EconTech

Apologies For Light Posting

2008-07-28T19:14:03Z

My server has had 2 memory slots die, my laptops have a dying hard drive, broken usb, broken audio, failing graphics card, and damaged space bar split between them. This has made turning on my computer difficult, not to mention using it. Hopefully things will be back to a more normal status sooner rather than later.

links for 2008-07-16

2008-07-16T02:31:17Z

Fannie/Freddie further follies - Paul Krugman - Op-Ed Columnist - New York Times Blog

links for 2008-07-15

2008-07-15T02:30:50Z

What to drink with your frites, I mean freedom fries - Paul Krugman - Op-Ed Columnist - New York Times Blog

links for 2008-07-09

2008-07-09T02:32:25Z

Anti-Dismal: The centipede game and chess players

Screw the prisoner’s dilemma. I have always found the centipede game to be the most mind blowing game in game theory.

Roommate Economic Bargaining

2008-07-08T18:04:25Z

Tyler writes:

Bargaining with your roommates

Joseph, a loyal MR reader, asks:

I recently leased my first apartment…with a friend who just graduated from college with me. It’s a nice apartment, and spacious, but it has one bedroom that is larger and nicer (better views, bigger closet, more windows) than the other.

We’re looking for the most equitable way to allot the good bedroom without resorting to cash transfers (too crass). We’ve come up with a few strategies so far:

1. Bid on the good room with chores (meaning the person who is willing to do the most domestic chores to compensate wins the auction and the room)
2. Best out of seven rocks-papers-scissors
2. Series of challenges submitted by close friends.

#1 seems like the best option we’ve come up with so far, but I’m afraid of winner’s curse. I don’t want a resentful roommate.

Do you think there’s a better solution?

Adam, another reader, asks, in a separate email, how friendly roommates should allocate the rights to joint furniture purchases.

I suggest the crass cash transfers!!

I agree. I witnessed a situation where 6 or so people were moving into an apartment and could all afford the average cost of rent + bills. However, when the size of the rooms were taken into account, the high variance in the size of the rooms led to a very high cost per room for a couple of the larger rooms that no one wanted to pay. These being very lefty types; I was surprised when they turned to an auction-like system to assign prices to rooms based on the willingness to pay for the extra square footage. The system worked wonderfully, and everyone ended up happy. Their recognition of the diminishing marginal utility of the extra space allowed them to create a market based solution which ended up being more fair than the constant dollar/square foot (ostensibly, more fair) solution.

One of Tyler’s commenters brings up the classic game theory solution: One person assign prices (cut the cake) the other person chooses the room (slice). However, I’m not too sure how to scale this to more than 2 people.

links for 2008-07-07

2008-07-07T02:32:04Z

Eighteenth-century “proto-globalisation” | vox - Research-based policy analysis and commentary from leading economists

Basically, war and disease did more to stop globalization prior to the 19th century than technology helped to improve it during the 19th century.

(tags: history Economics globalization)

links for 2008-07-05

2008-07-05T02:32:07Z

The Evidence Gap - Weighing the Costs of a CT Scan’s Look Inside the Heart - Series - NYTimes.com

Gabriel: Why no Econ-Fiction?

2008-07-03T21:16:27Z

Economics & Sci-Fi: Two Great Tastes…

… that don’t go well together?

I happened to see a few episodes from season I of Masters of Science Fiction and it got me thinking…

Economics is a science (yes it is, don’t argue with me!), so why is there no economic fiction? Sure, from Physics you get time travel and space travel and all, but then you could have both in a story: social experimentation informed by economic theory in outer space?

And another thing… watching this reminded me why Sci-Fi geeks are mostly (and often permanently) turned off Economics… Economics is about allocations and their properties, that is, scarcity, exchange, coordination, political power and market power. Sci-Fi nerds have little interest in these.

Remember, Star Trek supposedly takes place in a post-scarcity era, where replicators turn pure energy into anything, a world without money and where all leadership is provided by the army.

