Thursday, December 31

The economics of orgasms

In case you thought there were any topics that are off-limits for economists, Hugo Mialon from Emory University in Atlanta has produced a working paper on orgasms (hat tip to Greg Mankiw, who posted on his blog that Mialon is presenting the paper at the upcoming American Economic Association meeting).

Mialon uses game theory to develop predictions on whether or not people will fake orgasms, and then uses survey data to show his predictions are accurate. He argues that how close people are to their sexual prime (late teens for men and about 30 for women), their chances of getting caught and whether or not they love their partner (Mialon uses a very rigid definition of love) all matter.

Tuesday, December 15

Evolutionary economics

I recently discovered a new discipline of economics that I didn't know existed: evolutionary economics. In a nutshell, it tries to understand the economy by drawing parallels with evolutionary theory from biology.

I came across evolutionary economics by accident through an assignment for our microeconomics class. We were asked to find two papers describing non-traditional theories of the firm and compare them. To make the exercise interesting, I tried to find the wildest theory I could find, which led me to The Firm as an Interactor: Firms as Vehicles for Habits and Routines. It's a 2004 paper published by two European economists, Geoffrey Hodgson and Thorbjorn Knudsen, in the Journal of Evolutionary Economics. Yes, there is such a journal (actually, it's the 98th-ranked economics journal, according to

Monday, December 14

Musings on marijuana

The Canadian senate reformed a piece of drug legislation that would create mandatory sentences for people convicted of growing pot.

The bill originally said the mandatory sentence would apply to people growing at least five plants, but it seems the Senate felt that was too strict and changed the threshold to 201 plants. I would be willing to bet that if the legislation passes with the 201 threshold, there will be many grow-ops that decide to grow exactly 200 plants. People -- even criminals -- respond to incentives, after all. It also gives a potential argument lawyers could use to get their clients off easier ("But your honour, the 201st and 202nd plants were dead, so they didn't count").

Friday, December 11

What I've been up to

I've been very busy with school in recent weeks, but have been doing a little writing on the side. Here's some stuff I've done lately:

- My take on the single transferrable vote proposal put forward in British Columbia was published in the Canadian Student Review's Winter 2009 edition.

- I've been covering the Hamilton Bulldogs, including a profile of their coach Guy Boucher (also in French), and the team's recent home games against the Toronto Marlies and Abbotsford Heat.

Saturday, November 21

Unhiding property taxes

I've been a renter ever since I left home five years ago, so property taxes are not something I've worried about. They have always been something for my landlord has to deal with, while I just concern myself with the total value of my rent cheque.

Of course, a good chunk of the property tax gets passed on to me in the form of a higher rent. If my landlord faces higher property taxes, she'll probably raise my rent to help her pay for the tax increase. So I really should be interested in property taxes, since it indirectly affects my rent.

I gave this matter no thought until yesterday, when I received a letter from the City of Hamilton describing the property taxes on the apartment building I live in.

Friday, November 20

Football and violence

An unsettling new study suggests that upset losses in NFL games cause an increase in reports of male-on-female domestic violence (hat tip to Freakonomics).

The study is by controversial economist David Card and Gordon Dahl. They look at how many reports of domestic abuse police in NFL cities receive shortly after games where the local team was expected to win by more than three points, but actually lost. They find that these upset games increase the likelihood of domestic violence occurring by 8% for male-on-female violence compared to non-game days. There was no notable effect on female-on-male violence.

Wednesday, November 4

Add sneezing to the list

Recently, I blogged about how lemon-scented Windex and AC-DC music can affect the results of economic experiments. We can now add another factor to that list: sneezing.

Researchers in Michigan found that a pollster who sneezed before handing over a survey about health led to lower approval of the American health care system and predictions of lower health outcomes for Americans by survey respondents than when the pollster didn't sneeze.

Thanks to the Freakonomics blog for this one.

Monday, November 2

Are government employees more selfish?

One difference between left wingers and right wingers are their views of whether government or the private sector are better placed to offer services to citizens. Left wingers tend to be suspicious of businesses and more trusting of government, while right wingers tend to feel the opposite.

So perhaps a worthwhile question to ask is whether people running governments are any different than people running businesses. The answer is "yes," according to a recent study by Dutch researchers Margaretha Buurman, Robert Dur and Seth Van den Bossche.

Wednesday, October 28

Scented nonsense?

You may have read this one in your local paper: lemon scents make people more trustworthy, charitable and generous. The study by Katie Liljenquist (Brigham Young), Chen-Bo Zhong (University of Toronto) and Adam Galinsky (Northwestern) has apparently been accepted for publication in Psychological Sciences.

Basically, the researchers got subjects to play a trust game where subjects could pass money between each other or keep it. Money that was passed got multiplied, but there was a chance the other player could screw you by not passing much money back. Subjects were either in a room which was sprayed with lemon-scented Windex, or a room that wasn't. The subjects who were in the Windexed room passed more money back and forth.

The researchers did another experiment where people filled out a questionnaire about their wilingness to volunteer and donate to Habitat for Humanity. People in the Windexed room claimed to be more charitable and more willing to volunteer than people in the normal room.

