Fourth Quarter GDP Revised From A 2.8% Increase To A 3.1% Increase!

My students know how exciting this news is. See 4th Quarter U.S. GDP Revised Up to 3.1% Growth.

Why is this exciting? Let's suppose that per gapita GDP is $50,000 (it is a little less than that right now). Now what if over the next 20 years GDP (actually real GDP) rises every year by 3.1% instead of just 2.1%? How much difference will this make?

First, we need to say what the annual per capita GDP increase will be. Per capital GDP is GDP divided by population. What if we assume that population grows 1% per year. Then instead of an increase in per capita GDP of 3.1%, it would be about 2.1% (and instead of 2.8%, it will be about 1.8%).

Compounding an annual increase of 2.1% over 20 years would leave us with a per capita GDP of $75,460. That is more than $3,000 above what it would be if we grow only 1.8% per year ($71,188). An extra $3,000 in everyone's pocket is exciting news.

One technical note. When you see numbers like this reported in the media, real GDP did not increase 3.1% in the fourth quarter. It means that if it increased at the rate it actually did for that quarter for a whole year, then the yearly increase would be 3.1%. It would have increased about 0.766% for the quarter. If it does that for 4 straight quarters, the GDP will end up being about 3.1% higher than it was before.

Will The Real Multiplier Please Stand Up?

In the past few weeks in my macro classes, we have talked about the government spending multiplier. But not all economists agree on what the numerical value of the multiplier is. See Much ado about multipliers: Why do economists disagree so much on whether fiscal stimulus works? from "The Economist" magazine in Sept. 2009. Here is an excerpt:

"Different assumptions about the impact of higher government borrowing on interest rates and private spending explain wild variations in the estimates of multipliers from today’s stimulus spending. Economists in the Obama administration, who assume that the federal funds rate stays constant for a four-year period, expect a multiplier of 1.6 for government purchases and 1.0 for tax cuts from America’s fiscal stimulus. An alternative assessment by John Cogan, Tobias Cwik, John Taylor and Volker Wieland uses models in which interest rates and taxes rise more quickly in response to higher public borrowing. Their multipliers are much smaller. They think America’s stimulus will boost GDP by only one-sixth as much as the Obama team expects."

Factors Influencing The Price Of Gas

See Gas prices are about more than just oil. Here are some excerpts:

"Gas prices rise when oil prices rise, and fall when oil prices fall — except when they don't. What you pay at your gas station depends on an array of factors, from what happens on an exchange in New York to what the competition is charging."

"Sellers of commodities, like gas station owners and refineries, price their product based not on what it costs to produce it, but on what it costs to replace it. Stations like the Plainfield BP, which gets shipments of gas several times a week, must constantly adjust their prices to keep up with the changing costs of their shipments.

Oil is the biggest factor in gas prices. It accounts for 50 to 70 percent of the cost."

"In the next few weeks, gas prices are expected to rise as refiners switch to a more expensive blend of gasoline designed to help protect against evaporation during the warmer summer months."

"A wholesaler like BP or Gulf each has its own formula for setting the rack price. In an attempt to smooth out the spikes and dips of the market, a wholesaler usually buys some of his fuel through long-term contracts. The rest is bought on the so-called spot market, priced at a given moment by a benchmark like the New York Harbor gasoline price."

""If gasoline prices drop a dime, a station will only pass along one or two pennies a day," says Patrick DeHaan, an analyst at GasBuddy.com, a website that collects and publishes retail gas prices. "They are slower to pass along the discount because they need to make up for money they lost when prices went up.""

88% Of Bavarian Doctors Give Their Patients Placebos

See Half of all German doctors prescribe placebos, new study shows: Placebo cures shown to help with depression and stomach complaints – in Bavaria, 88% of doctors have prescribed them. They might help save money, too. Here are excerpts:

"The report says placebos, from vitamin pills to homeopathic remedies or even sham surgery, can prove highly effective in various treatments."

""Placebos have a stronger impact and are more complex than we realised. They are hugely important in medicine today," says Christoph Fuchs, the managing director of the BÄK.

