Wednesday, December 29, 2010

Pregnant Taiwan women trying to delay labour for 2011 cash bonus

Earth Times
December 28, 2010

Many pregnant Taiwan women are trying to delay labour so that their births can coincide with a government bonus, a newspaper reported Wednesday.

According to the Liberty Times, two Taiwan cities - Taipei and New Taipei City - plan to give bonuses for babies born in 2011, to celebrate the centenary of the birth of the Republic of China (ROC), as Taiwan is formally known.

Under the programme, a baby born in 2011 can receive 20,000 Taiwan dollars (680 US dollars) if one parent is a citizen of Taipei or New Taipei City.

New Taipei City is a recently organized municipality with a 3.8 million population.

As the programme begins Saturday, the first day of 2011, many pregnant women in Taipei and New Taipei City want to delay their births until Saturday or later.


Making It Clear That a Clear Parking Space Isn’t

New York Times
December 28, 2010

By dawn on Tuesday, the space savers were out in abundance on East Seventh Street in South Boston. Someone had staked out a neatly shoveled parking spot with a potted plant, its dead fronds trembling in the wind. Someone else had reserved a space with a hot-pink beach chair.

Elsewhere in the neighborhood, the epicenter of the parking wars that erupt here after a snowstorm, the narrow streets were lined with bar stools and coolers, end tables and shopping carts, all meant as warnings: This shoveled-out space is mine until the snow melts. Occupy it at your own risk.

Marguerite Maguire, who had an orange parking cone ready to guard her spot, was hoping to avoid the kind of confrontation she got into after a 2009 snowfall, when someone tried taking her space the minute she finished clearing it.

“I told her, ‘Forget it, lady,’ and we yelled at each other for a few minutes until she pulled away,” Mrs. Maguire, 50, recalled. “I think she must have been new here.”

Though not unique to Boston — Chicago, Philadelphia and Pittsburgh are among the other cities that embrace it — space-saving after snowstorms has an impassioned history here, especially in scrappy, densely populated South Boston. When snow puts parking spots at a premium, as the blizzard that just left 18 inches of snow here did, snatching someone’s marked space can lead to hurled insults, slashed tires or worse — in 2005, a man was arrested after smashing a car window with a plunger during an argument over a freshly shoveled spot.


Coase’s 100th Birthday: No More “Externalities”

by Terry Anderson


December 29, 2010

Today, the great economist and Nobel laureate Ronald Coase will celebrate his 100th birthday. Coase’s work has revolutionized the way economists view resource conflicts. His paper “The Problem of Social Cost” challenged the widely-accepted work of Arthur C. Pigou on externalities and inspired a whole new way of thinking about environmental issues.

Unlike the Pigouvian approach, which claimed that market failure could be corrected by taxes, subsidies, and regulations, Coase taught us to view these issues in light of property rights and markets. In short, Coase taught against the use of the word “externality.”

For several years, I have been on a campaign to expunge the term “externality” from the vocabulary of economists, policy makers, and environmentalists. My campaign is not motivated by a belief that markets perfectly account for all costs and benefits. Rather it is driven by the lessons learned from entrepreneurs—the people with a passion for solving problems by finding win-win solutions. Entrepreneurs thrive in the space where there are impacts not accounted for in market transactions. It is in that space that they create gains from trade.


Sunday, December 26, 2010

The Social Function of Futures Markets

by Robert P. Murphy

Mises Daily

November 29, 2006

In a previous article, I described the "social function" of stock speculators. In the present piece, we'll explore the role of healthy futures and forward markets in a modern economy. Of course, both parties to any voluntary exchange expect to benefit, at least ex ante — otherwise the exchange wouldn't be voluntary. But beyond this truism, it is at first unclear how anything is added when intelligent workers are sucked out of other occupations and devote their careers to trading "futures contracts." After all, these intangible financial instruments can't be eaten or used to build a house, so what good are they? The present article seeks to answer just this question.


The Social Function of Stock Speculators

by Robert P. Murphy

Mises Daily

November 22, 2006

Libertarian economists typically adopt a two-pronged approach in their advocacy of free markets. On the one hand, they stress that people have rights (whether God-given or self-evident from the exercise of reason) and therefore should be able to engage in any voluntary activities with each other, free from political interference. Unfortunately, this appeal to principle is never enough, since the type of person who votes for today's politicians doesn't care much about abstractions.

This leads to the second prong of the argument: The use of economic science to demonstrate unnoticed and often counterintuitive benefits from activities that the common man despises. For example, after pointing out that the government has no business sticking its nose into capitalist actions between consenting landlords and renters, the libertarian might use economic theory to illustrate the disastrous effects of rent control. After all, the right to property is (rightly or wrongly) easier to appreciate when populist violations of it lead to housing shortages.

It is in this spirit that I offer the present essay, an examination of the social benefits of stock speculators. Now when it comes to different ways of making a living, stock speculation certainly wouldn't make the Top Ten Most Altruistic among Oprah Winfrey viewers. Indeed, even among people who think that middlemen perform vital services in tangible commodities — such as buying oranges low in Florida, and selling them high in Alaska — there seems to be something artificial about transactions involving nothing more than electronic swapping of shares to corporations. Even among people who ought to know better, there is a presumption that stock speculation is a zero-sum game, and that if one person buys low and sells high, his gain only comes at the expense of someone else, leaving society on net exactly the same.


Thursday, December 23, 2010

Elena Panaritis ον Property Rights and Building Trust

December 23, 2010

Elena Panaritis at TEDxAthens 2010, in Athens, Greece, gives a great talk on property rights.

Wednesday, December 22, 2010

Teen birth rate hits record low

Washington Post
December 21, 2010

As the nation continued to struggle in the recession in 2009, the rate at which U.S. women are having babies continued to fall, pushing the teen birth rate to a record low, federal officials reported Tuesday.

The birth rate among U.S. girls aged 15 to 19 fell to 39.1 births per 1,000 teens in 2009, the most recent year for which statistics are available. That's a 6 percent drop from 2008 and the lowest rate ever recorded in the nearly 70 years that the federal government has been collecting reliable data, according to a preliminary analysis of data from the National Center for Health Statistics.

"The decline in teen births is really quite amazing," said Brady E. Hamilton, who helped perform the analysis.

The drop marked the second year in a row the birth rate among teens fell, meaning it has dropped for 16 out of the past 18 years. The 8 percent two-year decline strengthens the belief that a two-year increase during the preceding two years was an aberration.


Tuesday, December 21, 2010

Homes at Risk, and No Help From Lawyers

New York Times
December 20, 2010

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time.

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

The law, which has few parallels in other states, was devised to eliminate swindles in which modification firms made promises about what their lawyers could do, charged hefty fees and then disappeared. But foreclosure specialists say there has been an unintended consequence: the honest lawyers can no longer afford to assist Ms. Bell and all the others who feel helpless before lenders that they see as elusive, unyielding and skilled at losing paperwork.


