Every once in a while someone will ask how I came to be an economist. I’ll usually tell them a story about sitting in my undergrad poli-sci classes, where I listened to my fellow poli-sci students talking about economic policy without having the slightest clue about economics. But I wonder if the real story goes much further back, to the Halloweens of my youth… [cue wavy flashback lines]
When my brother Neal and I were kids, our mom kept us on a very strict diet. We were not allowed to have anything with added sugar of any kind. She contended that added sugar made us hyperactive and inclined to misbehave three days after eating it. I remember sometimes I would sneak to the 7-Eleven, buy and consume some candy, and then wait three days to see if I got in trouble with Mom three days later. (Apparently I had intuitively grasped the idea of a single-blind experiment, but I had not yet caught on to the double-blind experiment.) But there were never any sweets around the house, and my allowance was limited, so most of the time I went without.
Mom did, however, make exceptions for holidays. After that first Easter after the diet began (when I was about 6 years old), when I was sorely disappointed to find my plastic eggs filled with Nutrigrain cereal, Mom did allow a limited amount of sweets on special occasions. Halloween was one such occasion. But if she had allowed us to keep eating candy for as long as our stashes lasted, the exception could have lasted for weeks! So she implemented the dreaded 24-hour rule: all Halloween candy had to be consumed within 24 hours, or else get thrown away.
This meant, of course, that November 1st involved even more belly-ache-inducing gorging in the Whitman household than anywhere else. It was my duty, my quest, to make sure not a single piece of candy went to waste. And usually I succeeded. But one Halloween when I was about 11, one of my last years of trick-or-treating, the haul was just too large. By about 5:00pm on November 1st, it had become apparent that I would never make it.
And that’s when Neal – who had stopped trick-or-treating a year or two before – came to my rescue. Not by eating the extra, but by teaching me the art of trick-or-triage. He explained that the goal was to eat as much candy as possible in a limited period of time. He then helped me to separate my remaining pile into categories. In one category were the good candies that could be eaten very quickly, such as small chocolate bars. In another category were the mediocre candies that took forever to eat, like Sugar Daddies. A third category consisted of those lousy generic black-and-orange-wrapper candies, which were hardly worth eating in any case. Clearly, it was in my interest to focus on category one at the expense of categories two and three. A fourth category consisted of pretty good candies that took a long time to eat, such as Jolly Ranchers. This category posed a problem. But as Neal helpfully observed, these candies were also typically the least perishable and easiest to hide. Hard candies could spend months in the sock drawer without going bad, thereby allowing me to indulge in small exceptions – er, experiments – throughout the year.
I wasn’t able to finish all my candy that year, but with Neal’s help, I successfully maximized my candy-consumption subject to an exogenous time constraint! Neal ended up becoming a linguist, but his good work one All Saints Day may well have planted the seeds for my development into an economist.
Tuesday, October 31, 2006
Trick or Triage
Monday, October 30, 2006
You Got Surveyed
Last week Don Boudreaux blogged about his wife’s experience with a telephone survey in which she was asked to pigeonhole herself as either “conservative” or “liberal.” I had a similar experience myself on Saturday. Among many other things, my surveyor asked:
• ... whether I was a Democrat or a Republican. (I volunteered “neither.”)I may be misremembering the questions slightly, but the overall tenor is just as I’ve described. As Boudreaux observes, if this method of polling is at all common, it necessarily understates the extent of support for libertarian viewpoints, as well as other viewpoints outside the left-right spectrum.
• ... after she confirmed that I’d voted in the 2004 presidential election, whether I had voted Democrat or Republican. (Again, I volunteered “neither.”)
• ... after she confirmed my intention to vote in the upcoming election, whether I planned to vote Democrat or Republican. (When I again volunteered “neither,” I was asked to pick one. “Just say which way you lean,” she said. I can’t recall which I chose.)
• ... whether I considered myself very liberal, somewhat liberal, somewhat conservative, or very conservative. (After confirming that those were the only options, I reluctantly chose “somewhat liberal,” mainly because of my annoyance with the current Republican administration.)
Thursday, October 26, 2006
Drug Fiends
The bad news: Kids are dressing in paramilitary gear to celebrate the drug war.
The good news: At least kids are dressing as actual monsters for Halloween again. Before, they were the sort of monsters who eat your brains and suck your blood; now, they’re the sort of monsters who knock down your door, shoot your dog, beat up your grandparents, and steal your stash.
Tuesday, October 24, 2006
Homo Economicus
A friend emailed me the link to this post on Dealbreaker.com, which includes a YouTube video of Stephen Colbert interviewing Nobel-prize-winning chemist Peter Agre. Here's the key bit:
Colbert: "Are there monkeys as smart as you?"
Agre: "I'm sure there are quite a few, quite a few."
Colbert: "Oh really? Mm-hmm. Do they give a Nobel prize for throwing your own feces?"
Agre: "...That's the Economics prize, I think."
Scared Shift-less?
Last week, Julian found this risible op-ed in the New York Times about how sexy costumes are ruining the family-friendly character of Halloween. Julian’s sarcastalicious reply letter said, among other things:
I'm sure the glob of clay little Timmy brought back from nursery school, with "Worldz Graytest Mom" scrawled on it, is an exceptional piece of art, but it confers no special rights. It entitles you to no special authority over the direction of American culture. It does not obligate the rest of us to water down our entertainment in order to spare you the burden of cracking the manual on the cable box that came with all those terrible, filthy channels you're paying $40 a month for. It certainly doesn't require us to defer to your judgment about which occasions are "family holidays" to be celebrated in whatever manner you're comfortable with. There is, I realize, the risk that the instant they're old enough to stop brunching at your nipple, your precious tots will be scarred for life by the sight of a bit of cleavage, but I feel confident they'll recover somehow.So I’d been chuckling about that passage for several days, and planning to link to it eventually but never getting around to it. And then what should appear in the O.C. Register but another article denouncing the same trend! And how’s this for irony: while the reliably-left-wing Times included an op-ed decrying the trend on family-values grounds, the reliably-right-wing Register included an article decrying the same trend on feminist grounds. I would say this constitutes further evidence for the theory that editorial page editors choose their guest writers to make their ideological opposites look like dopes, except the Register article appears in the “Life” section.
To the author’s credit, she doesn’t actually espouse the feminist line herself, but she does let a women’s studies prof speak authoritatively without the barest hint of dissent:
"Looking sexy is now considered normal, feminine behavior for a woman, so on a day like Halloween, women will take it as creative license to wear revealing clothing and no one can call them a tramp that day," said Donna Gough, an assistant professor of women's studies at Cal State Fullerton. "And for men, it's a day where they can openly stare at and drool over women in such attire without being called a chauvinist pig." … "The message being sent for a woman is that you have to wear these costumes to fit in and be normal and be considered attractive and appealing to men," said Gough.That’s right – all those women wearing French maid uniforms and scanty cavewoman skins have been pressured into it by our chauvinistic culture. Of course, most women I see in such outfits seem positively giddy about it, but I suppose that’s just false consciousness.
How exactly did the sexification of Halloween occur? I must have missed the meeting where the boys all got together and hatched their dastardly scheme to overstock the costume shops with slinky stuff. Or maybe it was a decentralized process – probably one of those zero-sum status-seeking games I’ve been hearing about. Women who dress up sexy make other women look frumpier by comparison, so they have to sex it up too, and pretty soon they’re all shivering at outdoor Halloween parties without having gained any relative advantage. I suppose Robert Frank would recommend a bare-skin tax. I recommend throwing a big shapeless sheet over your head and going as a ghost. Then you can either cut out eyeholes (if you want to see) or go eyehole-free (to protect your corneas from being seared by the sight of skin).
(All right, I can’t out-snark Julian, but I sure can try.)
Monday, October 23, 2006
Sex & Violence Update
Two studies to warm libertarian hearts:
David Friedman reports on a study showing that increased availability of pornography (specifically via the internet) decreases the incidence of rape.
And Tyler Cower links to a study showing that violent movies decrease the incidence of violent crime.
Mind you, I haven't read either study, so I can't vouch for their reliability. But the basic arguments make sense: Virtual sex is a substitute for real sex; virtual mayhem is a substitute for real mayhem.
Friday, October 20, 2006
Framing as a Feature
I have no special expertise in the economics of advertising, so I’m probably reinventing the wheel here, or at least the pogo stick. But here goes anyway:
In marketing and economics, the functional explanations of advertising seem to fall into two broad categories: (1) informing people, and (2) fooling people. Economists working in the rational-choice framework usually focus on the informational function. Behavioral economists say that explanation is laughable; as any marketing executive knows, advertisements stoke desires, create illusions of worth and value, make people want things they didn’t want before, and so on.
