esther + economics = esthernomics!

The Economics of Being Ugly

2011-11-16T23:28:00.000-05:00

The economist, Daniel Hamermesh, is fighting for equality for the uglies!

"one study showed that an American worker who was among the bottom one-seventh in looks, as assessed by randomly chosen observers, earned 10 to 15 percent less per year than a similar worker whose looks were assessed in the top one-third — a lifetime difference, in a typical case, of about $230,000."

For $230,000, would you admit that you're ugly?

Read more

Inequality

2011-11-01T22:26:00.000-04:00

What are the first countries that come to mind when you think of inequality?

China?

India?

Think again.

These visuals are quite striking. Look at those gini coefficients!

Happy halloween!

2011-10-30T21:12:00.001-04:00

Had a great combined 24th birthday party/Halloween party!

Constructed Wall-E and EVE costumes with David. They were AWESOME!

Went to the Treasure Island flea market today and got an old school film camera for $10. Yay! Time to go take pictures with a real camera instead of my iPhone.

Gabriel goes apple picking!

2011-10-09T22:46:00.001-04:00

Took my nephew to an apple orchard and pumpkin patch for the first time!

He figured it out pretty quickly. He's CLEARLY gifted.

Hanging out in his pumpkin outfit in the pumpkin patch!

<3

Steve Jobs.

2011-10-06T01:45:00.000-04:00

Steve Jobs, you accomplished so much in only 56 years of life.

Lions and tigers and bears, oh my!

2011-10-04T23:48:00.002-04:00

Lions:
My boyfriend says I get annoyed about the Wall Street protests because I lack empathy. But this is absolutely FALSE. I went to see the Lion King 3D and cried twice, okay?!

I'm going home to NY for Columbus day weekend and totally watching the Lion King 3D again because it is the BEST MOVIE EVER!

Phone call with my dad:

Me - "Daddy, do you want to watch Lion King with me when I go home?"
Dad - "Didn't we see that one already...a long time ago?"

Haha. Excited for NYC! I am smiling like this!

Tigers:
Yankees beat Tigers 10-1! ALCS, here we goooo!

Bears (like the market!):
These articles about Wall Street protests annoy me. Anti-capitalist? Anti-globalization? I understand that people are protesting against corporate greed, exploitation of the "little people," etc. But what alternative systems are being proposed? Autarky? Socialism? If you're so unhappy with capitalist America, perhaps you should move to China and see how much better you like it over there.

I have the same frustration with environmentalists who protest the creation of a market for carbon. Many environmentalists argue that it is morally wrong to put a price on clean air. But if you're shooting down the idea of creating a market for carbon, you are advocating for a price of ZERO on carbon. Congratulations. Pat yourselves on the back. You have made it even EASIER for people to pollute. Ugh.

Also, should corporations not be greedy? Merriam Webster defines "greed" as "a selfish and excessive desire for more of something than is needed."
Well, how much profit is needed by corporations? Is the needed amount of profit not the maximum amount of profit? Is it not the corporation's duty to be greedy? (so long as they are not packaging products like mortgage backed securities and lying about the inherent risk of these products?) Should the corporation decide how much is "needed" by its shareholders? Milton Friedman talks about the responsibility of corporations in Capitalism and Freedom, but the gist of that chapter in his book can also be found here.

Optimistic Consultants

2011-06-27T01:29:00.004-04:00

OMG. This cracks me up.
From a World Bank report about high-speed rail projects being oversold:
"A whole new area of behavioral research has been generated by the phenomenon of over-forecasting in transport, known as 'optimism bias.' But a brief reading of the early days of railway development in the U.S.A. and Europe would quickly reveal that optimism bias is actually an inherited trait, handed down over generations, which tends to emerge whenever the recessive gene of optimism becomes over-stimulated by the dominant gene of self interest."14

14 - Whether professional or financial, the latter becoming prevalent when projects are supported by consultants and financial advisers working on a success-fee basis.

Translation by my fish-head teammate: "people are delusional, and consultants are happy to obfuscate reality in pursuit of payment."

What's an Ocean Without Fish?

2011-05-21T11:43:00.000-04:00

It's a giant toilet, that's what. Our government is paying people to turn the ocean into a giant toilet.

Look, here's an ocean with fish:

Here's an ocean without fish:

SO fugly.

The good news is that if there are any aliens out there who are in the business of shopping for a new planet, they might be less likely to target Earth.

Governments spend $10-30 billion a year on subsidies to the fishing industry. A small amount of that is spent on fisheries research and improved management (North America isn't doing too bad, with 55% of subsidies going towards R&D and Marine Protected Areas). However, the majority of subsidies goes towards increased capacity on the water - more boats, better technology to target fish, port construction, fuel tax exemptions, etc.

What does this mean for the fishies?

Even though fish stocks are being depleted, fishers have the means to go further and deeper into the ocean to catch the last remaining fish. And it's not like the government is doling out subsidies because the fishing sector is really profitable. From 1995-2005, the amount that India and Brazil spent on fishing subsidies EXCEEDED the value of fish that were landed! And high seas bottom trawl fleets - the ones with the giant nets that scrape the bottom of the sea practically destroying everything in their paths - would be operating at a $51 million annual LOSS if not for subsidies.

A few organizations such as Pew, The Nature Conservancy, and WWF have been trying to draw attention to this issue by increasing transparency of information, and speaking to appropriate people at WTO, FAO, etc., but who knows how many fish species will be commercially available within the next 5-10 years?

=(

Also, speaking of oceans, I watched Pirates of the Caribbean 4 last night at the Castro theater and it was EPIC!

Keynes vs. Hayek Round Two!

2011-04-30T12:57:00.002-04:00

Thanks to Lin for sending this my way and getting me to blog again.

First Keynes vs. Hayek rap here!

A few longer posts to follow, I promise. Probably about harmful subsidies (this is a note to myself so that I won't forget)

I've just been spending way too much time on my new bioeconomic model at work. It's BEYOOTEEFUL! Excel sheet after excel sheet all speaking to each other. The only frustrating thing about Excel is that if it doesn't do what you want it to do, you know it's because YOU made a mistake. I've definitely ripped out a few chunks of my hair over the past few months.

Ex-Aide to Bill Clinton Leads GGGI

2011-01-20T12:50:00.000-05:00

Richard Samans as ED of GGGI.

Strange to see all of these things happening from the outside now.

Happy to see it all start falling into place.

Toxic Homes

2010-12-11T16:24:00.001-05:00

Have you ever heard of the Beveridge Curve? Me neither. But it has nothing to do with drinks.

I was just reading the Modeled Behavior blog and there's an interesting post about friction in the job market being caused by "underwater" mortgages.

Basically, the Beveridge curve has job vacancy rate on the y-axis and unemployment rate on the x-axis.

When unemployment is high, job vacancies should be low. But that hasn't been true in recent years! Why?

Apparently, people end up being stuck in their underwater homes and can't move to places where their skills are needed.

This American Life had a great episode about toxic assets that were bought on purpose by reporters of Planet Money. They interview people with underwater mortgages and discover elaborate schemes of those who made bank (sort of) from the subprime mortgage crisis.

Sigh. Housing is stressing me out. Still looking for a place to live in SF. Looking through Craigslist postings is always entertaining.

There was a post that said, "Home is shared by 2 guys and 2 girls. We like to cook dinner together, sometimes at 4:20 PM." I thought, "What? 4:20 PM is so early for dinner! I'll never get to bond with my housemates because I get out of work so much later!" And then it hit me...like the strong smell of pot when I take the bus home sometimes.

News

2010-10-13T04:56:00.000-04:00

Nobel Prize

Climate

Education

Joy

Yoram Bauman, Standup Economist. New Video!

2010-10-07T04:23:00.009-04:00

His older video, which I love:

And finally, his book, which will make a great holiday gift for anyone!

You would think that I work as this guy's publicist, but I've only ever spoken to him once. On this very blog! See his comment on my blog here!

A Day In the Life Of...

2010-09-22T23:55:00.000-04:00

My team is insane, in the best possible way.

One guy flew in from China for the UN MDG summit and is now flying over to India. Yeah...that's right. China --> NY --> India in a span of like 5 days. INSANE.

Two guys got invited to Leonardo DiCaprio's house for dinner tomorrow night. One had to decline because he's just THAT busy. INSANE.

One guy managed to get everyone ground passes (pretty much unlimited access to all of the UN). INSANE.

Two guys made time to have dinner and watch Promises, Promises with me! INSANE given how busy these guys are.

I couldn't catch a cab after the MDG summit so I took a pedicab for the first time and it was THE MOST FUN THING EVER. And we ended up taking one after the Broadway show. Two pedicab rides in one night?! INSANE!

NYC is adding tax on clothing and shoes soon. INSANE. That has nothing to do with work, but I felt the need to add it. WTF NY?

Goals

2010-09-21T11:16:00.000-04:00

Going here tomorrow.

I am contemplating a 6 month shopping hiatus. Not as ambitious as the MDGs...I know.

Ugly Names and Ugly Situations

2010-08-19T09:38:00.002-04:00

The Economist had an article about the proposed Cordoba Centre in New York (at ground zero).
I completely agree that by treating Muslims in America as "outsiders" or as "terrorists," we are providing actual terrorists with new recruits.
I also completely agree that Americans should be the "bigger person" and say, "This is America. We are intelligent enough to recognize the difference between Muslims and al Qaeda. We not only accept, but embrace having a mosque at ground-zero."

However, having been so close to ground-zero on 9/11 (saw the 2nd plane hit from bio class at Stuy), I can understand the emotional response to the Cordoba Centre proposal. I am lucky enough to have had a diverse group of friends and know for a fact that none of my Muslim friends would EVER condone such horrific acts of terrorism. But let's face it. Most Americans are from boring, homogeneous cities in the middle of nowhere. I can easily see myself being one of those Americans...and if I had lost a loved one on 9/11, I can see my anger being horribly misdirected.
In fact, even though I'm Catholic, if an extreme sect of Christianity murdered one of my family members, I can see myself turning against my own religion.

I get that Imam Feiisal Abdul Rauf has good intentions, and that he wants to promote interfaith understanding. He hopes that his mosque will "heal some of the wounds opened by the felling of the twin towers and all that followed." But it's hard to get Americans to realize that diversity is a good thing when you have shameless idiots like Sarah Palin and Newt Gingrich running around.

Shame on you, Sarah and Newt, for blatantly using the emotions of those who have already been so hurt in the past to promote your own political agendas. As my friend Dan says, "[you] are so hellbent on making another party look bad that [you] will hop on the bandwagon to resonate with an issue [which] is clearly against the foundational underpinnings of our government."

I am thoroughly disgusted.

And Newt, you have a problem with the name "Cordoba" but really...you're not one to talk with a name like Newt. Newt Gingrich has got to be the ugliest name I have ever heard in all 22 years of my life.

Sponge-worthy Men

2010-08-18T08:22:00.002-04:00

I was on the elevator with two guys and pressed the 12 button, but they didn't notice initially.

Guy #1 to Guy #2: Did you press 12?
Me: Oh, that's my floor.
Guy #2 to Guy #1: But I would rather be going with her than with you.

Awkward...but then!

Guy #1: That's not funny.
Guy #2: You're right. That's not funny. I'm sorry, miss.

I have had encounters with sketchy people before, but at least this guy had the decency to apologize. And it's not like he was absurdly inappropriate. I wish boys were more chivalrous nowadays...

I wish they were more spongeworthy - an economist at Princeton, Avinash Dixit, wrote a paper on the option value problem of Seinfeld. "The paper uses option pricing theory to deconstruct Elaine’s decisions in the “Seinfeld” episode number 119 “ The Sponge.” In it, Elaine’s preferred contraceptive sponge goes off the market, sparking an ultimately fruitless hunt for a greater supply. Her limited supply of contraceptive sponges forces her to reassess their usage, and decide whether a potential partner is “sponge-worthy” or not." [See full WSJ article here]

Buying Happiness

2010-08-15T09:44:00.014-04:00

More on buying happiness.

But sometimes people can't handle the choices. SF is considering banning Happy Meals b/c parents are complaining that the toys cause their children to become...pigs. Right. And I grew up in a bubble where McDonald's did not exist. Therefore, I am 42.5 kg/94 lbs.

Please.

Deja vu

2010-08-14T10:54:00.000-04:00

On August 18, 1976, two US Army officials in the JSA of the DMZ (between North and South Korea) were brutally murdered by axe wielding North Koreans. This event has been called the axe murder incident and the poplar tree incident because it happened while South Korean soldiers were trying to cut down a poplar tree (on South Korean land). See the full story here.

On August 3, 2010, two Lebanese soldiers, a Lebanese journalist, and an Israeli officer were killed because an Israeli maintenance crew was using a cherry-picker to prune a tree. See the full story here.

WTF is wrong with people. The world is a f-ing mess.

I will drown myself in retail therapy, despite the NYT's advice on happiness...

I found an Alice + Olivia dress on shopbop.com, and they only had one left in my size. But I'm at my aunt's house in Incheon and left my wallet in Seoul. Almost had a fashion emergency b/c I couldn't remember the 3 security digits on the back of my debit card. They came back to me eventually.

Alice + Olivia dress, you are so much lovelier than this world.

40%

2010-08-04T23:55:00.012-04:00

40%.

That's a pretty significant number.

If I were to lose 40% of my body weight, I would be 25 kg, or 55 lbs. Basically, I'd be dead.

So how can we flippantly dismiss this fact:

Phytoplankton, the basis of the entire marine food chain, and an important player in the global carbon cycle, have declined by 40% since 1950. (probably in response to ocean warming)

The average global phytoplankton concentration in the upper ocean currently declines by around 1% per year and this rate is increasing. [Boris Worm]

Why should you care?

Phytoplankton, through photosynthesis, produce around half of the oxygen in Earth's atmosphere and drive the 'biological pump' that fixes 100 million tonnes of atmospheric carbon dioxide a day into organic material.

Open-ocean fish will also be severely affected by the drastic decline in phytoplankton.

The Little Mermaid is one of my favorite movies and I want us to be able to tell our future children that Flounder (Ariel's best friend) is a real animal and not just a figment of my imagination, or a thing of the past. OKAY?

BUY THE ECONOMIST THIS WEEK!

2010-07-09T07:50:00.001-04:00

3GI's ad will be in the Executive Focus section of the Economist this week! Even more exciting - I got to draft it!

I personally think my original draft is better than the one that's being published, but I suppose I'm biased...haha.

Anyway, remnants of my original draft still survived the harsh world of politics, so check it out!

We also placed an online ad that will be posted for a month.

I feel like I've come pretty close to my life goal (or death goal?) of having my obituary appear in the Economist. Yay!

UPDATE (July 11th)
Here it is!