Saturday, December 18, 2010

Jonathan Macey, "Corporate Governance: Promises Kept, Promises Broken"

Even in the wake of the biggest financial crash of the postwar era, the United States continues to rely on Securities and Exchange Commission oversight and the Sarbanes-Oxley Act, which set tougher rules for boards, management, and public accounting firms to protect the interests of shareholders. Such reliance is badly misplaced. In Corporate Governance, Jonathan Macey argues that less government regulation--not more--is what's needed to ensure that managers of public companies keep their promises to investors.

Macey tells how heightened government oversight has put a stranglehold on what is the best protection against malfeasance by self-serving management: the market itself. Corporate governance, he shows, is about keeping promises to shareholders; failure to do so results in diminished investor confidence, which leads to capital flight and other dire economic consequences. Macey explains the relationship between corporate governance and the various market and nonmarket institutions and mechanisms used to control public corporations; he discusses how nonmarket corporate governance devices such as boards and whistle-blowers are highly susceptible to being co-opted by management and are generally guided more by self-interest and personal greed than by investor interests. In contrast, market-driven mechanisms such as trading and takeovers represent more reliable solutions to the problem of corporate governance. Inefficient regulations are increasingly hampering these important and truly effective corporate controls. Macey examines a variety of possible means of corporate governance, including shareholder voting, hedge funds, and private equity funds.

Corporate Governance reveals why the market is the best guardian of shareholder interests.

Jonathan R. Macey is the Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale Law School. He is the author of a number of books, including Macey on Corporation Laws.


Wednesday, December 15, 2010

Why Do People Believe in Fantasies?

by John Stossel

December 15, 2010

We human beings sure are gullible. Polls report that 27 percent of Americans believe in ghosts, and 25 percent in astrology. Others believe mediums, fortunetellers, faith healers and assorted magical phenomena.

I'd think the astrologers or the psychics or the ghost hunters would be eager to prove they were for real. Not only would they convince skeptics, they'd make a million dollars.

That's what James Randi, the magician, author and debunker of bogus claims, will pay anyone who can prove he or she actually has an ability that can't be explained by science.

"All people have to do is make a claim, come to us, fill out the form, arrange a protocol, and then we have somebody else do the test," Randi says. He won't do the test himself, he says, because when psychics failed in the past, they claimed that Randi put out "evil vibrations" to thwart their powers.


The Inequality That Matters

by Tyler Cowen

American Interest

January - February 2011

Does growing wealth and income inequality in the United States presage the downfall of the American republic? Will we evolve into a new Gilded Age plutocracy, irrevocably split between the competing interests of rich and poor? Or is growing inequality a mere bump in the road, a statistical blip along the path to greater wealth for virtually every American? Or is income inequality partially desirable, reflecting the greater productivity of society’s stars?

There is plenty of speculation on these possibilities, but a lot of it has been aimed at elevating one political agenda over another rather than elevating our understanding. As a result, there’s more confusion about this issue than just about any other in contemporary American political discourse. The reality is that most of the worries about income inequality are bogus, but some are probably better grounded and even more serious than even many of their heralds realize. If our economic churn is bound to throw off political sparks, whether alarums about plutocracy or something else, we owe it to ourselves to seek out an accurate picture of what is really going on. Let’s start with the subset of worries about inequality that are significantly overblown.


Tuesday, December 14, 2010

Louis Kaplow, "The Theory of Taxation and Public Economics"

The Theory of Taxation and Public Economics presents a unified conceptual framework for analyzing taxation--the first to be systematically developed in several decades. An original treatment of the subject rather than a textbook synthesis, the book contains new analysis that generates novel results, including some that overturn long-standing conventional wisdom. This fresh approach should change thinking, research, and teaching for decades to come.

Building on the work of James Mirrlees, Anthony Atkinson and Joseph Stiglitz, and subsequent researchers, and in the spirit of classics by A. C. Pigou, William Vickrey, and Richard Musgrave, this book steps back from particular lines of inquiry to consider the field as a whole, including the relationships among different fiscal instruments. Louis Kaplow puts forward a framework that makes it possible to rigorously examine both distributive and distortionary effects of particular policies despite their complex interactions with others. To do so, various reforms--ranging from commodity or estate and gift taxation to regulation and public goods provision--are combined with a distributively offsetting adjustment to the income tax. The resulting distribution-neutral reform package holds much constant while leaving in play the distinctive effects of the policy instrument under consideration. By applying this common methodology to disparate subjects, The Theory of Taxation and Public Economics produces significant cross-fertilization and yields solutions to previously intractable problems.

Louis Kaplow is the Finn M. W. Caspersen and Household International Professor of Law and Economics at Harvard, a research associate at the National Bureau of Economic Research, and a fellow of the American Academy of Arts and Sciences. He has published widely on the theory of taxation and public economics.


Sunday, December 12, 2010

Timur Kuran" The Long Divergence: How Islamic Law Held Back the Middle East"

In the year 1000, the economy of the Middle East was at least as advanced as that of Europe. But by 1800, the region had fallen dramatically behind--in living standards, technology, and economic institutions. In short, the Middle East had failed to modernize economically as the West surged ahead. What caused this long divergence? And why does the Middle East remain drastically underdeveloped compared to the West? In The Long Divergence, one of the world's leading experts on Islamic economic institutions and the economy of the Middle East provides a new answer to these long-debated questions.

Timur Kuran argues that what slowed the economic development of the Middle East was not colonialism or geography, still less Muslim attitudes or some incompatibility between Islam and capitalism. Rather, starting around the tenth century, Islamic legal institutions, which had benefitted the Middle Eastern economy in the early centuries of Islam, began to act as a drag on development by slowing or blocking the emergence of central features of modern economic life--including private capital accumulation, corporations, large-scale production, and impersonal exchange. By the nineteenth century, modern economic institutions began to be transplanted to the Middle East, but its economy has not caught up. And there is no quick fix today. Low trust, rampant corruption, and weak civil societies--all characteristic of the region's economies today and all legacies of its economic history--will take generations to overcome.

The Long Divergence opens up a frank and honest debate on a crucial issue that even some of the most ardent secularists in the Muslim world have hesitated to discuss.

Timur Kuran is professor of economics and political science and the Gorter Family Professor of Islamic Studies at Duke University. He is the author of Islam and Mammon: The Economic Predicaments of Islamism (Princeton).


Sunday, December 5, 2010

Taking Sides in a Divorce, Chasing Profit

New York Times
December 4, 2010

Michelle Pont and her husband amassed millions of dollars in properties and investments from a freight-hauling business that they started with a single stake-bed truck in 1991. They bought a four-bedroom home, then a second home, a vacation home, a motor home and half a dozen cars.

But when Ms. Pont decided to seek a divorce last year, she quickly ran out of money. She had no job. Her husband controlled the family’s investments. A few months of legal bills maxed out her credit cards and drained her retirement account.

