Sunday, December 31, 2017

Using The Market (ala Airbnb) To Help Migrating Birds

See Using the Airbnb Model to Protect the Environment by Seema Jayachandran in The NY Times. Seema Jayachandran is an economics professor at Northwestern University. Excerpts:
"There is a surge in demand for protected land when migratory birds are passing through an area or a threatened species is breeding."

"the nonprofit Nature Conservancy has been a pioneer in bringing the “sharing economy” business model to conservation. It has been temporarily expanding wetlands for migratory birds in California’s Sacramento Valley since 2014."

"the Nature Conservancy, which pays rice farmers to flood their fields for the few crucial weeks each fall and spring. Rice growers routinely flood their fields for irrigation and to decompose crop residue after harvest; through the conservation program, named BirdReturns, they do so during periods when the fields would have been dry."

"A team of ecologists and economists figured out how much to compensate the farmers for this change. They ran “reverse auctions” in which landowners specified the lowest payment that would entice them to flood their fields for a given four- to eight-week period.

This auction system adjusts payments to farmers’ costs. For example, flooding during the end of the spring migration season is trickier to fit into an annual rice-growing schedule, so bids — and payments — are higher then. The auction model is also flexible when the weather fluctuates. The early years of the program occurred during California’s prolonged drought, but abundant rainfall in 2017 meant that BirdReturns could dial back the amount of pop-up wetland it procured this year."

"The team predicts the birds’ migratory paths using crowdsourced data from amateur bird-watchers and combines that data with satellite images of surface water, enabling the establishment of temporary wetlands at the right times and places."

"My research looked at a conservation group’s program in Uganda that made annual payments to farmers if they refrained from chopping down forestland that they owned. The approach turned out to be a remarkably inexpensive way both to protect forests and to reduce carbon emissions."

"Buying up the forest outright and turning it into traditional reserves not only would have cost more money, but it would have displaced thousands of people from their homes."

"In the Ugandan setting, a ban would deprive poor people of much-needed income generated by selling timber or using newly cleared land for agriculture.

Moreover, a market-based approach can balance conservation goals with critical needs like growing food. If a certain landowner is outstanding at farming — producing a lot of food for the community — it could very well make sense for her to continue to farm her land, even if doing so means clearing some forest.

Ideally, less productive farmers will participate in the program because food production — and profit — sacrificed by keeping their forest intact is small.

That’s why proper pricing is important. If you offer an appropriate payment for conservation, the best farmers will decline it because they can earn more by expanding their farms, while the mediocre ones will sign up. Markets can help us find those opportunities."

Saturday, December 30, 2017

Higher economic status can offset lower physical attractiveness in men much more easily than in women

See Different impacts of resources on opposite sex ratings of physical attractiveness by males and females.


Parental investment hypotheses regarding mate selection suggest that human males should seek partners featured by youth and high fertility. However, females should be more sensitive to resources that can be invested on themselves and their offspring. Previous studies indicate that economic status is indeed important in male attractiveness. However, no previous study has quantified and compared the impact of equivalent resources on male and female attractiveness. Annual salary is a direct way to evaluate economic status. Here, we combined images of male and female body shape with information on annual salary to elucidate the influence of economic status on the attractiveness ratings by opposite sex raters in American, Chinese and European populations. We found that ratings of attractiveness were around 4 times more sensitive to salary for females rating males, compared to males rating females. These results indicate that higher economic status can offset lower physical attractiveness in men much more easily than in women. Neither raters' BMI nor age influenced this effect for females rating male attractiveness. This difference explains many features of human mating behavior and may pose a barrier for male engagement in low-consumption lifestyles."

Related posts

Better Looking Real Estate Agents Make More Money
Do looks matter?
Do Good Looking People Get Better Loan Terms?
Do Looks Help In The Job Market? 
From The Life Is Not Fair Category: Better Looking, Tall, Thin People Make More Money 

The Unfairness of Unattractiveness

Friday, December 29, 2017

Can the Robot Revolution Create Enough Jobs?

See How the Robot Revolution Could Create 21 Million Jobs: Data detective, man-machine teaming managers: some of the ways human workers are likely to be needed to manage artificial intelligence and automation by Vanessa Fuhrmans of The WSJ. Excerpts:
"At least 21 new job categories may soon emerge from technological and other societal changes, says a new report from IT-services and consulting firm Cognizant Technology Solutions Corp. CTSH -0.17%
With titles such as “genetic diversity officer,” “virtual store sherpa” and “personal memory curator,” these roles aren’t science fiction, the study’s authors argue. Rather, they are identified as jobs many employers will have to fill within the next decade.

“It’s easier to understand what types of jobs are going to go away,” says Ben Pring, director of Cognizant’s Center for the Future of Work"

"Other studies have concluded that artificial intelligence and automation can create jobs. Many companies building AI systems have found that humans must play an active role in both building and running them. In retailing, store jobs lost to e-commerce have been replaced by jobs in fulfillment centers."

"Michael Reich, economics professor at University of California, Berkeley . . . disagrees with the grim no-jobs future that some envision. “Even if an employer would love to replace all of their workers with robots to make their cars, someone needs to be able to buy those cars made by robots for the business to function.”

