Astro says "Ruh Ro!"

Jason Whitlock mentions something that must not be mentioned (via Matt Mosley):

Hip hop athletes are being rejected because they're not good for business and, most important, because they don't contribute to a consistent winning environment. Herm Edwards said it best: You play to win the game.

I'm sure when we look up 10 years from now and 50 percent — rather than 70 percent — of NFL rosters are African-American, some Al Sharpton wannabe is going to blame the decline on a white-racist plot.

Here's a picture of Jason, in case you were wondering ...

He continues:

A little-publicized fact is that the Colts and the Patriots — the league's model franchises — are two of the whitest teams in the NFL. If you count rookie receiver Anthony Gonzalez, the Colts opened the season with an NFL-high 24 white players on their 53-man roster. Toss in linebacker Naivote Taulawakeiaho "Freddie" Keiaho and 47 percent of Tony Dungy's defending Super Bowl-champion roster is non-African-American. Bill Belichick's Patriots are nearly as white, boasting a 23-man non-African-American roster, counting linebacker Tiaina "Junior" Seau and backup quarterback Matt Gutierrez.

The markets say that one of these teams will win the Superbowl, with 55% of the aggregate probability.

Is the Bernanke Put in force?

The Bernanke Put is a conceptual extension of the Greenspan Put, which refers to the former chairman's predilection for easing money whenever trouble or even just storm clouds appeared on the financial market horizon. (Apparently, Greenspan gets up to $150,000 per speaking engagement these days, so Ben ought to respond to such incentives as well).

When the Fed cut their target rate by 50 basis points, it seemed like a "one and done". I was one of the lone voices in the wilderness thinking a 25 bp increase was better for the long term, but as a person employed in a sector where layoffs and pay cuts are imminent, I am guilty of protesting little.

Now, the market is expecting another 25 bp cut when the FOMC announces on Oct 31. Using Fed funds futures data, the probability of a 25 bp cut have increased from 38% to 72% in the last 48 hours. Bernanke & Co. seem to be citing domestic uncertainty as the largest factor, ahead of inflation (which is low), a weakening US Dollar and other international forces.

I think this contract is priced pretty close to October 16th's fair value, although it's not trading liquid:

There is no "we" in "I"

The most excellent Arnold Kling:

Most economists favor the free market, with reservations. [I reject] the reservations. If John and Mary are free individuals, and John trades with Mary, then John and Mary both are better off. End of story.

Most other economists believe in the need for government intervention. Like many non-economists, they talk about government policy in terms of we. We must, we have to, we need, we should, etc.

... you have to lose the we. When people use we in today's politics , they are doing two things.

1. Appealing to a moral entity that stands apart from and above John, Mary, or any other individual

2. Treating government as the embodiment of that higher moral entity

I should emphasize that "lose the we" does not mean that one should be selfish or uncompassionate or uncaring. Instead, it means that you should channel your impulse to do good by actually doing good. Saying we and advocating government policy is instead a way of feeling good. It is an arrogant, demagogic pose.

Governments lay claim to legal authority to collect taxes or impose restrictions on trade across borders. But there is no moral significance to a border. If John, Mary, and Sam all lived within the same country, the question of whether free trade is good for "us" would never arise. John's right to trade with Mary without interference on behalf of Sam would not be questioned. It is hard to see how moving Mary across a border changes the situation from a moral or economic standpoint.

* * *

One of the variables that is correlated with health status is Unmentionable. This Unmentionable Factor affects life expectancy, income, international differences in the standard of living, and many other phenomena. Garett Jones is a young economist who incorporates The Unmentionable into his research. I describe a recent paper of Jones as saying that "people with high levels of The Unmentionable are better able to co-operate with one another." Not surprisingly, Jones has just joined the faculty at George Mason.

Whooah, we're halfway there

Livin' on a prayer
Take my hand and we'll make it, I swear ...



We've got to hold on ready or not
You live for the fight when its all that you've got

Remember to ask your doctor about

false positives. Arnold Kling and Megan McArdle and Derek Lowe have more.

The most important prediction market in this life is your life. Don't let a doctor who lacks basic probability skills distort it.

Core inflation 0.2% for Sep; 2.1% year-over-year

I begged you.

UPDATE: So does Tim Kane.

It can take 1,700 gallons of water to produce 1 gallon of corn ethanol

Madness, in today's WSJ:

Heavily subsidized and absurdly inefficient, corn-based ethanol has already driven up food prices. But the Senate's plan to increase production to 36 billion gallons by 2022, from less than seven billion today, will place even greater pressure on farm-belt aquifers.

Ethanol plants consume roughly four gallons of water to produce each gallon of fuel, but that's only a fraction of ethanol's total water habit. Cornell ecology professor David Pimentel says that when you count the water needed to grow the corn, one gallon of ethanol requires a staggering 1,700 gallons of H2O. Backers of the Senate bill say that less-thirsty technologies are just around the corner, which is what we've been hearing for years.

Ethanol's big environmental footprint is not limited to water, because biofuels like ethanol are highly inefficient. In September, the Chairman of the OECD's Roundtable on Sustainable Development released a report entitled, "Biofuels: Is the Cure Worse than the Disease?" Authors Richard Doornbosch and Ronald Steenblik compared the power density of different energy sources, measured in energy production per unit of the earth's area. Oil -- because it requires only a narrow hole in the earth and is extracted as a highly concentrated form of energy -- is up to 1,000 times more efficient than solar energy, which requires large panels collecting a less-concentrated form of energy known as the midday sun.

But even solar power is roughly 10 times as efficient as biomass-derived fuels like ethanol. In other words, growing the corn to produce ethanol means clearing land and killing animals on a massive scale, or converting land from food production to fuel production. Peter Huber of the Manhattan Institute says that the best-case scenario promoted by ethanol cheerleaders will actually cause the greatest environmental disaster. If people can actually refine cheap, low-maintenance production techniques that don't require huge water supplies, Mr. Huber predicts a world-wide leveling of forestland as farmers turn vegetation into fuel.