But I think there’s a third sort of function that “fooling people” doesn’t really capture. Here’s one example that I posed to a marketing professor who gave a guest lecture to my students last week: Why does a beer advertisement that features hot women in bikinis sell more beer? The “fooling people” explanation implies the beer-drinkers have been duped into thinking this beer will make them more fun to be around, even more attractive to women. But I give the beer-drinkers more credit; I suspect most of them realize their beer gut doesn’t become suddenly become sexy when they down another Heinie. Instead, I think drinking that brand of beer evokes fond memories of the bikini-clad girls and party atmosphere in the ad, thereby making the beer more enjoyable.
To generalize, I think at least some ads actually enhance the associated products. Not by changing their physical characteristics, but by changing the images and feelings associated with them. The consumer of this product doesn’t just buy the physical item, but the mental experience that goes with it. And this is a real gain to the consumer, not an illusory one – he really does enjoy the product more as a result of the atmosphere created by its marketing.
Status-building strategies provide another nice example. Firms that successfully associate their products with higher-status lifestyles will generate greater demand. Is that because people are fooled into thinking the product is more enjoyable than it really is? Maybe. But it’s also true that people enjoy status and are willing to pay for it. Status-based marketing enhances the value of the product for such people. (And before anyone throws Robert Frank at me, I’ll observe that status is not a zero-sum game. There are different status niches, and different products exploit them. Day spas and diamond earrings provide one sort of status; high-end skateboards and surfboards provide another.)
Behavioral economists often focus on “framing effects” as per se evidence of irrationality. Framing effects occur when people make different decisions in analytically identical situations, simply because the situations are presented in a different manner or with different context. Marketers take advantage of framing effects by carefully choosing how to present their products; this is often characterized as a form of manipulation. But if people do in fact care about certain aspects of presentation and context, then irrationality is not necessarily involved, and the manipulation can improve the consumer’s welfare by supplying desired frames of mind.
I don’t mean to claim that consumers are never irrational and never duped. I do think, however, that many forms of advertising currently dropped into the fooling-people box belong in the product-enhancement box instead.
Wednesday, October 18, 2006
Proposition 90 Debate
The Pacific Legal Foundation will sponsor a debate at Chapman Law School on Friday, Oct. 20, about Proposition 90 and eminent domain. PLF offers details here. Members of the general public can get in gratis. Attorneys can get 3 hours of CLE credit for a mere pittance. And everybody gets to come to the reception afterwards! You won't get that good a deal when they bulldoze your house to make room for the new Costco.
Monday, October 16, 2006
Fat Stats
I’m currently reading J. Eric Oliver’s Fat Politics, a fascinating book that I’ll probably blog about more in the future. But for now, I just want to point out an interesting mathematical error.
Oliver spends a good bit of time debunking the Body Mass Index (BMI) as a measure of overweightness/obesity or health in general. And rightly so; BMI is flawed in a variety of ways. But I don’t think this is one of them:
Today, the same BMI formula is applied to men and women, despite the fact that, because men are taller on average, the formula automatically gives them a lower BMI. (BMI is a ratio of weight to height-squared, so the taller one is, the lower one’s relative BMI will be.) [p. 94-95]It would make sense to have a different BMI formulas for men and women simply because they have different physiologies (for instance, women just naturally carry more body fat). But it’s untrue that BMI is lower for taller people, so long as their bodies are proportionate to their height. In fact, BMI will be higher for such people. This is because weight increases with the cube of the proportional increase in height.
Suppose person A has an “ideal” BMI. For simplicity, measure him in three dimensions: height (h), width from side-to-side (a), and width from front-to-back (b). Person A’s total volume is hab.1 Treat weight as a scalar function of volume; that is, weight = d*volume.2 So A’s weight is w = dhab. His BMI is weight over height-squared; thus:
BMI = dhab/(h^2) = dab/hNow, suppose person B is taller than A, but with the exact same proportions. Given the same proportions, this person should be considered equally healthy and therefore “ideal” as well. If person B’s height is k times B’s height, then B’s side-to-side width must be k times A’s side-to-side width, and B’s front-to-back width must be k times A’s front-to-back width. So B’s total volume is (kh)(ka)(kb) = (k^3)(hab), and B’s weight is (k^3)(dhab). And thus:
BMI = (k^3)(dhab)/(k^2)(h^2) = kdab/hNote that person B’s BMI is k times larger than person A’s, despite A and B both having exactly the same bodily proportions. This is certainly a problem for BMI, since it gives two people with identical proportions different results; but the error is not in the direction indicated by Oliver.
Notes:
1. Yes, this is basically treating the person like a rectangular-based column, but nothing important hinges on that. If you like, imagine taking the person and breaking him into thousands of little Lego-like pieces and doing the same calculation on each one.
2. Weight = mass x force due to gravity, and mass = volume x density, and so weight = volume x density x force due to gravity. Let the scalar d = density x force due to gravity.
Sunday, October 15, 2006
Traveling in Stereo
I just returned from a conference in NYC; hence the dearth of blogging. One good thing about traveling by plane (other than, you know, getting where I’m going) is that it gives me an excuse to listen to my iPod with earphones, something I rarely do otherwise. Some songs sound best through earphones because they take full advantage of stereo sound – by playing different instruments for each side, creating the illusion of movement by having sounds move from one side to the other, or positioning the listener in the middle of a dialogue created by different voices. These effects are not nearly as obvious when the song is played with regular speakers, because both your ears can hear both speakers’ output. Some of my favorite songs to listen to with earphones include:
“How We Operate” – GomezHave suggestions for songs to add to the list? Put them in the comments. I have another conference in November...
“Such Great Heights” – The Postal Service
“Everybody Got Their Something” – Nikka Costa
“Tennessee” – Arrested Development
“Missing” – Everything But The Girl
“Closer” – Nine Inch Nails
“We Used to be Friends” – The Dandy Warhols
Saturday, October 14, 2006
Seto's Draft Article on USN&WR Law School Rankings
Professor Theodore ("Ted") P. Seto, of Loyola Law School, has posted on SSRN a draft paper entitled, Understanding the U.S. News Law School Rankings. Although he admits that he has posted his work rather early in the writing process (several sections of the paper remain unfinished), he explains in his abstract that "because of the unusual nature of what I am attempting, early feedback would be of great benefit." I encourage my fellow law school rankings geeks to check out Prof. Seto's draft paper and offer him comments. I here relate some of the paper's highlights and a few of my own observations.
Prof. Seto appears to have done a fine job of reverse engineering the USN&WR law school rankings. It would perhaps prove useful, however, were he to more clearly document how closely his results match those of the actual rankings. He might, for instance, simply offer something like the sort of graph I worked up comparing USN&WR's reported scores to those of my model.
Prof. Seto has made significant progress towards writing up a scholarly analysis of his modeling exercise. As readers here know, I published a long series of blog posts on the same topic (which Prof. Seto was kind enough to cite). I, too, have been putting together a paper on that topic. I'm happy to have Prof. Seto take the lead, though, as his draft paper ably lays out a great many crucial details about how the USN&WR law school rankings work. Citing his paper might let my own get more quickly to the interesting stuff: Analyzing how the rankings don't work.
Prof. Seto's draft paper offers a fair amount of analysis along those lines, too. At pp. 15-20, he offers a very telling critique of the reliability of the USN&WR rankings. He observes, in a nutshell, that "overall scores tell us something about direction, but very little about magnitude." P. 19.
Prof Seto uses his model to test for bias in schools' reputation scores, pp. 24-26. In so doing, he generates results that appear to contradict Prof. Brian Leiter's assertion that the reputation measure unfairly benefits schools on the East and West coasts. Seto argues, to the contrary, that the USN&WR rankings exhibit a bias in favor of schools in the Central time zone, as well as schools that tout "U. of [State]" titles. Given that Leiter's own University of Texas School of Law falls squarely within those parameters, Seto can expect some tough questioning on this front. (I'll note, for one thing, that Seto's treatment of the University of Florida School of Law does not appear to reflect my discovery of errors in that school's most recent USN&WR ranking.)
Prof. Seto's reverse engineering process differed from my own in some particulars. Whereas his model used forced mean and standard deviation similar to those of the schools for which USN&WR reported overall scores, for instance, my model used z-scores. P. 13. Perhaps he was right to do so; I'll have to think a bit more about the relative merits of Seto's approach. I note, however, that USN&WR has expressly stated that it uses z-scores, and that I borrowed that method in hopes of duplicating its rankings as closely as possible.
I admire Prof. Seto's zeal in trying to replicate USN&WR's proprietary cost-of-living indices. I (or rather my research assistant) worked up proxy numbers using Monster.com's online engine for comparing salaries across geographic regions. Seto, in contrast, put down good money for ACCRA figures, which he then tinkered with in an attempt to match USN&WR's overall scores. This, he found an exercise in frustration. Pp. 10-11. Like me, he found himself tripped up by errors in the ABA's printed take-offs. P. 11. I wonder, though, if he realized that a polite request to the right person at the ABA might have netted him corrected electronic data? That wouldn't have solved all of the problems he noted plague the take-offs, pp. 8-9, but it might have helped.