Several of the jobs that Mr. Pring and his colleagues envision involve helping companies manage artificial intelligence and automation. There is what the study calls “data detectives:” workers who dig into their employer’s data stockpiles and generate business recommendations. “Man-machine teaming managers” will be needed to ensure machines and human workers collaborate in a way that maximizes results, the study says, while “cyber city analysts” will see that municipalities’ digital systems and processes function smoothly."

"the study describes rising demand for “walker-talkers,” gig workers who answer calls to assist and provide companionship for a growing elderly population as people live longer. On the high-tech side, “augmented-reality journey builders” will help design virtual-reality experiences for consumers, the study projects."

Another WSJ article covered similar issues. See Forget Robots: Bad Public Policies Could Be Bigger Job Killers: Study stresses need for businesses, governments to prudently manage disruption created by automation by Lauren Weber. Excerpts:

"As many as 375 million workers around the world will need to find new occupations or lose their livelihood to automation by 2030, the McKinsey Global Institute estimates in a new report. It isn’t impossible for up to 14% of the global workforce to retrain and refocus, but it requires planning and the investment of will and resources, says Susan Lund, a principal at the Institute."

"The choices that policy makers and business leaders make about how to support displaced workers, invest in education and training, and fund job-creating projects in areas such as infrastructure and energy will all affect the labor market, she says.

If governments and businesses choose wisely, global job displacement could affect as few as 3% of workers, but that depends on how quickly companies adopt automation tools, reconcile regulatory issues, and adjust wage rates for workers, among other factors. Higher wages, for instance, mean companies have more incentive to automate tasks."

"Ms. Lund notes that support for displaced workers can include guidance and career coaching as well as services such as transportation and child care during job interviews. About 15% of all hours worked globally could be automated by 2030 using technology that is currently available"

"60% of all occupations could be at least partially automated with current tools, though fewer than 5% are at risk of total automation."

"The new jobs that emerge may be the indirect result of technology’s contribution to higher productivity and rising incomes"

"More jobs will also be created to . . . develop and maintain future technology . . . and to staff energy-efficiency initiatives."

Related pots:

What Econ 101 Can Teach Us About Artificial Intelligence

Are Robots Going to Steal Our Jobs? Many technologists think so, but economists aren't so easily convinced

Automation Can Actually Create More Jobs

Thursday, December 28, 2017

Why Economics Is Really Called 'the Dismal Science': The (not-so-dismal) origin myth of a ubiquitous term

By Derek Thompson of The Atlantic Monthly. From 2013.
"The story goes like this: Thomas Carlyle, a Scottish writer and philosopher, called economics "the dismal science" in reference to Thomas Malthus, that lugubrious economist who claimed humanity was trapped in a world where population growth would always strain natural resources and bring widespread misery. Dismal, indeed.

But this origin myth is, well, mythical. Carlyle did coin the phrase "the dismal science." And Malthus was, without question, dismal.

But Carlyle labeled the science "dismal" when writing about slavery in the West Indies. White plantation owners, he said, ought to force black plantation workers to be their servants.

Economics, somewhat inconveniently for Carlyle, didn't offer a hearty defense of slavery. Instead, the rules of supply and demand argued for "letting men alone" rather than thrashing them with whips for not being servile. Carlyle bashed political economy as "a dreary, desolate, and indeed quite abject and distressing [science]; what we might call ... the dismal science.

Today, when we hear the term "the dismal science," it's typically in reference to economics' most depressing outcomes (e.g.: on globalization killing manufacturing jobs: "well, that's why they call it the dismal science," etc). In other words, we've tended to align ourselves with Carlyle to acknowledge that an inescapable element of economics is human misery.

But the right etymology turns that interpretation on its head. In fact, it aligns economics with morality, and against racism, rather than with misery, and against happiness. Carlyle couldn't find a justification for slavery in political economic thought, and he considered this fact to be "dismal." Students of economics should be proud: Their "science" was then (as it can be, today) a force for a more just and, crucially, less dismal world."

Wednesday, December 27, 2017

Must-reads of 2017, from monopolies to sexism

By Noah Smith. He is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University.

Here are my three favorites of the top ten (the others will all be listed below but you can read about them at the link above).

"2. “The Complacent Class: The Self-Defeating Quest for the American Dream,” by Tyler Cowen
My Bloomberg View colleague took a look at the U.S. economy and society and saw a story of stagnation -- falling productivity, declining geographic mobility, fewer startups, fewer people moving between jobs and more people dropping out of the workforce. He wove all of these trends, as well as his own cultural observations, into a story of “complacency” -- of a society that had become so good at delivering us the things we already know we want that it never prods us to get out and find new goals and new dreams.