Slowly but surely, these problems are beginning to alert public opinion to the huge costs of force-feeding corn ethanol as an energy savior. The ethanol lobby is still hoping it can keep all of this under wraps long enough to shove one more big mandate through Congress, but the Members need to know the problems they'll be creating. We hope that House conferees, who did not include a new mandate in their energy bill, insist that any final bill is ethanol-free.

Here is one ethanol alternative that might work out better. Here is more on solutions being more problematic than the problem being addressed.

UPDATE: Daniel Botkin has more science (vs. global warming religiosity):

The key point here is that living things respond to many factors in addition to temperature and rainfall. In most cases, however, climate-modeling-based forecasts look primarily at temperature alone, or temperature and precipitation only. You might ask, "Isn't this enough to forecast changes in the distribution of species?" Ask a mockingbird. The New York Times recently published an answer to a query about why mockingbirds were becoming common in Manhattan. The expert answer was: food -- an exotic plant species that mockingbirds like to eat had spread to New York City. It was this, not temperature or rainfall, the expert said, that caused the change in mockingbird geography.

You might think I must be one of those know-nothing naysayers who believes global warming is a liberal plot. On the contrary, I am a biologist and ecologist who has worked on global warming, and been concerned about its effects, since 1968. I've developed the computer model of forest growth that has been used widely to forecast possible effects of global warming on life -- I've used the model for that purpose myself, and to forecast likely effects on specific endangered species.

I'm not a naysayer. I'm a scientist who believes in the scientific method and in what facts tell us. I have worked for 40 years to try to improve our environment and improve human life as well. I believe we can do this only from a basis in reality, and that is not what I see happening now. Instead, like fashions that took hold in the past and are eloquently analyzed in the classic 19th century book "Extraordinary Popular Delusions and the Madness of Crowds," the popular imagination today appears to have been captured by beliefs that have little scientific basis.

Some colleagues who share some of my doubts argue that the only way to get our society to change is to frighten people with the possibility of a catastrophe, and that therefore it is all right and even necessary for scientists to exaggerate. They tell me that my belief in open and honest assessment is naïve. "Wolves deceive their prey, don't they?" one said to me recently. Therefore, biologically, he said, we are justified in exaggerating to get society to change.

Scary baseball tonight

I'm trembling in the Wake.

Last time I saw him pitch was at Yankee Stadium in 2003 ALCS. Aaron Boone's walkoff HR landed about 40 feet from my seat.


UPDATE: Amalie Benjamin brings up the Kielty vs. Drew debate, too.

Interactive visual guide to Federal expenditures

Pretty cool (via Sunlight Foundation).

Peter Bottke traces the roots of Mechanism Design

back to the classical school of economics:

Yesterday Leonid Hurwicz, Eric Maskin and Roger Myerson won the Nobel Prize in Economic Science for their pioneering work in the field of "mechanism design." Strangely, some have used this occasion to disparage free-market economics. But the truth is the deserving recipients owe a direct debt to free-market thinkers who came before them.

Mechanism design is an area of economic research that focuses on how institutional structures can be manipulated by changing the rules of the game in order to produce socially optimal results. The best intentions for the public good will go astray if the institutional arrangements are not consistent with the self-interest of decision makers.

While we celebrate the brilliance of Messrs. Hurwicz, Maskin and Myerson, we should also remember that Hayek's challenge provided their inspiration. Hayek concluded that the private-property rights that come with the rule of law, freedom of contract, and freedom of association is still the one mechanism design that mobilizes and utilizes the dispersed information in an economy. Furthermore, it does so in a way that tends to capture the gains from trade and innovation so that wealth is continually created and humanity is made better off.

Great quote for the prediction markets faithful

It's the same each time with progress. First they ignore you, then they say you're mad, then dangerous, then there's a pause and then you can't find anyone who disagrees with you.

-- Tony Benn

Pats continue

their streak.

Today is the 20th Anniversary of Black Monday

The 23% drop in stock market value in October 1987 was the largest ever single-day loss in history.

Jan 1, 2008 is Baby Boomer Retirement Entitlement Day

Kathleen Casey-Kirschling, a retired Maryland teacher who was born at 12:00:01 a.m. on Jan. 1, 1946, applied this afternoon for early retirement benefits. She'll become eligible to receive benefits in January when she turns 62.

Like we say in the gym: Feel The Burn. (Via Paul Kedrosky)

Other notables who may be eligible this coming January include Diane Keaton and Dolly Parton.

Assuming that the Baby Boom ended with a whimper during the Cuban Missile Crisis, some of the June 1963 births, just eight months later, include Johnny Depp and Helen Hunt.

Even more "Science Is Religion": The Goran

Tim Blair:

ABC News reporter David Wright wonders at those who would defy a small panel of Norwegians:

Even the Nobel Prize is not going to be enough to silence the naysayers ...

It’s called dissent, pal, and for your information it happens to be the greatest form of patriotism. Among the sayers of nay remains Mark Steyn:

A schoolkid in Ontario was complaining the other day that, whatever subject you do, you have to sit through Gore’s movie: It turns up in biology class, in geography, in physics, in history, in English.

Whatever you’re studying, it’s all you need to know. It fulfils the same role in the schoolhouses of the guilt-ridden developed world that the Koran does in Pakistani madrassas.

In the West, they study the Goran.

In actual global warming news, the GISS Land-Ocean temperature for September plunged to +49 Celsius (above mean), the lowest in more than a year. Go make a trade at the Global Warming Exchange (link also embedded in the charcoal panel in the upper right of this blog).