July 4th

2010-07-04T06:52:00.000-04:00

I firmly believe that NYC is better than Boston at everything, EXCEPT 4th of July fireworks.

I miss you, fatkids.

I wish I were in either NYC or Boston today. Maybe I'll run into some rowdy expats here in Seoul. =)

Life Lessons

2010-07-01T22:46:00.000-04:00

Comparative Advantage: Learn it, love it, live it
Be entrepreneurial and work in small teams. "Jesus Chris tried 12, and that proved one too many." ~Norman Macrae
There is a high correlation between success and e-mail volume. At least, that's what I will tell myself when I wake up to a bajillion e-mails from Seoul, SF, and London.
Before you send an e-mail, always save a draft and go back to it later
You will never be as happy and optimistic as you were in college.
I'm a sensitive soul, though I seem thick-skinned. ~Pumba, from the Lion King

A Toy Story.

2010-06-30T08:57:00.004-04:00

I've had this Tweety doll for nearly 22 years now (I'm almost 23) and I bring it with me whenever I travel for long periods of time. A few weeks ago, I left it on my bed and housekeeping accidentally took it to the laundry room along with my sheets and blankets. I called the front desk and reported the missing doll. A few days later, I get a phone call from the front desk:

"Hello?"

"Hi. Did you call few days ago about missing doll?"

"YES!"

"Is it a duck?"

"Uh, it's a bird. A yellow bird."

"Yes, duck! We found it. We will bring it now to your room."

Saved!

Since then, I have carefully moved Tweety from my bed to my living room sofa every morning, but yesterday morning I forgot to do so and Tweety is missing yet again!

Parag offered to send me a new Tweety doll (thanks, friend!), but it's not really Tweety that I'm attached to. In fact, I'm afraid of birds because of a traumatic chicken experience that I had while living in the sticks of Korea as a kid.

I'm attached to the fact that Tweety is so old that my mom has to handwash it because it would probably fall apart in the washing machine. I'm attached to the fact that I still have no idea whether I should call Tweety a "he" or "she." I'm attached to the fact that Tweety is the same as always, minus the drool that it was covered in once upon a time.

On that note, I really want to watch Toy Story 3 in 3D. Too bad I can't find a theater in Seoul that is playing it...

July 1, 2010:
Tweety has been found!
=)

More Pictures!

2010-06-28T04:15:00.003-04:00

Click photos to enlarge.

On June 15th, we got to ring this giant bell in the middle of Seoul at noon. They usually ring it on New Year's Eve, and only ~2% of people in Korea have had the opportunity to ring this bell. Pretty awesome! The guide told us to make a wish while ringing the bell. I made four.

My happy team - Andreas, Chris and Mattia.

Words of wisdom from Andreas - "May you break many bells in your life." He's sticking his tongue out in this picture! Haha. He totally wants to break that bell.

My turn! My turn!

President Lee Myung Bak

Yvo de Boer

Professor Heller - Okay, so Tom's speech came with a powerpoint that was controlled by someone in the back of the room. However, Tom decided to skip around a bit...
The Korean guy in the back had no idea that he was on the wrong slide for a while, so I ran to the back to help him. Unfortunately, Tom had skipped like 6 slides and when I kept going back and forth searching for the correct slide, (which everyone in the room could see me doing) the tech guy yelled at me and was like, "do you have any idea what you're doing?!"
Mattia came and saved me. Just reaffirms my love for economists. Haha.

Lord Nicholas Stern

Professor Ekins

Secretary Kim Sang Hyup - so funny! I'm pretty sure he's pretending to be a pimp in this picture.

Andreas (behind me) is 6'4". How silly of me to think that I would have to bend my knees a bit in order to not cover his face!

East Asia Climate Forum/GGGI Launch!

2010-06-20T03:32:00.005-04:00

East Asia Climate Forum was pretty cool. Keynote speakers included President Lee, former Prime Minister Han Seung Soo, Ban Ki Moon, Lord Nicholas Stern, Thomas Heller, and Yvo de Boer.

Secretary Kim Sang Hyup, Andreas Merkl and Thomas Heller get ready to break the bell!

Mattia Romani, our economist, and (half of) Chris Stori, my Jedi Master.

Andreas enjoying some wine.

The man who escaped death, Eric Beinhocker! (His plane to Seoul had to make an emergency landing and all the tires blew off! He still managed to make it to the Board Meeting on time, of course.)

Younghoon Kang, our liaison to the Blue House, is soon to be married and leaving for MIT Sloan. "Esther, the only way you can escape is if you get married, or die." TRUTH.

From left to right: Yoo Yeon Chul, Chris Stori, Jang Won, Jung Tae Yong. Chris looks super happy!

Prime Minister Han Seung Soo on far right. (I see Chris in the background. Hehe.)
One of the highlights of my week: PM Han told my team that I was "very small, but very good." Haha. YEAH, POWER TO THE LITTLE PEOPLE!

Soy exhausted from all of the preparation and events, but it was a good week.

=)

Yvo de Boer or Christiana Figueres?

2010-05-29T05:47:00.005-04:00

Yvo de Boer?
Wiki entry
Guardian
Huffington Post
Washington Post

Christiana Figueres?
Wiki entry
Guardian
Huffington Post
NYTimes

Loading...

Press Release From the Blue House

2010-05-27T01:23:00.000-04:00

My life for the past month (GGGI)

On my mind...

2010-05-25T07:08:00.000-04:00

North Korean attacks on the ROK

Global stock markets see sharp falls

The next iPhone (mine)

The power of cheese!

Clippings

2010-05-24T02:57:00.000-04:00

From Thomas Friedman's Op-ed:
"Winston Churchill famously observed that, “You can always trust the Americans. In the end, they will do the right thing, after they have eliminated all the other possibilities.” Is that still true for our generation? We’re going to find out. The time for bluffing ourselves is over. Are we going to do what it takes to fix our country, or are we going to be remembered as the generation that received more poker chips from their parents than any other and then had to turn around and toss a single chip to their kids and tell them to put it on “Lucky 21” — and hope for the best."

Want to see the countryside? Go to Paris!
[Farmers Bring the Country to Paris]

North Korea, if you ruin my stay in the ROK, I will take it personally.
[The Economist]

Economix

2010-05-19T03:58:00.001-04:00

Making the Simple Complicated (Climate change economics)
Sigh. Story of my life...

Koreans WORK! (Not that this is a surprise...)

Ben Bernanke Quotes

2010-05-15T23:07:00.003-04:00

Ben Bernanke in the NYTimes

[And yes, Ben Bernanke is also married to a Wellesley alum. =P]

Ben Bernanke quotes:

“The world has a great deal more to offer than money.” [Damn straight]

“Because I appreciate the role of chance and contingency in human events, I try to be appropriately realistic about my own capabilities. I know there is much that I don’t know.” [I'm screwed]

"Keep a ‘gratitude journal,’ in which you routinely list experiences and circumstances for which you are grateful.” [Great idea!]

Colbert and Ok Go!

2010-05-06T06:45:00.002-04:00

Colbert on Environmental Threats

Readings

2010-05-06T06:03:00.002-04:00

"Trading cap-and-trade" [Free Exchange]

Roadblocks to preventing roadblocks in Washington [Free Exchange]

Esther Duflo: Inspiring.

2010-05-06T03:50:00.002-04:00

I want to live here.

2010-05-03T20:53:00.007-04:00

Went to the U.S. Ambassador's residence. It was beautiful.

Readings

2010-05-02T05:36:00.000-04:00

Krugman - This reminds me of Alan Blinder's "Hard Head, Soft Hearts"

San Francisco in Shanghai

Esther is badass

A Walk Through Insadong

2010-05-02T04:16:00.002-04:00

Increased temperatures --> increased migration

2010-04-25T05:50:00.001-04:00

Looks like Senator Graham has had enough. He is frustrated that climate change is taking a backseat to immigration...
I feel ya, Graham.

Colbert's take on immigration reform in Arizona.

The Colbert Report

Mon - Thurs 11:30pm / 10:30c

The Word - No Problemo

www.colbertnation.com

Colbert Report Full Episodes

Political Humor

Fox News

Recently added to my Google Reader: Green Blog!
Watch the 18 minute video chronicling the life of the plastic bag!

Weekend was fun. Hung out with the babycakes. Played hide and seek for the first time in like 15 years.

Earth Day!

2010-04-22T19:54:00.002-04:00

Happy Earth Day!

Esther goes to Seoul/SF!

2010-04-03T21:39:00.003-04:00

Dear friends,

As of April 19th, I will be working in Seoul and San Francisco with California Environmental Associates, ClimateWorks, McKinsey and the Korean government to help start an international economic think-tank, Seoul's Global Green Growth Institute. (3GI)

3GI's mission is to provide low carbon economic development plans for developing countries. I am excited to witness first-hand the birth of an international economic think tank and to study the intricate details of the public-private partnership model which I expect will become increasingly prevalent. I don't want to give away all the juicy details (partly because I don't know them myself, and also b/c some of it may be confidential) so you'll just have to wait until 3GI is officially launched! Keep an eye out for it!

In the meantime, you can check this out - Stern Review Summary. Another interesting read is Alan Blinder's "Hard Heads, Soft Hearts" which we read for Prof. Johnson's Econ&Politics class. Chapter 5 is called "Cleaning Up the Environment: Sometimes Cheaper is Better."

I'll be moving to Seoul on April 15th and staying at the Somerset Palace. (I'm not gonna lie, I'm really excited to live in a hotel) I'll be working in SF the weeks of May 3 and May 10.

I am really sad to leave my friends at Georgetown Law, but my professor and co-workers have been wonderfully supportive of my decision. I am blessed to have always been surrounded by people who genuinely care about my intellectual and professional growth.

I don't know if I'll have much time to blog, but I will try to post exciting stories about life in Seoul and work if it's not confidential. I hope I don't have too many epic fail stories...like that time one of the diplomats at the Embassy caught me singing Taylor Swift in the kitchen. (fail!)

I'm so excited about working on 3GI that I woke up yesterday and just started giggling in my bed. I can't remember being this excited about anything ever! (except maybe that scene in Lord of the Rings II where Smeagol is arguing with himself/Golem and finally gets rid of Golem, do you guys remember that? When he's like "go away and never come back!" And then he jumps around and shouts, "Smeagol is free!!!!" That scene made me so happy that I almost cried b/c I actually think Smeagol is really cute with his big bald head.)

Happy Easter Weekend!

<3
ESJ

P.S. - Special thanks to Nams who recommended me for the position!
Can't wait to see you in SF!!!!

Happy World Water Day!

2010-03-22T22:38:00.000-04:00

A message from friends at Replyforall here!

Target 7c of the Millenium Development Goals reads:
"Reduce by half the proportion of people without sustainable access to safe drinking water and basic sanitation."

Let's focus on the "safe drinking water" bit.

Some statistics:
Only about 2.5% of the Earth's water is fresh water (for ~6 billion people)
An average American uses 150 gallons of water each day, while a person in the developing world struggles to find 5 gallons.
Over one billion people still use unsafe water sources.
The highest numbers of people without access to clean water are in Asia.
Unsafe water kills more people than all forms of violence combined, including war.
[factoids from WHO, unicef - read more to see why water's so important]

My friend, Nami, who has guestblogged before, wrote a great blog post for 1Sky a few summers ago. I remember it well not only because it was a great post, but because some a-hole left a nasty comment (to which I posted a nasty response in return).

Anyway, one effect of climate change is that it will make people thirstier. As if to slap us all in the face, another effect of climate change is that fresh water supplies will decrease as sea levels rise. Fresh water will more likely fall as rain rather than snow making it harder to collect (spring snowmelt won't be a reliable source if there's not enough snow). Fresh water levels will also decrease as evapotranspiration losses increase.

So, how can we avoid disaster?!
Obviously, we all need to conserve. 100 ways to conserve here.
Becker and Posner had a blogpost about economic responses here.
And of course, a blog that I've mentioned in the past: Aguanomics!

Anyway, that's all for tonight kids. I am amazed by those who can blog so often. I don't have the discipline. I'm always getting caught up in real life...

Obama's Speech (Healthcare)

2010-03-21T20:05:00.001-04:00

From last night.

A History of Overhauling Health Care. (NYT)

A Piece of Land's Only a Piece of Land...

2010-03-21T20:03:00.000-04:00

I hope everyone had a great St. Patrick's Day. (I know, this is like a week late) I somehow remembered Pi Day (3.14) but forgot about St. Patrick's Day this year...must be because I'm no longer in Boston.

I was listening to this song on David Ford's new album and it seemed appropriate. It's about Stephen Carroll, the Irish policeman who was murdered by dissident republicans. "A piece of land's only a piece of land" is from an interview of his wife...so sad.

Stephen

by: David Ford

Stephen, the flag's at half-mast at the station
There's a cloud hanging over this town
The wind blows apologies; the sun looks ashamed
As it hides out behind Portadown

And out there are children still raised on old anger
Who believe there's reason to fight
A piece of land's only a piece of land
And you will not come home tonight

Stephen, the uniformed visitors came,
Unexpectedly, late yesterday
I opened the door to a man and a woman
And I knew what they's come here to say

Oh, I've never seen any darkness so deep
As the moment when I clicked off the light
And a piece of land's only a piece of land
But you will not come home tonight

Stephen, the news has been filled with your picture
It seems the whole world knows your name
And would you believe there was Martin McGuinness
Out condemning these bastards to blame?

Oh, I've never seen so much orange and green
Come together on a thin strip of white
Still, a piece of land's only a piece of land
And you will not come home tonight
Yes, a piece of land's only a piece of land
And you will not come home tonight...

Identity. Crisis.

2010-03-04T09:14:00.005-05:00

John Oliver (from the Daily Show) interviews b-school students about the MBA Ethics Oath. SO funny!

Feb. 25th's FT had an article by George Akerlof and Rachel Kranton about Identity Economics. Akerlof and Kranton argue that people are not simply motivated by huge bonuses. Rather, they are motivated when their personal goals are aligned with those of the organization for which they work. In identity economics, performance pay demonstrates bad faith (employers don't believe that employees will do a good job unless there are obscene monetary incentives...)
Our current financial system gives employees an incentive to manipulate the system rather than to live up to their responsibilities.

Another concern is regulatory capture. The Warwick Commission has proposed host country rules as opposed to home country rules to preclude regulatory capture (b/c host country rules tend to enhance the link between a financial system and national welfare objectives. But what about arbitrage?) Host country rules can also better empower national regulators. Len Seabrooke and Eleni Tsingou (on Warwick Commission) suggested that we empower the Financial Stability Board as the key coordinator to allow countries to share information on products. They think that the FSB is a better choice than the IMF or World Bank which lack legitimacy as institutions trusted by developing countries.

