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September 30, 2012

A True Tall Tale: Mankiw Lays a Reductio Ad Absurdum on the Egalitarians

(p. 155) Should the income tax system include a tax credit for short taxpayers and a tax surcharge for tall ones? This paper shows that the standard utilitarian framework for tax policy analysis answers this question in the affirmative. This result has two possible interpretations. One interpretation is that individual attributes correlated with wages, such as height, should be considered more widely for determining tax liabilities. Alternatively, if policies such as a tax on height are rejected, then the standard utilitarian framework must in some way fail to capture our intuitive notions of distributive justice.

For the full article, from which the above abstract is quoted, see:

Mankiw, N. Gregory, and Matthew Weinzierl. "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution." American Economic Journal: Economic Policy 2, no. 1 (Feb. 2010): 155-76.

September 29, 2012

How a Group of "Natural Philosophers" Created Science in a London "Full of Thieves, Murderers and Human Waste"


Source of book image: http://www.edwarddolnick.net/images/clockworkuniverse-cover.jpg

(p. 19) London before the mid-1600s was a general calamity. The streets were full of thieves, murderers and human waste. Death was everywhere: doctors were hapless, adults lived to about age 30, children died like flies. In 1665, plague moved into the city, killing sometimes 6,000 people a week. In 1666, an unstoppable fire burned the city to the ground; the bells of St. Paul's melted. Londoners thought that the terrible voice of God was "roaring in the City," one witness wrote, and they would do best to accept the horror, calculate their sins, pray for guidance and await retribution.

In the midst of it all, a group of men whose names we still learn in school formed the Royal Society of London for the Improvement of Natural Knowledge. They thought that God, while an unforgiving judge, was also a mathematician. As such, he had organized the universe according to discernible, mathematical law, which, if they tried, they could figure out. They called themselves "natural philosophers," and their motto was "Nullius in verba": roughly, take no one's word for anything. You have an idea? Demonstrate it, do an experiment, prove it. The ideas behind the Royal Society would flower into the Enlightenment, the political, cultural, scientific and educational revolution that gave rise to the modern West.

This little history begins Edward Dolnick's "Clockwork Universe," so the reader might think the book is about the Royal Society and its effects. But the Royal Society is dispatched in the first third of the book, and thereafter, the subject is how the attempt to find the mathematics governing the universe played out in the life of Isaac Newton.

. . .

To go from sinful "curiositas" to productive "curiosity," from blind acceptance to open-eyed inquiry, from asking, "Why?" to answering, "How?" -- this change, of all the world's revolutions, must surely be the most remarkable.

For the full review, see:

ANN FINKBEINER. "Masters of the Universe." The New York Times Book Review (Sun., March 27, 2011): 19.

(Note: the online version of the review has the date March 25, 2011, and had the title "What Newton Gave Us.")

The full reference for the book under review, is:

Dolnick, Edward. The Clockwork Universe: Isaac Newton, the Royal Society, and the Birth of the Modern World. New York: HarperCollins Publishers, 2011.

September 28, 2012

Reference Point Ignored Due to "Theory-Induced Blindness"

(p. 290) The omission of the reference point from the indifference map is a surprising case of theory-induced blindness, because we so often encounter cases in which the reference point obviously matters. In labor negotiations, it is well understood by both sides that the reference point is the existing contract and that the negotiations will focus on mutual demands for concessions relative to that reference point. The role of loss aversion in bargaining is also well understood: making concessions hurts. You have much (p. 291) personal experience of the role of reference point. If you changed jobs or locations, or even considered such a change, you surely remember that the features of the new place were coded as pluses or minuses relative to where you were. You may also have noticed that disadvantages loomed larger than advantages in this evaluation--loss aversion was at work. It is difficult to accept changes for the worse. For example, the minimal wage that unemployed workers would accept for new employment averages 90% of their previous wage, and it drops by less than 10% over a period of one year.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

September 27, 2012

The Mockingjay as Symbol and Reality


A burning Mockingjay symbol appears on this movie poster for "The Hunger Games." Source of poster: online version of the NYT article quoted and cited below.

(p. D4) "They're funny birds and something of a slap in the face to the Capitol," Katniss explains in the first book. And the nature of that slap in face is a new twist on the great fear about genetic engineering, that modified organisms or their genes will escape into the wild and wreak havoc. The mockingjay is just such an unintended consequence, resulting from a failed creation of the government, what Katniss means when she refers to "the Capitol." But rather than being a disaster, the bird is a much-loved reminder of the limits of totalitarian control.

. . .

I asked Joan Slonczewski, a microbiologist and science fiction writer at Kenyon College in Ohio, about her take on the mockingjay. Dr. Slonczewski, whose recent books include a text and a novel, "The Highest Frontier," teaches a course called "Biology in Science Fiction." The tools needed to modify organisms are already widely dispersed in industry and beyond. "Now anybody can do a start-up," she said.

That's no exaggeration. Do-it-yourself biology is growing. The technology to copy pieces of DNA can be bought on eBay for a few hundred dollars, as Carl Zimmer reported in The New York Times in March. As to where D.I.Y. biology may lead, Freeman Dyson, a thinker at the Institute for Advanced Study known for his provocative ideas, presented one view in 2007 in The New York Review of Books. He envisioned the tools of biotechnology spreading to everyone, including pet breeders and children, and leading to "an explosion of diversity of new living creatures."

Eventually, he wrote, the mixing of genes by humans will initiate a new stage in evolution. Along the way, if he is right, the world may have more than its share of do-it-yourself mockingjays.

