Wednesday, March 31, 2010

Women Make Trade-offs When Looking For A Man

There is no perfect man, a woman has to give up one quality if she wants more of another, just the kind of thing that economics would predict. That is one thing mentioned in the Wall Street Journal article Why Women Don't Want Macho Men: New research suggests that women from countries with healthier populations prefer more feminine-looking men. Here are some interesting exerpts:
"In countries where poor health is particularly a threat to survival, women leaned toward "manlier" men. That is, they preferred their males to have shorter, broader faces and stronger eyebrows, cheekbones and jaw lines."

"To a person unfamiliar with the field of evolutionary psychology, this may sound a little far-fetched. How is it even possible to link a woman's masculinity preferences to the health of her nation? The answer begins with the theory of sexual selection. It goes that women are the choosier sex because they take on most of the risk and burden of reproduction and child rearing."

"But what does health have to do with masculinity? The link is testosterone, the hormone behind manly muscles, strong jaws, prominent eyebrow ridges, facial hair and deep voices. Testosterone is immunosuppressive. This means a man must be healthy and in good condition to withstand its effects on his development. Testosterone is also linked to other traits related to strength: fitness, fertility and dominance."

"Masculinity, however, can come at a high price. Women often think of high-testosterone types as uncooperative, unsympathetic, philandering, aggressive and disinterested in parenting. In fact, there is evidence that they really do have more relationship problems than other men."

"...men with testosterone levels one standard deviation above the mean were 43% more likely to get divorced than men with normal levels, 31% more likely to leave home because of marital problems, 38% more likely to cheat on their wives, and 13% more likely to admit that they hit or hurled things at them."

"But if health comes at the expense of fidelity and good parenting, how much does masculinity really matter?

The apparent answer is not so much—if you're a woman living in a country with a decent health-care system and few harmful pathogens. While a masculine father's "good genes" may confer health advantages to children, so do good medical attention and a clean environment. In the Face Lab study, women with the weakest masculinity preferences tended to live in some of the healthiest countries."

"Women with the weakest masculinity preferences of all lived in Belgium, a country considered to have one of the best publicly funded health-care systems in Europe..."

"...women with the strongest masculinity preferences tended to hail from the countries with higher disease and mortality rates and some of the poorest scores on the health-care index..."

"...researchers found that a nation's health index explained more of the variation in women's masculinity preferences than did many culture-specific female norms..."

"Is it possible that modern medicine—and by extension modern life—inadvertently devalues masculinity?"

"As the social environment shifts, so may women's mate preferences. While Stone Age forces once wired women to associate strong cues of masculinity with their children's chance of survival, times are changing. The promise of improved health care in America could be one example of a shift.

Another is women's financial freedom. In 1970, women represented only 43.3% of women of the labor force, compared to 55.8% today. Moreover, the recession in America has been a tremendous blow to men in traditionally masculine jobs such as construction and manufacturing; 82% of job losses affect men."

" No longer as reliant on men's genes or jobs to ensure the health and wealth of their children, women may come to value other qualities in a mate. It may become evolutionarily adaptive to prefer men who are cooperative, communicative, caring and better parents over traditional "manly men.""

"...beautiful women (as determined by averaged ratings of eight teams of male and female interviewers) want it all in a partner: masculine, physically fit, loving, educated, desirous of home and children, a few years older than themselves and with a high income potential.

While exceptionally attractive (or wealthy) women may indeed capture this ideal male, most are forced by circumstance to settle for the best combination of traits. Some husband-seekers trade off masculinity for companionship and good parenting. Others forfeit compassion in exchange for wealth."

"To secretly have it all, some women adopt a "dual mating" strategy—marrying a solid, faithful guy and enjoying trysts with hunks. As a result, up to 10% of babies born in some populations have fathers who are presumed to be their biological dads but aren't."

"...as women's level of "resource control" increases—that is, they become more financially independent—their preference for good-looking men increases. So will it be considered progress if women start pursuing "metrosexuals"..."

Sunday, March 28, 2010

Should We Pay People To Adopt A Healthy Lifestyle?

That is what a New York Times article called Carrots, Sticks and Lower Premiums suggests. The article says:
"...the one thing that could really reform health care is you, collectively speaking: People living healthier lives."

"The statistical evidence has been clear for years, but it bears repeating. Studies show that 50 percent to 70 percent of the nation’s health care costs are preventable. Much of that expense goes to treat a few chronic conditions that are closely linked to behavior, including cardiovascular disease, diabetes, obesity and cancer. Bad genes and bad luck matter, of course. But behavior — exercise and choice of diet — matters most.

So why not pay people to live healthier lives? In fact, a fledgling “pay for prevention” industry is beginning to emerge, offering employers ways to reward workers with cash or reduced insurance premiums for exercising more and eating wisely."
So companies are paying their employees not to smoke or charging them less for health insurance if they are in good health.

