Econlinks: The 'Economics and Reality' edition

• Harald Uhlig has an interesting recent paper entitled "Economics and Reality"  (intentionally recalling Sims's 1980 ECMA, indeed) . While he discusses the relationship between Economics and Reality (yep, isn't that what you all hope to hear?) mainly in terms of Macroeconomics (you know, the black sheep of the family), I thought he does that in an informative and at the same time very concise way. Hence, highly recommended; I'll quote his end (optimistic, for once...) summary, to get you in the mood: "Reality, i.e. empirical evidence influences economic thinking and theory and vice versa -- but it does not do so in textbook fashion. Jolted by new empirical and theoretical insights and subjected to the fickleness of attention, the frontier of our sciences lurches forward to the unknown territory of ever more profound understanding. If it moves in circles, it hopefully does so on even higher levels. Practical economics and economic policy follows, with considerable distance. Perhaps, this is how it has to be."

• Colbert vs. Mankiw Part 1. Mankiw vs. Colbert Part 2. And here's how it all got started. Obviously we want serious blood, this is just teasing each other. We want more, we want war: we want the Colbert-Mankiw interview! It ain't gonna be easy, after all recall that his Harvard Econ colleague Freeman was a disaster on the Colbert Report (here is an updated link that seems to work)-- albeit his other Harvard colleague Fryer did eventually pretty well (3rd bullet point). But Mankiw is no nonsense, so this could be tough :-). Bets are open!
  

• Hopeless and hapless Romania: well, you do get what you wish for..., where "disappointing" is a euphemism. 
• A must read (also for philosophers and 'other social scientists'): Avinash Dixit's " My Philosophy of Economics, Life, and Everything (Not!)", the sequel to his by now (in)famous "My System of Work (Not!)" . As smart and humorous as always.
• And finally. Off with you, Mr. Pitt: here cometh the Age of the Wimp!

Econlinks: Kamelåså et al

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  Before I come up with my Econ Nobel forecast -- a week to go, stay tuned-- let us take a look to the 2010 Nobel Ig prizes related to Economics. The Economics Ig Nobel itself is perhaps not very unexpected this year--though not very creative either (I wonder whether Oliver Stone is behind this too; his latest movie gets pretty mediocre reviews-- IMDb, RottenTomatoes-- despite all the hype). The "Management" Nobel Ig reads much better (but I still need to check out that paper): "Alessandro Pluchino, Andrea Rapisarda, and Cesare Garofalo of the University of Catania, Italy, for demonstrating mathematically that organizations would become more efficient if they promoted people at random. REFERENCE: “The Peter Principle Revisited: A Computational Study,” Alessandro Pluchino, Andrea Rapisarda, and Cesare Garofalo, Physica A, vol. 389, no. 3, February 2010, pp. 467-72."

• Mankiw's excellent advice for all new college freshmen. Do learn some Economics, Statistics, and Finance, (ok, even Psychology, though this is second order) for your own sake... Couldn't have phrased it better.

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  He rocks no matter the topic, or context. Colbert for President (Stewart can make an ideal Vice-President).

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  What would happen if Lars von Trier were in charge with marketing Denmark. Not that the real (at least, intended, later withdrawn) ad  was much smarter. (With thanks to Fred for the links). If you ask me, the Danes should hire these Norvegians for the perfect branding job. Anyhow, good or bad PR, I am heading that way (momentarily with a headache in Schiphol's Crown Lounge). Inter alia, training a bit for future chilly times in Chicago.

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  And finally, keeping it in Scandinavian context: Magnus beat the world. And he got a date with Liv Taylor: I'd say that's worth the effort. See also his interview on the Pauw and Witteman Dutch TV show, before the world match (partly in Dutch, but you'll manage).



Econlinks (& more)

• Greg Mankiw's memo to the President-Elect; there is a chance Obama might actually listen, given how fast Mankiw's comment changed things here :-).

• The secret pleasures of Dr. Doom: and you still wonder why Roubini has so many fans among the young economists?! :-).

• Do not let this reach Transylvania (the current economic crisis did so, already...) :-).

• The playmate indicator, via Alex Tabarrok on MR. I guess I didn't feel the economic crisis just as yet, at least in this regard :-).

• Finally for today, all you bloggers may want to check out what type of blog you have. I am a "Mechanic" (ISTP) right now, was "Scientist" (INTJ) some weeks ago, looking forward to enter other categories in the near future.

