its recovery, and unemployment rates come back to more normal levels.
Since the opposite effects hold for China, I cannot justify their policies from the viewpoint of their interests. Their consumers and importers are hurt because the cost of foreign goods to them is kept artificially high. Their exporters gain, but as in the US, that gain is likely to be considerably smaller than the negative effects on the wellbeing of the average Chinese family.
I reach similar conclusions about China’s accumulation of their excessive reserves. The US has little to complain if China wants to hold such high levels of low interest-bearing US government assets in exchange for selling goods cheaply to the US and other countries. China’s willingness to save so much reduces the need for Americans and others to save more, but is not differences in savings rates also part of the international specialization that global markets encourage? To be sure, why China is willing to do this is difficult to understand since they are giving away goods made with hard work and capital for paper assets that carry little returns.
One common answer is that China hopes to increase its influence over economic and geo-political policies by holding so many foreign assets. Yet it seems to me just the opposite is true, that China’s huge levels of foreign assets puts China more at the mercy of US and other policies than visa versa. China can threaten to sell large quantities of its US Treasury bills and other US assets, but what will they buy instead? Presumably, they would buy EU or Japanese government bills and bonds. That will put a little upward pressure on interest rates on US governments, but to a considerable extent, the main effect in our integrated world capital market is that sellers to China of euro and yen denominated assets would then hold the US Treasuries sold by China.
On the other hand, the US can threaten to inflate away some of the real value of its dollar denominated assets-not an empty threat because of the large US government fiscal deficits, and the sizable growth in US bank excess reserves. Inflation would lower the exchange value of the dollar, and also of the renminbi, as long as China keeps it tied to the dollar. That would further increase the current account surpluses of China, and thereby induce China to hold more US and other foreign assets, not a very attractive scenario to China.
So my conclusion is that the US in its own interest should not be urging China to appreciate its currency- countries like India have a much greater potential gain from such an appreciation. On the other hand, I see very little sense at this stage of China’s development in maintaining a very low value of its currency, and accumulating large quantities of reserves. Paradoxically, President Obama and President Jintao should each have been arguing the others positions on these economic issues.
EconomistMom.com
…where analytical rigor meets a mother’s intuition
I?m Back
by economistmom
8 Mar 2010 at 8:18pm
Boy– that was awful being disconnected for so long (even longer than during Snowmageddon!). I’ll be back posting something of substance tomorrow (Tuesday) I hope. Can’t believe I missed CBO’s (preliminary) analysis of the President’s budget. I’ll write about it tomorrow, but you won’t be surprised about what I’ll emphasize. CBO Director Doug Elmendorf already [...]
Marginal Revolution
Small steps toward a much better world.
Facts and figures about Greece
by Tyler Cowen
12 Mar 2010 at 4:59am
Simon Johnson serves up a grim but realistic report: …Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders. What if Greek interest rates rise to, say,…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
Collatz Conjecture
4 Mar 2010 at 10:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
A Life in Finance
by noreply@blogger.com (Greg Mankiw)
7 Mar 2010 at 2:45pm
The great financial economist Eugene Fama offers a retrospective.
Freakonomics
New York Times Blog
Inside The Hurt Locker Suits
by By FREAKONOMICS
12 Mar 2010 at 8:01am
Foreign Policy’s recent photoessay offers readers a look at life on real Explosive Ordnance Disposal (EOD) teams.
Economix
Explaining the Science of Everyday Life
What We’re Reading…
by By CATHERINE RAMPELL
10 Mar 2010 at 1:11pm
Fake storefronts, and other links from around the Web.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Movers & shakers!
by Jessica Hagy
9 Mar 2010 at 8:53am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
Italian RECAP?
by nudgeblog
23 Feb 2010 at 8:13am
Bank of Italy Governor Mario Draghi says “the variety of new (bank) fees makes it difficult for customers to compare the different offers.” He then seems to propose a RECAP-style system of simplification and disclosure. Within days we will submit to the Government a comprehensive regulatory proposal that can lead to clearly stated charges, so that [...]
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for March 9, 2010
9 Mar 2010 at 1:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis and Other Stuff
Berkeley protest over budget cuts raises important questions
by John Whitehead
11 Mar 2010 at 8:27am
Some students wanted to attend the protest but may have faced possible retribution from their instructors.
?I support the rally but still need to go to my classes,? environmental economics major Alisa Rudnick said. ?I will join in after my schedule allows, but I can?t compromise my education for it.?
Rudnick said missing class for the rally would affect her grade negatively.
via theguardsman.com
Environmental economics is a major at UC-Berkeley? And, who is the environmental economics prof who penalizes students for missing class?
