economics

Gene Expression

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In this diavlog with Glenn Loury the behavioral economist Sendhil Mullainathan recounts the results of an experiment. – If given the option of paying $100 for an item vs. $80 for an item, but in the second case having to go across town for the item, respondents choose $80 and going across town – If…

The great productivity transient

This comment from Chris is interesting: I would speculate that the the massive productivity gains were due to a massive resorting of American society along cognitive lines; from 1940 to 1970 a large number of high ability people who were previously locked into agriculture and industry were able to sort themselves into more innovative positions.…

The business cycle, then and now

Two interesting graphs from Calculated Risk. The first shows that the changes in GDP seem during the last recessive are on a par with those of the early 1980s and before (though we don’t know if we’re in a U or V shaped recession yet, though the odds are probably more U than V right…

Jobless Turn to Family for Help, Often With Complications: More than half of the respondents to a recent New York Times/CBS News poll of 708 unemployed adults nationwide said they had borrowed money from friends or relatives. In most cases, their financial pictures were bleak. Nearly 80 percent of those who reported borrowing money said…

On scales of norms

There has been more blogospheric discussion on the topic of my post Doing the right thing, doing the legal thing. Megan McArdle, who started the discussion, has a long post elaborating on her objections to strategic defaults. Steve Waldman has two good posts up. Finally, at The Big Money Daniel Gross concludes: Of course, corporate…

Old tricks never die

This critique by Ted Goertzl, Myths of Murder and Multiple Regression, is making the rounds. It made me think of this old apocryphal story: There is a famous anecdote inspired by Euler’s arguments with secular philosophers over religion, which is set during Euler’s second stint at the St. Petersburg academy. The French philosopher Denis Diderot…

Going for the pain of paying

For Gun-Shy Consumers, Debit Is Replacing Credit: Visa announced this spring that spending on Visa debit cards in the United States surpassed credit for the first time in the company’s history. In 2008, debit payment volume was $206 billion, compared with credit volume of $203 billion. MasterCard reported that for the first six months of…

Institutional scerlosis

The Nightmare Of Regulatory Reform: …the SEC and the CFTC, two agencies that have fought hard to stay apart while the products they regulate grow more and more intertwined. Both Republicans and Democrats agree the two should become one, but former House Financial Services Committee chairman Mike Oxley says the chances of that happening are…

The modifier on innovation

Felix Salmon has been at the center of a discussion on the merits and value-add of financial innovation. He notes: Then there’s the more purely financial innovation. There are good things here too — fractional reserve banking, factoring, common-stock limited-liability companies, tradable fungible bonds, stock-market index funds, that sort of thing. But on this front…

The bubble in irrationality

Felix Salmon pointed me to The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street today. There really is a boom in these sorts of books recently! Are we overdoing the “irrationality” bit? Probably. Mike offers up some skepticism about the creeping of irrationality as an explanation for everything.