Econlinks for the weekend

• Dan Hamermesh, on Freakonomics, tackles a very interesting issue: competition between kids, grandkids and so on, for parental bequests. I don't have such a parental dilemma as yet, but my parents do, I guess :-).

• Relative social status seems to dominate relative material status: the neuroscience evidence. Of course I knew that all the time :-).

• How Economics can turn bleeding hearts into capitalists (and mutatis mutandis, for most of the other social sciences :-)). Here's the perspective on the study, by Ray Fisman, in Forbes and here's a first draft of Fisman, Kariv and Markovits (2008).

• Serious carbon tax homework for Greg Mankiw.

Quote for week 10th-16th Feb '08

At the root of the difference between the Libertarian and welfarist-Utilitarian conception of optimal tax policy is the relationship of the individual to the state. The welfarist-Utilitarian model sees the state as an entity outside the individuals who compose it, in that the government puts in place policies that are optimal according to its own social welfare function. This function is dependent upon the individuals' welfare, but by combining them in a particular way the state assumes an authority to force individuals to act in ways with which they may disagree. In constrast, a Libertarian model sees the state as merely a collection of individuals who agree to cooperate only insofar as it serves their individual interests. Thus, all contributions by individuals to the state's activities must be voluntary, and the state has authority over individuals only insomuch as they wish to grant it.

N. Gregory Mankiw and Matthew Weinzierl, in "The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution"

Read the quote of the previous week.

A heated debate on gender-based taxation

I mentioned this article from VoxEU by Alessina et al a while ago (1st bullet point). Meanwhile Gilles Saint-Paul came forth with a tough critique and Alessina, Ichino and Karabarbounis have replied today.

All very interesting (& most likely this is just the warming up stage...), but I really think all these researchers are (most likely willingly...) missing the more general point raised by Greg Mankiw (this is a great paper, by the way!).

PS. Everything in these entries is self-explanatory, so you won't get additional comments from me this time-- unless you really insist, that is...

Econlinks for 4-02-'08

• Greg Mankiw's birthday wish (with my "Happy Birthday", of course!). Among other things, I learnt I'd be young forever, despite being (aspiring to be?) an economist; here's why: "[...] you know you are old when you spend more time thinking about money than sex. If so, we economists must age prematurely. After all, it’s our job to think about money, both our own and other people’s." Apparently Mankiw forgot about the Solow-Friedman sex vs. money context (see page 3 of that PDF presentation; don't worry about the rest of the presentation in Romanian- unless you are Romanian, of course, in which case you might also want more background on that presentation).

• "[...] beware the one-armed economist; sometimes a good economist could use two or even three arms or more". This is the conclusion of a nice article by Tyler Cowen in the NYTimes.

• We all look forward to the Super Tuesday tomorrow; high time to remember some of the differences in the economics perspectives of the Democrat leading candidates and, respectively, of the Republican leading candidates (with Giuliani out, for better or worse...). For a brief account of their views on science see here: Clinton, Obama; McCain, Romney. Also see an excellent editorial by Donald Kennedy on why it is important to know the Presidential candidates position on science.

• When to say "I love you", in Tyler Cowen's perspective. I am particularly fond of the 'Proustian reminder' rationale in 4 (though I will strongly deny that was my only reason, ever, to utter those words) :-).

Econlinks for 27-12-'07

• How to avoid recession in USA: Greg Mankiw's answer. Gary Becker and Richard Posner advocate a similar perspective (the argument is centered, of course, on the subprime housing mess). Former Fed boss Greenspan already said that one should do absolutely nothing and wait for the bubble to break on its own, just as the people above (e.g. in Mankiw's words: "Sometimes, bed rest and wait-and-see are the best we can do"), see my previous post on that. This also takes me to a link by Mankiw on 'bad press for Ben Bernanke ", the new Fed chair; while I think some of that criticism is valid, I'd say there is really no reason to panic and that one should trust the Fed and its chief governor, with handling this. After all, the great Milton Friedman already said Ben Bernanke is a great choice and is expected to do a good job (& remark here: this youtube clip linked above is almost one hour long wisdom from Friedman; no second of that is expendable).

• "Morality matters for economic performance": A very interesting summary of recent research plus the agenda for further research in the context, by Guido Tabellini, on voxeu.org. Tabellini already presented (part of) this in the 2007 EEA-ESEM conference from Budapest (more precisely, as the EEA Presidential Address, from the 30th of August), for those of you who have also been attending.