Toxic Assets: What You Need To Know
11 Mar 2010 at 4:40pm
Homestead, Fla. March, 2009. (J Pat Carter/AP) By Jacob Goldstein Planet Money, as you may have heard, bought a toxic asset. Besides serving as our team mascot, the asset — a tiny sliver of a bond backed by home mortgages — will give us an up-close look at what’s happening with the bonds that fueled the housing boom, then fell apart in the bust. Here’s a quick overview of the toxic-asset universe: What are toxic assets? “Toxic asset” is a loose term. But it often refers to bonds that were sold during the boom and were based, directly or indirectly, on home mortgages. In particular, it refers to bonds based on mortgages that didn’t meet the criteria required by Fannie Mae and Freddie Mac, government-sponsored entities that guarantee lots of mortgages. If you want to sound fancy, you can call these bonds private-label RMBS (residential mortgage-backed securities). Why are they toxic? The bonds were sliced into different pieces, and many of the pieces were given high ratings by agencies such as Standard & Poor’s and Moody’s. This suggested they were safe investments. But once housing prices started to fall, it became clear that more people than expected wouldn’t be able to pay their mortgages, and the bonds didn’t seem so safe anymore. The ratings agencies began to downgrade many of the bonds, and their value fell. Nobody wanted to buy the things. Companies that owned them had to either sell them at a huge loss, or write down the bonds’ value on their balance sheet. What’s happened to them since the crisis hit? New issues of these bonds fell precipitously in mid-2007, and haven’t really come back, Jerome Fons, a consultant who used to work at Moody’s, told me. But the ratings agencies have continued to downgrade the bonds packaged and sold during the boom. In a report last month, S&P said it had downgraded 67% of U.S. RMBS issued between 2005 and 2007. How liquid are toxic assets? There was never much of a secondary market for these bonds, Fons said — most people who bought them held onto them. Still, there is some trading. About $500 million of private-label RMBS trade in a typical day, according to the guys at Mission Peak Capital who helped Planet Money buy a toxic asset. That number may sound big, but there are about $4 trillion of these bonds outstanding. So only about $12 out of every $100,000 trades in a given day. By comparison, daily trading in a big company such as IBM amounts to about $500 for every $100,000 in stock, the Mission Peak crew said. What does the future hold? “At this point, given where most of the ratings are, we don’t anticipate the types of severe rating changes that occurred in the recent past,” an S&P spokesman told me in an email. “That said, we continue to observe deterioration in the performance of RMBS bonds across the board and continue to monitor our ratings.”
Ecocomics
Where Graphic Art Meets Dismal Science
Superhero Pre-Nups Completely Unnecessary
by Mark
5 Mar 2010 at 6:42am
Cover to X-Men #30, art by Andy Kubert
In the wake of Valentine’s Day, I’ve been thinking about marriage. And not just how rewarding marriage can be. There’s that of course. But there’s also the fact that sustaining a marriage is a lot of work. Marriage can be rough. You commit to one individual for the rest of your life. Probably. Well, 50% of you do.
Anyway, there’s a lot that goes into marriage. You combine assests, pay the taxes of a married couple and unite yourselves emotionally, physically and economically. But marriage is even more complicated for the superheroic couple. Besides the fact that a superheroic marriage will be tested by unique concerns like alien invasion and the possibilty of having an affair with a demonically possessed spouse, superheroes have unique economic concerns when they are married.
This can be easily seen if a superhero couple contemplates divorce. If they seperate, how will assets be divided? Does one person get to keep the teleporting dog and the other get to keep the mansion on the blue side of the moon? Does the divorced couple get joint custody of the Fantasti-Car? Who gets to keep the Kryptonian crystal Fortress of Solitude?
These are important concerns. Important enough that you would think that a pre-nuptial agreement should be an essential part of any superhero marriage. But you’d be wrong.
That’s because very few superhero marriages ever end in divorce. Disintegration yes, divorce no. Think about the average superhero marriage and realize that if you have super powers and a lover, you never need to worry about hiring a lawyer. Think about Happy Hogan and Pepper Potts. Did Pepper need to divorce her hubby to start making out with Tony Stark? Nope. The Spymaster took care of that when he made Happy fall to his death.
Emma Frost, art by Greg Horn
What about Scott Summers and Jean Grey? Did Scott need to go through years of litigation to decide who was going to get the Blackbird jet or deal with alimony payments because of his psychic affair with Emma Frost? Nope, Magneto took care of that for him when he murdered Jean Grey. Now Scott is free to engage in all sorts of debauchery with the White Queen.
So relax heroes. If your marriage is becoming difficult, relax. You won’t have to wait long before some villain comes along and kills your annoying spouse. Take your time, start a profile on Match.com and wait for the sweet freedom of superhero singles life. And if your spouse simply refuses to go away, just make a deal with the devil and make her go away. If Spider-Man can do it, so can you.
Cover to Amazing Spider-Man #545