What Do Bonanza, Charles Dickens And Copyright Laws Have In Common?

In an episode of the TV show from 1963, Dickens came visited Virginia City and discovered his copyrights were being violated. So he protested and complained. Click here to go to the IMDB page for this episode. Click here to watch it on You Tube. Here is the summary from IMDB

"At Ben's invitation, Charles Dickens comes to Virginia City to give a reading from "Oliver Twist" while on a reading / lecture tour in America. While there, he stays at the Ponderosa. He becomes enraged by the townsfolk's casual attitude toward distribution of copies of his stories published without protection of copyright laws. After confronting the local newspaper publisher, the newspaper's office is destroyed. Already having lost the esteem of the townsfolk, Dickens now finds that the townsfolk blame him for the violence."

Here are some links with historical information:

Struggles For Copyright Laws

When Charles Dickens fell out with America (from BBC)

Bootlegging Dickens: Author Looks At 'Bookaneers' (from NPR)

Trade Weighted U.S. Dollar Index: Major Currencies (TWEXM)

This is from the St. Louis Federal Reserve Bank. Click here to go the site

2013-12-11: 76.248 Index March 1973=100 Last 5 Observations

2013-12-04:	76.626
2013-11-27:	76.466
2013-11-20:	76.159
2013-11-13:	76.293

Weekly, Ending Wednesday, Not Seasonally Adjusted, Updated: 2013-12-16 4:51 PM CST 

Notes:

Averages of daily figures. A weighted average of the foreign exchange value of the U.S. dollar against a subset of the broad index currencies that circulate widely outside the country of issue.
Major currency index includes the Euro Area, Canada, Japan, United Kingdom, Switzerland, Australia, and Sweden. For more information about trade-weighted indexes see http://www.federalreserve.gov/pubs/bulletin/2005/winter05_index.pdf.

Why Economics Is Really Called 'the Dismal Science'

Click here to read this great article by Derek Thompson in The Atlantic. The real reason is not the one which has been traditionally taught. Economics was first called the dismal science because it "couldn't find a justification for slavery." Economists considered slaves to be equal to other human beings.

Students March In The Streets, Demanding That Deadweight Loss Be Eliminated!!

I sometimes joke in class that students are marching in the streets and shouting "What do we want? Maximized Social Welfare! When do we want it? Now!"One of my students this semester, Charissa Fenton, made up this fake newspaper because of what I said. I think it is pretty funny.

Social welfare is the sum of consumer surplus and producer surplus. It is the total net gain we get from consuming and producing goods. It is one way to judge different policy outcomes. Deadweight loss is the loss of social welfare when we have monopoly instead of competition (or if we have negative externalities like pollution). There is no deadweight loss when P = MC. Here are some links

consumer-surplus-and-producer-surplus
 
Economic_surplus
 
Consumer-and-Producer-Surplus-Graphing-and-Calculating

The Pyschology & Economics Of Decision Making Under Uncertainty (With Snoopy's Version From 1966)

See You’re So Self-Controlling by MARIA KONNIKOVA. From the 11-16 NY Times. She has a Ph. D. in psychology from Columbia University and is the author of the book Mastermind: How to Think Like Sherlock Holmes.

Also see A Talk With Lars Peter Hansen, Nobel Laureate. Also from the 11-16 NY Times. He won the economics prize for "contributing to the study of asset prices." It is related to the debate on theory of efficient markets. The idea is that stock prices make sense based on publicly available information. They won't be priced too high or too low.

Here is what Hansen says about "Decision Making Under Uncertainty."

"Yes, people struggle with how to cope with uncertainty; it’s not so easy for them to build probability models about the future in very complicated environments. That’s not realistic. We’re very much interested in rational agents who are coping with uncertainty.

What do you want to call behavior under those conditions? Well, you can call that irrational. I’m not sure that I want to do that; maybe it’s a useful term, maybe it’s not, I’m not quite sure.

How to cope with the uncertainties under complexity is a very important question that we’ve just scratched the surface of."

"Yes, the key thing there, too, is we were driven by empirical evidence, about how people behave. We were driven partly by that and partly by other insights coming out of decision theory — broadly conceived in terms of how people might cope with uncertainty. One thing I loved about rational expectations was that it said, to what extent is public policy grounded on being able to fool people systematically?"

The first article, discusses some recent research from psychology on "Decision Making Under Uncertainty." It looks into how people make decisions in the short-run based on expectations of the long-run. We might eat a slice of chocolate cake because that is great in the short-run but if we have a long-run goal to lose weight, it might seem like it is irrational or a case of low willpower if we eat the cake.

But what if it is uncertain as to how long it will take for a person to reach their weight loss goal? Once you are not sure when the payoff will come, you might think it will never come. So it is better, and perhaps rational, to at least have the cake now and get some pleasure because the weight loss may never come. Excerpt:

"A failure of self-control, suggest the University of Pennsylvania neuroscientists Joseph W. Kable and Joseph T. McGuire, may not be a failure so much as a reasoned response to the uncertainty of time: If we’re not quite sure when the train will get there, why invest precious time in continuing to wait?

Mr. Kable, who has been working on the psychology and neuroscience of decision making for more than a decade, argues that the truth is that in real life, as opposed to the lab, we aren’t nearly as sure we’ll get our promised reward, or if we do, of when it will come. 

“The timing of real-world events is not always so predictable,” he and Mr. McGuire write. “Decision makers routinely wait for buses, job offers, weight loss and other outcomes characterized by significant temporal uncertainty.” Sometimes everything comes just when we expect it to, but sometimes even a usually punctual bus breaks down or an all-but-certain job offer falls through. 