• "Lawsuit investment" as the new hype: "Juridica will make investments in ongoing legal claims, mostly in the US, and loans to law firms to finance their costs in pursuing claims."

• Markets in everything, one more exotic episode from Tyler Cowen's book, "Discover your inner economist" (read here the previous one). Today about the 'business of renting wedding guests':

A report from India tells of a firm that rents out wedding guests, so that the wedding and the party do not look empty. The "guests" will wear either traditional Indian dress or Western clothes, depending on what the customer dictates. They are told to dance and make small talk, and show a knowledge of the marrying couple,without letting on that they are hired. The firm's owner, a Mr. Syed, told one newspaper: "The breaking up of joint families and lack of affection among relatives also creates a demand for paid guests". The Best Guests Centre, at Jodhpur in Rajasthan, is looking to expand. To each his own: I would pay some people to stay away from my wedding.

Salivating over economics in public

Definitely the morning pill today. Couldn't have phrased this better. From a self-defined "Ec10 slut" and necessarily via Greg Mankiw :-). The conclusion of this short article is useful to keep in mind as future reference, for everybody-- both outsiders and insiders to economics:

When we use the tools that economics give us, we need to be sure that the complexity of the models we use match the complexity of the real world situations. Economics embodies a different and valuable approach to public policy, one that strives to apply rigorous scientific standards to what can often seem like fuzzy questions. And when economics solutions fall short of the ideal, it is a signal that the specific methods employed are flawed, not that economic science as a whole needs to be scrapped.

How intelligent should leaders be?

Although I think there is more to the story, quite insightful thoughts from Richard Posner and Gary Becker on the relationship between intelligence and leadership. A few potential caveats I'd point out very rapidly:

• the examples considered are clearly selected to fit the theory advanced (though it is far from clear that if one considered, say, all -succesful and unsuccesful - political leaders within the last century, from all over the world, not just the USA, the correlation between intelligence and leadership would turn positive)
• "leadership failure" is far from easy to define. What if we are talking about more dimensions to leadership and the leader in question has been highly succesful in some but has made a total fiasco out of others? Would it be sufficient to simply consider whether her last 'leadership spell' coincided with an upturn/downturn in public support? Hence, that last very moment- glory or disgrace- would be the (one and only) proxy?
• I tend to agree that one might not want to have leaders from either the top or bottom percentiles of the (true) IQ distribution, but I also think that the vast majority of these people are very unlikely to ever consider accepting such jobs (for different reasons when comparing the top with the bottom of the IQ distribution, of course). And the example of Einstein refusing the presidency of Israel springs immediately to my mind. Hence, we are probably talking about a truncated "intelligence" distribution from where leaders are sampled, to start with.
• Linked to the previous point, I am rather dubious about placing "cognitive" and "non-cognitive" skills on adverse (or even mutually exclusive) positions for this particular context. If the leader's sampling IQ distribution is indeed truncated (particularly at the top end), I'd conjecture that cognitive and non-cognitive skills can still mix fine in the leader's "intelligence" portfolio without crowding each other out :-).

Below two representative fragments from each of the posts:

Economists have been emphasizing in recent years that that while cognitive abilities of individuals certainly raise their education and earnings, many non-cognitive skills are often more significant. These skills include simple factors like finishing one's work on time, to more complicated ones like good judgments in making decision, or effectiveness at using talents of subordinates. Posner argues convincingly that non-cognitive talents may be of greater importance in determining success at top-level government leadership positions than analytical brilliance and other cognitive skills. (Becker)

What is required at the top levels of government is not brilliance, but managerial skill, which is a different thing, and includes knowing when to defer to the superior knowledge of a more experienced but less mentally agile subordinate. Moreover, so specialized is management as a job that success in managing a business may not translate at all into success in managing a government agency. The firm-specific human capital that a person acquired in a career of management in a business firm may have no value for the management of a government agency, or for that matter a university, a private foundation, or an international organization. Indeed, an experienced manager of a firm may falter and have to be fired if a change in the firm's environment requires a different type of management skill.

(Posner)

Update, 22nd of June '07: It is quite ironic that some people hold the opposite view, ie. "a brainiac for president" (via Greg Mankiw). So just wait now, looking at the approaching USA presidential elections, if Becker and Posner have it right, both Romney and Obama should be out of the election race. And, au contraire, they should be the candidates in the decisive Republican-Democrat face-off if Mankiw's got it right :-). What if I am right? Then all presidential candidates are sampled from a truncated intelligence distribution :-).