Friday, March 26, 2010

Are Women Better At Investing Than Men?

That was the idea in How Men’s Overconfidence Hurts Them as Investors, from the New York Times, 3-14-10. Here are some interesing exerpts:
"All else being equal, men traded stocks nearly 50 percent more often than women. This added trading drove up the men’s costs and lowered their returns. The economists found that while both sexes reduced net returns through trading, men did so by 0.94 percentage points more per year."

"Selling volatile stocks in a down market — as male I.R.A. investors did more often than women, according to the Vanguard data — might seem to protect a portfolio. But that isn’t necessarily so. Selling before the market falls and buying after it falls is the smart move. For long-term investors, though, the best strategy may be to ignore short-term market movements (perhaps rebalancing a diversified portfolio every so often)."

"Gender differences appear to extend to other financial behavior. For example, women who are C.E.O.’s and company directors tend to pay a lower premium in corporate takeovers, saving their shareholders a bundle..."

"Researchers have found that activating the nucleus accumbens — a brain region that is stimulated when you eat delicious food or look at an attractive person — can affect financial risk-taking. When young Stanford men were shown pictures of partially clothed men and women kissing, he said, that region of their brains was activated. And when they were then given financial tests, the men became more likely to “make high-risk gambles.” Women didn’t respond much to the same pictures..."

"Others studying the effects of hormones on financial behavior have found correlations between testosterone and risk-taking."

"It’s also possible...that evolutionary psychology accounts for some of them. Before the dawn of history, aggressive risk-taking might have given men an advantage in finding mates, she said, while women might have become more risk-averse to protect their offspring."

I have had posts on related topics before. They were:

Can Testosterone Help Women Earn More Money?

Male sex hormone may affect stock trades

I also had a post on how genes can affect the way you invest. See

Is Your Investing Personality in Your DNA?

Wednesday, March 24, 2010

Crime and Punishment: Required Reading in My Economics Class

Okay, it is not the book Crime and Punishment by Fyodor Dostoevsky (this is a link to the entire book online). I will come back to this book. My students are required to read a chapter by this name from the book The Economics of Public Issues. It is only 5 pages long while the famous book is over 500.

One of the interesting things mentioned in this chapter is research by Steven Levitt. It deals with the question of whether or not more police officers means less crime, everything else being held constant. The problem is that cities with high crime rates will have to hire more police officers (it is the opposite for low crime cities). So it is hard to find a meaningful correlation. But this paragraph from the book shows how he got around that problem:

"In the case of police, Levitt has found that election cycles tend to have a strong independent effect on the size of police forces, enabling him to identify the impact of police on crime rates. Because crime is such a hot political issue, both mayors and governors have strong incentives (and the ability) to push for more police funding in election years. The result is that even though police forces in major cities tend to remain constant in nonelection years, they grow by about 2 percent in an average election year. Although this may sound small, it is (1) large enough to have a significant impact over several election cycles, and thus (2) large enough to detect clearly in the data."

So we can see that crime goes down when more police get hired in election years. Each city gets compared to itself, so the problem mentioned above is avoided.

Now back to the Dostoevsky book. Below are two passages that relate to economics and one sounds like the invisible hand.

"But Mr. Lebeziatnikov who keeps up with modern ideas explained the other day that compassion is forbidden nowadays by science itself, and that that's what is done now in England, where there is political economy." (economics used to be called political economy)

"if I were told, 'love thy neighbour,' what came of it?" Pyotr Petrovitch went on, perhaps with excessive haste. "It came to my tearing my coat in half to share with my neighbour and we both were left half naked. As a Russian proverb has it, 'Catch several hares and you won't catch one.' Science now tells us, love yourself before all men, for everything in the world rests on self-interest. You love yourself and manage your own affairs properly and your coat remains whole. Economic truth adds that the better private affairs are organised in society--the more whole coats, so to say—the firmer are its foundations and the better is the common welfare organised too. Therefore, in acquiring wealth solely and exclusively for myself, I am acquiring, so to speak, for all, and helping to bring to pass my neighbour's getting a little more than a torn coat; and that not from private, personal liberality, but as a consequence of the general advance."

More online versions of the book.

Sunday, March 21, 2010

Adam Smith vs. Bart Simpson

Last week I attended a lecture by Paul Zak, a neuro-economist from Claremont Graduate University, at the the Mind Science Foundation. He has studied how our behaviors are affected by the presence in our brains of a chemical called oxytocin, which can affect how generous we are. The more oxytocin you have have, the more generous and empathic (or sympathetic) you are. So he calls oxytocin "the moral molecule." It helps us identify with others and understand their feelings and situatons. Oxytocin can also increase when people trust you or are generous to you.