UPDATE: Interesting WSJ piece on Climate Geo-Engineering:

Expressed in terms of the metaphor of the "greenhouse effect," it would work like this: Geo-engineering would put a "parasol" over the greenhouse to deflect 1% or 2% of the sunlight that now affects the Earth. Scattering this small fraction into space would reduce global warming. In the language of climate science, we would increase by a few percent the Earth's "albedo" -- the ratio of incoming sunlight reflected back into space relative to the total inbound from the sun.

We know it would work because it happens naturally all the time. Clouds routinely deflect sunlight and thereby cool the Earth. Volcanoes -- when they erupt and inject millions of tons of fine particulate material into the stratosphere (mostly sulfate aerosols) -- have also cooled large regions of the globe. Mount Pinatubo in the Philippines erupted in 1991 and cooled most of the Earth for a few years, erasing for a short time roughly half of the global warming that took place during the entire 20th century.

The best Maureen Dowd column ever

cuz, it was written by Stephen Colbert:

Surprised to see my byline here, aren’t you? I would be too, if I read The New York Times. But I don’t. So I’ll just have to take your word that this was published. Frankly, I prefer emoticons to the written word, and if you disagree :(

I’d like to thank Maureen Dowd for permitting/begging me to write her column today. As I type this, she’s watching from an overstuffed divan, petting her prize Abyssinian and sipping a Dirty Cosmotinijito. Which reminds me: Before I get started, I have to take care of one other bit of business:

Bad things are happening in countries you shouldn’t have to think about. It’s all George Bush’s fault, the vice president is Satan, and God is gay.

There. Now I’ve written Frank Rich’s column too.

So why I am writing Miss Dowd’s column today? Simple. Because I believe the 2008 election, unlike all previous elections, is important. And a lot of Americans feel confused about the current crop of presidential candidates.

For instance, Hillary Clinton. I can’t remember if I’m supposed to be scared of her so Democrats will think they should nominate her when she’s actually easy to beat, or if I’m supposed to be scared of her because she’s legitimately scary.

Or Rudy Giuliani. I can’t remember if I’m supposed to support him because he’s the one who can beat Hillary if she gets nominated, or if I’m supposed to support him because he’s legitimately scary.

Our nation is at a Fork in the Road. Some say we should go Left; some say go Right. I say, “Doesn’t this thing have a reverse gear?” Let’s back this country up to a time before there were forks in the road — or even roads. Or forks, for that matter. I want to return to a simpler America where we ate our meat off the end of a sharpened stick.

This is eerily reminding me of this.

Parasites Attack Future Leaders of America!!!

According to IvyGate.

Nice wrap-up of the Nobel Prize in Economics

here. I made $6 trading the contracts! Liquidity just wasn't there.

Michael Kinsley applies Greenspan's Aristotelianism on Greenspan

and gets interesting results:

You could describe what Volcker did as officially accepting the theory of monetarism, or as contracting the supply of M1. Whatever. But put bluntly, what he did was to purposely engineer the deepest decline since the Great Depression in order to wring inflation — and the expectation of future inflation — out of the economy. This set the stage for the generation of prosperity that Greenspan presided over.

Greenspan deserves enormous credit for staying the course. And yet — as he himself tells it in this book — he also helped Ronald Reagan in 1980 to demagogue economic policy as a way of attacking Jimmy Carter. He wrote a speech for Reagan blaming Carter for “one of the major economic contractions in the last 50 years.” Reagan changed that to “a new depression — the Carter depression.” Within a week, this had turned into: “A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his!” Greenspan says, “What attracted me to Reagan was the clarity of his conservatism.”

As Greenspan surely knows but doesn’t admit, Reagan achieved this appealing clarity by ignoring the “objective reality separate from consciousness” that Greenspan used to treasure. And Greenspan does the same. Early in Reagan’s administration, as a member of the president’s economic advisory board, he supported Reagan’s tax cuts “if spending was restrained” and if the Fed kept money tight. Volcker’s Fed continued to do its bit but Reagan, famously, did not, leading to enormous deficits. Greenspan says, “Congress shied away from the necessary restraints on spending.” But the data — those good old data — show that the budgets Reagan proposed were only slightly smaller than the budgets Congress eventually passed.

The data also show that George W. Bush has done a better job than Reagan did at controlling government spending. Spending has averaged 19.7 percent of G.D.P. during Bush’s first six years — Iraq war and all — while it was 22.4 percent during Reagan’s eight years. (If you assume a year’s lag between policy and result, it’s 22.3 percent.)

Half this book — the half that is getting no attention — isn’t memoir: it’s what Greenspan calls “detective stories”: just Alan riding the data wherever it takes him, having the time of his life, trying to solve all the world’s economic puzzles, like why it took so long for computers to affect productivity, why incomes are becoming more unequal and what to do about it, the energy crisis, immigration, entitlements and so on. Not all of this is wildly original, but there are great nuggets and aperçus. And it is all written in English and fully comprehensible.

Gore had better kayak over to Oslo

The latest bit of genius from John Tierney:

I don’t want to dampen the celebration over Al Gore’s Nobel Peace Prize, but I wonder if this is, as they say, a “teachable moment.” Should he skip the trip to Oslo, Norway, on a fuel-burning jet and instead accept the award by teleconference?

I realize two plane flights would make little difference to Mr. Gore’s carbon footprint (certainly by comparison with the much-publicized utility bills for his home). But as he pointed out in “An Inconvenient Truth”:

Flying is another form of transportation that produces large amounts of carbon dioxide. Reducing air travel even by one or two flights per year can significantly reduce emissions. . . . If your airplane travel is for business, consider whether you can telecommute instead.

Should Mr. Gore follow his own advice here? You could argue that the publicity generated by his presence in Oslo would do more to combat global warming than the reduced emissions from trip. But you could also argue that the symbolism of staying home would send an even more powerful message about the need for everyone to conserve energy. He could generate plenty of publicity by delivering the Nobel lecture through a video link and letting the prize be sent to him on an energy-efficient ship.