On why you need Maths for Economics and in general

Some young but very ambitious students (yeah, yeah, some of you are reading this post on my blog right now :-)) have been asking me why would they need to know Maths if they want to become economists (in industry or academia) and what Maths courses are most suitable for them and how much Maths would they actually use in practice anyway...

These are very interesting and very pertinent questions and obviously they were asked and answered before. By many, many times. I'll thefore select a few such answers for you, among those that I largely agree with. To start up, I am very lucky to be able to refer all of you to Greg Mankiw's detailed answers to the questions directly relating Maths to your further careers as economists. First, why do aspiring economists need Maths and second, which Maths courses are a minimum that you should plan to take. By the way, for those of you interested in doing a PhD in Economics, I'd take professor Mankiw's advice very seriously: "if you are thinking about a PhD program in economics, you are advised to take math courses until it hurts" :-).

And if you want something to complement the above - and, at the same time, a more general perspective on why a Maths education might be useful - I also recommend you to read Gian-Carlo Rota's "10 lessons of an MIT education" (it's not the MIT part that's important for my purpose here :-)) and I am referring in this case (there are also things among these 10 lessons that I do not fully agree with, but it's not time to voice my discontent with that :-)) particularly to his Lesson number 10, here's the relevant part: "Mathematics is still the queen of the sciences [...] When an undergraduate asks me whether he or she should major in mathematics rather than in another field that I will simply call X, my answer is the following: "If you major in mathematics, you can switch to X anytime you want to, but not the other way around."

For the last part of the questions above, on how much Maths would you actually use in practice beyond absurd requirements of some crazed professors :-): that largely depends on what you will actually do, whether you'll be working as an academic or as a consultant of some sort etc (Greg Mankiw already had a bit on this, at the links mentioned above). But that aside, a good Maths training will give you something potentially more important, whatever you'll be doing: it will enable you to think logically in whatever situations you will face (and that is what I'd call the 'qualitative' bonus of having done Maths), plus it will give you a technical basis and will allow you to rely on your own skills for most day-to-day computing, accounting, investing, issues (and that is what I'd label the 'quantitative' methodology advantage that comes with having learnt Maths): à propos, I recall here a pertinent citation attributed to Anatole France: "People who don't count won't count"... Furthermore, and this is more important than many think, once you did it properly and you understood it (in Maths you do not memorize- if you try that, you don't stand a chance- you need to understand, you need to get used to it...), you will always be able to know how and where to look for particular bits, whenever you need to apply them again (that was contained also within Rota's rules, if you read carefully, in his Lesson 3: By and large, "knowing how" matters more than "knowing what." ).

Econlinks for 05-04-'07

• Greg Mankiw, the most popular Econ teacher in Harvard, having fun on April Fool's Day. A classic one . No wonder he is so popular :-). In any case, part of the secret is: give some attention to your students!
• One older excellent article on entrepreneurship by the most recent Economics Nobel Laureate, Edmund Phelps, in the WSJ Editorial Page. It is entitled "Dynamic Capitalism" and was published on October 10th, last year. Reminds me of a great quote from another Nobel Laureate, in Literature this time (known even better as a statesman, of course), Winston Churchill: "Some regard private enterprise as if it were a predatory tiger to be shot. Others look at it as a cow that they can milk. Only a handful see it for what it really is - the strong horse that pulls the whole cart". Amen!
• Is Freakonomics ruining Economics? An interesting discussion of Alex Tabarrok and Tyler Cowen on MR. I tend to agree with the "Levitt and Heckman" rather than "Levitt vs. Heckman" part but only as long as the freakonomics is simply not wrong (chances are- and the temptation is high- that one extrapolates those results and most often that is not possible) and does not claim to be anything else than... freakonomics. As I mentioned previously on my blog, Heckman, Rubinstein or Rust certainly have different opinions than the guys from George Mason University and much more extreme than mine :-).

Mankiw's "10 principles of economics" translated

After this nobody should say that Economists don't know how to have fun. The only worry is that "the translation" might become more popular than the original :-).