She wrestled with accepting a smaller settlement than she considered fair. Then a lawyer referred her to Balance Point Divorce Funding, a new Beverly Hills lender that offers to cover the cost of breaking up — paying a lawyer, searching for hidden assets, maintaining a lifestyle — in exchange for a share of the winnings.

In October, Balance Point agreed to invest more than $200,000 in Ms. Pont’s case.

“It’s given me hope,” Ms. Pont said. “I don’t view it as a loan; I view it as an investment in my future. They are helping me to get what is rightfully mine.”


Stacey Napp is the founder of Balance Point Divorce Funding

Sunday, November 21, 2010

Take a Closer Look

New York Times
November 20, 2010

Starting in 2012, cigarette packages and advertisements will have to carry new warning labels that pound home the message that smoking sickens and kills. The message isn’t new, but it will be presented in a bigger, starker format — including images of tobacco’s devastating effects — that should be harder to ignore than the tiny, text-only warning labels that have lost their punch.

The current labels, tucked away on the side of packages or the corner of advertisements, have not been changed in a quarter-century. And smoking rates, which had been dropping for decades, have flattened out in recent years. One in five adults and high school students are smokers.

A 2009 law gave the Food and Drug Administration the power to regulate tobacco. It requires that the new warnings must cover the top half of both the front and the back of cigarette packs and 20 percent of cigarette advertisements. Manufacturers will also be required to use F.D.A.-approved images.


Saturday, November 20, 2010

Preventable medical mistakes take an intolerable toll

USA Today
November 19, 2010

If a 747 jetliner crashed every day, killing all 500 people aboard, there would be a national uproar over aviation safety and an all-out mobilization to fix the problem. In the nation's hospitals, though, about the same number of people die on average every day from medical "adverse events," many of them preventable errors such as infections or incorrect medications. Where's the outrage?

Obviously, patients who die one-by-one don't attract attention the way a fiery air crash does, and the problem isn't new. A 1999 report by the Institute of Medicine estimated that as many as 98,000 people a year died in hospitals from medical errors. Now, 11 years later, a new survey from the inspector general of the Department of Health and Human Services finds that about 1 in every 7 Medicare patients in hospitals suffers a serious medical mishap.

The report says these adverse events contribute to the deaths of an estimated 180,000 patients a year. Of those, roughly 80,000 are caused by errors that could be caught and prevented, such as letting infections develop, giving the patient the wrong medication or administering an excess dose of the right drug. Aside from the human toll, the extra medical care required to correct for these mistakes costs taxpayers more than $4 billion a year.


Over 95 Percent of 9/11 Workers Approve Settlement

New York Times
November 19, 2010

After a wrenching seven-year battle, more than 10,000 workers who sued New York City over health damages they claimed after the 9/11 recovery efforts have approved a settlement, clearing the way for payouts totaling at least $625 million, lawyers said Friday.

Their responses, delivered to a federal judge in Manhattan, ended months of wrangling over whether the city and its contractors were shortchanging the workers for the respiratory and other illnesses they developed after toiling in the smoldering ruins of the World Trade Center.

The judge, Alvin K. Hellerstein of United States District Court, threw out a smaller settlement in March, arguing that the plaintiffs deserved more and lawyers were getting too big a cut.

A 95 percent approval rate was required for the latest accord to take effect. The plaintiffs barely cleared the threshold by the Tuesday night deadline they were given: 95.1 percent of the 10,563 workers accepted the settlement’s terms, according to documents filed on Friday.


Know-It-All Toll Roads

by Tom Vanderbilt

Scientific American
December 2010

The road of the future will look much like the road of the present, but it most certainly won't be free. “You can have your driveway,” says Bern Grush, founder of Skymeter, a Toronto-based company that creates GPS-enabled devices to measure road use. “But if you're going to come over to visit me, you need to pay to get to my place from your place.”

With the emergence of wireless, location-based technologies such as GPS, it is now possible to gauge the true costs of driving and the true value of the roads. The umbrella term is dynamic road-use charging, which means essentially that drivers will pay for roads they use by the mile, rather than through other mechanisms such as registration fees or a gas tax. Only a few pilot programs are up and running at the moment, but urban planners think the idea could change our experience of driving from white-knuckled frustration to something closer to a joyride. Researchers at the Massachusetts Institute of Technology and General Motors laid out such a vision earlier this year in “Reinventing the Automobile,” a study that argued that transparent trip pricing would optimize road use, reducing traffic congestion and highway deaths.

Shifting the true cost of driving onto the driver would be a radical departure from what goes on now. Drivers pay no more to use crowded roads than empty roads, a person who drives once a month pays as much in insurance as someone who drives every day, and parking meters cost the same during the busiest times as during the most quiet. The federal gas tax, which for a century has financed U.S. highways, has effectively dropped from a peak of 3.9 cents per mile (2007 dollars) to 0.9 cents today, writes Cato Institute analyst Randal O'Toole in his book Gridlock: Why We're Stuck in Traffic and What to Do about It. As a result, congestion levels have risen steadily in the cities and suburbs. As Harvard University economist Edward Glaeser notes, you can ration scarce goods—like urban roads—by price or by queue (also known as sitting in traffic). So far the de facto choice has been traffic.

Results from the first pilot studies have been encouraging. The Dutch government plans to enact countrywide GPS-based “per kilometer” pricing on all roads in the Netherlands by 2016. A six-month pilot trial in Eindhoven last year showed that 70 percent of users changed their behavior as a result of pricing, by traveling either at off-peak hours or on less crowded roadways. Once the program is expanded to the rest of the country, the Dutch government expects a 58 percent reduction in traffic delays.


This ain't no banana republic

by Will Wilkinson

November 19, 2010

Nicolas Kristof's latest column on income inequality is an excellent example of the sort of confusion and laziness that moved me to write a very long and widely ignored paper promoting greater clarity and rigour on the subject.

Mr Kristof begins by assuming what ought to be argued. He refers to America's "rapacious income inequality", by which I take him to mean that our level of inequality has been caused by rapacity. Was it? Mr Kristof should show his work.

He writes that "the wealthiest plutocrats now actually control a greater share of the pie in the United States" than in many Latin American countries, where income inequality has recently declined. Are America's wealthiest people really "plutocrats"? Can you tell whether a country is a plutocracy or a "banana republic" just by looking at the Gini coefficient? The answer is: No, you cannot. Despite all our inevitable complaints, America is a relatively healthy and functional democracy. Perhaps Mr Kristof noticed that Meg Whitman, a billionaire, failed to take the governor's mansion in California, despite spending more of her personal fortune on a political campaign than anyone in history. In a plutocratic California, the state's fourth wealthiest person wouldn't have to win an election to rule.

