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Well, it has been over a month since I noted the potentially misleading representation of Apple TV on Apple Australia’s website. By the way, that post received over 10,000 hits (the most of any post on this site). Did anything change?

I looked today and it is all the same. I wonder if anyone has purchased this thinking they could get movies and/or TV? If so, please post a comment.

Labor’s plan to offer low interest government loans for household investments in environmentally friendly technologies and have them paid back according to ‘capacity to pay’ (which I presume will actually be a HECS like approach through the tax system) is probably a sound idea. It promotes rather than constrains and there is a clear externality identified. Nonetheless, it has drawn some criticism; especially with regard to who is being subsidised and the fact that it is not a carbon tax or more comprehensive plan. Read more

Another post up on Game Theorist today concerning my son’s new diet and other related matters.

Andrew Leigh points us to a NYT article today about prisons in California that are relatively luxurious (right up to computer and mobile phone usage) that non-violent offenders can pay to serve their time (between $80 and $127 per day). Andrew is nervous about it as it seems unfair; if you have money you are getting a ‘lighter’ sentence. He wonders if perhaps you sentence should be longer to compensate. (On the flip-side, Andrew knows that regular prisons have their additional complications that themselves are unfair — perhaps correlated with outside wealth — and so maybe this is OK). By the way, California officials like this for the obvious reason that it makes funding much easier. Basically, it is the same rationale as private health care; and it works so long as people are ‘over-paying’ for their upgrade. What worries me is that competition between private prisoners may mean that that does not happen and also, any relationship with funding, might give governments and prison operators to spend less on quality at regular prisons (you know, like airlines do to economy class to make people willing to pay more for business class). Read more

This will be interesting, two academics — Tim Wilson and Sinclair Davidson — have lodged a complaint with the ACCC about Oxfam and fairtrade coffee (click here for the story). Their concern is that they are not sure the growers are really better off. I have worried about this myself.

Oxfam’s Neil Bowker rejected criticism of the Fairtrade coffee project, saying: “It’s all audited and monitored, from beginning to end, and we’ve got no doubts about the effectiveness.”

In fact, given some of scepticism being expressed, Oxfam should probably welcome an ACCC investigation. Over the last six months, I have had an RA trawling and writing to the relevant organisations for information. We have received some but far from enough for us to make a conclusive assessment. The ACCC and its resources should be in a much better position to tackle this.

John Howard is pushing strongly for investment in nuclear power. From The Age:

“If we’re fair dinkum about this climate change debate we have to open our minds to the use of nuclear power,” Mr Howard told the gathering.

“We need to take action now to prepare the way for the contribution that nuclear power can make to challenging the problem of greenhouse gas emissions.”

Now the argument may be correct — nuclear power is a good way to reduce emissions — but is it really good politics? On the one hand, it looks savvy: favour an option on environmental grounds that environmentalists have traditionally ruled out based on historic (and possibly not current) environmental concerns. It looks like you are taking the higher and scientifically objective ground. Read more

Chris Wilson and Catherine Waddams Price presented research a few years back on how consumers have responded to retail competition in electricity and gas. The answer was not as well as one might have hoped. Here is Tim Harford’s take:

Next time someone knocks on your door or telephones you and tries to persuade you to switch electricity suppliers, try to do better than a fellow who, to spare his blushes, I’ll just call ”Mr Blockhead”. According to research by two British economists, Chris Wilson and Catherine Waddams Price, Mr Blockhead managed to make himself ₤100 a year worse off by switching, rather than choose a tariff that would have saved him ₤50 a year.

Mr Blockhead isn’t alone. Another genius had such an uncompetitive tariff that he could have saved ₤150 a year – but he somehow managed to find an even worse tariff and switched to it. Of 250-odd people who had moved supplier with the avowed purpose of saving money, most picked up less than half the available gains, and about a quarter actually made themselves worse off.

In commenting on their work, I analysed the situation in Australia (here are the slides). As it turns out, we don’t have to worry about this. Why? Well, energy competition for us has not really generated different prices for consumers. It takes some work to actually demonstrate this, but the vast majority are still at their regulated cap. Better, isn’t it?

An interesting post by David Houle today on changes in radio advertising.

