Dim economy drives women to donate eggs for profit

That is the title of the article. Go to Dim economy drives women to donate eggs for profit. Increases in "donations" may not be totally due to the economy, but some stats show that they are rising rapidly:

""We are seeing an increase in inquiries, but we're not sure if it's due to the economy or increased awareness," said Dr. Susan Willman, a reproductive endocrinologist at the Reproductive Science Center of the Bay Area. In July 2007, the Reproductive Science Center received 120 calls inquiring about egg donation. This year, that number jumped to 158 calls.""

And

""We are so inundated right now," said Robin von Halle, president of Alternative Reproductive Resources.

Von Halle said that 30 to 50 inquiries a day from potential donors come in to her Chicago, Illinois, agency, which connects would-be parents with donors and surrogates. A year ago, it would have been 10 to 30, she said."

And

""I think there is a spike more for financial reasons," said Mahshid Albrecht, manager of Donor Services at the Reproductive Science Center. "But is that the only reason? Probably not."

An egg donor is typically compensated between $5,000 and $10,000. Experts say that although most women donate out of desire to help infertile couples, the financial allure is real."

So it is not just a donation. But not all women are accepted to "donate" and it is not an easy process, as the article explains.

With Economy Down And Consumers Wanting Good Deals, More Goods Are Stolen And Sold At Discounts

The article on this is Retail crime grows with demand for discounts. So people want these good deals. Then organized crime comes in. Goods are stolen. Then show up on the Wedb (eBay for example). Legislation has been proposed to fight this but it was not clear exactly what it would do. I have not heard of this before in past recessions. Maybe the internet makes it easier.

This Economist Is Anti-Bono (And Much Better Looking, Too!)

The story was in today's New York Times magazine called The Anti-Bono. Her name is Dambisa Moyo and she has a book coming out this year. The Times interviewed her. Here is an exerpt:

"You argue in your book that Western aid to Africa has not only perpetuated poverty but also worsened it, and you are perhaps the first African to request in book form that all development aid be halted within five years.

Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.

Maybe that’s because they have so much money that we here in the U.S. are begging the Chinese for loans.

Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid."

She thinks that foreign aid to Africa is taken by corrupt leaders and stifles entrepreneurship. Her recommendation for people who want to help Africa is microfinance. There is an organization called Kiva which allows you to lend money directly to entreprneurs in third world or developing countries that need very small loans for their businesses.

Book Review of "The Next 100 Years"

The book is The Next 100 Years: A Forecast for the 21st Century By George Friedman. It was reviewed in the San Antonio Express-News recently. The book makes some incredible predictions. Here are some that are hard to believe:

"In the '30s, America will see a massive financial crisis exacerbated by the retirement of the baby boomers and a worldwide population shortage. Instead of restricting immigration, Friedman predicts that the United States will start paying people to immigrate to America. He argues that the United States will emerge financially stronger, as it always does after such crises.

The '40s will see the emergence of three new great powers: Japan, Turkey and Poland. Japan will attempt to take control of the Pacific; Turkey will be the strongest power in the Islamic countries; and Poland will scoop up the remnants of Eastern Europe after the collapse of the Russian Federation. American interests will be threatened by the resurgence of Japan and Turkey, leading to the next global war in the '50s.

However, says Friedman, the Third World War won't be fought as the first two were: It will begin with sneak attacks on American military space stations.

America will retaliate with hypersonic weapon strikes on Japanese and Turkish forces. After about two years of fighting, America and its ally Poland will emerge victorious."

When you watch these ads, the ads check you out

That is the title of an article about a very interesting new video system. Here is the link: When you watch these ads, the ads check you out. Here is the intro:

"Watch an advertisement on a video screen in a mall, health club or grocery store and there's a slim — but growing — chance the ad is watching you too.

Small cameras can now be embedded in the screen or hidden around it, tracking who looks at the screen and for how long. The makers of the tracking systems say the software can determine the viewer's gender, approximate age range and, in some cases, ethnicity — and can change the ads accordingly.

That could mean razor ads for men, cosmetics ads for women and video-game ads for teens.