What about Lomborg's Peace Prize

(Via David Boaz):

This year's Nobel peace prize justly rewards the thousands of scientists of the United Nations climate change panel (the IPCC). These scientists are engaged in excellent, painstaking work that establishes exactly what the world should expect from climate change.

The other award winner, former US vice-president Al Gore, has spent much more time telling us what to fear. While the IPCC's estimates and conclusions are grounded in careful study, Gore doesn't seem to be similarly restrained.

Gore concentrates above all else on his call for world leaders to cut CO2 emissions, yet other policies would do much more for the planet. Over the coming century, developing nations will be increasingly dependent on food imports from developed countries, not primarily as a result of global warming, but because of more people and less arable land in the developing world.

The number of hungry people depends much less on climate than on demographics and income. Extremely expensive cuts in carbon emissions could mean more malnourished people. If our goal is to fight malnutrition, policies like getting nutrients to those who need them are 5,000 times more effective at saving lives than spending billions of dollars cutting carbon emissions.

Likewise, global warming will probably slightly increase malaria, but CO2 reductions will be far less effective at fighting this disease than mosquito nets and medication, which can cheaply save 850,000 lives every year. By contrast, the expensive Kyoto protocol will prevent just 1,400 deaths from malaria each year.

With attention and money in scarce supply, we should first tackle the problems with the best solutions, thereby doing the most good throughout the century. Focusing on solving today's problems will leave communities strengthened, economies more vibrant, and infrastructures more robust. This will enable us to deal much better with future problems - including global warming - whereas committing to massive cuts in carbon emissions will leave future generations poorer and less able to adapt to challenges.

To be fair, Gore deserves some form of recognition for his resolute passion. However, the contrast between this year's Nobel winners could not be sharper. The IPCC engages in meticulous research where facts rule over everything else. Gore has a very different approach.

Scott Boras just misses the top of the market for his client?

The money, certainly in NYC, is generally nervous. Markets are pretty much at all time highs, and most managers of money see more potential downsides than upsides.

I think this is why the Boras Team is assembling such a treatise on the economics of A-Rod staying with the Yankees. Because, despite the other large market teams who would be logical alternatives to sign him, no responsible manager of baseball talent would invest half, a third, or even a fourth of their entire payroll on one player. (I'm thinking, like in equities portfolio management, one-seventh is the cap for one player--and that should not be a long-term position). So, to pay him his preferred $30 mil for even a single year, the total team payroll should top $210 million, and the Yankees are the only ones who can go there.

Bill Simmons and one of his astute readers agree:

Q: How about Bob Brenly accurately describing the astounding ambivalence of Eric Wedge (and Carmona) toward A-Rod in that ninth-inning at-bat in Game 2? Tying run on second, open base, two outs in the ninth of a 1-1 game, and you PITCH to the HR, RBI, runs scored, and ninth-inning batting average leader in all of baseball?!? Amazing how heavy the postseason baggage is for A-Rod.
--Chris, Philly

SG: Yeah, I don't think you'll see that moment mentioned in Scott Boras' 200-page pamphlet that will be handed to every baseball team as he's gunning for a $300 million contract. By the way, in the aforementioned podcast, JackO mentioned a Jimmy Chitwood-type scenario in which A-Rod tells the media, "Torre stays, I stay ... he goes, I go" and becomes a hero in New York for sticking up for his manager. (Note: Rivera pulled this move Wednesday but A-Rod's gesture would carry more weight and change the way he's perceived by Yankees fans forever. Of course, he'd never do it because Boras would tie him up in Zed's basement and stick a red rubber ball in his mouth for the entire winter before letting it happen, but still.)

It's up to you, New York, New York (queue the brass section). These are now available for your trading pleasure:

The Al Gore 9/11 Conspiracy

Decoded by Tim Blair. I'm short a bit, and it's in the money.

I am looking forward to this Sunday afternoon

Just bought some NFL.NEP@DAL.NEP

Early British-American business history

and force majeure:

Jamestown might have been the first business scandal in North America. Or it might have been the first time the government used business failure and public health concerns as a pretext for increasing its own power.

Whatever it was, we're now in the 400th anniversary of its founding.

I would not deposit a penny at the World Bank

It's sad that our tax dollars are shipped there by the truckload. Today's WSJ:

A senior operational bank source has now showed us a second set of INT reports concerning corruption in seven projects in Cambodia. The reports are so sensitive that they were never shared with Cambodia's government, lest they put the lives of whistleblowers at risk. We have therefore agreed not to publish or quote directly from the documents, as well as to obscure certain details. But take our word for it: These are remarkably specific reports that document corrupt practices and name officials and companies by the dozen. Even more astonishing, senior bank officials have essentially let the Cambodian government get away with it.

As usual, the projects have the most benign-sounding names: "Land Management and Administration"; "Provincial Rural Infrastructure"; "Flood Emergency Rehabilitation"; "Provincial and Peri-Urban Water Supply and Sanitation," and so on.

Yet in each case, evidence of extortion, bribe-taking, bid-rigging and procurement manipulation was rampant. In one or more of the projects, 75% of companies seeking project work admitted to offering bribes to government officials, some of them in the tens of thousands of dollars. In another project, investigators found that contracts for 17 out of 18 new office buildings were manipulated in favor of just one company, and that they had been built with substandard materials -- or not built at all. The jockeying for bids even led to contracts being taken out on people's lives. And so on and on, causing one to wonder what part of the World Bank's work in the country wasn't corrupted.

When INT released these reports inside the bank in May 2006, then bank-president Paul Wolfowitz immediately put the projects on hold, and demanded the Cambodian government refund the $12 million the bank estimated it had lost to corruption. Bank sources tell us Mr. Wolfowitz would have pulled the bank out of Cambodia altogether, but he was prevailed on to adopt what amounted to a "stop-go" strategy toward Cambodia.