3. “Housing Constraints and Spatial Misallocation,” by Chang-Tai Hsieh and Enrico Moretti

As cities become more important to the U.S. economy, the problem of NIMBYs -- local landowners who oppose urban growth -- has received a lot more attention. In San Francisco and other hot-tech hubs, rent has skyrocketed as demand has increased with no concomitant increase in supply. Hsieh and Moretti attempt to quantify just how much this is hurting the economy, and they come up with some pretty eye-popping numbers. Even if those numbers turn out to be too high, there’s a growing economic consensus that urban land-use restrictions are a problem that needs fixing."

"10. “Economics for the Common Good,” by Jean Tirole

Nobel Prize-winning economist Jean Tirole isn’t known for his public policy advocacy -- instead, he’s the consummate academic, penning highly mathematical theories that only a few people are qualified to understand and apply. But in “Economics for the Common Good,” Tirole descends from the ivory tower, offering a number of ways that he believes economic models can inform public policy debates on a huge variety of pressing issues."

1. “The Rise of Market Power and the Macroeconomic Implications,” by Jan De Loecker and Jan Eeckhout
4. “Economism: Bad Economics and the Rise of Inequality,” by James Kwak
5. The Ongoing Macro Debate
6. “WTF?: What’s the Future and Why It’s Up to Us,” by Tim O’Reilly and “Machine, Platform, Crowd: Harnessing Our Digital Future,” by Andrew McAfee and Erik Brynjolfsson
7. “The New Urban Crisis,” by Richard Florida
8. “The Power of Bias in Economics Research,” by John P. A. Ioannidis, T. D. Stanley, and Hristos Doucouliagos
9. “Gender Stereotyping in Academia: Evidence from Economics Job Market Rumors Forum,” by Alice H. Wu

Tuesday, December 26, 2017

Is Technology Holding Down Inflation?

See As the Fed Deliberates, Amazon Is Making Its Job More Difficult: Comparison shoppers keep a lid on inflation, complicating deliberations on interest rates by Harriet Torry and Laura Stevens of The WSJ. Excerpts:
"Holiday shoppers with smartphones can retrieve instant price comparisons that make bargain hunting easier—and the Federal Reserve’s job tougher.

Web-driven comparison shopping complicates Fed decisions on how much and how fast to raise interest rates. Consumer knowledge is keeping a lid on prices that retailers can charge on a wealth of goods, a small but growing factor holding down inflation in the U.S., Japan and other advanced economies"

"Fed officials, along with central bankers in Europe and Japan, want inflation to rise to an annual rate of around 2%, considered a healthy level for spending, business investment and higher wages. With the U.S. economy expanding and showing very low unemployment, an interest-rate increase would help forestall asset bubbles or other financial dangers."

" inflation remains puzzlingly weak, running below 2% for most of this year. Moving too quickly could stall growth.

Persistently weak inflation has stumped Fed Chairwoman Janet Yellen and her colleagues. Some Fed officials have argued for holding rates low a bit longer to give inflation a nudge. Most, though, want to raise them.

Economists attribute feeble inflation across developed economies to several causes, including aging populations, slow productivity growth and globalization, which have reined in the ability of companies to raise prices and wages." [it seems strange to say slow productivity growth holds down inflation since more productivity growth would shift supply curves to the right which lowers prices and later in the article they say that productivity is helped by this price competition-CM]

In a nod to the growing practice, Ms. Yellen said in September that increased competition created by online retailers “may have reduced price margins and restrained the ability of firms to raise prices in response to rising demand.” She said in October that online shopping “could be helping to hold down inflation in a persistent way in many countries.” The Bank of Japan in has attributed part of the price declines at supermarkets to online shopping."

"online price competition may be subtracting as much as a tenth of a percentage point from core inflation"

"and quarter of a percentage point from core-goods inflation, as measured by the personal-consumption expenditures index. It may not sound like much, but with annual core inflation at just 1.4% in October, it is significant."

"retail pricing now mirrors gas stations, where prices are clearly marked and competitors quickly match their rivals"

"The competition helps drive innovation and productivity, according to economists, while giving consumers more for their money. And some believe it will have a growing influence over central bank policy."

Saturday, December 23, 2017

Vanilla is so valuable now that it needs to be guarded

See Your Passion for Fancy Vanilla Ice Cream Is Creating World-Wide Havoc: With the price skyrocketing, farmers in Madagascar, the industry’s epicenter, are sleeping in their fields, hiring guards; ‘there are many vanilla thieves here’ by Alexandra Wexler of The WSJ.
"Driven in part by Americans’ increasing taste for natural products, the price of vanilla has grown sixfold over the past three years."

"Vanilla bandits are plundering pods, which at about $600 a kilogram are now more valuable than their weight in silver and come second only to saffron in the spice price rankings."

"Farmers . . . have hired guards or spend their nights sleeping in their fields. On at least four occasions this year, farmers have killed thieves caught stealing vanilla from farms"

"Some communities, including Ambodiampana, whose neat wooden-slat houses materialize out of the thick, green jungle on either side of a wide tar road, have created village defense forces, which are staffed by the strongest men. They are trained by the local gendarmes to guard access to the area and bring thieves in to the authorities.