When we set a self-control goal for ourselves, we often have specific time frames in mind: I’ll lose a pound a week; a month from now, I’ll no longer get cravings for that cigarette; the bus or train will come in 10 minutes (and I’ve committed to taking public transportation as part of lessening my carbon footprint, thank you very much). 

But what happens if our initial estimate is off? The more time passes without the expected reward — it’s been 20 minutes and still nothing; I’ve been dieting for a week and a half now and still weigh the same — the more uncertain the end becomes. Will I ever get my reward? Ever lose weight? Ever get on that stupid train?

In this situation, giving up can be a natural — indeed, a rational — response to a time frame that wasn’t properly framed to begin with, according to a series of new studies conducted by Mr. Kable’s decision neuroscience lab at the University of Pennsylvania and published in Cognition and Psychological Review. 

“There are lots of situations, probably the majority of situations, in the real world,” Mr. Kable told me, “where waiting longer is actually a valid cue that the reward is getting further and further away.""

They have also done some experiments that back this up. Now here is the Peanuts comic which was originally from 1966, although it appeared again on 11-23. I think what Snoopy does and says is what the article was all about.

Oil-rich Midland, TX is nation’s fastest growing metro area, with highest per-capita income in the country at $83,000

Great post from economist Mark Perry (his blog is called "Carpe Diem")

"The Bureau of Economic Analysis (BEA) released data today on “Local Area Personal Income” with new estimates for personal income in 2012 for the nation’s 381 metropolitan statistical areas (MSAs). Here are a few highlights:

1. Midland, Texas is clearly America’s “economic miracle city.” For the third year in a row, Midland was the nation’s fastest growing MSA, with growth in personal income in 2012 of 12.1%. Midland also led the country as the MSA with the highest per capita personal income in 2012 at $83,049, followed by Bridgeport-Stamford-Norwalk, CT ($81,068), San Francisco ($66,591), the Silicon Valley MSA of San Jose-Santa Clara-Sunnvale ($65,679) and Washington, DC ($61,743).

2. Following Midland’s income growth of 12.1% in 2012 were nearby No. 2 Odessa, TX (11.5%), No. 3 Grand Forks, ND (11.5%) and No. 4 Bismarck, ND (10.1%), which are all benefiting from America’s Shale Revolution that has made Texas and North Dakota the shining stars of the Great American Energy Boom. Other Texas and North Dakota MSAs that experienced strong personal income growth in 2012 were No. 7 Fargo, ND (8.3%), No. 14 Victoria, TX (7.1%), No. 16 Houston (6.7%) and No. 22 Austin (6.1%). Of the top 22 fastest growing metro areas in 2012, eight were either in Texas or North Dakota.

3. On a per-capita basis, the Grand Forks MSA led the country in 2012 with personal income growth of 9.5%, followed by No. 2 Odessa (7.9%), No. 3 Elkhart, IN (7.8%), No. 4 Bismarck (7.6%), No. 5 Columbus, IN (7.4%) and No. 6 Midland (7.2%). Of the six MSAs with the highest per-capita income growth in 2012, four were either in North Dakota and Texas.

MP: More evidence from today’s BEA report that America’s Shale Revolution is creating shale-based wealth, income, jobs and prosperity, especially in the states of Texas and North Dakota, the two shining stars of the Great American Energy Boom. And Midland, Texas has emerged as America’s “economic miracle city” with the highest per-capita income in the country ($83,049), higher even than average incomes in Silicon Valley ($65,679) by 26.4% and Washington, DC ($61,743) by 34.5%."

The Dalai Lama Says It Is Sometimes OK To Be Selfish

And of course, Adam Smith said when people act selfishly they are led, as if by an invisible hand, to make society better off.

So when might it be OK to be selfish according to his holiness? When caring for others.

Wait, how can that be selfish? Or is this some kind of Zen riddle like what is the sound of one hand clapping? No, it's biology and evolution. See Lending a hand does a body good by Jessica Belasco, from the San Antonio Express-News, 10-25-2013.

She talked to Dr. James R. Doty, a neurosurgeon at the Stanford University School of Medicine and founder of Stanford's Center for Compassion and Altruism Research and Education. Excerpts:

"Practicing compassion — recognizing someone else is suffering and wanting to help relieve that suffering — just might be as important for health as exercise or a healthful diet, some scientists believe.

When we respond to another person's needs, our body responds in turn:

We become relaxed and calm.
Our blood pressure goes down.
Our stress level goes down.

Practicing compassion is associated with lengthened telomeres, the DNA that protects the ends of your chromosomes and is a marker of longevity.

To understand why humans are hard-wired for compassion, Doty said, just look at human evolution: Caring for others was essential to the survival of the species. Humans developed powerful neuropathways associated with nurturing and bonding with their offspring as motivation to care for them in a hostile environment; otherwise their genes could not be passed on. The same was true beyond the nuclear family when humans formed hunter/gatherer tribes.

A few hundred millennia later, our need for compassion remains strong. We may not be facing predators as our ancestors did, but frequent low-level stressors — work deadlines, traffic noise, our cellphone buzzing with texts — keep our fight-or-flight response continually engaged. That releases stress hormones, which raises the risk of disease.

When we're responding to others' needs, though, we engage the “parasympathetic nervous system,” relaxing us, Doty said. Stress hormones decrease, and the immune system is boosted. In fact, that occurs even if we just think about performing a good act for someone.

That's why intervening when someone needs help — whether in the form of a hug, reassurance, financial help or something else — has a powerful impact not just on the person being helped but on the helper.