The bank's bureaucracy had its own ideas. Within months the bank had lifted its suspension of the land management project and two others. In February, James Adams, the bank's vice president for the East Asia and Pacific Region, wrote to the Cambodian Finance Minister noting brightly that despite the INT's findings, the bank was ready to forgive: "Considering the Government's expressed commitment to improve governance and fight corruption . . . the Bank proposes to seek the immediate refund of only a portion of the [bank] funds against the misprocured contracts." We're told that not one company has been debarred, despite INT's recommendations.

In August, Mr. Zoellick visited Phnom Penh, where he announced that the bank "wants to assist the Government to enact reforms to reduce rural poverty, encourage social development, improve the business and investment climate, and strengthen the rule of law." Yet if the INT reports mean anything, it is that Cambodia's government cannot administer even the most basic projects honestly. It's far from clear that further aid won't simply generate more corruption, however many strings are attached.

* * *

Mr. Zoellick is still new to his job, and no doubt he is eager to win over the staff that ousted his predecessor. Yet Mr. Zoellick's most basic obligations are not to them. They are to the bank's donors and to the world's poor, both of whom are cheated when corruption is tolerated. Cambodia is one country where that happens. If the bank isn't willing to act against it, then Congress should deny the bank more money until it does.

Tyler Cowen recommends two shorts

Both make sense to me, but I suggest trading around Fred and holding the other to expiry. (I'm long some Thompson from way back but took most of my profits, and I've been selling Recession.08 regularly).

UPDATE: Russell Roberts agrees on selling Fred.

How about a Nobel prize for

funny?

No New York Times correction on recession risk

forthcoming, notes Gene Epstein (via Don Luskin):

For August, the Bureau of Labor Statistics reported a statistically insignificant decline of 4,000 in non-farm payrolls, prompting the New York Times to run the headline, "Unexpected Loss of Jobs Raises Risk of Recession." Not for the first time, and probably not for the last, the loss of 4,000 has now been revised to a gain of 89,000. Imagine the corrected headline: "Unexpected Upward Revision in Jobs Raises Risk of No Recession."

The latest episode of "Science Is Religion"

By David Bernstein (via Glenn Reynolds):

Professors and Intelligent Design:

According to the survey of academics' ideology linked in my previous post, "creationist identity was also low, but with less identifiable shift by age group (the range was 3.9 to 4.7 percent) and with the strongest disciplinary support in the social sciences (17.6 percent) and humanities (5.0 percent), with negligible support elsewhere. Gross and Simmons cautioned, however, that in fields like sociology and literature, scholars who identify as theocentrists are in many cases talking about specific approaches to their research and analysis, and not necessarily about a ideology they wish to see in operation."

Whoops, my mistake, substitute "Marxist" for "creationist" and "theocentrist" in the quote above. It turns out, according to the study, that 17.6 of professors in the social scientists consider themselves Marxists. Only academics doing a survey of other academics could possibly think that this is low (actually, the authors use the term "rare"!). The next time someone tells you that conservatives avoid academic positions in the social sciences because they believe in nonsensical superstitions with no empirical or logical support, while liberals believe in the scientific method, remember that 17.6% figure. (Update: See also Freud and Freudianism, whose time thankfully seems to have largely passed.)

UPDATE: Among actual scientists, in the physical and biological sciences, the percentage who identify themselves as Marxists is zero.

Original screenplay by Thomas Kuhn, of course.

Why the government could be a smidge smaller, maybe?

Via Sunlight Foundation, this is the House Ethics Subcommittee chairwoman, repressing the press over one of her earmarks*.

*An earmark is a not-so-ethical way of sneakily pushing taxpayer money to a preferred party or interest group, by smuggling it into some other spending bill, which usually has quite a noble sounding name.

Another journalistic triumph by CBS; I posted on another one recently.

Great update on oil prices

By James Hamilton:

The real story remains as it has been-- the demand for oil remains strong, and increases in production have not been very significant. That reality is what has been driving oil markets all along.

Maybe you believe that the price of oil has nothing to do with the quantity of oil that OPEC produces. Or maybe you believe that the declarations of OPEC ministers sometimes have nothing to do with the facts.

Bill Gross is a poor forecaster

According to CXO Advisory (via Paul Kedrosky). I've complained about Gross before.

UPDATE: The glass is half full, too! Congrats, Don Luskin.

Intrade lists Nobel Economics Prize contracts

Here (via Greg Mankiw).

Markets in Defense

Rather than distorting things with a coercive military draft or conscription, an all-volunteer force can indicate whether defense policy is working or not.

World Series bayesians

At 11:50 am EST, here is what the Tradesports mid-market prices imply:

69% Boston Red Sox
61% Cleveland Indians
35% Colorado Rockies
34% Arizona Diamondbacks

These are the respective probabilities of each team winning the Series, conditioned upon the probability of each team winning the Pennant.

A doping athlete gives up his awards; why not Jimmy Carter his Nobel?

I was just thinking about him last week. (Via Stephen Green):

Reuters reports that Carter called Washington's use of the term "genocide" was both legally inaccurate and "unhelpful."

"There is a legal definition of genocide and Darfur does not meet that legal standard. The atrocities were horrible but I don't think it qualifies to be called genocide," he said. Washington is almost alone in branding the 4 1/2 years of violence in Darfur genocide. Khartoum rejects the term, European governments are reluctant to use it and a U.N.-appointed commission of inquiry found no genocide, but that some individuals may have acted with genocidal intent. Carter, whose charitable foundation, the Carter Center, worked to establish the International Criminal Court (ICC), said: "If you read the law textbooks ... you'll see very clearly that it's not genocide and to call it genocide falsely just to exaggerate a horrible situation I don't think it helps."

Brahimi's and Carter's comments come at the end the Elders' two-day mission to Sudan. Voice of America reports that during their visit, the Elders found that "people in Darfur were desperate for protection, despite the Sudanese government's insistence that the situation in the region is getting better."

