Apr 29, 2008
A convergence of such values was a good thing in my head all along. You can't call the fact that some people are unhappy in certain countries and happy in otehr countries and say that it should remina like that for the sake of culture! Better for it to converge towards happiness. That is human progress. Same thing for mutual trust. It's like saying that countries should stay poor as it is better for tourism!
I would imagine that the worldwide convergence in income be accompanied by a convergence in values. The fact that some countries think it OK to praticse female genital mutilation should not be regarded as a desired cultural difference. Or the fact that you don't want homosexuals as neighbors. As countries become richer, they become more educated and less anti-homosexuals. A convergence in such liberal values is desirable in my opinion. It could save us from a third world war.
And this certainly does not mean that Japanese stop eating sushi, Greeks stop eating Tzattziki and Indians stop watching crazy bollywood dancing over tandoori chicken or that Nigerians stop wearing bubas. It just means that we start accepting each other, or at least understanding and tolerating each other.
Apr 27, 2008
- Act One -
It can be surprising sometimes which kind of topics the Economic discipline has incorporated into its realm. One of these fields is the “Economics of Smoking” which exists now also as the “New Economics of Smoking”. On one hand the potential costs of smokers for the health system of a country gives enough reason for economists to care about smokers. On the other hand it is surprising to see that it requires a whole new “Economics of…” for a field that seems rather trivial at least from the point of view of the individual smoker.
An influential researcher on this topic is Jonathan Gruber, who writes on the NBER website
“...The fundamental problem with the rational addiction model is that it does not account for the "self-control" problems faced by smokers. There is ample evidence that adults are unable to quit smoking even if they have a desire to do so….”
Well having smoked for easily 10 years this does not come as too much of a surprise to me nor will it to any other person: smoker or non-smoker. Gruber goes on to say:
“…These facts motivated Koszegi and me to develop an alternative formulation of the smoking decision which changes the traditional formulation in just one critical way: by allowing smokers to be time inconsistent. This approach, now widely used within the new field of "behavioral economics," is one where there is conflict between what the smoker would like for himself today and what he would like for himself tomorrow. Today's "self" is impatient. Faced with the tradeoff between the short- term pleasures of smoking and the long- term health damages of doing so, he will greatly discount the latter and decide to smoke. But tomorrow's "self" is much more patient. That more patient self would prefer to quit smoking. The problem, however, is that tomorrow never comes. The next day, the future self who was patient is now the current self who is impatient. So the smoking continues, to the long-term regret of the smoker. This is in contrast with the time consistent formulation that is assumed by the traditional economics model. In that formulation, today's self and all future selves are in agreement about the advisability of smoking, leading to no regret or inability to carry out plans to quit.
Now this is amazing! If you ever thought about smart ways of “marketing” your research, this part of the outline of Gruber’s research agenda is a perfect example of how to do this. Why? Because it sounds incredibly great and smart , but at least all smokers (economist or not) could have told you the same, however in very different words, since probably most smokers keep telling themselves: “One day I will stop!” Unfortunately, that day never comes since we keep telling us that sentence every other day. And: We are fully aware of this!
Gruber continues by writing:
“…The key implication of time inconsistent preferences is that one's future self would like to somehow constrain one's current self to behave more patiently [..]. Thus, time inconsistent consumers will have demand for commitment devices that can be used to induce more appropriate behavior in the present. Indeed, the search for such commitment devices is the hallmark of most recommended strategies for quitting smoking: people regularly set up socially managed incentives to refrain from smoking by betting with others, telling others about the decision, and otherwise making it embarrassing to smoke…”
Having stopped to smoke just recently, I was aware of the commitment problem. Also all the other smokers and non-smokers at our lunch table in the Economics department saw immediately the reason for my public “outing” of having become a non-smoker. So either the people sharing lunch with me in the Graduate Institute are really smart or the fact that we are all economists implies that we have understood the problems of incentives and commitments or less charming to our “self” it is a rather obvious thing to do. Irrespective of this, the bad news for me and my future as non-smoker according to Gruber is that:
“..Unfortunately, […] there is no way to truly commit oneself to not smoke..”