Simon Johnson is more pessimistic. He says, "hoping that we can constrain banks through some form of international governmental cooperation is a complete illusion. The IMF and the WTO have no mandate on this issue. The Financial Stability Board is a paper tiger – really just a talking shop between regulators (and the same goes for the Bank for International Settlements more generally)."

The Institute of International Finance says that all of these uncertainties about regulatory reform are slowing economic recovery. Boo.

Currently reading: The Wages of Failure (working paper by Lucian A. Bebchuk, Alma Cohen, and Holger Spamann)

Paul Krugman Loves Politics...and Costumes!

2010-02-22T17:47:00.004-05:00

Paul Krugman's profile in the New Yorker!

Also, since Evelyne pointed out the part about how Paul Krugman loves costumes...
my Halloween costume two years ago was capital flight!

Mamma Mia!

2010-02-18T09:33:00.000-05:00

I don't care what's going on in Greece. Someone take me. We can do Greece a favor by spending lots of money while we're there...it will be completely selfless!

My mom is in Turkiye right now. I'm so jealz.

Simon Johnson talks about why Greece might go to the IMF for help and why things are not as simple as when Greece had its own currency. He also talks about how politics may (as always) get in the way of things...
In another piece, Johnson talks about Goldman's role. Felix Salmon thinks that Goldman is just a scapegoat.

Martin Feldstein suggests a holiday from the eurozone for Greece - Greece could devalue the drachma to reduce imports and boost exports (reducing trade deficit and maybe increasing GDP and employment)

Roses are red, violets are blue, Hank Paulson loves Wellesley women too!

2010-02-15T21:53:00.002-05:00

I hope everyone had a happy lunar new year and valentine's day!
My aloe vera plant, Henry, now has a friend named Zach. Yay!

I bought myself Hank Paulson's new book, On the Brink, yesterday. A funny comment was made about Paulson the other day, I can't remember where...but someone said, "Here is a man who is too big to fail." Ha.
Anyway, I really like Paulson's book so far. But maybe I'm biased because Hank Paulson is clearly a fan of Wellesley women. He writes:
"I come from a line of strong women -- smart independent, plain-spoken women[...]My mother inherited her grit and determination from her own mother, Kathrun Schmidt, who graduated from Wellesley College in 1914 and supported her family through the Depression[...]My mom, Marianna Gallauer, followed her to Wellesley, graduating in 1944."
"In my senior year, several weeks before graduation, I met Wendy Judge, a junior at Wellesley, on a blind date set up by a friend. I was immature and behaved badly." (Hrm...sounds sooo familiar! Haha.) "We went to a Boston Pops concert, and she was not impressed when I folded my program into a paper airplane and sailed it off the balcony at Arthur Fiedler, the conductor. Wendy asked to be taken home early, and I thought I'd never hear from her again. But she called me up later and invited my roommate and me to come down for Tree Day, a Wellesley celebration of spring. So I had reason to think there was hope."

So cute.

Anyway, his book is not all about his love for Wellesley women. (Who doesn't love Wellesley women, seriously...)
He talks about what it was like to tell Fannie and Freddie that they would be placed under a conservatorship. He shares embarrassing moments and first impressions of certain politicians (Sarah Palin, of course)

I can't wait to devour this book. I'm only four chapters in, but I highly recommend it.

[Confession: I wish I were in H.S. again when I could stay up all night reading books and not worry about having to sleep because I knew I could just sleep during classes the next day. I'm pretty sure sleeping at work is frowned upon...]

An Ode by Wellesley's Chip Case!

2010-02-12T22:19:00.001-05:00

Reflections on the Housing Market - in verse form
Karl Case

For the last few years, we have shed many tears
Living through a recession.
The economy's broke and it's not a joke,
When we talk of another depression.
Fifteen million without a job,
Foreclosures and banks that fail,
401K's became 201K's,
And everything's up for sale.

How can it be? What didn't we see
That led to all of this trouble?
There is little doubt that the proximal cause
Was a bursting housing bubble.
But other than that, who can we blame?
And what do they lament?
Millions of people contributed to
This hundred-year event.

For me, it began in '76
With a house on Cleveland Road.
At fifty-four thousand, I thought it a lot
For a small three-bedroom abode.
But ten years later, that very same house
Would sell for four times the price.
I was glad that I bought...I remember the thought,
"This may not be fair, but it's nice."

In Boston alone, that boom created
$100 billion in wealth.
We spent more, saved less, and I have to confess,
It was good for our mental health.
We had to know that it couldn't go on.
Someday prices would fall.
We knew there were risks -- to ourselves and our fiscs
If those prices were ever to stall.

It all began in 2001,
9/11, the dot.com bubble.
The Fed had to act because of the fact
A recession would mean big trouble.
So the Fed funds rate, sitting just below eight,
Was cut to under two.
And you had to know, with rates so low,
That a refi boom would ensue.

The volume of mortgages written back then
Stunned imaginations.
In a single quarter in 2003,
A trillion in originations!
But something happened late that year
That caused long rates to rise.
And that was the end of the refi boom.
It came as quite a surprise.

With refi's gone, so were big fees,
But banks still had money to lend.
And the search for buyers to fill the gap
Seemingly had no end.
The Fed kept pumping through 2005
To keep short rates very low.
And Greenspan gets a share of the blame;
His halo has less glow.

Of course the key for all to see
Was a robust housing market.
Buyers could borrow lots of cash
And a house was a good place to park it.
A summer home...a new big house,
No one seemed to care.
Homes were made of bricks and land,
The value would always be there.

It didn't matter what rate you paid
Or what you made in a year.
For a while liquidity led to stupidity,
"Just sign and see the cashier."
High LTV's and Option ARMs
Negative AM's and more,
2-28's with teaser rates
And ridiculous Fico scores.

Competition was the force
That made the music play.
As long as prices didn't fall
Everything was OK.
People could always sell their house
For more than they had paid.
Defaults and foreclosures stayed quite low
And lots of money was made.

Fannie and Fred were always ahead,
Then Countrywide got in the fray.
Then Lehman and Merrill and Goldman Sachs
Couldn't be kept away.
You can guess that MBS
Helped make the trading brisk.
Investors thought that the paper they bought
Was traunched with well-measured risk.

To that, add leverage and default swaps,
And then when house prices fell,
"Smart guys" got hosed as the risks were exposed,
And that was the closing bell.
Now where do we go? We really don't know.
We've never been here before.
Only time will tell when the markets will clear
And prices will fall no more.

Some of the data suggest a bottom,
While other data conflicts.
Houses are selling at rates not seen
Since back in 2006.
The inventory of unsold homes
Is down, it no longer grows.
And we're not building any new homes.
Starts are at 50-year lows.

A number of problems remain as risks
As the market begins to turn:
The number of loans that still need to be marked
Is making stomachs churn.
Fifteen million who want to work
Don't have jobs today.
And slow is the pipeline of loans in default
Since no one wants to pay.

It could also be that the pick-up we see
Is just from government red.
Lower rates and tax rebates
Buying paper from Fannie and Fred.
All have certainly played a role
And only time will tell.
What will happen when they're withdrawn,
Still empty units to sell?

So now we come to the end of this ode
Without much to say for certain.
I hate to say, that's where we are
Not beginning or final curtain.
The truth of the matter at the end of the day
Is that markets will make you humble.
Just when you think that it's time for a drink
They will turn and fortunes will crumble.

That free markets work to provide what we want
Is a notion that is not in dispute.
The problem is that once in awhile,
Markets overshoot.
Of course there is greed and there is a need
For moral hazard and rules.
You are damned if you do and damned if you don't.
To be "pure" is a game for fools.

Politicians, of course, are starting to shout
That they want more retribution.
It's better, I think, if they used their time
Helping to find a solution.

Welcome back, attention span!

2010-02-10T17:07:00.000-05:00

So, my personal life jumped off a 20 story building, landed on concrete and exploded all over the f-ing place...I've been frustratingly distrait (widget word of the day!) for the past few weeks but have been regaining my attention span. I decided to celebrate by reading old issues of The Economist that had been piling up and posts on my Google Reader. Some things that I particularly liked (even though they're mostly from older issue of The Economist...):

"Ouch: Obama says he doesn't begrudge $17 m bonus on Wall St, quasi-defends bonuses. I begrudge 'em. http://bit.ly/aXX5E8 " [NickKristof tweet]

"The authors say that what is needed is not merely institutional tinkering but a different frame of mind. Governments, they say, should think more in terms of reducing risk and increasing resilience to shocks than about boosting sovereign power. This is because they think power may not be the best way for states to defend themselves against a new kind of threat: the sort that comes not from other states but networks of states and non-state actors, or from the unintended consequences of global flows of finance, technology and so on."
Milton Friedman, who, when monetarism was being mocked in the 1970s, replied "our basic function [is] to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable." [The Economist - "A Needier Era"]

"The Volcker rule may have looked like a reaction to the Democrats' loss of a once-safe Senate seat in Massachusetts. Insiders insist, however, that Mr. Geithner and Mr. Summers were not suddenly sidelined but gradually persuaded of the merits of limiting banks' activities." [The Economist - "New plan, new people?"] (I think it's funny to imagine Larry Summers being gradually persuaded of something...or like, coaxed into saying, "Hey, yeah! You're totally right!")

With respect to the unintended consequences of past financial reforms...
"...capital, like water, tends to flow around obstacles. Try to dam its movement at one point, and slowly but remorselessly it will find it's way around." [The Economist (Buttonwood) - "Not what they meant"]

"As many gardeners and farmers know, crossbreeding two wimpy specimens sometimes produces strong offspring - an effect known as hybrid vigour. Hybrid vigour is common in plants and is found in some animals - though, some speculate, it may be lacking in European royalty." [The Economist - "Shelling Out"] (Made me crave oysters)

"By separating our sample into boys and girls, our results also show that girls significantly benefit from interactions with very bright peers, whereas boys are negatively affected by a larger proportion of academically outstanding peers at school. We also find that the positive effect stemming from interactions with ”good” peers is more pronounced for female in the bottom part of the ability distribution. On the other hand, while not strongly significant, our results suggest that more able boys suffer from interacting with a larger fraction of outstanding schoolmates."
"At the other extreme, the most talented girls could gain more than 0.20 of a standard deviation from being educated in homogeneous environments." (Wellesley!) [The good, the bad, and the average: Evidence of ability peer effects in schools]

Threat of Protectionism - Silly or Systemic?

2010-02-03T10:59:00.001-05:00

I went to this lecture in January (by the way, where did January go?!) on rising protectionism in global trade. The speakers were Simon Evenett and Ed Gresser with whom I have spoken about the KORUS FTA back when I was working at the Embassy. He was also a guest speaker at the WTO Academy here at GULC. (Blogged about him here before too. He's really nice and funny!) He is of the belief that the threat of protectionism is being exaggerated and that it is not systemic as many, including Simon Evenett, would suggest. Here is a brief outline of Simon's arguments and Ed's counterarguments. After you read them, take the poll at the end!

Simon Evenett [CEPR, Co-Director in International Trade and Regional Economics] - Simon has taken part in initiating a Global Trade Alert which draws research from seven regions of the world. Its goal is to present an objective view of the rise in protectionism during the economic crisis. The full report can be found here.

A WTO study showed that almost all major trading jurisdictions exceeded the normal four percent increase in tariff lines. Are these increases permanent?
The current economic climate has precipitated a new mix of protectionist measures. Always question studies that look at only one form of protectionist measures because in order to truly understand that threat of protectionism, one must look at the entire mix of measures that are being implemented.
About 1/7 (46 out of 332) of protectionist measures are tariffs.
Ordinarily, in recession, the most popular form of protectionist measures is trade defense. This includes AD, CVD, safeguards, etc. However, bailouts and subsidies now account for 136 out of 332 protectionist measures making them the most popular. (Is anyone surprised?)
Interestingly, (but maybe not surprisingly) less than half of these bailouts and subsidies apply to the financial sector; most apply to manufacturing. The sectoral incidence of protectionism has not changed. (The sectors that have traditionally been good at receiving protection continue to receive it)
Even if the overall impact of new protectionist measures on trade is miniscule now, these measures may be difficult to remove in the long run and affect future trade activity. Congress seems to want to include Buy American provisions in more permanent bills.

Edward Gresser [Democratic Leadership Council, Senior Fellow and Director of Trade and Global Markets Project] - Ed presents a different view on the rise of protectionism in the midst of the economic crisis. You can read his post about the fall of U.S. imports here.

The decrease in imports is roughly parallel to the overall decrease in world trade. The decrease may not necessarily be a good measure of the impact of protectionist policies. Rather, it may simply reflect the fall in global demand.
Last year, there were 34 cases of protectionism. This figure is higher than those of 2005, 2006 and 2007 (~10-15), but still coincides with the long term average since 1979.
Are bailouts and subsidies necessarily bad for trade? Allowing the financial sector to fail would have likely been more harmful to trade than any combination of tariffs.
People draw many parallels between now and the 1930s, but the mentality then was very different. In the 1930s there was a broad decision to move towards autarky and away from the global economy. That is not the case now. Countries are motivated to become more integrated in the global economy.
There are factors outside of policy that work to liberalize trade. (Ex: cost of moving goods and information goes down every year)

Additional things to consider:

GTA has not yet studied whether the increase in protectionist measures would be considered normal had there not been a financial crisis. (They still need to see how the financial bailouts/subsidies creates a bias in their results.)
It is difficult to substantiate information regarding technical standards and regulatory interventions.
How has FDI changed? How does this affect trade?
Data on public procurement needs to be improved. It is difficult to find how much of the decrease in imports was in the private or public sector.

Random Fact: When you google search GTA, you won't immediately find Global Trade Alert. You find Grand Theft Auto. Ha.

&amp;amp;amp;lt;p&amp;amp;amp;gt;Loading...&amp;amp;amp;lt;/p&amp;amp;amp;gt;

Austan Goolsbee on the Daily Show!

2010-02-02T14:25:00.004-05:00

Austan Goolsbee was on the Daily Show last night! Full episode here. Some of you might remember him as the winner of "DC's Funniest Celebrity Contest." Here!

He talked about the Volcker Rule. WSJ has lots of videos on this (Volcker Rule vs. Basel Committee Proposals) Economics of Contempt responded.

Campus Progress quoted Jon Stewart on Students Over Banks!
"The idea of taking away the middle man in college loans would get us 46 billion dollars over 10 years- that, stunned me. That gets us more savings than removing subsidies from oil companies which I guess over 10 years is like 40 billion."

Sorry I haven't blogged in a while...last week was hectic because I was catching up on classwork and work work. And I now have a roommate and a dog!