For the full story, see:

JAMES GORMAN. "SIDE EFFECTS; D.I.Y. Biology, on the Wings of the Mockingjay." The Wall Street Journal (Tues., May 15, 2012): D4.

(Note: ellipsis added.)

(Note: the online version of the article has the date May 10, 2012.)

September 26, 2012

Macro Policy Should Be Less Interventionist, More Rules-Based, and More Predictable

(p. 165) This article reviews the role of monetary and fiscal policy in the financial crisis and draws lessons for future macroeconomic policy. It shows that policy deviated from what had worked well in the previous two decades by becoming more interventionist, less rules-based, and less predictable. The policy implications are thus that policy should "get back on track."

For the full article, from which the above abstract is quoted, see:

Taylor, John B. "Getting Back on Track: Macroeconomic Policy Lessons from the Financial Crisis." Federal Reserve Bank of St. Louis Review 92, no. 3 (May-June 2010): 165-76.

September 25, 2012

"Science Is Weakest in the Lands of Islam"


Source of book image: http://photo.goodreads.com/books/1327925578l/10379376.jpg

(p. 18) The upshot was, while the Greek works in particular were disappearing in Europe, they were being preserved in Arabic to be retranslated later into Latin for a rebirth of "lost" knowledge. This is one half of the point the author makes frequently in the text and, in boldface, as the book's subtitle.

The other half is that contrary to some doubters, the Arab interest in learning extended well beyond translations: thinkers working alone or in observatories and houses of wisdom were conducting original research during "the world's most impressive period of scholarship and learning since ancient Greece." Accordingly, al-Khalili writes that ­al-Mamun stands as "the greatest patron of science in the cavalcade of Islamic rulers."

Sometimes al-Khalili, like a lawyer who suspects a jury of unyielding skepticism, strains to give stature to the leading lights of Arabic science in the Middle Ages. But modern historians of science agree that more attention should be given to the Arab contribution to the preservation and expansion of knowledge at this critical period, and the author has done so in considerable detail and with rising passion.

But that was then, and al-Khalili is obligated to end on an inescapable but deflating note: science today is in a chronic state of neglect in the Arab world and the broader Islamic culture of more than one billion people. Al-Khalili spreads the blame widely, citing inadequate financing for research and education, sclerotic bureaucracies, religious conservatism, even an ingrained fear of science. The Pakistani physicist Abdus Salam, perhaps the greatest Muslim scientist of the last century, won a Nobel Prize in 1979 and did what he could to promote a scientific renaissance among his people, without success. "Of all civilizations on this planet, science is weakest in the lands of Islam," Salam said in despair. "The dangers of this weakness cannot be overemphasized since the honorable survival of a society depends directly on its science and technology in the condition of the present age."

By recounting Arabic science's luminous past, al-Khalili says, he hopes to instill a sense of pride that will "propel the importance of scientific enquiry back to where it belongs: at the very heart of what defines a civilized and enlightened society."

For the full review, see:

JOHN NOBLE WILFORD. "The Muslim Art of Science." The New York Times Book Review (Sun., May 22, 2011): 18.

(Note: the online version of the review has the date May 20, 2011.)

The full reference for the book under review, is:

al-Khalili, Jim. The House of Wisdom: How Arabic Science Saved Ancient Knowledge and Gave Us the Renaissance. New York: The Penguin Press, 2010.

September 24, 2012

Kahneman Grants that "the Basic Concepts of Economics Are Essential Intellectual Tools"

(p. 286) Most graduate students in economics have heard about prospect theory and loss aversion, but you are unlikely to find these terms in the index of an introductory text in economics. I am sometimes pained by this omission, but in fact it is quite reasonable, because of the central role of rationality in basic economic theory. The standard concepts and results that undergraduates are taught are most easily explained by assuming that Econs do not make foolish mistakes. This assumption is truly necessary, and it would be undermined by introducing the Humans of prospect theory, whose evaluations of outcomes are unreasonably short-sighted.

There are good reasons for keeping prospect theory out of introductory texts. The basic concepts of economics are essential intellectual tools, which are not easy to grasp even with simplified and unrealistic assumptions about the nature of the economic agents who interact in markets. Raising questions about these assumptions even as they are introduced would be confusing, and perhaps demoralizing. It is reasonable to put priority on helping students acquire the basic tools of the discipline. Furthermore, the failure of rationality that is built into prospect theory is often irrelevant to the predictions of economic theory, which work out with great precision in some situations and provide good approximations in many others. In some contexts, however, the difference becomes significant: the Humans described by prospect theory are (p. 287) guided by the immediate emotional impact of gains and losses, not by long-term prospects of wealth and global utility.

I emphasized theory-induced blindness in my discussion of flaws in Bernoulli's model that remained unquestioned for more than two centuries. But of course theory-induced blindness is not restricted to expected utility theory. Prospect theory has flaws of its own, and theory-induced blindness to these flaws has contributed to its acceptance as the main alternative to utility theory.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

September 23, 2012

Ice Melts too Slowly for Obama Backed Arctic Oil Project

ArcticDrillingMap2012-09-03.jpgSource of map: online version of the WSJ article quoted and cited below.

(p. B1) Royal Dutch Shell . . . is spending billions of dollars to drill the first oil wells in U.S. Arctic waters in 20 years, backed by an Obama administration eager to show it wasn't opposed to offshore exploration.

But the closely watched project isn't going the way the company or the government hoped--illustrating the continuing challenge of plumbing for natural riches in one of the world's most unforgiving locations.

