1. I leave the house without my wallet. Suddenly I feel that the probability of being stopped for driving without a license has suddenly increased.
2. I buy an external disk drive and set up a back-up schedule. If I miss the back-up I feel that the probability of a hard disk failure has gone up.
Sunday, January 9, 2011
How much can academic economists make?
Much, much more (by about 3x) than I ever imagined. Courtest of WaPo are the financial disclosures of the members of the CEA (before the mid-term elections):
Christina Romer: $232K
Cecilia Rouse: $301K
Austan Goolsbee: $465K
Note: Figures are rounded, and only include salaries.
Christina Romer: $232K
Cecilia Rouse: $301K
Austan Goolsbee: $465K
Note: Figures are rounded, and only include salaries.
Saturday, January 8, 2011
How different is this recession?
The above chart (from FRED) has received a fair amount of attention and indicates how different this recession has been compared to previous recessions. In future posts, I hope to be able to show more on the differences (or similarities) between this and the previous recession.
Market failure books
Long overdue are my thoughts on How Markets Fail by John Cassidy and The Myth of the Rational Market by Justin Fox. My initial thoughts were that the former was much more readable and flowed better than the latter although it may be because of the different focus. Cassidy's book approach market failure in the "traditional" economics sense - summarizing the evolution of economic theory through the Arrow-Debreu framework and its implications. This narrative is one that I am familiar with and he does talk about efficient markets but the essence of the book is that market failures warrant government intervention. The critique is that almost the entire economics profession bought into the argument that competition leads to the most efficient outcomes without much regard for the fact that competitive markets can behave perversely as well. Unfortunately, the profession was so invested into this dogma that it ignored regulation altogether.
We have all heard this argument before and I am sympathetic but unconvinced. Once we talk of market failure it is not hard to see market failures everywhere but is each and every one worthy of intervention? The academic research on the size of market failures and the social cost of inefficiences is severely lacking if the basis for government intervention is some kind of cost benefit analysis.
Fox's book approaches market failures from the financial side and here economics like Fama, Shiller and Thaler feature prominently. The book points out one of the ironies of the Efficient Market Hypothesis - if a market becomes efficient either through price discovery or some other information aggregation feature, doesn't this mean it has to be inefficient in the first place? This question had always been in the back of my mind when sitting in finance courses at the Simon school but was definitely one of those questions that I thought was too stupid to ask. (Incidentally, I wonder what they're teaching these days over there - certainly EMH but perhaps not with the gusto and faith that they did when I was there.)
Again, I am sympathetic to the argument that markets are not rational some of the time but when is intervention justified? Both books are great complements because of the coverage. Although there is some overlap in discussion there was not as great an overlap as I would have expected. However, I though Cassidy's book was more readable than Fox's.
We have all heard this argument before and I am sympathetic but unconvinced. Once we talk of market failure it is not hard to see market failures everywhere but is each and every one worthy of intervention? The academic research on the size of market failures and the social cost of inefficiences is severely lacking if the basis for government intervention is some kind of cost benefit analysis.
Fox's book approaches market failures from the financial side and here economics like Fama, Shiller and Thaler feature prominently. The book points out one of the ironies of the Efficient Market Hypothesis - if a market becomes efficient either through price discovery or some other information aggregation feature, doesn't this mean it has to be inefficient in the first place? This question had always been in the back of my mind when sitting in finance courses at the Simon school but was definitely one of those questions that I thought was too stupid to ask. (Incidentally, I wonder what they're teaching these days over there - certainly EMH but perhaps not with the gusto and faith that they did when I was there.)
Again, I am sympathetic to the argument that markets are not rational some of the time but when is intervention justified? Both books are great complements because of the coverage. Although there is some overlap in discussion there was not as great an overlap as I would have expected. However, I though Cassidy's book was more readable than Fox's.
What recession?
We were at the Hyatt Chesapeake again in December. This time we were there between Christmas and New Year instead of our customary pre-Christmas stay. As always the food was good and they have changed the menu at Water's Edge to include more pasta. The prices are still in the $20-25 range and the portions are smaller but at least I didn't feel overstuffed this time.
The crowd was much more than I expected. It was crowded enough in the indoor pool that we didn't feel like going in and jostling for space. We won't be coming here again next year (at least not at this time anyway).
The crowd was much more than I expected. It was crowded enough in the indoor pool that we didn't feel like going in and jostling for space. We won't be coming here again next year (at least not at this time anyway).
Sunday, December 19, 2010
Hybrid ownership and gasoline taxes
First snow and why I hate the Prius
Washington DC saw its first snow this winter last week on Thursday Dec 16th. As expected the Prius handled it badly. I first noticed the prblem the week after I bought the car last year when I was going over bumps and usually manhole covers. Now I find that it is not as isolated as I thought:
From a discussion:
It's a known condition that if you go over a bump violent enough to take a wheel off the road, it will trigger the traction control. That will delay application of the brakes. Several owners have reported this. It can happen on bumps you wouldn't think were that bad.
And whole pages devoted to this traction control problem.
Bottom line: I'll never buy a Toyota, much less a Prius. This fact that Toyota refuses to correct this problem is perhaps indicative that is become too American? My next car might be a Ford, which is an American company that has become more international.
From a discussion:
It's a known condition that if you go over a bump violent enough to take a wheel off the road, it will trigger the traction control. That will delay application of the brakes. Several owners have reported this. It can happen on bumps you wouldn't think were that bad.
And whole pages devoted to this traction control problem.
Bottom line: I'll never buy a Toyota, much less a Prius. This fact that Toyota refuses to correct this problem is perhaps indicative that is become too American? My next car might be a Ford, which is an American company that has become more international.
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