"Fear the Boom and Bust" a Hayek vs. Keynes Rap Anthem

2010-01-25T19:51:00.002-05:00

Thanks for forwarding this to me, Professor Lucas!
My Wellesley Professors continue to enhance my life.

TAN/FAT.

2010-01-16T20:46:00.001-05:00

Going to the Bahamas on a cruise with my fams.
I will return tanner and fatter. (although, I did pack sneakers and gym shorts so I could work out...)

Peace out, SUCKERS. HA.

The Economics of Relationships: Your Votes.

2010-01-14T10:00:00.000-05:00

14 of you thought that Yes! Relationships are fun and cost-effective!
1 of you thought No! I'm not wasting my time on lemons!
12 of you thought Nams and I are insane.
2 of you are asexual.

Thanks for your feedback, and sorry for the delay in posting results!

Topic suggestions for next debate?

The Economics of Relationships: Counterpoint.

2010-01-05T18:39:00.016-05:00

This is Nami, guestblogging in response to Esther's post on the economics of relationships. Read our blog posts then take the 1 question survey below! We'll post the results in a week!

You’re young, fresh out of college, with your entire future ahead of you. New opportunities and possibilities abound. No longer strapped to your academic core and concentration requirements, you’re free to pursue almost anything you want – except another boy. Why? Because you’re in a “relationship.” Bah.

Now, I’m neither an economist nor an expert on relationships. But, I am a new grad in a new city, with a new life and a new boyfriend (I’ll refer to him as A). Our relationship has seen its share of ups & downs and the option of splitting has, in times of stress, fatigue, and annoyance (can we say Friday nights?), more than once entered our vocabulary. I’m sure that the question of “Is this worth it?” has crossed our minds multiple times.

But, the answer thus far has always been yes. Once the fights die down and the rage begins to dissipate, a fear settles in. “What am I doing? I don’t want to break up!” Panic hits me, a fist to the stomach. I’ve acted and reacted in such a way many times, but I rarely stopped and thought about the question – Is this worth it? Am I gaining as much as I should from this boyfriend? Do the allowances of this relationship really outweigh its limitations?

As I stated earlier, I’m no economist. But, Esther is. She suggested that I research the following terms to better understand my situation, from an economic point of view:

· Diminishing marginal returns
· Opportunity cost
· Sunk cost

Here’s my understanding of them:

· Diminishing (marginal) returns: when you get progressively less as you put in more (in contrast to what you would expect). Relationship example: Before A & I were anything 1^st person plural, I would get really happy when he called me. Over time, he continues to call me – it still pleases me but I derive less and less happiness from each call.
· Opportunity cost: value of the next best choice, or basically, what you’re giving up. Relationship example: One opportunity cost of having a boyfriend is freedom to see other boys.
· Sunk cost: costs that have already incurred and you can’t get back – what you already gave up. Relationship example: We’ve been through too much; what a waste all our troubles were! Even if I’m miserable now, I can’t just bail – I’m loss-averse!

Given her previous post and the terms she'd assigned me, I think we can all agree that she's not only an economist, but a Pessimist! And it's true, these terms paint a pretty grim picture of love. But, let’s take a closer look at how these terms can apply.

Diminishing returns do indeed exist in dating – the 100^th kiss does not rival the 1^st. Thinking about diminishing returns makes it seem as if you’re losing out in the end: I’m putting my love, patience, and time into this relationship…but why am I not getting the same high? But, first of all, what you have to realize is: hey, you’re still getting some high! You’re still gaining from the relationship, just not as much as in the beginning. And this makes perfect sense. The opposite of diminishing returns is accelerating returns. For example, once a crush develops, every phone call and e-mail brings more and more excitement and pleasure. You start dating and every moment you spend together seems better than the last. OMG, this is perfect, you think, it can’t get any better! Your returns are accelerating, your happiness is through the roof; 1^st kiss and you melt.

but Warning: this may not last. But, that’s not a bad thing! Your returns start to even out, become constant, normalize. This is good: people can stop regurgitating.

Second of all, you lose some, you win some. While you lose some of the excitement and eustress over time, you gain consistency, reliability, dependability. Boring? Maybe. But, definitely more satisfying in the long run. The high dissipates but contentment and security take its place. I now have a companion, a partner-in-crime. The spectrum of sentiments I express widens – I can be angry, I can be a brat, I can be depressed, I can be annoying, and I know that he’ll understand, and vice versa.

Now, with opportunity cost, things get more interesting. Having a significant other has its perks, but it also has its drags. Am I still the i-n-d-e-p-e-n-d-e-n-t woman that I was? Sure, but less so. What am I giving up by being with A? Being the center of my own life. There’s another party to consider now. What do we both want to eat? What do we want to do? Another is romantic freedom: I’m not free to sow my wild oats! I am not living the care-free, dating-around, everyone’s a potential hook-up kind of lifestyle. Bound to monogamy: prison! And last but not least, I may possibly be giving up The Perfect Boy, The One – somewhere out there, my exact counterpart may be waiting for me, searching for me, but I’m nowhere to be found. This relationship is a prison! Free me from my chains, lovely captor!

But, wait. We must consider the opportunity costs of being single or breaking up. I mentioned some before (reliability, companionship, etc.), but there are more. I lose a best friend, a listener, consistent plans, consistent physical relations, and freedom…from loneliness. We’ll get into the actual financial costs and gains later.

Considering the role sunk costs play in all of this makes everything a lot more…serious. Technically, if you’re a rational player – and I’d like to think of myself as quite practical and reasonable – you shouldn’t take sunk costs into consideration. The example Wikipedia gives us is about buying tickets to a movie. Let’s say you Fandango that shit and buy advance tickets to High School Musical 2. Then, you realize there’s no way you want to watch that – the reviews have been terrible and you don’t know what you were thinking. Should you bail or go? The sunk cost is the price of the movie ticket. If you stay, you’ve lost $9, your mental well-being, and your time. If you bail, you still lose $9, but you’re mental state is intact and you can spend your time better elsewhere. If you look at it that way, of course you should bail! But more often than not, people stay.

So, maybe I’m not so rational. I know I ought not consider sunk costs, but I do. I order a big meal, it’s expensive, I get full after eating half of it. But, what do I do? I truck on and devour the entire dish, which leads to stomach pains, fat goggles, and world of regret. Why do I do it? Because I paid for that goddamn meal!

Right, so back to relationships. Relationships aren’t easy; they require work and sacrifice. The road to A & my relationship was rocky – distance and time differences aggravated tensions, resulting in countless arguments and resentment. We worked through each and every one. Sunk cost. I moved to a new city, not for him, but it would be wrong to say he didn’t play a part in my decision-making. Sunk cost. How can we break up now? After all we’ve been through, after all we’ve put into this mess? Technically, if things are rough with A & me, I should consider only the future, ignore sunk costs, and break it off. Eff this, A!...right?

Not exactly. Yes, a relationship is an investment, but it’s not a night at the movies. A sunk cost in making a relationship work is nowhere near the same as $$ paid to watch Zach Efron. With love, a cost can also be a gain – arguments can make your relationship stronger – and sunk costs are also history, and history is part of what holds relationships (friendships, family, romantic) together! A shared history with your best friend is invaluable. Sunk costs need not be the focus, but they should be considered to some extent!

I’m guessing you have a pretty good idea by now where I stand in terms of my relationship. But, this wasn’t easy. Weeks of field research have shaped my conclusions, during which A & I experienced the best and worst of our times together. So, let’s scrap all this theoretical and romantic nonsense and get down to the numbers. Is our decision to stay together a financially sound one?

FOOD & DRINK: Going out every weekend adds up. When I was single, I usually went out (dinner + drinks) on Fridays and Saturdays. Dinner was an affair and drinks were expensive. There was pressure to go out hard and spend the money to do so. And if you're a guy, you can expect to spend even more -- impressing your dates with fancy dinners at fancier restaurants, buying rounds of drinks for the ladies you're trying to bed. Once you're in a relationship, standards begin to change. A fun night can just meet a night in, cooking dinner and watching something on Hulu. Lame? Maybe. Affordable? Heck yes. Cruising for potential mates costs money, and by money, I mean alcohol. People like to loosen up with liquor and unless you limit yourself to happy hours, drinks can get expensive. BFs and GFs sort of eliminate the need to booze up. Alcohol doesn't loosen you up, then, it just makes you sleepy.

Maybe I've just become lamer, more boring. Maybe I've imprisoned myself, allowing hundreds of potential mates slip past me. Maybe I'll find myself at age 42, stuck in a loveless marriage full of resentment and discontent. Perhaps. But for the meantime?-- at least, I'm saving a shit ton of money.

&amp;amp;lt;p&amp;amp;gt;&amp;amp;lt;p&amp;amp;gt;Loading...&amp;amp;lt;/p&amp;amp;gt;&amp;amp;lt;/p&amp;amp;gt;

The Economics of Relationships

2010-01-05T18:39:00.006-05:00

My parents have been bothering me a lot about getting married. I'm offended that they're so eager to get rid of me. However, it did make me think about my aversion to relationships. It made me wonder why certain people find relationships so appealing…

Does anyone else think that it’s kind of unhealthy to be attached to any one person in the world? The first thing we learn when making investments is diversification! Relationships are like investments. Your closest friends and the people you love the most are like stocks – high returns, high volatility (b/c they are the ones who affect your emotions the most). Your 2nd tier friends are like bonds – low volatility and low returns. Your frienemies are like cash – zero nominal returns, negative real returns, but you keep them around just in case…
How can you possibly place so much trust in ONE person? That’s like putting all of your retirement money in Enron stock...OOPS.

I once told a boy that I couldn’t date him because my utility of expected value exceeded expected utility. In other words, I am risk averse. I know that I can achieve a certain amount of happiness when I’m single, but when I’m in a relationship, it’s a gamble. But I’m sure my utility function will change once I turn 30? Or 40? (I hear 40’s the new 30…)

Also, George Akerlof’s Market for Lemons paper has so many levels…
In his paper, George Akerlof explains how market failure occurs because of asymmetric information. In the used car market, a seller has good used cars and bad used cars, aka “lemons.” The seller knows which cars are lemons, but the buyer does not. Therefore, the buyer is only willing to pay the price for an average quality car. Since the seller cannot receive a fair price for the good cars, the seller will resort to selling only “lemons.” Thus, “the bad drives out the good.”
It’s the same with men. I’m assuming that most douchebags know that they’re douchebags. But it’s not like they’re going to go around broadcasting it. Even the seemingly nice ones can turn out to be complete a-holes. Therefore, I am only willing to invest so much in my relationships because there’s a pretty good chance that I am in fact, dating a lemon.

However, my friend Evelyne points out that as we get older, there will likely be more “lemons” in the market because all of the good guys will already be taken. My mother also argues that it is the girl’s responsibility to turn a bad guy (because all guys are naturally bad, of course) into a good guy – take lemons and make lemonade?

Basically, I don’t want lemonade enough to look for a “good lemon.” Or maybe I don’t have the patience to squeeze lemons until I find good lemonade.

What’s the point?

It’s only a matter of time before the principle of diminishing returns kicks in and we get tired of each other. Someone told me that human beings are only made to be “in love” for two years at a time. That’s fine. Boyfriends, and future husband, I accept that you may not love me “until death do us part.” All I ask is that you not make a COMPLETE fool out of me the way Tiger did with his wife.

It's a crapshoot, friends. In general, the romantics will be disappointed and the pessimists will be pleasantly surprised. I suppose that’s what we would call mean reversion in standpoint…

Bernanke's Life in Photos

2009-12-28T20:02:00.003-05:00

From my friend XYN's blog! [tumbled from Time]

Also from Time, a brief history of the Fed. [in pictures!]

Holly and Reindeer.

2009-12-25T20:18:00.002-05:00

Is It Christmas?!

Tried to get my puppy, Holly, to pose as a reindeer. She was not cooperating...
And yes, that is my moose hat from Alaska (thanks nams!) which I wore around Wellesley b/c it literally feels like a warm animal is sitting on your head.

Mishkin and Monetary Policy.

2009-12-24T10:41:00.074-05:00

According to the International Economic Law and Policy Blog, if Santa were party to the WTO he would be charged with "dumping, not to mention violating IP rules, destroying the environment, using genetically modified reindeer and abusing his labor."

Ha.

So, I just finished reading an NBER paper titled, "The Channels of Monetary Transmission: Lessons for Monetary Policy" by Frederic S. Mishkin (author of my ECON 321 - Money and Banking textbook!) I found it on Akila's homepage and thought it would be fun to read. It was written in 1996, but seems relevant to today's economy, no

Before I talk about the paper, I thought it would be good to review IS-LM curves! Also, throughout this blog post remember that Y = C+I+G+NX. (output = consumption + investment + government spending + net exports)

[picture from the Economist]

LM stands for liquidity-money. And if there's one thing I learned from Professor Johnson, it is that IS-LM curves are NOT supply and demand curves. They're equilibrium loci! IS is the equilibrium locus of points at which the market for goods and services is cleared in the short run. Example: at r1 and Y1, the market for goods and services is cleared.

LM is an equilibrium locus of points for which money supply equals money demand. Example: at r3 and Y3, the money demanded in an economy equals the money supplied in that economy.

Okay, Mishkin's paper!
Mishkin starts out by explaining the principle of traditional expansionary monetary policy:

Money supply [M] increases leading to a decrease in real interest rates [r]. This stimulates investment spending [I] and leads to an increase in aggregate demand [AD] and output [Y].
M increases --> r decreases --> I increases --> Y increases.

If you're looking at IS-LM curves, the LM curve is shifting to the right. Because in order for demand to match the increased supply of money, interest rates must be lower for any given level of output/income [Y].

So what happens when money supply increases SO much such that nominal interest rates reach zero? (hrm...sound familiar?!)
Spending is actually affected by real interests rates rather than nominal interest rates. So, during times of expansionary monetary policy, expected price level [P^e] and expected inflation levels [π^e] rise. Given the Fisher equation, r = i − π, we can say that this increased expected inflation will lower the r and stimulate I leading to an increase in AD and Y.
M increases --> P^e increases --> π^e increases --> r decreases --> I increases --> Y increases.

Mishkin says that "this mechanism is a key element in monetarist discussions of why the U.S. was not stuck in a liquidity trap during the Great Depression and why expansionary monetary policy could have prevented the sharp decline in output during this period."

Mishkin points out that interest rate channels are not the only way through which monetary policy can promote growth. There is also the exchange rate channel, equity price channels and credit channels.

Exchange Rate Channel
When money supply increases, real interest rates fall. This means that the return on dollar denominated deposits will be relatively less than that on foreign exchange denominated deposits. Thus, demand for the dollar will fall and the exchange rate (E) will reflect depreciation. Depreciation isn't always a bad thing though. If the value of the dollar falls, American goods become relatively cheaper than foreign goods. This boosts net exports (NX) which boosts output (Y).
M increases --> r decreases --> E decreases --> NX increases --> Y increases.