Parts III of Prof. Seto's paper, which for now remains largely unwritten, will doubtless excite the attention of law school administrators. It bears the title, "Managing Your School's Rankings." Personally, I'm more interested in the yet-to-be written Part IV, titled "Improving the U.S. News Ranking System." Prof. Seto's draft paper already offers us a wonderful addition to the burgeoning literature on assessing law school performance. The final version of his paper cannot fail to prove still more useful, yet.
[Crossposted to MoneyLaw.]
Thursday, October 12, 2006
A New Indictment for Treasonous Speech
A grand jury in Orange County filed a charge of treason against Adam Yahiye Gadahn yesterday. That marks him as the first person charged with treason against the U.S. since 1952. If captured and found guilty, Gadahn could face the death sentence.
The indictment accuses Gadahn of acting as a propagandist for al-Qaeda in several of that group's videos. He allegedly announced that he had joined al-Qaeda and claimed, "Fighting and defeating America is our first priority. . . . The streets of America shall run red with blood." Gadahn also supposedly called on Americans to convert to Islam and urged U.S. soldiers to switch sides in the Iraq and Afghan wars. On the basis of those and other allegations, the indictment concludes that Gadhan "knowingly adhered to an enemy of the United States, namely, al-Qaida, and gave al-Qaida aid and comfort . . . with intent to betray the United States."
A treason charge in the War on Terror? Who would have thought of that? Well, um, I would have. Indeed, I wrote a law review article on the topic: Treason, Technology, and Freedom of Expression, 37 Ariz. St. L. J. 999 (2005) [PDF]. As I said there, "Courts have already held that an American employed as an enemy propagandist may justly suffer prosecution for treason. Any American employed as a propagandist by the al-Qaeda terrorist network would doubtless risk the same fate." Id. at 1004.
I must admit, though, that I did not expect U.S. officials to finger an actual agent of al-Quaeda. I reasoned that, "Contemporary terrorist networks . . . tend to generate and distribute propaganda through relatively informal means. Al-Qaeda disseminates its message through volunteers on the street or in the press, for instance . . . ." My paper thus spends a fair amount of time wondering whether the law of treasonous expression reaches sympathetic non-agent volunteers of U.S. enemies. I find that a close and interesting question, one that can tell us a lot about the scope of our constitutional freedoms of expression. Assuming that they can prove he acted as an employee of al-Quadea, however, Gadahn's prosecutors won't face that particular problem.
That is not to say that Gadahn's prosecutors will have an easy go of it. They will have to prove that Gadahn owed allegiance to the U.S., that he adhered to its enemies, and that he intentionally committed an overt act giving them aid and comfort. Furthermore, prosecutors will have to provide two witnesses to any overt act of treason they try to pin on Gadahn (or, less interestingly, get him to confess in open court).
The first bit might cause prosecutors some trouble. Gadahn apparently left the U.S. in 1998. Assuming that he thereafter renounced his U.S. citizenship, he no longer owed the U.S. any allegiance. (Non-citizen residents of the U.S. owe it allegiance, granted, but the indictment appears to cite only acts that Gadahn committed while living abroad.) If Gadahn does not owe allegiance to the U.S., after all, he cannot commit treason against it. Did he renounce his U.S. citizenship? That remains to be seen. Notably, though, it is not quite as easy as, say, simply burning a flag.
Assuming, as seems likely, that Gadahn did willingly star in al-Queda propaganda videos, prosecutors will have little trouble showing that he adhered to enemies of the U.S. and intentionally committed an overt act giving them aid and comfort. The treason clause affords a definition of "enemies" easily broad enough to encompass terrorists intent on killing American civilians. Getting two witnesses to Gadahn's overt acts treason will probably not prove too tricky, either. Judging from treasonous expression cases following World War II, the testimony of any two recipients of Gadahn's propaganda should suffice. As the court in Burgman v. United States observed of the propaganda broadcast recordings before it: “They were not merely testimony concerning the acts of treason; they were the physical embodiment of the very acts themselves." 188 F.2d 637, 639 (D.C. Cir. 1951). On that logic, if you've witnessed Gadahn's propaganda, you have witnessed his treasonous act.
Bottom line: If prosecutors can catch Gadahn, they have a fair chance of convicting him of treason.
Tuesday, October 10, 2006
Tired Statistics
From Sunday’s Parade Magazine article on 6 Ways to Have More Energy:
Over the past three decades, Americans’ time on-the-job has increased an average of one full month a year. The reality is even worse for working mothers who also may bear the brunt of household duties.The old trope that Americans have less and less leisure time is very popular. But it just ain’t so. For some actual figures, check out this article from the Federal Reserve Bank of Boston. According to their calculations, the average American’s weekly leisure time increased over the period 1965-2003, by 6-8 hours a week for men and 4-8 hours a week for women. Of course, the reasons are different for men and women. Women, naturally, are spending more time working in the marketplace, but they are spending less time in non-market work (like housework). For men, the reverse is true. For both, the net effect is a reduction in total hours worked.
Incidentally, the reduction in non-market work by women has not been completely compensated by the increase in on-market work by men. Rather, there’s been an overall reduction in non-market work because of (a) labor-saving devices and (b) outsourcing of household work to the market (such as by eating out more often). Also, it’s worth noting that leisure time is not the same as relaxation; it also includes tiring activities like walking the dog, exercising, and going to the kids’ soccer games.
Why a One-Way Constitution?
Timothy Sandefur has posted to SSRN his new paper analyzing the justifiability of the Confederate states' secession from the Union: How Libertarians Ought to Think About the U.S. Civil War, 28 Reason Papers 61 (2006). In brief, Tim argues that the those states erred because the U.S. Constitution forbids a state from unilaterally seceding and because, while self-defense against a tyrannical government might justify unconstitutional secession, the southern states had no just claim to that excuse. So far as those two claims go, I don't have much of a beef with Tim. But I've enjoyed arguing with him since we first met, and I'm not going to stop, now!
Even if Tim has established that the South seceded improperly, there still remains this vital question: Did the North responded appropriately? Contract law recognizes a firm distinction between breach and remedy. To say that someone has breached a contract is not, for instance, to say that you can kill them. For an analogous argument that the North over-reacted, see Jeffrey Rodgers Hummell, Emacipating Slaves, Enslaving Free Men: A History of the American Civil War (Open Court Pub. Co., 1996).
But set that aside. I here want to challenge an argument that Tim did make, rather than one he might have made. He says, on page 8 of his paper,
Because the sovereignty of a state is distinct from that of the union, a state can no more absolve its people of their allegiance to the federal government than the gas company can absolve a customer from paying her electric bill. The people, who adopted the Constitution, may decide to allow the people of a state to leave the union—through Congressional action . . . or by adopting a Constitutional Amendment . . . . But unilateral secession is unconstitutional.
I don't quite see how the latter point follows from the former. Suppose for the sake of argument that a state cannot unilaterally secede. Why does it follow that the people of a state cannot secede without the permission of the federal government? Granted that the gas company cannot absolve me from paying my electric bill, in other words, why do I need the permission of every other electric customer to go off the network?
Again: Suppose that 100% of the people of the state of California decide that they want to secede. Even supposing that the state of California could not secede on behalf of its citizens, why could they not dissolve that state and create a new political entity independent of the U.S. federal government? I don't quite see why the citizens of, say, Iowa should have any say in the matter.
Granted, that is not quite how the seceding states went about matters. And granted that, even in my scenario, the former citizens of California might owe damages to the U.S. federal government (which is not to say that the feds could rightfully invade "New California"). But none of that goes to show, Tim's claims to the contrary notwithstanding, that U.S. citizens cannot, independent of the states that claim sovereignty over them, unilaterally disclaim their allegiance to the federal government.
Sunday, October 08, 2006
How the UnInGEn-ious Act Will Encourage Internet Gambling
I earlier described why the Unlawful Internet Gambling Enforcement Act of 2006 (the "UnInGEn-ious Act") will put the domestic financial services industry at the disadvantage of overseas competitors capable of escaping U.S. regulations. How will Mastercard, Visa, and their ilk react to the resulting loss of business? More likely than not, by seeking shelter in one of the UnInGEn-ious Act's safe harbors. The result: legal Internet gambling will increase in the U.S.
The UnInGEn-ious Act targets only with "unlawful internet gambling." Section 5362 of the Act defines that term to specifically exclude certain forms of intrastate, intratribal, or interstate horseracing gambling. The Act thus plainly clears the way for a few types of legal Internet gaming. Domestic financial services might well join the lobbying to encourage states and tribes to develop new gambling services that qualify for the UnInGEn-ious Act's express safe harbors.
Domestic financial services will most want, however, to enter the large markets for interstate and international casino and sportsbook internet gambling. Could those types of gambling also fit within the UnInGEn-ious Act's safe harbor provisions? Almost certainly, but only impliedly.