There are many possible causes of a high level of income inequality. The historically most typical cause is the concentration of political power in the hands of a predatory elite. This is the main explanation for the typically high levels of Latin American income inequality. This is not the main explanation for the high levels of income inequality in the United States and Great Britain. The main explanation for widening income gaps in wealthy, advanced liberal democracies is a complicated combination of (1) increasing economic returns to the acquisition of high levels of skill; (2) low supply of highly-skilled workers relative to demand; (3) changes in the way executives are paid, and in the norms governing executive pay; (4) technology-driven magnification of top rewards in "winner-take-all" or "superstar" markets; and (5) relatively low political demand for higher levels of progressive redistribution. Unlike expropriation and monopolisation by ruling elites, none of these causes of rising inequality are particularly objectionable in their own right. In a plutocratic California, it bears pointing out, the state's fourth wealthiest person wouldn't have become such by running a company that creates immense consumer surplus by dramatically lowering the transaction costs of selling goods to a large market.


Read the Paper

Friday, November 19, 2010

Marriage: What's It Good For?

by Belinda Luscombe

November 18, 2010

The wedding of the 20th century, in 1981, celebrated a marriage that turned out to be a huge bust. It ended as badly as a relationship can: scandal, divorce and, ultimately, death and worldwide weeping.

So when the firstborn son of that union, Britain's Prince William, set in motion the wedding of this century by getting engaged to Catherine Middleton, he did things a little differently. He picked someone older than he is (by six months), who went to the same university he did and whom he'd dated for a long time. Although she is not of royal blood, she stands to become the first English Queen with a university degree, so in one fundamental way, theirs is a union of equals. In that regard, the new couple reflect the changes in the shape and nature of marriage that have been rippling throughout the Western world for the past few decades.

In fact, statistically speaking, a young man of William's age — if not his royal English heritage — might be just as likely not to get married, yet. In 1960, the year before Princess Diana, William's mother, was born, nearly 70% of American adults were married; now only about half are. Eight times as many children are born out of wedlock. Back then, two-thirds of 20-somethings were married; in 2008 just 26% were. And college graduates are now far more likely to marry (64%) than those with no higher education (48%).

When an institution so central to human experience suddenly changes shape in the space of a generation or two, it's worth trying to figure out why. This fall the Pew Research Center, in association with TIME, conducted a nationwide poll exploring the contours of modern marriage and the new American family, posing questions about what people want and expect out of marriage and family life, why they enter into committed relationships and what they gain from them. What we found is that marriage, whatever its social, spiritual or symbolic appeal, is in purely practical terms just not as necessary as it used to be. Neither men nor women need to be married to have sex or companionship or professional success or respect or even children — yet marriage remains revered and desired.


See the Pew Research Center's full report The Decline of Marriage And Rise of New Families.

Wednesday, November 17, 2010

Cost-effective ways to address climate change

by Bjorn Lomborg

Washington Post
November 17, 2010

One of the scarier predictions about global warming is the suggestion that melting glaciers and ice caps could cause sea levels to rise as much as 15 to 20 feet over the next century. Set aside the fact that the best research we have - from the United Nations climate panel - says that global sea levels are not likely to rise more than about 20 inches by 2100. Rather, let's imagine that over the next 80 or 90 years, a giant port city - say, Tokyo - found itself engulfed by a sea-level rise of about 15 feet. Millions of inhabitants would be imperiled, along with trillions of dollars' worth of infrastructure. Without a vast global effort, could we cope with such a terrifying catastrophe?

Well, we already have. In fact, we're doing it right now.

Since 1930, excessive groundwater withdrawal has caused Tokyo to subside by as much as 15 feet. Similar subsidence has occurred over the past century in numerous cities, including Tianjin, Shanghai, Osaka, Bangkok and Jakarta. And in each case, the city has managed to protect itself from such large relative sea-level rises without much difficulty.


Moms Who Smoke During Pregnancy Might Have Criminal Kids

November 16, 2010

Betty Drapers of the world, listen up. While research has already shown a link between maternal smoking in pregnancy and attention and behavioral problems in kids and teens, a new study from the Journal of Epidemiology and Community Health finds a longer-term correlation: between smoking during pregnancy and eventual criminality in adult children.

"The prevalence of behavior problems is quite high during adolescence," explained the study's lead author, Angela Paradis of the Harvard School of Public Health. "But there are groups who are more life-course, persisting [criminal] groups versus those who are just experimenting, asserting independence, or emulating anti-social peers. Looking at outcomes in adolescents you might be mixing two groups. So we wanted to look at only adult outcomes."

Researchers found not only a correlation between maternal smoking and the likelihood of criminal activity in grown children, they also found a dose-dependent relationship: women who smoked heavily during pregnancy (more than 20 cigarettes per day) were more likely than moderate smokers to have adult children with an arrest record.

In fact, adults whose mothers were heavy smokers during pregnancy were 30% more likely to have been arrested than those whose mothers were light or nonsmokers. Further, they were more likely to be repeat offenders.


Read the Paper

See also

A Streak is Broken: Plaintiff Wins $80 Million Tobacco Verdict in Florida

Wall Street Journal
November 16, 2010

In an age when big-ticket trials are a rarity, plaintiffs lawyers and Big Tobacco continue to battle ferociously in courts across the Sunshine State.

More than 7,000 lawsuits claiming injuries and death due to smoking are pending in state and federal courts in Florida, the legacy of the state Supreme Court’s 2006 “Engle” ruling, which required jurors in future smoking cases to be bound by certain factual findings, including that tobacco companies sold cigarettes that were “defective” and “unreasonably dangerous.” (Here’s a previous LB post on the litigation.)

The supreme court ruling has given smoking plaintiffs in Florida a huge leg up; they have so far amassed more than $250 million in damages in so-called Engle progeny cases.

The latest news comes out of Bronson, Florida (pop. 1,049), where a jury yesterday awarded $80 million — $72M of which was in punitive damages — to the daughter of James Cayce Horner, a two-pack a day smoker who died in 1996 of lung cancer.


Washington's Equal Pay Obsession

by June E. O'Neill

Wall Street Journal
November 16, 2010

Women in the workplace don't face rampant pay discrimination, and yet the Senate may soon pass a bill—already passed in the House—premised on the erroneous charge that they do. The Paycheck Fairness Act (PFA) would be a harmful addition to the many federal laws that already protect women and men from labor-market discrimination.

The original Equal Pay Act of 1963 made it illegal for firms to pay different wages to women and men who performed equal work on jobs in the same establishment. Title VII of the 1964 Civil Rights Act outlawed discrimination against women and minorities in all aspects of employment, including hiring, promotion and compensation. Additional protections came with the 1978 Pregnancy Discrimination Act; the 1991 amendments to Title VII, which boosted penalties for discrimination; and the 2009 Lilly Ledbetter Act, which essentially eliminated the time limit for filing discrimination claims.

In addition, for more than 40 years two major federal agencies have been dedicated to fighting labor-market discrimination: the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance.

