Twitter: Joshua Gans- @jodiecongirl Actually, it says more about you that you've heard of them!
- @jodiecongirl I think it says that economists don't just assume rational agents but are attracted by them too. Talk about a value conflict.
- @jodiecongirl Why uninteresting? Think of Alex P. Keaton, Quark , Sheldon and Dogbert.
- RT @freakonomics: Freakonomics Movie is released via iTunes tomorrow: http://bit.ly/9YveA3 [I'm gathering the kids for a Friday night movie]
- Am I to understand that we are now in the path of a Hurricane? http://bit.ly/daitO9 This aint the tropics.
Readership
Nov
28
Lucko
by Joshua Gans | Filed Under Uncategorized | 4 Comments
I have just watched Michael Moore’s Sicko documentary. I have enjoyed his previous work but this one resonates with me as an economist.
The United States is the only advanced economy without universal health care. Moore paints a picture of what that is like. He uses irony – e.g., 911 rescue workers not getting the same treatment as prisoners in Guantanimo Bay. To be sure, as with such things, he does not conduct a census and presents anecdotes. However, one is left with the overwhelming feeling that it shouldn’t have been so easy for him to make this documentary, find these cases and provide the requisite irony.
But to me it gave me a great sense of how fortunate we are in Australia. Our health system is by no means perfect. However, the notion that if you seriously need help then it does not represent financial ruin is uncontestable. I pay the top marginal tax rate. If we were to move from the Australian system to the US one my taxes would fall. My welfare wouldn’t if it means the broad divide that exists in the US.
For anyone who is well off in Australia, I recommend watching this movie. It will make you think more carefully about the social contract that is part of our society and why it is worthwhile to ‘pay’ to keep it going. The documentary is not a call for socialised medicine – Moore never argues for it. Instead it is a call for universal coverage in health insurance.
The US pays more per head for health care than we do. Across the people actually receiving the care that translates into even more. The issue is where is that money coming from and where is it going to. It can’t be coming from those without health insurance or with inadequate health insurance. So it must be from the well-off; the very people whose taxes would rise should there be universal coverage. To me this suggests there is a real issue on the argument that universal coverage would lead to higher overall payments from even the rich.
But what of the other argument: the US is supposedly where the medical innovations are coming from and being funded. I am not sure that is true but even if it were then to continue that outcome would require that the same total amount of health care payments be no lower under universal coverage than under the current system. Once again, if the US could lower health costs for the rich, raise their taxes and allow more people to be covered, then there would be the same dollars in the system to provide US companies with their required returns on investment. Let’s face it: the economies of all other countries could not have sustained themselves if that wasn’t the case.
PS: I just picked up a copy of Paul Krugman’s The Conscience of a Liberal. Basically, he confirm the thoughts I expressed above. He also advocates reforms very similar to reforms I have recommended for the Australian health system. Of course, in our case, we would be approaching the optimum from a different direction.
Nov
27
Blogging for fun (not profit)
by Joshua Gans | Filed Under Uncategorized | Comments Off
Following on from Greg Mankiw, another blogger — Scott Adams — has worked out that the only reason to blog is for fun. He is right of course. Then again he has just published a book of his blog posts — something that I highly recommend.
Nov
27
A change for a time
by Joshua Gans | Filed Under Uncategorized | 1 Comment
I have a brief comment in today’s Age as part of a University of Melbourne post-election feature. Here is what I wrote:
New Labor governments have always been associated with generational change; immediately rejoining the international fold. In 1972, we ended Cold War non-diplomacy towards half of the world. In 1983, we joined the world economy with the dollar float and tariff reform.
Today, we will join international community on climate change. For my 9 year old daughter, our failure to sign Kyoto despite supposedly applauding its prescriptions has been a puzzle. Refusing to play was winning us no friends while leaving us on the sidelines with an uncertain future. She knows that it’s the sort of behaviour we wouldn’t tolerate in our children. This weekend, Australians decided they could not tolerate it in their government either. We can now move towards certainty in this critical economic area.
These are exciting times.
Nov
25
Republic anyone?
by Joshua Gans | Filed Under Uncategorized | 4 Comments
Malcolm Turnbull has thrown his hat in the ring for Leader of the Opposition. If that happens then, for the first time ever, we will have the two party leaders in favour of becoming a Republic. Then it will really be time.
