Superfreakonomics: The Final Review

I had intended to review Superfreakonomics chapter by chapter but only managed Five, One and Two. Chapter 3 was perhaps the most satisfying of the book dealing with John List’s research on altruism (or that lack of it). It is a bit triumphant but otherwise informative. Chapter 4, in contrast, with pithy and unsatisfying. It was a prelude to Chapter 5 (on global warming) and dealt with how often there are simple solutions so long as you are willing to look for them. They again talk lots about hand washing and they also introduce a plan to rid the US (at least) of category 5 hurricanes. All interesting but it didn’t seem much like economics to me. The book ends by moving to the truly freaky: monkeys are rational economic actors too describing the experiments of Yale’s Keith Chen who managed to introduce currency and prostitution into the monkey economy. Ironically, Levitt and Dubner appear to be saying that for the environment prices don’t matter although for monkeys they’ll do lots in response to small price changes. This highlights what essentially is a lack of a theme throughout the book.

The theme for the book should have been: it is good to look dispassionately at data. And there are ripples at this. But it is obscured by continual digs at government, non-economists and, of course, climate science. Perhaps to be entertaining, it just went too far off message and so the message was lost. Moreover, that entertainment aspect doesn’t look like it is going to translate into book sales. If you are college-aged are you really going to give a book with ‘global cooling’ and ‘prostitution’ in the subtitle to your friends? Last time around it was the rouge economist and that has a certain appeal with its questioning of the unintended side effects of monetary incentives (after all, the Sumo wrestlers cheated because of the gambling). This time around it is more the stereo-typical Chicago-style economist where it is government action that is potentially the evil. And for a book that doubts altruism, hard to say if that says ‘gift me’ this year.

Scrooge is an economist

and his name is Joel Waldfogel. Who is Scrooge? He is someone who hates Christmas and thinks that Christmas activities are a waste. Joel Waldfogel in his new book, Scroogenomics (will the onomics trend know no end?) tell us in a series of essays why you shouldn’t buy presents for the holidays. Actually, he does better than that, he calculates it. It is around $12 billion per year made up of the money value of the total difference between what a gift is worth to someone versus just having the money. And that is not counting the whole hassle of the fruitless exercise of trying to make that value less by shopping and making the thoughts that count.

Scroogeonomics is an aptly titled 170 odd page presentation of the case against Christmas but more generally against gift giving. (Note to self: don’t invite Joel to birthday parties). That said, it is completely compelling. You just can’t read this book without thinking about how to get out of the whole gift giving mess. And the book doesn’t even mention the classic Seinfeld episode about bringing stuff to dinner parties. So Joel is like George Castanza too.

But the book is not without hope. We can end the inefficiency yet preserve the ‘social’ value of gift giving. One way is to use gift cards or money rather than trying the ‘thought’ approach. Another is to give to charities in someone’s name although that is still kind of complex as you can get that wrong too. One thing you should not do is do what I have said and encourage self-made gifts. That seems to only exacerbate the inefficiency.

And what of the book itself. It is published by Princeton University Press but if you excepting the usual academic sized affair that is not to be. Instead it is ‘made for gifts.’ A small little book that you might see as a last minute counter purchase at a Borders. In other words, Waldfogel is capitalising on the problem and potentially creating more inefficiency.

So let me help get out of this. Don’t buy this book as a Christmas gift. Go out and buy it now and send it to one friend and ask them to read it and pass it on. That would be efficiency enhancing by the book’s own metric. By the time we get to December, enough may have read it to have killed Christmas for good.

Running

As Jon Stewart so aptly put it, from its title Chris McDougall’s Born to Run is either about sprint racing or a primitive tribe in Mexico that run everywhere. Turns out it is about the latter and the rest of the Daily Show interview with the author caused me to buy it right away.

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It is a great book and certainly not something I would normally read. It is about the Tarahumara, a reclusive tribe who live in Mexico’s Copper Canyons and pretty well run everywhere. It ties this in to the whole industry of endurance ultra-marathon runners which was a short step to link in with the notion that Nike has done running harm (with cushioned impact changing the way people run in a way that causes more injuries). And if that isn’t enough: it turns out that humans as a species owe their existence to running. All this mixed in with a great tales, or series of tales. You could do worse than running down to your bookstore to buy this one.

http://rcm.amazon.com/e/cm?lt1=_blank&bc1=000000&IS2=1&bg1=FFFFFF&fc1=000000&lc1=0000FF&t=coreecon-20&o=1&p=8&l=as1&m=amazon&f=ifr&md=10FE9736YVPPT7A0FBG2&asins=0307266303

Australian speculative fiction

I recently finished a book, The Two Pearls of Wisdom, by Alison Goodman who hails from Melbourne. The book is an interesting tale about a mythical Chinese empire set when there was a Chinese empire. I was drawn to it by this Orson Scott Card review (and you need only read that to be sold on the whole thing):

Australian writer Alison Goodman has written an absolutely stunning fantasy novel that deserves a wide readership, among both adults and children.