Sea ice in the Chukchi and Beaufort seas off the northern Alaska coast was slow to break up this year, leaving the drilling areas inaccessible much later than anticipated.

For the full story, see:

TOM FOWLER. "Shell Races the Ice in Alaska; Delays Put $4.5 Billion Arctic Drilling Plan in Danger of Missing Window Before Next Freeze." The Wall Street Journal (Mon., August 20, 2012): B1-B2.

(Note: ellipsis added.)

(Note: the online version of the article has the date August 19, 2012.)

September 22, 2012

Incentives Matter, Even in Refereeing Articles for Journals

(p. 678) A natural experiment in an economics fleld journal afforded time-series observations on payments to referees for on-time reviews. The natural experiment yielded 15 months' worth of data with no payments and about two subsequent years of data with payments. Using referee and manuscript-specific measures as covariates, hazard models were used to gauge the effects of payments on individual referee's review times. All models indicate statistically significant reductions in review times owing to referee payments. Reductions in review times translate into significant reductions in first-response time (FRT). Median FRT was reduced from 90 to 70 days, a 22% reduction in the presence of payments. With payments, only 1% of the FRTs exceeded six months; without payments, 16% of the FRTs exceeded six months.

For the full article, from which the above abstract is quoted, see:

Thompson, Gary D., Satheesh V. Aradhyula, George Frisvold, and Russell Tronstad. "Does Paying Referees Expedite Reviews?: Results of a Natural Experiment." Southern Economic Journal 76, no. 3 (Jan. 2010): 678-92.

September 21, 2012

Models Often "Ignore the Messiness of Reality"


Source of book image: http://www.namingandtreating.com/wp-content/uploads/2011/04/SuperCooperators_small.png

(p. 18) Nowak is one of the most exciting modelers working in the field of mathematical biology today. But a model, of course, is only as good as its assumptions, and biology is much messier than physics or chemistry. Nowak tells a joke about a man who approaches a shepherd and asks, ''If I tell you how many sheep you have, can I have one?'' The shepherd agrees and is astonished when the stranger answers, ''Eighty-three.'' As he turns to leave, the shepherd retorts: ''If I guess your profession, can I have the animal back?'' The stranger agrees. ''You must be a mathematical biologist.'' How did he know? ''Because you picked up my dog.''

. . .

Near the end of the book, Nowak describes Gustav Mahler's efforts, in his grandiloquent Third Symphony, to create an all-encompassing structure in which ''nature in its totality may ring and resound,'' adding, ''In my own way, I would like to think I have helped to give nature her voice too.'' But there remains a telling gap between the precision of the models and the generality of the advice Nowak offers for turning us all into supercooperators. We humans really are infinitely more complex than falling apples, metastasizing colons, even ant colonies. Idealized accounts of the world often need to ignore the messiness of reality. Mahler understood this. In 1896 he invited Bruno Walter to Lake Attersee to glimpse the score of the Third. As they walked beneath the mountains, Walter admonished Mahler to look at the vista, to which he replied, ''No use staring up there -- I've already composed it all away into my symphony!''

For the full review, see:

OREN HARMAN. "A Little Help from Your Friends." The New York Times Book Review (Sun., April 10, 2011): 18.

(Note: ellipsis added.)

(Note: the online version of the review has the date April 8, 2011, and has the title "How Evolution Explains Altruism.")

The full reference for the book under review, is:

Nowak, Martin A., and Roger Highfield. Supercooperators: Altruism, Evolution, and Why We Need Each Other to Succeed. New York: Free Press, 2011.

September 20, 2012

Sticking with Expected Utility Theory as an Example of "Theory-Induced Blindness"

(p. 286) Perhaps carried away by their enthusiasm, [Rabin and Thaler] . . . concluded their article by recalling the famous Monty Python sketch in which a frustrated customer attempts to return a dead parrot to a pet store. The customer uses a long series of phrases to describe the state of the bird, culminating in "this is an ex-parrot." Rabin and Thaler went on to say that "it is time for economists to recognize that expected utility is an ex-hypothesis." Many economists saw this flippant statement as little short of blasphemy. However, the theory-induced blindness of accepting the utility of wealth as an explanation of attitudes to small losses is a legitimate target for humorous comment.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

(Note: bracketed names and ellipsis added.)

September 19, 2012

EU Is "Infused with the Spirit of Yesterday's Future"

ThatcherMargaretIronLady2012-09-02.jpg "Mrs. Thatcher at a Conservative Party Conference in 1982." Source of caption and photo: online version of the WSJ commentary quoted and cited below.

(p. C2) . . . , it was Mrs. Thatcher . . . , a couple of years after she left office, who identified the problem with European construction. It was, she said, "infused with the spirit of yesterday's future." It made the "central intellectual mistake" of assuming that "the model for future government was that of a centralized bureaucracy." As she concluded, "The day of the artificially constructed megastate is gone."

For the full commentary, see:

CHARLES MOORE. "What Would The Iron Lady Do? She preached a gospel of self-discipline, free enterprise and national autonomy. As Europe implodes and the West's economic woes mount, it's time to re-examine Margaret Thatcher's ambiguous legacy, writes Charles Moore." The Wall Street Journal (Sat., December 17, 2011): C1-C2.

(Note: ellipses added.)