Mankiw's advice for new junior faculty

Plenty of good advice from Greg Mankiw for new junior faculty. Though I might have a problem with his one-before-the-last piece: "Avoid activities that will distract you from research. Whatever you do, do not start a blog. That will only establish your lack of seriousness as a scholar." I am not even a new junior faculty (yeah, yeah, still busy on my PhD dissertation for the moment, but I am getting there...) and I already have a blog. Well, well, but there is still some hope. Mankiw's last piece of advice could (should! must! please?) override everything else: "Remember that you got into academics in part for the intellectual freedom it allows. So pursue your passions. Do not be too strategic. Be wary of advice from old fogies like me." Amen!

Inflation is illegal! (in Zimbabwe)

I don't know whether it is in any way comforting to know that there are even worse politicians and decision makers than our very own, in Romania. Of course it is not at all comforting for the poor people from Zimbabwe, where the following example comes from. So what's going on there? Many bad things, for sure, but one of the worst is that the inflation reached 1281 % (this is not a typo) this months and has been over 1000 % since last year's April. What does Mr. Mugabe and his (indeed, his, everything is his there...) central bank do about it? Well, they apply the most clever solution one could think of: they declare inflation illegal- not a type either- (and of course blame the West for plotting against them)! I think I won't put this in the 'fun' category, though it is indeed tragicomic, as Greg Mankiw points out (and he also mentions in passing, his 10 concise principles of Economics- useful for all readers of this blog, Economists or not).

Paul Krugman on Milton Friedman (and my opinion on Krugman's essay)

Quite a long essay of Paul Krugman on Milton Friedman, in the New York Review of Books. I must say I would only call "fascinating", as Greg Mankiw does (with a shadow of irony, I'd like to hope; he couldn't have read the entire article, otherwise), its first part, up to the 3rd section (part which is also well written and informative, I'd say, also for persons who did not have formal training in Economics). For the rest and put as shortly as possible: I believe Krugman is a great scholar, but I think that what impedes him (for the moment) to become even greater is his being so dismissive, despite not having sufficient arguments to backup his opinion, with regard to Neo-Classical Economics, while adhering to the Neo-Keynesian trend too zealously. There is of course some room for debate there but I believe (am I so wrong? comments invited) that most economists see the balance here in a very different way than Paul Krugman does. And that is such a pity for an economist admired by so many people (myself included)!

Update: I wrote part of the comment above too much in a hurry and, re-reading it, I don't find it quite (actually not at all...) what I wanted it to be. Obviously both the 'new classical' and the 'new Keynesian' trends had a few waves over time and there were enough differences even among those. Moreover there was of course also the 'neo classical- Keynesian synthesis' attempt and 'new neo-classical' blend (which takes some Keynesian elements as its core). One excellent recent material that discusses all this very well (and that perhaps justifies in a way- I've thought of it now- why Mankiw called Krugman's text 'fascinating') is in my opinion a recent article by Greg Mankiw in the Journal of Economic Perspectives, the Fall 2006 edition (you need either individual subscription or institutional access) entitled "The Macroeconomist as Scientist and Engineer". I can perfectly agree with the idea Mankiw presents there, that the real 'tension' in macroeconomics is in fact between its "scientific" and respectively its "engineering" perspectives. To some extent Krugman also tackles this 'macroeconomics engineering perspective' when criticising Friedman in the last part of the essay in the NYRB (I still do not agree at all with Friedman's characterization as 'dishonest': in fact one could say he was merely putting forward the scientific view of the macroeconomist also in his public policy advice, if one follows Mankiw's point). But you should definitely read this article by Mankiw to get a full impression of the macroeconomics development, its present status etc. I paste its abstract below:

The subfield of macroeconomics was born, not as a science, but more as a type of engineering. The problem that gave birth to our field was the Great Depression. God put macroeconomists on earth not to propose and test elegant theories but to solve practical problems. This essay offers a brief history of macroeconomics, together with an evaluation of what we have learned. My premise is that the field has evolved through the efforts of two types of macroeconomists, those who understand the field as a type of engineering and those who would like it to be more of a science. While the early macroeconomists were engineers trying to solve practical problems, the macroeconomists of the past several decades have been more interested in developing analytic tools and establishing theoretical principles. These tools and principles, however, have been slow to find their way into applications. As the field of macroeconomics has evolved, one recurrent theme has been the interaction, sometimes productive and sometimes not, between the scientists and the engineers. John Maynard Keynes (1931) famously opined, "If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid." As we look ahead, "humble" and "competent" remain ideals toward which macroeconomists can aspire.