However, my efforts are not doomed yet since:
“…the government, on the other hand, can provide an excellent commitment device: cigarette taxation [..]. By raising the price of cigarettes, the government and courts can make smoking more costly for today's self, helping achieve what the smoker's own long-term self would desire by lowering smoking today. ..”
Unfortunately for me, this is the point where I disagree. Yes, it is true that higher prices discourage smoking (in particular for young smokers who just start and this is why I am for cigarette prices as high as possible). BUT, there is a limit to it. I remember very well the times that Berlin’s streets where full of cigarette vendors who sold well below the prices in the stores. So, price increases have a natural limit and this will be well below the price that the addicted smoker is willing to pay (during the time that I smoked cigarette prices nearly doubled).
So if you read up to this point you probably know what my stance is on the successful approach to fight smoking, at least from the point of view of the individual smoker…to be continued with some statistics on the issue…A hopefully lasting non-smoker
Apr 25, 2008
Do you like graphs? Here's a gallery with some nice stuff like the ones on this post. From The Economist, of course. Turns out South Africa will be better tha India or China to do business. Anyone wants to start a business? I'm in.
Apr 23, 2008
Apr 22, 2008
I recently, visited the homepage of my former university to find the following announcement for a conference on "Kritik der polysexuellen Ökonomie" (sorry it is only in German and even though I consider my English sufficiently good I do not see myself in the position of translating the text; not to speak about the meaning of the text). The text is here reproduced:
"...Theorie der polysexuellen Oekonomie ist Ausdruck eines historischen Prozesses, in den/m alle vergangenen Kämpfe um Integration und Verschiebung (Frauen/ Homos/Transen/usw.) münden und weiterhin treibend bleiben. Sie lässt historisch einzigartig die Möglichkeit einer sexuellen Oekonomie erblicken, die zum ersten Mal in der Geschichte nicht ständischfeudal, nicht rassexistisch-segregationistisch strukturiert wäre, ein universeller (Welt)Markt, auf dem alle Körper als Waren auftreten, ineinander tauschbar sind (welche Verzögerung, seit 1789). Aus der Perspektive dieser liberalisierten Zirkulation erscheinen Paarmonogamie, Zwangsheterosexualität und segregationistischer Rassismus lediglich als Marktbeschränkungen, als vormoderne Überreste präkapitalistischer Vergesellschaftung. Die polysexuelle Bewegung durchschlägt die Zwei dreifach: des Geschlechts (Mann/Frau), der Sexualität (Homo/Hetero), des Paars (Ich/Du). Sie etabliert ein tableau économique, auf dem die Körper un/mittelbar nach der zu ihrer Reproduktion gesellschaftlich durchschnittlich notwendigen sexualisierend-sexuierenden Arbeitszeit bepreist werden. Gleich sind die Körper somit, insofern sie alle der Herrschaft desselben Wertgesetzes unterworfen sind. Ungleich, insofern sie diese Herrschaft ungleich hart trifft. Erst an der einen Norm gemessen, werden sie als Mehr und Minder quantifizierbar, universell hierarchisierbar. Erst das Schönheitsregime bringt die Hässlichen hervor und mit ihnen die alle ergreifende Angst: übrig zu bleiben. Liberalisierung der Oekonomie ist also Abschaffung ihrer Begrenzungen, nicht bereits Abschaffung der Oekonomie, um die es geht. Gesucht wird ein Modus von Vergesellschaftung, der weder der (unterkonsumptiv) krisenhafte des Single-Marktes ist, noch der des Paars, des Ehevertrags, Handelsabkommen auf Lebensabschnittszeit. Weder protokapitalistische Oekonomie allgemeiner Konkurrenz also, noch sozialistische, Planwirtschaft, die die Armut (eine und nur eine Ware Anziehungskraft für jede[n?]) für die Ewigkeit verwaltet. So gestellt, springt die Lösung des Problems unmittelbar ins Auge: Gesucht wird Communismus, polysexuell."