September 18, 2012

Raising Minimum Wage Hurts Working Poor

(p. 592) Using data drawn from the March Current Population Survey, we find that state and federal minimum wage increases between 2003 and 2007 had no effect on state poverty rates. When we then simulate the effects of a proposed federal minimum wage increase from $7.25 to $9.50 per hour, we find that such an increase will be even more poorly targeted to the working poor than was the last federal increase from $5.15 to $7.25 per hour. Assuming no negative employment effects, only 11.3% of workers who will gain live in poor households, compared to 15.8% from the last increase. When we allow for negative employment effects, we find that the working poor face a disproportionate share of the job losses. Our results suggest that raising the federal minimum wage continues to be an inadequate way to help the working poor.

For the full article, from which the above abstract is quoted, see:

Sabia, Joseph J., and Richard V. Burkhauser. "Minimum Wages and Poverty: Will a $9.50 Federal Minimum Wage Really Help the Working Poor?" Southern Economic Journal 76, no. 3 (Jan. 2010): 592-623.

September 17, 2012

A Marshmallow Now or an Elegant French Pastry Four Years Later


Source of book image: http://images.amazon.com/images/G/01/richmedia/images/cover.gif

(p. 19) Growing up in the erratic care of a feckless single mother, "Kewauna seemed able to ignore the day-to-day indignities of life in poverty on the South Side and instead stay focused on her vision of a more successful future." Kewauna tells Tough, "I always wanted to be one of those business ladies walking downtown with my briefcase, everybody saying, 'Hi, Miss Lerma!' "

Here, as throughout the book, Tough nimbly combines his own reporting with the findings of scientists. He describes, for example, the famous "marshmallow experiment" of the psychologist Walter Mischel, whose studies, starting in the late 1960s, found that children who mustered the self-control to resist eating a marshmallow right away in return for two marshmallows later on did better in school and were more successful as adults.

"What was most remarkable to me about Kewauna was that she was able to marshal her prodigious noncognitive capacity -- call it grit, conscientiousness, resilience or the ability to delay gratification -- all for a distant prize that was, for her, almost entirely theoretical," Tough observes of his young subject, who gets into college and works hard once she's there. "She didn't actually know any business ladies with briefcases downtown; she didn't even know any college graduates except her teachers. It was as if Kewauna were taking part in an extended, high-stakes version of Walter Mischel's marshmallow experiment, except in this case, the choice on offer was that she could have one marshmallow now or she could work really hard for four years, constantly scrimping and saving, staying up all night, struggling, sacrificing -- and then get, not two marshmallows, but some kind of elegant French pastry she'd only vaguely heard of, like a napoleon. And Kewauna, miraculously, opted for the napoleon, even though she'd never tasted one before and didn't know anyone who had. She just had faith that it was going to be delicious."

For the full review, see:

ANNIE MURPHY PAUL. "School of Hard Knocks." The New York Times Book Review (Sun., August 26, 2012): 19.

(Note: the online version of the article is dated August 23, 2012.)

The full reference for the book under review, is:

Tough, Paul. How Children Succeed: Grit, Curiosity, and the Hidden Power of Character. Boston, MA: Houghton Mifflin Harcourt, 2012.

September 16, 2012

"Theory-Induced Blindness"

(p. 276) The mystery is how a conception of the utility of outcomes that is vulnerable to . . . obvious counterexamples survived for so long. I can explain (p. 277) it only by a weakness of the scholarly mind that I have often observed in myself. I call it theory-induced blindness: once you have accepted a theory and used it as a tool in your thinking, it is extraordinarily difficult to notice its flaws. If you come upon an observation that does not seem to fit the model, you assume that there must be a perfectly good explanation that you are somehow missing. You give the theory the benefit of the doubt, trusting the community of experts who have accepted it. . . . As the psychologist Daniel Gilbert observed, disbelieving is hard work, and System 2 is easily tired.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

(Note: ellipses added.)

September 15, 2012

Where Credit Is Due

SchatzWaksmanStreptomycinLab2012-09-02.jpg "EVIDENCE; A lab notebook belonging to Albert Schatz, left, with his supervisor, Selman A. Waksman, and discovered at Rutgers helps puts to rest a 70-year argument over credit for the Nobel-winning discovery of streptomycin." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D3) NEW BRUNSWICK, N.J. -- For as long as archivists at Rutgers University could remember, a small cardboard box marked with the letter W in black ink had sat unopened in a dusty corner of the special collections of the Alexander Library. Next to it were 60 sturdy archive boxes of papers, a legacy of the university's most famous scientist: Selman A. Waksman, who won a Nobel Prize in 1952 for the discovery of streptomycin, the first antibiotic to cure tuberculosis.

The 60 boxes contained details of how streptomycin was found -- and also of the murky story behind it, a vicious legal battle between Dr. Waksman and his graduate student Albert Schatz over who deserved credit.

Dr. Waksman died in 1973; after Dr. Schatz's death in 2005, the papers were much in demand by researchers trying to piece together what really happened between the professor and his student. But nobody looked in the small cardboard box.

. . .

Thomas J. Frusciano, the head archivist of the Alexander Library special collections, recalled that the Waksman papers had been acquired in 1983, 10 years after the professor's death, and had even included a vial of streptomycin. He asked a member of his team, Erika Gorder, to search the stacks.

She remembered seeing the small box next to Dr. Waksman's papers. "I must have passed by it a million times," she said, "but I always thought it must contain miscellaneous material from the Waksman papers when they were cataloged."

When she pulled down the box and carefully opened it, however, there, loosely piled inside, were five clothbound notebooks -- just like Dr. Waksman's, but marked "Albert Schatz."