Tuesday, October 27

A review of Superfreakonomics

It's not every week a high-profile economics book hits the market, so I decided to forgo some studying over the weekend to read Superfreakonomics, by Steven Levitt and Stephen Dubner. It's the sequel to Freakonomics, probably the most well-known economics book designed for mass consumption.

This is the Seinfeld of economics books: it truly is a book about nothing. Sure, there are chapters which seem to have a unifying theme. But the book itself does not have a concept behind it.

Monday, October 26

Journalists don't do game theory

Does game theory work in the news media business?

According to Saturday's Toronto Star, the Obama administration recently offered an interview with a senior official to all major national news outlets (CNN, ABC, NBC and CBS) except Fox News. Fox News has a reputation for having a strong-right wing bent, favouring Republicans over Obama's Democrats.

Game theory would tell us that (assuming the interview was worthwhile to do) the other networks should have done the interview. But the networks banded together and stood up for Fox by declining interviews.

Sunday, October 18

The debate continues

Knowing and Making, a behavioural economics blog in the UK, has taken up the swine flu vaccine allocation debate (originally blogged about here and here). They argue against my lottery idea and instead make the case for a government-held auction of vaccines.

Saturday, October 17

Monkey-see, monkey-do

I think humans tend to follow the monkey-see monkey-do practice more than we think.

I went for a $17 haircut yesterday and was planning on tipping to $20 (it seemed like a nice round number) until I noticed that the customer before me didn't tip at all, even though he remarked on how pleased he was with his cut. I changed my mind and decided tipping to $19 would be more appropriate.

Likewise, I frequently visit one of the Tim Horton's on campus for their Iced Cappucinnos. They require a straw, which at Tim's is always wrapped in paper. So it's not uncommon to see a bunch of crumpled-up straw coverings on their counter (and sometimes an assortment of other garbage -- I saw a Kit Kat wrapper there the other day). When there are straw wrappers already on the counter, I usually leave mine behind as well. But when the counter is clean, I usually feel guilty about being the first to litter and tuck the wrapper in my pocket to dispose of later.

Thursday, October 15

More swine flu economics

A few weeks ago, I blogged about the Hamilton health authority's proposal of how to figure out who gets scare flu vaccines in the event of a pandemic. Now, the Canadian Olympic Committee's chief medical officer is suggesting that Olympic athletes get first dibs on flu vaccines in the event of a pandemic (hat tip to ECalgary). He notes athletes are a high-risk group and that Canadians would be sad if their Olympic hockey team caught swine flu.

Personally, I'm not convinced his argument that the positive externalities for Olympians getting vaccinated is that strong. I tend to agree with the Hamilton health authority that emergency workers should get dibs over athletes. But I'm not convinced the health authority's solution is the right one.

Why not hold a lottery for flu vaccines, and then allow people to trade or sell their vaccines as they wish? It ensures the rules are equal for everyone, and trading will allow for people who don't put a high value on the vaccine to transfer it to someone who does.

Monday, October 12

Brunches for risk lovers

I visited Floyd's Diner in Victoria for brunch with some friends yesterday. They have an interesting menu item: The Mahoney. Essentially, the cook makes whatever he wants, and you can either pay face value, or flip a coin and get it free if you win but pay double if you lose. I think it's supposed to be a reference to Dan Mahowney (yes, Floyd's made a spelling mistake), a gambling addict.

It's a novel concept. Economists usually assume most people are risk averse, and consequently there are lots of insurance-type products and money-back guarantees in the market to cater to these people. But rarely do businesses (other than casinos and lotteries) cater to the risk lovers among us. Offering people a chance to flip for a free breakfast or paying double seems smart -- it increases the expected value of the meal for risk lovers, and while the restaurant will lose money on the meals it gives out for free, over the long run its revenues should be no different than if it simply charges face value (assuming, of course, the coin toss results in a 50-50 outcome).

For the record, I was feeling risk averse and opted for the Cajun Club with fries. It was delicious.

Friday, October 9

Unintended consequences of Breathalyzers in high schools

Schools in Foxborough (near Boston) will be using Breathalyzer tests on students suspected of being drunk at school or school functions.

When I saw this on Fox News last night, it struck me as a horrible idea because of unintended consequences. Sure, Breathalyzer tests will increase the chances that a student who is drunk gets caught. Sure, it may reduce underage drinking a little bit. But it also means drunk students will be less likely to show up at school functions. While this is a good thing for the school, it's probably bad for the drunk students.

Sunday, October 4

Economics at Dundurn Castle

I visited Dundurn Castle on Friday with my parents, who were visiting from Vancouver. The castle, built in 1835, is a National Historic Site in Hamilton that was a former home of Sir Allan MacNab. He was a prime minister of Canada, before Confederation in 1867.

On our hour-long guided tour, I was surprised at the economic references that crept into our tour. Our guide tried to justify the MacNab family's use of child labour. She mentioned that the servant who did the dishwashing for the MacNab family was likely eight or ten years old and worked ten-hour days. But she qualified this by mentioning that her working conditions were far better than many other jobs at the time, given that it she had a brick floor, a window and running water to work with.