The mayhem in the Malagasy jungle, where about 80% of the world’s vanilla is grown, is spurred by some of the world’s largest packaged-foods companies, which are increasingly using natural—rather than artificial—vanilla flavor in chocolates, ice creams and baked goods. Natural vanilla flavor is now used in products including NestlĂ© SA’s Crunch bars, McDonald’s Corp.’s vanilla soft serve and Hershey Co.’s Hershey’s Kisses.

In 2017, the market for U.S. vanilla imports jumped to $402.4 million through October, from $232.8 million during the same period in 2016, after more than doubling in 2016 from the previous year, according to the U.S. International Trade Commission and the U.S. Department of Commerce.

This year, the increase in price for natural vanilla was compounded by a March cyclone that hit the northeastern vanilla-producing region of Madagascar, which fueled buyers’ worries about shortages."

"Vanilla plants are the only fruit-bearing orchid and it takes them about three years to start producing beans—one reason why supply is lagging demand."

"Vanilla farmers receive a fraction of the jump in prices for their produce, with much of the profits staying with middlemen, who buy the pods and then sell to exporters. Farmers in Ambodiampana said they get about $200 a kilogram for their beans, about one-third the market price. In the hope of shielding them from thieves, farmers have been picking their beans before they’re ripe, which drastically reduces the amount and quality of the vanilla that they yield."

"For now, smaller retailers like artisanal bakeries and gourmet ice-cream makers are feeling the pinch more acutely than their mass-market peers—they require higher-quality vanilla and the beans make up a much higher percentage of their costs."

Friday, December 22, 2017

Would You Pay $50,000 So Your Baby Can Be Born In The USA?

See Saipan: The Island Where Chinese Mothers Deliver American Babies: Women looking to give birth to U.S. citizens have found a loophole in the Pacific on the island of Saipan. By Jon Emont of The WSJ.

Doing so is called "birth tourism." Saipan is a U.S. territory and is only a 4-5 hour flight from China. Excerpts:

"The Northern Marianas, an island chain that includes Saipan, is the only U.S. soil that Chinese can visit without a visa, after a change in immigration policy in 2009 allowed Chinese and Russian tourists visa-free entry for up to 45 days."

"The number of Chinese visitors has risen substantially since 2009 and now represents 36% of tourists to the island"

"The number of American babies born here to Chinese women who entered as tourists also climbed—to 472 last year from eight in 2009—according to the Northern Marianas government. Last year, for the first time, more Chinese tourists gave birth here than Americans."

"Chinese travel businesses offer competing packages to help Chinese mothers reach U.S. soil and provide them with lodging, hospital care and domestic help.

There is nothing illegal about birth tourism, provided the visitor has the funds to pay for required medical procedures and doesn’t intend to overstay"

"In China, websites advertising birth-tourism packages abound, with names such as, promising luxurious birth vacations to Saipan. The Chinese translator whose wife gave birth on Saipan said total costs can exceed $50,000.

“Everyone is feeling unsafe in China,” the father said, citing among other things the political crackdown under President Xi Jinping. “We will do anything for our kids.” The father still lives on Saipan with his wife and children, and fears they will be deported."

"Doctors and administrators said the surge in the number of Chinese mothers is overwhelming health facilities. “It’s a strain for the community,” said Esther Muna, CEO of government health provider Commonwealth Healthcare Corporation, which runs the hospital."

Thursday, December 21, 2017

The time demands of many jobs can explain much of the gender pay gap

See How to Win the Battle of the Sexes Over Pay (Hint: It Isn’t Simple.) by Claudia Goldin. She is a professor of economics at Harvard University and a past president of the American Economic Association. Excerpts:
"unequal treatment in hiring and in the work setting is real and may be reflected in unequal pay.

Yet it is also true that the time demands of many jobs can explain much of the pay difference, a finding that has sobering implications. Eliminating the gender earnings gap will require changes in millions of households and thousands of individual workplaces.

Even defining the gender earnings gap isn’t simple: It cannot be reduced to a single number, though it often is expressed that way. According to a commonly used measure adopted by the United States Census Bureau, women in 2016 earned 81 cents for each dollar earned by men, both working full-time.

This definition focuses on the annual income of the individual at the median — or middle — of the income distribution for men and for women. Another valid option is to focus on mean, or average, earnings."

"The gap is larger among more educated people, for example, and varies according to occupation, often in big ways. Among college graduates, it is far larger in business, finance and legal careers than in science and technology jobs. In health care, it is larger when self-employment is high (think dentists) and much lower when professionals are mainly employees (think pharmacists).

What’s more, the gap is a statistic that changes during the life of a worker. Typically, it’s small when formal education ends and employment begins, and it increases with age. More to the point, it increases when women marry and when they begin bearing children.

Using the data that shows women earn 81 cents for each dollar earned by men, when the careers of recent college graduates start, the gap is much smaller: 92 cents for each male dollar. By the time college-educated women are 40 years old, they earn 73 cents.

Similar patterns appear using data for women and men who have earned master’s degrees in business administration. Immediately after graduation, women earn 92 cents for each male dollar. A decade later they earn only 57 cents.

Correcting for time off and hours of work reduces the difference in the earnings between men and women but doesn’t eliminate it.