Equity Price Channels
1) Tobin's q theory of investment: "q" --> the market value of firms divided by the replacement cost of capital. The higher q is, the cheaper it is (relatively) for firms to buy new plant and equipment capital. Fixed investment rises as q rises.
Since higher equity prices (P^e) will lead to higher q, we can say that:
M increases --> higher P^e --> higher q --> I increases --> Y increases.

2) Wealth effects: Remember Y = C+I+G+NX? Well, one of the determinants of C is the value of one's financial wealth. When stock prices rise, C is likely to rise as well.
M increases --> P^e increases --> wealth increases --> C increases --> Y increases.

1 & 2 apply to housing and land prices channels as well since housing and land also determine one's wealth.

Credit Channels:
"There are two basic channels of monetary transmission that arise as a result of information problems in credit markets:"
1) The bank lending channel: Expansionary monetary policy increases bank reserves and bank deposits thus allowing them to make more loans available to firms.
M increases --> bank deposits increase --> bank loans increase --> I increases --> Y increases.

Clearly, this does not always happen. The Economist recently wrote about the difficulties that small firms face during recession. Small firms rely on banks for about 90% of their financing needs while larger firms rely on banks for only about 30% of their financing needs.

2) Balance sheet channels:
When firms have lower net worth, there tend to be more adverse selection and moral hazard problems in lending to these firms. Businesses with lower net worth don't have as much collateral to put down for their loans (banks are more likely to suffer losses). Owners of such businesses also have lower equity stake in their firms and are willing to take greater risks with investment projects, etc. (moral hazard)
Thus, when M increases and P^e (net worth of firms) increases --> adverse selection/moral hazard decrease --> lending increases --> I increases --> Y increases.

Increased M and decreased nominal interest rates (i) also raises cash flow of firms which improves their balance sheets.
M increases --> i decreases --> cash flow increases --> adverse selection/moral hazard decrease --> lending increases --> I and Y increase.

An unanticipated rise in price level also improves balances sheets by raising the real value of firms' assets. Since burden of debt is dictated by nominal interest rates, an unexpected rise in price level lowers burden of debt. (Lenders don't like inflation, debtors like inflation)
Therefore, an unexpected rise in price level raises real net worth of firms, lowering adverse selection and moral hazard problems and stimulating I and Y as mentioned above.

M increases --> unanticipated P increases --> adverse selection/moral hazard decrease --> lending increases --> I and Y increase.

Household balance sheet effects:
This one's pretty straightforward...if households expect themselves to be in financial distress in the near future, they don't want to invest in illiquid consumer durable or housing assets.
However, if they expect the value of their financial assets to rise, they will be willing to buy a new house or car, etc.
M increases --> P^e increases --> financial assets increase --> likelihood of financial distress decreases --> consumer durable and housing expenditure increase --> Y increases.

Okay, so this blogpost is pretty monstrous. I'll just bullet point a few important things from the rest of Mishkin's paper:

Monetary policy affects Y through other asset prices besides interest rates.
Near zero short-term interest rates do not necessarily mean that monetary policy is easy if economy is undergoing deflation. (ex: short-term interest rates during Great Depression were near zero, but monetary policy was contractionary)
If short-term interest rates are near zero but stock Ps are low, land prices are low and value of domestic currency is high, then monetary policy is very tight and not easy.
"Avoiding unanticipated fluctuations in the price level is an important objective of monetary policy, thus providing a rationale for price stability as the primary long-run goal for monetary policy."

So, basically, when I started writing this blog post, I just wrote out the things that are bolded and in green so I wouldn't forget what I had read in Mishkin's paper. It turned out to be a pretty incoherent blogpost, so I started adding more and more details...

If you're still reading, pat yourself on the back.

Happy Christmas Eve!

Answers to Crossword #4!

2009-12-18T08:45:00.000-05:00

Across:
3) five
5) four
6) progressive
8) treasury
10) expensive
12) dubai
14) inflation

Down:
1) discouraged
2) somalia
4) emerging
7) obesity
9) median
11) spending
13) upward

Pauls.

2009-12-14T14:59:00.002-05:00

Paul Krugman talks about Paul Samuelson here.
Boo. Hate it when smart people die.

Sorry for the delay on crossword. Will post new one with answers to old one soonish!

All's Fair in Love and War?

2009-12-09T10:12:00.000-05:00

A post from The Economist blog Free Exchange from Democracy in America.

"A BIG hat tip to my colleague at Democracy in America for highlighting this factoid, from Spencer Ackerman:

According to Gen. McChrystal, the Taliban pays its soldiers about $300 U.S. per month—which is more than the U.S.-sponsored Afghan government does... McChrystal said that in coordination with the Afghan government, the pay scale for the Afghan security forces has just almost doubled, to the point where it’s "almost at parity" with the Taliban now. Of course, that still means the Taliban pays its recruits more than the Afghan government does. And if the Obama administration and NATO are correct that many Taliban foot soldiers essentially fight because of economic opportunity, then this is a glaring, flashing red light of a problem.

Matt Yglesias follows up with relevant thoughts:

At the same time, this highlights a lot of lingering issues about the cost-effectiveness of our approach. Why are we spending a multiple of Afghanistan’s total GDP on fighting a war in the country? Couldn’t more be done, for cheaper, with cash for bribes and development? How is it that it doesn’t take the Taliban years to train competent soldiers?

The concept of a sunk cost really doesn't seem to have penetrated the intellectual sphere of military policymakers."

HA.

Speaking of sunk cost, this is for my friends who are in less than ideal relationships:

If you're in a sh*tty relationship that's been sh*tty for a while and you're thinking, oh but I should just stay in it because I've already given up so much to be with this person blah blah blah, mission abort! Sunk cost! Do you want to add opportunity cost to your list too?! You're young! Go find someone else who will make you happier! (divorce in my future? hope not.)

My heart bleeds for the filthy rich.

2009-12-07T15:02:00.006-05:00

From the Economist: The rich tax themselves to stay rich. Interesting.

Buttonwood tackles the issue of banker bonuses. As does Richard Murphy.

I am very bitter about the finance industry. In college, I thought that I would lose my friends to their significant others. But it looks like I've lost many of them to banks instead...boo. When people ask my friend if she has a boyfriend her response is, "Yes. His name is Deutsche Bank." Sad.

In a gchat conversation today:
----: we better getting bonuses this year or else i legit have mcd's hrly wages

Haha.

Will post answers to Crossword #4 on Friday when I put up a new crossword!

Extra: Great visualization of income inequality in NYC here.

Beautiful Redemption.

2009-12-06T22:17:00.000-05:00

Performance by my favorite person in the world, my younger sister, Serena!

She is amazing because 1) she doesn't have any formal vocal training (well, she took a lesson or two back in h.s. but didn't really have time for it...) and 2) if you've EVER heard me sing, you know that vocal talent does not run in the Jang family...

Bad Ben, Bad!

2009-12-04T14:47:00.001-05:00

Poor Ben Bernanke. He's orders of magnitudes smarter than the people who bitch him out on a daily basis. Washington Post article here.

Testimony here.

Crossword Puzzle #4!

2009-12-04T09:58:00.009-05:00

Puzzle and hints are two separately uploaded pictures. Click on either one to enlarge/enhance.
Enjoy! Answers posted on Monday.

HAPPY THANKSGIVING!

2009-11-26T22:25:00.004-05:00

My favorite holiday of the year. For obvious reasons.

Some things that I am thankful for:

1) replyforall.com - donate to your favorite causes just by sending e-mails! [fabulous. i love donating other people's money! haha]

2) threadsy.com - because I hate going to separate webpages for facebook, twitter, gmail, etc. Thank you, threadsy, for pulling me together. You've come a long way since your unifime days.

3) my job, which allowed me to have a kid without the messiness of giving birth. I just signed up to sponsor a child through worldvision.org. It's awesome! You can donate a GOAT AND TWO CHICKENS for $100. LOVES IT.

4) The Economist.

5) my people (this includes family, friends, blog followers, etc.)

6) my dog.

7) and how could I forget, the independence of the Fed.

Music and Medicine.

2009-11-17T21:38:00.018-05:00

I went to an intellectual property rights (IPR) lecture the other day, and the professor mentioned this thing called the "homestyle exemption" which basically allows small restaurants and stores to play music without paying royalties so long as they use "homestyle equipment."

I don't know about other people, but I have pretty badass subwoofers and speakers attached to my laptop...and Carrie's subwoofer puts mine to shame...

Anyway, there's also a "business exemption" which allows food and retail establishments to play music without authorization or payment of a fee as long as their size does not exceed a certain square footage limit.

So I was telling Hillary that in Dispute Settlement 160, the EC complained that these exemptions were violations of Article 9(1) of the TRIPS agreement, which is basically this, from what I can tell...

Her response was, "It makes me sad that people spend their energy on that kind of thing..."

I can't really imagine Lang Lang throwing a hissy fit because he didn't get paid for a CD of his that was played at Bloomingdale's or wherever...
He probably plays because he loves to, and because he's so f-ing good at it. [Just went to his concert on Friday and he was amazing!]

And I don't think F. Scott Fitzgerald wrote The Great Gatsby thinking, "Yeah...this one is totally going to produce $500,000 a year for my grandchildrens' trust fund!" (Truth)
Hillary says, "That's crazy! That's more than 7 times what YOU make." Thank you, Hillary, for so kindly pointing this out to me.

Anyway, it seems silly to me that people have to pay to play music for others...if it is a disincentive for musicians to make music because their music is being played in public places for free, then maybe they shouldn't be musicians to begin with.

The Economist just had an article about music piracy, here.

Also, because I was talking to a few people about IPR and drugs and wanted to write down some thoughts:

1) As Michelle Boldrin and David Levine argue, perhaps we are on the wrong side of the Laffer curve when it comes to innovation and rewards. CMR International reported that in the 1990s, $35-40 billion on R&D yielded 35-40 new drugs. Now, however, $60 billion on R&D yields fewer than 30 new drugs.

2) A good excerpt from an old article in the Economist:

"• Drugs Much of the recent debate over the impact of IPR on the poor has centred on the issue of access to expensive medicines. On paper, many of the world's least-developed countries have laws which provide patent protection for pharmaceuticals. In practice, few enforce them. Spurred on by a victory in April 2001 against drug companies fighting patent reform in South Africa, developing countries issued a declaration at the WTO meeting in Doha last year. This asserted the primacy of public health over IPR. They resolved that the world's least-developed countries should be given at least until 2016 to introduce patent protection for pharmaceuticals.

On September 17th, the WTO council responsible for TRIPS will consider a far trickier proposition in the declaration: how to make compulsory licensing (the manufacture and marketing of a patented drug without the patent-holder's consent) work for the poorest. TRIPS already permits compulsory licensing under certain conditions, including national emergencies. This is fine for countries such as Brazil, which have domestic drug industries to copy the medicines. Brazil has, indeed, used the threat of compulsory licensing to wring price discounts out of drug companies, a ploy which the commission, somewhat controversially, supports.

The problem is what to do with countries which have no drug makers. For the moment, they can import generic copies from the likes of India, but come 2006, when those exporters are supposed to have fallen in with the TRIPS line, who will supply the drugs?"

3) Random fact: Viagra was initially developed as the hypertension drug, Slidenafil. But they were like, hey, there's this weird side effect and we can make so much more money this way! Ha.
Hillary: "Can you imagine? You're going to climb Mount Everest and you pack some Viagra with you, and people are like, 'why are you bringing that along?!'"

4) From Hillary: "This does make the drug companies look pretty evil, but the argument that drug companies need to make money in order to invest in new research is a valid one."

Happy World Series!

2009-11-01T17:57:00.006-05:00

Interesting fact about Larry Summers and baseball, "in the sixth grade Larry created an analysis of baseball games that attempted to predict the probability of a team’s performance at the end of the season based on its position in the standings on the Fourth of July." [from the New Yorker]

Alan Greenspan also learned how to do fractions by studying baseball stats.

Let's go YANKEES, let's go!

Paul Blustein on the Misadventures of the Most Favored Nations

2009-10-21T22:29:00.008-04:00

"Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trading System"
That's the subtitle of Paul Blustein's book, Misadventures of the Most Favored Nations. How can one not want to pick up a book with that title/subtitle?!

The Washington Post says, "Blustein has thoroughly mastered the craft of breathing life into intrinsically dull material with compelling thematic narrative and delicious character studies." Delicious, indeed.

Paul Blustein came to Georgetown Law today to talk about his book, and it was so fun! He read some pages from his book and at one point he pretended to be an army guy yelling at trade representatives.
Apparently, Americans attending the Doha round were given the password "paging Mr. Black," which meant that there was a terrorist threat and all Americans had to evacuate so they could be taken to navy ships nearby. (To hell with the reps from other countries, right? Haha.)

Blustein talked about the frustrations of different countries during multilateral trade rounds like Doha, and the challenges that must be overcome when negotiating a deal between parties with disparate views and priorities. Towards the end of his lecture, Blustein said he felt that a moratorium should be placed on bilateral trade agreements because they draw attention away from multilateral processes.
I thought this was an interesting statement for him to make since he had spent so much time talking about the doomed nature of multilateral trade rounds. If multilateral rounds are so ineffective, isn't the opportunity cost of focusing on bilateral trade agreements insignificant? Why not focus on the pareto improvements that could be made through bilateral trade agreements rather than those that will never be made through multilateral agreements?
Blustein clarified: Although the WTO has its flaws, countries need to preserve this organization that has done so much to prevent trade wars (through its dispute settlement system). When countries start shifting toward bilateral agreements, there is less of an incentive for them to pursue/cooperate in multilateral agreements that can lead to more benefits at the margin. (He explained all of this much more eloquently that I have...)

I agree that countries need to start thinking about themselves as part of a global community, and not just the European community, or the East Asian community, etc. Like Lant Pritchett said, we need to stop having these "imaginary communities."

The Washington Post says, "Blustein leaves the book's punch line until its final section: The benefits of free trade have been grossly oversold. By the WTO's own accounting, even the utopian elimination of all tariffs would boost world GDP by less than a half-percent, with most of that benefit going to the wealthiest nations." However, it is difficult to swallow this idea after reading pieces like "Ricardo's Difficult Idea" by Paul Krugman.

A friend of Blustein argued that by claiming that the sky is falling, one is only doing more to catalyze the self-prophesied failure of the WTO. It's kind of like deflation - if people go around saying that there is the threat of deflation, even when there is none, we could end up in a deflationary death spiral like Japan's lost decade...