In the notebook for 1943, on Page 32, Dr. Schatz had started Experiment 11. In meticulous cursive, he had written the date, Aug. 23, and the title, "Exp. 11 Antagonistic Actinomycetes," a reference to the strange threadlike microbes found in the soil that produce antibiotics. Underneath the title he recorded where he had found the microbes in "leaf compost, straw compost and stable manure" on the Rutgers College farm, outside his laboratory.

The following pages detailed his experiments and his discovery of two strains of a gray-green actinomycete named Streptomyces griseus, Latin for gray. Each strain produced an antibiotic that destroyed germs of E. coli in a petri dish -- and, he was to find out later, also destroyed the TB germ. The notebook shows that the moment of discovery belongs to Dr. Schatz.

One of the pages in Experiment 11 had indeed been cut out, but the page was toward the end of the experiment, after Dr. Schatz had made his discovery. There was no evidence of a break in the experiment to suggest that Dr. Schatz might have removed the page to conceal something he didn't want the rest of the world to know.

And in Dr. Waksman's own papers -- in the 60 boxes -- there was confirmation that the professor knew the missing page was not a real issue. His legal advisers had told him bluntly that it was a distraction. As one lawyer wrote, the missing page was "insignificant."

As for the professor's story that Dr. Schatz's uncle had carried off the key 1943 notebook, Dr. Waksman's own documents make clear it could not have been true. At the time the key notebook was not at Rutgers; it was with university-appointed agents who were preparing the streptomycin patent application. Here, indeed, was evidence that Dr. Waksman had deliberately spread doubt and confusion about Dr. Schatz's Experiment 11 in a campaign to belittle the work of his student.

For the full story, see:

PETER PRINGLE. "Notebooks Shed Light on an Antibiotic's Contested Discovery." The New York Times (Tues., June 12, 2012): D3.

(Note: ellipsis added.)

(Note: the online version of the story has the date June 11, 2012.)

The issues treated above are discussed in more detail in Pringle's book:

Pringle, Peter. Experiment Eleven: Dark Secrets Behind the Discovery of a Wonder Drug. New York: Walker & Company, 2012.

September 14, 2012

How Politics Trumps Peer Review in Medical Research


The U.S. public biomedical research system is renowned for its peer review process that awards federal funds to meritorious research performers. Although congressional appropriators do not earmark federal funds for biomedical research performers, I argue that they support allocations for those research fields that are most likely to benefit performers in their constituencies. Such disguised transfers mitigate the reputational penalties to appropriators of interfering with a merit‐driven system. I use data on all peer‐reviewed grants by the National Institutes of Health during the years 1984-2003 and find that performers in the states of certain House Appropriations Committee members receive 5.9-10.3 percent more research funds than those at unrepresented institutions. The returns to representation are concentrated in state universities and small businesses. Members support funding for the projects of represented performers in fields in which they are relatively weak and counteract the distributive effect of the peer review process.


Hegde, Deepak. "Political Influence Behind the Veil of Peer Review: An Analysis of Public Biomedical Research Funding in the United States." Journal of Law and Economics 52, no. 4 (Nov. 2009): 665-90.

September 13, 2012

"A Place of Hypocrisy and Fear, Where Tenured Professors Proclaim Empty Solidarity with Exploited Workers"


Source of book image: http://c481901.r1.cf2.rackcdn.com/wp-content/uploads/2012/08/victims.jpg

(p. 20) A couple of years ago, Bawer made a trip home to see what's happened to the academic world he left behind. He attended a few conferences for women's studies, black studies, queer studies and Chicano studies, where he heard plenty of cant, as when a participant at a "Fat Studies" conference explained her veganism by declaring: "Dairy is a feminist issue. Milk comes from a grieving mother." He found, in abundance, what he's looking for: ­jargon-spewing careerists posing as radicals, semiliterate professors of literature and widespread condemnation of reason itself as a hoax perpetrated by the powerful on the powerless. Based on this sample, he concludes that the contemporary American academy is a place of hypocrisy and fear, where tenured professors proclaim empty solidarity with exploited workers, and Take Back the Night rallies promote the idea that "male students metamorphose, werewolf-like, into potential rapists" every night.

. . .

The humanities and "soft" social science departments that Bawer mocks are sinking into insignificance -- partly, to be sure, because they have purveyed the kind of buffoonery he decries.

For the full review, see:

ANDREW DELBANCO. "Back to School." The New York Times Book Review (Sun., August 26, 2012): 1 & 20.

(Note: ellipsis added.)

(Note: the online version of the article is dated August 23, 2012 and had the title "Academic Battleground; 'The Victims' Revolution,' by Bruce Bawer.")

(Note: in the print version, the review started in the left column of the first page under the title "Back to School." The title was shared by a review of another book, that started in the right column of the first page.)

The full reference for the book under review, is:

Bawer, Bruce. The Victims' Revolution: The Rise of Identity Studies and the Closing of the Liberal Mind. New York: Broadside Books, 2012.

September 12, 2012

Premortem Reduces Bias from Uncritical Optimism

(p. 265) As a team converges on a decision--and especially when the leader tips her hand--public doubts about the wisdom of the planned move are gradually suppressed and eventually come to be treated as evidence of flawed loyalty to the team and its leaders. The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice. The main virtue of the premortem is that it legitimizes doubts. Furthermore, it encourages even supporters of the decision to search for possible threats that they had not considered earlier. The premortem is not a panacea and does not provide complete protection against nasty surprises, but it goes some way toward reducing the damage of plans that are subject to the biases of WYSIATI and uncritical optimism.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

September 11, 2012

"Oldest" Pottery Now 2,000 Years Older

PotteryAncientKitchen2012-09-02.jpg "Pottery made by mobile foragers dates back 20,000 years." Source of caption and photo: online version of the NYT article quoted and cited below.