On the face of it, that looks like proof of disparate treatment. It may seem understandable that when a man works more hours than a woman, he earns more. But why should his compensation per hour be greater, given the same qualifications? But once again, the problem isn’t simple."

The data shows that women disproportionately seek jobs — including full-time jobs — that are more likely to mesh with family responsibilities, which, for the most part, are still greater for women than for men. So, the research shows, women tend to prefer jobs that offer flexibility: the ability to shift hours of work and rearrange shifts to accommodate emergencies at home.

Such jobs tend to be more predictable, with fewer on-call hours and less exposure to weekend and evening obligations. These advantages have a negative consequence: lower earnings per hour, even when the number of hours worked is the same.

Is that unfair? Maybe. But it isn’t always an open-and-shut case. Companies point out that flexibility is often expensive — more so in some jobs than others.

Certain job characteristics have a big impact on the gender earnings gap. I have looked closely at these issues, including the extent to which workers are:

■ Subject to strict deadlines and time pressure
■ Expected to be in direct contact with other workers or clients
■ Instructed to develop cooperative working relationships
■ Assigned to work on highly specific projects
■ Unable to independently determine their tasks and goals

Occupations with a lower level of these characteristics (like jobs in science and technology) show smaller gaps, corrected for hours of work. Occupations with a higher level (like those in finance and law) have greater gaps. Men’s earnings tend to surge when there are fewer substitutes for a given worker, when the job must be done in teams and when clients demand specific lawyers, accountants, consultants and financial advisers. Such differences can account for about half the gender earnings gap.

These findings provide more nuance in explaining why the gap widens with age and why it is greater for women with children. Whatever changes have already taken place in American society, the duty of caring for children — and for other family members — still weighs more heavily on women. And if you thought that moving to a more family-friendly nation would eliminate the gap, think again. In several nations, including Sweden and Denmark, a “motherhood penalty” in earnings exists, even though these nations have generous family policies, including paid family leave and subsidized child care."

"In sum, the gap is mainly the upshot of two separate but related forces: workplaces that pay more per hour to those who work longer and more uncertain hours, and households in which women have assumed disproportionately large responsibilities."

Friday, December 15, 2017

Does It Matter If We Call Entrepreneurs Heroes?