The report recommends that students and doctors should be taught about placebos and their usage.

"Placebos can maximise the effect of medication," says Robert Jütte, author of the study and a BÄK board member.

"They can reduce undesirable side-effects and are a more efficient usage of our healthcare budget.""

"Recent research, he said, showed that placebos had helped 59% of patients who had been suffering from an upset stomach. Used to treat depression, placebos have the same effect as antidepressants in about a third of cases.

The efficacy of a placebo depends on many factors, according to the report, including the size and colour of a pill.

The more expensive the placebo, the higher the success rate, the study found, and intravenous injections are shown to be more effective than oral medication.

It's also a question of trust. Placebos produce better results if a patient feels their doctor understands their concerns, and believes they are being taken seriously, the study says."

I have blogged about this before. See

Study: Half of American Doctors Give Patients Placebos Without Telling Them.

Can A Product Work Just Because It's Expensive?

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

People Waiting In Line For The Apple iPad 2 Is Socially Wasteful So The Price Should Be Extra High The First Few Days

See Woman Sells First Spot in iPad 2 Line For $900. She waited in line for 41 hours. This benefits no one one. No goods or services are created. It is wasted time and is inefficient. The iPad 2 starts at $499.

Apple should charge a higher price to begin with to avoid these long waiting lines. There is a shortage at the $499 price the first few days. They could start at $1000 and lower it $100 each day until it is back down to $499. Once these waiters get one they sell them for a very high price to someone else anyway and some go even higher than $1000 when sold on eBay.

Apple could get some great PR by donating the extra profit to charity. They could use that money to donate computers to schools. People who bought at the extra high price early on could get a t-shirt that says they support the Apple school computer initiative. So they could get to brag about their "donation."

Is It Getting Too Expensive To Go College?

Hedge-fund manager and author James Altucher says he will not be sending his kids to college. See Rethinking College as Student-Loan Burdens Rise. This link has both an article and a video clip. (Hat Tip: Frances Minten)

But remember that on average, college grad makes about 75% more a year than someone who only has a high school diploma. So let's say that if a high school grad makes $24,000 a year then the college grad is making $42,000. That is an extra $18,000 a year and it won't take long to make up for the $100,000 average cost of going to college.

Here are some earlier posts on related topics:

Maybe That College Degree Is Not As Valuable As You Thought

As college costs rise, sticker shock eased by student aid

Does It Pay To Go To College?

The EU Says Insurers Can No Longer Discriminate On The Basis Of Gender

See EU Closes Insurers' Gender Rate Gap from The Wall Street Journal, 3-2-11. This is actually bad news for women. Here are some key excerpts:

"The European Union's highest court declared illegal the widespread practice of charging men and women different rates for insurance, setting in motion an overhaul of how life, auto and health policies are written across Europe.

Two Belgian men had challenged the higher life-insurance premiums charged to members of their sex, arguing that it was discriminatory. In a ruling Tuesday, the Luxembourg-based European Court of Justice agreed.

The judgment can't be appealed. It will have vast implications: Insurers routinely charge women, who live longer, lower premiums for life insurance; young male drivers, who statistically cause more accidents, pay higher premiums for auto policies."

"A study last year commissioned by the British insurers' group found excluding sex would have a particular impact on the auto policies of young women, whose premiums could rise by as much as 25%."

The Problem In The Middle East Might Be The State Preventing Entrepreneurship

I saw this article mentioned at Carpe Diem, the blog of economist Mark Perry. It links an article in the New Yorker by James Surowiecki called The Tyrant Tax. Here is one paragraph:

"Healthy economies need a thriving and independent private sector, where resources are allocated by markets and competition, and where small and medium-sized businesses can flourish. But in most of the Middle East the state and big business are so tightly intertwined as to be indistinguishable, and competition has been discouraged in favor of central planning and private monopolies. It’s hard for entrepreneurs to start and run a business. Minimum capital requirements tend to be high, so you can’t get started without lots of cash, and getting business licenses and registering property are frequently arduous. Political favoritism is rampant, and byzantine regulations are difficult for outsiders to navigate. It’s instructive that the young man whose self-immolation helped set off the protests in Tunisia had had his fruit cart confiscated for violating some government rule."