The federal government has traditionally, and properly, declined to interfere with gambling that does not offend the laws of any state. Thus, for instance, the federal Wire Act contains a safe harbor exempting from liability "the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on the sporting event or contest is legal into a State or foreign country in which such betting is legal." 18 U.S.C. 1084(b). The Illegal Gambling Business Act likewise covers only a business that violates "the law of a State or political subdivision in which it is conducted" 18 U.S.C. 1955(b)(1)(i).
To its credit, the new UnInGEn-ious Act apparently shares its predecessors' respect for states' rights. Prior to delineating the various specific safe harbors alluded to above, the Act defines "unlawful internet gambling" to apply only to a bet or wager "unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made." § 5362(10)(A). To ensure that busybody states cannot complain about internet gambling transactions that merely pass through their territories, § 5362(10)(E) specifies that "The intermediate routing of electronic data shall not determine the location or locations in which a bet or wager is initiated, received, or otherwise made."
The UnInGEn-ious Act thus sends a clear signal to state legislatures and the lobbyists who love them: If you legalize casino or sportsbook Internet gambling, the feds will not intervene. A single state could, by recognizing the right of its citizens to gamble on in-state or overseas websites, create many new opportunities for taxation. Those tax revenues will increase, moreover, once other states follow suit and thereby create a national market for legal internet gambling. California residents might thereby gamble in New Jersey without ever leaving home.
Legislators would get more tax revenues to play with. Consumers would benefit from easier access to gambling services and, thanks to the effects of increased competition, better odds. Bricks-and-mortar casinos and sportsbook operations would have to figure out how to upload their services, granted, but that would merely put them on the same footing as businesses like The New York Times or Home Depot.
And domestic financial services? They would win access to new and large markets in legal internet gambling transactions, markets safely sheltered from the reach of the UnInGEn-ious Act. Domestic financial services will probably not want to offer credit to gamblers, granted. Under common law, courts generally refuse to enforce gambling debts—even debts run up on legal games. But that would still leave domestic financial services free to offer gamblers debit cards and the like.
The authors of the UnInGEn-ious Act portray it as a blow against Internet gambling. In fact, however, the Act allows states to legalize Internet gambling and encourages the domestic financial services industry to lobby states to do so. In retrospect, then, perhaps I was unfair in labelling it "the UnInGEn-ious Act." Given that it stands to achieve the exact opposite of its stated goal, perhaps we should call it "the UnInGEn-uous Act."
[Crossposted to Technology Liberation Front.]
Friday, October 06, 2006
The Random Awesomeness You Sometimes Find on the Internet, Part LXVII
The Nietzche Family Circus. (Thanks to Gene for the link.)
The Mating Auction
Tyler asks, “Would any of you like to ponder the difference between a Dutch and an English auction, and how it applies to dating strategy?”
Sure, I’ll go there. For those who don’t know, an English auction is the familiar variety in which the price starts at some reservation level (the lowest the seller would accept) and then rises with the bidding. A Dutch auction starts with a very high price, higher than anyone would willingly pay, and then gradually drops the price until someone takes it. In an English auction, many bids are heard; in the Dutch auction, only one.
In the dating context, someone running an English auction would trade-up whenever a better mate came along, and he would finally settle down when no better offers were forthcoming. Someone running a Dutch auction would start with really high standards, keep lowering those standards until someone agreed to date him, and settle down with that person.
If there were perfect information, the two auctions would yield the same qualitative result (though see qualification below). But in reality, dating is a learning process; we don’t initially know what we want, nor do we know how many and what quality of people would want to date us. There is also a valuable experience to be gained by dating around. These reasons strongly favor the English auction, which reveals information in the bidding process.
The Dutch auction can do better than the English auction in one regard: in the context of imperfect information, it can produce a higher surplus (difference between value gained and value sacrificed) for the seller. In the English auction, the highest bidder will offer a price just barely above the potential buyer who places the next highest value on the object. The same would be true in the Dutch auction, except the would-be highest bidder doesn’t know the valuation of the second-highest bidder. If she did, she would just wait to jump in until the price was a tiny bit above that price. But lacking information, she might bid somewhat earlier just to be sure she’s the buyer.
In the dating context, the Dutch-auction advantage might take the form of a better “deal” within the relationship – more concessions with regard to housework, preferred dates, etc. However, this strikes me as rather unlikely in a competitive dating market. The Dutch auction’s advantage occurs primarily with unique items, where the would-be high bidder can’t just go buy somewhere else. Yeah, sure, I know you think you're really unique, but if you face competition from other possible mates, you probably can’t sustain the surplus created by a lopsided arrangement within the relationship. Don’t forget, this is a bilateral auction.
But I still think search theory is the more fruitful branch of economics for analyzing mating strategies. Among other things, it addresses how to calculate your reservation level if you're the seller in the English auction.
The UnInGEn-ious Act's Non-Impact on Internet Gambling
With the Unlawful Internet Gambling Enforcement Act of 2006, Congress took aim at Internet gambling, pulled the trigger, and shot the domestic financial services industry. The regulatory bloodshed might temporarily put off American consumers of Internet gambling services. Very quickly, though, foreign financial services will step into the breach. More likely than not, Internet gambling will continue unabated. Federal lawmakers will have done little more than won a sound-bite for the upcoming elections and encouraged the widespread use of Internet-based financial systems capable of wholly escaping U.S. control. Hence my moniker for the new law: The UnInGEn-ious Act.
Congress passed the UnInGEn-ious Act as subchapter IV of the SAFE Port Act, H.R. 4954, 109th Cong., 2nd Sess. (2006). Strictly speaking, because the SAFE Port Act has yet to receive a presidential signature, it has not yet become law. It surely will, though.
The UnInGEn-ious Act does not outlaw Internet gambling per se. Instead it prohibits anyone "engaged in the business of betting or wagering" from knowingly accepting payment "in connection with the participation of another person in unlawful Internet gambling." Id. § 5363. Mere consumers face no liability under the Act. Nor, thanks to the Act's careful definition of "unlawful Internet gambling," id. § 5362, do a variety of intrastate, intratribal, or interstate horseracing gaming services. In other words, the UnInGEn-ious Act basically targets new online competitors to more traditional gambling services.
The UnInGEn-ious Act aims to stymie those upstarts not by outlawing them outright, but rather by choking off their revenue. The Act thus threatens civil injunctions, id. § 5365, and criminal penalties, id. § 5366, against gambling businesses that accept payment for illegal Internet services. Unless run or owned by a person who runs an illegal online gambling site, id. §§ 5365(c)(2), 5367, interactive computer services or telecommunications services will suffer no worse than an order to take down an offending site or link, id. § 5365(c)(1).
Domestic financial services face the threat of a bevy of new regulations, issued by the Federal Reserve in consultation with the Attorney General, designed to identify and prevent transactions prohibited by the UnInGEn-ious Act. Id. § 5364. Although the exact form of those regulations won't be known for some time, the Act limits their scope to what can "be reasonably designed to identify and block or otherwise prevent or prohibit" offending transactions, id. § (b)(1), specifies that the regulations must "to the extent practical, permit any participant in a payment system to choose among alternative means" of achieving the Act's goals, id. § (b)(2), and must "exempt certain restricted transactions or designated payment systems from any requirement imposed under such regulations, if . . . it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such transactions . . . ."id. § (b)(3). The Act also warns regulators to "ensure that transactions in connection with any activity excluded from the definition of unlawful internet gambling," i.e., the intrastate, intratribal, or interstate horseracing gaming services mentioned above, "are not blocked or otherwise prevented or prohibited by the prescribed regulations."
What does all this mean for internet gambling? Not much. Credit card services subject to U.S. law have been blocking most internet casino and sportsbook transactions for some time. The industry has thus already begun the transition to alternative payment systems such as NeTeller and Firepay, that can escape the reach of U.S. law. Some online gambling services even offer discounts to encourage consumers to give up their credit cards.
Because they stay safely overseas, NeTeller, Firepay, and other alternatives to U.S.-based financial services can escape the reach of the UnInGEn-ious Act and other domestic regulations. Thanks to the veil of secrecy that these new financial services cast over their customers' transactions, moreover, it looks very unlikely that U.S. authorities will be able to selectively prohibit domestic transactions that ultimately end up funding Internet gambling services. The UnInGEn-ious Act thus does little more than speed up the flight of Internet-based gaming and financial services from the U.S. to more friendly homes oversea. Since U.S. consumers will still enjoy free access to those services, they will hardly notice the difference. If only we could just as freely escape from the uningenious government services of domestic politicians!
[Crossposted to Technology Liberation Front.]
Thursday, October 05, 2006
Hot Under the Collar
I am extremely upset about RateMyProfessors.com’s list of the Top 50 Hottest Professors. First, I didn’t make the list, and I’m the hottest damn professor I know! (With co-blogger Tom a close second, of course.) And second, the ranking system doesn’t make a bit of sense.
The professors are ranked based on the total number of student evaluators who have given them “chili peppers,” without taking into account the total students who have evaluated the professor at all. As a result, the system gives an advantage to professors who teach more classes, who teach larger classes, or who teach at colleges where students make greater use of RateMyProfessors.com. The rankings may not correlate at all to the fraction of students who actually find the professors hot.