Studies also have shown that volunteering, which is a way to practice compassion, helps increase longevity — but with an important exception. Study subjects who said they were volunteering to impress somebody or for some other benefit, not because they authentically wanted to help others, didn't enjoy the same benefit."

Adam Smith 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 (and I wonder if we need to be good storytellers to be able to do that). Neuroeconomist Paul Zak has been studying how the hormone oxytocin plays a role in making us feel good when we have empathy for others (beware: Zak is a big hugger). See an earlier post Adam Smith vs. Bart Simpson for more details.

There is an interesting book called Paleopoetics: The Evolution of the Preliterate Imagination. It relates storytelling to evolution.

Click here to go the Amazon listing. It is by Christopher Collins, professor emeritus of English at New York University. Here is the description:

"Christopher Collins introduces an exciting new field of research traversing evolutionary biology, anthropology, archaeology, cognitive psychology, linguistics, neuroscience, and literary study. Paleopoetics maps the selective processes that originally shaped the human genus millions of years ago and prepared the human brain to play, imagine, empathize, and engage in fictive thought as mediated by language. A manifestation of the "cognitive turn" in the humanities, Paleopoetics calls for a broader, more integrated interpretation of the reading experience, one that restores our connection to the ancient methods of thought production still resonating within us.

Speaking with authority on the scientific aspects of cognitive poetics, Collins proposes reading literature using cognitive skills that predate language and writing. These include the brain's capacity to perceive the visible world, store its images, and retrieve them later to form simulated mental events. Long before humans could share stories through speech, they perceived, remembered, and imagined their own inner narratives. Drawing on a wide range of evidence, Collins builds an evolutionary bridge between humans' development of sensorimotor skills and their achievement of linguistic cognition, bringing current scientific perspective to such issues as the structure of narrative, the distinction between metaphor and metonymy, the relation of rhetoric to poetics, the relevance of performance theory to reading, the difference between orality and writing, and the nature of play and imagination."

Click here to read a longer description by Collins himself

Internet Kills the Video Store

Blockbuster, Outdone by Netflix, Will Shut Its Stores and DVD Mail Service

Click here to read this NY Times story by Brian Stelter. Excerpt:

"Blockbuster, which had more than 9,000 retail stores across America just nine years ago, is closing the few hundred video-rental stores that it still has, the company’s owner, Dish Network, said on Wednesday in a bittersweet but long-expected announcement.

Dish, which acquired Blockbuster through a bankruptcy auction in 2011, after the retailer had already been crushed by digital video distributors like Netflix, said it still saw value in the brand name and would use it in limited ways. But it will close all Blockbuster locations — it says there are about 300 left — and the distribution centers that support its DVD-by-mail service, which is also being dismantled. 

The announcement amounted to a surrender: a statement that Netflix, symbolized by its little red envelopes and more recently its streaming service, had prevailed over the little blue boxes that Blockbuster VHS tapes and DVDs came in."

This reminds me of my favorite economist Joseph Schumpeter and his theory of innovation. The process whereby innovations occur was called "Creative Destruction" by Schumpeter in his book Capitalism, Socialism, and Democracy. "Creative Destruction" was

"The opening of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U. S. Steel illustrate the same process of industrial mutation if I may use that biological term-that incessantly revolutionizes the economic structure from with in, incessantly destroying the old one, incessantly creating the new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in (p. 83)."

If It Pays To Have Friends, Can You Pay To Have Friends?

I know, it sounds like Yogi Berra doing an Aflac commercial. But there were two related news stories this week. One was The boyfriends you can buy! Chinese website offers men by the hour to women ashamed of their single status. Some factoids:

• Rent-a-boyfriends can advertise their wares on Taobao.com
• Increasingly popular with women under parental pressure to marry
• Services include dinners and cinema visits. Hand-holding is free

Excerpts:

"Meeting someone new isn't always the easiest of tasks, so spare a thought for China's young women who face intense parental pressure to find the right man.

As a result, women terrified of returning home without a handsome other half resort to hiring 'boyfriends' for the duration of their visit.

Now a shopping website, Taobao, has launched a new rent-a-boyfriend service which allows would-be fake other halves to advertise their services - complete with price lists."

Then there was The rise of paid friends: How wealthy New Yorkers are socializing with hired staff over 'real' companions – because they’re easier 'to control'. Excerpts:

"Rappers have long had their entourages, and lonely stay-at-home mothers have similarly long had the tendency to enlist luxury department store salespeople as makeshift best friends.

But a new trend for paid best friends is only now sweeping the upper echelons of New York’s social circles, according to the New York Observer.

The paid friends, or PF’s for short, are not platonic escorts. They are personal trainers, stylists, chefs, and chauffeurs who take their jobs to more congenial levels.

They offer rich benefactors all of the benefits of a friend’s companionship, without the drawbacks like arguments.

A fashion designer, who was anonymously quoted in The Observer’s piece much like rest of the article’s sources, told the paper: ‘There is a market, a currency for paid friends in New York. Some people need the money, and some people need the friends.’

She added that paid friends can become addictive acquisitions.

The Observer’s various sources explained that PF’s offer wealthy men the opportunity of companionship without emotional strings attached.

Acording to one avid PF employer, ‘Once you’ve had paid friends who don’t argue with you, it’s actually quite hard to go back to real friends.’

The ex-wife of a PF hoarder said ‘many really successful men don’t actually have time for real friends,’ because normal friends ‘are either resentful or bitter or ask for money,’ and that some ‘are often competitive.’