Some people they visited slipped them notes full of allegations of rape and other abuse by militias aligned with the Sudanese government. The wife of former South African President Nelson Mandela, Graca Machel, told of her meeting with women in Darfur. "The first thing they told us they need security," she said. "They need security. They gave us examples of what happened to them, even graphically, to show how women are being raped, are beaten and are brutalized. I think because they thought we may not get a clear translation, they went at length of using gestures to show us how brutal it was, the kind of assault they are subjected to."

This really angers me--folks thinking that Jimmy is helping people. He is helping people get killed.

Yet another case proving why one-size-fits-all government programming

is not a good thing (via Glenn Reynolds):

At Metro's headquarters in downtown Washington, the lights pop on at 5:30 every weekday morning. Hours before the masses arrive for work, the building glows like a silent, hulking eight-story spaceship.

Every evening, most employees go home at 5, but the lights stay on for three more hours, bright enough that passersby can see the artwork in individual offices. No "Starry Night," apparently.

The electric bill was $1,775,194.96 last year: nearly $1,400 per employee.

UPDATE: Even the NY Times gets in on the bash, as James Miller observes (via Josh Hendrickson):

In this free market editorial the New York Times laments the large debt that awaits many men when they get out of prison. Apparently because of child support, fines and prison fees some newly released prisoners have as much as "25,000 in debt the moment they step outside the prison gate."

Various government agencies come after the ex-cons to collect the debt. As a result, if the ex-cons get legitimate jobs they must give much of their salary to the government. This, as the New York Times writes, makes the ex-cons "less likely to seek regular employment."

So, according to the liberal New York Times editorial board, if you know the government is going to take much of your salary you are less likely to get a job. I wonder if the Times has considered how the economic logic of this editorial could be applied to tax policy.

Not one BUT TWO consensus(es?) on climate science

There seems to be more than one consensus on global warming, if that's even possible. (I thought not, by definition).

A claim for scientific consensus on global cooling found here (via Steve Conover) which I had not heard, but had thought about, given my reading as a kid about multiple ice ages:

[Narrator:] Our first major challenge will be the climate at the start of the 21st century. We may worry about global warming, but most scientists recognize that we are in a gap between ice ages. Our whole civilization has occurred in a brief warm period, ten thousand years so far. This warmth has proved crucial...

Even if our industrial economies effect a global warming over the next couple of centuries, it can do no more than delay the inevitable.

[Dr. McMenamin:] The New York area is going to be completely changed by the next cycle of glaciation, and at some point glaciers are going to move down and grind New York into the North Atlantic ocean.

Cool graph on the distribution of GDP growth

provided by Calculated Risk (via James Hamilton):


These recession contracts finally selling off a bit (I've been selling for awhile now):

University ethics programs exempt university ethics

Professor Peter Berkowitz in today's WSJ:

Take away a few defenses of affirmative action and multiculturalism, and a few reflections on teaching ethics at the university, and little is left. All in all, after 20 years of generously funding research in practical or applied ethics, Harvard's program has made no discernible contribution to illuminating the challenges of university governance, and the variety of duties and conflicts confronted in their professional roles by professors and administrators.

Much the same holds true of the Yale Program in Ethics, Politics, and Economics and the Princeton University Center for Human Values.

What explains the neglect by our leading university ethics programs of a vital topic that so plainly falls under their purview? The major cause is probably routine thoughtlessness: Surrounded by like-minded souls and therefore protected from questions that might rock the boat, and from research projects that might call for scholarly retooling, it may never occur to many ethics professors that, no less than law, medicine, business and journalism, their profession too is worthy of systematic scrutiny.

One cannot rule out that a few ethics faculty may have convinced themselves that professors and administrators, because of their peculiar virtue, already confront and wisely dispose of all the moral dilemmas and professional conflicts of interest that come before them. It would not be the first time that intellectuals, so aggressive in finding false-consciousness and self-interest in others, concealed or overlooked their own.

Nevertheless, if they are impelled or compelled to overcome disciplinary inertia and intellectual orthodoxy and turn their attention to their own profession, professional ethicists will discover a trove of fascinating and timely questions. Here are a few:

Is it proper for university disciplinary boards, often composed of faculty and administrators with no special knowledge of the law, to investigate student accusations of sexual assault by fellow students, which involve crimes for which perpetrators can go to jail for decades?

Should universities have one set of rules and punishments for students who plagiarize or pay others to write their term papers, and another -- and lesser -- set for professors who plagiarize or pay others to write their articles and books, or should students and faculty be held to the same tough standards of intellectual integrity?

How can universities respect both professors' academic freedom and students' right to be instructed in the diversity of opinions?

What is the proper balance in hiring, promotion, and tenure decisions between the need for transparency and accountability and the need for confidentiality?

What institutional arrangements give university trustees adequate independence from the administrators they review?

Is it consistent with their mission for university presses to publish books whose facts and footnotes they do not check?

Richard Posner has more:

But [Ahmadinejad's] status as an enemy of the United States and a leader of a revolutionary Third World state that overthrew a monarch (the Shah of Iran) allied with the United States makes him more acceptable to the left than the Democratic Jewish ex-president of Harvard who dared to raise the question whether there might be a genetic explanation for the fact that the female distribution of IQ is flatter than the male, although the means are the same, the distributions largely overlap, and thus there are plenty of women in the scientific and other professions who are more brilliant than many of their male colleagues.

Danny Vinik, the anti-Bartman

Nice job!

Enviro-friendly lightbulbs kill US jobs and increase pollution from China

notes Andrew Leonard.

Markets Produce Information To Get Cheaters

Steve Levitt links to this WSJ story about Vegas bookmakers who find point-shavers.