The evidence quoted below is somewhat esoteric, but it bears on an important issue: how long ago did our ancestors become our equals in terms of biological and intellectual abilities? (The longer that period, the longer is the handle in McCloskey's "Great Fact.")

(p. D3) Fragments of ancient pottery found in southern China turn out to date back 20,000 years, making them the world's oldest known pottery -- 2,000 to 3,000 years older than examples found in East Asia and elsewhere.

. . .

The crockery, found in Xianrendong Cave in Jiangxi Province, belonged to a group of mobile foragers, Dr. Bar-Yosef said. They were a hunting and gathering community; plant cultivation and agriculture probably did not arrive until about 10,000 years later.

For the full review, see:

SINDYA N. BHANOO. "OBSERVATORY; Remnants of an Ancient Kitchen Are Found in China." The New York Times (Sun., July 3, 2012): D3.

(Note: ellipsis added.)

(Note: the online version of the review has the date June 28, 2012.)

The full reference for the book under review, is:

Wu, Xiaohong, Chi Zhang, Paul Goldberg, David Cohen, Yan Pan, Trina Arpin, and Ofer Bar-Yosef. "Report; Early Pottery at 20,000 Years Ago in Xianrendong Cave, China." Science 336, no. 6089 (June 29, 2012): 1696-700.

September 10, 2012

Economists Have "the Tools to Slap Together a Model to 'Explain' Any and All Phenomena"

(p. 755) The economist of today has the tools to slap together a model to 'explain' any and all phenomena that come to mind. The flood of models is rising higher and higher, spouting from an ever increasing number of journal outlets. In the midst of all this evidence of highly trained cleverness, it is difficult to retain the realisation that we are confronting a complex system 'the working of which we do not understand'. . . . That the economics profession might be humbled by recent events is a realisation devoutly to be wished.


Leijonhufvud, Axel. "Out of the Corridor: Keynes and the Crisis." Cambridge Journal of Economics 33, no. 4 (July 2009): 741-57.

(Note: ellipsis added.)

(Note: the passage above was quoted on the back cover of The Cato Journal 30, no. 2 (Spring/Summer 2010).)

September 9, 2012

Economists Optimistic that Economy Can Adapt to Climate Change


Source of book image: http://www.bibliovault.org/thumbs/978-0-226-47988-0-frontcover.jpg

(p. 222) Efficient policy decisions regarding climate change require credible estimates of the future costs of possible (in)action. The edited volume by Gary Libecap and Richard Steckel contributes to this important policy discussion by presenting work estimating the ability of economic actors to adapt to a changing climate. The eleven contributed research chapters primarily focus on the historical experience of the United States and largely on the agricultural sector. While the conclusions are not unanimous, on average, the authors tend to present an optimistic perspective on the ability of the economy to adapt to climate change.

For the full review, see:

Swoboda, Aaron. "Review of: The Economics of Climate Change: Adaptations Past and Present." Journal of Economic Literature 50, no. 1 (March 2012): 222-24.

Book under review:

Libecap, Gary D., and Richard H. Steckel, eds. The Economics of Climate Change: Adaptations Past and Present, National Bureau of Economic Research Conference Report. Chicago: University of Chicago Press, 2011.

September 8, 2012

People "Reward the Providers of Dangerously Misleading Information"

(p. 262) As Nassim Taleb has argued, inadequate appreciation of the uncertainty of the environment inevitably leads economic agents to take risks they should avoid. However, optimism is highly valued, socially and in the market; people and firms reward the providers of dangerously misleading information more than they reward truth tellers. One of the lessons of the financial crisis that led to the Great Recession is that there are periods in which competition, among experts and among organizations, creates powerful forces that favor a collective blindness to risk and uncertainty.

The social and economic pressures that favor overconfidence are not (p. 263) restricted to financial forecasting. Other professionals must deal with the fact that an expert worthy of the name is expected to display high confidence. Philip Tetlock observed that the most overconfident experts were the most likely to be invited to strut their stuff in news shows. Overconfidence also appears to be endemic in medicine. A study of patients who died in the ICU compared autopsy results with the diagnosis that physicians had provided while the patients were still alive. Physicians also reported their confidence. The result: "clinicians who were 'completely certain' of the diagnosis antemortem were wrong 40% of the time." Here again, expert overconfidence is encouraged by their clients: "Generally, it is considered a weakness and a sign of vulnerability for clinicians to appear unsure. Confidence is valued over uncertainty and there is a prevailing censure against disclosing uncertainty to patients." Experts who acknowledge the full extent of their ignorance may expect to be replaced by more confident competitors, who are better able to gain the trust of clients. An unbiased appreciation of uncertainty is a cornerstone of rationality--but it is not what people and organizations want. Extreme uncertainty is paralyzing under dangerous circumstances, and the admission that one is merely guessing is especially unacceptable when the stakes are high. Acting on pretended knowledge is often the preferred solution.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

September 7, 2012

Behaviorally Modern Humans Emerged at Least by 44,000 Years Ago

CaveRelicsAfrica2012-08-21.jpg "CAVE RELICS; Clues to relatively modern behavior 44,000 years ago in Africa." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. D3) In the widening search for the origins of modern human evolution, genes and fossils converge on Africa about 200,000 years ago as the where and when of the first skulls and bones that are strikingly similar to ours. So this appears to be the beginning of anatomically modern Homo sapiens.