In much mainstream/commercial Sci-Fi, politicians and bureaucrats are either benevolent, if not always competent, either gratuitously evil. There seems to be little understand of what drives political actors (hint: allocations!) and why and how government (doesn’t) work(s).

It seems to me that this disdain for anything “commercial” or money-related shown by many idealistic, intellectual youth (I was one of them, I think!) is the kind of mindset that’s favorable for pro-socialist sentiments among the middle and upper class.

Wasn’t Star Trek was just as much economic fiction as it was sci-fi. I’m not sure what else economic fiction would look like. I think most of science fiction assumes some kind of economic fiction. This is usually boring (yes, I hate Star Trek). Indeed, I find shows much more interesting when scarcity is an issue. I was probably one of few people who liked the Battlestar Galactica episode on the underground economy, and the issues of power and scarcity explored there, though BSG itself is all about scarcity. Other examples might be the Stargate series, which went downhill when it started to ignore economic reality and the characters were suddenly capable of much more than the resources they had should’ve allowed. This might also be why I prefer the original Star Wars over the new pre-quels. The Rebel’s were having to deal with scarcity, the Republic did not. You get a little of both in The Matrix, where, while in the matrix, they have full access to information and armaments, and in the real world, they are dealing with extreme scarcity relative to the robot enemy.

And count me as one of those few appreciators of (some) Sci-Fi and of economics. I think I want less economic fiction with my Sci-Fi.

Newsflash: Scalia Could Care Less About the Facts

2008-07-02T17:43:55Z

More at 1986.

Brad DeLong writes Impeach Antonin Scalia. Impeach Him Now:

Outsourced to Hilzoy:

Obsidian Wings: Returned To The Battlefield: In his dissent in Boumedienne (pdf), Justice Scalia wrote: “At least 30 of those prisoners hitherto released from Guantanamo Bay have returned to the battlefield.”

When I read this, I wondered about the word ‘returned’, since it seems to assume that these detainees were enemy combatants when they were captured. But I didn’t wonder whether 30 prisoners had, in fact, taken up arms against the US since their release. I don’t keep track of these things, and the idea that people whom we had locked up for years, without justification, might take up arms against us didn’t seem all that farfetched.

Silly me. Luckily, researchers at the Seton Hall Law Center for Policy and Research were paying closer attention. They tracked down the sources of Scalia’s claim… a DoD press release…. [I]t says that 30 detainees have returned not to the battlefield, but to “the fight”. Since I have become accustomed to treating the words of this administration the same way I treat such words as “Orange Juice Drink: Made With Real Orange Juice!”… I naturally thought: ah, “the fight”… the DoD elaborates:

We are aware of dozens of cases where they have returned to militant activities, participated in anti US propaganda or other activities…. (Examples: Mehsud suicide bombing in Pakistan: Tipton Three and the Road to Guantanamo; Uighurs in Albania)

Well, this clarifies things somewhat. The Tipton Three were three British citizens who were captured… suspected of being members of al Qaeda… thought, wrongly, to be in a videotape of a rally featuring bin Laden. After British intelligence cleared them… they were released. And after that, they participated in the movie The Road To Guantanamo. Apparently, this counts as “returning to the battlefield”.

And then there are the Uighurs…. “What fight had they returned to? Abu Bakker Qassim had published an op-ed in The New York Times. Adel Abdul Hakim had given an interview. These press statements were deemed hostile by the Department of Defense. Surely the Pentagon was joking? They weren’t… giving hostile interviews constituted ‘returning to the fight.’”…

Last December, the researchers at Seton Hall compared the DoD’s claims to publicly available government documents and concluded (pdf): “Extending to the Government the benefit of the doubt as to ambiguous cases, the list of possible Guantánamo recidivists who could have been captured or killed on the battlefield consists of two individuals: Mohammed Ismail and Mullah Shazada…”

In this country, we assume that people are innocent until proven guilty…. We think it is worth it because we do not have the option of locking up all and only guilty people against whom we have insufficient evidence. We have to choose between letting the government lock people up when it cannot make a case against them, knowing that some, perhaps most, of these people will be innocent; and requiring that the government actually make a case against someone, in which case we will of course let some guilty people go free.