The more sensible approach, of course, is to look at the percent of student evaluators who found a professor hot (possibly excluding professors without enough total evaluations to constitute a good sample). So I created the graph below using chili peppers as a fraction of all evaluations for the (alleged) Top 50.
Notice the absence of anything resembling a downward trend. In fact, there’s actually a slight upward trend. And a full 60% of professors on the list scored better than the professor ranked as #1 (sorry, Steve Joordens!). This is an outrage, and I hope RateMyProfessors.com will rectify it forthwith. Without accurate hotness ratings, how will prospective college students know where to enroll?
Safe Harbor for Prediction Markets in SAFE Port Act
Congress recently passed a law, the Unlawful Internet Gambling Enforcement Act of 2006, that aims to restrict access to certain forms of online gaming. It has not, contrary to some reports, been passed into law. The House and Senate passed the UnInGEn-ious Act (as I style it) as subchapter IV of the SAFE Port Act, H.R. 4954, 109th Cong., 2nd Sess. (2006), which as yet lacks a presidential signature. Let's assume that it will get one, though. What will the enactment of the SAFE Port Act, and thus of the UnInGEn-ious Act, portend for prediction markets? Nothing very scary.
Appropriately, given the title of the larger bill into which it got tucked, the UnInGEn-ious Act creates a safe harbor that prediction markets can probably take shelter in. The Act targets only "unlawful internet gambling," which it defines as the knowing transmission of "a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law . . . ." Section 5362(10)(A). If prediction markets do not involve bets or wagers, therefore, they escape the reach of the UnInGEn-ious Act.
Helpfully, the Act defines "bet or wager" to not include
participation in any . . . educational game or contest . . . that meets the following conditions:Id. section (1)(E)(ix).(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.
(III) No winning outcome is based--(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.
Does that definition of "bet or wager" exclude prediction markets? Probably. It certainly seems that most prediction markets—even real money ones—establish payoffs in advance of any game or contest (i.e., you stand to win the face value of any certificates you hold at the expiry of trading in the associated claim), and those payoffs are not determined by the number of participants or the fees they've paid. That takes care of section 5362(1)(E)(ix)(I).
Whether or not prediction markets satisfy 5362(1)(E)(ix)(II), which was evidently written with fantasy sports teams in mind, poses a closer question. Certainly, the winning outcomes on a prediction market reflect the relative knowledge and skill of the participants. Are they also "determined predominantly by accumulated statistical results of the performance of individuals . . . in multiple real-world . . . events"? In the case of prediction markets in elections, almost certainly. In the case of prediction markets in science claims, possibly. Claims on such markets would, to play it safe, have to relate not to mere abstract phenomena but rather to the performance of particular scientists. Write claims that treat science (or movie making, or anything else) like a spectator sport, in other words, and you will probably satisfy the requirements of UnInGEn-ious Act section 5362(1)(E)(ix)(II).
The last condition, in section 5362(1)(E)(ix)(III), presents no problem for prediction markets.
Even if prediction markets do not qualify for safe harbor in UnInGEn-ious Act section 5362(1)(E)(ix), moreover, it does not follow that the Act renders them illegal. Recall, after all, that the Act reaches only bets or wagers. As I've argued elsewhere, prediction markets generally do not deal in bets or wagers as defined in applicable state or federal laws. Even the UnInGEn-ious Act makes that clear; section 5362(1)(A) defines "bet or wager" as, in relevant part, "the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance . . . ."
Bottom line: The UnInGEn-ious Act does not expand U.S. law to outlaw prediction markets and offers a safe harbor expressly exempting properly structured prediction markets from the Act's reach.
[Crossposted, in part, at Midas Oracle.]
Wednesday, October 04, 2006
The Free-Rider Effect vs. the Hard-Driver Effect
A conversation with a colleague about classes with group assignments brought to mind a potential upside of the free-rider problem. The downside, obviously, is that the free riders don’t contribute as much effort as they would if they faced the full costs and benefits of their choices. But the potential upside is suggested by something I’ve observed in teaching classes with group work: the grades are generally higher.
This is not because I grade group work more leniently, because I don’t. And while it could be a result of division of labor, in practice I don’t think that’s the case. Observation, as well as my own group work experience, suggests a simpler explanation: the most competent and motivated members of the group – who presumably care most about their grade – do most of the work, while the incompetent and unmotivated do less. The unsurprisingly result is higher quality work.
To put it another way, division of labor generally operates by getting everyone (even the less competent) to work according to comparative advantage. But the effect I describe – call it the "hard-driver effect" – operates by squeezing more effort out of those with an absolute advantage in all tasks.
Of course, this is a problem for purposes of information-gathering. Group work obscures the real differences in quality among team members, in both education and business contexts. And the loss of effort from low-quality team members is indeed a loss, so long as they can produce work of positive (if low) value; exploiting comparative advantage matters. But these losses are at least partially offset by providing high-quality team members with stronger incentives to perform. Of course, as one of the harder-working members of my own groups in college, that’s what annoyed me most about group work.
Wednesday, September 27, 2006
Anti-Neuro-Paternalism
At TCS Daily, Will Wilkinson has an excellent article on the paternalist implications of neuroeconomics, made all the better by the fact that he cites me.
Pretty Sure That's Wrong Department
Last night on Loveline, Dr. Drew’s guests were Steve-O and Wee Man of “Jackass” fame. Wee Man had an announcement to make: his girlfriend is pregnant! In the ensuing discussion, Wee Man, who is a dwarf, said that the child has a 25% chance of sharing his condition. Dr. Drew did not object; I think he even affirmed the claim.
But I’m fairly certain they’re both wrong – which is weird, given that Wee Man presumably knows a lot about his own condition, and Dr. Drew seems to know a lot about everything medical. Achondroplasia (the technical term for dwarfism) is caused by a single gene that is functionally dominant: you only need one copy to exhibit dwarfism. And in fact, if you have two copies, you’ll die pretty quickly. Now, I don’t know if Wee Man’s girlfriend is a dwarf or not. But if she is not, then their child has a 50% chance of inheriting the gene from the father; otherwise the child will be normal-sized. If she is a dwarf, then the child has a 50% chance of being a dwarf who lives, a 25% chance of dying quickly, and a 25% chance of being normal-sized. No matter what assumption we make about the girlfriend, there’s no way you get only a 25% chance of achondroplasia.
I suspect that both Wee Man and Dr. Drew were assuming that achondroplasia is caused be a recessive gene; it would take two recessive genes to cause the trait to appear. Drew even mentioned the possibility of Wee Man’s girlfriend being “a carrier,” which supports my hypothesis. But achondroplasia is not caused by a recessive gene; if the girlfriend were a carrier, she would display the condition.
(By the way, I use the term ‘dwarf’ because I can’t stand the currently popular term ‘little person.’ But I don’t wish to offend. If anyone knows a better term [‘achondroplasic,’ perhaps?], I’ll be happy to use it.)
Tuesday, September 26, 2006
Cutting Comments
Neal emailed to let me know about Tasty Research, a blog that summarizes and comments on recent articles, mostly from the fields of sociology and psychology. Great stuff; I’ve added it to the blog roll.
One recent post discusses line-cutting norms – specifically, who is most likely to object when someone cuts? The research shows that when someone objects (which occurs 54% of the time), the objector is the next person behind the intruder 73% of the time. What explains the pattern?
1. They have to notice it. Those closer to the intrusion will be more likely to see it.I would collapse the third reason into the first two. The question is why the person behind the intruder is considered responsible for objecting. Other norms include (a) having the person in front of the intruder object, (b) having the second person behind the intruder object, (c) having everyone object, etc. But the first-behind-the-intruder rule utilizes both local knowledge (that person is most likely to notice and most likely to recognize legitimate “place-keeping”) and self-interest (that person has more to gain by objecting than those in front of the intruder). The blog’s unknown author adds:
2. They have to be aware that this is line jumping and not the more legitimate practice of “placekeeping”. Those further from the intrusion point may not be sure so they will be more hesitant to object.
3. Those directly behind the intruder are socially regarded as more responsible for that spot. If everyone defended the space in front of them, line jumping would not be a problem. Hence, it’s their duty to object to those to who jump directly ahead of them.
I also hypothesize another factor is the relative cost to person in line. Those in the back are delayed only a small percentage of their time in line, while the person in front may have to wait twice as long.I think he’s onto something, but I wouldn’t put it in terms of the delay as a percentage of time in line. Why should the percentage matter, when the added delay is the same for everyone? I would instead look at time discounting. If there are x people in front of the intruder, the first person behind the intruder will experience the added delay x + 1 periods in the future, whereas the second person will experience a delay x + 2 periods in the future. Given that people discount future costs more when they are further in the future, the second person will (other things equal) experience a smaller marginal disutility from the added wait. Put this factor in the “utilizing self-interest” column.