and

"The state’s intrusive presence forces much economic activity off the books—in Egypt, eighty-five per cent of small businesses are in the “informal” sector—and this reduces growth, since informal businesses have a hard time getting credit or expanding beyond a certain size."

and

"Strict regulations enable the government to protect its friends in the private sector from competition, and bureaucrats line their own pockets, becoming further indebted to the system."

and

"Not surprisingly, when autocratic regimes in the region have tried to change their economies they’ve done so primarily with an eye toward maintaining power. In the past decade, countries like Egypt, Jordan, and Algeria have made vaunted public commitments to reform. But, as a recent study by the political scientist Oliver Schlumberger shows, reform did not, for the most part, aim at introducing genuine free-market competition, the most important feature of a healthy capitalist system. Instead, it strengthened what he calls “patrimonial capitalism”—a system in which the key determinant of success is how close you are to those in power."

Qatar Is The New Number One

In per capita GDP, that is. The table below shows the the top 10 countries in per capita GDP based on the the CIA's 2010 estimates (they are not all from 2010-Liechtenstein's estimate comes from 2007, for example).



Click here to go to the CIA World Factbook. The numbers are based on "purchasing power parity," which means the differences in cost of living between countries is taken into account. But it does bother me that our most recent estimate for Liechtenstein is from 2007. With all their riches, they could be a threat. So maybe the CIA should pay closer attention to them.

Update 3-4: Commentor "Sparrow" mentioned that Qatar uses slave labor. Here is a UN report on that Trafficking in Persons Report 2008 - Qatar. Here is a recent news story Online Petition Asks Qatar to Fight Human Trafficking in Advance of World Cup.

From The Life Is Not Fair Category: Better Looking, Tall, Thin People Make More Money

See Ways Your Appearance Affects Your Paycheck. Here are some excerpts:

"Men who are at least 6' tall make an average salary of $5,525 more than their shorter, 5'5 counterparts..."

"... 1% increase in body mass [for a woman] results in a 0.6 percentage point decrease in family income..."

"people with above average looks typically received premiums in pay of 5% or more, and that less attractive people "suffered a salary penalty of up to 9%.""

Here is some research from a few years ago that explains why looks might matter from an evolutionary perspective:

"So you think beauty is in the eye of the beholder? Think again. According to new research from the University of Exeter in Great Britain, the preference for pretty faces over ugly ones is embedded in our brains from the moment of birth and possibly prior to birth.

Newborn babies come fully equipped with built-in preferences, including a preference for an attractive face, that help them make sense of their new environment, report the BBC News Online and Newsweek magazine. The Exeter researchers showed more than 100 infants two images that were placed side by side. One was of an attractive face, while the other was a less attractive face. The babies, ranging in age from five hours old to two days old, spent about 80 percent of the time looking at the attractive face, while barely glancing at the unattractive face.

"You can show them pair after pair of faces that are matched for everything other than attractiveness. This leads to the conclusion that babies are born with a very detailed representation of the human face," Dr. Alan Slater, a psychologist at Exeter, explained to the BBC News. Why would infants have this capability? "It helps them to recognize familiar faces--particularly that of the mother--and it helps them in learning about the social world. Attractiveness is not simply in the eye of the beholder, it is in the brain of the newborn infant right from the moment of birth and possibly prior to birth," he added.

When those babies grow up, the preference for pretty faces doesn't change. And it crosses all cultures and geography as well. When an insular European is shown the faces of two Africans, the one he chooses as most attractive is also the same one an African chooses. And it works the other way around when an African is shown the faces of two Europeans.

"Although we think that standards of facial beauty vary over time and culture, they don't actually change that much," Slater explained to Newsweek. The evidence indicates that there is a biological and universal standard."

So don't blame a man when he can't help but look at a pretty face! He's biologically programmed that way."

