Truck and Barter

Hard America

HedgeFundGuy at Mahalanobis makes some comments about Hard America/Soft America. Actually, he refers to why we produce mediocre 18 year olds and highly productive 30 year olds. What happens in those intervening years? This reminds of some comments I ran across years ago on a website of an Indian student attending a U.S. institution as a graduate student. He was slightly perturbed that his fellow American students were just interest in what was going to be on the test and not more intellectually curious. I think this goes a long way in explaning why people in this country become enourmously productive.

People in this country are interested in learning only what they need to get the job done and not necessarily in peripheral knowledge. How often have I heard a comment from a kid that math isn't needed? A lot. I was once trapped next to a teacher on a flight to London who wanted to explain to me that it was more important that a student feel good than about actually learning. It was an 11 hour flight so I was polite, my reaction would have been much different otherwise. I worked with many people who simply couldn't do basic fractions. I think to a certain extent, education people or as Barone calls it, Soft America is fairly ignorant of what is needed in a competitive economy. Lord knows they do all they can to prevent competitive forces from entering the education field.

The point I'm getting at is that kids are ignorant of what skills are needed. So, we have the ignorant teaching the ignorant. It isn't enough to say that you get out of an education what you put into it if you don't know what you should know and neither does your teacher. We need a system that transmits market signals to kids at a younger age, higher standards will go a long way since kids will learn only what they need to pass a class.

More Use of Shame

Since it seems that shame works best if you can expand the group of people who repeatedly interact with those who are being "shamed", this strikes me as a particularly cost-effective method:

U.S. city unveils sex solicitor billboards of shame

Naturally, I'll avoid the thornier issue of sex work legalization...for now.

The Limits of Shame

While shame -- or social opprobrium -- can be used to curb behavior upsetting to groups, one must still take into consideration the opposing forces. In the case of publicly identifying those homeowners that fail to keep up their properties, one has to ask if the effort and money that would be incurred by the offending homeowner is worth less to them than not having a "Scarlet Letter" signal attached to their property. Judging from some of the places I've lived in and around, this might not always be the case. Not to mention the fact that these people already certainly have some inkling that their place is unlike the rest of the neighborhood in terms of orderliness and cleanliness. The cost of shame would have to be significant to alter the behavior of someone who is already apparently far less concerned with "outward appearances".

One of the reasons I'd argue such a tactic would work is that the makeup social group in the case of homeowners would tend to be fairly constant over time. People move in and out, but not terribly rapidly. The offending homeowner would have to cope with repeatedly interacting with the neighbors he has offended. The less dynamic the change in actors in the social network, the more shame could affect behavior.

As a counter-example to illustrate the point, I cite the near-ubiquity of adult magazines at airport kiosks and bookstores. From the small terminal-side stands for news and candy to the in-house Border's, I could have had my pick of several titles of adult magazines. While Pl4yb0y might have once had some slightly mainstream credit with semi-popular authors publishing short stories in its pages, I imagine such value disappeared with the rise in competition against P3nth0use. Surely these would not be part of the regular offering if, in fact, no one was buying them. But who, I wondered, would sidle up behind a mom and her kids buying some candy and aspirin and in front of a dapper elderly man who still dresses for travel, and lay down the latest copy of any of these publications*? Isn't there a reason adult-material shops are located behind barred windows, or off highway service roads? Simply keeping materials out of windows would serve the public restriction against displaying materials for any child to see. The more stringent measures seem more calculated to serve a clientele eager to keep some sort of anonymity. (Sidenote: And indeed, the demand must be strong enough in airports to support such a range of sellers. That people would frequent the more popular and more crowed Borders over the small cart in an quiet terminal implies such. Even more interesting to me is that the Hotelling effect obtains here as well. Several mobile snack/news carts carrying such materials were located by terminal junctions, where most of the large stores have permanent space rather than gathering in the empty spaces between gates.) The difference, of course, is that whatever shame that exists lasts only briefly, and only in connection to a highly fluid set of people. When waiting in line to buy something from the magazine stand, you don't much expect to see any of these people again. There are few worries, as there would be living in a neighborhood that knows you are the one who refuses to mow your lawn, that interactions would be sustained and repeated.