However, it’s also possible that there could be increasing marginal disutility from waiting time. This is especially true if, say, the line is for a product like concert tickets that could run out. The chance that the intrusion will cause you to miss out on a ticket is greater for the person farther from the front of the line. (Extreme example: If there are 5 tickets, and the intruder cuts right after the third person in line, the fourth person experiences only a delay, but the fifth person is denied a ticket.) This leads me to wonder if the usual first-behind-the-intruder norm is more likely to break down in situations where the product is likely to run out. I wonder what line-cutting norms were like in the Soviet Union?
Analytical questions aside, what I like best about this study is how it was (apparently) conducted: by having experimenters cut into real-life lines at grocery stores and other locations, and then recording how the unknowing subjects – the other people in line – responded.
Why Abandon Average LSAT Scores for High Ones?
Imagine yourself as the American Bar Association Section of Legal Education and Admission to the Bar. You have been asked to approve a policy recommendation, originating from the Questionnaire Committee, that looks likely to: 1) Make LSAT scores less accurate at predicting law school success; 2) Increase the LSAT scores of Caucasian and Asian American law school applicants relative to the LSAT scores of applicants in other racial or ethnic groups; and 3) Double the number of law school applicants who expend time, effort, and money retaking the LSAT. What do you do?
Regardless of what you would have done, the real ABA adopted the policy recommendation in question. In other words, the ABA Section of Legal Education and Admission to the Bar decided last June to change the definition of the LSAT data it collects from its member law schools each year. Whereas formerly it had asked law schools to use each student's average LSAT score in calculating the 25th, median, and 75th percentile LSAT of entering classes, the ABA will now ask law schools to use each student's highest score in calculating those figures. The 2006 version of the Annual Questionnaire that the ABA requires each member law school to complete already reflects the policy change. U.S. News & World Report's questionnaire will doubtless follow suit.
How could that seemingly minor change to the ABA's definition of "LSAT score" have the effects described above? Sam Stonefield did an admirable job, in his May 24, 2006 letter to the Section of Legal Education, of explaining why. To his able analysis, I would add only a reference to a research study by the very organization that administers the LSAT—the Law School Admission Council: The Performance of Repeat Test Takers On the Law School Admission Test: 1997–1998 Through 2003–2004 Testing Years (TR-04-02). It reports that among those who took the LSAT more than once, "the mean score gains in descending order have been for Caucasian and Asian American (2.9 points), Mexican American (2.7 points), Puerto Rican and Hispanic (2.4 points), and African American (2.0 points) test takers." Retaking the LSAT thus seems to help most the people who need help least.
If you successfully imagined you were the ABA Section of Legal Education and Admission to the Bar, perhaps you can tell me why that body decided to start ignoring repeat test-takers' average LSAT scores in favor of their high LSAT scores. I'm having trouble with that mental exercise. My natural skepticism keeps getting in the way. It causes me to dwell on the likelihood that LSAC stands to make a lot of money thanks to the policy change, which will lead many more students to retake the LSAT, and on the fact that the ABA's member law schools own and operate LSAC. Curious about the details of that organizational relationship, I've requested the LSAC's federal tax returns for the past three years. Perhaps the details in those dry documents will stimulate my imagination, making it easier for me to understand the reasons for the ABA's policy change.
[Crossposted to MoneyLaw.]
Sunday, September 24, 2006
ABA to Make Law School Data More Accessible
I have good news for my fellow rankings geeks! The American Bar Association has agreed to make the quantitative data contained in The Official Guide to ABA-Approved Law Schools available in a format congenial to number-crunching. David Rosenlieb, the ABA's Data Specialist, told me last Friday that the organization's website will soon offer the data in a downloadable Excel file.
Formerly, the ABA had made that data available only in comparatively unwieldy hardcopy or PDF formats. That made using the ABA data to duplicate and double-check the U.S. News & World Report law school rankings unnecessarily difficult. By making the quantitative data from the Official Guide available in a downloadable Excel file, the ABA will have partially fulfilled one of the reforms I suggested for improving the way the U.S. News & World Report law school rankings work.
I am very grateful to David for acting on my proposal. Notably, however, the ABA must do still more to empower researchers to replicate the USN&WR rankings. USN&WR follows the ABA's lead in collecting financial data about the law schools it ranks. Specifically, the USN&WR rankings use five categories of ABA-defined financial data:
- Total Instruction and Administration;
- Library Operations;
- Law School Miscellaneous Expenses;
- Tuition Reimbursement, Grants, and Loan Forgiveness; and
- Indirect Financial Aid.
Why does the ABA hesitate to release that vital financial data? When earlier I described the details of the ABA's data collection and dissemination practices, I surmised that it restricted access to schools' financial data in order to increase its revenue. More recently, however, my better-at-deciphering-law-school-politics half (who runs USD Law School's very cool Entrepreneurship Clinic) came up with an alternative explanation for the ABA's secrecy: Law schools probably want to keep the magnitude of some expenditures--especially those relating to law profs' salaries--hidden from alums and other potential donors. Better, from a fund-raising point of view, to draw a veil over law school expenditures and instead focus on revenue shortfalls.
Whatever the reasons for the ABA's reticence, I hope they do not dissuade it from publicly disclosing law schools' financial data. As I've explained to David, it would suffice for purposes of replicating the USN&WR rankings to combine the categories described above into three numbers for each school: Total Instruction and Administration; Library Operations plus Law School Miscellaneous Expenses; and Tuition Reimbursement, Grants, and Loan Forgiveness plus Indirect Financial Aid. (The ABA would also have to release that data from each of the last two years.) That sort of obscuring tactic might help assuage concerns that disclosing the data will eat into the revenues that the ABA gets from its take-offs and that law schools get from ignorant donors. David has told me he will look into the issue. For now, we rankings geeks can only wait with bated breath.
[Crossposted to MoneyLaw.]
Thursday, September 21, 2006
Mass HIV Testing: The Numbers
Today’s lesson plan included teaching my students about Bayes’ Rule and its application to disease and drug testing. Coincidentally, the first news article on MSN.com this morning (which I found about an hour before class) was on the CDC’s recent recommendation to routinely test everyone between 13 and 64 for HIV.
Hoping for a concrete and topical application, I tried to get estimates of the relevant numbers. Finding HIV prevalence was easy enough; according to the latest estimates, about 1 million Americans have HIV, of whom about a quarter don’t know it. If we assume all infected persons are in the 10-64 age range (a group of 215 million people), the prevalence rate for that group is about 0.47%. But what about false positive rates? Those turned out to be harder to find.
The good news is that HIV tests are usually administered sequentially: if the first test comes up positive, a second (presumably more accurate) test is performed, and only if both tests come up positive is the subject presumed to be infected.
The bad news is that the first round tests (like ELISA/EIA and OraQuick) have a false positive rate of about 0.2%. That doesn’t sound bad, until you realize (based on the prevalence numbers above) that if we tested everyone aged 10-64, nearly 30% of those who tested positive on the first round would actually be uninfected. That’s about 430,000 people. (I’m assuming a zero false negative rate for simplicity.)
Fortunately, many of those people would eventually be ruled out by the subsequent test. But how many false positives would remain? This is the part that came as something of a surprise to me: we just don’t know. To calculate the answer, we’d need the false positive rate of the Western Blot test, which is the test used in the second round. But the Western Blot is widely used as the definition of what it means to be infected. When they calculate the false positive rates of other tests – like those used in the first round – they use the Western Blot as the standard of truth. Yet apparently there are good reasons to question the infallibility of the Western Blot; see this 1993 paper, for example. I couldn’t find anything more recent on the reliability of this test. Does anyone know where I can find an estimate of the Western Blot’s false positive rate, or better yet, the rate at which uninfected persons test positive for both the initial test (usually ELISA) and Western Blot? (Don’t point me to the Burke study, because that’s the one sharply criticized in the article cited above.)
The Shorter New Yorker
Hey, remember that New Yorker article on neuroeconomics? You know, the one the econobloggers were talking about, but you never had the time to read?
Lucky for you, there's a blog that summarizes New Yorker articles in haiku form! Here's their version of the neuroeconomics article:
Economists wantI don't generally read the New Yorker, so I can't say whether the other haiku-summaries are accurate. But this one's dead-on! (You do, however, have to pronounce "aren't" as a single syllable to fit the haiku format.)
To scan your brain, find why you
Aren't more rational.
Tuesday, September 19, 2006
Perspective on Terrorism
At Cato Unbound, in response to a lead essay by John Mueller, Clark Kent Ervin rejects the comparison of the death rate from terrorism to the death rates from bee stings, lightning, drowning, etc. Ervin’s argument is so unpersuasive (to me) that I think it deserves a fisking.
It is undoubtedly true that Americans are far more likely to die from “bee stings, lightning, or accident-causing deer” than terrorism, but so what? ... This statistical argument implicitly equates deaths from bee stings, lightning or close encounters with marauding deer with deaths from terrorism.They should be equated. It doesn’t make sense to spend a billion dollars to prevent one death by terrorism if the same billion dollars could prevent ten or a hundred deaths by other causes. Death is death. It can be sensible to give different treatment to deaths by different causes, but only if there’s some reason to think one cause of death is more easily deterred than another. More on that later.