If we want to call this principle into question, it’s not enough to say: if we let people go, they might kill Americans. That’s what I call “cost analysis”: asking whether some alternative has costs, and if it does, deciding that we can’t possibly adopt it, without asking whether it has benefits as well…. [I]f we’re going to get into a debate about whether the costs of taking people to be innocent until proven guilty are too high, it’s crucial to know what those costs actually are. And claiming that participating in a documentary about your arrest and detention, granting an interview, or writing an op-ed constitute “returning to the fight” do not help at all. They merely darken counsel by words without wisdom.

Parental Responsibilities to the Development of Children

2008-07-02T17:13:12Z

Robin Hanson writes, To What Expose Kids?:

State courts recently rebuked Texas Child Protective Services and told them to return 440 kids to their polygamous Mormon parents. The main complaint I’ve heard is that these teen girls can not really consent to polygamous marriage because they were not exposed enough to the rest of the world. For example, Will Wilkinson:

About kids raised on isolated compounds by religious fanatics … It is tyrannical for parents to attempt to reproduce their ideologies and prejudices in their children, especially when this requires social isolation and emotional coercion. … They just have a political right to not be stopped, within bounds. Many parents, though they intend the opposite, are in fact guilty of wrongful disregard for the development of their children’s psychological freedom.

Of course responsible parents know they should expose kids to more than just the local neighborhood. But parents’ judgments on optimal exposure surely depend on their judgments about that outside world. Someone who sees outsiders as mostly immoral heathens will choose less exposure than we as outsiders would choose for those same kids.

So is the principle here that parents should go beyond their simple judgment when choosing to what to expose our kids? For example, should we let polygamists argue for their way of life directly to our kids? Should we let pedophiles argue their case directly to our kids? Or is the principle here that we know we are right and those other parents are wrong, obligating us to make those parents give their kids what we judge best?

I wonder, could different cultures make a deal where they each give the other cultures X hours to make their case to their kids? Of course with many cultures of differing sizes there’d be the issue of what fraction of that time each culture gets to use. And of course unreasonable cultures might be excluded from the deal. (But what criteria could characterize “reasonable”?) And if such a deal is not possible, even among some reasonable cultures, what exactly would that say about what we think about who should be exposed to what?

Added 29June: Will responds here.

This is exactly why I said that I am more comfortable with the Amish model. While not incredibly familiar with their practices, I do know that at a certain age (I believe late teens) the children are told to go out and experience the modern world for a year or so. Only then are they allowed to choose whether they want to stay in the Amish community or to lead their life in broader society.

We give enormous latitude to parents in the rearing of their children. Typically the line is drawn at obvious physical abuse. I do believe the lines in these situations should be drawn a bit more tightly than they are. For perhaps the first time, I agree with Will on this one, particularly the point that psychological freedom is important and requires certain types of treatment of the child by their parents.

links for 2008-06-27

2008-06-27T02:33:20Z

Economist’s View: “Is Income Volatility Really Rising?”

Requisite Library Software

2008-06-26T22:44:06Z

This is the type of software that should be implemented for the library, especially with books being increasingly locked away. Recreating the browsing experience is something that has been (somewhat) done with some music apps and the flipping interface with album art. That is the kind of thing I was looking for with books. It looks like about what Zoomi brings to us:

Hands on: Zoomii breathes life into Amazon’s bookshelves

The web has revolutionized many aspects of the modern shopping experience, but it has never been able to recreate the pleasure of wandering a book store’s shelves in search of literary adventure. Sure we can search, nay paddle, through a sea of books at Amazon and save 20 percent on toilet paper if we buy a package with two or more books, but the sheer pleasure of leisure browsing the local bookseller have been lost in translation when viewed through a browser. This is why Ars Technica went hands on with Zoomii, a new service that hopes to bring some of the visual thrill back to browsing books online.