Nov
25
The fall out
by Joshua Gans | Filed Under Uncategorized | Comments Off
The election is over and this promises to be an interesting week. Last night, when I listened to Peter Costello’s speech, I commented that he looked like he was bowing out. Laurie Oakes emphatically thought otherwise and so I didn’t rush to blog my thought. Turns out I was right.
This is actually a very good move for the Liberal party and for having a high quality opposition in Australia. The election said one thing: Australia wanted a change. The senior Liberal party folks should step aside and re-build afresh.
Nov
24
Troublesome and strategic voting
by Joshua Gans | Filed Under Uncategorized | 7 Comments
So we voted today. There was a bit of a queue (15 minutes or so) and so I had a chance to read the various how to vote cards and get the kids a sausage sizzle. In my electorate, the Greens had put Family First ahead of the Liberals in their voting preferences. I was very surprised about this and I wondered what major parties had put as their preference ordering for ‘above the line’ voting for the Senate. Of course, there was no material at all on this. So voting above the line is a leap of faith that their preferences match yours.
When it came to vote, I disguarded the how to vote card and just did my own preferences for the House of Reps. Usually, my daughter does this but her hands were dripping with tomato sauce. Then I came to the Senate. There were 68 choices. I could either go above the line and be out of there in seconds or go below it and spend at least 10 minutes getting my order right. With three children in tow, for the first time ever I went above the line and ran off.
Now, it is clear that votes don’t count, especially stuff at the 60 or 61st preference below the line. But I wasn’t too happy with my behaviour. It then occurred to me that such guilt was stupid. If I cared about my first preference enough, then I should trust their preference order as it may well reflect strategic behaviour. As has occurred in the past, that can really matter. (See what I wrote about the Victorian election here). There are plenty of incentives for people and parties to note vote their true preference ordering but a strategic one that takes into account what others might be doing. It is a complex game — useless for an individual — but for a party that can matter alot.
The Australian system allows strategic preference orderings to be done easily and without error. In principle, that should have given rise to much more strategy than in past years where we didn’t have above the line voting. The bottom line is: if you care about your first choice, chances are your should also respect their preference ordering. And it is better just not to know who you are really voting for.
Nov
24
Electronic tip jar
by Joshua Gans | Filed Under Uncategorized | 4 Comments
Tim Harford looks at Radiohead’s well publicised new direction in selling music — optional payments — and likens it to an electronic tip jar. That leads him to conclude that this isn’t a sustainable business model.
I have wondered whether a small change in the rules might make it more sustainable. When you are at restaurants (especially if you pay by credit card), there is room left for a tip. On a credit card, you have to actively not pay a tip by writing in the payment amount again and crossing out the tip. I think that it is this that makes tipping in restaurants sustainable. Take it away but, say, letting people deposit a tip later on or mail it in and we would find that tipping would quickly disappear.
Radiohead effectively opted for the latter policy on their site. In order to tip, you had to fill in credit card or other payment details. That was costly compared to just downloading the album for free. But what if they required people to put in payment details even if they chose to leave a tip of $0. My guess is that they would earn lots more as it then becomes trivial for people to tip a dollar or two.
Nov
23
Who to vote for
by Joshua Gans | Filed Under Uncategorized | 2 Comments
In Survivor at Tribal Council, players go to vote for who they would like voted off the island. Sometimes it is quite agonising. But imagine that was how we voted for politicians? I think it would be quite easy (although Andrew Norton isn’t so sure).
For me the hard thing is what to put first. Except that, in every election (federal and state) that I have voted in (I guess with one exception), I have voted the same way and will do so this time around. The hard choice is not whether to put a major party above another major party but whether to put a minor party first. In effect, the vote ends up being for the major party anyway (as I put them second). So why I might put any effort into this at all is beyond me.
But in doing this I have never really deliberated on the basis of my own preferred criteria: entertainment value (although my voting pattern, it turns out, matches this anyway, for the feds but not States). I wrote about this some time ago:
There is a part of me (actually a large part) that believes that in modern democracy the real differences between alternative governments is not politics or policies as much as how much entertainment value they might provide during their term in office.