But evidence for the emergence of behaviorally modern humans is murkier -- and controversial. Recent discoveries establish that the Homo sapiens groups who arrived in Europe some 45,000 years ago had already attained the self-awareness, creativity and technology of early modern people.

. . .

In their research, Dr. d'Errico and colleagues re-examined organic artifacts from Border Cave and their refined radiocarbon ages, concluding that "key elements of the San material culture" place "the emergence of modern hunter-gatherer adaptation, as we know it," to more or less 44,000 years ago.

Previous discoveries revealed that other cave dwellers in southern Africa were experimenting with pigment use, body adornment, and advanced stone and bone tools more than 75,000 years ago, but that many of these artifacts seemed to disappear by 60,000 years ago. Dr. d'Errico's group said this suggested that "modern behavior appeared in the past and was subsequently lost before becoming firmly established."

. . .

In an earlier paper written with Dr. Stringer, Dr. d'Errico said that in his view, present evidence "does not support a gradualist scenario nor a revolution scenario, but a nonlinear process during which key cultural innovations emerge, are lost and re-emerge in different forms before being finally adopted."

This process, he continued, "does not happen everywhere at the same time," and the material culture at Border Cave is "not necessarily valid elsewhere."

For the full story, see:

JOHN NOBLE WILFORD. "Artifacts Revive Debate on Transformation of Human Behavior." The New York Times (Tues., July 31, 2012): D3.

(Note: ellipses added.)

(Note: the online version of the article is dated July 30, 2012.)

The 2012 academic publication by d'Errico et al can be found at:

d'Errico, Francesco, Lucinda Backwell, Paola Villa, Ilaria Degano, Jeannette J. Lucejko, Marion K. Bamford, Thomas F. G. Higham, Maria Perla Colombini, and Peter B. Beaumont. "Early Evidence of San Material Culture Represented by Organic Artifacts from Border Cave, South Africa." PNAS 109, no. 33 (2012): 13214-19.

September 6, 2012

Macaulay Argues that a Limited Government that Protects Property Will Promote Economic Growth

Our rulers will best promote the improvement of the nation by strictly confining themselves to their own legitimate duties, by leaving capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property, by diminishing the price of law, and by observing strict economy in every department of the state. Let the Government do this: the People will assuredly do the rest.


Macaulay, Thomas Babington, Lord. "Review of: Robert Southey's "Sir Thomas More; or, Colloquies on the Progress and Prospects of Society"." In Critical and Historical Essays Contributed to the Edinburgh Review. London: Longman, Green, Longman, and Roberts, 1830.

(Note: the quote above appeared on the back cover of The Cato Journal 30, no. 1 (Winter 2010); Macaulay's full review, including the quote, can be viewed online at: http://www.econlib.org/library/Essays/macS1.html )

(Note: the online version does not give page numbers, but gives what I think are "screen" numbers. The passage quoted is all of "SC.96" which appears at the very end of the essay.)

September 5, 2012

Renaissance Florence: "A Really Vibrant, Flexible, and Free-Market City"


Source of book image: http://covers.booktopia.com.au/big/9781421400594/the-economy-of-renaissance-florence.jpg

(p. 176) Chapters 4 and 5 deal with manufacturing, by far the main source of employment in the city. The Florentine textile industry had developed thanks to the Arno River, which provided water and power, and had become a market leader in Europe for high-quality products. Production was based, as everywhere in Europe, on a putting-out system--but strictly confined to the city. The author describes the organization and its changes over time, stressing, as for international banking, the flexibility of firms and their high turnover. Workers were organized in guilds, but the author stresses their nature as political associations rather than their economic role. Florentine guilds did not restrict the access to profession nor stifle innovation. Chapter 6 describes the banks catering for urban market--including local branches of international banks as well as smaller local firms, plus pawnbrokers, both Catholic and Jews. Local banks appeared thoroughly modern in their business and the resort to banking services was quite widespread. Artisans and workers were routinely paid with checks and had bank accounts. And the whole system worked well with almost no state intervention, at least until the late sixteenth century.

. . .

. . . , the author argues that Florentine society was very upwardly mobile, at least for the standard of the time and that the distribution of wealth by household according to the 1427 Catasto was fairly equal (although inequality increased in the next century).

(p. 177) As a whole, at the end of the book one has the impression of a really vibrant, flexible, and free-market city. The standard of living was undoubtedly high and not only for the wealthy, as witnessed by the art treasures of the city, but also for the working class. Literacy and numeracy was very common, and the majority of children attended a primary school.

For the full review, see:

Federico, Giovanni. "Review of: The Economy of Renaissance Florence." Journal of Economic Literature 48, no. 1 (2010): 175-77.

Book under review:

Goldthwaite, Richard A. The Economy of Renaissance Florence. Baltimore, MD: The Johns Hopkins University Press, 2009.

September 4, 2012

Big Firm CFOs Were Confident about Their "Worthless" Stock Forecasts

(p. 261) For a number of years, professors at Duke University conducted a survey in which the chief financial officers of large corporations estimated the returns of the Standard & Poor's index over the following year. The Duke scholars collected 11,600 such forecasts and examined their accuracy. The conclusion was straightforward: financial officers of large corporations had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero! When they said the market would go down, it was slightly more likely than not that it would go up. These findings are not surprising. The truly bad news is that the CFOs did not appear to know that their forecasts were worthless.