Zoomii, in a nutshell, is a visual bookshelf browser for over 19,000 books from Amazon’s catalog, though it can search for over 162,000 titles. Instead of browsing through flat lists of book titles and their cold statistics, Zoomii stacks books in shelves alphabetically by author, organized by genre. You can click and drag across Zoomii’s landscape of shelves, zoom in and out with your scrollwheel, and click a book’s cover for basic statistics from Amazon, including the ability to add the book to your cart or wishlist. We aren’t quite sure how Zoomii picks the books that stock its shelves, but some kind of system that picks through a combination of top sellers and new releases is a safe bet.

A few aisles of Zoomii’s bookstore, complete with an almost-empty bookshelf and even a bargain section

Utilizing JavaScript in the browser, Java on Linux servers, and Amazon’s EC2 and S3 services, Zoomii’s attempt to bring the bookshelf back to the online bookstore experience is a novel—and mostly successful—experience. Scrolling across Zoomii’s shelves is snappy, and book images render in crisp detail surprisingly quickly. Clicking a book’s cover displays a higher-res version and plenty of details instantly, and all refreshingly without a single drop of Flash.

When was the last time you could get a view like this of Barnes & Noble’s isles?

Zoomii is developed by a single developer, Chris Thiessen. On Zoomii Inc.’s site, Thiessen explains his inspiration for what appears to be not much more than his longing experiment: “Online bookstores are wonderful. They’ve got amazing prices, huge selections, and they’re open all the time. If you know exactly what you want, they’re perfect. But somehow I kept coming back to the bookstore just to browse,” Thiessen continues. “Zoomii is my attempt to bring online as much of the real bookstore experience as possible.” There’s no word on whether the comforting smell of fresh hardcover pages is next on Zoomii’s to-do list.

The detail view for a book with all the basic necessities

Of course, Zoomii’s very narrow scope of Amazon’s endless catalog limits the site’s utility and appeal. Zoomii can only display 19,000 books and search a total of 162,000, and Amazon could always cut Thiessen off if his clever experiment begins demanding too much in the way of hardware and bandwidth resources. Still, being able to actually browse bookshelves, to the extent that the digital realm allows in this form, is a novel experience, one that is pleasant enough for us to have a little hope that Amazon takes a liking to Zoomii and scoops it up.

Gelman on the Popularity of Statistics

2008-06-26T15:47:29Z

The popularity of statistics?

Jennifer pointed me to this site, which states that “white people hate math” but “are fascinated by ‘the power of statistics’ since the math has already been done for them.” I’d like to believe this is true (the part about white people liking statistics, not the part about the math having already be done to them) but I’m skeptical. Everywhere I’ve ever taught, there have been a lot more math majors than stat majors, and I’m pretty sure this is true among the subset of students who are white. But it might be true that the business majors, the poli sci majors, the English majors, etc.–not to mention the people who don’t go to college at all–prefer statistics to mathematics. Actually, I think most of these people should prefer statistics to mathematics. But I fear that a more likely reaction would be something like, “math is cool, statistics is boring.”

P.S. I looked further down, and this “Stuff White People Like” site is just weird. “With few exceptions, white people are actually fond of almost any dictator not named Hitler”?? Huh? I mean, I can see that the site is a parody, but this is just weird.

I’m just posting this because I also do not like the “Stuff White People Like” blog and was excited to finally find someone else who felt similarly.

The Milton Friedman Institute

2008-06-26T15:36:45Z

Levitt and Warsh have both commented on some of the issues surrounding the announced institute. I have a couple issues of my own. One is that ousting the university’s bookstore from its current location would be a shame. It does a great job of capturing the essence of the university’s culture in a nice little basement bookstore. When people ask if they will like it at Chicago, you can bring them there and have them ask themselves if they could live there for four years. Question answered.

More seriously, anything that increases the teaching capacity of the university is a good move. The university has been attempting to increase the student body for some time but has not made serious moves to increase its teaching capacity. I was sold on the university’s small classes, which basically did not exist for the fields I went into. Unfortunately, nothing about the press release for the MFI indicate anything about using it to increase the teaching capacity of the economics department. Thus, I have a great deal of sympathy for arguments that funds should be used to expand teaching resources throughout the university. For example, the Law, Letters, and Society program recently (about 4 years ago) had to start a lottery and then an application process for the concentration, a first for any of the undergraduate programs.