Apr 18, 2008
happens when the subject has spent enough time in our country without having been noticed". This is one of the opening sentences of "The Swissmakers", an acute satire about integration/assimilation policies of foreign citizens in
After immigrants have made a formal request for citizenship, it is the duty of the agents from the "office for assimilation" to compile a report of "good candidacy" which, together with an interview with a commission of local citizens (mostly about Swiss history but also on other aspects of private life) determines whether or not the “Swiss wannabe” deserves his/her passport.
According to Rodmer, the strict, inflexible, super-efficient, thick-headed agent from the
The cases they have to examine are an Italian-communist pastry chef from Apulia, a dancer from
The two guys work together, but then Fischer gets tired of the methods imposed by Rodmer. Being loyal to his role though, he “makes” a Swiss citizen, but in a different way…The dialogues are highly enjoyable, while the direction is sometimes too pedantic. The movie was released in 1978, and apparently, it is one of the most successful Swiss movie ever made. It was blockbuster until 1997, when it was surpassed by Titanic..but honestly it’s way better than Di Caprio’s worst movie..
Apr 16, 2008
Here's a paper idea: Do a survey and show that the HEID students with the best grades want to work in the unproductive sector (for example, the UN), relatively more than the average. Control for sex, age, origin, specilization and haircut.
Two typical citizens—the army's “most average” soldier and a street prostitute—find themselves transported 500 years into the future. They soon discover that they are towering geniuses compared with the knuckle-draggers who inhabit the America of 2505. The country's best university is run by Costco. People are named after brands such as Frito and Mountain Dew. Starbucks has become a chain of brothels. The president is a former porn star and wrestling champion.
Apparently, America's politicians are doing all that they can to let Mr Judge's dystopia materialise, with their straight dumg immigration policy, trying their best to keep the world's best and brightest from darkening America's doors. They call this a policy of national self-sabotage.
All in all, Idiocracy sounds like a Rigot Movie night. Anyone interested?
Apr 13, 2008
This is what Nudge, a new book by Richard H. Thaler and Cass R. Sunstein (both at the University of Chicago) explains. "There are many ways to trick people, but one of the easiest is simply by giving thought to the way choices are arrayed to them, or what they call choice architecture."
For example, let’s say you want men to stop accidentally peeing on the floor instead of in urinals in an airport bathroom. Maybe you could make them pay a fine for missing target or maybe someone could teach them on the diseases it can create. The choice architects have an easier solution: paint a fly in the urinal. It turns out with something to aim at, “spillage” is reduced 80 percent.
Apr 11, 2008
Apr 9, 2008
Apr 8, 2008
I was petrified
I kept thinking I could never write
With Baldwin by my side
But then I spent so many nights
Just looking at his famous wall
And I grew strong
And I learned Stolper-Samuelson
And so I'm back
To join the rats
I juts walk in to find them there
With Wyplosz' book around their tails
I should have learned that Dornbush model
I should have passed that open macro
If I had known that in the short run
Exchange rates do overshoot
Oh now go! Outside Rigot
Don't turn around now
You can't stand stata anymore
Weren't you the one who tried to estimate demands
with bad regressions
You'd think it all come out just fine
Oh no! All wrong!
As long as Jaya is around
I know I'll do just fine
I've got all my output saved
I've got all of Cuddy's notes
And I'll regress
I will regress
It took all the strength I had
Just not to fail his course
Kept trying hard to solve
And Djajic Oh so many times
Just teaching Krugman to the class
Verdier and Tille are here for that
Big Push or Trap
And Central Banks
I'm not afraid of all that crap
You keep on feeding me
and so you feel like dropping out
and just expect to find a job
But now you're running out of money
You better finish that mémoire
Oh no! All wrong!