The other day Clear Channel Communications announced that a station it owns in Dallas, KZPS, was going to stop airing 30 and 60 second commercials.  Instead of running lots of commercials, the station will have advertisers sponsor an hour of programming.  During each hour the DJ will spend about two minutes speaking about the sponsor or the sponsors products in a personal, conversational way.  This compares to the usual commercial load on radio stations of 12 to 16 minutes of 30 and 60 second spots.  In addition, sponsors will have category exclusivity.  The station has sold four sponsors, Southwest Airlines, AT&T, Coors and Guitar Center, and will therefore not have any other airlines, phone companies, breweries or music retailers on their air.

He attributes this to the ad-free substitutes available to drivers and also a desire for advertisers to really target consumers. 

Telstra often point to the US as an example of how the market works and that we should just leave the market to work. Economic theory tells us markets will only work if there is sufficient competition (something arguable here). It turns out that the evidence supports just that when it comes to broadband. Where? In the US, of course.

A former Stanford classmate of mine, Wei-Min Hu and his co-author, James Prieger, have a new working paper that analyses the drivers of broadband provision [HT: Nick Gruen]. They find that when competition is created for local telephone companies (whether it be from other telcos or from independent cable providers), they invest more in broadband. This is controlling for the usual factors such as market size and demographics. So, let’s have a US model here — all we need to do is make sure the local teleco is separate from the cable provider. If Telstra want that, I am all for it. After all, Telecom NZ have moved dramatically in that direction. Surely, we aren’t going leave them to cause us to dip in the relevant broadband stakes?

[From Chris Lloyd] From The Daily Telegraph:

JPMorgan economist Helen Kevans said steady producer prices could be a sign that inflation is not rising fast enough for the Reserve Bank of Australia(RBA) to raise interest rates next week.

“It’s a precursor to Consumer Price Index (CPI), but there’s not a lot of correlation between the two series…”

And just so we were clear she said:

“We would expect a CPI on the lower side of our expectations.”

And for those betting …

“We’re very happy with our forecast at this stage,” Ms Kevans said.

Just as well.

In the NYT, Austan Goolsbee gets it wrong. He looks at the recent (well, 7 year) surge in reality or unscripted television. He argues that such programs cost less to produce and so that it why we see so many of them. Why the surge? Because competition from other media (Pay TV, the Internet, etc) means that networks can no longer justify investment in higher quality television.

So competition leads to lower investment? That seems strange. Indeed, given that free-to-air television is not constrained in its maximum audience size at any given point (unlike Cable) higher investment would seem to be warranted. The issue is not the total market size but instead the characteristic of marginal viewer. That person has changed.

There are two impacts on the marginal viewer. First, because there are more high quality options, the marginal viewer is someone who didn’t particularly like television before. Second, because there are technologies to avoid ads, the marginal viewer is now someone who doesn’t mind ads as much. This means that programming will naturally target a mass rather than a niche market. Moreover, it will involve shows that give people an incentive to watch it live. Reality TV falls into that category.

So we will continue to see reality TV, not because it is cheap per se, but because it is of wide and immediate appeal.

Peter Martin does a fine piece of investigative journalism in The Canberra Times. He looks into where the $30b per year benefits from broadband investment came from (the calculated figure that is). It takes considerable effort but he finds the relevant Accenture study (ironically, far from being on the web) and it turns out it is from 2001. Every person and their dog has quoted this number but clearly have not done more than that with the study. Labor, of course, touted it to justify its $4.7b claim on public funds.

But more disturbing is that Telstra happily quoted it too (click here; it is still there as of 6:38pm 26th April). Why is that more disturbing? Because Telstra claim that companies like themselves are best placed to judge and bear the economic risks from investing and that regulators should get out of their hair and not pre-judge them. But if their decisions are relying on old Accenture studies, then one is given pause to wonder. Based on this, perhaps the regulator is doing the shareholders a favour?

Six years of Segway.

In The Know: Life Before The Segway

Following up from my brief argument in BRW, CNN and Freakonomics provide some Wii analysis. From CNN, comes the news that the downspeeding strategy was to get people to want Wii’s near their TVs. In Freakonomics, they look at the Wii shortage. Let’s face it, unlike PlayStation, this is a combination of two things. First, they made an error and haven’t produced enough. Second, as I noted in my article, Wii’s secrecy left a lag in third party game development. There aren’t that many games available and so getting consoles out at the moment is not that critical. However, my guess is that some real killer games are coming and they will time console sales for them.