The undergraduate economics program plays (or at least, played) an even more exciting game with the initial concentration sequence. Knowing that about 5 people will withdraw from each of their classes before the end of the ’shopping’ period, which lasts about 1/3 of the course, the department will overbook most of the classes. This leaves about 10 students unregistered and having to attend multiple classes with different professors and different homework assignments until enough people drop that they are able to get their registration slip signed. Given the intensity of the quarter system at Chicago, this is a ridiculous game and a heavy burden on the students who simply pre-registered later than others. An easy fix is an increase in teaching capacity to meet student demand.

As for the name, I find it mildly annoying. I cannot think of, or find, any department or program in the social sciences division that is named after anyone, though certain names come to mind when thinking about various programs. I do not like institutionalizing specific scientists because the entire idea of science is that the young show the old where they made their mistakes. Naming institutions after them does not lend credence to that idea and culture. Thus, my first preference would to have a name that does not reference a specific person.

Obviously a second dimension of the naming issue is that Friedman was a highly controversial public figure with whom many people had serious disagreements. Moreover, his publicity comes from work which did not extend directly from his high quality research programs, but rather from his philosophical and political views. This certainly creates a distraction through the controversy and seems to deepen the issues of the previous paragraph, especially because of the very fuzzy line that exists between economic policy and political beliefs. In the end, I do not care so much about the name. I will be more concerned about the quality of research coming out of the program, which is quite likely to be top notch.

links for 2008-06-26

2008-06-26T02:32:54Z

A Non-Socratic Dialogue on Social Welfare Functions: Archive Entry From Brad DeLong’s Webjournal

links for 2008-06-22

2008-06-22T02:32:08Z

More Torture Info From Senate Committee

links for 2008-06-21

2008-06-21T02:33:04Z

Global War Deaths Underestimated

2008-06-20T22:49:50Z

Global war deaths have been substantially underestimated

Research paper: 50 years of violent war deaths from Vietnam to Bosnia

Globally, war has killed three times more people than previously estimated, and there is no evidence to support claims of a recent decline in war deaths, concludes a study published on BMJ.com.

Current survey-based techniques used to estimate violent war deaths have been criticised for their potential biases and inaccuracies. For instance, surveys estimating war mortality on the basis of household deaths, such as those recently done in Iraq, were alleged to be statistically invalid, and to incorporate politically motivated over-reporting of deaths.

But the alternative technique used during most ongoing conflicts including Iraq—passive data collection from eyewitnesses and media reports—is also subject to major biases, including the fact that high levels of war deaths occur in dangerous areas where eyewitnesses are least likely to go.

To overcome some of these biases, Ziad Obermeyer and colleagues from the Institute for Health Metrics and Evaluation in Seattle, designed a new method of estimating violent war related deaths using data on the siblings of respondents in large household surveys conducted in peacetime.

According to the researchers, by comparing passive surveillance data of violent war deaths (mainly from eyewitnesses and the media) in 13 countries over the past 50 years, to peacetime data collected after conflicts in the UN’s World Health Surveys, they were able to provide more accurate data on war deaths. For example, say the researchers, the new technique avoids the constraints imposed by active combat, and using siblings’ histories rather than household deaths, reduces double counting and exaggeration of deaths.

They estimate that 5.4 million deaths occurred as a result of war in the 13 countries studied between 1955 and 2002, from 7000 in the Democratic Republic of Congo to 3.8 million in Vietnam.

The researchers point out that these estimates are on average three times higher than those obtained from previous reports. For example, they estimate that 378 000 people died a violent death as result of war each year between 1985 and 1994, compared to previous estimates of 137 000 people during this time.

The largest differences, they say, were in Bangladesh where, during the conflict for its independence, they estimate there were 269 000 violent war deaths, compared to previous estimates of 58 000. And in Zimbabwe where they estimated 130 000 deaths, compared to previous estimates of 28 000.

