Saturday, May 10, 2008

The Subprime Primer

Business Pundit has an entertaining slide show explaining the origins of the sub-prime mortgage crisis.

Thursday, May 08, 2008

If Sexism were Racism

Dr. Violet Socks over at The Reclusive Leftist has an interesting rant about Obama. I can't agree with her conclusion to not ever vote for Obama, because McCain has promised more supreme court justices like Roberts and Alito (would that be Catholic men?). But the bit which rewrites the media's sexist treatment of Clinton in reverse, so that Obama receives the racist media treatment, highlights how sexism is invisible to most men and women. Sexism flies under the radar, so it never gets rooted out.

Tuesday, May 06, 2008

Page 123 Meme

I always was late handing in assignments, so of course I'm late with this meme. Here's the first five sentences from page 123 of the nearest book with more than 123 pages. (Taken from Red Queen and Chanson.) No tags, cause everybody's already done it, but feel free to leave a comment with yours, especially if you don't have a blog!

"You can actually calculate the average bubble factor for any point in a super-satellite using the following formula:
(Players left -1)/(Eliminations left)
So with 15 players left in a 10-prize satellite, the average bubble factor is (15 - 1)/(5) = 2.8.
Remember that this is the average bubble factor around the table. Big stack clashes have much higher numbers."

Yeah, that would be a poker strategy book belonging to JSM. Looking around for the nearest book that belongs to me, (and cheating slightly because I'm in the study and went looking for the nearest book that belongs to me that wasn't in the bookcases in the study) we find:

"Leland noted, "Consumers are asking others to help themselves develop self-control because so many companies are not showing any restraint."
Bloggging about overspending is important and useful, but as we saw in the last chapter, on emotions, what we truly need is a method to curb our consumption at the moment of temptation, rather than a way to complain about it after the fact.
What could we do? Could we create something that replicated the conditions of Gaurav's class, with some freedom of choice but built-in boundaries as well? I began to imagine a credit card of a different kind--a self-control credit card that would let people restrict their own spending behavior."

That's from Dan Ariely's Predictably Irrational, chapter 6, "The Problem of Procrastination and Self-Control."

That's our interests in a nutshell. Poker and Strategy, and Behavioral Economics. Remarkably precise.

Saturday, May 03, 2008

No Answer

It's very annoying. Justin Wolfers replied to Freakonomics readers about the "likely economic consequences" of this year's tax rebates, but the papers he cites only discuss whether people spend the money, and if so, on what.

There's a microeconomist for you. I suspect when most people ask about the economic consequences they really mean, "Tell me, really, is this actually going to cut short the recession?"

It reminds me of the only math joke I know. A math professor is working away at his desk when the contents of his wastebasket spontaneously combust. He picks up the flaming trash bin, waves at it rather uselessly, then drops it on his desk and runs for a fire extinguisher. He then proceeds to put the fire out with the fire extinguisher.

The next day, the professor is again working away at his desk when the contents of his trash bin burst into flame again. The professor reaches over, picks up the trash bin, places it on his desk, and returns to work.

[Yeah, I know, not very funny unless you are a mathematician. In case you didn't get it, the joke is that the prof has proved he can put the fire out when the trash can is on his desk, so all he needs to do is place the trash can on the desk and the rest follows. QED.]

In other words, the papers Wolfer cites address the micro question of whether consumers will spend the money on extra consumption or pay off debt, but don't answer the macro question of how extra spending might get the economy moving again, and what might be the size of the effect.

Not that I'm going to tell you. I'm a microeconomist too. ;)