Kahneman, Daniel. Thinking, Fast and Slow. New York: Farrar, Straus and Giroux, 2011.

September 3, 2012

Some Cultures Really Are Barbaric


"The mummy of a sacrificed Inca girl was found in Argentina in 1999." Source of caption: print version of the NYT article quoted and cited below. Source of photo: online version of the NYT article quoted and cited below.

(p. D3) Dr. Dávalos and Dr. Corthals and their colleagues report their findings in the journal PLoS One.

The researchers discovered the mummy, along with those of two other sacrificed children, in 1999.

"They were buried in a tomb, and the tomb was packed solid with volcanic ashes and covered in snow, so they did not desiccate," Dr. Corthals said. "Their entire bodies were sealed and perfectly preserved."

The sacrificed youths probably made a journey of as many as 1,500 miles from Cuzco, the capital of the Inca empire, to the summit, Dr. Corthals said. "The girl actually had gray hair, so I think they knew their fate," she said. "And the little girl and boy also had their teeth ground down."

For the full story, see:

SINDYA N. BHANOO. "OBSERVATORY; Disease Diagnosed in a 500-Year-Old Mummy." The New York Times (Tues., July 31, 2012): D3.

(Note: the online version of the article is dated July 30, 2012.)

(Note: the online version, quoted above, corrects the mistaken "3,000 miles" number in the print version. It also replaces "Argentine researchers" with "The researchers.")

The academic publication being summarized can be found at:

Corthals A, Koller A, Martin DW, Rieger R, Chen EI, Bernaski M, Recagno, G, Dávalos, LM . (2012) Detecting the Immune System Response of a 500 Year-Old Inca Mummy. PLoS ONE 7(7):e41244. doi:10.1371/journal.pone.0041244

September 2, 2012

Information Technology Enables Massive Process Creative Destruction

(p. 2) . . . I want to argue that something deep is going on with information technology, something that goes well beyond the use of computers, social media, and commerce on the Internet. Business processes that once took place among human beings are now being executed electronically. They are taking place in an unseen domain that is strictly digital. On the surface, this shift doesn't seem particularly consequential -- it's almost something we take for granted. But I believe it is causing a revolution no less important and dramatic than that of the railroads. It is quietly creating a second economy, a digital one.

. . .

(p. 5) Now this second, digital economy isn't producing anything tangible. It's not making my bed in a hotel, or bringing me orange juice in the morning. But it is running an awful lot of the economy. It's helping architects design buildings, it's tracking sales and inventory, getting goods from here to there, executing trades and banking operations, controlling manufacturing equipment, making design calculations, billing clients, navigating aircraft, helping diagnose patients, and guiding laparoscopic surgeries. Such operations grow slowly and take time to form.

. . .

(p. 6) Is this the biggest change since the Industrial Revolution? Well, without sticking my neck out too much, I believe so. In fact, I think it may well be the biggest change ever in the economy. It is a deep qualitative change that is bringing intelligent, automatic response to the economy. There's no upper limit to this, no place where it has to end.

. . .

I think that for the rest of this century, barring wars and pestilence, a lot of the story will be the building out of this second economy, an unseen underground economy that basically is giving us intelligent reactions to what we do above the ground.


Arthur, W. Brian. "The Second Economy." McKinsey Quarterly, no. 4 (Oct. 2011): 90-99.

(Note: ellipses added.)

(Note: I first saw the passages quoted above on pages 243-244 of Timothy Taylor's "Recommendations for Further Reading" feature in The Journal of Economic Perspectives 26, no. 1 (Winter 2012).)

September 1, 2012

Mitt Romney on Innovation and Creative Destruction


Source of book image: http://mittromneycentral.com/uploads/No-Apology1.jpg

(p. 108) Innovation and Creative Destruction

The key to increasing national prosperity is to promote good ideas and create the conditions that can lead them to be fully exploited--in existing businesses as well as new ones. Government is generally not the source of new ideas, although innovations from NASA and the military have provided frequent exceptions. Nor is government where innovation is commercially developed. But government policies do, in fact, have a major impact on the implementation of innovative ideas. The degree to which a nation makes itself productive, and thus how prosperous its citizens become, is determined in large measure by whether government adopts policies that stimulate innovation or that stifle it.

The government policy that has the greatest effect on innovation is simply whether or not the government will allow it. It's sad but true: Government can and often does purposefully prevent innovation and the resulting improvement in productivity. Recall my hypothetical example of a society in which half the farming jobs were lost due to innovation in the use of a plow? Some nations accept and encourage such "creative destruction," recognizing that in the long run it leads to greater productivity and wealth for its citizens. But other nations succumb to the objections of those in danger of becoming unemployed and prevent innovation that may reduce short-term employment.

Two centuries ago, more than three-quarters of our workforce actually did labor on farms. Over the succeeding decades, innovations like irrigation, fertilizer, and tractors were welcomed, and eventually large farming corporations were allowed to prosper, despite protests from family farmers and the often heart-wrenching dislocations that accompanied consolidation of farmlands. The result was the disappearance of millions of agricultural jobs and the large-scale migration of Americans from rural regions to our cities. Once there, they provided the labor that powered America's new industrial age. And at the same time, because farming innovation and productivity were allowed to flourish, America became the leader in agriculture education, research, and industry. Innovations from these sources have enabled us to produce sufficient food to feed not only our growing population but other parts of the world as well.


Romney, Mitt. No Apology: The Case for American Greatness. New York: St. Martin's Press, 2010.

(Note: bold in original.)


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