Why do we need still more legislation? The reason, say the bill's sponsors, is that women earn 77% as much as men, according to the Bureau of Labor Statistics. But this figure refers to the annual earnings of full-time, year-round workers. It doesn't compare comparable men and women, and it doesn't reflect that full-time men work 8%-10% more hours per week than full-time women.


Tuesday, November 16, 2010

The faces behind tobacco's deadly addiction

Washington Post
November 16, 2010

With apologies to Jonathan Swift, I have a modest proposal of my own. Instead of the government requiring cigarette packs and cartons to feature large warning labels designed to shock, sicken and otherwise make the point that smoking can kill - a toe tag on a corpse, for instance - a photo of Louis C. Camilleri would do quite nicely. He is the chairman and chief executive of Philip Morris International. Louis, stand up and take a bow.

You, too, Richard Burrows, chairman of British American Tobacco, and Daniel M. Delen, chief executive of R.J. Reynolds. You gentlemen should also be known and celebrated for your genius at selling a product that sickens and kills. It is not anyone who can do that - indomitably selling and marketing when your customer base is huddled in doorways or too young to realize that a puff here and a puff there, and inevitably you are sharing a smoke with the grim reaper. These men do not get half the attention they deserve.


Freaks, Geeks, and Economists: A study confirms every suspicion you ever had about high-school dating

by Annie Lowrey

November 15, 2010

In the Darwinian world of high-school dating, freshman girls and senior boys have the highest chances of successfully partnering up. Senior girls (too picky!) and freshman boys (pond scum!) have the least.

These are truisms known to anyone who has watched 10 minutes of a teen movie or spent 10 minutes in a high school cafeteria. Now, however, social scientists have examined them exhaustively and empirically. And they have found that for the most part, they're accurate. So are some other old prom-era chestnuts: Teen boys are primarily—obsessively?—interested in sex, whereas girls, no matter how boy-crazy, tend to focus on relationships. Young men frequently fib about their sexual experience, whereas young women tend to be more truthful. Once a student has sex, it becomes less of an issue in future relationships.

A recently released paper—called "Terms of Endearment," but don't hold its too-cute title against it—looked at how and when high-school students choose mates and their preferences when searching for a partner. Economists Peter Arcidiacono and Marjorie McElroy of Duke and Andrew Beauchamp of Boston College examined an enormous trove of data from the National Longitudinal Study of Adolescent Health, more commonly known as Add Health. The survey first queried adolescents, from seventh graders to high-school seniors, during the 1994-1995 school year and has followed up with them periodically.


Read the Paper

Monday, November 15, 2010

Richard Posner on the receipt of the Ronald H. Coase Medal: "Uncertainty, the Economic Crisis, and the Future of Law and Economics"

The board of the American Law and Economics Association decided 2 years ago to establish the Ronald H. Coase medal to be awarded bi-annually in recognition of major contributions to the field of law and economics. The American Law and Economics Review will publish each medal recipient’s lecture. The first medal recipient is Richard A. Posner, to whom the medal was presented by Lucian Bebchuk at the May 2010 meeting of the Association in Princeton, NJ.

Presentation by Lucian Bebchuk, Chairman, ALEA Committee to Select the Recipient of The 2010 Ronald H. Coase Medal.

I had the honor of serving as chair of the committee appointed to select the first recipient of the Coase medal. The other members of the committee were Orley Ashenfelter, the current President, former President Shelly White, President-elect Louis Kaplow, and Dean Robert Rasmussen. Our committee unanimously selected Judge Richard Posner to be the first recipient of the Coase medal. We are here today to celebrate the contributions for which this medal is awarded.

According to the official citation, the medal is awarded to Judge Posner for “pioneering work that demonstrated the value of applying economic analysis to a very wide spectrum of legal questions and paved the way for much subsequent work in law and economics.”

Let me elaborate a bit on this official citation. Prior to Judge Posner’s pioneering contributions, the use of economic tools had to a large extent been confined to several legal areas, such as antitrust, tax, and torts. Then came Judge Posner’s work. In his classic book, Economic Analysis of Law, the first edition of which was published in 1973, and in a large body of accompanying articles, Judge Posner demonstrated that economic tools can be deployed effectively in a very broad range of legal areas. Many of us subsequently traveled on the trails that he blazed.

To give a personal example, I count myself as one of those deeply influenced by Judge Posner’s work and example. When I came to do my LLM at Harvard three decades ago, I knew I wanted to combine economics and law but I thought that this was primarily possible in tax and antitrust and focused on these courses in my first semester. During my first year, however, I read and was fascinated by Judge Posner’s Economic Analysis of Law. It made me realize how broadly and fruitfully economics can be used, and this realization had a deep impact on me. I am sure that many in our field had a similar experience when reading Judge Posner’s work and were influenced by it in a similar way.

Beyond shaping the field in this way, Judge Posner has made numerous valuable contributions to the economic analysis of many legal fields. Over the past four decades, he has been an unending fountain of original, creative insights. The author of more than forty books, three hundred articles, and two thousand judicial opinions, he has produced a body of work that has unparalleled breadth, scope, and richness in our field.

Although not part of the basis of the award, I should express on this occasion the ALEA’s appreciation for Judge Posner’s contribution to the institutional development of the law and economics field. He founded and provided intellectual leadership to the Journal of Legal Studies that published many of the early significant contributions to the field. He later co-founded the ALER, which will be publishing the prize lecture we are about to hear. I should also note his service as President of our beloved association in 1995–1996.

In closing, let me thank Judge Posner on behalf of all of us for his pioneering contributions. We in law and economics are all indebted to him.


Read Richard Posner's Paper

Religious people are 'better neighbors'

by David Campbell and Robert Putnam

USA Today
November 15, 2010

Is religion toxic or a tonic for our nation's civic life? The question often inspires passion, and vitriol, on both sides. Professional atheists like Christopher Hitchens argue that "religion poisons everything," while advocates for religion, like Glenn Beck, see faith in God as the antidote to all that ails America.

To understand religion's role in America today, we have spent the last five years exhaustively examining the many ways that religion affects American society — from our families to our politics to our communities. We have done so with what we believe to be the most comprehensive survey of religion in America ever done, supplemented by every other source of relevant data we could find. The result is our new book, American Grace: How Religion Divides and Unites Us. Our objective is not to take sides on religion, but only to report what the data say.

The data provide fodder for both sides. On the one hand, religious Americans are somewhat less tolerant of free speech and dissent. As just one example, in our survey we asked Americans whether someone should be allowed to give a speech defending Osama bin Laden or al-Qaeda. While most Americans said yes — we are indeed a tolerant people — religious Americans were slightly less likely to say so. The same pattern is true for many other measures of tolerance: While, in general, Americans are quite tolerant, religious Americans are less tolerant than their secular neighbors. Furthermore, the "tolerance edge" among secular Americans cannot be explained away by some other attribute that they share. Statistically, we have accounted for every imaginable way that religious and secular Americans differ from one another. When we do so, the story stays the same.


