Friday, February 26, 2021

The CPI increased 1.4% in 2020

The 1.4% means that the CPI in December 2020 (260.474) was 1.4% higher than what it was in December 2019 (258.811).

The 260.474 means that what cost $100 in 1982 cost $260.47 in December 2020.

Now the CPI can go up and down during the course of the year and the Bureau of Labor Statistics calculates it for every month. So if it increased every month but then fell quite a bit in December, it might not look like there was much inflation.

They also calculate an average CPI over the twelve months and then compare that to the one for the previous year. That inflation rate for 2020 was 1.2%. Those two figures are usually pretty close to each other, but not always. 

In 2008, the Dec.-Dec. method gives a 0.1% inflation rate while the monthly averaging method was 3.8%. In 2009, those numbers were 2.7% and -0.4%. So they can be pretty far apart.

To see this data (actually going back to 2013), go to Consumer Price Index Data from 1913 to 2021.

See also Prices, and Confusion, Set to Rise as Pandemic Fades: Price gains remain muted, but only because services demand is still depressed by the Covid-19 crisis by Justin Lahart of The WSJ. Excerpts:

"The things that have kept inflation low during the Covid-19 crisis are a lot different than the ones that used to keep it low. A whipsawing of prices when the pandemic passes is something to look out for.

The Labor Department on Wednesday reported that U.S. consumer prices rose 0.4% in December from November, putting them 1.4% above their year earlier level. Core prices, which exclude food and energy items to better capture inflation’s trend, rose 0.1% from November, and were up 1.6% on the year. 

The Federal Reserve’s aim is for 2% inflation, and the consumer price measures it follows run cooler than the Labor Department’s.

Under inflation’s hood, though, there are some big shifts. Prices for food at home—groceries and the like—remain elevated as a result of the pandemic, and were up 3.9% in December from a year earlier. Meanwhile, prices for lodging at hotels and the like were down 11.2%."

"Core goods prices were up 1.7% on the year last month" (excluding food and energy)

"Core services prices were up 1.6%"

Sunday, February 21, 2021

Monkeys seem to be selfish and rational

From Marginal Revolution.

"At the Uluwatu temple in Bali, monkeys mean business. The long-tailed macaques who roam the ancient site are infamous for brazenly robbing unsuspecting tourists and clinging on to their possessions until food is offered as ransom payment.

Researchers have found they are also skilled at judging which items their victims value the most and using this information to maximise their profit.

Shrewd macaques prefer to target items that humans are most likely to exchange for food, such as electronics, rather than objects that tourists care less about, such as hairpins or empty camera bags, said Dr Jean-Baptiste Leca, an associate professor in the psychology department at the University of Lethbridge in Canada and lead author of the study.

Mobile phones, wallets and prescription glasses are among the high-value possessions the monkeys aim to steal. “These monkeys have become experts at snatching them from absent-minded tourists who didn’t listen to the temple staff’s recommendations to keep all valuables inside zipped handbags firmly tied around their necks and backs,” said Leca.

After spending more than 273 days filming interactions between the animals and temple visitors, researchers found that the macaques would demand better rewards – such as more food – for higher-valued items.

Bargaining between a monkey robber, tourist and a temple staff member quite often lasted several minutes. The longest wait before an item was returned was 25 minutes, including 17 minutes of negotiation. For lower-valued items, the monkeys were more likely to conclude successful bartering sessions by accepting a lesser reward.

Here is the full story, via David Curran."

Saturday, February 13, 2021

A Special Valentine's Message On Romantic Love

But first some links to related news stories:

The first one is Researchers at AAAS Annual Meeting Explore the Science of Kissing. The following quote gives you an idea of what it is all about: "Kissing, it turns out, unleashes chemicals that ease stress hormones in both sexes and encourage bonding in men, though not so much in women." I guess economists call this "interdependent utility functions." Meaning that what brings one person pleasure brings brings the other person pleasure, and vice-versa.

The other is Cocoa Prices Create Chocolate Dilemma. (that is from 2009) The article opens with "Soaring cocoa prices are creating a Valentine's Day dilemma for chocolate makers. They don't want to raise retail prices when recession-weary consumers are trying to limit their spending." The problem is crop diseases in Ivory Coast and Ghana. You might need to be a WSJ subscriber to read the whole article.