When it comes down to it, Australian politicians do not offer what U.S. ones do in this regard. This week’s events with the Vice President are a big case in point (see this link for one example). In an earlier era, we had such value from Dan Quayle; so much so that a part of me was sad when Bill Clinton was elected (especially as he droned through 45 minutes of acceptance speech). But boy did he turn out well on the entertainment front.
It seems to me that Australian politicians really need to get out more. What the above US examples have in common is that they happened on vacation or out of the office (or at least out of meetings) time. Australian politicians appear to be overworked and not spending enough leisure time or time in front of primary school classrooms. If they did this, we may be able to get a better quality of government (for our amusement that is) with probably little sacrifice in the quality of other things politicians provide.
In Australia, I am pretty sure that the following is true: having Labor in government and the Liberals in Opposition maximises total entertainment value at the Federal level while the Liberals/Nationals in government and Labor in opposition maximises entertainment value at a state level.
Just consider the evidence, Keating, Whitlam and Hawke were extremely entertaining as prime ministers while in opposition, Beasley, Crean and Latham where hardly at their full potential. In contrast, Fraser and Howard were dull as dishwater as prime minister but the same two people were wonderfully entertaining in opposition (something people tend to forget). And just add to that mix Peacock and who can forget, Downer, and what fun we had. At the State level, Kennett is an obvious mark in favour of my hypothesis while Bjelke-Peterson takes the cake. The Labor folks just don’t rate in this environment.
That said, in historical terms, the maximal entertainment value outcome outlined here. was not always the case. I am pretty sure that the country’s ‘interest’ was served very well with Menzies and the cadre of Labor opposition leaders. It was only in the late 1960s that the switch came.
To be sure, I am, of course, talking about entertainment value rather than whether they were good or not. Although I still pine for Keating where we had both. But I expect that Kevin Rudd will come true to form in the entertainment department if he wins tomorrow. It will hopefully end 11 years of boring Australian politics.
Nov
22
The Official Unlocked iPhone
by Joshua Gans | Filed Under Uncategorized | Comments Off
News today that because of local laws, T-Mobile will offer an unlocked iPhone for 999 euros — a 600 euro premium above the locked version. That is US$862 in extra expenditures. However, it also saves a US$1440 AT&T contract; that may be a pure saving if you already have an existing contract.
Now apparently, Apple were making $18 a month off the AT&T contract or, in total over 24 months, $432. What this means is that, say, T-Mobile in the US, could to say to its customers, buy an unlocked iPhone and sign up with us and you get a $15 per month discount on our basic plan. This is a discount that would arguably leave them with plenty of profits still for them compared with losing a customer to AT&T. Looking at their web-site, that might be around $40 per month so, with the discount, the total cost of a 2 year plan would be $600. They could include their Wi-Fi access in that but not visual voice mail but what the hey?
So you have a choice (i) an iPhone + 2 year AT&T plan = $1,840 or (ii) an unlocked iPhone + discounted T-mobile plan = $1,862. Hmm, this suggests that it could easily be worth people’s while paying for an unlocked iPhone. (Note that without the discount that T-Mobile or other carriers could potentially offer, this would add $360 in costs.)
[Update: seems I was overly conservative in the discounts that might be given. A T-Mobile rival in Germany is offering to compensate users fully for the unlocking fee.]
Nov
21
Hola, Mexico to the iTunes Index
by Joshua Gans | Filed Under Uncategorized | 9 Comments
Mexico now has its own iTunes Music Store with singles selling for 15 pesos a piece. Figured that was time for another update of the iTunes Currency Index. Notice that Mexicans are paying 38% more than those North for iTunes songs. An odd sort of price discrimination to say the least.
Nov
21
$60b in The Age
by Joshua Gans | Filed Under Uncategorized | Comments Off
I don’t know about you but when I sit down for breakfast and look at the front page of the newspaper I don’t expect to see some ‘economics professor’ telling me in 100 on or so words what to spend $60b on. But that is just what I saw in The Age this morning [reproduced over the fold].