Truth and cigarettes

Washington Post
November 15, 2010

Imagine that someone is in danger, but for whatever reason is heedless to warning. It would be wrong to walk away; you'd look for better ways to get the message across. That simple but sound principle is behind the federal government's commendable decision to require new, bigger - and more graphic - warning labels on cigarette packs.

Last week, armed with new power to regulate tobacco products, federal officials unveiled proposed warning labels for cigarette packs marketed in the United States. Many of the images are disturbing. Instead of the modest and by now familiar surgeon general's warning, the new labels use coffins, diseased lungs and rotting teeth to drive home the health effects of tobacco. The language makes clear that cigarettes are addictive; cause cancer, heart disease and strokes; harm children; and "can kill you."

The Food and Drug Administration will survey smokers, hear public comment and listen to experts in winnowing the 36 proposals to the nine deemed to have the best chance of deterring smoking.


A Culture of Carelessness

New York Times
November 14, 2010

Though its final report is two months away, the presidential commission investigating the gulf oil spill is beginning to confirm what we already suspected and feared. The April blowout on the Deepwater Horizon was not some unfortunate occurrence. It was the result of a series of bad decisions by companies less concerned about safety than about finishing a project that was over budget and 38 days behind schedule.

The commission’s preliminary findings, presented last week, were inevitably sketchy. It has been operating without subpoena powers that could more quickly clear up conflicting accounts given by the three big players — BP, Hallibuton and Transocean. The House has granted these powers; the Senate has not. Harry Reid, the Senate majority leader, must correct that.

The findings did not single out individual workers or executives for blame. The panel’s chief counsel, Fred Bartlit Jr., said that so far his staff had not found “a single instance where a human being made a conscious decision to favor dollars over safety.”


Putting Money on Lawsuits, Investors Share in the Payouts

New York Times
November 14, 2010

Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings.

The loans are propelling large and prominent cases. Lenders including Counsel Financial, a Buffalo company financed by Citigroup, provided $35 million for the lawsuits brought by ground zero workers that were settled tentatively in June for $712.5 million. The lenders earned about $11 million.

Most investments are in the smaller cases that fill court dockets. Ardec Funding, a New York lender backed by a hedge fund, lent $45,000 in June to a Manhattan lawyer hired by the parents of a baby brain-damaged at birth. The lawyer hired two doctors, a physical therapist and an economist to testify at a July trial. The jury ordered the delivering doctor and hospital to pay the baby $510,000. Ardec is collecting interest at an annual rate of 24 percent, or $900 a month, until the award is paid.

Total investments in lawsuits at any given time now exceed $1 billion, several industry participants estimated. Although no figures are available on the number of lawsuits supported by lenders, public records from one state, New York, show that over the last decade, more than 250 law firms borrowed on pending cases, often repeatedly.


THE LAWYER Jared Woodfill has borrowed more than $3.5 million from a New York hedge fund to pay for the Somerville lawsuits.

Sunday, November 14, 2010

We need more decisions like Judge Posner's

The Record
November 13, 2010

For years we've advocated for legal reform to curb tort abuse, but we've never lost sight of the fact that legislative remedies would not be necessary if judges simply acted judiciously.

A good model to follow is Judge Richard Posner of the U.S. Seventh Circuit of Appeals in Chicago. Judge Posner has frequently deplored tort abuse during the course of his career and nipped it in the bud more than once with his decisions.

A case in point is the ruling he and his colleagues handed down last week in a class action suit against Sears.


Making Ads That Whisper to the Brain

New York Times
November 13, 2010

What happens in our brains when we watch a compelling TV commercial?

For one thing, certain brain waves that correlate with heightened attention become more active, according to researchers who have used EEGs, or electroencephalographs, to study the brain’s electrical frequencies. Brain waves that signal less-focused attention, meanwhile, tend to subside.

In other words, this is your brain on ads.

Or so say neuromarketers, a nascent group of researchers who use techniques from neuroscience to analyze people’s responses to products and promotions.


Cigarette Giants in a Global Fight on Tighter Rules

New York Times
November 13, 2010

As sales to developing nations become ever more important to giant tobacco companies, they are stepping up efforts around the world to fight tough restrictions on the marketing of cigarettes.

Companies like Philip Morris International and British American Tobacco are contesting limits on ads in Britain, bigger health warnings in South America and higher cigarette taxes in the Philippines and Mexico. They are also spending billions on lobbying and marketing campaigns in Africa and Asia, and in one case provided undisclosed financing for TV commercials in Australia.

The industry has ramped up its efforts in advance of a gathering in Uruguay this week of public health officials from 171 nations, who plan to shape guidelines to enforce a global anti-smoking treaty.

This year, Philip Morris International sued the government of Uruguay, saying its tobacco regulations were excessive. World Health Organization officials say the suit represents an effort by the industry to intimidate the country, as well as other nations attending the conference, that are considering strict marketing requirements for tobacco.

Uruguay’s groundbreaking law mandates that health warnings cover 80 percent of cigarette packages. It also limits each brand, like Marlboro, to one package design, so that alternate designs don’t mislead smokers into believing the products inside are less harmful.

The lawsuit against Uruguay, filed at a World Bank affiliate in Washington, seeks unspecified damages for lost profits.


Saturday, November 13, 2010

The Price 20-Somethings Pay to Live in the City

New York Times
November 12, 2010

Abe Cavin Quezada, a 22-year-old aspiring music producer, lives with two roommates in a three-bedroom apartment in Bedford-Stuyvesant, Brooklyn. Mr. Cavin Quezada, who works as an unpaid intern at Electric Lady Studios in Greenwich Village, has kind words for his building, a renovated tenement near Marcus Garvey Boulevard, and for his apartment, for which he pays $500 a month and has a 10-by-6-foot bedroom. But as for the neighborhood, he is less enthusiastic.

“Before this I was living in a loft in Bushwick,” said Mr. Cavin Quezada, who grew up outside Washington. “This apartment is nicer, and has more amenities, but the neighborhood is noticeably fishier. In Bushwick, I never really felt threatened. Now, the sounds around are more aggressive. I’ll see 20 guys ride by on motorcycles, or hear gunshots outside my window.

“And one day,” he said, “in the middle of a Sunday afternoon, I saw a guy on a motorcycle with a handgun. It was not a reassuring sight.”

Mr. Cavin Quezada often works until 2 a.m. or later, and the first few nights after moving here, he considered asking one of his roommates to meet him at the subway after work and walk him back to the apartment.

Does his mother, who’s paying his rent, worry about him? “I don’t think I’ve given her enough details for her to worry,” Mr. Cavin Quezada said.

New York City was home to nearly 1.28 million people in their 20s last year, up from 1.21 million in 1980. In many respects, Mr. Cavin Quezada’s situation mirrors the way large numbers in that age group are living, three years after the Great Recession began.


