Econlinks for 27-11-'07

• Becker and respectively Posner, on tax evasion. Why is tax compliance higher than one would expect (with a reservation here: it also follows from Posner's argument than in fact tax evasion isn't necessarily lower than rationally expected...) and is that mainly due to the rational fear of punishment or to the taxpayers' feeling of moral duty/ fairness etc? For me Posner wins this argument (they do oppose each other on the essence herein, which after all rarely happens on the Becker-Posner blog...): it is much more the deterrence effect of the fear of punishment plus the costs associated with getting to know how to evade the taxes 'properly', than a feeling of moral duty or fairness, particularly when no other individual is directly involved; after all Posner's got the comparative advantage in this area and it is very very difficult to beat that...

• From now on (until I'll exhaust all notable examples), I'll present within the 'econlinks' posts my favourite examples of 'markets in everything' from Tyler Cowen's recent book, "Discover Your Inner Economist"-- one of my best reads this year (that does not mean that its chapters cannot be ranked: there are very good and also not so good, parts). Check for instance some quotes from it previously taken over for my quote-of-the-week rubrique, here or here. For today about the drinking-and-dialing-problem and equally exotic market solutions to prevent it (and from a more personal perspective, I think there is scope for a drinking-and-emailing-problem resolution as well :-)).

We have all known people who make phone calls when they shouldn't, especially when they are drunk. A survey of 409 people by Virgin Mobile found that 95 percent had made drunk calls, mostly to ex-partners (30 percent), 19 percent to current partners, and 36 percent to others, including their bosses. Fifty-five percent of those people looked at their phones the next morning to see whom they had called-- similarly, someone is waking up in the world this minute and checking to see who it is he or she is sleeping with.
To alleviate the drinking-and-dialing problem, a phone company in Australia started offering customers blocked "blacklist" numbers, which they select before going out to drink. In Japan they sell a mobile phone with a breathanalyzer, to see if you are really fit to drive home, or for that matter to make a phone call. If a bus driver fails the test, his location is sent immediately to his boss by GPS.

• Some wisdom from the one and only Milton Friedman. More actual than ever (in fact I recalled this old interview with Friedman after mentioning the very recent one with Richard Freeman in a previous post and disagreeing with some details in Freeman's address). The most spontaneous and brilliant economist you've ever heard, I promise. So listen and relisten and... relisten. To all of it. And learn. About 30 min clip on YouTube.

• And finally, I will be a millionaire (albeit in DK Kroner, but after all one has to start somewhere) for the next two years. I have been awarded (mange tak!) a prestigious (and generous, academe-wise) independent postdoctoral research grant of The Danish Social Science Research Council (Forskningsrådet for Samfund og Erhverv) for my project "Wages, Productivity and Firm Sizes in Imperfectly Competitive Markets", submitted for the grant applications' contest last August. So yes, you can congratulate me :-). And no, they won't let me buy Belgian beers for all that money. Though I guess that some top wine for research inspiration is allowed :-). Cheers!

Best phrase I've read today

"no one cares about inequality. People care about injustice, unfairness, poverty, sexual predators, family values, gay marriage, terrorism, and many other problems of everyday life. People don't care about Gini distributions."

This is by Herbert Gintis, via Greg Mankiw.

I would add that even when one thinks/is convinced s/he cares about inequality (I know some people that claim that loudly...), that is not direct, it is not unconditional, it is always a cover for something else, e.g. something likely to be on Gintis's list above...

One hour conversation with Richard Freeman (on YouTube)

Shortly after having posted a link to an IZA clip about Richard Freeman among a recent 'econlinks' post, I discovered, via Greg Mankiw, this other link to a very recent (October 31st) whole one hour interview with Freeman on YouTube, within the "Conversations with History" series, having Harry Kreisler as host. Richard Freeman talks, inter alia, about his own career path and decision to become a labour economist, about globalization and its implications, about the 'feminization' of the labour market, about the relationship institutions-market and the role for governmental policies etc. Very clear talk, aimed to a general audience, hence if you want to learn more about all these topics (although the discussion is mostly within a US context, it is generally applicable everywhere), the easiest thing you can do is take some time and watch this video (tip: watch it in more sessions, as I did, that way you don't have to allocate a full hour in one shot...).