Importantly, say the authors, these new data do not support the prevailing view that war deaths are declining and have been since the mid-twentieth century, or that recent wars have killed relatively few people thanks to technological and strategic innovations designed to minimise civilian deaths. In light of the substantial differences in estimates, conclude the authors, these claims need to be re-evaluated.

Even these figures are still likely to underestimate the importance of conflict as a cause of death because they only address violent deaths, cautions Professor Richard Garfield from Columbia University in an accompanying editorial. “In the poorest countries, where most conflicts now occur, a rise in deaths from infectious diseases often dwarf the number of violent deaths during a conflict”.

Garfield argues that the “promising method” pioneered by Obermeyer and colleagues will force us to re-evaluate our assumptions about these deaths “The importance of war as a public health problem and a social problem makes this imperative”, he concludes.

This is a rather inconvenient fact for me. As one of my rants in counter to the uselessness of the UN, I cite decreased international war and casualties. It would appear I need to look at some time series to make sure that that is still a valid concern. And before you find this much too heartless, I don’t find this to be of particular moral relevance. The people have already died; we just now got to counting them. I’ll need to take a closer look at the estimates to see if they are reliable.

links for 2008-06-17

2008-06-17T02:33:02Z

Marginal Revolution: Bottomfeeder

(tags: food)
Vinod Khosla - All Biofuels Are Not The Same - washingtonpost.com
Trying to solve the long-term nuclear waste storage problem

I hear a call for space elevators.

(tags: energy environment nuclear)
FT.com / Comment & analysis / Analysis - For Le Monde and the French press, the news is nearly all bad
Good surveillance: satellites watch for human rights abuses

(tags: humanrights surveillance satellite)

Movie Theater Robbery

2008-06-14T15:06:02Z

I always knew the prices were much higher than I was willing to pay (luckily, there is always a Walgreens, grocery, or liquor store nearby). I never suspected the larges were so large small though (Felix Salmon via Cowen):

Popcorn fact of the day

[Richard] McKenzie did a fair amount of real-world research on the popcorn front, and his most important finding (as far as I’m concerned) is that if you’re in a cinema which gives you a choice between buying a medium bag of popcorn and a large tub of popcorn, there’s a greater-than-50% chance that the medium bag will actually contain more popcorn than the large tub.

links for 2008-06-14

2008-06-14T02:33:55Z

Mr. Obama’s Neighborhood

I would not agree with all the characterizations made of HP, but overall, well written.
FT.com / Columnists / Christopher Caldwell - Web gossip is forever
Healthcare Economist · High Quality Hospitals Near You
Economist’s View: Is McCain Confused?
The Kozinski mess (Lessig Blog)

(tags: privacy media)

links for 2008-06-13

2008-06-13T02:39:37Z

McCain Wants Tougher Iran Sanctions

2008-06-13T01:57:05Z

. . . Al Jazeera reports. My question is, has there ever been a situation where a country that was outside the international mainstream made a change in policy due to sanctions. There are the obvious major counter-examples (Cuba, North Korea, Iraq). I cannot think of any evidence that supports the notion that sanctions are a sane way to deal with rogue countries. That is, any examples where they have effected a change in policy in a country typically considered uncooperative.

Underlying Causes of Anti-Trade Opinions: Xenophobia or Rules-Sets

2008-06-13T00:57:52Z

Tyler Cowen argues that most anti-trade positions are driven by xenophobia. Dani Rodrik argues that differing rule-sets (labor laws and such) are a serious source of concern. Tyler and his co-blogger Alex respond. All of those posts are worth reading.

In my mind, this is definitely not an either-or situation. I hope that before I die I will be able to argue that xenophobia and other bigotries are not an issue in almost any given U.S. political issue. At this point, however, such a position is almost laughably false, if it weren’t so frustrating. Nevertheless, it is unfair to lump all “anti-trade,” including but not limited to those who want a breather on trade or simply more rule-setting in trade, people into the same pot. To be clear, this is NOT Rodrik’s position. Rather, he is arguing that the current change in intellectual climate is driven by concerns for justice, specifically the embeddedness of the markets in the social, political, and legal frameworks.