She said that as a result, ‘very rich men have paid friends as an expensive filter, because they can control them.’"

Was The October Jobs Report Really Good News?

See October surprise: Job gains soar to 204,000. It seems like most news reports said that the 200,000 added jobs was good news in view of the government shutdown. But the percent of the adult population that had a job actually fell from 58.6% in September to 58.3% in October. See Employment status of the civilian noninstitutional population 16 years and over, 1978 to date. The labor force participation rate also fell from 63.2% to 62.8%.

For all of 2007, the percent of the adult population that had a job was  63.0% (the recession started in December of 2007). Here are the percentages since 2007

2007	63.0
2008	62.2
2009	59.3
2010	58.5
2011	58.4
2012	58.6

The percentage was at least 60 for every year from 1985-2008. It was at least 62% every year from 1994-2008. So far this year, the average monthly percentage has been 58.58%. So compared to recent history, we have a long way to go. And 2013 probably won't be any better than 2012.

Is The Old Comic Book Market A Ponzi Scheme?

See Those Comics in Your Basement? Probably Worthless. It seems like the forces of supply and demand have greatly reduced the price of most, but not all, old comic books. Excerpts:

"Barry T. Smith, 44, spent most of his life collecting comic books. And he always considered them an investment. “These books would someday be college tuition, or a house down payment,” Smith remembers thinking. “I would lay them all out in my parents’ living room, sorting them, cataloging them, writing down entries on graph paper while cross-referencing them against the Overstreet Price Guide.”

After college he landed a tech job in Silicon Valley but held on to all 1,200 of his comics, including several hundred early issues of Marvel’s X-Men, which his research suggested had grown in value every year. The comics sat in a storage unit, boarded and bagged, for close to two decades. When Smith found himself unemployed and in need of money to support his wife and two daughters, he decided the time was right to cash in on his investment.

The entire collection sold for about $500. “I’m not too proud to admit, I cried a bit,” Smith says.

Frank Santoro, a columnist for the Comics Journal and an avid collector himself, has noticed the same trend. “More and more of these types of collections are showing up for sale,” he says. “And they’re becoming more and more devalued. The prices are dropping.” He recently had to break the bad news to a friend’s uncle, who was convinced his comic collection—about 3,000 books—was worth at least $23,000. “I told him it was probably more like $500,” Santoro says. “And a comic book store would probably only offer him $200.”

Stories like these are a stark contrast to what’s typically reported. To go by media accounts, 2013 has been a huge year for the vintage comic market. A Minnesota man found a copy of Action Comics No. 1—the first appearance of Superman, published in 1938—in a wall of his house and sold it for $175,000 in June. Three decades ago a different copy of the same comic sold for about $5,000, a record at the time.

Outlandish claims and tales of amazing windfalls elicit only groans from Rob Salkowitz, a business analyst and author of Comic-Con and the Business of Pop Culture. He also happens to be, in his own words, “a guy in his 40s with a basement full of old comics.” He warns that too many people have been deluded into thinking they are sitting on a comic book gold mine.

“There are two markets for comic books,” Salkowitz says. “There’s the market for gold-plated issues with megawatt cultural significance, which sell for hundreds of thousands and sometimes millions of dollars. But that’s a very, very, very limited market. If a Saudi sheik decides he needs Action Comics No. 1, there are only a few people out there who have a copy.” And then there’s the other market, where most comics change hands for pennies and nobody is getting rich or even breaking even. “The entire back-issues market is essentially a Ponzi scheme,” Salkowitz says. “It’s been managed and run that way for 35 years.”

On the other end of the spectrum, almost any comic book store owner can supply eye-opening tales of depreciation. Walter Durajlija, an adviser for Overstreet and owner of Big B Comics in Hamilton, Ont., sold a copy of Uncanny X-Men No. 94 in 2010 for a record $26,500. Last year, that same comic sold in his store for only $12,000. “[My] last two sales [of X-Men No. 94] were $9,501 in February of 2013 and $8,089 three short days later,” he says. And that’s just the tip of the iceberg. “Incredible Hulk No. 181 was getting $20,000; they now trade for $8,000.”

There are many theories for why comic collectibles have stopped being valuable. Some blame readily available reprints. “What drove the collectibility of the old comics was that they were once genuinely rare,” says Salkowitz. Others point to the grading system, which now requires that comics be encased in plastic polymer. “It really is a shady process that’s completely changed the marketplace,” says Santoro. And there’s reason to suspect that the Internet era has yet again worked its magic on prices: “In the ’60s, the only way to read these stories was to own the original issues,” says Salkowitz. “Now you can go on Pirate Bay and download a torrent of anything you want for free.”"

eHarmony To Provide Personal Counselors To Help You Find Mr. Or Ms. Right

But there's a catch: it will cost you $5,000. See For $5,000, dating site will be your wingman: Premium eHarmony service will pre-screen prospective dates for you. Excerpt:

"The whole point of online dating sites was to make matchmaking so easy anyone could do it themselves. Which makes the pitch for a new premium service from dating giant eHarmony seem odd at first: Pay us $5000 and you’ll get a personal counselor to help not only sift through matches, but quietly approach them on your behalf. 