As long as Jaya is around
I know I'll do just fine
I've got all my output saved
I've got all of Cuddy's notes
And I'll regress
I will regress
Words by Maria and Pierre-Louis based on "I Will Survive", performed by Gloria Gaynor, released in October 1978, written by Freddie Perren and Dino Fekaris.
Guys we wanna make a video with all of us out of this. Show these Berkeley guys what we're made of.
Dear Rigotnomics comunity,
One of the ideas that appeared in the super Christmas dinner we had last year was to organize some cinema sessions in our sanctuary of knowledge. We just have to ask for one of the R rooms for the evening and bring beer. I’m full of documentaries to show, also movies. Even when see any good movie is perfect, I propose to have things with some economical, political or social content that we can discuss (or even model and estimate!!) later. Anyone interested? Any movie proposal is more than welcome.
Apr 7, 2008
Unfortunately, Australia is one of the main contributors to the problem - we are experiencing a 'once in a thousand year drought' at the moment, which is at least in part induced by our lack of action on the climate change issue.
That's especially bad news for the rest of the world, given that Australia is under normal circumstances the world's second largest wheat exporter.
So why do educated people still throw away trash on the street, or fail to recycle plastic bottles or even paper?
By the way, here's a video on this story. If you feel that you're being too brainwashed by The Economist sometimes, try this magazine, it's my second favourite. It also gives good fashion advice.
Our Brand is Crisis
Democracy for sale: This documentary shows how a progressive leader in Bolivia can be as marketable as Ronald Macdonald.
Inside every teenage girl there's a fountain
Inside every young pair of pants there's a mountain
Inside every mother's eyes is Tommy Tinkrem's bed
Inside every candidate waits a grateful dead
“Candidate”, David Bowie
Gonzalo Sanchez de Lozada, better known as “Goni”, was president of Bolivia between 1993 and 1997. In 2002 he is campaigning again. He takes his private jet and flies to a rural locality in order to participate in a support rally. The local leaders give speeches in his honour, while young local ladies dance to folk music, dressed in pink as almost everyone else is. Pink is the “fresh” official color of the candidate. Finally, the great moment arrives, Goni gives his speech: “The main problem in Bolivia is the economical crisis... yes, we can go out to the crisis!” People get excited, yes the crisis is really bad: “viva Goni”.
The scene seems to be similar to any political contest in Latin America, but there is one big difference. Everything has been planned by an American consulting group that Goni has hired. The experts from Greenberg, Carville and Shrum go from Washington DC to La Paz analysing reams of data about the country and the conclusion is strong: “Our advertisement has to fit the frame, and our frame, our brand, is crisis”. The pollsters conduct a lot of focus groups in order to understand what people want in a president. They carefully analyse the strategies of the other candidates and plan aggressive attacks on them. The core of the documentary is to follow step by step how the campaign is modelled by these “experts”, who resemble the classic enthusiastic and pseudo creative American business man - a deep contrast with the Bolivian indigenous population they claim to interpret.
What is wrong with this? Politics is always a dirty business, and all the candidates hire external specialists for their campaigns. But the images that Rachel Boynton offers us are frankly repulsive, to see this guys displaying their marketing in order to decide the future of a country is beyond the pale. They are dangerous; they are too good at their work. They can manage to install any clown as a head of a State. Who has the money to pay them? Only the rich elites who have kept the power in many poor countries and now have to deal with tedious free elections that are observed by Jimmy Carter. In the old days they could just offer a live chicken for a ballot. Nowadays they have to convince the people with propaganda.