With a lot of time available waiting for a delayed flight in Houston, this is the sort of thing that keeps my mind occupied.

*Please note: I do not mean to suggest that people who purchase adult magazines should be "ashamed". Rather I here use the term "shame" to express the emotional cost of revealing something potentially embarassingly personal to the outside world through such a purchase. Whether or not one should be ashamed (and I'm on the side of "no", so long as the content is produced free of coercion) is beside the point, since we exist in a world with social institutions that still hold to such mores.

[N.B. Odd spellings of publications, and lack to links thereof, are intended to keep down the amount of unwanted traffic from search engines and spiders.]

Regulation on Everything: Think Different Edition

(With apologies to Marginal Revolution)

From the Technology Liberation Front I see that some kind-hearted government folks are looking at the possibility of extending V-Chip technology to our iPods (of which I am now a proud owner; the Cult card comes soon) and assorted other media. In fact, Senator Clinton is going to be introducing legislation that would

“create a program to study the impact of electronic media on children’s cognitive, social and physical development, focusing in particular on very young children and infants. The program will also examine the links between media consumption and childhood obesity.”

So the fear is that all of this access to technology is making kids fat? Then why make technologically delivered media an easier crutch?

Hillary: “Just a decade ago, we made great strides to keep children away from inappropriate material. But we face a complex new world. All across our country, kids today are playing increasingly violent video games while sending instant messages to friends and strangers on-line and listening to music they’ve downloaded on their I-Pods. How does a parent today who wants to protect their child from violent or explicit content have a chance? Parental responsibility is crucial, but we need to make sure that parents have the tools they need to keep up with this multi-dimensional environment. All of us need to rise to this challenge.”

(Quote from TLF.)

See, I think people have this exactly backwards. Here's my argument. Suppose I really do believe that there ought to be some sort of governmental intervention in people's personal eating habits. In that case, I want television, music, movies and video games to be as graphic and filthy as is entirely possible. Blood, gore, graphic sex, hate-filled language, mistreatment of minorities and women -- and that's just the Disney channel. In fact, I'd suggest government subsidies to pornography producers, tax breaks to video game companies researching high-definition evisceration graphics, and endless loops of George Carlin's "7 words" on the public access channels. Rap music written by serial killers. Government research into more and varied spam for impotence drugs and kinky sex phone lines.

That's what will make my kids skinny. After all, if television, games, movies, and music got so horrendous, then there's no way in hell I'm letting my kids just sit around and surf the web or channel-flip. Go on, then, boy. Get out into that great big world; Congress says its good for you.

Sigh. Using technology to regulate choice simply makes it easier to rely on the technology, and thus makes it more likely to have overweight children. It's not like Rolie Polie Olie is lower on carbs that Blue's Clues. And all that thumb work on the X-Box might wear off a Tic-Tac or two, but that's about it. My friends weren't thinner than me because they played Super Mario Cart while I was mowing down Nazi's in Castle Wolfenstein.

Perhaps, just perhaps, the technology isn't really the issue. I'd offer the suggestion that technology happens to be a strong indicator for something else. Something that boils down to personal choice on child rearing, for good or ill. (I played a lot of video games growing up, and never once have I considered taking a semi-automatic to school.)

In my opinion, regulating technology is wonderful way to feel like you're "doing something", but if my money is being spent to figure out why kids are fatter today than they were 20 years ago, is it too much to ask that the people doing the study ask slightly better questions?

IMMEDIATE UPDATE: It only dawned on me after posting this what this post might do to the Google Ads and search results. If it gets bad, I'll move the bulk of the post "below the fold" to see if it helps.

Price Gouging Sans Tragedy?

Just :46 seconds into this report on the Michael Jackson jury selection process, and the reporter (Carrie Kahn) dredges up the evil spector of "price gouging."

The worries over price gouging usually arise in the wake of some natural (as though others were "unnatural"?) tragedy, such as the hurricanes in Florida. In this case, however, the epithet is being applied to people who are "lucky" enough to have their businesses close to the courthouse where the Jackson trial is taking place. Rooftop locations for viewing, local eateries, hotels, and other places have raised prices -- or in the case of spectator seating, had to create them to answer a demand that was not there before -- as the swarms of journalists and onlookers have flowed into town.