So why did they do it? After surveying 15,000 eHarmony members who earn more than $250,000 a year, it was clear there was huge demand for such a perk, says Grant Langston, eHarmony’s vice president of customer experience. The site has one other reason to fast-track the new counseling service: An unexpected marketing opportunity. Ben Stiller’s holiday movie, “The Secret Life of Walter Mitty,” features an eHarmony counselor. eHarmony didn’t pay for the plug or provide such a service — until now. “The counselor is going to have a lot of power,” Langston says. “The service is also designed to minimize the rejection and anxiety that comes with online dating.”

eHarmony’s 29 different dimensions — the company’s famous and sometimes parodied algorithms created by founder Neil Clark Warren, a clinical psychologist — cover personality and character rather than chemistry or physical attractiveness, Langston says. That’s where the counselor comes in. As with the fictional eHarmony counselor in Stiller’s movie, the real ones will talk to members by phone or Skype — or in person for those who live near eHarmony’s offices in Santa Monica, Calif.""

China has something similar. See The Price of Marriage in China. Excerpt:

"FROM her stakeout near the entrance of an H & M store in Joy City, a Beijing shopping mall, Yang Jing seemed lost in thought, twirling a strand of her auburn-tinted hair, tapping her nails on an aquamarine iPhone 4S. But her eyes kept moving. They tracked the clusters of young women zigzagging from Zara to Calvin Klein Jeans. They lingered on a face, a gesture, and then moved on, darting across the atrium, searching.

“This is a good place to hunt,” she told me. “I always have good luck here.”

For Ms. Yang, Joy City is not so much a consumer mecca as an urban Serengeti that she prowls for potential wives for some of China’s richest bachelors. Ms. Yang, 28, is one of China’s premier love hunters, a new breed of matchmaker that has proliferated in the country’s economic boom. The company she works for, Diamond Love and Marriage, caters to China’s nouveaux riches: men, and occasionally women, willing to pay tens and even hundreds of thousands of dollars to outsource the search for their ideal spouse.

In Joy City, Ms. Yang gave instructions to her eight-scout team, one of six squads the company was deploying in three cities for one Shanghai millionaire. This client had provided a list of requirements for his future wife, including her age (22 to 26), skin color (“white as porcelain”) and sexual history (yes, a virgin).

“These millionaires are very picky, you know?” Ms. Yang said. “Nobody can ever be perfect enough.” Still, the potential reward for Ms. Yang is huge: The love hunter who finds the client’s eventual choice will receive a bonus of more than $30,000, around five times the average annual salary in this line of work."

How Does The Price Of Gas In San Antonio Today Compare To A Year Ago?

See Falling gas prices in S.A. now below $3. I saw $2.92 last Saturday (I think it was in New Braunfels). Excerpts:

"A year ago, the price for regular unleaded was $3.50 in San Antonio.

Unless there is a major hurricane or an unexpected disruption in gasoline production and distribution, prices could continue to fall, AAA spokesman Doug Shupe said."

"GasBuddy.com's chief oil analyst, Tom Kloza, said San Antonio likely will see average prices fall below $3.

“Demand is flat, but supplies are quite plentiful, particularly in Texas,” he said.

Cheaper crude oil and cheaper ethanol, which is blended into gasoline, also is helping suppress prices, said Kloza, who expects gas prices to bottom out between Election Day and Valentine's Day.

“People are driving less,” said Ed Hirs, energy economist at the University of Houston, “and the gasoline doesn't have to be processed as much in the fall and winter,” making it less expensive for refiners to produce. That helps lower prices.

Also, “I'd thank the Eagle Ford Shale and the Permian (Basin),” Hirs said, where oil production is soaring.

Refiners are buying “a huge amount of oil from the Permian and the Eagle Ford,” and the crude can be bought at a slight discount to the price on the Gulf Coast.

That's also contributing to lower prices at the pump, he said."

I don't think Kloza actually meant that the demand line for gas is flat. I think he meant that demand is simply not increasing recently (it might eve be going down if people are driving less). If the demand line is not moving and if the supply line is shifting to the right, then the price will fall.

Is It Okay To Use An App To Bribe Someone Into Going On A Date?

See Is Carrot Dating, the Bribe-Based Dating App, Really So Bad?. The author, Daniel Stuckey, suggests it is just an electronic means of doing what has long been done. It seems that people are always buying and selling something. Maybe even love, affection and companionship. Excerpts:

"In the convoluted hellscape that novelty dating sites live in, it takes a really unique feature to stand out. Take Carrot Dating. It's an app that incorporates a surface-level, quid-pro-quo-dating model, and might just be ridiculous enough to work. I instantly downloaded the app to find out.

In a piece published by Al Jazeera America yesterday, MIT entrepreneur and app creator Brandon Wade explains the concept of letting users (who may lack confidence, or sociability, or physical attractiveness) bribe incentivize potential dates that are supposedly hot with a wide range of lures. Bribes include:

• Coffee
• Dinner
• Drinks
• Tattoo
• Bouquet of Flowers
• Box of Chocolates
• Tank of Gas
• Piece of Jewelry
• Movie
• Concert

The Internet erupted, calling Wade's app "thinly veiled prostitution," and shaming him and his carrot-stick concept before ever actually trying it. I think it's fair to say that, even if the app were requiring reciprocity in kind, a coffee isn't going to get me laid. My favorite bribe from this list is a tank of gas, but call me a sucker for indie movie romance.

But the Carrot Dating app does make a great point about transactional relationships. We live in a world in which expensive gifts and outlandish dinners are sometimes par for the course for attracting a mate. Whether that's bad or not depends on your own opinion, but is it any worse if the arrangement is laid out in an app?"

"But let's face it, most dates have some form or another of unbalanced reciprocity. Perhaps that's all that Carrot Dating is trying to highlight. Whether or not you've met "the one," you're likely making some sort of compromise. And likely, if you think about it, you're able to assess some type of value to whatever that compromise is. For instance, plastic people can be an unworthy investment of patience. And coffee can range from Dunkin' to artisanal pour-overs."