Friday, November 12, 2010

The Great Cyberheist

by James Verini

New York Times Magazine
November 10, 2010

One night in July 2003, a little before midnight, a plainclothes N.Y.P.D. detective, investigating a series of car thefts in upper Manhattan, followed a suspicious-looking young man with long, stringy hair and a nose ring into the A.T.M. lobby of a bank. Pretending to use one of the machines, the detective watched as the man pulled a debit card from his pocket and withdrew hundreds of dollars in cash. Then he pulled out another card and did the same thing. Then another, and another. The guy wasn’t stealing cars, but the detective figured he was stealing something.

Indeed, the young man was in the act of “cashing out,” as he would later admit. He had programmed a stack of blank debit cards with stolen card numbers and was withdrawing as much cash as he could from each account. He was doing this just before 12 a.m., because that’s when daily withdrawal limits end, and a “casher” can double his take with another withdrawal a few minutes later. To throw off anyone who might later look at surveillance footage, the young man was wearing a woman’s wig and a costume-jewelry nose ring. The detective asked his name, and though the man went by many aliases on the Internet — sometimes he was cumbajohny, sometimes segvec, but his favorite was soupnazi — he politely told the truth. “Albert Gonzalez,” he said.

After Gonzalez was arrested, word quickly made its way to the New Jersey U.S. attorney’s office in Newark, which, along with agents from the Secret Service’s Electronic Crimes Task Force, had been investigating credit- and debit-card fraud involving cashers in the area, without much luck. Gonzalez was debriefed and soon found to be a rare catch. Not only did he have data on millions of card accounts stored on the computer back in his New Jersey apartment, but he also had a knack for patiently explaining his expertise in online card fraud. As one former Secret Service agent told me, Gonzalez was extremely intelligent. “He knew computers. He knew fraud. He was good.”


What, No Dead Babies?

by Jacob Sullum

November 11, 2010

Yesterday the Food and Drug Administration proposed new, bigger, colorized, and illustrated cigarette warning labels. The theory behind the labels, required by the Family Smoking Prevention and Tobacco Control Act, is that people already know that smoking is bad for them, but they need to be reminded good and hard. The FDA is suggesting a few possible illustrations for each of nine rotating warnings. Below are a few of my favorites.

By contrast, comic-book-style warnings like the one showing a premature infant in an incubator have an air of unreality that undermines the FDA's point, as do the secondhand smoke warnings that show smokers breathing directly into the faces of babies and old ladies. The illustrations showing what you can do when you quit smoking (blow bubbles, wear a T-shirt bragging about your feat, clog your toilet with cigarettes) can be charitably described as uninspired. And I am not buying the second strokes-and-heart-disease guy. Is he having a heart attack or a stroke? The hand to his head suggests a stroke, while the hand to his chest suggests a heart attack (although it's on the wrong side of his chest). Maybe he's having both—or it could be indigestion combined with a migraine. He's got to go.


Thursday, November 11, 2010

Wal-Mart Says ‘Try This On’: Free Shipping

New York Times
November 11, 2010

For years, Wal-Mart has used its clout as the nation’s largest retailer to squeeze competitors with rock-bottom prices in its stores. Now it is trying to throw a holiday knockout punch online.

Starting Thursday, Wal-Mart Stores plans to offer free shipping on its Web site, with no minimum purchase, on almost 60,000 gift items, including many toys and electronics. The offer will run through Dec. 20, when Wal-Mart said it might consider other free-shipping deals.

“Everyone’s trying to figure out how we can serve a customer that’s trying to save every penny they can,” said Steve Nave, senior vice president and general manager of “It’s the most competitive offer out there, and we’re pretty excited about it.”


Can't Buy You Love

by Jacob Sullum

November 10, 2010

Two months ago, The New York Times reported that "Democratic officials" believed "corporate interests, newly emboldened by regulatory changes," were trying to "buy the election." But it turned out the election was not for sale—at least, not to the highest bidder.

According to data collected by the Center for Responsive Politics, Democrats and Republicans each shelled out $1.6 billion during this election cycle, including spending by candidates, parties, party committees, and independent groups. In terms of spending, the two parties were evenly matched. But that is not how it looked on election night.

A closer look provides further evidence that Republicans did not win by outspending their opponents. They got substantially more votes in House races, where they spent less than Democrats yet picked up more than 60 seats (and control of the chamber), than they did in Senate races, where they spent more than Democrats and added half a dozen seats.


Wednesday, November 10, 2010

Even a filthy habit deserves a fair hearing

by John Kay

Financial Times

November 9, 2010

Like me, you probably disapprove of drinking and driving and dislike it when people smoke. So, like me, you may have been impressed by reports that reducing Britain’s limit on blood alcohol content for drivers would save several hundred lives a year and that the ban on smoking in public places has significantly reduced the incidence of heart attacks among non-smokers. But then I looked at the evidence for these claims.

Most analysis of the association between drinking and road accidents is based on investigation of blood alcohol levels in victims of fatal road accidents. One conclusion jumps out from these data. Most people who have been drinking and are killed on the road are not close to the limit. They are drunk. Two-thirds of victims of fatal road accidents who were over the legal limit had blood alcohol levels more than twice the legal limit. Many of them had consumed much more.

The claim that reducing the legal limit would save many lives is entirely based on the belief that such a measure would have a big effect on the behaviour of people who are already well above the legal limit. The principal evidence for this claim is a study undertaken in South Australia. But the incidence of drunk driving in South Australia was then 10 times the current figure in the UK. Australia used to have a culture of the drive-in bottle shop, which would fill your car boot with cans of beer. A raft of policies have sensibly addressed the issue. The social context is so different that Australian experience is almost irrelevant.


How Donald Shoup Will Find You a Parking Spot

Reason TV
November 9, 2010

Can't find curb-side parking? UCLA economist Donald Shoup can find you a space.

Professor Shoup is the author of The High Cost of Free Parking, and points out that, "just because the driver doesn't pay for parking doesn't mean the cost goes away."

In addition to making it harder to find a spot when you need one, "free" parking exacerbates other problems, from pollution to traffic congestion. Using the power of market pricing, Shoup explains how to fix the parking mess in three steps.

Cities from San Fransisco to Washington, DC are already adopting Shoup's reforms.


Some judges chastise banks over foreclosure paperwork

Washington Post
November 9, 2010

A year ago, Long Island Judge Jeffrey Spinner concluded that a mortgage company's paperwork in a foreclosure case was so flawed and its behavior in negotiations with the borrower so "repugnant" that he erased the family's $292,500 debt and gave the house back for free.

The judgment in favor of the homeowner, Diane Yano-Horoski, which is being appealed, has alarmed the nation's biggest lenders, who say it could establish a dramatic new legal precedent and roil the nation's foreclosure system.

It is not the only case that has big banks worried. Spinner and some of colleagues in the New York City area estimate they are dismissing 20 to 50 percent of foreclosure cases on the basis of sloppy or fraudulent paperwork filed by lenders.