Prescott, Card and Mankiw on income and substitution effects (applied to USA vs. EU)

Without holding either a Nobel, a John Bates Clark, a chair in Economics or even a PhD in Economics for that matter (yet!- working hard to finish my thesis soon), I will adventure to state that I am inclined to agree with the argument put forward in a recent post by Greg Mankiw (which is also Ed Prescotts's position, but not so much David Card's). And not only because I am currently located in Denmark, which happens to be, I'd say, one close-to-perfect illustration for Mankiw's "pure" substitution case.

The labour market features of this Scandinavian country make it in fact quite a good term of comparison to the USA in this context (relative to the rest of the continental EU), given that the DK labour market is very flexible in terms of labour mobility (tenure-specific turnover does not fall below 12% of all employment per year, that figure is more than 50% for less than 1 year of seniority! ), while at the same time the DK welfare system is one of the most extensive and "evolved" of its kind. Inter alia, social benefits and health care are (generally) freely available for residents and largely funded by taxes. Let us see how general is "general": 98% of the Danish population is covered by the publicly funded national health insurance, only 2% are under a health insurance scheme where they pay the costs themselves (the advantage of this latter category is materialized in the fact that they do not need to be referred by a general practioner when they wish to see a specialist). Many other social benefits such as day-care for children etc. are offered freely and are tax funded, as well. It is therefore the case in Denmark that the largest chunk of the tax revenue is rebated lump-sum to the taxpayers, hence essentially only the substitution effect would remain, as Mankiw argues. And as he concludes, the implication would be that "the effect of high taxes on the quantity of labor supplied is larger."

Update: This is the original paper of Prescott from July 2004 referred to by Card and Mankiw (where all data sources are mentioned - most of them are readily accesible online, see for instance the OECD Labour Force Statistics Data).

How rich are you?

If you ever wondered where do you fit in the global income distribution, here's your chance to find out with only one click.

This and other very interesting "random observations" for all of us - life-time students of economics- are on the excellent blog of Greg Mankiw.

New, old and (always) exciting in science

Shortly back to blogging after quite a while... Today I'll drop a few lines about some interesting science pieces, both new and old, but anytime exciting. Of course the selection is mine.

• For quite a while now, I've been listening every week (really!) to the Scientific American (SCIAM) podcast new episodes. It is absolutely worth it and it is very practical as well since you can do it in a break (from reading, programming or any other research or non-research activities). Steve Mirsky, the host, manages to keep a perfect balance between general and specific, with humorous interludes now and then, hence all these subjects are generally available to the large public- provided of course a minimum interest in science (which, by the way, might be induced this way)- and they are never boring! One of my favourites so far is a recent entry from May 3 which is largely dedicated to a very nice informal interview with 2004 Physics Nobel Laureate Frank Wilczek (he shared the prize with other 2 researchers). Among other things you'll find out the basics about the weak and strong forces acting in the nature, super symmetry, but also about the call received at 5:30 in the morning from Stockholm announcing Prof. Wilczek that he received the Nobel prize. One small correction though to be made to Prof. Wilczek's story (nothing on the technical side though :-)): Professors Gerardus van 't Hooft and Martinus Veltman received the Nobel in 1999, not 1998. I was actually present at the ceremony dedicated for this great event within the Utrecht University (as an aspiring Theoretical Physicist at that time!) and later attended a very interesting lecture by Prof. van 't Hooft, at the University College Utrecht (in which I remember he also talked about Frank Wilczek's research and the fact that Wilczek and his co-laureates were just a bit- in the annoying sense- faster than him in publishing on the extension of his previous research with Veltman, that won them the 1999 Nobel ). All right, just one more digression here: you should also check out Betsy Devine's (the wife of Frank Wilczek) page about their Nobel adventures but also a bunch of Funny Ha-Ha and Funny Peculiar things (btw, the Guy Goma- BBC entry is absolutely hillarious).

• Prof. Harold Shapiro's recent address at the AAAS is an important advice addressed to all scientists:

  Humility remains an important human characteristic even for scientists. [...] Scientists need to recognize, for example, that other areas of human activity also have been critical participants in this vast humanitarian effort, providing quite different but equally imaginative, equally creative and equally valuable contributions to the evolution of human societies. The evolving literary, artistic, political institutions and imaginations have also been central to this humanitarian enterprise, to say nothing of the world’s great religions, whose narratives have done so much to sustain human efforts over such a long period of time. More on this address.