The air can be cut with a knife. Everybody is perspiring. The consultants loosen their ties while following the evolution of prices on the stock market… sorry… the first results of the election. Happiness!!!: Manfred Rey 20.8%, Evo Morales 20.9%, Goni 22.5%. Great victory! There is no second round in the Bolivian electoral system. Time for the marketing geniuses to go home? No, they stay in order to support the brand-new president. They keep doing their focus groups but now fail to understand why people are so angry. They are not just selling the brand crisis anymore, but influencing the politics that create the crisis. Why do people man the barricades to protest against the rise in the taxes? The smart lady from Harvard is afraid because complete anarchy reigns in the streets. Eventually, one year after the election, the team of consultants has to flee back to Washington. Goni goes with them.
Official Name: “Our Brand is Crisis”
Director: Rachel Boynton
Year released: 2005
Length: 85 minutes (aprox.)
Apr 6, 2008
Apr 5, 2008
Corruption, Violence, and the Poverty of Nations
by Raymond Fisman and Edward Miguel
From the intro on the book's website I'm sure I'll just love it:
"Meet the economic gangster. He’s the United Nations diplomat who double-parks his Mercedes on New York streets at rush hour because the cops can’t touch him—he has diplomatic immunity. He’s the Chinese smuggler who dodges tariffs by magically transforming frozen chickens into frozen turkeys. The dictator, the warlord, the crooked bureaucrat who bilks the developing world of billions in aid. The calculating crook who views stealing and murder as just another part of his business strategy. And, in the wrong set of circumstances, he just might be you."
Here's what Levitt, coauthor of Freakonomics, thinks of it:
“Economic Gangsters is a fascinating exploration into the dark side of economic development. Two of the world's most creative young economists use their remarkable talents for economic sleuthing to study violence, corruption, and poverty in the most unexpected ways. Subjected to their genius, seemingly inconsequential events (like New York City parking tickets and Suharto catching a cold) become potent tools in understanding how the world really works. Rarely has a book on economics been this fun and this important. ”
I'm adding it to my list after "The logic of life" by Tim Harford. By the way, here's another super interesting paper by Miguel on National Cultures and Soccer Violence (here's an Economics Focus style summary). And one by Fisman, Gender Differences in Mate Selection: Evidence from a Speed Dating Experiment.
Am I the only one here interested in that kind of stuff? I mean, behavioral economics and development?
Apr 4, 2008
Apr 2, 2008
Steven D. Levitt is complaining on his freakonomics blog that his undergrads did poorly in their final exam, as if they didn't care about their future. But, as he understood when watching the video below, they were actually investing in, euh...somewhat different kinds of skills.
When the nostalgic owner of a VHS renting shop (Danny Glover) goes away for a week to spy on the competitor’s DVD shops, he tells his adoptive son (Mos Def) to take care of the shop. But he has a clumsy friend (Jack Black), who, when trying to sabotage a power station, becomes magnetized. So when he enters the video club, he erases all the tapes just by being there.
So when the shop’s best client wants to rent “Ghostbusters”, they quickly realize that the only way to have a VHS copy of the movie is to film a remake themselves. It turns out to be very crappy, but with a lot of heart, so the best client’s son and friends find it fascinating.
When asked what the hell is going on, Jack Black answers that the movie has been sweded. “That’s not a verb, that’s a country”, the young gangster reacts. “Exactly” retorts Jack Black, “that’s why it’s expensive”!
Turns out they start making more of this hilarious and “feel good” sweded versions, including 2001, a space odyssey, Rush Hour 2, the Lion King and Driving Miss Daisy. But just as they’re starting to make enough money to save the building from being destroyed by urban developers, the copyright lawyers come and destroy all their sweded versions.
They conclude by filming a documentary on Fats Waller, the jazzman who supposedly lived in that same house where the video club is today and the idol of the shop owner. When they project it the night of the building destruction in the video shop, the entire neighbourhood has gathered to enjoy the craziness and human feeling of their filmmaking.
Anyway, this is a crazy movie about how people care about social assets such as friends and neighbourhood culture in Passaic, New Jersey. The point is not that change or progress is a bad thing; the point is that the best things in life are the ones from the heart.