Now, inasmuch as my opinion is concerned, I agree 95% with the views of Prof. Freeman expressed in this interview and I think he is one of the current best labour economists able to explain them clearly also to a non-specialist audience. The disagreement arises in some of the details (precisely where a general audience- including his otherwise witty and sympathetic host- would in all likelihood feel lost): namely, a. with respect to Freeman's (seemingly uncritical) support for a raise in the federal minimum wage (see here a sequence of posts I had on that debate), though he stated previously that he strongly favours the Earned Income Tax Credit (EITC)- well, so do I, and I see that that as the best alternative to the raise-the-national-minimum-wage policy- and b. regarding the possible implication of his saying that there is a lot of scope for governmental intervention in 'leaning against the wind' inasmuch (potentially 'heavy') corporate regulation is concerned (suffice to say that US has one of the highest corporate taxes in the world: I am not sure whether Freeman hinted to anything in this regard, but I can hardly see how you can eventually make that even higher or enact similar measures...). With respect to this latter point, maybe we should all remember- and once again give the last word to the one and only Milton Friedman- that "corporation conscience" is not possible (and neither desired...). Come on, join the Milton Friedman choir: "Freedom to choose, says Friedman, or you will lose, says Friedman, freedom is freedom, says Friedman..." :-).

Quote for the week 18th to 24th of Nov '07

During America's experiment with Prohibition, it was common to see the following label on grape juice: Caution: May Ferment into Alcohol. The harvesting of grapes rose dramatically.

Tyler Cowen, "Discover your inner economist"

Read the quote of the previous week.

Econlinks for 23-11-'07

• Remember my post about names in Denmark? At that time I could not find which were really the most frequently used first names. But Denmark Statistics even has those available. So "Jens" (male) and "Anne" (female) are the most common first names in Denmark, to date. In terms of recents trends, the most popular names given to newborn children in 2006 were "Lucas" and "Sofie", respectively. PS: read also some relevant comments to an older post of Dan, with several interesting links concerning (though some of that is about futuristic trends:-)) names elsewhere in the world.

• Here's a short video about one of the most famous labor economists of the moment, Richard Freeman. (wmv file, about 55 MB). The clip is with relationship to his winning this year's IZA Prize (after he won a bunch of other relevant prizes during the years). IZA award statement, Freeman's website at Harvard (or the one at NBER). And yes, the hat is part of Richard Freeman's personality (by the way, did you know that before JFK all US Presidents had hats? I didn't. Freeman makes that clear in the video linked above:-)).

• WineSpectator's top 100 wines for 2007 is now also available (PDF). See also my previous post about the winner and top 10 of this year. I am happy to say that, at a first glance (did not go thoroughly through the list yet) I have tried at least 7 wines in top 50 (but none in top 10). Among those, number 26, "Marchesi de’ Frescobaldi, Brunello di Montalcino Castelgiocondo, Ripe al Convento Riserva 2001" is the one I prefer (2001 is by far the best year for that wine). Try it out. And if you really want the sublime experience, do this while indulging in an Italian classic dish: "lepre in salmì".

• Yes, Bloomberg goes ahead with the "cheap talk for better grades" plan (see my previous post on this) in New York, which is partly due to the initiative of Harvard's Roland Fryer. Excellent, let's see if incentives of this kind elicit better students' outcomes. Ex ante it is not clear how this will work, hence the more interest around these types of studies ( for instance, in a different but related context, recent research by Edwin Leuven, Hessel Oosterbeek and Bas van der Klaauw at SCHOLAR, University of Amsterdam & Tinbergen Institute, suggests that financial incentives do not work as intended (at least not for everybody), ie. extrinsic rewards might be detrimental for intrinsic motivation).

Replication in Economics

Here's my most interesting read in the last weekend, a recent article by Dan Hamermesh, published in the Canadian Journal of Economics, on "replication in economics". It is also downloadable as PDF from Hamermesh's site (Dan Hamermesh's website contains much more information, potentially useful for any economist, albeit junior or senior-- that as a remark for those of you who did not know about this excellent online resource...). But going back to Hamermesh's viewpoint in this context: the short article linked above is extremely interesting and informative. And it contains also a proposal ("modest proposal" in the text), which I also support as very welcome: the only way to see more replication studies done is to have them commissioned (to senior researchers, with tenure...) by journal editors.