Will A Tax On Junk Food Help Mexico Fight Obesity?

See Mexico Tries Taxes to Combat Obesity by Amy Gutrie, WSJ, 10-18-13.

This chart illustrates the issue.



 Excerpts:

"The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients."

"Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs."

"All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

"We're a country of malnourished fatsos," José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico's high consumption of soda and snacks on incessant TV advertisements and poor education."

"Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. "We can't allow last-minute taxes," said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.
"There's no such thing as junk food, just junk diets," said Felipe Gómez, head of a regional food makers' group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse."

The Texas Economy Is The Time Magazine Cover Story This Week

See Does Texas portend the future of the United States? by George Mason University economics professor Tyler Cowen. Here is the excerpt he posted at his blog:

"Jed Kolko, chief economist for San Francisco–based real estate website Trulia, says that from 2005 to 2011, 183 Californians moved to Texas for every 100 Texans who moved to California. “Home prices, more than any other factor, cause people to leave,” Kolko says.

…the federal government calculated the Texas poverty rate as 18.4% for 2010 and that of California as about 16%. That may sound bad for Texas, but once adjustments are made for the different costs of living across the two states, as the federal government does in its Supplemental Poverty Measure, Texas’ poverty rate drops to 16.5% and California’s spikes to a dismal 22.4%. Not surprisingly, it is the lower-income residents who are most likely to leave California.

On the flip side, Texas has a higher per capita income than California, adjusted for cost of living, and nearly catches up with New York by the same measure. Once you factor in state and local taxes, Texas pulls ahead of New York—by a wide margin. The website MoneyRates ranks states on the basis of average income, adjusting for tax rates and cost of living; once those factors are accounted for, Texas has the third highest average income (after Virginia and Washington State), while New York ranks 36th."

It doesn't say if the cost of living takes into account quality of life. California might have more amenities like beaches or art museums (I really don't know). A place like San Diego has a great climate, where it rarely gets very hot or cold. But it is not clear how much difference any of this would make.

The $100 Bill Is Getting More Expensive

More expensive to produce, that is. Click here to find out how much more and why

The Biggest Cost Of The Government Shutdown

See Government shutdown side effect: no new craft beers by Carrie Antlfinger and Todd Richmond of the Associated Press. Excerpt:

"The federal government shutdown could leave America’s craft brewers with a serious hangover.

Stores will still offer plenty of suds. But the shutdown has closed an obscure agency that quietly approves new breweries, recipes and labels, which could create huge delays throughout the rapidly growing craft industry, whose customers expect a constant supply of inventive and seasonal beers.

Mike Brenner is trying to open a craft brewery in Milwaukee by December. His application to include a tasting room is now on hold, as are his plans to file paperwork for four labels over the next few weeks. He expects to lose about $8,000 for every month his opening is delayed.

‘‘My dream, this is six years in the making, is to open this brewery,’’ Brenner said. ‘‘I’ve been working so hard, and I find all these great investors. And now I can’t get started because people are fighting over this or that in Washington. ... This is something people don’t mess around with. Even in a bad economy, people drink beer.’’

The Alcohol and Tobacco Tax and Trade Bureau, or TTB, is a little-known arm of the Treasury Department. The agency will continue to process taxes from existing permit holders, but applications for anything new are in limbo."

Some Good Economic News

No, really, I'm not kidding. See A Way of Life Is Ending. Thank Goodness by NICHOLAS D. KRISTOF of the NY Times. Excerpts:

"The share of people in the developing world who live in extreme poverty has been reduced from 1 in 2 in 1980 to 1 in 5 today..." (so that means the extreme poverty rate fell 60% since 1980)

"In 1990, more than 12 million children died before the age of 5. Now that figure is down close to 6 million."

"When child mortality drops and families know that their children will survive, they are more likely to have fewer babies — and to invest more in them."

"Ancient diseases are on the way out. Guinea worm and polio are likely to be eradicated in the coming years. Malaria has been brought under control in many countries, and a vaccine may reduce its toll even further."

"Poor people used to go blind routinely from disease or were unable to work for want of reading glasses. Now they are much less likely to go blind, and far more likely to get glasses."

"Some of the biggest gains resulted from economic growth in China and India."

"Despite the gains, a Pew poll early this year found that the budget area that Americans most wanted to cut was “aid to the world’s needy.” Perhaps one reason is that aid groups and journalists alike are so focused on problems that we leave the public mistakenly believing that the war on poverty and disease is being lost."

Today Is An Important Economic Anniversary

Click here to read all about it

Is College Financial Aid Shifting From Need To Merit?

See Freebies for the Rich by CATHERINE RAMPELL of the NY Times. Excerpts:

"Over the years, many state-university systems — and even states themselves — have shifted more of their financial aid away from students who need it toward those whose résumés merit it. The share of state aid that’s not based on need has nearly tripled in the last two decades, to 29 percent per full-time student in 2010-11. The stated rationale, of course, is that merit scholarships motivate high-school achievement and keep talented students in state."

 "about 1 in 5 students from households with income over $250,000 receives merit aid from his or her school. For families making less than $30,000, it’s 1 in 10."

"After years of state-funding cuts, many recognize that wealthy students can bring in more money even after getting a discount. Raising the tuition and then offering a 25 percent scholarship to four wealthier kids who might otherwise have gone to private school generates more revenue than giving a free ride to one who truly needs it."

"enticing these students also helps boost a school’s rankings."

"“nearly all” of the spending on state merit-based scholarships had little effect on keeping students in state after they graduated."