Related Links:
Blustein mentioned Smoot-Hawley at one point and it reminded me of the '93 debate where Gore gives Perot a framed picture of Smoot and Hawley and says, "I framed this so you can put it on your wall if you want to." Ha!

Professor Johnson used to do Ross Perot imitations. Those were fun. (Sigh, I miss Wellesley.)

Greg Mankiw blogged about VAT not too long ago.

In other news:
I'll be blogging about ridiculous things countries have done to discriminate against certain imports. (Are all cows the same?! Are all sardines the same?! What exactly is a "like good?")

Filling out paperwork for my retirement account and health insurance has made me even more depressed about turning 22 this week...Melky Cabrera is only 3 years older than I am and he plays on the best baseball team EVER, AND he has crater like dimples. How am I supposed to beat that?!

Anyway, time for sleep. Tomorrow's Thursday - my favorite day of the week! (b/c I get to go to International Trade and get out of work knowing that the next day is Friday...but I assure you, Friday is not my favorite day of the week. My favorite day of the week is Thursday.)

Racism and Religionomics.

2009-10-17T15:02:00.019-04:00

I had a conversation with a man who reminded me of a real life Michael Scott. And not in a good way.
Here's how it went.

Me: Hello. Can I help you?
----: Oh, my. What a cute voice you have. You're so cute. You must be brand new.
Me: Well, I just started 2 weeks ago...
----: Well, you're brand new and squeaky clean, aren't you?
Me (in my head): Well, I did take a shower this morning, but he doesn't know that...
----: I'm looking for L----. Is she here today?
Me: Yes, but I'm not sure where she is right now.

A little while later.
----: L----, isn't she nice? (points toward me) What's your name?
Me: Esther.
----: Oh, cmon. That's not your real name.
Me: My real name?
----: Is it?
Me: Uhh, yeah...
----: Where did you go to school?
Me: Wellesley.
----: (laughs) Oh, well I went to Babson. I know you Wellesley girls, with your noses in the air. Who did you date in college?
Me: No one. My econ textbooks. If we have our noses in the air, it's with good reason.
----: You probably only dated Harvard men, isn't that right?

WTF. Does he SERIOUSLY wonder why Wellesley girls wouldn't go out with him? I'm pretty sure it's not because he went to Babson...

Anyway, I've been feeling sick and went to bed at 7pm last night thinking that I would wake up in an hour or so. I ended up waking up at 9am the next morning. Haha. WIN.

I've been reading Brothers Karamazov, which I love love love. I just finished reading "Rebellion," a chapter in the book that makes one of the strongest arguments against the existence of God. (according to people who know way more lit than I do...) I will probably still go to church tomorrow and ask God to make sure I don't get H1N1. (Thanks, God.)

In Development Econ, Professor Lucas once asked us to name examples of things that are correlated with GDP per capita where the causation only runs from GDP per capita to that something, and not vice versa. It's actually kind of difficult, no? My group's response was religion. We figured that as countries become wealthier, they place less importance on religion. However, religion does not really have an effect on GDP per capita. [Apparently, the U.S. is an outlier and is very religious for its level of wealth.]

Robert Barro has also studied religion in the context of economics. It was mentioned in Marginal Revolution here!

The Economist had a little something about Islam: here.

As Voltaire once wrote, s'il n'existait pas Dieu, il faudrait l'inventer. [In Bound Together, Nayan Chanda claims that Voltaire drank 80 cups of coffee a day at Le Procope, to which I say, eww.]

It was probably not a good idea for me to blog in a feverish state...I don't think this is a very coherent post.

OMGSH GUYS. I just googled "religion economics" and found a blog called RELIGIONOMICS. HAHAHAHA. How funny is that?!

I also found this article about economists and religion.

That's all for today. Is it a bad idea for me to try to make Phoenician honey biscuits while sick?

Prizes!

2009-10-12T14:26:00.002-04:00

This year's Nobel Prize for Economics: Elinor Ostrom & Oliver E. Williamson

Peace prize went to Obama...
A few economists commented, "it's like giving a Nobel Prize to an economist who is going to write a good paper..."
Haha.

Sorkin Book Excerpt: "Too Big to Fail"

2009-10-06T10:39:00.003-04:00

Sorkin Book Excerpt: "Too Big to Fail"

Can you imagine someone telling Geithner to get f*cked?!

Posted using ShareThis

The Marshmellow Test

2009-09-24T00:18:00.012-04:00

A lesson on hyperbolic preferences.

New Yorker had an article about it here!

So, if you're computer has no sound, don't worry. Basically, a woman tells these children that they can eat the 1st marshmellow right away, OR they can wait until she comes back and receive a 2nd marshmellow. She then leaves for a very long time...

The boy in grey shirt (the one who does NOT display hyperbolic preferences) is SOOO CUTE from 2:46-2:53. OMGAHHH. SO FUNNY. I DIE.

Diversions.

2009-09-19T13:09:00.012-04:00

I finally have some time to blog! These past two weeks have been crazy. By the end of this week, I will have been on a bus/car for a total of 27 hours...
I picked out my apartment in Pentagon City and it's going to be awesome! It's pretty much across the street from the Pentagon City mall, Pentagon City metro station, Costco and a Mr. Smoothie. What more could a girl who does not drive ask for? Maybe a puppy...

Anyway, I linked you guys to Jenn's blog earlier. She wrote an awesome post about Chavez's impact on Venezuela. As promised, here is my post on expropriation and social institutions. (I promised Jenn it would be meaty...)

In ECON 333, we studied a paper called, "Why do some countries produce so much more output per worker than others?" by Robert E. Hall and Charles I. Jones. In this paper, Hall and Jones hypothesize that output per worker is affected by differences in social infrastructure across countries. They assume that social infrastructure is determined historically by location and other factors captured in part by language.

So, what exactly is "social infrastructure?" Unfortunately, social infrastructure is not easily quantifiable. However, Hall and Jones think that "the ideal measure of social infrastructure would quantify the wedge between the private return to productive activities and the social return to such activities. A good social infrastructure ensures that these returns are kept closely in line across the range of activities in an economy." Good social infrastructure protects people against "diversion." Diversion includes things like expropriation, corruption, etc.

Not surprisingly, Hall and Jones find that:
1) Differences in social infrastructure across countries cause large differences in capital accumulation, educational attainment, and productivity, and therefore large differences in income across countries.

One might argue that there is a feedback effect from output per worker to social infrastructure (i.e. high output per worker may lead to the creation of better social infrastructure). However, Hall and Jones control for this feedback by using instrumental variables.* This is explained in their last finding:
"The extent to which different countries have adopted different social infrastructures is partially related to the extent to which they have been influenced by Western Europe. Using distance from the equator and language data, we conclude that our finding that differences in social infrastructure cause large differences in income is robust to measurement error and endogeneity concerns."

Basically, Hall and Jones are saying that countries that have been influenced by Western Europe tend to have better social infrastructure and higher output per capita. They study a sample of 127 countries and give a nice table of different countries' productivity levels as ratios to U.S. values.

Here are some figures:
Canada: 0.941
U.K.: 0.727
Japan: 0.587
India: 0.086
China: 0.060
Zaire: 0.033
The average for 127 countries was 0.296 w/a standard deviation of 0.268.

Why is the quality of social infrastructure so different across countries? (UGH, my mom just pulled a white hair out of my head as I was typing...WTF. THAT HURT.)

Anyway, there are several theories that address the above question, but I think I'm going to need another blog post to write about Acemoglu, Johnson & Robinson, and Engerman & Sokoloff...

* Instrumental Variable:
Let's say we want to find the effect of "x" on "y." However, "x" is not quantifiable. So, we create an instrumental variable, "z," which is quantifiable. "z" affects "y" ONLY through "x." A bad instrumental variable affects "y" through other pathways.
For example,
x = total number of hours of TV watched
y = prevalence of autism in a city
z = amount of rainfall in that city

If we had no way of measuring the number of hours of TV watched in a city, but wanted to study its effect on the prevalence of autism, we could create instrumental variable "z," which is the amount of rainfall in that city.

More rain --> More kids stay indoors and watch TV --> higher prevalence of autism(?)

However, "z" is not a very good instrumental variable because you can make a pathway like this:

More rain --> More kids wear raincoats --> higher prevalence of autism(?)

Does all of that make sense?

OMGSHHH. I'm going to die laughing. I'm watching FRIENDS DVDs and my dad says, "Why do these people never look older? They're still so young!" I told him I was watching DVDs, and he said, "Oh okay. So they're old now, right?" Haha. LOVES IT.

Succexy (Like the song by Metric!)

2009-09-09T09:50:00.004-04:00

I am no longer frictionally unemployed! YAYAYAYAY!

Thanks so so so much to friends who have helped me along the way! Could NOT have done it without you. I <3 you!!!

I'll be working at Georgetown Law/thinking about going to law school because it will be FREE.

Here is the awesome Professor with whom I will be working: John H. Jackon
I'll have a chance to go to his International Economic Law seminars/classes. YAY! I'm SUPER EXCITED.

AND I WILL HAVE HEALTH INSURANCE! YESSSS!

Please visit me in D.C. PLEASE?!

<3
ESJ

The Middle Finger of the South.

2009-09-08T11:40:00.005-04:00

Hi! So I started writing this over the summer, but got distracted. Enjoy!

The Economist (a while ago): "Morton Marcus, a prominent local economist, calls [Indiana] 'the middle finger of the South thrust into the North.'"

Indiana is a rather dichotomous state. On July 21 and 22, the Indiana Office of Energy Development hosted an event called WIndiana. The conference focused on wind farming in Indiana, and according to the American Wind and Energy Association, "Indiana leads the nation in the growth of wind energy." On May 29th, Indiana celebrated the construction of Fowler Ridge Wind Farm, which will eventually produce 750 MW of wind energy (enough to power ~200,000 homes). However, only 2 out of 5 Dems in Indiana voted in favor of the climate change bill. The climate change bill is pretty flawed, but these Dems didn't oppose the climate change bill because of the $600 billion in forgone revenue (free permits vs. auctioned permits). They opposed the bill because they believed that stricter energy standards in Indiana would translate into a loss of jobs.

Indiana ranks 3rd in per capita consumption of coal (10.45 tons per year in 2007-2008) and approximately 94% of its electricity comes from coal. U.S. Rep. Joe Donnelly opposed the clean energy bill because he believed that Indiana's manufacturing sector would no longer be able to compete with those of China and India if stricter clean energy standards were imposed. In the face of such difficult times, the American Coalition for Clean Coal Electricity created this fabulous ad. I remember first hearing about this on Wait Wait...Don't Tell Me! Oh, such wonderful things I learn from Peter Sagal and Carl Kassel!

Anyway, I think America needs to quit whining/blaming foreign competition and up its game. Also, I think it's ironic that poorer countries are most adamantly opposed to clean energy standards even though they will be hit the hardest by climate change. Although, their opposition is more understandable. If you have to choose between food in your stomach and clean air in your lungs, you're going to choose food. Mmm....food. Lunch time! Peace out!

Also, I'm going to post about expropriation/nationalization next. And I think you should all read Jenn's post about Chavez to prepare yourselves!

News

2009-09-02T21:09:00.009-04:00

Hi everyone! These past two weeks have been absolutely crazy, so I haven't had a chance to blog much...

However, a few tidbits from the news:
Taxpayers are realizing profits as big banks repay their loans. This article reminded me of the Resolution Trust Corporation from the S&L crisis.

The WTO ruled that the U.S. would face ~$300 million in annual sanctions as a result of illegal subsidies to U.S. cotton growers. WP article here. Hrm...does this remind anyone else of corn subsidies?! Corn subsidies and sugar tariffs also make it impossible for Brazil to export sugar cane based ethanol, which is more environmentally friendly than corn based ethanol. Boo. I imagine Professor Johnson shaking his fists angrily as he tells his students this...

Paul Krugman's reaction to Greg Mankiw's post on SAT scores here. I guess even grown ups have frienemies...haha.

Pieces on health care from Free Exchange and WP.

Going to meet Chanda for bubble tea now! She is leaving for Peking University tomorrow. I am 80% excited, and 20% sad. Chanda, NY will miss you! That's right. ALL OF NEW YORK WILL MISS YOU, ESPECIALLY ME!

<3
ESJ

LaRouchies

2009-08-28T19:35:00.011-04:00

OMGSH guys, remember that time I got into a huge 2 hour argument with that guy outside my office from the LaRouche organization or whatever it's called?

Check this out!

So the argument that I had with the guy outside my office was about oil prices and speculation. LaRouchies were stopping people on the street and telling them that speculators were the reason oil prices were so high. When they stopped to tell me this, I asked, "have you considered reverse causality?"

I argued that speculators were perhaps betting on higher oil prices BECAUSE oil prices were rising. Maybe it's not the speculators who are driving prices up. Rather, it is our increased demand for oil that is driving oil prices up...

And then, of course, we got into an argument about whether climate change is real. They don't believe in climate change.
They also hate Britain.
I don't really know why...Britain has good scones. Mmmm. Scones...

Anyway, Susan, Anli and I wrote this in response to an ECON 321 [Money & Banking] p-set question. We mentioned oil speculation...

Financial asset markets often fail to exhibit the "law of demand" we learn in ECON 101, in which price increases lead to decreasing demand and increasing substitution. In these financial asset markets, however, rising asset prices actually cause higher demand and falling asset prices are a signal to sell. This failure of the "law of demand" in financial asset markets means that asset price movements feed upon themselves. Once they're going up, they continue to do so. As the Economist writes, "asset prices pull themselves up by their own bootstraps." But once there is a downturn, prices drop very quickly.
In the case of Lehman's collapse, one can argue that the reluctance of other financial institutions - BofA and Barclays - to buy Lehman, even at bargain prices, served as an indication that the government and other banks were losing faith in the financial system. After the collapse of Lehman, the prices of such debt instruments as MBSs and CDSs fell in price, further contributing to higher debt to asset rations for surviving banks. This led to a freeze-up in credit as surviving institutions tried to liquidate their balance sheets.
The market for oil and oil speculation is another example of the failure of the "law of demand." During the summer of 2008 [when I got into that argument with the LaRouchie!], many domestic consumers of oil complained that high prices were being driven by speculation. However, the Economist argued that in reality, high prices may have been driving speculation.

[To which the LaRouchies would say, "but how can we trust The Economist? it's from Britain!"]

GRE. GROSSLY RIDICULOUS EXAM.

2009-08-28T14:37:00.007-04:00

As I bury myself in GRE books, I find myself daydreaming about grad school. Ugh, I really just want to go to school. On that note...

This post reminded me of Stuy, which is NOT a private school.

Correlation between income and SAT scores for this year. Greg Mankiw and I had the same reaction to this...
If only I could also sell millions of textbooks every year. Haha.