Rodrik contends:

The international trade counterpart of this hypothetical is the worker who loses his job because his company decides to move to a country where, say, labor rights are routinely violated. So the “us” and “them” characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on.

We already know that there are pretty massive human rights violations occurring throughout the world in the context of production. There are currently over 20 million slaves throughout the world (the largest absolute number in human history, though the smallest in terms of the percent of the population) and many of these are involved in the production of goods put on the global market (summary).

There are, of course, other labor issues, such as the right to organize and safety and health concerns. And people do care about these issues! I remember when I was at university, there was a campaign to make sure that goods (hoodies, t-shirts and such) sold by the university weren’t being produced through unfair labor practices. One of my economics professors railed against the students as complete ignoramuses, citing the standard “they can’t afford the same environmental and safety standards as us.” He was (mostly) right, insofar as he went, but he was completely non-responsive to the arguments that were being made by the students. I happened to have ended up on a plane trip and several day conference with two of the leaders and had a long discussion with them on it. Turns out, they never made the claim that they wanted equalized wages, safety, and environmental standards. They simply wanted to make sure the goods weren’t being purchased by places that used private (or sometimes, government) police forces to kill union leaders and other kinds of very basic human rights issues. These concerns are a far stretch from the caricature made of the opposition by so many free-trade advocates.

These are real issues that do concern many people who have issues with the current regime of global trade. If we have our trade agreements address these issues, to one degree or another (in addition to other unfair practices of our own, e.g. agriculture subsidies), then we cordon off those who are opposed to trade for bigoted or rent-seeking reasons and force them to try to make their (now much weaker) case for altering our trade agreements.

Some more random comments:

Tyler writes:

More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank.

Doesn’t that figure come from before the revision of international GDP figures by the World Bank? Which poverty standard is Tyler using here?

A new research paper by Christian Broda and John Romalis, both professors at the Graduate School of Business at the University of Chicago, has shown that cheap imports from China have benefited the American poor disproportionately. In fact, for the poor, discounting in stores such as Wal-Mart has offset much of the rise in measured income inequality from 1994 to 2005.

Ok, this paper has been discussed a number of times before (and hopefully more is down the line). The paper shows how consumption has behaved for different income groups due to international trade and its ability to keep cheap goods cheap. Income inequality, i.e. the ability of the poor to purchase the goods that the rich typically purchase, remains an issue and is unchanged by the results of the paper. Wording this approximately as “Wal-Mart’s ability to provide cheap goods through extensive international trade relations has helped to maintain a steady consumption level since the mid-1990s” would be a more accurate description of the results.

The bottom line is that most people support their countries to a highly irrational degree in most international questions or disputes. That’s just obvious — watch the World Cup — and yes Jonathan Swift understood that too.

For the record, since ‘94 I have supported Argentina in the World Cup, not the U.S. despite absolutely no familial relations with Argentina. I just like the way they play soccer. Of course, I also find patriotism and nationalism to be about as disgusting as most other forms of arbitrary and socially significant biases; so, I’m probably an outlier here.

Alex writes:

Rodrik has a very Ivory-tower view of what people care about.

People are still dragging this tired ‘argument’ out? Done by an ivory-tower denizen too. This is disappointing.

More interestingly:

A testable implication of Rodrik’s hypothesis is that people will be more upset about international trade than immigration since foreigners in foreign countries obey different rules but immigrants obey the same rule as us. In reality, people are more upset by immigration than by trade and as a result we are much closer to free trade than to free immigration.

This would be an interesting test. However, there are some effects that I think need to be controlled for, and that may not be possible.Even though there are foreign goods all over the place, they are typically presented as most other goods, with English labels and American-style marketing. Immigrants, on the other hand, with some exceptions, are relatively obviously immigrants, particularly the first generation who tend to hold on to their customs more than the second and third generation. Thus, even if you are not directly interacting with them as labor-competitors, you see them at the movie theater, the grocery store, etc. To some degree, this issue is going to bring out xenophobia. But even without that element, the reminder of the new competitor is more salient. Further, to continue to play devil’s advocate here, many immigrants are not documented and work outside the labor rules established by the federal and various state governments. Thus, in many instances, they are not ‘obey[ing] the same rule[s] as us.’

