Is tax 'rebate' doomed to fail?

That is the title of an article that you can read here. People need to spend the money if the rebate is going to help the economy (so AD can increase, if we are below the full-employment GDP). They might not. And how much they spend might depend on what you call it. Calling it something else and not a rebate might make a difference.

Higher Food Prices May Be Here to Stay

That was the title of an article in the Wall Street Journal on April 14. You can read it here. The wages farmers have to pay are rising, land prices are rising, energy prices are up, chemical prices are up. Here is an excerpt:

""Diesel, fertilizer, insecticide, grass-killing chemicals, they're all going up -- just like a shadow," says Samear Ruengrit, a 57-year-old farmer who grows rice about 45 minutes north of Bangkok. His average costs are now about 50% higher than last season, he says.

Farming costs are climbing for several reasons. Higher fuel prices make it more expensive to run tractors and other equipment, while pricier natural gas -- needed to make some fertilizers -- has also played a role. Equipment prices are rising because of strong demand for farm machinery in China and other developing countries, along with rising costs for raw materials like steel.

Wages are up in some parts of the world because many farms are expanding to meet higher demand, putting pressure on labor supplies, especially in countries like Australia where many workers are already occupied in commodity-based trades like mining."

Male sex hormone may affect stock trades

That is the name of an article you can read here. Here is an excerpt:

"Coates and Joe Herbert studied male financial traders in London, taking saliva samples in the morning and evening. They found that levels of two hormones, testosterone and cortisol, affected traders.

Those with higher levels of testosterone in the morning were more likely to make an unusually big profit that day, the researchers found. Testosterone, best known as the male sex hormone, affects aggression, confidence and risk-taking. Cortisol is tied to uncertainty, novelty and unpredictability, "which pretty much describes a trader's life," Coates said in a telephone interview.

Coates and Herbert's study comes less than two weeks after U.S. researchers reported that young men shown erotic pictures were more likely to make a larger financial gamble than if they were shown a picture of something scary, such as a snake, or something neutral, such as a stapler."

Does Or Can Money Buy Happiness?

You might think I am kidding. But some research says yes and some no. The article is Maybe Money Does Buy Happiness After All from the NY Times. Post World War II opinion polls seemed to show that Japanese people were not getting any happier even though their economy grew. Here is an exerpt from the article:

"This contrast became the most famous example of a theory known as the Easterlin paradox. In 1974, Richard Easterlin, then an economist at the University of Pennsylvania, published a study in which he argued that economic growth didn’t necessarily lead to more satisfaction.

People in poor countries, not surprisingly, did become happier once they could afford basic necessities. But beyond that, further gains simply seemed to reset the bar. To put it in today’s terms, owning an iPod doesn’t make you happier, because you then want an iPod Touch. Relative income — how much you make compared with others around you — mattered far more than absolute income, Mr. Easterlin wrote."

Anthropology, Cell Phones, Economics and World Poverty

Yes, they do all go together. The NY Times Magazine today had an article about an anthropologist who works for Nokia who visits lots of poor countries trying to find out the kind of cell phones that they would like and could afford. But cell phones can be vital to people in these countries, improving their well being in lots of surprising ways by helping them find jobs and customers and creating an informal banking network. This fascinating article is titled Can the Cellphone Help End Global Poverty?.

The World's Oldest Profession Uses The Latest Technology

Prostitution is sometimes called the world's oldest profession. I don't know if that is true, but they are certainly innovative when it comes to technology. They use cell phones for text messaging, website allow you to rate the prostitutes and they use anti-bugging devices. It makes me wonder what kind of industry it is. It could be competitive if there are no barriers to entry and the competition would force all the suppliers in the industry to keep up with by innovating and adopting the latest technology. But it could be monopolistic competition since not all suppliers are the same-there could be product differentiation. Anyway, the article is Prostitution Advances in a Wired World. Here is an excerpt:

"There are a host of online message boards where clients or potential clients can discuss, rate and exchange information about individual women. Technology also eases the business-end of things, Weitzer says. While clients are surveying potential companions, escort-service managers can look into clients with a background check or even a simple Google search. Payment is easier, too. "It's often convenient to have an account established with a balance, so if you have the last-minute urge, you don't have to worry about getting money into the account," says Norma Jean Almodovar, executive director of the sex workers' rights organization COYOTE ("Call Off Your Old Tired Ethics") in Southern California."

and

"Not only can prostitutes and escort services now run more efficient businesses, but they can leverage word-of-mouth advertising in new ways to build their brands and troll for clients. Online social communities built around the escort and sex worker industries can solidify customer loyalty."