Aside from the trouble I have in viewing any sort of price changes in the face of changing demand as "gouging", I'm even more confused by the use of the term in this instance. Clearly the reporter is attempting to make a case that the circus surrounding the Jackson case is somehow tragic in nature and scope, as it comes with the things that normally attend a great tragedy or shock. And, to go further, we see that the trial atmosphere brings out the worst in some local merchants who have been so crass as to charge for the use of their space, raise prices on a hamburger, or take advantage of similarities in naming. Clearly we should see this as a great failing all around.

Obvisouly the reporter feels she is above it, and should be excluded from this, though she herself makes her living on the spectacle, gains notoriety and thus financial and reputational reward in proportion to amount of coverage and the continued public fascination with what is, no matter the outcome of the trial, a horrendously flawed and troubled man. If she didn't, would not the labels she hurls at businesspeople indicate that she herself would be horrified by her own participation?

My issues: First, does Carrie Kahn's pay increase with this sort of trial, given the nature of the work as opposed to other stories? Does she, or any journalist such as this, get an increase in pay or expenses due to the 24-hour scope of the work, the locality pay, or other varying factors? If she does, why is this not "price gouging", since the reporters are charging more in the face of greater demand?

And second, why can't we see these trials as boons to local economies? Reporters flock in, with all their attendant camera and sound people, various commentators and professional spectators are on constant watch, and all of them need places to sleep, eat, and get a drink after a grueling day of picking through the gory details. Local restaurants and hotels and bars most likely didn't stock up heavily in hopes of a future rush; their prodcuts are now relatively more scarce. A price increase seems not only natural, but beneficial. The resources move to the people more willing to pay, and the seller gets an appropriate price. If they went too high, no one would buy the burger/beer/hotel room/plastic lounge chair on a roof; then they come down.

Rather than engage in the hand-wringing and teeth-gnashing of concern about why we're all so obsessed with these sorts of events, I'm choosing to appreciate the spur in commerce this means for those folks in Santa Maria, California. (Hmmm, do I smell a research topic? Judicial Spectaculars: The economic benefits of sensational trials.)

It's a good explanation, but my finacee will still glare at me...

In an all-too-rare post at The Idea Shop, Andrew Chamberlain has a great explanation for why punctuality is inefficient.

Here’s the logic: You don’t know when I’ll show up, and waiting is costly. If you’re early you’ll have to wait. If you’re late you won’t. So you come late. I do the same thing. Presto, we’re both late.

Lessons in Incentives

Hospitals are trying to figure out if it sends the "wrong signal" to have a Mickey D's in the lobby ready and waiting for the guy who just had heart surgery.

At a time when two-thirds of American adults are overweight or obese, putting their hearts and arteries at grave risk, health officials and physicians are urging people to be watch their weight and eat healthier.

Having french fries at a leading center for treating heart disease sends the wrong message, officials of the Cleveland Clinic believe.

Of course, if the hospital is private property, I don't mind at all if they decide that the only food service should be through Seattle Sutton, Lean Cuisine, Baja Fresh, the Outback, or Cold Stone Creamery. Then again, I would mention that, at a time when hospitals are losing money, turning away rent from high-volume places maybe isn't the wisest financial move. If they're just going to stop through a drive-thru on the way home, why not capture some of the market? But that could just be me.

If people bore more of the direct cost for their medical problems -- heart disease in this case -- would they be more willing to take care with their eating habits? Sure, the heart poblem the man in the story is having treated is going to drive up premiums, and makes it hard for him to get new or different insurance, but that's a far cry from getting a bill a week later that has, say, a five- or even six-figure bottom line. If there was some sort of tote-board next to the refrigerator, totalling up the likely medical costs for every extra slice of cheese or spoonful of sour cream, then the answer is clear. Since people are often very bad at weighing potential risks and assessing the future, however, it's not so clear.