Jenn, Toby, do we really want to be professors? I'm convinced professors have the best lives...

Response from Professor Case! (Of the Case-Shiller Index)

2009-08-18T13:51:00.014-04:00

Response from Professor Case @ Wellesley regarding Nami's question on my previous post:
Thanks, Professor!

Question: wait, what about this in america, now? http://www.calculatedriskblog.com/2009/08/research-on-homeownership-rate-through.html
from homeowners to renters?
explain plz

Response from Professor Case:

In 1989, Greg Mankiw and David Weil wrote a paper called "the baby boom the baby bust and the housing market." It made a big splash because it said the housing market would collapse in the U.S. during the 90's. He found a very strong correlation between household formation and house prices. Since the baby boomers were housed and the baby bust meant fewer households would be formed, he called for a big bust. Needless to say he was wrong. The 1990's and 2000's saw the biggest boom ever. I wrote a paper called "Land Prices and House Prices in the United States" published in an NBER volume edited by Jim Poterba some years ago, taking issue with Mankiw's result. I am attaching a copy. The real issue is how long will the boomers stay in their houses? I suspect they will stay a long time. They also buy houses like we buy cars...many own more than one. Consumer confidence is also not a strong predictor of behavior. Look at pages 40-45....Finally they forgot immigration....in the 1990 census we discovered about 10 million folks that we didn't know we had.... I also wrote the attached paper fpr Brookings

soooo

...contrary to what you read, there may no be such a big housing market effect...Quigley and I also find that falling house prices don't lower spending

Karl E. "Chip" Case

What Would Obama Do? And What Does Greg Mankiw Do?

2009-08-07T13:24:00.005-04:00

South Korea just wrapped up its free trade agreement with India. WSJ article here. It's been kind of hard to tell how Obama will address the issue of free trade...The Washington Post speculates...

Class of 2009, rejoice! Unemployment may be a lagging indicator, but do recent numbers give us hope? Or will we have to be more patient?

Also, I think this is so cute! Greg Mankiw at a Jason Mraz concert?! Haha.

Candles vs. the Sun

2009-08-03T20:15:00.002-04:00

I have rediscovered my love for Bastiat's Petition [brilliantly witty]. Too bad Bastiat is dead. I feel we could have been great friends!

Lunch and Lecture with Subir Lall!

2009-08-03T19:25:00.014-04:00

Thoughts after having lunch with Subir Lall, an expert on Korea at the IMF...

From Rice to Riches. (Like the rice pudding place in Soho!)
After the division of the Korean peninsula at the 38th parallel in 1945, the economy of South Korea was comparable to those of Cameroon, Ghana, and Malaysia. However, it effectively utilized foreign aid and pursued measures that would boost exports. Thus, South Korea established itself as the 16th largest economy by GDP by pursuing export-led growth. It has improved human welfare through what Robert Barro calls "capitalism without apology." As GDP per capita increased for Koreans, so too did domestic demand. This increased domestic demand may help Korea get through the financial crisis as it mitigates the sharp decrease in global demand. However, it is not enough to maintain medium to long term growth. Some issues that need to be addressed: rigid labor market, economic diversification, low savings rate.

The Labor Market
Although flexible labor markets can cause unemployment to be higher in countries like the U.S. than in countries like Korea (b/c it is much more difficult to fire people in Korea), in the long run, flexible labor markets promote long term growth through quicker and more efficient redistribution of resources. Dr. Lall commented that although the U.S. has done well in promoting flexible labor markets, it has not provided an adequate social safety net for times like these when the flexible market can cause unemployment to reach very high rates. Historically, the U.S. has relied on credit to serve as a social safety net. People would borrow against future earnings to get through times of frictional unemployment, etc. However, credit is not a guaranteed social safety net, as we discovered during the "credit crunch." Like the U.S., Korea also needs to expand and improve its existing social safety net. While doing so, it also needs to promote more flexible labor markets that will be necessary in order to allocate resources efficiently and promote long term growth.

The Government
One thing Korea has done well in the face of the crisis is execution. In the U.S., the passing of a fiscal stimulus bill does not immediately lead to a distribution of funds. However, when a fiscal stimulus bill is passed in Korea, they are quick to get funds where they are most needed.

Economic Diversification
Because Korea has depended on export-led growth for so long, its government is accustomed to providing incentives for export industries. However, these industries no longer need government support, and Korea might get more bang for the buck, or wham for the won?? if it were to provide incentives for entrepreneurs. Korea has an abundant supply of human capital and needs to find more outlets for its educated workers. Dr. Lall suggested that Korea pursue Silicon Valley type projects.

Korea also needs to expand its labor market and work its women! Korea isn't all that into gender equality, and I always tell my mom that I can't marry a Korean guy because I find them to be chauvinistic. I say this because I think it's kind of true, and also because it annoys her to no end that I don't date Korean guys. Haha.
Anyway, back to economics...productivity in non-tradable sectors stands at about 2%, while that of the manufacturing sector stands at about 4.6%. In order to compensate for the low productivity in the services sector, Korea needs to expand its labor market. It needs to include young people, old people, women...you get the idea.

Save, save, save!
If you go to outlet malls in New York or Boston, I promise, you will run into a group of Korean tourists. That's right. Outlet malls are a Korean tourist attraction. Why? Because Koreans are obsessed with designer clothes, bags, shoes, napkins...everything.

The Washington Post recently had an article about this phenomenon. At lunch, Dr. Lall mentioned the article, and I opened my bag and was like, "oh yeah! This article!" Haha. What a dork I am.
Anyway, low savings is dangerous in countries like Korea because the population is aging. Well, all populations age of course, but the birth rate is not high enough for the ratio of workers to old people to remain constant.

Wow! I'm amazed by how much I learned just by having lunch with Dr. Lall. I told him I felt like I was back at Wellesley sitting in a lecture. [a great thing for someone who is homesick for college!]

Fat Tax

2009-07-31T09:33:00.004-04:00

Interesting take on the taxes that I mentioned in an earlier blog post: here. From the Economist. =)

Also, Greg Mankiw's blog post!

Stuff I wrote before about fat taxes and health care.

Singapore and Tajikistan

2009-07-30T21:13:00.007-04:00

One of the most efficient health care systems that we studied in Advanced Health Econ was that of Singapore. Bryan Caplan blogs about it here.

The Embassy has been rather busy this week...the IMF will be releasing a forecast of the Korean economy in the next few weeks. (Details on Korea's economic recovery coming soon!) Apparently, the IMF gets calls from other countries asking how Korea plans to recover from the financial crisis because Korea has been rather resilient in dealing with economic crises...

In other news: One of my housemates just returned from Tajikistan! He's in the army and was studying Farsi.

He told us so many stories about Tajikistan! Apparently, they have a lot of natural resources, but none of it is really tapped because it's as if the country is being run by the mafia. He pointed out that Tajiks are somewhat lazy in that most businesses are owned by Russians or Chinese immigrants. Of course, I argued that if property rights are non-existent and Tajiks are constantly afraid of expropriation, they would not be motivated to start businesses, etc. He agreed that Tajikistan's property rights are somewhat antediluvian. (GRE word, Jenn!) Apparently, if a man builds a business on a piece of land and gets killed, whoever gets there first (I'm assuming it would be the killer) could claim that piece of land. (To which I say, WTF?!) Jonny Steinberg mentioned that in Africa, there was a man who had a really successful store in the neighborhood and he told his neighbors that the store was owned by a white man because he was afraid of backlash from the neighbors, etc. Jonny said the man lived in constant fear that people would kill him out of jealousy. Maybe Tajiks have the same fear?

J bought a Russian fur hat in a store whose owner was on the losing side of the civil war. He had a whole bunch of fur hats of Russians that he had killed with pictures of their corpses...J bought the hat, but left the picture of the corpse at the store...

Also, if an American is shot by a Tajik policeman, the Tajik gov't shoots that policeman and calls it even stevens...

In another adventure, he was being driven up a path that had a rising cliff on its right side and a cliff edge on its left side. And if you looked over the cliff edge on the left side, you could see cars that had fallen off in the past. There were many...
Upon seeing these car-wrecks, his friend said, "why are we driving so close to the left?! I like the right side so much better!" Haha.

In Tajikistan, they eat something called "osh." Apparently it's served on a rug on the floor. It's a pile of rice and oil and onions. Everyone sits around the rug, sits on their left hand, and eats with their right. When J tried to wash his hands before eating, he was told that it was an insult because he was implying that the woman's rug was not clean. He got sick later that night.

Currently, J is enjoying his first real shower in 6 weeks. Apparently, the running water in Tajikistan is muddy, and he said he felt as if he were trading sweat for filth...

I hope he doesn't fall asleep in the shower!

Waiting.

2009-07-28T09:36:00.006-04:00

While you hold your breathe and wait for me to post again (ha): Martin Feldstein in the Washington Post here. Remember him from my previous blog post?! We are obviously BFF.
Also, an older NYT editorial here.

Sorry it's taking me so long to post about other health care systems. It's difficult because there are so many that are better than our own...

Dizzying Health Care in America

2009-07-26T12:42:00.039-04:00

Things I remember from ECON 230 [Economics & Politics] and ECON 332 [Advanced Health Econ].

Basic Facts:
Medicaid: means-tested program that provides health insurance for low-income individuals. Medicaid is federally funded.

Medicare: not means-tested, which means even Bill Gates will receive Medicare. And why shouldn't he? He seems like a lovely fellow. I'm sure he will also need help from the government when he turns 65!
Anyway, it's for people over 65 years old who have paid Medicare taxes.

Medicare funding:
40% payroll taxes, 39% general revenues, 12% beneficiary premiums [yeah, I know, these numbers don't add up to 100, but that's what they are in the Kaiser factsheet]

Part A [Hospital Insurance]: 85% funding comes from payroll taxes (2.9% from employers and employees, each paying 1.45%), the rest comes from general rev.

Part B [Supplementary Medical Insurance/Non-hospital]: 75% general rev, 25% beneficiary premiums.

Part C [Medicare Advantage Plans/private]

Part D [Drugs, but not the bad kind. The gov't will not fund your crackhead habits!]: 77% general rev, 13% state payments for dual eligibility, 11% beneficiary premiums. [again, these numbers do not add up to 100]

U.S. Health Care Spending [click images to enlarge]

From oecd.org, here.

Why Costs are Increasing
1. adverse selection/moral hazard: Unhealthy people are more likely to buy insurance. People with insurance are more likely to engage in dangerous/unhealthy activities, driving up health care spending.

2. malpractice insurance: Evs, I can't find the paper that we read about malpractice insurance for ECON 332, so correct me if I am wrong. I think this is what the paper said. I'll try to find it later...
Anyway, In rural areas, doctors have fewer patients per whatever unit of area you want to use than in cities. Therefore, when malpractice insurance costs increase, rural doctors pass these costs onto their patients. Since there are fewer rural patients per doctor, these patients feel increasing costs more acutely than do patients in the city. Overall, the impact of malpractice insurance premium increases is not very large...

3. defensive medicine/over-utilization: here

4. technological advances/improved quality of life: Clifford Asness of AQR Capital Management points this out (very avidly) in the paper linked in my previous post. (thanks, tina!) He says, "I’m reasonably certain the cost of 1950’s level health care has dropped in real terms over the last 60 years (and you can probably have a barber from the year 1500 bleed you for almost nothing nowadays). Of course, with 1950’s health care, lots of things will kill you that 2009 health care would prevent. Also, your quality of life, in many instances, would be far worse, but you will have a little bit more change in your pocket as the price will be lower. Want to take the deal?"

4. Americans are fat. When I was home, I saw a commercial protesting taxes on junk food and soda...has anyone seen it? I tried finding it on Youtube, but was unsuccessful. In the commercial, there's a family going camping, and they've packed chips and soda and stuff, and the voice in the background is like, "so many Americans are facing tough times, and now is not the time to tax simple pleasures like chips and blah blah blah. write to your congressman, etc, etc."

I'm sorry, simple pleasure of what? Being FAT? Is it much more difficult to pack baby carrot sticks and peanut butter than chips during a recession? Does the recession somehow make juice and water less appealing than soda? Does being FAT somehow make being poor more bearable? I don't get it...and this is coming from someone who also writes in a blog called Fat Kid Adventures.

Also, don't be like this. If someone asks you why HFCS is bad, you can respond with, "large quantities of fructose stimulate the liver to produce triglycerides, promotes glycation of proteins and induces insulin resistance." [wikipedia] in other words, it makes you FAT.

In one of my many classes with Prof. Johnson (I can't remember which), he pointed out that people who smoke around us are not just hurting our lungs, but they're stealing from us! His argument was as follows:
People who smoke are a negative externality because they are more likely to get lung cancer, throat cancer, etc. Health care spending will go up. As a result, health insurance premiums will go up. Of course, smokers pay more in premiums anyway, but I think the same logic can be applied to people who consume junk food excessively.

Health insurance companies have ways of attracting "good risks." Prof. McKnight told us about "3rd floor walk up" policies - policies that are meant to keep out those who wouldn't be able to walk up three flights of stairs without passing out. For example, some health insurance companies offer deals at ski resorts because they know that healthier people go skiing, spend more time working out, etc.

Sneaky, right? And you thought the health insurance companies just wanted you to have more fun...

Anyway, I need to go study for GRE. I finally registered for Sept. 24th!

But don't worry Tina, I'll post about other countries' health care systems. [South Korea, Singapore, etc] In ECON 332, different groups presented on different health care plans/countries. Those were fun...will post [soon!]

Dizzying Health Care in America [Intro]

2009-07-24T18:23:00.005-04:00

So I just got a FB message from Tina asking me to blog about universal health care. I didn't realize how long it's been since I last blogged! Sorry for being so MIA!

I've had vestibular vertigo for the past week and a half and have been horribly dizzy. I have been to the hospital 5 times in the past 6 days for an MRI, ENG, hearing test, vestibular rehab, etc. Fortunately, no brain tumors or calcium deposits were found. That means the vertigo should go away on its own in about a month. Although I will have fully recovered by then, I doubt the American health care system will have made as much progress. This whole ordeal has made me realize (again) that American health care is in desperate need of reform...

But I'm going to dins with the fams right now, so I'll blog about universal health care when I get back! [but I have to pack for DC tonight, so I might post tomorrow night]

Thanks for pulling me back into the blogging world, Tina! And thanks for linking me to this paper!

Food!

2009-07-15T00:19:00.005-04:00

Ah, food. People love it (me & my office-mates), people hate it (anorexics), people can't get enough of it (developing countries).

While doing research on the G8 Summit in L'Aquila, my thoughts wandered to the wonderful thing that is food. What a dichotomous thing food is...the demand for certain types of food is elastic (remember that word, nams? If wheat bread gets too expensive, I'll just buy white bread!) but the demand for food in general is inelastic.