But, a moment’s reflection should be more than sufficient to show why this is fallacious.Yup, it’s true: we react differently to terrorism than to other threats. But is the different reaction justified? Ervin is begging the question here. Mueller and others have argued persuasively that we have overreacted to terrorism. Pointing to evidence of the overreaction only strengthens the point.
First of all, tragic as it may be, we instinctively feel less bad about someone’s dying from a bee sting than about someone’s dying from a terror attack. Why? Well, a bee sting is an act of nature, not an act of man. A bee, presumably anyway, does not intend to cause the death of whomever he stings. A bee does not, presumably, have an “agenda” when he stings someone. There is no intention to affect public policy, and no intention to terrorize or otherwise discomfort anyone other than the person stung. These distinctions account for why, though every single day, significantly more people die from car accidents or cancer than terrorism, any deaths any day from another terror attack here at home would surely engender bold face, round-the-clock headline news coverage, while a greater number of deaths on that day by car accidents, bee stings, or cancer would not.
Ervin’s right that intentions matter. We instinctively get angrier at a murderer than at a killer bee. But when does it make sense to indulge our instincts? A hypothetical: If you had to choose between (a) stopping a single murder in progress and (b) moving a station wagon full of children out of the path of a falling tree, which would you choose? The only sensible reason to choose the former would be that allowing the murder would encourage more murders, by this villain or others. So the justification of our instinct to treat intentional deaths differently is that intentional deaths are often more easily deterred, because a person can choose not to kill while a killer bee cannot. But when that ceases to be the case – when our prevention efforts generate severely diminishing returns – it’s time for us to let reason trump our instincts.
Furthermore, though we tend to take such deaths in stride, we still do everything we reasonably can to minimize deaths from car accidents (mandatory speed limits, seat belts, air bags, and kiddie car seats, for example), bee stings (sensible people don’t stick their heads or hands in bee hives!) and cancer (the FDA warning on cigarette packs, the ban on smoking in public places, the anti-smoking advertising campaign on TV, etc.). If we do everything we reasonably can to prevent deaths that, in the scheme of things, are far more natural and ordinary, shouldn’t we do everything we reasonably can do to prevent deaths by the unnatural and extraordinary means of terrorism?“Reasonable” is too vague a term. We certainly don’t do everything conceivable to prevent bee stings, drownings, cancer, etc. There’s always more we could do, but some efforts aren’t worth it. A better rule is to do everything cost-effective to prevent deaths. That means asking hard questions about the both the severity of the problem and the costliness of prevention. These are just the kind of calculations that fear-mongering discourages.
Second, the statistical argument misses the fact that, though the chances of a terrorist attack are, indeed, relatively small, the consequences are larger than they would be if the same number of people were killed in some natural way or by means of “garden variety” murder. The economic toll of 9/11 numbered in the billions. The psychic toll was incalculable. As Mueller points out, the impact on civil rights and civil liberties, which he rightly values highly, has likewise been huge.This isn’t just begging the question; it could be a textbook illustration of the fallacy. The economic toll of 9/11 was in the billions of dollars in large part because of our reaction to it. And the impact on our civil liberties was entirely because of our reaction to it. Remember, the whole question in this debate is whether we should continue to sacrifice money and freedom to the cause of preventing terrorism – so it’s circular reasoning of the highest order to use those very sacrifices as justification for doing more.
And, by showing that the world’s lone superpower can be brought low by 19 guys armed with box cutters, the success of the 9/11 plot can be said to have imperiled our national security by emboldening individual terrorists and nation states who previously regarded us as all but invulnerable.I’m not sure the terrorists ever thought we were invulnerable. But if they did, then America was benefiting from an illusion; we were never invulnerable, we only appeared to be. Now the genie’s out of the bottle. Actual invulnerability is not an option and never was. Sensible policy now requires weighing benefits and costs of enforcement at the margin. The first step in that process is putting the real magnitude of terrorist threats in perspective.
Monday, September 18, 2006
Fuss Budgeting
Today’s Ask Amy column revisits a topic from a few weeks ago: the husband who shirks on his household duties. A reader takes Amy to task for her husband-accommodating advice:
DEAR AMY: Your advice to "Frustrated," regarding her husband's refusal to do the housework properly, was utterly abysmal.So Amy advises a return to the bargaining table, while K from Illinois recommends a threatened walk-out. Between those options, I’m with Amy. After all, the current division of duties might not split the gains from trade evenly, as the husband apparently has a higher tolerance for filth (or higher cost of domestic exertion).
Refusing to finish the job – leaving dishes unwashed, furniture and rugs out of place, etc. – is the same passive-aggressive trick children use in an attempt to get out of chores, and it should be dealt with the same way.
"Frustrated" shouldn't tolerate it for a minute. She should not excuse him in any way.
He's an adult, and he should act like it; it doesn't take two X chromosomes or "high standards" to finish the dishes, put back furniture and rugs after vacuuming or put away the laundry, and it shouldn't take Frustrated's constant attention and reminders either.
If "Frustrated" refuses to let up the pressure, her husband will complain that she's being an unreasonable old nag for expecting him to act like a responsible adult, and if she does let up, he gets to continue being amazingly childish and stick her with all the grinding, constant work.
I recommend a firm conversation in which Frustrated points all this out to her husband, and if his behavior doesn't change, dump him. Life's too short. – K, in Illinois
DEAR K: Many readers loathed my advice to "Frustrated," which was to "re-examine the chore wheel" in their house. I would hope that with some compromises, both parties might be able to work out how these chores can get done - to an agreed-upon standard....
Your advice that "Frustrated" should dump her husband because he doesn't do household chores up to her standard shows that you don't place much value on marriage.
Once the bargaining is done, I recommend the creation of separate budgets, as suggested by Megan Non-McArdle in a different context (link via Tyler). Each partner should maintain a private fund (Megan recommends 1/3 of one’s income) that’s distinct from the common fund (the other 2/3). The husband is responsible for fulfilling his assigned duties, either by performing them directly or paying for domestic help out of his private fund. Likewise for the wife’s duties and private fund. Each partner will have to make their own trade-off between leisure and consumption, without the option of foisting half the cost of domestic help on the other partner by draining the common fund.
If there’s still an enforcement problem because the husband neither performs the duties nor arranges for domestic help, then simply require a greater contribution by the husband each month to the common fund. The added amount should be sufficient to pay for the help required to fulfill the husband’s agreed-upon duties. The wife may then (a) withdraw the extra money to pay for domestic services or (b) transfer the extra money into her private account and do the tasks herself. Of course, option (b) would effectively turn the wife into a maid-for-hire, but only if she chose to exercise the option.
Saturday, September 16, 2006
Free Lunch Advice
A letter from Thursday’s Ask Amy column:
DEAR AMY: There is a situation I am not good at handling that involves my 12-year-old son and his friends.Amy advises Debbie to talk to the other kids’ mothers, despite this approach already having failed with at least one mother. Talk is cheap. Here’s what I would have said:
Often, they arrange to come to my house and then they head to the deli or pizza place for lunch. They enjoy this activity, as it makes them feel a little independent.
These children know beforehand that this is the plan. However, they arrive with no money, or with only a dollar or two. My son is then left to pay for their food, often after they have ordered it.
I have asked my son to tell his friends before they arrive to be sure they bring money, but he feels uncomfortable doing so.
I have even mentioned to one mother that they are planning to go up to the shopping center for lunch, but the child arrives with empty pockets. I don't know why the parents don't make sure their children have enough money to cover their own expenses when they eat out by themselves.
I usually reimburse my son for the extra expense, as he doesn't get much allowance, but this annoys me and puts a dent in my budget. How would you handle this? – Debbie
Neither your son, nor his friends, nor their parents have any incentive to change their behavior. They’re all getting a free ride at your expense – including your son, who gets to look generous in front of his buddies. And you’re doing them all a disservice by letting them think there really is such a thing as a free lunch.
Stop reimbursing your son when he treats his friends to lunch. Give him a fixed allowance (or one that varies with his chores or grades or what have you), and then let him decide how to spend it – on his friends or other things he wants. You can increase his allowance if you like, but under no circumstances should you make the amount contingent on how often he pays for his friends’ meals. Let your son deal with the trade-offs necessitated by living within a budget. He might choose to eat out less often, and he’ll probably choose to treat his friends less often. This will force his friends to learn the same lesson – unless, of course, their parents make the same mistake you did. Either way, it won’t be your problem anymore.
Friday, September 15, 2006
Validity of SSRN's "# of New Papers" Measure
I earlier related the kerfuffle that followed Chapman Law School's acknowledgement of its recent success in the SSRN's "# of New Papers" measure. A skeptic might conclude that Chapman drew criticism primarily because it "acted above its station," daring to trumpet that it had bested the champions of USN&WR's law school rankings. Perhaps so. I find more interesting, however, the claim that Chapman erred in describing the SSRN's "# of New Papers" measure as a "key scholarly output ranking." Outlandish puffery or accurate reporting?