To be sure, the poor are both the most likely to be without health care, and also the most likely to be overweight. The issue, I think, stems from the progress in making processed foods has driven out costs while infusing the product with items that put on weight. Or at least their concentration has increased dramatically -- think "high fructose corn syrup". Without paying monthly premia, these people also don't face a direct cost for health care, but do assume a much higher risk and face a far more worrisome situation. Eating well is an expensive proposition in this country as compared to pre-packaged meals and fast food, however, and the increased risk doesn't reduce the gap.

But my question then becomes: is providing state-funded health care -- such as proposed plans to extend health insurance in an ever-more socialized way -- to the riskiest possible group going to help in terms of producing better health results? Certainly the costs of health care provision would be driven up by the new people who are now using services at a higher rate than the less risky group. And the presence of health insurance hasn't created a drive towards healthy living among the covered. In fact we'd expect the opposite. I understand that some people would feel better knowing that more and more people are covered, but I'm not certain that I see how this results in what I assume to the be ultimate goal of health insurance and thus access to health care: healthier people. (Note that I don't count children or coverage of children in this, since I think there is a strong case to be made about their inability to understand -- though how we cover children alone is a question I've not got a good answer to.)

Is the desire to make sure people are covered, or to have healthier people? If it's public funds being spent to achieve and end, I'd prefer to have a clearer purpose.

More Subsidization, More Doctors?

(NB: Please excuse the haste and possible inconsistencies of this post. I can honestly say this is the first time I've posted to T&B when I've been exceedingly annoyed.)

I just turned on the radio -- NPR, my usual when it's not C-SPAN -- to hear a report by Patricia Neighmond on a study about a potential shortage of doctors. (I've not located the full study yet. I'll have to listen to the report again.)

Essentially, the problem is this: while the population grows and thus the demand for health care, the US is graduating only about enough doctors to replace the ones that are retiring. Population and demand will soon outstrip supply. In the course of the interview, Neighmond lets the guest opine on how the country might confront such a problem. And how does the man respond?

"It's the right time to spend more money on training more doctors." (A paraphrase, but a close one.) And it went by the Neighmond with nary a comment.

In a world of skyrocketing malpractice premiums, higher insurance bills for patients, and ballooning court awards to winners of court trials (see first item), are we sure that it's the cost of the education that is the problem here? Why might it not be, oh, I don't know...the fact that the strong financial incentives to incur the debt in the first place are being eroded through massive regulation by the AMA, FDA, the federal government and more? With all the technique and expertise it takes to be a doctor in the world's most advanced health care industry, are we really certain making it easier for more people to go to school is the best idea? Wouldn't we expect to draw more of the wrong kind of people to medical school if we make entrance easier? Might we not see such a surge in demand for attending medical school that schools might start to accept more people in order to capture more of the funds (perfectly acceptable to me on the part of the hospitals -- but why should I be on the hook for the income of a university because someone's gotten some of this "training money"?). Oh, certainly there might be some dedicated folks that such a policy would draw, much the same as there really are good people working for the government (there are, I promise, I've worked with them). But at the margin, why should we make the temporary price of education lower when we could allow the future profit stream to rise and thus induce a lot more people to become doctors?

This strikes me as similar to the problem with the supply of teachers. In order to get more teachers, states frequently drop the requirements for becoming one. This allows in more people, but they are not necessarily the ones best qualified to become a teacher. As a result, we have more people getting little to no better results from the education system. It seems to me that the requirements are moving in precisely the wrong direction. Harder qualifications to enter the profession could limit the pool, allow wages to rise and begin to draw the people who either have the innate ability or the willingness to work hard in order to achieve the financial and emotional rewards of becoming a teacher. Meanwhile, better trained teachers might better handle the larger class size that will result from the short-run reduction in supply of teachers.

Why is the default position -- "clearly the government needs to spend more money to fix the problem" -- accepted so blindly by some reporters? There are good reasons we don't have doctors sitting on the Council of Economic Advisers, and why we don't have economists doing brain surgery. Why not take a moment to realize that a good person to comment on economic incentives might be someone who actually studies the issue to some extent? Was a phone call to a local college really too time consuming for Neighmond?

After all, do we want more doctors? Or do we want more good doctors?