What does this have to do with Adam Smith? He wrote a book called The Theory of Moral Sentiments. One point he made there was that we are able to sympathize with other people by trying imagine what they are going through. This is directly related to oxytocin. Last September I had a post on this called Science Proves That Adam Smith Was Right Over 200 Years Ago (sort of). That will provide you with more details.

Where does Bart Simpson come in? Professor Zak showed a video clip from the "The Simpsons" that illustrated sympathy, a concept that Adam Smith wrote about in the above mentioned book. To watch a lecture by professor Zak (very similar to the one he did here in San Antonio), go to The Moral Molecule. The Bart Simpson clip starts at the 7:40 mark. Bart's mom tells him to look at his sister and try to feel what she feels. Exactly the kind of thing Adam Smith talked about.

Oxytocin also facilitates trust. Economies need trust because not everything can be put into a law, a contract or be monitored. Your boss can't watch you every second to make sure you don't slack off on the job. We trust banks and our pension funds not to take the money and blow it all in Vegas. We trust our government officials not to accept bribes. Yes, we have rules and regulations against these things. But if we had to have a rule for everything and if everyone was being watched constantly, it would be too costly to our economy. Trust helps quite a bit.

Here are two articles about professor Zak's lecture from the San Antonio Express-News:

Emerging field offers insight into human virtues

Humans release ‘niceness' chemical

More information about neuroeconomics can be found at:

Neuroeconomics Explained, Part One

Neuroeconomics Explained, Part Two

Wednesday, March 10, 2010

As college costs rise, sticker shock eased by student aid

That is the title of an article that you can read by clicking here. The idea is that the listed price is very high by grants and scholarships actually lower the cost. The thing is, is that collegs don't give aid. They just charge students different prices and this is called price disicrimination.

Here are some notes on it:

Price Discrimination = Selling a given product at more than one price, with the price difference being unrelated to differences in marginal cost.

Examples include when senior citizens get discounts at restaurants or students get discounts at theaters. Firms do this because it increases their profits.


Why price discrimination raises profits

1. If a firm can get a higher price from some customers than others they increase their profits.
2. If a firm can lower the price for others who might not have bought the product to begin with, they also increase their profits.

Necessary Conditions for Price Discrimination

1. The firm must face a downward sloping demand. Monopolies do but firms in perfect competition do not (their demand, also their MR line, is flat).

2. The firm must be able to readily (and cheaply) identify buyers or groups of buyers with predictably different elasticities of demand (senior citizens have a more elastic demand and will shop around more since they have more time so restaurants might give them a discount).

3. The firm must be able to prevent resale of the product or service. If a student can buy a movie ticket for $6 while everyone else pays $8, the firm will lose money if the students turn around and sell their tickets for $7. So the theater can prevent resale by checking student IDs to make sure people holding the lower price ticket really are students.

Sunday, March 07, 2010

Free Can Be Deadly

On the first day of each semester, I define a scarce good as one for which there is not enough to go around when it is given away for free. A tragedy occurred in India this week when free food and clothes were given away at a religious compound. The event was publicized more this year than in the past and many more people showed up than expected. People started gathering a few hours before the event and a stampede ensued. 63 people died, mostly women and children. Here is an article about it:

Dozens killed in India temple stampede for free clothes and food.

This kind of tragedy has happened before:

Freebies led to stampede in '04 too

Friday, March 05, 2010

The Depression Is Over!

So said an enthusiastic character in the 1934 movie Stand Up and Cheer!. We watched a video about the Great Depression in my macro classes. Here is the video clip of the man getting worked up about how everything has turned around. The text is below the clip in case the sound is not good enough.



Here is a link to the video file: We're out of the red!

Mr. Cromwell, I've got great news for you.
The depression is over.
Over, do you realize that.
Factories are opening up.
Men are going back to work by the thousands.
Our farm products are being sold the world over.
Savings accounts are heaping up.
The banks are pouring out new loans.
There is no unemployment.
Fear has been banished.
Confidence reborn.
Poverty has been wiped out.
Laughter resounds throughout the nation.
The people are happy again.
We're out of the red.

Here is the movie's IMBD synopsis: "President Franklin Roosevelt appoints a theatrical producer as the new Secretary of Amusement in order to cheer up an American public still suffering through the Depression. The new secretary soon runs afoul of political lobbyists out to destroy his department." I guess they were trying to make people feel better. Unemployment was 25% in 1933. This was one of the first big roles for Shirley Temple.

Wednesday, March 03, 2010

Deadweight Loss & Who Won The Olympics

After the last post, my students might wonder what "deadweight loss" is. It is the loss of social welfare caused by that dreaded demon, inefficiency. Examples are monopoly and externalities. It can also be caused by taxes. To learn more, go to the following links (which are all different)

Deadweight_loss
Deadweight_loss
Deadweight_loss

Who won the Olympics? Go to

Canada Wins The Olympics! (based on the market value of the medals