Their decisions illustrate the central role lower court judges will have in resolving the country's foreclosure debacle. The mess came to light after lawsuits and media reports showed lenders were routinely filing shoddy or fraudulent papers to seize the homes of borrowers who had missed payments.


Tuesday, November 9, 2010

Why is America so rich?

November 9, 2010

Economic gloom and doom aside, America remains the world's richest large country. It's generally estimated to have a per capita GDP level around $45,000, while the richest European nations manage only a $40,000 or so per capita GDP (setting aside low population, oil-rich states like Norway). Wealth underlies America's sense of itself as a special country, and it's also cited as evidence that America is better than other economies on a range of variables, from economic freedom to optimism to business savvy to work ethic.

But why exactly is America so rich? Karl Smith ventures an explanation:

I am going to go pretty conventional on this one and say a combination of three big factors

1. The Common Law
2. Massive Immigration
3. The Great Scientific Exodus during WWII

You’ll notice that four of the top five countries in the Human Development Index have the Common Law and the top, Norway, is a awash in oil. Without the petro-kronors they probably wouldn’t be so hot.

You’ll also notice that 3 of the top 4, again with Norway the odd man out, are immigrant nations. The founder effect here should be clear.

The bonus from the great exodus is definitely waning. Most of our hey-day German and Jewish scientists are dying off, but its still given us a boost that lingers to this day. There is no fundamental reason why the US should be the center of the scientific world but for a time it was the only place in the world safe for many scientists.


Anti-Smoking Programs Are Slashed

Wall Street Journal
November 9, 2010

Many cash-strapped U.S. states are slashing budgets for tobacco-prevention programs, raising alarms among public-health groups as the nation's progress toward getting adult smokers to quit has stalled.

The adult smoking rate was 20.6% in 2009, the same as a year earlier and largely unchanged since 2004, according to the Centers for Disease Control and Prevention. That amounted to 46.6 million adult smokers in 2009.

States have cut their combined funding for smoking prevention in the current fiscal year to the lowest level since 1999, according to data gathered by a coalition of antismoking groups for a report that will be released later this month.


How to Fix a Broken Marketplace

Harvard Business School Working Knowledge
November 8, 2010

An economic handyman of sorts, Alvin E. Roth fixes broken markets.

As a pioneer in the field of market design, the Harvard Business School professor cofounded a kidney donation matching system for New England, corrected public school choice programs in New York and Boston, and tackled the market for new medical residents, economists, and lawyers. (Last week, Forbes magazine named him one of the world's "seven most powerful new economists.")

"Market design is the engineering part of game theory," Roth explains. "It's the underlying science of how the details work and how the parts fit together. We deal with much more complicated games than the game theory usually deals with."

In short, Roth has determined that successful marketplaces require three key elements. "They must be thick, uncongested, and safe," he says.


Read the Paper

Corruption as a barrier to entry

by Nauro F. Campos, Saul Estrin and Eugenio Proto

November 8, 2010

Conventional wisdom says that corruption hurts the economy because it taxes investment and weakens public services. This column presents evidence from interviews with CEOs in Brazil. It argues that corruption acts as a barrier to entry, with potential entrants put off by the uncertainty over what bribes to pay and when to pay them.

Corruption is often viewed as having a negative effect on economic performance. Mauro (1995) considers it as a tax on investment while Goulder, Parry and Burtraw (1997) suggest bribes may reduce public service provision because they substitute for taxation.

While some argue that corruption can “grease the wheels of growth” by addressing inefficiencies created by government intervention (Méon and Sekkat 2005), the econometric evidence supporting a negative effect is overwhelming (see Bardham, 1997, and Pande, 2008, for authoritative surveys). Despite this body of evidence, the exact mechanisms through which the harmful effect of corruption operates onto enterprise and national economic performance are still not fully understood. This column summarises recent research presenting a different mechanism and econometric evidence of its importance.


Sunday, November 7, 2010

Marek Kaminski. "Games Prisoners Play: The Tragicomic Worlds of Polish Prison"

On March 11, 1985, a van was pulled over in Warsaw for a routine traffic check that turned out to be anything but routine. Inside was Marek Kaminski, a Warsaw University student who also ran an underground press for Solidarity. The police discovered illegal books in the vehicle, and in a matter of hours five secret police escorted Kaminski to jail. A sociology and mathematics major one day, Kaminski was the next a political prisoner trying to adjust to a bizarre and dangerous new world. This remarkable book represents his attempts to understand that world.

As a coping strategy until he won his freedom half a year later by faking serious illness, Kaminski took clandestine notes on prison subculture. Much later, he discovered the key to unlocking that culture--game theory. Prison first appeared an irrational world of unpredictable violence and arbitrary codes of conduct. But as Kaminski shows in riveting detail, prisoners, to survive and prosper, have to master strategic decision-making. A clever move can shorten a sentence; a bad decision can lead to rape, beating, or social isolation. Much of the confusion in interpreting prison behavior, he argues, arises from a failure to understand that inmates are driven not by pathological emotion but by predictable and rational calculations.

Kaminski presents unsparing accounts of initiation rituals, secret codes, caste structures, prison sex, self-injuries, and of the humor that makes this brutal world more bearable. This is a work of unusual power, originality, and eloquence, with implications for understanding human behavior far beyond the walls of one Polish prison.

Marek M. Kaminski is Assistant Professor of Political Science and Mathematical Behavioral Science at the University of California, Irvine. Between 1982 and 1989 he managed Solidarity's underground publishing house STOP.

Written with refreshing directness--funny and horrible by turns--and complemented by delightful illustrations, Games Prisoners Play . . . makes a highly original contribution to the literature on prisons. The book will also prove valuable for introducing game theory. . . . There could be no better advertisement for rational choice.
Michael Biggs, American Journal of Sociology

Games Prisoners Play is not just a superb description of prison life but also a provocative analysis of why the choices prisoners make under difficult circumstances are rational. The lens through which Kaminski views these choices is elementary game theory, which he uses to elucidate the subtleties of different strategic situations in a highly imaginative way. This book ranks with only a handful of works I know of that apply game theory, in depth, to unusual subjects and end up enriching both the subject and the theory.
Steven J. Brams, New York University, author of Theory of Moves
and coauthor of Fair Division: From Cake-Cutting to Dispute Resolution

An exceptionally interesting book, and a very engaging read, Games Prisoners Play is bound to make a major impact on scholarship in the field. I would be very surprised if it did not become a staple reference for any study of prison life for years to come.
Diego Gambetta, author of The Sicilian Mafia

A terrific achievement. Marek Kaminski combines a unique 'fieldwork' in Polish prisons with insightful models of prisoners' behavior. This is an exceptional contribution to the ethnography of prison life and an imaginative application of game theory. It is also a memoir in its own right.
Federico Varese, author of The Russian Mafia