Actually, I can’t complain about an opinion piece making it to the front page. But the thought did occur to me that I might have spent a little more time on it had I known where it would end up. I wrote those thoughts in spare moments taking care of three kids this weekend.
It was originally, three hundred words. These two opening paragraphs were cut:
This election has a unique combination of good economic times plus an incumbent government in peril. So, usually, there isn’t much money to dole out in promises or no need to because the incumbent is safe, no such restraint exists today. Consequently, the next government has committed to at least $60 billion has been promised in tax cuts and new spending. Given the unique political environment this time around, there is good reason to believe that this amount may not have been wisely spent.
That said, chances are that two thirds of it are on stuff governments would have done anyway. So that means about $20 billion is money that we have committed to spend in the next five years rather than leave it to future generations. Now it could be that people don’t care too much about those generations. But if we weight them more evenly, as I think we should, then any money we spend should be an ‘investment’ of some kind.
Also, cut was the reference to my 2004 book with Stephen King, Finishing the Job, that outlined the policies in more detail.
Nov
20
US style election-lawyering
by Joshua Gans | Filed Under Uncategorized | 4 Comments
According to reports, the Liberal party is going to bring in the lawyers after election day. This is the type of thing we have seen in the US since 2000. I thought we had an Electoral Commission to deal with this stuff.
Nov
20
Kindle is interesting but …
by Joshua Gans | Filed Under Uncategorized | 6 Comments
Amazon.com have done the sensible thing and have gone hard into eBooks with their new Kindle reader. For US$400 you get the reader and free access to Sprint’s high speed broadband access which you can use to download books (usually at a cost of US$10.00), newspapers, blogs, wikipedia or receive some files by email. That all attracts some extra charges; so clearly Sprint have moved to a use-based charging system for this one.
That leads us to an immediate fact: amazon.com have shut out the rest of the world from this one. Even if you wanted to use it connected to a computer, they wont ship it to Australia. However, it does look like you can purchase one for a ‘friend’ in the US. But what that might mean for downloads is uncertain. Where is a FAQ when you need one? For instance, will international US travelers be able to use the “anywhere, anytime” wireless connectivity. If not, amazon’s claims on this are misleading.
Ignoring that whole question, the big question is: is this the iPod of books? I think it is close but suffers from a flaw the iPod did not — it fails to allow open reading. When it comes down to it, like the iPod, the initial users have a stock of information that they would like to load up. For the iPod is was CDs and MP3s. For an e-reader, it is pdf files. Amazon’s device does not appear able to handle them. For me that is a killer problem and I am not the only one. Gizmodo compares it with Sony’ Reader and amazon comes up short. I have a stock of pdf articles and files that would be great to have in a reader form but this one wont take it.
That said, Kindle does a few things right. It appears very easy to use, has lots of functionality (including notes and search), lots of battery life, lots of space (200 books all told) and keeps the books backed-up at amazon in case you ever lose the reader. That said, what if someone else in your family wants to read. Do they have to take your e-reader too? Again a FAQ would sort out whether books had transferability like Apple’s DRMed music files do.
The problem here is simple. To start buying books in this format, you want to be assured that they will be accessible in the future. Amazon have a good claim here — they already have the iTunes Music Store of books. But the unanswered questions make me nervous about such an investment. And the major answered question is: what might Apple and Google be hatching up? Until then, I’ll stick to my paper stock. At least they look nice and intellectual on my bookshelf.
Nov
19
Emissions Trading the Melbourne Review
by Joshua Gans | Filed Under Uncategorized | 3 Comments
I have a new paper on “The practicalities of emissions trading” with John Quiggin that was published this month in the Melbourne Review. You can download the paper here.
Nov
19
Amazon.com looks to cut costs
by Joshua Gans | Filed Under Uncategorized | 1 Comment
Amazon.com is moving to cut one of its biggest costs, books. On the cover of Newsweek, it announces its Kindle e-book reader that will allow users to download books and carry them around. It is a very natural move for them to make. Can Google or Apple be far behind?
I think books will tip into the digital realm within the next 5 years. I have seen some of the e-ink readers and they are very easy on the eyes. And just like in music, the big threat will be to publishers who will lose the power they have over the distribution channel for books. It is a very exciting move.