First, a funny comic from Non Sequitur

Should society call entrepreneurs heroes? Are they like heroes from mythology? Those may seem like strange questions for an economist to ask. But they matter for several reasons. Dwight Lee and Candace Allen argued that if we don't honor entrepreneurial accomplishments, we won't get enough startups. Deirdre McCloskey says that economic growth only took off around the year 1800 because the West began according dignity to entrepreneurs. The work of entrepreneurs parallels the hero's adventure in mythology. The idea has been gaining attention recently, being discussed in The Wall Street Journal while Jeffery McMullen has called for scholars to once again take it seriously. Even Joseph Campbell, the author of The Hero With a Thousand Faces, one of the inspirations for Star Wars, called the entrepreneur the real hero in American capitalistic society in a radio interview (see appendix). 
            Cyril Morong was the first to examine the similarities between entrepreneurs and mythological heroes.[i],[ii] He compared entrepreneurship research to The Hero With a Thousand Faces to see if the activities of entrepreneurs corresponded to the hero's adventure. What is the hero's adventure? According to Campbell
"The standard path of the mythological adventure of the hero is a magnification of the formula represented in the rites of passage: separation-initiation-return, which might be named the nuclear unit of the monomyth. A hero ventures forth from the world of common day into a region of supernatural wonder; fabulous forces are there encountered and a decisive victory is won; the hero comes back from this mysterious adventure with the power to bestow boons on his fellow man."
How is this similar to the entrepreneur's adventure?
            The hero's journey begins with a call to adventure. He or she is awakened by some herald which touches his or her unconscious world and creative destiny. The entrepreneur, too, is "called" to the adventure. By chance, he or she discovers a previously unknown product or way to make a profit. The lucky discovery cannot be planned and is itself the herald of the adventure. Israel Kirzner sees successful entrepreneurship as result of a lucky discovery of a new opportunity for economic profit, but it is luck that was due to alertness while leading a life of purposeful action.[iii]
            The entrepreneur must step out of the ordinary way of producing and into his or her imagination about the way things could be to discover the previously undreamt of technique or product. The "fabulous forces" might be applying the assembly line technique or interchangeable parts to producing automobiles or building microcomputers in a garage. The mysterious adventure is the time spent tinkering in research and development. But once those techniques are discovered or developed, the entrepreneur now has the power to bestow this boon on the rest of humankind.
            Heroes and entrepreneurs both bring change. Campbell refers to the constant change in the universe as "The Cosmogonic Cycle" which "unrolls the great vision of the creation and destruction of the world which is vouchsafed as revelation to the successful hero." This is similar to Joseph Schumpeter's theory of entrepreneurship called “creative destruction.” A successful entrepreneur simultaneously destroys and creates a new world, or at least a new way of life. Henry Ford, for example, destroyed the horse and buggy age while creating the age of the automobile. The hero also finds that the world "suffers from a symbolical deficiency" and "appears on the scene in various forms according to the changing needs of the race." The changing needs and the deficiency correspond to the changing market conditions or the changing desires for products. The entrepreneur is the first person to perceive the changing needs.
            Candace Allen and Dwight Lee say that "society needs heroes" and that "entrepreneurs are heroes in every sense." Yet they are not often see as heroes-in fact the opposite seems to be true even though they are indispensable to economic progress. One problem is that economists have not generally promoted entrepreneurs as being important. They acknowledge that creative destruction was "the hallmark of entrepreneurship" without mentioning the parallel to Campbell. Entrepreneurs are motivated not just by money but also by "service to something transcendental."  Their views can be summed up with:
“Just as the society that doesn't venerate winners of races will produce fewer champion runners than the society that does, the society that does not honor entrepreneurial accomplishment will find fewer people of ability engaged in wealth creation than the society that does.”[iv]
            Dwight Lee and Candace Allen Smith covered similar ground in a later article but also used Campbell, notably the "separation-initiation-return" core of the monomyth (although they still missed the creation destruction connection between Campbell and Schumpeter). They suggest that entrepreneurs are seen negatively due to political biases and the fact that their role in capitalism is poorly understood.[v] Calling them heroes might offset this.
            Jeffery McMullen argues that seeing entrepreneurs as heroes doesn't mean that they are hyper-individualistic lone rangers, cutoff from the rest of society. They may receive some community support, but a new venture still requires someone to act, to take the first step. This requires courage due to uncertainty. They are heroic because they bear personal costs. McMullen also bases his observations on the work of Campbell and Schumpeter. He calls on scholars to end their hostility to calling entrepreneurs heroes. Otherwise, we are all "vulnerable to the tyranny of cautious conformity while subjecting our social systems to the constant threat of stagnation."[vi]
            Charles Murnieks, Jeffery McMullen, and Melissa Cardon also mention entrepreneurs being heroes (citing Campbell and Schumpeter). Using surveys, they found that entrepreneurs experienced positive emotions (PE) when they perceived that their self-identity as entrepreneurs matched that of society or their environment. That is, if the entrepreneurs saw themselves as risk-takers who enhance social welfare, and if the entrepreneurs thought that society saw them that way as well, positive emotions were experienced.
            Their empirical findings may support Allen and Lee's contention that society should honor entrepreneurial accomplishments:
"challenging environments are part of what makes a hero’s actions valiant. In a similar manner, we contend that dynamic environments may play a key role in framing an entrepreneur’s actions as courageous or innovative, because the individual is seen to act in the face of uncertainty and turbulence. Stakeholders (such as mentors, family members, or investors) who advise entrepreneurs should know and accentuate this point. By providing reaffirming feedback in dynamic and challenging environments, these stakeholders can elevate the PE experienced by the entrepreneur and motivate them to continue on their journey. In essence, this strategy can help separate the generation of PE from the success of the venture in some cases."[vii]
The "reaffirming feedback" is a way to honor the entrepreneur which motivates them to "continue on their journey."
            The idea that entrepreneurs might be heroes is now starting to reach the popular media. Barbara Haislip reported on how storytelling, especially about the founders, can be a marketing tool for businesses. She interviewed Angela Randolph of Babson College who said “Stories about founders and new innovations are often in the form of a myth and follow the hero’s journey.” Randolph then described the hero's journey as outlined in Campbell. Telling the founding story about "the hero’s call to action...pulls the audience in" if they can trigger "strong emotions."[viii]
            This question may be relevant now since entrepreneurship may be in decline. Jeffrey Sparshott reported that “the share of private firms less than a year old has dropped from more than 12 percent during much of the 1980s to only about 8 percent since 2010. In 2014, the most recent year of data, the startup rate was the second-lowest on record, after 2010.”[ix] Honoring and respecting the work of entrepreneurs might be a way to reverse this trend.[x]
            Also, historically, it may have only been when entrepreneurs became respected that economic growth took off. Deirdre McCloskey argues that what made the world so wealthy today, when average world income in 1800 was just $1 to $5 per day (adjusted for inflation)  was a change in ideas:
" Holland and then in England. The revolutions and reformations of Europe, 1517 to 1789, gave voice to ordinary people outside the bishops and aristocrats. Europeans and then others came to admire entrepreneurs..."
It was a "Middle-Class Deal" that gave entrepreneurs dignity and liberty to seek profit and generate social welfare. This led to a flurry of inventions, innovations and new institutions that made our modern world and therefore "the ordinary people, and especially the very poor, were made much, much better off." She even says "People had to start liking "creative destruction...""[xi]
            In fact, one of her books is titled Bourgeois Dignity: Why Economics Can’t Explain the Modern World. McCloskey writes
"that the modern world was made not by the usual material causes, such as coal or thrift or capital or exports or imperialism or good property rights or even good science, all of which have been widespread in other cultures and at other times."[xii]
McCloskey even credits "the Kirznerian entrepreneur [for allowing her] to make progress on the puzzle of economic growth." What is entrepreneurship? It is an "unhirable factor" or "alertness" and "can't be something that can be provided routinely, such as the services of banking or management. It must be creative."[xiii] Creativity comes from stepping outside the normal way of doing things, "jumping over the edge and moving into the adventure" (see the Campbell interview in the appendix). So the entrepreneur is just like the hero in mythology.[xiv]
Tape #1901: "Call of the Hero" with Joseph Campbell interviewed by Michael Toms. New Dimensions Foundation audio tape from a live interview on San  Francisco's radio station KQED. The following exchange was part of a discussion of the question of: What is creativity?
Toms: In a sense it's the going for, the jumping over the edge and moving into the adventure that really catalyzes the creativity, isn't it?
Campbell: I would say so, you don't have creativity otherwise.
Toms: Otherwise there's no fire, you're just following somebody else's rules.
Campbell: Well, my wife is a dancer. She has had dance companies for many, many years. I don't know whether I should talk about this. But when the young people are really adventuring, it's amazing what guts they have and what meager lives they can be living, and yet the richness of the action in the studio. Then, you are going to have a concert season. They all have to join a union. And as soon as they join a union, their character changes. (emphasis added, but Campbell changed the tone of his voice) There are rules of how many hours a day you can rehearse. There are certain rules of how many weeks of rehearsal you can have. They bring this down like a sledgehammer on the whole thing. There are two mentalities. There's the mentality of security, of money. And there's the mentality of open risk.
Toms: In other societies we can look and see that there are those that honor elders. In our society it seems much like the elders are part of the main stream and there is a continual kind of wanting to turn away from what the elders have to say, the way it is, the way to do it. The union example is a typical one, where the authority, institution, namely the union comes in and says this is the way it's done. And then one has to fall into line or one has to find something else to do.
Campbell: That's right.
Toms: And it's like treating this dichotomy between elders and the sons and daughters of the elders. How do you see that in relationship to other cultures?
Campbell: This comes to the conflict of the art, the creative art and economic security. I don't think I have seen it in other cultures. The artist doesn't have to buck against quite the odds that he has to buck against today.
Toms: The artist is honored in other cultures.
Campbell: He is honored and quickly honored. But you might hit it off, something that really strikes the need and requirements of the day. Then you've given your gift early. But basically it is a real risk. I think that is so in any adventure, even in business, the man who has the idea of a new kind of gift (emphasis added) to society and he is willing to risk it (this is exactly what George Gilder says in chapter three, "The Returns of Giving" in his book Wealth and Poverty). Then the workers come in and claim they are the ones that did it. Then he (the entrepreneur) can't afford to perform his performance. It's a grotesque conflict, I think between the security and the creativity ideas. The entrepreneur is a creator; he's running a risk.
Toms: Maybe in American capitalistic society the entrepreneur is the creative hero in some sense.
 Campbell: Oh, I think he is, I mean the real one. Most people go into economic activities not for risk but for security. You see what I mean. And the elder psychology tends to take over.
This discussion ended and after a short break a new topic was discussed.