Bernard Black and Paul Caron consider the utility of SSRN's measures in their paper, "Ranking Law Schools: Using SSRN to Measure Scholarly Performance," 81 Ind. L. J. 83 (2006). They argue that both the number of posted papers and the number of downloads “play a valuable role in the rankings tapestry," offering new and potentially more accurate alternatives to the USN&WR rankings.
Black and Caron observe, moreover, that measures of the number of papers posted to SSRN arguably offer a more accurate measure of genuine scholarship than measures of the number of papers downloaded from the network. Why so? Because the latter offers more opportunities for gaming the system. Though I again admit that I'm not purely disinterested in the matter, I thus conclude that the SSRN's "# of New Papers" does plausibly qualify as a key measure of scholarly output.
Granted, none of the SSRN's rankings work perfectly. In particular, as I observed in my earlier post, the "# of New Papers" measure could stand some improvement. Black and Caron put it this way: “The SSRN measures have important field and other biases. Still, they offer up-and-coming schools a way to ‘show their stuff,’ long before the US News rankings respond to the school’s improvement. That alone is an important contribution.”
[Crossposted to MoneyLaw.]
Washington Stock Exchange Takes Off
The Washington Stock Exchange (WSX) has successfully launched! Because it uses market processes to predict electoral and legislative events, WSX promises to make political news more accurate and fun. Soon, reporters might routinely sprinkle their stories with statements like, "Traders on the Washington Stock Exchange still predict that Republicans will hold onto to the House, but the odds just got longer." As an alternative to polls or talking heads, WSX offers the virtues of blogospheric decentralization plus hard numbers.
Want to know whether or not Arnold Schwarzeneger will be reelected California's governor? Check out the GVARSC06 stock. It currently trades at W$96.08/share, indicating that most traders think he'll win. If you think that too optimistic, you can express your opinion by shorting GVARSC06. Guess correctly and you'll win both $W (the play-money used on WSX) and, not incidentally, bragging rights.
I proudly to serve on the exchange's advisory board. WSX promises both to do well and to do good. Visit WSX, and get the news of the future, today!
[Crossposted to Technology Liberation Front.]
Thursday, September 14, 2006
Social Drinking and Social Capital
A new study by Ed Stringham and Bethany Peters shows that men who drink alcohol earn 10% more than those who don't; women who drink earn 14% more than those who don't. Also, men (but oddly, not women) who visit a bar at least once a month earn an additional 7%. Here's Stringham's explanation, which makes sense to me:
"Social drinking builds social capital," said Stringham, an economics professor at San Jose State University. "Social drinkers are networking, building relationships, and adding contacts to their Blackberries that result in bigger paychecks."A few reactions. First, one implication is that taxes on alcohol could be taxes on the formation of social capital -- which can have deleterious effects on both individual and overall productivity. As the article says, the study "suggests that the growing wave of anti-alcohol legislation at state and local levels will have harmful effects on local economies and individual finances." A possible response to this claim is that the social-drinking boost results not from the alcohol per se, but from the social context in which people drink (and are sometimes expected to do so). So if taxes succeeded in reducing or eliminating alcohol consumption, the social contexts might persist -- or re-form in other locations -- and continue to do their job. That may be partially true, but I suspect alcohol itself performs a crucial "lubricating" function, allowing people to let down their guard, meet more people, and get to know each other better. Alcohol-free social contexts would therefore generate lower levels of social capital.
Second, while the 7% earnings boost associated with visiting a bar at least once a month is good evidence for the social capital hypothesis, it also makes the 10-14% boost from merely drinking somewhat mysterious. The bar-visiting variable is supposed to control for the effect of drinking in social contexts. But perhaps some of the relevant drinking takes place in other locations, such as non-bar restaurants and workplace lounges; the boost from such drinking would be captured by the drinking-at-all variable. Or perhaps a more precise variable measuring the frequency of bar visits (rather than the dummy varible used by the study) would capture more of the social capital formation effect, leaving a smaller effect from merely drinking.
Third, I wonder why the bar-visiting boost applies only to women. The paper doesn't speculate much about this, saying only, "Perhaps, women increase social capital apart from drinking in bars." This might dovetail with my drinking-in-other-locations speculation above.
Fourth, I wonder if differences in drinking behavior might result in different earnings for men and women. The famed "74 cents on the dollar" male-female earnings gap is flawed, because it doesn't take account of all the factors that differ between men and women (such as years of education and labor force loyalty). But even once these explanatory factors are included in regressions, a smaller gender gap remains. If men drink more than women, that could be another factor that helps explain the gap.
Wednesday, September 13, 2006
Shocking News
According to a new study (registration required) authored by Dr. Drew Pinsky of "Loveline" fame, celebrities are more narcissistic than the general public. No big surprise there. More interesting is which celebrities are the most narcissistic: those most lacking in actual skills. Musicians had low narcissism ratings relative to other celebrities, for instance. The most narcissistic celebs? Reality TV contestants. Now I know you're shocked.
I wonder how bloggers would fare on the narcissism scale? Or to put it another way, what about me?
Ugly Furniture Theory
Sometime last year, they renovated the faculty lounge at my college. The lounge is much more pleasant than it used to be, with sturdy and surprisingly comfortable new furniture. There's just one problem: the furniture is all ugly as sin. Burnt oranges and olive greens fused in hideous herringbone patterns. Really, truly awful.
Does the person who made the purchases have really lousy taste? Maybe. But thinking back, I realize that I've hardly ever seen attractive furniture in faculty lounges, dormitories, and other institutional settings. This is a general phenomenon. And I don't think it's just cost-cutting, because as I said, the furniture in question is sturdy and comfortable.
So why is institutional furniture ugly? Here's my hypothesis: Theft deterrence. Furniture in these semi-public areas can be easily stolen. But the offensive color patterns assure that the furniture will match hardly anyone's home decor. This is much cheaper than chaining the furniture to the ground, posting guards, or ordering new furniture any time something gets stolen.
SSRN v. USN&WR v. Truth
Chapman University School of Law did very well in the most recent Social Sciences Research Network (SSRN) rankings. Chapman topped all other law schools in the number of new papers posted in the last 12 months, and ranked 71 out of the 353 schools in the total number of downloads over that same period. So much, so good. Chapman apparently ruffled some feathers, however, by publicly acknowledging its success.
Joseph A. Hodnicki, Associate Director for Library Operations at the University of Cincinnati Law Library, characterized Chapman's announcement as "an amazing display of hubris . . ." Prof. Dan Markel, of FSU Law School, agreed, praising Hodnicki's "super post puncturing Chapman School of Law's inflated claim to outperform Yale, Harvard, etc. . . ." And, yet, Chapman plainly did outperform its counterparts in terms of what the SSRN rankings measure. What's the problem, then?
The SSRN's "# of New Papers" measure does not discriminate between old and new publications. Hodnicki complains that Chapman aced that measure because some of its faculty members recently posted on SSRN papers they published years ago. (Hodnicki seems more comfortable with Chapman's top-100 debut in the SSRN's "total downloads" measure.) I agree with Hodnicki insofar as he thinks the SSRN should do a better job of gauging law schools' scholarly performance. Indeed, I'll go farther: I'd bet that the SSRN defines "# of New Papers" as it does in order to encourage the posting of old papers, which helps to increase the size and value of the SSRN database.
The SSRN's "# of New Papers" measure thus merits criticism—of SSRN. Chapman perhaps committed a gaucherie, granted, in trumpeting its success. And perhaps, as a member of Chapman's faculty, I lack a sufficiently objective view of the matter. It seems to me, though, that Chapman caught flack for truthfully reporting that it did a good job at sharing its scholars' work with the world. Why criticize Chapman for that?
Hodnicki tries to discredit Chapman's achievement by citing the school's low reputation score in the U.S. News & World Report rankings. As I've explained elsewhere, though, Chapman's (presently) low reputation score in the USN&WR rankings says more about law school ranking games than it does the school's actual qualities. The most USN&WR recent rankings credited Chapman with:
- a median LSAT (156) above that of USN&WR's third tier (155);
- an average GPA (3.31) closer to the third tier's (3.39) than the fourth's (3.22);
- an employment at nine months figure equal to the third tier's (91%);
- an acceptance rate (30.2%) better than the third tier's median (35.0%); and
- a Bar pass/jurisdiction figure (109.3%) better than the second tier median (103.9%).
I'm happy to join Hodnicki and anyone else in casting a skeptical eye on the SSRN rankings. Let's aim our fire at the SSRN, though, rather than on the schools it ranks. And let's not assume that USN&WR's reputation scores offer a more accurate measure of law school quality.
Update: See this more recent post for an analysis of the validity of SSRN's "# of New Papers" measure.
[Crossposted to MoneyLaw.]