Nov
17
Intelligent and accessible
by Joshua Gans | Filed Under Uncategorized | 5 Comments
I try to make this blog accessible to a general audience. Here is how I fare:
That puts me at a wider potential audience than some other academic econ blogs in this country.
Nov
17
Business killing idea
by Joshua Gans | Filed Under Uncategorized | 7 Comments
Last week, there was lots written about StickK.com, a start-up allowing people to take out contracts on themselves; e.g., to suffer financial penalties if they fail to lose weight.
This week, Aaron Schiff, proposes a start-up for customers of StickK to insure themselves against failure. Now Aaron Schiff has proven himself to have generally good sense on his blog but this time his idea is truely market-killing (although I am pretty sure he realises that although Tim Harford who purchased a contract at StickK probably did not). Put simply, if the idea of StickK.com is to allow people to commit to a plan and penalty, unStickK.com destroys it as it will be always worthwhile for you to purchase a counter-contract from them after you have ‘committed’ to one from StickK.com. Moreover, the very existence of an unStickK option means that consumers will not find it worthwhile to purchase a contract from StickK.com. So neither StickK.com nor its anti- counterpart will end up making money.
Sadly, this exposes the problem with StickK.com. Even without unStickK, you will likely always have a ‘friend’ who will find it worthwhile to provide a counter-contract. StickK.com is a lovely idea but it relies on markets not working in order to work.
Nov
17
Bemused, more like it
by Joshua Gans | Filed Under Uncategorized | 2 Comments
So in the High Court yesterday in the Telstra v ACCC case, there was apparently this exchange:
“Airports are an extremely good example,” Mr Gageler said. They enter into 99-year leases with the commonwealth, “the conditions of which leases involve a huge amount of restrictions on what can be done with the property”.
He argued that if there was an acquisition it was of a service, not property, but Justice Kirby opined an economist would laugh at that suggestion.
“Economists speak with many tongues,” said Justice Gummow.
Dr Bennett: “They do, your honours, and I could tell many anecdotes but I will refrain from doing so.”
Justice Kirby: “I am sure economists would have equal comments on lawyers. It is just that we have the last word.”
My feeling when I read that was bemusement. An economist wouldn’t really care about that distinction, it is something for lawyers. If it mattered it would be on the dimension of time that is of relevance. In the short-run, no difference, in the long-run, maybe some difference. Just ask the people of Hong Kong. That said, the exchange indicates more about lawyers difficulties in really understanding economics and sorting out the good tongues from the bad.
Nov
16
Pagan on Work Choices
by Joshua Gans | Filed Under Uncategorized | 2 Comments
Australia’s most noted econometrician, Adrian Pagan, has weighed in on some statistical work trumpeted by the Coalition on the supposed success of work choices in job creation. Bottom line: employment has been rising both before work choices and using the model espoused by the government would probably allow us to attribute employment success to various other things including the success of the iPod, the announcement of the iPhone in the US, Christmas 2006 and whatever else you might care for. I read this as saying that the impact of Work Choices is still a very open issue.
Nov
16
Cleaning out the office
by Joshua Gans | Filed Under Uncategorized | Comments Off
I have been cleaning out my office in preparation for a move. Basically, all paper is going. I just don’t need printed articles anymore. I wouldn’t know where to look for them and would go for the Internet or my hard drive first. So what is the point? It is the biggest step towards a paperless office I have ever taken. (I have 10 full recycle bins — the large ones — to prove it).
Anyhow, turns out that there is lots of crap at the bottom of filing cabinets. Most fun was a catalog for the MacWarehouse from what appears to be 1995. Here are some specials:
- PowerBook 190cs/66 with 8MB Ram/500MB HD/1-/4″ Colour display for $2,999.
- Teleport Platinum Fax/Modem (288 v.34) for only $499
- Power Macintosh 8500 with 16MB RAM and a 1.2GB HD for $7,899 (I think I had this one)
- Claris Em@iler for $95
- Norton Utilities 3.2 for $159
- Myst for $110
- You Don’t Know Jack for $49
- Soft Windows 3.0 for $369 with Windows ’95 pre-installed
- Microsoft Office 4.2.1 Upgrade for $399
Seems there has been a little progress in 12 years.