Small Guns, Big Money

Many police officers in my area find that their self-interest requires them to be packing all the time. Here's the rather stark incentive:

"I run into people I put in prison at the oddest places," said Bunney, who likes buying his weapons and accessories at Potomac Arms Corp. in Old Town, where he worked after graduating from high school. "You run into them when you're shopping at a mall, when you go to the beach, when you go to dinner. I always want to have that edge if they decide to get even."

But they don't need the big guns off duty, and they opt for smaller models. This requires their own ammunition, holster, and other accessories. Apparently, this is where a gunshop finds its most consistent source of profit:

Jim Rowe, manager of Shooters Paradise, estimated that the store sold about 1,300 guns in 2003, not enough to cover the rent at the strip mall the store is in on Route 1. The real money, he said, is in the accessories.

Why are new, legal guns not so profitable? Well, one might think that since the US stock of (presumably working) firearms is 200-250 million, that the market is "flooded". But that's not so. Instead, this article suggests that manufacturing pricing policies yield a narrow retail price range for new guns, and the absence of such policies on used guns leads to a diversified pattern: some dealers use a fixed subjective markup over their purchase price, others price dynamically, by reacting to perceived demand conditions. The article addresses the problem of pricing (for maximum profit) a single firearm when originally purchased in a bulk lot; more importantly, the author reminds gun shop owners that inventory is costly:

Sooner or later you invariably will pay too much for a gun. For myself it usually occurs when I have been sloppy in my inspection of the piece and overlooked a detractor like a bent or bulged barrel, a stock crack, or such. It is also possible to misidentify a gun, overlook the fact that a barrel has been shortened, or just plain over estimate what it is actually worth. As Karl Malden would say: "What do you do? What do you do?"

Some dealers will simply refuse to sell a gun at a loss. It is a point of pride with them and they will literally let a gun sit in the rack for years rather than to take a loss. When the gun finally does sell, they think to themselves that they at least broke even. Well, they are wrong. Actually they lost far more money than if they had just bitten the bullet and sold the gun for a loss in the first place.

More Economics of Terrorism

Despite having spent a good deal of time in graduate school looking at this very issue, I realized only recently that I hadn't been blogging much about it. Perhaps it's that I was worried that if I started, I'd just never stop, as I am wont to do with so many things.

But now, via Mahalanobis I see that Corner Solution has put up a couple of thoughts on the issue. Dochia has listed some interesting papers, and you should check out the trackbacks there as well. All interesting stuff.

The only problem is, I'm not buying it. Well, that's a bit much. How about I say, I'm incredibly skeptical of what's been mentioned so far. In specific, the supply and demand analysis of terrorism might be interesting, but it's not very helpful. I'm all for applying the lessons of economics to understanding terrorist groups, and do think there are some insights from institutional econ that would certainly be of use in understanding the functioning of such groups.

But here's my basic problem: terrorism is, by and large, becoming synonymous with suicide terrorism. (Caveat: the number of political kidnappings in Iraq will necessarily affect this, though it's been tracking in proportion with suicide bombings so I don't expect the ratio to be changed much.)

Here's the catch, then: suicide bombers die. Which, by definition, includes a cessation of all benefits from being a living person who is evetually going to be a martyr (Iannacone explains some of the gains from being seen by a religious group as someone that devoted to the cause; recognition, stature in the group, not to mention the physical benefits often awarded to families of suicide bombers like cash transfers, free housing, free education, etc.). To abstract these benefits for the moment, let's just call it utility. Why would someone choose to end the stream of utility gains by choosing to die? Perhaps the individal is other-regarding enough that the improvement of someone else's life is enough to believe that ending their own is worth it. Or maybe they're just crazy. None of these, however, are easily dealt with in the economic literature I've read. At least not directly.

Belonging to groups, as numerous people point out, confers significant utility to the member in a number of ways. Membership and the desire to fit in can drive a large number of behaviors. But why, then, would one choose to end that association through suicide? It's not that it doesn't happen regularly, so there must be some answer. However comparisons to other extremist groups that have resulted in group-suicide are problematic to me. The pressure from a group that is all doing the same thing at once (or in groups -- think Jonestown) exerts a very different pressure than getting an individual to perform an act where there are no others around. Seeing that your group is about to disappear, you may well be induced to drink the Kool-Aid. Walking alone into a crowded marketplace with dynamite strapped to your chest and no familiar faces around, it would seem, loses some of the direct peer-pressure effect.

Terror "firms" are interesting to consider, but of vital importance then is the idea of recruiting into the suicide bomber ranks. Supply and demand can potentially address why terrorist groups persist, why they use suicide bombers, why they're structured the way they are, and more. But I don't see that it addresses how you convince someone to stop being with a wife, children, friends and the religious community.

My answer? Two parts; the person is bored, and he or she likes killing people.

Taken in reverse order, some of this is semantic. By "likes", I mean that we should consider that utility is derived from the death of others. Think of yourself as a soldier in war, choosing killing over death. This utility isn't "pleasure", but rather the gains that come from having fewer people in the world looking to kill you. Even if the threat is only perceived, it's still a utility gain to see that those you think COULD be seeking your death are diminished in number. Some religious groups, or more accurately terrorist groups that use religious iconography and messages, teach to their members from the earliest age that their targets are enemies, and that the situation is tantamount to war. Killing the other side's soldiers in such a case is a useful activity and could, potentially, convey utility. So, when faced with asymmetric force structures, the person seeking to kill as many of the other side as possible will have to choose methods such as suicide bombing.

But still the question arises, why not just kill from afar, and live a long life gaining more and more utility along the way as the number of deaths increases? That's the boredom part.

Despite good evidence to the contrary, people still insist on claiming that poverty causes terrorism. What the authors of the linked study do find, instead, is that downward movement in economic position may well incite people to participate in terrorism. But they need not be moving from prosperity to poverty. Instead, I think, this is an indication that people's view of the future is a heavy indicator for potential participation. That is, the contributing inputs to discount factor of the individual as it pertains to their future stream of utility might be a big determinant in choosing suicide over living.

With stagnant or declining economic situations people may have little reason to believe that the future holds much worth or reward. Even those who would qualify as "middle class" (a highly relative measure, but let's go with it for now) could discount the future value of income/utility enough to believe that the future is bleak, at best. In a place where there are few jobs, and the jobs that are present are laborious and unchanging (the economy of Palestian territories has changed little over 30 years; or compare the incidences of terrorism in the economies of some former Soviet sattelite countries during the same time period) there may be little reason for hope.

With nothing to do and no reason to believe that things will get better (boredom) and a belief that killing the enemy could help (liking to kill), perhaps suicide bombers are rationally choosing suicide over living? Of course, the utility from killing needs to come in the moments before death, and there is a need to assume that the bomber believes his or her action will create change. So, it's not clean by any means, but so far it's the best that I've got.

(NOTE: This is done quickly during work hours, so I may update or refine later.)

Neurotic CD/DVD Packaging?

I recently purchased a CD from Target with a nearly intact case and outer plastic wrapping, but the CD had been removed without breaking the seal. When I returned it to the counter, the associates were NOT surprised. Hence, I understand the commercial need for better theft protection. Some others don't:

But what really struck me is how neurotic Hollywood still is with regard to packaging.... Think about how long it actually takes you to open a CD after you've purchased it. It's hard enough to find a loose piece of plastic on the shrink-wrapped packaging so that you can tear through to the inside of the CD container. But after completing that laborious task... you're still only about a third of the way there. Now you must find a way to remove the clear, plastic sticker from the front cover of the CD - you know, the one that is apparently applied using Super Glue....

The DVD market is beyond obsessed; they're paranoid! As we all know, they use the same hard-core plastic shrink-wrap packaging that the CD industry uses. But loathe to use just one of those Super Glue-based stickers on the spine, they use three of them -- one on the spine, one on the top and one on the bottom of the DVD case. This is ridiculous. It is impossible to cleanly remove all the, apparently, theft-proof packaging and leave the DVD case intact.

What is going on here? Is DVD theft really that bad?

What struck me about that article was not the redundancy of all that plastic, or "Hollywood"'s implicit indifference to consumer experiences, but the path that has led us to such tight packaging, and the paths already leading us away from it.

I don't think I need to demonstrate that multiple small pieces of plastic adhered with super-glue is a low cost front-end solution to theft, although it imposes removal costs on the consumer, and downgrades the overall experience.