OK, so you knew it was coming. Here is Parentonomics, the preview site.

Labor have released their innovation policy (click here). I am always happy to support politicians taking innovation seriously and acknowledging its critical role in economics growth and productivity. Beyond this, the Labor plan offers only a few tweaks to current policy — mostly consolidating functions to improve effectiveness and avoid duplication. The dollars being committed are not large (except of course for broadband where they are enormous!) and so it appears that this will not be a key platform for the election. That said, higher education policy is still to come and hopefully there will be something more radical there.

Scott Adams, in only a semi-tongue-in-cheek way, provides his own take on our evaluations of life-style and inequality. You will see over the fold how cuttingly close to home this is and I hope it might give you more than a moment’s pause. (To you too, John Howard in thinking that we can possibly separate out economics from the environment). Read more

Two days ago, it was announced that Susan Athey would be the 2007 recipient of the John Bates Clark Medal (A hasty Wikipedia entry is here). It is one of the most prestigious awards in economics and a predictor of future Nobel prize glory. Of the 18 awardees prior to 1983, 11 have already won a Nobel prize. Those are good odds. Read more

My Stanford classmate and friend, Susan Athey (Harvard) has won the John Bates Clark Medal for 2007 (click here). It is awarded each year for the best economist in the US under 40 years old. Susan joins an incredible but really short list of winners.

She is both one of the younger winners of the award and also the very first woman in its 60 year history. Susan is both one of the most talented economists and also genuinely nice people in the whole profession. With 2 kids under her belt as well, Susan will continue to be a role model for so many and hopefully continue to go onwards and upwards for more achievements. I will blog later on about what precisely she did to get this honor but for the moment I wanted to express my own excitment for one the academic economics profession got right.

OK so how many people out there called “Joshua Gans” have blogs? Answer: more than one. Click here for proof. I didn’t even know my name was shared with anyone else at all (well legitimately anyway). Of course, there is a big difference, he is “Josh” and I am “Joshua.”

I came across this interesting blog post from 31st January, 2006. It talks of the defeat of a bill on Virginia that would have given students the right to carry handguns on campus. Interestingly, it quotes someone from Virginia Tech. Doesn’t look like this resolves anything in the gun debate but I just thought I’d point it out for those interested.

Here is a list of 29 predictions from the Ladies Home Journal in 1900. [HT: Marginal Revolution] Some of my faves … Read more

[From SpeculativeBubble] Here is Shiller’s index of US house prices as you have never seen it before — as a rollercoaster ride. [HT: Freakonomics]

As you will see, it is not much different than a similar ride for global carbon levels. A long climb at the end with no downward plunge. All anticipation, no relief.

Reports today that Australia’s ICT deficit is $21b (click here). It is a continual and persistent cause of a yearly report about how we should do something about our ICT deficit. Everyone remembers back in the 1950s when our ICT deficit was $0. Those were the days. None of these foreign-made computers all over the place.

The reports argue for a policy to redress these. Such as increased spending education and something about promoting ICT exports. But let’s face it, that won’t do the trick. We need to reset the clock to the 1950s and simply ban ICT goods. Indeed, as I look around education is a culprit not a cure (look at all those students using computers rather than paper). Then it will all be fine and we can be saved this yearly clutter in our newspapers.

By the way, while we are at it, we need to kill the clearly unsustainable trade surplus in wool but throttling exports there. We don’t owe the world a wool living!

I’m back and just as the outbound leg to the US brought some celebrities, there were a few on the inbound one too. On the same flight were sports commentator, Bruce McAvaney, and I think I saw the guy who played Kenny in Kenny. But the big name for readers of this blog was Telstra CEO, Sol Trujillo. And, yes, I did go and speak to him as we are sort of in the same business. Suffice it to say, I got a signal on my own influence in this arena when I told him that I worked on telecommunication regulation and he asked if I had ever tried to influence policy in this area! So I don’t think I can count him as one of my readers.

We did have a brief discussion about broadband and what you see is what you get with Trujillo. He knows where his shareholders’ — at least profit-wise — interests are and it is in resisting regulation and letting the market work. It is all quite transparent. For the record, I, too, am in favour of the market working but let’s start it with much less dominance. Sadly, that ship seems to have sailed.

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