"A recent study by researchers at Harvard Kennedy School looked at a scholarship program in Massachusetts in which high-scoring students get tuition waivers at in-state public colleges. It found that taking the scholarship actually reduced a student’s likelihood of graduating because they ended up at a school with a completion rate lower than one of the other schools they could have gone to."

"Among needier kids, the six-year graduation rate is 45 percent when grants cover under a quarter of college costs versus 68 percent when they cover more than three-quarters"

"If you look at comparable stats for high-income students, the amount of aid makes almost no difference. Their graduation rates are around 78 percent either way."

"The share of 24-year-olds from families in the top-income quartile who hold college degrees rose from about 40 percent in 1970 to 70 percent in 2011. The share from the bottom quartile, however, remained pretty flat, edging up to 10 percent from 6 percent"

"having a higher density of college-educated workers boosts wages of even those around them without college degrees. Economists refer to the ripple effect as the “positive externalities” of higher education."

Is There Economic And Political Meaning In "The Wizard of Oz?"

A new 3D version of the movie has been playing this week.

To get a handle on this, you can read Money and Politics in the Land of Oz By Quentin P. Taylor. Also, for my students, there is an article in chapter 15 of the micro book by Tucker and in chapter 18 in the macro book.Below is an excerpt from the Taylor paper:

"Dorothy, the protagonist of the story, represents an individualized ideal of the American people. She is each of us at our best-kind but self-respecting, guileless but levelheaded, wholesome but plucky. She is akin to Everyman, or, in modern parlance, “the girl next door.” Dorothy lives in Kansas, where virtually everything-the treeless prairie, the sun-beaten grass, the paint-stripped house, even Aunt Em and Uncle Henry-is a dull, drab, lifeless gray. This grim depiction reflects the forlorn condition of Kansas in the late 1880s and early 1890s, when a combination of scorching droughts, severe winters, and an invasion of grasshoppers reduced the prairie to an uninhabitable wasteland. The result for farmers and all who depended on agriculture for their livelihood was devastating. Many ascribed their misfortune to the natural elements, called it quits, and moved on. Others blamed the hard times on bankers, the railroads, and various middlemen who seemed to profit at the farmers’ expense. Angry victims of the Kansas calamity also took aim at the politicians, who often appeared indifferent to their plight. Around these economic and political grievances, the Populist movement coalesced.

In the late 1880s and early 1890s, Populism spread rapidly throughout the Midwest and into the South, but Kansas was always the site of its most popular and radical elements. In 1890, Populist candidates began winning seats in state legislatures and Congress, and two years later Populists in Kansas gained control of the lower house of the state assembly, elected a Populist governor, and sent a Populist to the U.S. Senate. The twister that carries Dorothy to Oz symbolizes the Populist cyclone that swept across Kansas in the early 1890s. Baum was not the first to use the metaphor. Mary E. Lease, a fire-breathing Populist orator, was often referred to as the “Kansas Cyclone,” and the free-silver movement was often likened to a political whirlwind that had taken the nation by storm. Although Dorothy does not stand for Lease, Baum did give her (in the stage version) the last name “Gale”-a further pun on the cyclone metaphor.

The name of Dorothy’s canine companion, Toto, is also a pun, a play on teetotaler. Prohibitionists were among the Populists’ most faithful allies, and the Populist hope William Jennings Bryan was himself a “dry.” As Dorothy embarks on the Yellow Brick Road, Toto trots “soberly” behind her, just as the Prohibitionists soberly followed the Populists.

When Dorothy’s twister-tossed house comes to rest in Oz, it lands squarely on the wicked Witch of the East, killing her instantly. The startled girl emerges from the abode to find herself in a strange land of remarkable beauty, whose inhabitants, the diminutive Munchkins, rejoice at the death of the Witch. The Witch represents eastern financial-industrial interests and their gold-standard political allies, the main targets of Populist venom. Midwestern farmers often blamed their woes on the nefarious practices of Wall Street bankers and the captains of industry, whom they believed were engaged in a conspiracy to “enslave” the “little people,” just as the Witch of the East had enslaved the Munchkins. Populists viewed establishment politicians, including presidents, as helpless pawns or willing accomplices. Had not President Cleveland bowed to eastern bankers by repealing the Silver Purchase Act in 1893, thus further restricting much-needed credit? Had not McKinley (prompted by the wealthy industrialist Mark Hanna) made the gold standard the centerpiece of his campaign against Bryan and free silver?"

Now an excerpt from Tucker:

"Gold is always a fascinating story: The Wonderful Wizard of Oz was first published in 1900 and this children's tale has been interpreted as an allegory for political and economic events of the 1890s. For example, the Yellow Brick Road represents the gold standard, Oz in the title is an abbreviation for ounce, Dorothy is the naive public, Emerald City symbolizes Washington, D.C., the Tin Woodman represents the industrial worker, the Scarecrow is the farmer, and the Cyclone is a metaphor for a political revolution. In the end, Dorothy discovers magical powers in her silver shoes (changed to ruby in the 1939 film) to find her way home and not the fallacy of the Yellow Brick Road. Although the author of the story, L. Frank Baum, never stated it was his intention, it can be argued that the issue of the story concerns the election of 1896. Democratic presidential nominee William Jennings Bryan (the Cowardly Lion) supported fixing the value of the dollar to both gold and silver (bimetallism), but Republican William McKinley (the Wicked Witch) advocated using only the gold standard. Since McKinley won, the United States remained on the Yellow Brick Road."