Our guide also gave a neat example of an unintended consequence of tax policy. In those days, taxes were assessed based on how many rooms a person had in their house, with a room being defined as having a door. Therefore, closets were considered rooms. So the house had no closets, instead making liberal use of dressers, until the law was changed so that closets were no longer considered rooms.

It's a reminder that people respond to incentives, even in the 19th century.

Tuesday, September 29

Correlation vs. causation and hockey

Here's a good example of mixing up correlation and causation, for those sports fans who happen to be econ geeks. Our profs in empirical courses always harp on this kind of stuff.

I have the third overall pick from this year's NHL draft, Matt Duchene, in my hockey pool. So I was looking for analysis about how he might perform this season when I came across a posting on Mile High Hockey tackling the question of whether Duchene could benefit from another year of junior hockey before turning pro. The blogger does this by analyzing how other high draft picks faired in their rookie year, making this conclusion:
"Granted, this is an extremely small sample size, but the argument can be made here that the statistical output of the rookie season for these high draftees wasn't enhanced by an extra season in juniors. The 4 who made the leap averaged .53 points a game. The 6 who didn't? .43 PPG."
But there's an important oversight. Sure, there seems to be a negative correlation between playing an extra year of junior and output during one's rookie NHL season. But it's quite likely that the reason these players were sent back to junior for another year was because they were less skilled to start with. There's nothing to indicate that the extra year of junior made these players worse than they would have been had they jumped straight to the NHL.

Sunday, September 27

STV too complicated for strategic voting

Single transferrable vote (or STV for short) is too complicated for people to figure out how to vote strategically under, a paper by an economist at the University of Montreal and three French economists suggests.

The voting system puts multiple seats in a single riding and has voters rank their candidates in order of preference, with portions of each vote getting transferred between candidates. It was soundly defeated for the second time by B.C. voters in the 2009 election.

One of the arguments proponents of STV used was that it eliminates any incentive for strategic voting -- that is, there is no reason for people to vote for a candidate other than the one they truly want to win. But game theory shows people can still get better outcomes by voting strategically with STV.

Strange bedfellows?

When people hear I'm interested in both economics and journalism, they tend to be puzzled, thinking the two are unrelated. So when I saw an article about the relationship between an economic think tank I interned at (the Fraser Institute) and a newspaper I interned at (the Vancouver Sun), I was surprised and intrigued. Online B.C. news site The Tyee ran what I thought was a pretty fair article about the two organizations.

It's interesting to note the high rate of citations of the Fraser Institute in the Sun relative to other newspapers, but I think the proximity explanation is a likely one. The Fraser Institute's head office is in Vancouver, which is where most of their employees are (including their two English-language media relations people), so it's natural that there'd be more communication between the Institute and the Sun.

Also interesting were the comments on the article, which seem to indicate that Tyee readers do not think very highly of either of my former employers.

Saturday, September 26

Monopolies and Air Miles

I was at the LCBO earlier today to buy some beer, and it struck me as strange that they participate in Air Miles. Air Miles, for those who don't know, is a customer loyalty program; they give you rewards if you buy enough stuff.

But the LCBO has a virtual monopoly over booze sales in Ontario, so it seems very strange that they would be part of a customer loyalty program. My understanding is that the point of these programs is to differentiate companies from their competitors in hopes customers will keep coming back. So gas stations, for example, usually sell almost identical products at almost identical prices, so a customer loyalty program would make sense because it gives customers a reason to patronize your station instead of the one across the street.

But it's not like there is lots of choice over where to buy booze in Ontario. If I want booze, I'm going to go to the LCBO whether or not they have a customer loyalty program. It makes me wonder what the LCBO's logic was in joining Air Miles.

Life or death economics

The health authority in Hamilton has come up with a formula to determine who gets a flu vaccine and who doesn't in the event of a shortage during a pandemic.

Health care workers, police and firefighters get vaccinated first. If there's enough left, people who caught the flu at work get it. If there is still some left over, people who care for children get next dibs. Then children and "young people" themselves. Finally, if there is still some left over, people who are most likely to survive their particular flu strain get vaccinated. Otherwise, you'll be out of luck.

According to the article in the Hamilton Spectator, the formula was developed by "front-line staff, doctors, ethicists, lawyers, human rights experts and the hospital's board."

Interestingly, it appears no economists were consulted.

Friday, September 25

Ethics of returning classified documents

I found a McMaster student union executive's folder in the desk in my econometrics class this afternoon. I know it belonged to the executive becuase I opened the folder and his business card was in the front. When I opened it, I noticed a letter about a student union personnel matter that was obviously supposed to be confidential.

Without thinking about it much, I returned the folder to the executive's office after my class. But when I mentioned the folder to a friend of mine who works at the McMaster student newspaper, he said the newspaper had been trying to find out details on the issue in the letter, and noted the folder would have been a great story if I held onto it.

But as a journalist myself, did I do the right thing returning the documents?

My first post!

I've decided to jump into blogging. Facebook and Twitter just don't allow enough space to let me share all my thoughts. I make no promises on how often I'll update -- we'll play it by ear.