And even if the ads don't shift based on which people are watching, the technology's ability to determine the viewers' demographics is golden for advertisers who want to know how effectively they're reaching their target audience."

It is not surprising that this is happening. Since we can mute our TVs, fast forward over commercials when we record shows, etc., alot of advertising is not viewed. So they are trying new ways to get our attention. I'll really get scared when they can recognize that I'm an economics professor.

A Special Valentine's Message On Romantic Love

Below is a repeat of last year's Valentine's day post. First there are a couple of new links:

The first one is Kisses unleash chemicals that ease stress levels. 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. 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.

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. I originally became aware of this back in the early 1980s when another student at the University of Chicago showed it to me. It was in a magazine. The student was David Brooks, who now writes for the New York Times.

More recent research backs this up. Read 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."

Maybe The Worst Is Over For Zimbabwe (Maybe)

In some of my classes we read about how bad Zimbabwe's economy is doing. But apparently the dictatorial president Robert Mugabe is starting to share power with a man who probably beat him in the election (Tsvangirai). The inflation rate last year was 11 million percent. The unemployment rate is 80%. The national debt as a percentage of GDP is 242%.

Here are some exerpts from the CIA:

"His chaotic land redistribution campaign, which began in 2000, caused an exodus of white farmers, crippled the economy, and ushered in widespread shortages of basic commodities. Ignoring international condemnation, MUGABE rigged the 2002 presidential election to ensure his reelection."

"April 2005, the government embarked on Operation Restore Order, ostensibly an urban rationalization program, which resulted in the destruction of the homes or businesses of 700,000 mostly poor supporters of the opposition. President MUGABE in June 2007 instituted price controls on all basic commodities causing panic buying and leaving store shelves empty for months."

An exerpt from one of the other articles is:

"Tsvangirai has been beaten and jailed by Mugabe's security forces. In 2007, police attacked him after he held an opposition meeting the government had banned. Images shown on news broadcasts around the world of his bruised and bloodied face came to symbolize the challenges his movement faced.

Mugabe, who turns 85 on Feb. 21 and has been in power since independence from Britain in 1980, has in the recent past treated the 56-year-old Tsvangirai as a junior partner at best, often not bothering to hide his contempt.

Tsvangirai won the most votes in the first round of presidential election held almost a year ago, and withdrew from a June runoff only because of attacks on his supporters."

If you want to know more, go to the following links:

CIA World Factbook on Zimbabwe

Morgan Tsvangirai Sworn In as Zimbabwe PM; Pledges Focus on Economy

Mugabe swears in rival as Zimbabwe prime minister

Zimbabwe lifts foreign currency restrictions

What it means Dollarisation formula a sham

There's A New Number 1 In The World: Liechtenstein Passes Luxembourg In Per Capita GDP

To see the complete ranking, go the CIA World Factbook. Here is the top 10:

1 Liechtenstein $118,000
2 Qatar $101,000
3 Luxembourg $85,100
4 Bermuda $69,900
5 Kuwait $60,800
6 Norway $57,500
7 Jersey $57,000
8 Brunei $54,100
9 Singapore $52,900
10 United States $48,000

Here is something the CIA reports about Liechtenstein (which is small with a population 35,000 and is only 160 square kilometers in area):

"Despite its small size and limited natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and the highest per capita income in the world. The Liechtenstein economy is widely diversified with a large number of small businesses. Low business taxes - the maximum tax rate is 20% - and easy incorporation rules have induced many holding companies to establish nominal offices in Liechtenstein, providing 30% of state revenues. The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association (EFTA) and the EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe. In 2008 Liechtenstein came under renewed international pressure - particularly from Germany - to improve transparency in its banking and tax systems."

In last place was Zimbabwe at $200. With 118,000/200 = 590, it means that the standard of living is 590 times higher in Liechtenstein than in Zimbabwe.

The country of Guinea-Bissau has a population of 1.5 million. But their GDP was only about $900 million. That is less money than the movie "The Darknight" has made, even if you take into account its production costs. Click here for details.