The Percent Of The Civilian Noninstitutional Population Employed Since 1970

(This is a post from last October with an update at the end, including a link to a comaparison of unemployment rates in different countries from 2002-09)

I talked about unemployment in my macro classes yesterday. If you go to this site by the Bureau of Labor Statistics called Employment status of the civilian noninstitutional population 16 years and over, 1970 to date, you can see unemployment rates going back to 1970. It also shows the percent of the civilian noninstitutional population that is employed. The graph below shows how that has changed over time.


The general trend since 1975 has been up, although it has flutctuated. Unfortunately, it has been going down for a couple of years and we are well below the high of 64.4% in the year 2000. It was 59.3% in 2009.

But the average for the years 1970-84 was 58%. So we are still above that. That does not mean what we have is good. But it just puts what is currently going on in perspective.

Some will say that we have a large prison population, so they are not part of the figures and that prison population has been growing. In 2008, the U. S. prison population was 1,610,446. See Prisoners in 2008. Suppose we increase the number of people in the civilian noninstitutional population by that amount. Right now it is 235,801,000. The new figure will be 237,411,446. Now let's keep the number employed the same, at 139,877,000. That would 58.9% employed, still higher than the average from 1970-1984.

Now there were some tough economic times in that earlier period. But we survived and we weren't exactly destitute. So although the economy is not doing well right now, maybe things are not so bad.

Update: For all of 2010, the percent employed in the US was 58.5%. From 1975-83, the average annual unemployment rate was 7.7% and the the average inflation rate was also 7.7%. The average annual percent employed in that period was 58.21%, still less than what we had in 2010 or any other recent year. The last 9 years averaged 61.9%.

Click here to see international comparison of unemployment rates by country.

Also, here is something from the Wall Street Journal last December about how GDP growth is related to unemployment:

"Okun's Law," as it came to be known, has been tweaked over the years, and now states that for every two percentage points the economy grows above its long-term trend annually, unemployment falls by a percentage point.

Most economists peg the economy's long-term trend rate at about 2.5%, which is roughly where economists polled by The Wall Street Journal estimate growth stands in the current quarter.That means, according to Okun's Law, that the economy isn't growing fast enough to bring down unemployment."

We Spend A Much Smaller Percentage Of Our Incomes On Food And Clothing Than We Used To

Economist Mark Perry has posted two great graphs at his blog (links to the two entries are below). But here are the graphs, They show that over time the percentage of our income that we spend on food and clothing has been falling. It looks like in 1950 that about 30% of our income went to food and clothing combined. Today it is only about 12.5%.




Here are the links to his two posts on this:

As a Share of Income, Americans Have the Most Affordable Food in World & It's Never Been Better

As a Share of Income, Clothing and Footwear in U.S. Are More Affordable Today Than Ever Before

Can Some Places Really Be The "Best" Places To Retire To?

See The Best Places to Retire Outside the U.S.

But if people really believe this and many of them go to a given country, 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 any of the countries on the list in the article. Once everyone sees it 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 that country has to offer alot more than the average person or the crowds and congestion will erode your enjoyment. That country won't be any better than anywhere else for retirement. Other places will be just as desirable.

Incentives Matter, Even When It Comes To Returning Bottles

See Shades of 'Seinfeld': Maine bottle scam alleged form the AP. Here are the first two paragraphs:

"A memorable "Seinfeld" episode features Kramer and Newman taking thousands of cans and bottles to Michigan so they can get a nickel more per container than they would in New York, but beverage distributors say there's nothing funny when it happens for real.

In Maine, which has a more expansive bottle-redemption law than neighboring states, three people have been accused of illegally cashing in more than 100,000 out-of-state bottles and cans for deposits, the first time criminal charges have been filed in the state over bottle-refund fraud, a prosecutor said.

A couple that runs a Maine redemption center and a Massachusetts man were indicted this week for allegedly redeeming beverage containers in Maine that were bought in other states."

And here is more:

"An estimated 90 million cans and bottles are fraudulently cashed in each year in Maine, costing beverage distributors $8 million to $10 million, said Newell Augur, executive director of the Maine Beverage Association.