• In the latest issue (vol 96, no.2, 2006) of the American Economic Review, Gregory Mankiw is addressing a letter (you need to have a subscription to AER) to new Fed Governor Ben Bernanke. I like a lot the part about the fact that the Fed boss should be as boring a public figure as possible (and I agree!):

  My recommendation to you is to become as boring a publig figure as possible. For an economist, boring is an occupational hazard. For a central banker, however, it is just the ticket. The central bank's job is to create stability, not excitement. One way of doing that is to increase confidence in the institution of the Federal Reserve and to educate the public that the institution matters more than the individual who happens to be leading it at the moment. It would be ideal if, after a long, succesful tenure, your retirement as Fed chairman were a less momentous event than your arrival.

• a US Senator decided to question and probably oppose (you need subscription for Science to read the whole article) any further NSF funding for social science (and target all funding for natural sciences and engineering). While I think USA social scientists could (and should) do a much better job in explaining what they are doing and why they are doing what they are doing, I also think she is more than exaggerating and simply making a show. What is amazing though is that apparently social scientists present at the audience could not answer her immediately to questions which show her being parallel to science, such as (taken from one of the Science numbers) "Why is the NSF funding a study of a women's cooperative in Bangladesh? Why are US taxpayers footing the bill for efforts to understand Hungary's emerging democracy? And why are social scientists even bothering to compile an archive of state legislatures in a long-gone era when those legislators choose US senators (ok, that might actually have a direct answer since it could prove that US senators back in those times were having somewhat higher IQ's)." On the other hand, no answer from the scientists point of view (remember Shapiro's point above) seems even more foolish and I don't really want to think of what it indicates.

• and finally for now (simply a time constraint, otherwise I could go on ad infinitum), an older, nonetheless very interesting and definitely very actual article. It concerns new developments in trying to explain circumstances under which people might cooperate for contributing towards a public good and how the option to punish detractors can help. Just imagine you could immediately punish people that avoid paying their mandatory taxes etc, albeit at a cost. Would you do it? This very nice experiment described below suggest you would, even if initially you might not think so. And assumably that this will also eliminate any cheating behavior in the long run.

Understanding the circumstances under which people cooperate is a complex matter that has challenged evolutionary, behavioral, and economic researchers for decades. Particularly difficult to deconstruct are so-called "public-goods" problems, which involve situations in which individuals incur a cost to create a benefit for the group (modern examples might include recycling, voting, or giving blood). In a Report inthe 7 Apr 2006 Science, Gürerk et al. (http://www.sciencemag.org/cgi/content/short/312/5770/108 ) offered new insight into what drives cooperation in large groups. In an experimental game, individuals were asked to choose between two artificial societies. In one society, players could contribute money to a group project and the sum of all contributions was divided evenly amongst all players. The second society was similar except that after players contributed, they were allowed to pay to punish (reduce the payoff of) players who did not contribute equally. After each of 30 rounds of play, players were allowed to choose their society for the next round. The researchers found that most people initially picked the first society, which does not permit punishment and tolerates freeloaders. But as successive rounds of the gamewere played, cooperation broke down in that group and nearly all players came to appreciate the greater rewards of the other society, which enabled higher total payoffs despite the individual cost of punishing freeloaders. An accompanying Perspective by J. Henrich (http://www.sciencemag.org/cgi/content/short/312/5770/60 ) highlighted the study.

An interview with Gregory Mankiw, back to Harvard after 2 years of being Chief Economic Adviser to Mr. Bush

What I find most interesting in this interview- next to the glimpse inside the White House having as guide a former Chief of the Council of Economic Advisers- is the part that characterizes Bush's "economic thinking". I find Mankiw very subtle and diplomatic- he's got style, definitely. Here we go:

I think he's got a great intuition for economics—he doesn't think like an economist in the sense of thinking in terms of equations and graphs. He was an undergraduate history major and that's a pretty good description of how he thinks about things. He thinks about things more intuitively, more verbally. But he also has an MBA and so he thinks about things very much from the standpoint of what institutional framework is going to allow businesses to flourish and allow markets to work. I had the opportunity once to spend the weekend with him, and John Snow and Steve Friedman at Camp David. When I came back from that weekend I sent him a thank you note and I included a copy of Milton Friedman's Capitalism and Freedom because I thought that was a book that he would very much relate to. It's very good economics, it's free market economics, but it explains economics verbally. It talks about economics as individuals speak, rather than as we teach in the classroom with graphs and equations.