Economy Got You Down? Buy An $8 Chocolate Bar For A Little "Compensatory Consumption"

Doing this can help you regain status after getting laid off. Go to The Sweet Payoff. Don't confuse this with "Conspicuous Consumption" (consumption undertaken to make a statement to others about one's class or accomplishments)

Here are is an exerpt:

"Derek Rucker and Adam Galinsky of the Kellogg School of Management at Northwestern University have lately been exploring the relationship between feelings of powerlessness and what they term “compensatory consumption.”

In one experiment, subjects were divided into two groups and told to reflect on an incident in which they felt powerful or on one in which they felt powerless. Each group was then given a supposedly unrelated task that involved gauging how much each participant would be willing to pay for a variety of products. For items that carry little association with status — a ballpoint pen, a sofa, etc. — there wasn’t much difference between what the two groups would pay. But subjects who had put themselves in a powerless frame of mind were willing to pay measurably more than the other group for high-status items — an executive pen, a fur coat, a silk tie. In a more recent study, Rucker and Galinsky found that individuals who felt less powerful showed a preference for clothing with larger and more conspicuous luxury logos.

Their thinking is that the little boost of, say, pricey chocolate, might not be solely about mood but about responding to threats to status or competence, Rucker told me. Ideally you would respond to such challenges directly: standing up to a boss who is pushing you around, demonstrating skill to silence skeptics and so on. But often the sources of undermined confidence are more abstract. “What’s happened in modern society under capitalism is that people have found consumer products as an outlet, a safety valve for addressing these threats in a very indirect fashion,” Rucker contends."

Students Use Drugs To Get Better Grades (and guess when they go up in price)

College students are using Adderall and Ritalin to boost "cognitive function and enables [which] them to study for hours with full concentration without getting fatigued" according to this NPR report. The report also says

"Students say Adderall and its cousin Ritalin are easy to get — bought and sold in the library, the cafeteria, the dorm, pretty much anywhere on campus. The going rate, they say, is typically $5 a pill. Unless it's exam week. Then, supply and demand kicks in and the price can shoot up to $25 a pill."

I guess the demand goes up then when students need an extra boost! But maybe the students just learned this from their professors. Read about that at Some Professors Pop Pills for an Intellectual Edge: Scientists say drugs help concentration. That article reports

"In an online survey of 1,400 readers published this month, the journal Nature found that 20 percent had taken pharmaceuticals for the nonmedical purpose of improving their concentration, focus, and memory. Most of the people who responded to the survey work in science, engineering, or education."

How Special Interests Hurt The Economy

The Sunday New York Times magazine had a very good article about the problems facing the economy right now and how they might be solved called The Big Fix . It is very long, with several parts. Although it is all interesting, one part stands out, part II called "THE UPSIDE OF A DOWNTURN."

Rahm Emanuel, Obama’s chief of staff, has said “You never want a serious crisis to go to waste...it’s an opportunity to do things you could not do before.”

Then the article mentions a very important economist.

"In the early 1980s, an economist named Mancur Olson developed a theory that could fairly be called the academic version of Rahm’s Doctrine. Olson, a University of Maryland professor who died in 1998, is one of those academics little known to the public but famous among his peers. His seminal work, “The Rise and Decline of Nations,” published in 1982, helped explain how stable, affluent societies tend to get in trouble. The book turns out to be a surprisingly useful guide to the current crisis.

In Olson’s telling, successful countries give rise to interest groups that accumulate more and more influence over time. Eventually, the groups become powerful enough to win government favors, in the form of new laws or friendly regulators. These favors allow the groups to benefit at the expense of everyone else; not only do they end up with a larger piece of the economy’s pie, but they do so in a way that keeps the pie from growing as much as it otherwise would. Trade barriers and tariffs are the classic example. They help the domestic manufacturer of a product at the expense of millions of consumers, who must pay high prices and choose from a limited selection of goods."

The big question now is are the special interest groups going to stop the economy from recovering or is this crisis a chance to take some power away from special interests. The article mentions how the banking and finance industries are the special interest groups that are the major cause of the current crisis (which is a debatable point). But this issue illustrates an important sub-field of economics.