Ironically, he criticises the title, which in the US is, Eon: Dragoneye Reborn. Suffice it to say that made it difficult for me to locate here even though after reading the book the US title seemed more apt than the Australian one and certainly conveys the idea that there are more books to come in the trilogy. Regardless of the title, if you like speculative fiction, it is worth a look (click here for Amazon link).

Hitchhiker’s Guide to Econometrics

Princeton University Press just sent me Joshua Angrist and Jorn-Steffen Pischke’s new book, Mostly Harmless Econometrics. I haven’t had a chance to read it yet but any econometrics book with a clear Douglas Adams reference will get my attention.

Continue reading “Hitchhiker’s Guide to Econometrics”

Gangsternomics

I just finished reading Ray Fisman and Ted Miguel’s book, Economic Gangsters. The book covers their research on the micro-impediments to economic development. In many respects it is more of a tease than a treatise. Rather than explain comprehensively, the causes of mass poverty it provides chapters — each framed around their own research — that shed light on the problem. So there is a chapter on whether corruption is rampant throughout Indonesia and another one the parking infractions of UN diplomats. There is a chapter about the impact of bombing in Vietnam and another on smuggling into China.

For each you get the distinct impression of their importance. And it is hard to disagree with the general theme that getting the variables right for economic development is hard and it would be good if we could give peace a chance. But the value of the book is similar to Freakonomics: how do you scientifically work out what is the best approach? Which are the tighter constraints? What policies might stand a chance of success? This is a challenge that Fisman and Miguel have taken up in their own lives and the book is a journal of how far they have come. It is an excellent read; especially for those interested in policy evaluation, even if it does not leave you fully satisfied — but that is the fault of the world and not of the authors.

http://rcm.amazon.com/e/cm?t=coreecon-20&o=1&p=8&l=as1&asins=0691134545&md=10FE9736YVPPT7A0FBG2&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr

Outliers hits the mark

Malcolm Gladwell’s new book, Outliers: The Story of Success, does in fact succeed. Of course, to argue that requires a definition of success. What it does not do is establish scientifically anything new about the world. It does not even generate a new hypothesis. Those would be measures of success to the frontier of knowledge but that is not how you should judge this book.

Instead, my criteria of success, for all popular expositions of scientific material is (a) does it make you think about your own world and (b) does it touch a literature you had not previously explored in depth. To be sure, those aren’t strong criteria to leap over but very few popular books make that mark.

Gladwell makes a simple point: capabilities are a necessary but far from sufficient condition for success and outstanding accomplishment. You need things which, on a world scale, amount to a great deal of luck but that is because they themselves can be rare commodities. Gladwell makes the case for hard-work. Surprisingly, that made me think. These days we often find ourselves apologists for hard work as if a softer life is in fact desirable. Economists are easy prey to this value judgement as work enters as dis-utility in assumed preferences. And similarly we angst about over-working our children.

But Gladwell isn’t simplistic on this point. Hard work is not something you can just do. You need incentives — a clear link between effort and reward — but also intrinsic satisfaction. But get it right and you have the conditions to invest 10,000 hours of effort required for outstanding success without blinking. As I reflect upon my own life and career that resonates. For instance, you can look at the sheer quantity of stuff I write these days and it is out there (never mind the quality or typos). To me, it is easy. Writing is like a muscle. The more I did it, the easier it became. And blogging is just another outlet for that. So when people ask me how I found the time to pop out Parentonomics, the truth is that I didn’t. I wrote it in little bits and during that time wasn’t even thinking about the time spent. Indeed, for most of that time, I regarded my hard work as elsewhere, particularly, research papers and submissions to government inquiries — oh yes, and meetings and stuff. There the time was felt.

There is more than just hard work to the pot of luck that is important. Legacy and cultural background appears important too. And what is interesting about these are what you might need to do to escape those things. This was a literature that I did not know too much about. I know more now.

So I can highly recommend Outliers. It is the best of the Gladwell trilogy and well worth your time.
http://rcm.amazon.com/e/cm?t=coreecon-20&o=1&p=8&l=as1&asins=0316017922&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr