Economists Discover That Watching Television Is Not All Bad

This was recently reported in the Wall Street Journal. Here is the link:

A New View On TV

One of the big issues is what you stop doing or what you do less of when you watch TV. If it replaces something "bad," then TV can have benefits. For example:

"The economists found that television was especially positive for children in households where English wasn't the primary language and parents' education level was lower. "We don't exactly know why that is, but a plausible interpretation is that the effect of television on cognitive development depends on what other kinds of activity television is substituting for," says Mr. Shapiro, 28.

Growing up in the 1950s, Sonia Manzano, who plays Maria on "Sesame Street," was part of the first generation of children who watched television. Born in the South Bronx to Spanish-speaking Puerto Rican parents, she says that television "gave me a view of the world -- it gave me sort of a sense of what it was to be an American and what that was about.""

This describes the methods:

"The variation Mr. Gentzkow and Mr. Shapiro exploited was the timing of the introduction of TV into different cities. Television began taking off in the U.S. in 1946, after a wartime ban on TV production was lifted. But the Federal Communications Commission stopped granting new commercial television licenses from September 1948 to April 1952 while it made changes in allocating broadcast spectrum. There was a long lag between when some cities got television and when others did.

The economists then looked at results of a survey of 800 U.S. schools that administered tests to 346,662 sixth-grade, ninth-grade and 12th-grade students in 1965. Their finding: Adjusting for differences in household income, parents' educational background and other factors, children who lived in cities that gave them more exposure to television in early childhood performed better on the tests than those with less exposure."

The 10 Most Affordable Housing Markets

You can find out where they are by reading the following article:

The 10 Most Affordable Housing Markets

But if more people move to these cities, prices in those cities will rise and they won't be very affordable anymore. This illustrates what economist Steven Landsburg calls the "Indifference Principle."

"Except when people have unusual tastes or unusual talents, all activities must be equally desirable."

So unless you really like where you live or you have no interest in moving to these "affordable places," they will not stay very affordable for long. All the people who don't care about where they live and only want to minimize cost will start moving there. But that will drive up costs. If people don't move there because they don't want to move to those cities (like Youngstown, OH or Indianapolis, IN), finding out that they are "affordable" won't have any effect on them.

Texas economy stronger than most

That is what a current government report says. It does not say, but most likely Texas is doing better than the rest of the country because of higher oil prices. Here is the article:

Fed survey shows Texas economy stronger than most

High Gas Prices Spur Sales Of Electric Bikes

This is what economic theory predicts. With higher gas prices, people will seek a better deal somewhere. Here is the link to the article. Electric bikes selling briskly as gas prices climb. Here is a brief exerpt:

"Official sales figures are hard to pin down, but the Gluskin-Townley Group, which does market research for the National Bicycle Dealers Association, estimates 10,000 electric bikes were sold in the U.S. in 2007, up from 6,000 in 2006. Bert Cebular, who owns the electric bike and scooter dealership NYCeWheels in New York, said his sales are up about 50 percent so far this year over last. Amazon.com Inc. says sales of electric bikes surged more than 6,000 percent in July from a year earlier, in part because of its expanded offerings."

How Much Money Does It Take To Be Rich?

This was the topic of a recent article in the Houston Chronicle called Got $5 million? Consider yourself rich, experts say. Here is a brief exerpt of the article:

"most people in finance use the $5 million mark, and apparently others agree. In a January telephone survey of 253 people with at least $500,000, 45 percent said it takes at least $5 million to qualify as rich.

Another 25 percent said $25 million, and 8 percent picked $100 million, according to the Spectrem Group, a consulting firm that specializes on research about wealth. For the Internal Revenue Service, earning $349,700 qualified for the top-tier 35 percent tax bracket in 2007.

The Securities and Exchange Commission, meanwhile, requires individuals to earn $200,000, couples $300,000 or households to show they have $1 million in the bank before they're considered wealthy enough to safely invest in lightly regulated instruments like hedge funds.

The U.S. Census Bureau, which in its most recent annual Current Population Survey in 2006, estimated that 2.3 million households — or 1.9 percent — brought in at least $250,000, the highest figure it measures."

Colbert bump' benefits Democrats

It seems that when Democrats appear on the Colbert Report, they get an increase in campaign contributions. But this does not happen to Republicans who appear on the show. Here is the link:

Colbert bump' benefits Democrats

Should We Pay Students To Study?

I am curious to see what my students think of this. But before I get to it, here are links to stories about "Obamanomics" (which also have some info on McCainonomics, I guess).

New York Times

Barrons

Here is the link to the Wall Street Journal article on the studying issue and its intro. I also have a link to another story about this in case anyone can't get into the WSJ link.

When Schools Offer Money As a Motivator

"More and more school districts are banking on improving student performance using cash incentives -- a $1,000 payout for high test scores, for example. But whether they work is hard to say.

In the latest study of student-incentive programs, researchers examining a 12-year-old program in Texas found that rewarding pupils for achieving high scores on tough tests can work. A handful of earlier studies of programs in Ohio, Israel and Canada have had mixed conclusions; results of a New York City initiative are expected in October. Comparing results is further complicated by the fact that districts across the country have implemented the programs differently."

Pay for grades — does it work?

Is tax 'rebate' doomed to fail?

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

Higher Food Prices May Be Here to Stay

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

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

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

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

Male sex hormone may affect stock trades

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

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

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

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

Does Or Can Money Buy Happiness?

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

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

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

Anthropology, Cell Phones, Economics and World Poverty

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

The World's Oldest Profession Uses The Latest Technology

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

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

and

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

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

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

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

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

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

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

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

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

Lighthouses Are Not Always Public Goods

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

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

Save 54 Cents A Gallon On Gas

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

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

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

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

Farmers In Argentina Protest In Favor (not against) Free Trade

Argentina is taxing the export of food. That makes it harder for farmers to sell their goods overseas. They will, on net, get less for what they sell. So they are blocking traffic as a protest. Maybe the government wants to keep food in the country to make sure everyone has enough to eat. But if farmers make a lower profit due to the tax, then they will have less incentive to grow food. That is the opposite of what the government probably intended. The article is called Argentine Farmers Restore Roadblocks After Talks With Officials .

Don't Like The Price Tag At The Store? Try Haggling

There was an interesting article on this in The New York Times last Sunday. It was titled Even at Megastores, Hagglers Find No Price Is Set in Stone. Here is the intro:

"Shoppers are discovering an upside to the down economy. They are getting price breaks by reviving an age-old retail strategy: haggling. A bargaining culture once confined largely to car showrooms and jewelry stores is taking root in major stores like Best Buy, Circuit City and Home Depot, as well as mom-and-pop operations. Savvy consumers, empowered by the Internet and encouraged by a slowing economy, are finding that they can dicker on prices, not just on clearance items or big-ticket products like televisions but also on lower-cost goods like cameras, audio speakers, couches, rugs and even clothing. The change is not particularly overt, and most store policies on bargaining are informal. Some major retailers, however, are quietly telling their salespeople that negotiating is acceptable."

Basketball on Office Monitors Madness for Business

Here was a brief item at the Internet Movie Database. The NCAA basketball tournament will cause lost productivity since people will be watching at work. Also, with so many people watching on their computers at work, servers might crash.

"A leading business consultant has predicted that CBS's online "March Madness On-Demand," in which it is streaming all 63 final college basketball games free, will cost American businesses about $1.7 billion in lost productivity. Rick Cobb, a vice president at business consultants Challenger, Gray & Christmas, told Newsweek magazine that the estimate is based on the number of workers known to participate in office pools and CBS's figures showing that 1.4 million unique online viewers watched on average 1.9 hours of its coverage last year. Predicting that that number will rise substantially this year, Cobb said another source of lost productivity could be office servers unable to deal with demands for the webcasts -- and crashing. "When servers go down, most people want to head home," he observed."