But not everyone agrees with this. Economist Bradley Hansen wrote an article titled The Fable of the Allegory: The Wizard of Oz in Economics in the Journal of Economic Education in 2002. Here is his conclusion:

"Rockoff noted that the empirical evidence that Baum wrote The Wonderful Wizard of Oz as an allegory was slim, but he compared an allegorical interpretation to a model and suggested that “economists should not have any difficulty accepting, at least provisionally, an elegant but controversial model” (Rockoff 1990, 757). He was right—we did not have any difficulty accepting it. Despite Rockoff’s warning, we appear to have accepted the story wholeheartedly rather than provisionally, simply because of its elegance. It is as difficult to prove that The Wonderful Wizard of Oz was not a monetary allegory as it is to prove that it was. In the end, we will never know for certain what Baum was thinking when he wrote the book. I suggest that the vast majority of the evidence weighs heavily against the allegorical interpretation. It should be remembered that no record exists that Baum ever acknowledged any political meanings in the story and that no one even suggested such an interpretation until the 1960s. There certainly does not seem to be sufficient evidence to overwhelm Baum’s explicit statement in the introduction of The Wonderful Wizard of Oz that his sole purpose was to entertain children and not to impress upon them some moral. The Wonderful Wizard of Oz is a great story. Telling students that the Populist movement was like The Wonderful Wizard of Oz does seem to catch their attention. It may be a useful pedagogical tool to illuminate the debate on bimetallism, but we should stop telling our students that it was written for that purpose."

I found a review of the book in the NY Times from 1900 and it does not mention anything about OZ having political or economic meaning. The book was also made into a musical a few years later and none of the reviews of the musical mention any political or economic meaning.

None Of The Contestants On Jeopardy Yesterday Knew What The Gini Coefficient Measures

They even had a pretty good hint. Click here to read all about it at Wikipedia.I cover the Gini coefficient every semester in my Principles of Microeconomics class.

The San Antonio College Newspaper Printed An Article I Wrote

Click here to read it

Percentage Of College Students Receiving Financial Aid Rises

See 7 in 10 Undergraduates Get Financial Aid, New Data From a Major Federal Study Show by Beckie Supiano of The Chronicle of Higher Education. Excerpts:

"Seventy-one percent of undergraduates received some form of aid in the 2011-12 academic year, up from 66 percent in 2007-8, according to the U.S. Department of Education's National Center for Education Statistics. Their average aid amount also went up, to $10,800 from $9,000 four years earlier..."

"Take the Pell Grant program, the main federal support for needy students. Forty-one percent of undergraduate students received a Pell Grant in 2011-12, up from 28 percent in 2007-8. Some of that increase was probably the result of lower-income adults going back to college in a weak economy and families finding themselves in worse financial positions as they faced the tuition bills for their children.

At the same time, policy changes expanding eligibility for the program also drove some of the increase."

"As for borrowing, the share of undergraduates with federal Stafford loans grew from 35 percent in 2007-8 to 40 percent in 2011-12, while the average amount they borrowed also went up, from $5,000 to $6,400."

The article also has some very detailed statistical tables.

See an earlier post called Are College Costs Actually Falling? The basic idea is that although the stated price (tuition) has been rising, so has financial aid.

Another post explained how financial aid is just price discrimination. Schools are just charging different prices to different students. See As college costs rise, sticker shock eased by student aid

Are People Driving Less Because Of The Economy Or Something Else?

See Americans Driving Less as Car Culture Wanes by JOAN LOWY of the Associated Press. Excerpts:

"After rising for decades, total vehicle use in the U.S. — the collective miles people drive — peaked in August 2007. It then dropped sharply during the Great Recession and has largely plateaued since, even though the economy is recovering and the population growing."

"... the average number of miles drivers individually rack up peaked in July 2004 at just over 900 per month..."

"By July of last year, that had fallen to 820 miles per month..."

"... the share of people in their teens, 20s and 30s with driver's licenses has been dropping significantly..."

"Researchers are divided on the reasons behind the trends. One camp says the changes are almost entirely linked to the economy."

"The other camp acknowledges that economic factors are important but says the decline in driving also reflects fundamental changes in the way Americans view the automobile. For commuters stuck in traffic, getting into a car no longer correlates with fun. It's also becoming more of a headache to own a car in central cities and downright difficult to park."

"Lifestyles are also changing. People are doing more of their shopping online. More people are taking public transit than ever before. And biking and walking to work and for recreation are on the rise.

Social networking online may also be substituting for some trips."

"Demographic changes are also a factor. The peak driving years for most people are between ages 45 and 55 when they are the height of their careers and have more money to spend, said transportation analyst Alan Pisarski, author of "Commuting in America." Now, the last of the baby boomers — the giant cohort born between 1946 and 1964 — are moving out of their peak driving years."

"There's also a driving gender gap. In a role reversal, there are now more women than men in the U.S. with driver's licenses"

"There are several economic factors that help explain the trends. Driving declines exactly mirror job losses among men during the recession, when male-dominated industries like manufacturing and construction were especially hard hit, researchers said. But average automobile use has declined recently even among those who have remained employed.

Economists say many Americans, especially teens and young adults, are finding that buying and owning a car stretches their financial resources. The average price of a new car is $31,000..."

"Then there's the cost of insurance, maintenance and parking. The price of gas has gone up dramatically over the past decade.

The share of younger workers who can find jobs is at an especially low ebb, while the cost of a college education — and with it student loans — is soaring."

"18- to 20-year-olds were three times more likely to have a driver's license if they lived in a household with an annual income above $100,000 than if they lived in a household with an income below $20,000."