More "we can't believe a lot of what we read"

Now it's what the journalists write. I linked to Alex Tabarrok's hypothesis testing example awhile back, which is a logical follow-on to Thomas Kuhn's science-is-religion conclusion. Arnold Kling links to Tyler Cowen (Tabarrok's co-blogger), and says:

Journalists write stories. The best stories have villains and victims. The villain-victim framework is often ill-suited to capturing economic phenomena. So that while Shannon Brownlee's Overtreated is praiseworthy in she does not blame the usual villains, it is still constrained by the villain-victim framework. I still owe the book a full review, so I need to resist going on at length here, but...

One example is that she thinks that managed care has the potential to be more efficient than our current fragmented system. Fine. But as an economist, I am inclined to ask why the market has not evolved toward managed care. My tentative hypotheses are (a) managed care may be only efficient for a few people, namely those with complex ailments, such as diabetes; (b) managed care can achieve only a small fraction of its potential efficiency given our current medical licensing laws, which micro-manage the process of delivering medical services. Instead of thinking along those lines, Brownlee speaks in terms of villains and victims.

Anyway, back to Tyler. His comment that most made me go "Hmmm...." was

Most journalists work in a declining sector -- newspapers or TV -- and this does not augur well for their belief in progress and the virtues of economic growth. They are not well-positioned to enjoy "creative destruction."

I suspect that journalists have catered to what Bryan calls "pessimistic bias" for a long time, even when the news business was thriving.

World Series bayesians steady

From late this morning, conditional probabilities derived from Tradesports mid-market prices:

69%	YANKEES
63%	REDSOX
62%	ANGELS
59%	INDIANS
37%	ROCKIES
37%	CUBS
36%	PHILLIES
34%	DIAMONDBACKS

Last week, it looked like this (also following the link is an explanation of the probability calculation):

68.1% New York Yankees
62.6% Boston Red Sox
61.7% Los Angeles Angels of Anaheim
61.1% Cleveland Indians
41.2% Chicago Cubs
40.9% Arizona Diamondbacks
40.5% Colorado Rockies
39.6% Philadelphia Phillies

Free Trade Kills Poverty (v. Globaloney)

Stephen Moore:

A group of scientists calling themselves the Club of Rome issued a report called "Limits to Growth." It explained that lifeboat Earth had become so weighed down with humans that we were running out of food, minerals, forests, water, energy and just about everything else that we need for survival. Paul Ehrlich's best-selling book "The Population Bomb" (1968) gave England a 50-50 chance of surviving into the 21st century. In 1980, Jimmy Carter released the "Global 2000 Report," which declared that life on Earth was getting worse in every measurable way.

A new United Nations report called "State of the Future" concludes: "People around the world are becoming healthier, wealthier, better educated, more peaceful, more connected, and they are living longer."

World-wide illiteracy rates have fallen by half since 1970 and now stand at an all-time low of 18%. More people live in free countries than ever before. The average human being today will live 50% longer in 2025 than one born in 1955.

To what do we owe this improvement? Capitalism, according to the U.N. Free trade is rightly recognized as the engine of global prosperity in recent years. In 1981, 40% of the world's population lived on less than $1 a day. Now that percentage is only 25%, adjusted for inflation. And at current rates of growth, "world poverty will be cut in half between 2000 and 2015"--which is arguably one of the greatest triumphs in human history. Trade and technology are closing the global "digital divide," and the report notes hopefully that soon laptop computers will cost $100 and almost every schoolchild will be a mouse click away from the Internet (and, regrettably, those interminable computer games).

I take special pleasure in reciting all of this global betterment because my first professional job was working with the "doom-slaying" economist Julian Simon. Starting 30 years ago, Simon (who died in 1998) told anyone who would listen--which wasn't many people--that the faddish declinism of that era was bunk. He called the "Global 2000" report "globaloney." Armed with an arsenal of factual missiles, he showed that life on Earth was getting better, and that the combination of free markets and human ingenuity was the recipe for solving environmental and economic problems. Mr. Ehrlich, in response, said Simon proved that the one thing the world isn't running out of "is lunatics."

Mr. Ehrlich, whose every prediction turned out wrong, won a MacArthur Foundation "genius award"; Simon, who got the story right, never won so much as a McDonald's hamburger. But now who looks like the lunatic? This latest survey of the planet is certainly sweet vindication of Simon and others, like Herman Kahn, who in the 1970s dared challenge the "settled science." (Are you listening, global-warming alarmists?)

Why Sports are important for Prediction Markets

I recently told a friend, fomerly of the Fed and currently with a large investment bank, that trading sports outcomes helped traders (who are familiar with sports) learn how to better trade and manage risk, thereby adding greater accuracy to the predictiveness of markets beyond sports. He countered that I should feel so strongly about poker and blackjack, but I demurred, proposing that an introductory probability course would be enough to move the student beyond the lessons of those games.

Now, here is the eminent Justin Wolfers on why sports is key to economists, too:

1. Sports provide unique opportunities to test economic theories. Cribbing from a New York Times article, this is the Thaler defense:
   

   "'My justification for doing this is that it's the one really high-stakes activity where you get to watch all of the decisions,'' Thaler said. ''If Bill Gates invited me to watch all of his decisions, I'd talk more about that.''

2. Sports shapes broader national debates. Sports is a microcosm of our broader society and our national narrative on the important issues, from drugs, to race, to cheating, to sexual harrassment often play out on our sports pages. In honor of a particularly compelling example, let's call this the Jackie Robinson defense.
3. Professional sports are an important part of the economy. I call this the Dog defense, not as a dyslexo-religious statement, but simply because dogs raise an important question: aren't pets a bigger part of the economy than professional athletics? If so, why are there so many papers on professional sports and so few on the economics of dogs?
4. Sports participation is an important activity. It seems important to learn whether sports make us happier, healthier or more productive. For instance, it is important to learn, say, what the broader effects of Title IX were. Under this view, research on sports is part of the human capital agenda, leading me to call this the Gary Becker defense.
5. Sports provides a useful teaching metaphor. Many of those teaching Sabermetrics-inspired courses argue that sports provides a useful vehicle for teaching something far more important - basic quantitative reasoning. When I teach my class on behavioral economics, I do so by analyzing anomalies in sports betting markets.
6. Doing research on sports is fun. It was no mistake that the conference I attended was on a Saturday. Many of the academics in attendance were giving up leisure, not more important work. But for some, sports provides a chance to mix work with leisure; of course, if non of the above arguments holds, then it is just a chance to mix leisure with leisure.