But, theft actually is that bad, which seems to justify attempts to seal packages with plastic strips, and ugly, clunky, and intrusive cages for each jewel case:

The current furor surrounding illegal internet downloading has overshadowed the age-old problem of theft from shop floors. Which can be anywhere from 1% to 10% of the stock....

Note that alternative anti-theft technologies do exist:

CD and DVD packs are increasingly being designed with the aim of fending off would-be thieves as well as being lightweight, strong, and with branding opportunities aplenty. At its most basic level, case makers are adding internal lips and extra hub security to make it more difficult for the in-store thief to steal the disc out of the case....

The Red Tag security system from AGI Amaray, producer of the Amaray DVD-Safe case, integrates a disk and case locking mechanism with the possibility of tagging.

The case is locked and the disc secured by inserting a security slider at the retail stage. The disc is locked on the hub and cannot be removed without either destroying the disc or the case. The slider can be removed easily and quickly at the point of sale. Having proved immensely successful in Australia, the system is also being further developed in the UK and continental Europe.

This is just like those tags on clothing that have to be removed at the counter; I look forward to these visually appealing solutions on my local CD and DVD racks.

Paleolithic Economics

An interesting new study links the rise in the number of old(er) members of paleolithic societies to massive leaps in human development.

Rachel Caspari of the University of Michigan and Sang-Hee Lee of the University of California at Riverside believe that groups in which old people survived better were more successful, in turn allowing more people to live into old age.

"There has been a lot of speculation about what gave modern humans their evolutionary advantage. This research provides a simple explanation for which there is now concrete evidence -- modern humans were older and wiser," Caspari said.

Of course, the news is of some interest on a "hard-science" basis alone. But really, that's something the paleontologists, biologists, and more will have to grapple with. What I got out of the story was something a little different: intelligent economic actors, solutions to collective action problems, and the provision of public goods.

The finding, published in this week's issue of the Proceedings of the National Academy of Sciences, supports the so-called "grandma hypothesis," Caspari said.

This credits grandmothers with helping to raise their extended families, contributing to a group's success.

When the bulk of your time is spent on personal subsistence, little time is left for other pursuits, like caring for children. Getting older would reduce an individual's ability to spend time on the more rigorous part of subsistence living (hunting, back-breaking gathering, etc). However, one who reaches an older age will have some better insight into longevity on the very grounds of their existence, and the growth of that person's child to child-bearing age. Suddenly, trade is possible. One hunts, while the other offers better treatment of growing children. Even if the older person were still able to get the smaller amount of food necessary to sustain their own lives, it makes more sense for them to provide education and childcare, while the younger person attends to other matters. Ricardo didn't invent comparative advantage, he gave us a great way to think about it. The better care given to children, the more likely they will be to reach old age, at which point they can contribute their knowledge for the care of the newest generation. Increasing returns to childcare and education, indeed.

Of course, any grandmother (or -father) will know this. But there's more to the story apparently:

Caspari and Lee rechecked their numbers and analysis.

"But then we started to think about it and thought we really shouldn't be surprised, because there is a behavioral change that took place over time at the same time," Caspari said.

"You start to see a change in symbolic behavior. You see art. You see a large number of people being buried with jewelry, with body ornaments."

Now, I don't know about you, but that sounds an awful lot like productivity gains, specialization of production, and substitution effects for leisure time. Without seperating out those who hunt better, and those who are more able to care for members of a family, no one would really have the time to become interested or skilled in art or crafts of any kind. That the art and jewelry making continued signals, in my mind at least, some general preference for the creation of it -- that is, the group found utility in having art made over having a weaker member not hunt for him or herself. Ask any mother how leisurely it is to raise a child, and I think we can say that not all cave-painters or jewelery crafters were simply women back in the cave doodling while the kids were asleep. These are specific choices made by those who had to spend a great deal of effort wondering about where the next meal was coming from. Attend a play, concert, movie, the opera, or really any art event today, and the people who attend are those who don't have to spend that time making money (finding the next meal, wrapped in a modern monetary system).

Rational choice theory may have some oddities and discrepancies with the real world, but I think it's hard to say that it doesn't have some serious traction.