[i] Cyril Morong, "The Creative-Destroyers: Are Entrepreneurs Mythological Heroes?" (Presented at the annual meetings of the Western Economic Association, July), 1992, available at:
Cyril Morong, "The Calling of the Entrepreneur," The New Leaders: The Business Bulletin for Transformative Leadership, November/December 1992, p. 4, available at:
Cyril Morong, "Mythology, Joseph Campbell, and the Socioeconomic Conflict,” The Journal of Socio-Economics, Volume 23, No.4, Winter 1994, pp. 363-382, available at:
[ii] Wyn Wachhorst in Thomas Alva Edison: An American Myth (Cambridge, MA: MIT Press, 1981), pp.74-86, uses Joseph Campbell's book The Hero With a Thousand Faces to analyze part of Edison's early life, although Wachhorst suggests that Edison might have been more trickster than hero. Wachhorst quotes David McClelland from The Achieving Society with: "Interestingly, David McClelland found that Hermes, the trickster of the Greek pantheon, is the mythological type which best reflects the "achievement personality [of entrepreneurs]."" Morong (1992a) also mentions tricksters. The word entrepreneur does not appear in the index of the Edison book. So Wachhorst probably did not look at any research on entrepreneurs in general. He did not mention Schumpeter and creative destruction, either. Wachhorst often compares Edison to Prometheus, suggesting that using electricity is like stealing fire.
[iii] Israel Kirzner, Perception, Opportunity, and Profit (The University of Chicago Press, 1979), p. 163, 181.
From personal correspondence with Israel Kirzner he writes "I should point out in my own treatment of the entrepreneur, he is not seen as a "hero." Moreover, in my own treatment pure luck is not seen as entrepreneurial. (but as the act of deliberately putting oneself into a situation which one hopes will prove lucky is entrepreneurial)." It is my contention that the best way for a person to put themselves into a situation in which they will be lucky is for them to follow Campbell's advice that is based on his analysis of the hero's adventure. This is to follow your bliss, to listen to the wisdom of your heart and do what you love, not what the social system would have you do. If you follow your bliss, you are a hero. I believe that the most successful entrepreneurs follow their bliss and are therefore heroes. Jeffery McMullen (cited below) also mentions that entrepreneurs follow their bliss.
Joseph Schumpeter, The Theory of Economic Development (New Brunswick, NJ:Transaction Books, 1983), p. 923 lists three classes of motives for entrepreneurship: the will to found private kingdom, the will to conquer, and the joy of creating. The first, although seemingly only greedy, ranges, however, from "spiritual ambition down to mere snobbery." The second was like a sporting event, with money used to keep score, and not an end in itself. The entrepreneur of the third class of motives is in it for the sake of "exercising one's energy and ingenuity" and for the delight in venturing. All three classes of motives are anti-hedonistic, with the third being the most so. This certainly makes it plausible to see the entrepreneur as someone who follows his or her bliss.
[iv] Candace Allen and Dwight Lee, "The entrepreneur as hero," Journal of Private Enterprise, Volume 12, No. 1, Fall 1996, pp. 1–15.
[v] Dwight Lee and Candace Allen Smith,  “The Entrepreneur on the Heroic Journey,” The Freeman, Vol. 47 No. 4, April 1997, available at:
[vi] Jeffery McMullen, "Are we confounding heroism and individualism? Entrepreneurs may not be lone rangers, but they are heroic nonetheless," Business Horizons, Volume 60,          Issue 3, May–June 2017, pp. 257–259.
[vii] Charles Y. Murnieks, Jeffery S. McMullen, and Melissa S. Cardon, "Does Congruence with an Entrepreneur Social Identity Encourage Positive Emotion Under Environmental Dynamism?" Journal of Small Business Management, 27 February 2017, doi:10.1111/jsbm.12335, abstract available at:
[viii] Barbara Haislip, "Tell Me a Story," The Wall Street Journal, May 1, 2017, page R8, available at:
[ix] Jeffery Sparshott, "Sputtering Startups Weigh on U.S. Economic Growth," The Wall Street Journal, October  23, 2016, available at:
[x] Allen and Lee (1996) mention that "during the 1980s almost 90 percent of all business characters on television were portrayed as corrupt." It does not seem like there are many movies or TV programs even now that show entrepreneurs in a positive light.
[xi] Deirdre McCloskey, "Liberty and Dignity Explain the Modern World": An Essay Based on Bourgeois Dignity: Why Economics Can't Explain the Modern World, November 2011, available at:
[xii] Deirdre McCloskey, "Ideas, Not "Capital," Enriched the World," March 19, 2016, available at:
[xiii] Deirdre McCloskey, "A Kirznerian Economic History of the Modern World,"  June 17, 2011, available at:
[xiv] McCloskey also writes that the growing freedom and increasing respect for entrepreneurs "created more and more opportunities for Kirznerian alertness." Furthermore "Austrian discovery and creativity depends also on the other virtues, in particular on Courage and Hope" and "A new rhetorical environment in the eighteenth century encouraged (literally: "gave courage" to the hope of) entrepreneurs." She does, however, see a weakness in that Kirzner does not consider the audience of the entrepreneur, the customers and the rhetoric they use.

