Sunday, March 05, 2006


From the Oxford English Grammar Dictionary

"His parents are atheists, and mine are eccentric too."

That cracks me up.

Wednesday, March 01, 2006


Via Marginal Revolution

Another "Markets in Everything" post over at MR caught my attention. Here is the post about a governmental corruption case where the representative had a "bribery menu" listing prices for awarding contracts including the statement that every additional one million in contract value would cost $50,000 in how much was needed for the bribe. Alex has this to say:

"What's most disturbing about this is how low the prices were, $50,000 for $1 million in contract value. Now let's remember Econ 101, what makes prices low? That's right, competition. So who was Cunningham competing with?"

Now I'm about as cynical as anyone, but I think Alex isn't giving this his usual thoughtful analysis. First of all, selling contracts is similar to an auction for a unique item and so we would expect the price that it is sold at to be the market clearing price for only one buyer and would thus be higher than if we were trying to maximize profit while fixing a price across multiple buyers. Secondly, Alex is making a similar mistake that people make when they see oil companies posting huge revenue numbers. The absolute dollar amount is not the relevant factor, but rather what is their return on investment? In other words, it doesn't matter if a company makes 100 billion dollars in profit if their return on investment is equal to what they could have gotten from bonds (or whatever investment would be of comparable risk or less than the venture they engaged in) - they still didn't make an economic profit and aren't really doing that well. Similarly, if a company wins a 20 million dollar contract, that says nothing of their margins and what percentage of that is actually profit. Let's say that a company wins a contract and has a 10% profit on it. If it is a one million dollar contract that means that 100,000 of it is profit. But they haven't paid the bribe now it is only $50,000 dollars of profit or 5%...all of a sudden it may not even be clear if they have gotten anything out of the deal (which is what we would expect from our theory of rent-seeking).

Anyway, comments weren't open on the post over at MR so I figured I'd post about it over here...not that Alex is likely to read my blog anytime soon (which I should be greatful for since I'm sure he'd be able to hammer me more frequently than I him, plus I might feel obligated to proof read my posts then).

Catch ya all later.

Friday, February 17, 2006



I don't comment on my work on this blog, but I would like to say something about standard business practices. I worked in the private sector and if I didn't return phone calls to anyone, let alone someone with the government, I believe I would have faced serious consequences and if it was persistent I would have been fired. Apparently this area of the country doesn't do business like that, because I get many people who unapologetically simply refuse to acknowledge your phone calls, let alone return them. Apparently they think that if they don't respond you will just go away. I've got news for those takes more time to avoid me then it does to respond to me. This has been a public service announcement.

Thursday, February 16, 2006


It's like Christmas

I have a new 400 page economic document I get to read through. It is just like Christmas. For those of you equally enthralled, here is the annual economic report of the President. I have to say that regardless of how you feel about the policies of this administration, the annual reports have been great primers for people interested in economics. They have been so good in fact, that I often wonder if the administration is actually reading the report it puts out. I can only hope that this year's report is of the same quality as previous years. I will let you know in about a week.

Sunday, February 12, 2006


Funeral Services

As some of you may know...I toyed with the idea of being a funeral director as my chosen profession for awhile. This got me involved in "necronomics" as it is sometimes called. Death and death services are fertile grounds for interesting study and I'm always suprised that they don't get more attention. In any case, this paper "State Casket Sales and Restrictions: A Pointless Undertaking?" goes to a fundamental point of pricing services. If somone is buying an end output or service, the relevant price is the total price and not the component price. I remember back when I was taking Antitrust classes arguing vigorously for extending monopoly power to secondary product lines if possible for some services and products. The reason is simple...the demand for the end product or service is whatever it is and thus the price that they are willing to pay is not determined by the pricing of the various components since most customers don't really care about the inputs into the good and only the output that they are receiving. If a company has monopoly in one input area but not another, it doesn't change the price that they can ultimately charge the consumer, but it might change the allocation of inputs by distorting the true rate of technical substitution and thus create inefficiencies in the production of the product. In any case...I think the paper is pretty interesting so I thought I'd share.


Sunday Night appears Dick Cheney shot a fellow hunter this weekend. Prepare for him to be the posterboy for gun control in the coming months.

In more interesting reading is a paper from the University of Chicago that is pretty interesting. "Should We Aggregate Mental Hospitalization and Prison Population Rates in Empirical Research on the Relationship between Incarceration and Crime, Unemployment, Poverty, and Other Social Indicators? On the Continuity of Spatial Exclusion and Confinement in Twentieth Century United States (January 2006)"

Have fun reading.

Tuesday, February 07, 2006


On my way out

I'm about to head out for appointments, but I thought I would share this. Via geekpress. It is safe for work, but if someone walks up behind you they might think you are a bit weird. Especially the bunny rabbit.

Monday, February 06, 2006


Why you would never want to face an economist in a Reality TV/Gameshow.

Gladly, I'm not the only Economist watching a reality tv show. Glen over at Agorophilia is watching Survivor and has this post on the dangers of not knowing basic probability theory.



Via Newmark's Door I was directed to this post at Tightly Wound. ...this conversation is hilarious. I think I will be checking in on this blog fairly regularly if this post is any indication of content.

"And since he is four and has my tendency toward hyperbolic overstatement, we have emotionally fraught rides home like this:

Boy: I wanted to see the doggie!
Me: You'll see him tomorrow.
Boy: Nooooo! I wanted to play with him today!
Me: I weep for your loss. (Sarcasm, the last refuge of the tired and edgy)
Pause. Boy doesn't get it, so he changes tactics.
Boy: I want to go to outer space!
Me: Well, when you grow up and get your college degree in science or engineering, maybe you can.
Boy: Nooooo! I want to go now!
Me: You can't go now.
Boy: Why?
Me: Because they don't make space suits in your size. Only grownup sizes.
Another pause, followed by a deep wailing cry:
Boy: First I can't play with the doggie, and now I can't blast off into outer space! THIS IS THE MOST DISAPPOINTING DAY EVER!
Preach it, brother.

Via geekpress...not all placebos are equal. Story here.

I'd also like to point out that the one game show that I'm currently watching and having a hard time not watching despite all its flaws is Beauty and the Geek. I don't know why I watch this show. I mean the women lie through their teeth and the guys...well the guys are pretty cool by my standards so the fact that they are considered geeks is a bit troublesome. (From this season my two favorites are already being ripped to of them wearing a shirt saying "I put the stud in study" and the other writing in red paint that looks like blood on the wall of a room in an interior design competition.) Also, the girls as a general rule aren't really that attractive. So far each season (a total of two) there was only one girl that I really found myself interested in. First season was this girl. 2nd season is this girl.

I also have to wonder how many times they hit the contestants over the head and told them..."It is not a gameshow...refer to it as a "social experiment." A social experiment? It is a show that appeals to the lowest common denominator. It's main source of appeal is that everyone watching can find someone that they feel superior too. And watching I get more and more bitter. Exchanges like the one where one of the girls tells the guy who asks what she would do if one of them came up to her and asked her out responds by saying something like, if you approach with confidence then you could get somewhere. It is a lie. Take it from a guy who has approached many many women with quite a bit of confidence and well situated in the knowledge that I'm the best looking guy in the room. It doesn't matter how you approach the woman if you aren't insanely successful, i.e. wealthy, or over 6 feet tall with a moderately decent build.

Anyway...that's all I wanted to say today...catch ya all later.

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