So, yes, sure sure, the anthro is all cool, and the fossil record is, you know, spiffy...but I'd say this is a pretty interesting economic find...

Markets For Everything: Mom Must Be Proud Edition, or "My case of buyer's remorse is worse than yours."

David Vardy's a virgin. And it seems he's tired of that fact.

So he's auctioning off his virginity on eBay.

Not surprisingly, a number of the offers have been very odd, he says. High prices and far afield locations. The act of selling a sexual experience on the internet could well be the cause of that one. But that's just a guess. And how is this not prostitution, you might be wondering? Well, because he's not going to do it again:

"I'm not selling myself for sex repeatedly like a prostitute," Vardy said. "And the money issue is simply there to put back the losers and make sure that only serious bidders are interested in this. I want to protect my own safety, to be honest. … I was in this from the start to lose my virginity, and I'll see it through. So, I'm going to accomplish that if it's the last thing I do."

Apparently it's not prostitution until you sell yourself multiple times. Maybe the streetworkers in Chicago should have mileage counters with them, so that cops can tell the neophytes from the old pros.

One note about the article itself: one would hope that the caption on the picture of Vardy is intentional, and not the product of poor word choice that it appears to be.

Medicare and Other People’s Money

The new Medicare plan from the Bush administration has been under a lot of heat from political opponents of the President, assorted pundits, and some elderly folk too. I forget who said the following quote, but I think it’s applicable to this situation: “You spend your money on yourself very carefully. You spend someone else’s money on yourself less carefully. You spend other people’s money on other people even less carefully.” It’s a remarkably profound statement about bearing the costs of certain actions. Assume I spent my money on a poor purchase, say a real lemon of a stereo system. When it breaks as soon as I turn it on, I bear all the costs; I’m out the price of the stereo and I didn’t get the utility from it that I expected to get. On the other hand, if I had used a charitable donation from my grandma to buy lemon stereos for the local breakdancing club (i.e. spending other people’s money on other people), I am basically liberated from all costs (except 1. the time and effort spent making the purchase and 2. and the disutility resulting from them not being my breakdancing club friends anymore).

President Bush is essentially spending other people’s money on other people with his new Medicare plan. To be fair, any time a President proposes big spending measures, the money isn’t his except for the tiny percentage of the spending that comes from his taxes. Nor will he be the primary beneficiary of the policy. If President Bush needed Medicare the way some elderly Americans do, I suspect that his policy would be different. I can’t say if it would better or worse, just different.

So I’m not surprised that critics say he is spending our money carelessly. The “rules of the game” give American Presidents very small incentives to be cautious with our tax dollars; those who voted for him in 2000 will likely do so again and those who didn't, probably will vote for someone else. Even if Bush wanted to spend our money as carefully as we would, it would be impossible for him to gauge and aggregate our preferences as accurately as the pricing mechanism of a free market. So while many disillusioned Americans point out the self-centered nature of politicians in regards to reelection, I find it interesting that many of the same Americans expect someone else to spend their money on them as carefully as they would spend it on themselves. And just for the record, I seriously doubt Bush or Cheney will be applying for Medicare come age 65.

Incentives Matter: Lawyers' Edition

On page 4 of the latest decision requiring Barbra Streisand to compensate opposing counsel ~$177,000 after losing her civil case, the judge refers to Children's Hosp. and Medical Center v. Bonta, which contains a delightful examination of incentives:

The example DHS finds most egregious is the complaint, which is only six pages long. Respondents’ counsel spent 39 hours preparing this document, which DHS says any competent lawyer could draft in an hour or two. We reject this analysis. The length of a document is no gauge of the time needed to prepare it. The pithy pleadings that are most effective usually require more time to prepare than the endlessly discursive and digressive documents judges often receive. Moreover, given the complexities of this case, the precise language of the concise complaint warranted the exceptional attention counsel devoted to its preparation. Judicial use of the length of a pleading or brief as a measure of the time necessary to prepare it would reward verbosity and penalize thoughtful and precise draftsmanship. Given the ponderous plethora of prolix pleadings that inundate our courts, no trial judge in his or her right mind would adopt such an approach.