People from other states — especially New Hampshire, which has no "bottle law" — routinely redeem loads of cans and bottles in Maine, Augur said. Redemption centers pay customers 5-cent refunds on most beverage containers and 15 cents for wine and liquor bottles. The centers, in turn, get that money back from distributors, plus a 3 1/2- or 4-cent handling fee per container."

And

"Officials estimate that up to 1 billion beverage containers are sold in Maine each year. Containers sold in other states, however, carry the Maine deposit stamp because it's not cost-effective to change labeling for each state."

Adam Smith, Marriage Counselor

That is an article from the NY Times. Click here to read it. It is by Jenny Anderson, co-author of the book “Spousonomics,” written with Paula Szuchman (as you can probably guess, I am continuing with the Valentine's theme from Sunday).

They discuss how using incentives and economic theories like loss aversion, game theory and information processing costs can improve your marriage. The two authors answered questions at Freakonomics.

Finally, neuro-economist Paul Zak explains why romance in the workplace is important. Go to The Container Store Cheers Office Romance, Love This Valentine's Day. Here is an excerpt:

"Research has shown that a loving work environment causes the brains of those in it to produce the neurotransmitter oxytocin, which motivates people to care for the people around them, the company says, citing the findings of Paul Zak, founding director of The Center for Neuroeconomics Studies and professor of economics psychology and management at Claremont Graduate University.

In 10 years of research, I have shown that when we are loved and trusted, we in return love and trust others," Zak told WalletPop.

"Love is the foundation for all economic exchange which, at its core, is about serving others. Love creates employee engagement, builds customer loyalty and creates sustainable businesses. Imagine that: the best business practices derive directly from love.""

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.

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."

New Technologies Open Up Oil And Gas Reserves

In one of my macro sections this week we read a chapter from the book The Economics of Macro Issues about technology. It mentions how better techniques have expanded our proven reserves of resources like oil. Some more cases of this were in the news recently.

One was New drilling method opens vast oil fields in US from the Associated Press. Here is an excerpt:

"A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude.

Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day — more than the entire Gulf of Mexico produces now.

This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers."

Something similar has happened with natural gas. See IEA doubles global gas reserves estimates from the BBC. Here is an excerpt:

"The world may have twice as much natural gas than previously thought, according to the rich nations' think tank the International Energy Agency (IEA).

The world may have 250 years of gas usage at current levels thanks to "unconventional gas" from shale and coal beds, Anne-Sophie Corbeau, senior gas expert at the IEA told BBC News."

It also has a nice picture explaining the new technique (I pasted it below). The authors of The Economics of Macro Issues also have a book called The Economics of Public Issues. Here is an interesing excerpt:

"In 1914, for example, the Interior Department announced that there was only a ten-year supply of oil left. That same department told us in 1939 that there was a thirteen-year supply. Then in 1951 we were told that oil wells would run dry in the mid-1960s. President Jimmy Carter in the 1970s said that we would use all proven reserves of oil in the world by the end of the 1980s."

Should Children Be Forced To Visit Their Aging Parents?

A couple of weeks ago I had a post about something from SuperFreakonomics, how children are more likely to visit their parents in nursing homes if the parent is rich (and if they have a sibling, since they are in competition for the inheritance). Now it turns out that China might force children to visit their parents. A proposed law would allow parents to sue their children if they don't visit. It is not clear how often they would have to visit or for how long. See China Might Force Visits to Mom and Dad from the NY Times. Here is one tidbit that has economic implications:

"In Shandong Province, for instance, a court ordered three daughters to each pay their 80-year-old mother between 350 to 500 renminbi, roughly $53 to $75 a month, after the mother claimed that they ignored her and treated her like a burden, The Qingdao Evening News reported this month."

Will Computers Replace Professors?

This past week in one section of my macro class we read a chapter about technology and how people respond to it from the book The Economics Of Macro Issues. It mentioned Luddites, people who destroyed industrial equipment in England in the early 1800s. They were weavers who lost their jobs to new machinery. See What is a Luddite? by Steve Anderson at Utah State University.