Here is a new article from yesterday's San Antonio Express-News (2-13-2011). Romance in bloom at workplace: Survey indicates 59% have taken the risk-filled leap. It seems like many people admit to having a romance at work and/or meeting their spouse at work. So what starts out as economic activity leads to some other needs being met.

Now the economic definition of romantic love.

 Abstract: "Romantic love is characterized by a preoccupation with a deliberately restricted set of perceived characteristics in the love object which are viewed as means to some ideal ends. In the process of selecting the set of perceived characteristics and the process of determining the ideal ends, there is also a systematic failure to assess the accuracy of the perceived characteristics and the feasibility of achieving the ideal ends given the selected set of means and other pre-existing ends.

The study of romantic love can provide insight into the general process of introducing novelty into a system of interacting variables. Novelty, however, is functional only in an open system characterized by uncertainty where the variables have not all been functionally looped and system slacks are readily available to accommodate new things. In a closed system where all the objective functions and variables must be compatible to achieve stability and viability, adjustments in the value of some variables through romantic idealization may be dysfunctional if they represent merely residual responses to the creative combination of the variables in the open sub-system."
The author was K. K. Fung of the Department of Economics, Memphis State University, Memphis. It was from a journal article in 1979. More info on it is at this link. The entire article, which is not too long, can be found at this link.

Then there was this related article: Love really is blind, U.S. study finds. Here is an exerpt:
"Love really is blind, at least when it comes to looking at others, U.S. researchers reported on Tuesday.

College students who reported they were in love were less likely to take careful notice of other attractive men or women, the team at the University of California Los Angeles and dating Web site eHarmony found.

"Feeling love for your romantic partner appears to make everybody else less attractive, and the emotion appears to work in very specific ways in enabling you to push thoughts of that tempting other out of your mind," said Gian Gonzaga of eHarmony, whose study is published in the journal Evolution and Human Behavior.

"It's almost like love puts blinders on people," added Martie Haselton, an associate professor of psychology and communication studies at UCLA."
More links:

How to Be a Better Valentine, Through Economics by economist Paul Oyer.

Here’s what science says is the secret ingredient to making your love spark 

Can Giving Up Money And Material Things Lead To More Love?

What Do Men In China Need To Get A Bride?

Adam Smith, Marriage Counselor

A Special Valentine's Message On Romantic Love

Can You Put A Price Tag On Love?

Do Opposites Attract? Not Usually, Except Maybe When It Comes To Money

Return of the Love Headhunters

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

Economist Paul Zak, aka Dr. Love (he studies the brain with "neuroeconomics")

This is your brain on love   (brain scans and biology seem to confirm the economic definition given above)

Dollars & Sex: The Blog of Economist Marina Adshade

Do Women Really Value Income over Looks in a Mate? by Marina Adshade

Thursday, February 04, 2021

The curious task of economics and the President’s Council of Economic Advisers

The Wall Street Journal had an article last week about Princeton professor Cecilia Rouse being nominated to be the chair of Council of Economic Advisers (CEA).  See Cecilia Rouse, Tapped to Be Biden’s Top Economist, Brings Labor-Market Focus: The Princeton dean would be the first Black chair of the Council of Economic Advisers by Paul Kiernan.

A passage in that article reminded me of what Nobel prize winning economist F.A. Hayek called "curious task of economics."

Here is the passage:

"The primary role of the CEA chair is to provide objective economic analysis to the president. Its staff of Ph.D. economists brief the president on economic data, write an annual Economic Report of the President, and participate in policy discussions alongside other agencies—often seeking to stop ideas they think are bad from gaining traction."

So one thing the staff is supposed to do is stop bad ideas from gaining traction. That sounds similar to what Hayek said in his book The Fatal Conceit: The Errors of Socialism. Here is the relevant passage:

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.  To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order.  Yet that decentralization actually leads to more information being taken into account." 

I think stopping bad ideas from gaining traction is like (or can be achieved by) demonstrating to people that they don't know enough about the policies they are proposing or designing. So the two quotes in red maybe say the same thing.

Click here to see more on Hayek.