Tuesday, December 05, 2017

Is There A Christmas Tree Shortage?

See No Tannenbaum! There’s a Christmas-Tree Shortage by Valerie Bauerlein of The Wall Street Journal.

They seem to be saying that there has been a decrease in supply. That will cause prices to rise and quantity to fall. But just because there are fewer trees for sale than there used to be does not mean there is a shortage. That requires that quantity demanded is greater than quantity supplied. They are equal, although at a lower quantity than before.

"This Christmas, supplies of live trees are tight. Some Christmas tree lots are closing almost as soon as they open, citing a shortage of trees and presaging a potential national run on firs this weekend, traditionally the busiest of the tree-buying season.

Some suppliers blame extreme weather this past year. Some blame changes to agriculture, like small farmers in Oregon, the biggest tree-producing state, turning to grapes and cannabis instead.
But most growers blame the Great Recession.

It takes seven years to 10 years to grow a tree. Many farmers planted fewer seedlings or went out of business altogether in the years after the housing bust, when consumers pulled back spending. At the same time, total acreage in production declined 30% between 2002 and 2012, according to the latest federal data available.

The ensuing tightening of supply started last year and live-tree buyers spent an average of $74.70, more than double the average in 2011, according to the National Christmas Tree Association, a trade association for the live-tree industry. To meet 2016 contracts, some growers cut trees from this year’s crop early, making the 2017 supply even leaner.

The lack of supply is being felt most acutely in states including Florida, Arizona and Illinois—those farther from Oregon and North Carolina, which account for 37% and 25%, respectively, of Christmas tree production.

Customers are likely to pay at least 10% more than last year for a 5-foot to 7-foot tree, and up to 20% more for a taller tree, said Steve Troxler, agricultural commissioner for North Carolina."
Previous Christmas posts:

Are Homemade Gifts Better Or More Special?

What Anthropologist Melvin Konner Fails To See When He Criticizes Economists And Their Views On Gift Giving 

Is Christmas Gift Giving Inefficient?