I think people in America should think about this. If you and your children were starving in a desert, you would gladly trade a $1000 bill in your wallet for a bottle of water and some food for your kids. But what if you didn't have $1000? What if your annual salary were ~$1000, and the people who promised you food argued about where to purchase the food from while your children withered away and died?

Such a situation is not too far from the truth, I suppose.

There will be over a billion hungry people this year. But sure, why shouldn't the U.S. government care about its own farmers first? Surely, the right thing for Americans to do is support what the Council on Foreign Relations called "a Byzantine system of handouts and insurance benefits [in which] only households making over $1.5 million a year will see any reduction to their subsidies—and even those restrictions can be avoided through loopholes."

The G8 Statement on Food Security makes me hope that U.S. policies in the future will be more focused on effectively executing their purposes. The Minister Counselor and I met with a few economists yesterday, and one of them stated that policy in the U.S. is in a state of transition. As my friend Nami and I realized while working on various policy recommendations, the biggest challenge in making policy recommendations does not lie in modifying details. Rather, it lies in garnering support from people with divergent views and guaranteeing a positive reception from the media and the public at large. Just look at what Harry and Louise did to Hillary's Health Security Act!

OMG! it's 12:22 (2 hours past my bedtime!) Must go to sleep.

Tomorrow is packed, but it looks like fun!

Trade, Aid and Security Coalition

American Leadership for Global Development

Wednesday, July 15, 2009, 8:30 a.m. - 6:00 p.m.

AGENDA:

8:30 a.m. – 9 a.m. Registration

9:00 a.m. – 10:00 a.m. Opening remarks: Rep. Jim McDermott (WA-7), Committee on Ways and Means, Rep. Earl Blumenauer (OR-3), Committee

on Energy Independence and Global Warming, Committee on Ways and Means, Ambassador Stuart E. Eizenstat, Former

Deputy Secretary of the Treasury, Under Secretary of State for Economic, Business and Agricultural Affairs, Under Secretary of Commerce for International Trade, U.S. Ambassador to the European Union, Covington & Burling, LLP

[Room: Metropolitan East]

10:00 a.m. – 11:45 a.m. Panel I: National Security: Economic Development, Trade and Investment

Featuring: Rep. Adam Smith (WA-9), Select Committee on Intelligence, Committee on Armed Services; Tim Reif, Office of the US Trade Representative, Rudy deLeon, Former Deputy Secretary of Defense, Center for American Progress

Moderator: Doug Wilson, Former Principal Deputy Assistant Secretary of Defense, The Leaders Project, Harvard University, Howard Gilman Foundation

[Room: The Hill]

Noon – 2 p.m. Luncheon: Business Innovation and Partnerships for Development

Featuring: Jane Nelson, Harvard University, Brookings Institution, Daniel Runde, International Finance Corporation, Angela Hofmann, Wal Mart

Moderator: Claude Fontheim, Trade, Aid and Security Coalition, Business Council for Global Development, Fontheim International, LLC

[Room: Metropolitan East]

2:15 p.m. – 3:45 p.m. Panel II: Climate Change and Economic Development

Featuring: Rep. Brian Baird (WA-3), Committee on Science and Technology, Chair of the, Subcommittee on Energy and Environment, Manish Bapna, World Resources Institute, Jim Lyons, Oxfam America, Walter Grazer, National Religious Partnership for the Environment

Moderator: Frank Loy, Former Undersecretary of State for Global Affairs, Environmental Defense Fund, The Nature Conservancy

[Room: The Hill]

4 p.m. – 5:30 p.m. Panel III: Investing in Women

Featuring: Rep. Joseph Crowley (NY-7), Committee on Ways and Means, Committee on Foreign Affairs, Ritu Sharma, Women Thrive Worldwide, Mary MacPherson, Vital Voices Global Partnership

Moderator: Katrin Kuhlmann, Trade, Aid and Security Coalition

[Room: The Hill]

5:30 p.m. – 6 p.m. Reception: Remarks by Rep. Charles Rangel (NY-15), Chairman, Committee on Ways and Means; Rep. Debbie Halvorson (IL-11), Committee on Agriculture, Rep. Kevin Brady (TX-8), Committee on Ways and Means

[Room: Metropolitan East]

Crossword #3!

2009-07-10T15:03:00.011-04:00

This is a strange looking one... [click on images for better resolution]

Also, 5 down reminds me of this hilarious blog post. Here's a preview:

"...if I was a degenerate crackhead who snuck into your neighborhood and mugged you for $50, the Wall Street Journal Opinion Page would want me thrown in jail. Now imagine that I’m a degenerate crackhead who took out a subprime loan to move next door to you, in an arrangement that I’m likely not going to pay off. I might not even make one payment. If I default you’ll lose 10% of the value of your home from the externality effect. Assuming your home is worth $300,000, there’s a 20% chance I default in 2 years (realistic numbers), and you lose 10%; 300,000*.2*.1 = I’ve just robbed you for $6,000 while the Wall Street Journal Opinion Page cheered me on. And that’s one house – I’ll have a dozen neighbors. Now mind you, the product was great for me – I got to smoke crack indoors, in a house I could never realistically afford, which was a big plus. The subprime lender sold my loan to a pension fund in Denmark for a nice fee. It goes in the win column for us."

Happy Friday~

The Jobless Recovery and the Unhealthy Health Care System

2009-07-09T14:51:00.012-04:00

Some thoughts on unemployment and health care reform [issues that we have been following @ the Embassy]:

The Federal Reserve Bank of San Francisco reported that the labor market has more slack than the official unemployment rate indicates. The FRBSF measured labor under-utilization using involuntary part-time workers and projected that "the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-World War II period, implying a longer and slower recovery path for the unemployment rate."

I found this old NYTimes article about the jobless recovery in 2003. I think it does a good job of explaining the meaning of a jobless recovery (although, it might be a bit self-explanatory...)

Note that the NYTimes and the FRBSF both predict that employers will increase output by increasing productivity of existing workers as opposed to hiring new ones. (Jeez, great news for the class of 2009.)

on health care:
from whitehouse.gov
REMARKS BY THE VICE PRESIDENT AT HEALTH CARE ANNOUNCEMENT

Promises, promises.

Our friend, Jonathan Gruber, comes up with some solutions! [Jonathan Gruber is not actually my friend, but I wish he were. Haha.]

Good paper that I remember from Health Econ: Madrian on job lock as a result of employer provided health care. Here's an old article about job lock.

a little bit of joy:
This picture of Russell, from the movie Up, is currently my desktop background. Isn't it sooo cute?! It makes me happy whenever I look at it.

Happy (belated) July 4th!

2009-07-05T15:17:00.010-04:00

I hope everyone had a Happy 4th of July!
I wish I could have been in Boston with the fatkids...last year's fireworks by the Charles River were amazing!

This year I went to my friend's house in Maryland for the ultimate fatfest. Heidi's mom makes the BEST chicken wings EVER! (From the way I talk sometimes, you'd think that I'm terribly obese, but I have yet to break 100 pounds...boo.)

@ work this week:
Something I wrote the other day after watching this. President Uribe answered a question about free trade and his answer was so heartfelt and sincere...

His Excellency Álvaro Uribe Vélez, President of Colombia
Wilson Center Forum on 6.30.09

At a forum hosted by the Wilson Center on June 30th, 2009, Colombian President Álvaro Uribe presented, to the audience, a delineation of the improvements that have been made to Colombia’s political, sociological, and economical scenes. President Uribe has done much to improve the stability of his country, and in 2006, he was re-elected by an overwhelming margin of 62 percent. Despite improvements in the country, the U.S. has been reluctant to move forward with the U.S.-Colombian Free Trade Agreement.

As stated during the forum, the issue of trade has taken a back seat on President Obama’s agenda. However, Colombia’s free trade agreement has more to do with simply opening the American market to Colombian exports. The ratification of the U.S.-Colombian Free Trade Agreement would be, as President Uribe stated, a signal of friendship and confidence between the two countries. President Uribe argued that such a signal would help lift Colombia out of poverty by attracting more foreign direct investment. While a free trade agreement would be convenient for both countries, Colombia does not predict a dramatic increase in exports to the U.S. in the near future. President Uribe believes that before Colombia can become an export-driven economy, it must provide its people with an alternative to narco-trafficking. In order for Colombia to fund such alternatives, it is in need of foreign investment. Foreign investment would increase income distribution and decrease poverty in Colombia, while shifting workers into a formalized economy. The Colombian President expressed frustration in having to explain to foreign investors that although Colombia’s government is committed to protecting private investors, the U.S. has still not agreed to free trade with Colombia. President Uribe called the free trade agreement a “necessary signal” in not only improving bilateral relations with the U.S. but also moving the Colombian economy into one that is formalized and self-sustainable.

Such a ratification may also draw attention to the KORUS FTA, which has been called an “easier” free trade agreement in that it is a purely economical case. However, it is unlikely that trade will be addressed in the near future while such issues as health care and climate change are being addressed.

Green bill, Greenspan, Green with envy.

2009-06-30T16:56:00.009-04:00

Yesterday:
Yesterday, the Minister Counselor and I had lunch with two congressional staffers on the Ways and Means Committee. It was one of the more exciting days at work, and not just because we were at a restaurant! They talked mostly about the KORUS FTA, but I had a chance to ask some questions about the U.S. auto industry in general, and the politics surrounding the issue of free trade. Evan and Alex were both really nice and patiently answered all of my questions.
For example,
I was thinking that on the one hand, it is an awful time to approach the issue of free trade because people gravitate towards protectionist policies during recessions in an effort to boost domestic markets. On the other hand, it is a great time to ratify free trade agreements because the global community has become (painfully) aware of the degree to which our economies are linked. Paul Krugman didn't win the Nobel Prize for nothing, right?

However, President Obama seems to be preoccupied with Health Care reform and the Energy Bill, which are also really important.

I also met Edward Gresser yesterday! He made a really good point about how the U.S. has some contradictory policies when it comes to the auto industry. For example, there is a 25% tariff on light trucks, which acts as an incentive for automakers to produce more light trucks. However, the government is simultaneously trying to get automakers to produce more fuel efficient vehicles. Why not just get rid of that 25% tariff?

BTW, isn't it interesting that in 1930, there was a 70% tariff on magic tricks and practical joke items?! So silly!

In other news: Brad DeLong blogged about the Fed and Greenspan. Chanda and I love all things Alan Greenspan. We want to adopt him as our grandfather.

Today:
I finally finished a report that I have been working on for one of the diplomats at the Embassy. He's such an interesting character. I saw him one Monday and asked, "how was your weekend?" and his response was, "I went to an Aerosmith concert with my friend and we stayed out past 11 PM! I went because I don't know if I'll be able to go once I get a little older..."
HAHA. He's so funny!

Anyway, the report was on tax incentives that motivate employers to hire disabled workers. I won't bore you with the details, but basically, employers can receive tax credits for hiring disabled workers or for making their work place more accessible. The efficacy of these tax incentives are disputed, but there have been arguments that such incentives would distort the labor market and lead to" displacement" and "churning." Displacement is the discrimination against those who will not allow the employer to take advantage of disabled worker tax credits. Churning is the act of replacing older disabled workers with new ones such that the employer would qualify for more tax credits. However, in 2001, the GAO testified before the Committee on Ways and Means and stated that 93% of employers surveyed reported that displacement and churning have little to no cost-effectiveness. So, no such labor market distortions.

Someone at work today said, "I am amazed by the wonderful opportunities and programs that are available to the disabled people in the U.S. (compared to Korea.) But then I wonder, how can the same country have such bad health care?!"

Haha. I thought that was really funny.

Tomorrow:
Having dinner with DJ Nabs and his wife, Alaka, tomorrow! I can't wait to ask them about the IMF and the World Bank. They're so awesome. I'm jealous.

Death of a Star.

2009-06-26T08:40:00.001-04:00

So sad.

Free Markets Scrutinized

2009-06-25T11:01:00.005-04:00

NPR's Economy podcast on 6.23.09 discussed free markets, Adam Smith, Milton Friedman's book, "creative destruction-ism" and Joseph Schumpeter, "Meltdown" by Woods...

Also mentioned: how shitty the job market is for recent college graduates [ME].

Good time to become an entrepreneur?

The President on Health Care

2009-06-25T09:24:00.001-04:00

Here.

Health Care

2009-06-23T10:28:00.008-04:00

The New Yorker had an article in which Atul Gawande attempts to explain the disparity in health care costs between McAllen and El Paso County, Texas. The culprit? "Defensive medicine." [Remember from Health Econ, Evelyne?!]

Anyway, here's an excerpt:
"...year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.

“Maybe the service is better here,” the cardiologist suggested. People can be seen faster and get their tests more readily, he said.

Others were skeptical. “I don’t think that explains the costs he’s talking about,” the general surgeon said.

“It’s malpractice,” a family physician who had practiced here for thirty-three years said.

“McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?

“Practically to zero,” the cardiologist admitted.

“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures."

Things I've come across in the blogosphere:

Some people have argued that health care reform is necessary for the U.S. to maintain international competitiveness. Greg Mankiw, Paul Krugman, and the CBO think that's bullshit.

From the CBO: "Even though changes to the health care system could have various effects on the supply of labor, the underlying amount of labor supplied at any given level of compensation would hardly be affected by a change in the health care system. As a result, cash wages and other forms of compensation would have to rise by roughly the amount of the reduction in health benefits for firms to be able to attract the same number and types of workers."

In Health Care Overhaul, Language Matters - NYT

For Health Econ [great class, take it], my group presented on the Health Security Act [Hillary 1993]. We pointed out that President Obama was careful to avoid phrases like "universal." Instead, he opted for "accessible to all." I'm sure he didn't want to evoke such memories as these...

Mankiw thinks a public plan is a bad idea...

Alternative plans here.

Also, because we love him: How to Cure Health Care by Milton Friedman.

Random notes:
Evs, this reminded me of glorious nights spent as college seniors at the pub...

How much is one more year of life [of spending time with friends at the pub] worth? "A rough consensus from this literature is that an additional year of life is worth about $100,000 per year
(Viscusi, 1993; Tolley et al., 1994)" -Walking the Tightrope on Medicare Reform, David Cutler

Also, someone, play this with me.

Answers to Crossword #2!

2009-06-23T10:15:00.006-04:00

Across: 1) Goolsbee 2) two 3) hedge funds 4) Waxman 5) Chrysler 7) citibank 10) Easterlin
Down: 1) global warming 6) finance 8) Alaska 9) college

I don't know where 11 went...

The clue was: "This investor said he thought that U.S. prices would rise at a rate close to Zimbabwe's [231 million percent, seriously dude?]"

Answer: Faber