Let me now translate this into advice, because I often hear from students wanting to write a thesis on sports. My first response is always: Don't. Too often, we find our sporting heroes more interesting than other people do. (Yes, I have been guilty of breaking this rule.)

But if you must work on sports, make sure you have a defense to this charge. I find the Thaler and Becker defenses most compelling, because they speak to the broader economic issues or yield policy implications. The Jackie Robinson defense is also important, but not applicable often enough. The Dog defense is often raised, but rarely compelling; neither pets, nor professional sports, are really a big part of the economy (estimates to the contrary usually turn out to be more applicable to the Becker defense).

Another problem at Tradesports/Intrade

Changing margin horses midstream.

The Nobel brand is losing its luster

There have been a few Peace Prize recipients who have made (or left) the world a more dangerous place (off the top of my head, I am thinking El-Baradei, Kofi Annan, Jimmy Carter, and Yasser Arafat).

But now, it's spreading to an Economics Prize recipient (via Don Boudreaux). Tyler Cowen does the Nobel-worthy book review, and ends with:

Ms. Klein also tellingly remarked, "I believe people believe their own bullsh**. Ideology can be a great enabler for greed."

When it comes to the best-selling "Shock Doctrine," that is perhaps the bottom line on what Klein herself has been up to.

More Dating Economics

I recently posted about why dating consulting doesn't work. I just got this from one of my brokers (off of Craigslist), and now it's up at DealBreaker:

What am I doing wrong?

Okay, I'm tired of beating around the bush. I'm a beautiful (spectacularly beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York. I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all.

Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a roadblock. 250,000 won't get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?

Here are my questions specifically:
...

THE ANSWER

Dear Pers-431649184:

I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament. Firstly, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity...in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!

So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!

...

Best sports quote I've seen in awhile

I can't remember a front office having greater range of hits and misses than the Red Sox over the past five years. Somehow, it's working. This is a franchise that spent more than $265 million the past three winters on Dice, Drew, Edgar Renteria, Matt Clement and Julio Lugo. They're like the anti-Patriots.

Bill Simmons, of course.

Michael Giberson posts World Series conditional probabilities

over at Midas Oracle:

As of 12:30 PM BST, Tue Oct 1 2007, here’s what p (A | B) looked like:

68.1% New York Yankees
62.6% Boston Red Sox
61.7% Los Angeles Angels of Anaheim
61.1% Cleveland Indians
41.2% Chicago Cubs
40.9% Arizona Diamondbacks
40.5% Colorado Rockies
39.6% Philadelphia Phillies

Interestingly, the top four teams are American League and the bottom four are the National League.

The Dating Consulting Market (and why it isn't bigger)

Tyler Cowen notes:

First, many of the people with dating problems are their own worst enemies. Paying for advice won't much help because self-sabotage is the goal and the advice-giver can't disassemble the relevant weirdnesses. And many people would hire the coach as a substitute for actually making themselves emotionally available.

Second, I do not believe it much benefits "losers" to learn additional slickness. The more likely result is that the coach tells the loser about seven of his mistakes, thereby discouraging him altogether.

He sums it up with this:

It is much easier to sell aspirational goods than honesty.

Why I don't get economic perspective from

here. Felix Salmon does a great job on this.

This was the best CBS news work I can remember

A retrospective on Clarence Thomas' retrospective. I was flipping during NBC's Football Night in America, and found that this was much more interesting.

Nice job, CBS. Keep this up and I'll keep watching.

Kling on explaining economic growth to a 5-year-old

It might even work for a journalist, or even an MIT economist:

There are lots of people in the world who will give us things that we want, as long as we give them something they want in return. This is called trading. Some of the things we trade are hard to see--they are like nice thoughts. Other people keep thinking up nicer things to trade with us, and we keep thinking up nicer things to trade with them. We keep trading nicer and nicer things. Many years ago, people had not thought up all of these nice things, so they did not have as much to trade as we do. That is why people who lived back then were poor, and we are not.

Trader Alert: Caplan's 4 Bonehead Biases

Great essay. Will help you increase your profits.

Gearing up for tonight's Bengals @ Patriots game!

WSJ reporters say economy is strong

By PETER FRITSCH and KELLY EVANS

For all the concern, the world today is better equipped to swallow expensive oil than it was when Jimmy Carter was installing solar panels and a wood-burning stove in the White House.

The main reason has to do with what some call the Wal-Mart effect. For every extra dollar taken from drivers' pockets at the pump in the form of higher prices in recent years, low-cost exporters from China and elsewhere have put roughly $1.50 back in the form of cheaper retail goods. Even at today's near-record prices, U.S. households today spend less than 4% of their disposable income at the pump, vs. over 6% in 1980.

Current prices are also a reflection of a strong economy, not an oil embargo or war in the Middle East. Since a market-share war between Saudi Arabia and Venezuela flooded the market with oil and drove prices to below $11 a barrel in 1998, oil prices have risen nearly eight-fold. During that run, the global economy grew roughly 5% each year.

Strong growth in places like China helps take some of the edge off the oil-price blow for U.S. and European companies such as Detroit's Big Three auto makers. Many emerging markets are hitting a "takeoff" stage, where per-capita income reaches a level that sparks serious auto demand, says Ellen Hughes-Cromwick, Ford Motor Co.'s chief economist. Growth in emerging markets is a "structural development" that is "less sensitive to oil-price changes," she says.