The sub-field of economics that studies politics and how special interest groups is called "public choice." For my students that want to know more about this, if you are in ECON 1301, see pages 343-346 in the main book by Tucker. If you are in 2301, see pages 307-312 in the main book by Tucker. If you are in ECON 2302, read pages 122-124 in the main book by Miller.

There Is No Such Thing As Free Salt (Or Sand)

Go to Buckland Ends Free Salt & Sand Service. The town has been letting residents take salt and sand at no charge. They expected people to just take a bucket or two, but

""We had some instances where contractors, non residents were coming across, filling up their sand trucks and taking them back to whatever towns," says Town Selectman Stefan Racz. "They're salting driveways and charging people for it with our salt.""

A good is scarce if there is not enough of it if it were given away free of charge. This is what happened with the salt and sand.

More Details And Analysis On The Stimulus Bill

It passed in the House of Representatives yesterday. It is 647 pages long. This New York Times article, Components of Stimulus Vary in Speed and Efficiency, has what seems like a good over view in terms of facts and analysis. But when the whole thing is 647 pages, who knows.

But the same concerns apply that I mentioned last week. Getting the policies to work at the right time due to policy lags. There is also the issue of who will fill the jobs that the government creates, people currently unemployed or those currently unemployed. The economist Gary Becker has pointed out

"Some of this infrastructure spending may be very worthwhile-I return to this issue a bit later- but however merited, it is difficult to believe that they would provide much of a stimulus to the economy. Expansion of the health sector, for example, will add jobs to this sector, but it will do this mainly by drawing people into the health care sector who are presently employed in jobs outside this sector. This is because unemployment rates among health care workers are quite low, and most of the unemployed who had worked in construction, finance, or manufacturing are unlikely to qualify as health care workers without considerable additional training. This same conclusion applies to spending on expanding broadband, to make the energy used greener, to encourage new technologies and more research, and to improve teaching."

As some of my students know, different resources are better suited to different productive activities (which explains why the law of increasing opportunity cost is true). Alot of the workers who have lost their jobs are construction workers and only some of the stimulus can use their skills.

Any Questions?

Some Basics On The Proposed Stimulus

There is an article called Stimulus 101: What's in the Bills. Its give a summary of what has been proposed plus the pros and cons.

Worker Tax Cut: Maybe Not so Immediate

To find out why, go to Worker Tax Cut: Maybe Not so Immediate. This is really just another version of the post I had a few days ago on the policy lag problem. The government might want to help the economy, but it takes time for the policies to be put in place and have an effect.

Job losses hitting men harder than women

To read about this go to Job losses hitting men harder than women. Here are some key exerpts:

"The economic crisis is hitting men much harder than women in the workplace, largely because male-dominated industries like construction and transportation are bearing the brunt of job losses, figures show.

Women, meanwhile, dominate sectors that are still growing, like government and healthcare, experts said.

Four-fifths of the 2.74 million people who lost their jobs between November 2007 and November 2008 were men, Sum said.

The biggest losses came in construction, where men comprise 87 percent of the work force, he said. Large losses also came in manufacturing and wholesale trade, where men make up more than two-thirds of the work force, he said.

"Males were dominant in sectors that were taking a bad hit," he said. "It's men and the blue-collar jobs. It's overwhelming."

According to the U.S. Bureau of Labor Statistics, men's employment as a ratio of the population dropped by 2.7 percent, while the ratio among women's dropped 0.8 percent from December 2007 to December 2008. The unemployment rate among men rose to 7.9 percent from 5.0, while among women, it rose to 6.4 percent from 4.8 percent, the agency said."

I am curious if any of my students have gotten laid off and whether you are male or female. Also, what about friends, relatives, co-workers, etc? Does it seem like more men or women are getting laid off? Of course, San Antonio has not been doing as badly as the rest of the country. In November, the national unemployment rate was 6.8% while it was 5.4% in San Antonio. The national rate went up to 7.2% in January.