While I'd advise any empirical economist (or better: any economist that is currently/ plans in the future to also do some empirical work) to read the paper, I'll put forward below some possible omissions in Prof. Hamermesh's article, which would have been particularly interesting for me:

a. What to do about registered (say, matched employer-employee) datasets that cannot be made publicly available due to confidentiality agreements (though clear steps for accessing them can be always provided as information; in practice, some of these might take too long etc. for the replication to be worth undertaking); the use of such datasets is increasing day by day, particularly within applied microeconometrics, hence I'd say they would merit some separate discussion. Caveat lector: although their case is somehow similar to that of any proprietary database, these administrative datasets do have one common characteristic, namely that usually they are provided by the official statistics bureaus of individual countries. This might suggest possible (ad-hoc) agreements between journals and such bureaus to allow replication of studies under the same very strict confidentiality rules as those the initial author had been subjected to.

b. There is no discussion in Hamermesh's paper about structural approaches: in those cases replication, as commonly understood (particularly "scientific replication" in Hamermesh's terminology), is typically not an issue (subject to correct coding and analysis, to start with). In fact, one way to avoid frequent requests for replication using other datasets and other time periods etc, would be to have a structural framework to start with...

Quote for week 11th-17th of Nov '07

How can my muse want subject to invent,
While thou dost breathe, that pour'st into my verse
Thine own sweet argument, too excellent
For every vulgar paper to rehearse?
O! give thy self the thanks, if aught in me
Worthy perusal stand against thy sight;
For who's so dumb that cannot write to thee,
When thou thy self dost give invention light?
Be thou the tenth Muse, ten times more in worth
Than those old nine which rhymers invocate;
And he that calls on thee, let him bring forth
Eternal numbers to outlive long date.
If my slight muse do please these curious days,
The pain be mine, but thine shall be the praise.

William Shakespeare, Sonnet XXXVIII

See quote for the previous week.

Econlinks for 18-10-'07

• On (speed) dating preferences (in USA): some old stereotypes reconfirmed but also some news. Here's the full paper (Fisman et al, QJE 2006) on which the Slate article linked above is based. What's intriguing is that another (very interesting) research based on speed dating (not published yet) done in UK finds some opposite results, though it also agrees in others. See here that paper (Belot and Francesconi, mimeo Univ of Essex) and/or a summary of their findings.

• Car preferences of faculty at Harvard. They could not detect the owners of the Porsches, but the BMWs belonged mostly to the Econ faculty (also: "Of 18 respondents in the economics department, eight said they owned luxury cars—one of the highest percentages")... Now compare that with the Subarus owned by most faculty at other departments and tell me which Dep there has taste:-). Via Greg Mankiw.

• Some (Japanese) econometricians have time to combine their haiku and econometrics knowledge :-). Here's one superlative result of that endeavour: "Econometrics Haiku" by Keisuke Hirano.

• A rather oldish article from The Economist; the best I've seen so far in describing what the recent hysteria over Romanian immigrants in Italy amounts to.

• And here's one of the very few who didn't lose their sense in the debate over health policy in the USA...

The Wine of the Year: Clos des Papes, Châteauneuf-du-Pape 2005

Wine Spectator's best wine of 2007: Clos des Papes, Châteauneuf-du-Pape 2005. Apparently an easy choice, almost unanimous decision among the senior editors of Wine Spectator for the best wine of Vincent Avril's domain. One should also say that number 3 is from another Châteauneuf-du-Pape domain and also from 2005. Hence, Vive la France! And: Dan knows now what he should bring from France when he comes back to Romania this winter :-).

You can also see the videos for all top 10 here. Unfortunately I have to confess that I have not tried any of this year's top 10...yet! For the full top 100 for 2007 you have to wait until Monday next week :-).

See my post about the wine winner from 2006.

Song of the day: "Call me" (in Eliane Elias's version)

Nicole, your turn :-). The song of the day (tonight dedicated to Nicole, if she can handle it...) is "Call me"... and not just any version of this superlative piece, but indeed my very favourite one: Eliane Elias's "Call me" (I'd almost consider the artist's intro here as part of the piece). Enjoy!

Assuming you all know (alternatively, you will immediately inform yourselves...) who Eliane Elias is, I'll just say that some months ago, with the occasion of the yearly International Jazz Festival from Aarhus, Elias and her band (in my opinion the very highlight of 2007's edition) softened the Vikings' (and not only) hearts; for an evening the entire city was under her spell... But more about other Eliane Elias's top musical pieces with another occasion.

Here's more info on Tony Hatch's masterpiece. And here's the song in other, equally famous, renditions (unfortunately Petula Clark's was removed from YouTube shortly after I had found it and I was not able to trace Shirley Bassey's at all) : Astrud Gilberto's (be patient and wait a bit until it starts, in the clip...), Sinatra's, Blue Velvet's, even a version in Polish... Pick your favourite.