Placebos: The More You Think They Cost, The Better They Work

It is the miracle cure of the ages. Read all about it at Placebo Nation: Just Believe. You might see an ad first, but just close it. Here is an exerpt:

"Ariely's curiosity about the power of expectation—which he explores in his new book, "Predictably Irrational"—inspired a study of what affects those expectations. He and colleagues gave 82 volunteers a brochure explaining that they would be testing a new pain drug called Validone that worked like codeine, but faster. (It was actually a placebo.) Each then received a series of electrical shocks on their wrists, rating them from "no pain at all" to "the worst pain imaginable." Each then took a "Validone." Half were told it cost $2.50, the other half that it cost a dime. They then received shocks again. Of those who got the $2.50 pill, 85 percent felt less pain from the same voltage than before taking it; 61 percent of those taking the cheap pill felt less pain, the scientists reported last week in The Journal of the American Medical Association. The pricier the drug, the higher the expectation of efficacy, and the stronger the placebo effect."

The Flutie Effect: When The Teams Win, More Students Apply To The College

The article is called ‘Flutie Effect’ study shows success on fields and courts really does mean more applications. Back in 1984, Boston College quarterback (and Heisman Trophy winner) threw a miraculous pass to win a college football game against Miami. This caused more students to apply to Boston College. A couple of economists have studied this for both college basketball and football. Here are some of their findings:

— Schools that make it to the Sweet 16 in the men’s basketball tournament see an average 3 percent boost in applications the following year. The champion is likely to see a 7 to 8 percent increase, but just making the 65-team field will net schools an average 1 percent bump.

— Similarly, applications go up 7 to 8 percent at schools that win the national football championship, and schools that finish in the top 20 have a 2.5 percent gain

It was even better for George Mason last year when they made the final four.

Lighthouses Are Not Always Public Goods

This is really intersting. It comes from the Public Goods and Externalities entry at the Concise Encycopedia of Economics. It is by Tyler Cowen. It should also be mentioned that Nobel Prize winner Ronald Coase wrote an article about this that appeared in the Journal of Law and Economics in 1974. So here is the quote from the Tyler Cowen article:

"Lighthouses are one of the most famous examples that economists give of public goods that cannot be privately provided. Economists have argued that if private lighthouse owners attempted to charge ship-owners for lighthouse services, a free-rider problem would result. Yet lighthouses off the coast of nineteenth-century England were privately owned. Lighthouse owners realized that they could not charge shipowners for their services. So they didn't try to. Instead, they sold their service to the owners and merchants of the nearby port. Port merchants who did not pay the lighthouse owners to turn on the lights had trouble attracting ships to their port. As it turns out, one of the economics instructors' most commonly used examples of a public good that cannot be privately provided is not a good example at all."

Save 54 Cents A Gallon On Gas

How? Read Slow Down a Little, Save a Lot of Gas. Your car gets less efficient as you start going faster than 60:

"Traveling faster makes the job even harder. More air builds up in front of the vehicle, and the low pressure "hole" trailing behind gets bigger, too. Together, these create an increasing suction that tends to pull back harder and harder the faster you drive. The increase is actually exponential, meaning wind resistance rises much more steeply between 70 and 80 mph than it does between 50 and 60."

"Engineers at Consumer Reports magazine tested this theory by driving a Toyota Camry sedan and a Mercury Mountaineer SUV at various set cruising speeds on a stretch of flat highway. Driving the Camry at 75 mph instead of 65 dropped fuel economy from 35 mpg to 30."

That is about a 14% drop in efficiency. If you pay $3 per gallon, it costs you about 42 cents a gallon. The faster you go above 60 and/or the more you pay for gas, the bigger the decline in fuel economy. Truck drivers are now slowing down to save money. Read Drivers slow down their tractor-trailer rigs to save fuel.