A liberal economist should understand that for the most part labor, environmental and consumer safety standards are chosen not imposed (not always, of course, but for the most part in the long run). In the United States we have a lot of job safety because we are wealthy and are willing to pay for job safety with a reduction in our (already high) wages. In other words, Americans buy a lot of on-the-job safety for the same reasons we buy a lot of smoke alarms and DVD players. (OSHA has very little effect on job safety.) Job-safety is thus a choice Americans make about what to consume - we use some of our wealth to buy safety both at home and at work and some of our wealth to buy DVD players.

These results seem less surprising in a modern context than in a developing economy context. I’m curious as to what role Alex would say unions and government had in the worker safety and free labor movements of the late 19th and early 20th century. Given the amount of violence that occurred to secure these things, I suspect the effect was non-negligible. I would also suspect that government also often impeded these movements. Do we have evidence for stagnant wages as safety standards were established during this time period? These large changes seem more relevant to the conditions of developing countries than our modern, highly developed, highly embedded economy, and these contexts do matter. I am not aware of any papers discussing these effects during this time period. If you know of any, please pass them along.

EBay Reduces Auction Space

2008-06-12T17:34:50Z

The roots of sticky prices

Apparently the beasts are back in charge:

Now we’re beginning to find out that eBay’s seemingly revolutionary core - the online auction - may have been a fad all along. As Business Week reports, eBay’s auctions are “a dying breed.” Buyers and sellers are reverting to the traditional retailing model of fixed prices:

Auctions were once a pillar of e-commerce. People didn’t simply shop on eBay. They hunted, they fought, they sweated, they won. These days, consumers are less enamored of the hassle of auctions, preferring to buy stuff quickly at a fixed price … “If I really want something I’m not going to goof around [in auctions] for a small savings,” says Dave Dribin, a 34-year-old Chicago resident who used to bid on eBay items, but now only buys retail …

At the current pace, this may be the first year that eBay generates more revenue from fixed-price sales than from auctions, analysts say. “The bloom is well off the rose with regard to the online-auction thing,” says Tim Boyd, an analyst with American Technology Research. “Auctions are losing a ton of share, and fixed price has been gaining pretty steadily.”

Hat tip to Andrew Sullivan. Chris Masse sends me more.

A not totally unexpected result. I never liked purchasing via auctions and always preferred the buy-it-now option once it was available or deal-hunting sites like PriceWatch to find good prices from legitimate retailers (using sites like ResellerRatings to check on their legitimacy). The uncertainty of actually getting the item I wanted, and the time cost of searching for another one, was typically far and above the amount that could be saved via the auction process.

However, I am curious if there is another effect here. Specifically, I am wondering how much the availability of pricing aggregates (even Amazon’s collection of individual sellers competing with one another on Amazon’s own site at various prices for goods in various states of newness/usedness). The BusinessWeek article Tyler links to mentions this effect:

What happened to auctions? Not only do shoppers want convenience, they’re also looking for value. And the proliferation of pricing information online has made it easier for consumers to bargain-hunt and lessened the need to risk overbidding in an auction. Hershenson recalls when a new $40 toaster could fetch $80 on eBay, thanks to a bidding frenzy. Now, a buyer can figure out the retail price with a few mouse clicks.

Have these price aggregators created an informal, Internet-wide auction that drastically reduces the space for more formal auctioning of goods available elsewhere. That is, are online auctions only good, now, for hard-to-find items? There is probably a small paper topic there somewhere.

Unfortunately, Tyler missed one of the bigger points, namely that Ebay’s own fee structure is driving auctioneers out of business in favor of making one-click shopping easier for buyers:

The changes gave breaks to many large vendors who sell fixed-priced goods on the site, while hiking fees for many eBay users who sell using a traditional auction structure (BusinessWeek.com, 1/29/08).