Nov
15
Why don’t producers want writers to care about new media?
by Joshua Gans | Filed Under Uncategorized | 2 Comments
The Hollywood writer’s strike is beginning to worry me as the prospect of no new shows for the rest of the season looms. The loss of The Daily Show and Colbert Report is already a disaster. But if this goes on all we will have is reality TV. That isn’t enough.
So I decided to look into the demands some more to see if I can help. What are the positions of each side?
- Writers: want residual payments for downloaded material and more for DVD sales.
- Producers: want the same rate for downloaded material as was previously used for DVDs and videocassettes.
So there are two things here. First, the writers want more money and the producers don’t want to give it. Second, the writers want more incentives or ‘at risk’ pay from DVDs and downloads.
It is this second thing that is interesting. It seems to me that the writer as much as anyone has a big impact on later DVD sales and downloads. So why wouldn’t producers want to increase incentives there? Of course, this depends on the base but still, it is useful to ask the question.
This strike has massive potential to last a long time. For starters, producers have other things to show and viewers can move on-line. For writers, they will likely finish off other projects they don’t normally have time for. So we should expect some innovative stuff over the next couple of years as a result of that.
All in all, near as I can tell, the person most likely to suffer is me and I am not near the negotiating table to broker a deal for myself.
Nov
15
Over-promised
by Joshua Gans | Filed Under Uncategorized | Comments Off
A question: how do you know when politicians have gone too far in spending promises? Answer: when another politician promises to spend less.
How do you know spending promises were really really too far? Answer: when that other politician is on the left side of politics and supposedly the ‘big government’ proponent.
That said, we have just lived through the biggest spending and taxing government in recent memory compared with one of the smallest previously. Maybe we have to re-think the big government/small government bias and accept that at long last the politicians on each side of politics are promising what they actually practice.
Nov
14
Academic fellowships
by Joshua Gans | Filed Under Uncategorized | Comments Off
Even with the dollar at an all time high, attracting Australian academics home or keeping them here is a hard challenge. Of course, this is self-interested, but Labor’s plan to extend the Federation Fellowship scheme to get mid-career academics back to Australia is a great one. When it comes down to it, we have to provide money and resources to make up for the tyranny of distance. I’d like us to go further and give scholarships for Australians to undertake postgraduate study overseas and then have to return home for a time. That would benefit both industry and academia. But one policy at a time …
Nov
14
Digital education
by Joshua Gans | Filed Under Uncategorized | 6 Comments
Labor has put in a new plank in their broadband policy: they are going to provide computers and wire up all secondary school students in Australia. It will cost $1 billion and will cover public and private schools. Going across these is a good idea although the precise terms are something that will be interesting to look at.
This is a better way to do e-Education than wiring homes up. It is targeted on that activity and is part of education — something provided by the government. I was critical of Labor’s broadband policy as I didn’t see it as a public good. This aspect, however, does fall within that rubric and is a potentially sensible use of public money. Someone get Steve Jobs on the phone. Surely, we don’t want Vista everywhere.
Nov
14
Dual careers and stress
by Joshua Gans | Filed Under Uncategorized | 2 Comments
Via Greg Mankiw, an interesting paper by Harvard PhD student, Noam Kirson, that identifies a correlation between female labour force participation and poor health outcomes, especially, for death from heart disease, for both men and women. There are caveats but the result is strong enough to give us pause for thought.
What does it mean? No evidence is presented on the impact of men staying home on stress-related health (there just isn’t enough data points there) but at the moment it is probably safe to guess that if men stayed home that would improve health outcomes too. In this case, I interpret this result to mean that family health outcomes are improved by having one adult in the household handle the household duties.
But here is the thing: in my observation and experience, handling the household duties — especially with regard to children — is hardly stress free. It is simply unpaid employment. So why should this form of unpaid employment, provided to the household, result in better health outcomes than if it was provided by another means? If it were simply the case that working women were taking on both a career and the household duties then surely that would impact on their health more. My point here is that this is a puzzle but may most likely mean that outside-home work is bad for adult family health and no one should leave the house. That said, we are a long way from policy implications here but hopefully this work will spur more research to tease out what is really going on.