Some Of Obama's Economic Policies Might Take Too Long To Help

You probably know that we are in a recession. Unemployment is at 7.2%, the highest in 15 years. As my macro students will learn later this semester, increasing aggregate demand (AD) through government spending can help the economy in recessions. But only if that spending hits the economy at the right time.

To read about the problems that Obama's policies might have, go to Much in Obama stimulus bill won't hit economy soon. Here are some key exerpts:

"It will take years before an infrastructure spending program proposed by President-elect Barack Obama will boost the economy, according to congressional economists.

Less than half of the $30 billion in highway construction funds detailed by House Democrats would be released into the economy over the next four years, concludes the analysis by the Congressional Budget Office. Less than $4 billion in highway construction money would reach the economy by September 2010.

The economy has been in recession for more than a year, but many economists believe a recovery may begin by the end of 2009. That would mean that most of the infrastructure money wouldn't hit the economy until it's already on the mend.

Overall, only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent. Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.

And other pieces, such as efforts to bring broadband Internet service to rural and underserved areas won't get started in earnest for years, while just one-fourth of clean drinking water projects can be completed by October of next year."

The parts that will hit the economy quickly are the tax cuts and aid to states, who are facing budget problems due to lower tax revenue, which always happens in recessions. Later in the semester, we will also learn about something called the "policy lag problem."

A group of economists called the Monetarists believe that when a recession occurs, it takes too long for the government to recognize it and take action to end it. The action will probably cause AD to increase when the economy is already back to the full-employment GDP. This is called the Policy Lag Problem. Here is how it works:

A recession begins (the economy produces less and workers are laid off) and at least 6 months later, the government finally recognizes that we are in a recession, so there is a Recognition Lag.

A few months later (maybe more), the government finally decides to do something about the recession (it can take time for Congress to pass a spending bill), so there is a Decision Making Lag.

A few months later (maybe more), the government implements the spending plan (maybe Congress passed a spending bill for highways and companies have to be found, bids taken and so on), so there is an Implementation Lag.

A few months later (maybe more), the government spending finally has an effect on the economy (AD increases), so there is a Effectiveness Lag. By this time, the economy is normal or back to full-employment. Then alot of spending hits the economy. This could cause inflation. Inflation is too many dollars chasing too few goods. If there is too much money in the economy, prices rise.

The Top Budget Vacation Spot Is...Austin, Texas!?

To read about this go to Top Budget Travel Destinations for 2009: The best value hot spots for the New Year. But if people really believe this and many of them go to Austin for fun or a vacation, things won't be very fun due to the crowds (which reminds me of something that Yogi Berra said about a restaurant: "nobody goes there anymore, it's too crowded").

This also illustrates what economist Steven Landsburg calls the "Indifference Principle." "Except when people have unusual tastes or unusual talents, all activities must be equally desirable." This applies to Austin or any of the other cities on the list in the article. Once everyone sees Austin as a good deal, they start going there. Only people with unusual tastes will really enjoy it. That is, you will have to like what Austin has to offer alot more than the average person or the crowds will erode your enjoyment. Austin won't be any better than anywhere else for a vacation. Other places will be just as desirable.

Touching A Product Makes You More Likely To Buy It

That is the finding of an interesting study. Click on Study: You Touch It, You Buy It to read about it. This exerpt gives the basic idea:

"Participants in the study were shown an inexpensive coffee mug, and were allowed to hold it either for 10 seconds or 30 seconds. They were then allowed to bid for the mug in either a closed (where bids could not be seen) or open (where they could be seen) auction. The participants were told the retail value of the mug before bidding began ($3.95 in the closed auction; $4.95 in the open auction). The study, detailed in the August 2008 issue of the journal Judgment and Decision Making, found that on average, people who held the mug for longer bid more for it - $3.91 to $2.44 in the case of the open auction and $3.07 to $2.24 in the closed. In fact, people who held the mug for 30 seconds bid more than the retail price four out of seven times."

I am curious if any of my students have had experiences like this. Have you noticed buying something because you touched it? If so, why? Anybody work in a store where you encourage customers to touch the merchandise?