Today, the New York Times had an article called Online Courses, Still Lacking That Third Dimension by Randall Stross. It raised the question of computers doing the teaching, making it possible to do away with professors. Here are some excerpts:

"“We should focus on having at least one great course online for each subject rather than lots of mediocre courses,” Bill Gates suggested in his 2010 annual letter for the Bill & Melinda Gates Foundation.

Developing that best-in-the-world online course — in which students would learn as much, or more, than in an ordinary classroom or a hybrid online class — requires significant investment. The Open Learning Initiative at Carnegie Mellon University, which has developed about 15 sophisticated online courses, mostly in the sciences, spent $500,000 to $1 million to write software for each. But neither Carnegie Mellon nor other institutions, which are invited to use its online courses, dares to use them without having a human instructor, too."

'Separately, many universities have put free videos online featuring their best lecturers. And Academic Earth, an aggregator Web site founded in 2009, makes the lectures easy to navigate. It says it offers 150 full university courses.

But even when lectures are accompanied with syllabuses, handouts, sample problem sets and other aids that Academic Earth has for some of its courses, is the experience really complete? The Massachusetts Institute of Technology also shares the raw materials of courses in its OpenCourseWare program. For the benefit of autodidacts who aren’t M.I.T. students, it strives to publish materials online for every M.I.T. course. But students cannot interact and do not receive vital feedback about their own progress that an instructor or software provides.

“Unlocking the Gates,” by Taylor Walsh (Princeton University Press) is a recently published history of M.I.T.’s online venture, as well as those of Columbia, Harvard, Yale, the University of California, Berkeley, and others. Comparing the book’s case studies, I found that Carnegie Mellon seems to have made the most progress in developing fully self-contained online courses. Anyone can use them free, with the proviso that Carnegie Mellon doesn’t offer credit.

But course credit can be earned at other institutions if instructors send their students to the site. Students pay nominal course registration fees, generally $15 to $60, and Carnegie Mellon sends data about each student’s progress to the instructor at the student’s home institution.

Carnegie Mellon, however, does not use these online courses as replacements for its own humanoid instructors. “Any tuition-driven, private university would have a hard time being the first one to make a change as drastic as offering an entirely automated course,” Ms. Walsh told me recently."

Even If You Don't Like Sports, You Might Be Paying For Them

See The Price of Football That Even Nonfans Pay by Mark Frost. From the Wall Street Journal, page D6, February 3, 2011. Cities spend tax payers money on stadiums. They don't always generated the hoped for benefits and some cities are still paying for stadiums that have be demolished. Here are some excerpts from the article:

"...the state (i.e., the taxpayers) still owes about $110 million in debt on the old Giants Stadium."

"Harris County, Texas, still owes about $32 million in debt on the Houston Astrodome, which opened in 1965 and was dubbed the "Eighth Wonder of the World." The RCA Dome in Indianapolis, which was demolished in 2008, still has about $60 million of outstanding debt and will not be paid off for at least 10 years. Even tiny Vero Beach, Fla., longtime home to Dodgers Spring Training, is on the hook for some $17 million in debt after the Dodgers moved to Glendale, Ariz., two years ago. Pima County, Ariz., taxpayers similarly still have to pay $21.3 million in stadium debt after the Chicago White Sox and Arizona Diamondbacks moved their training camps to Phoenix from Tucson."

""The problem with tearing down stadiums early isn't the debt," said Neil deMause, who co-wrote "Field of Schemes" (Bison) and blogs at a website with the same name. "It's the revenues that you're giving up by allowing teams to move into new buildings with sweetheart leases.""

"...there was nothing functionally wrong with the old Yankee Stadium, the old Giants Stadium, or many other stadiums that have been replaced over the past decade. The problem was that the old stadiums didn't generate enough luxury revenue. So New Jersey, which is about $36 billion in debt at last count, gave up about $15 million in annual tax revenue so that the Giants and Jets could be more profitable."

"The politicians spent the money that was originally intended to pay off the debt on other things. It's a common problem. Revenues get diverted to other programs and the stadium debt gets refinanced."

"The other problem is that cities often overestimate how much revenue a stadium tax will generate—and they often do it to make the new tax and the new stadium more palatable to the citizenry."