Saturday, December 31, 2011

Mazi's Link O' the Day

Off to the great unknown that will be 2012:

Thursday, December 29, 2011

Mazi's Link O' the Day

Wouldn't be right to wish off the foul year of our Lord, two-thousand eleven, without the best bits of TED:

Wednesday, December 28, 2011

Mazi's Link O' the Day

Ricardian equivalence is not really supported empirically, but here's a good summary of the idea. And, as they mention, usually these defunct, yet basic theorems, are good starting points for further discussions:

Monday, December 26, 2011

Sunday, December 25, 2011

Saturday, December 24, 2011

Friday, December 23, 2011

Mazi's Link O' the Day

I'm almost certain I made this point earlier, but because all those foreclosed homes are selling for cheap, we're going to see existing home sales far outpace new home sales... FOR A WHILE:

Monday, December 19, 2011

Mazi's Link O' the Day

It's been a while since we had some TED. So, here you go. Ruminations on leaving this world behind:

Sunday, December 18, 2011

Saturday, December 17, 2011

$50 or Build-a-Bear? That Is the Question

Dan Ariely (of Predictably Irrational fame) writes about the irrationality of gift giving. At least, that's what the standard economist would say. Of course, Ariely, being a behavioralist doesn't think this way. He gives a number of examples of why, if you combine psychological reasons with economic ones, gift giving can make sense on a lot of levels. The one I am most interested in is a more general point: gifts vs. just giving cash.

My argument is that giving a gift creates more utility than giving the equal measure of dollars. Let's see why.

First, the simple cash gift... If you give someone $50, you are $50 poorer, and the recipient is $50 wealthier. For a short while after, your friend is happy for the money, and maybe you're glowing after doing something nice. But pretty quickly, this fades. There's no guarantee that your money gets spent quickly, and, more likely than not, your buddy probably just deposits into his bank account. Also, obviously, the good vibes form giving a gift don't last indefinitely, and you'll eventually realize you're $50 poorer.

Alright, now let's say you give a gift of equal value, and for simplicity's sake, let's say you take a pretty good guess at what your friend wanted. The first part of the situation is identical. You are $50 poorer, and your friend's wealth has increased by $50 (since he could always sell the gift for the money). Let's really simplify things down, but not lose generality here.

Your friend wanted a Build-a-Bear for $50. However, that toy doesn't fit in his budget right now. If he were to receive $50 exogenously of his own income (i.e.- as a gift from you), he would run off and buy the bear. So, if you gave him the gift, you're pretty much eliminating a lot of steps here. You're saving your friend's time. Which, you might argue, is an added bonus to the bear. Also, the bear will remain in your friend's mind longer (since he has to see it), and therefore the psychological boost probably lasts longer. (I'm no psychologist. Just a guess)...

Point being: the equivalently valued gift, in my view, is worth more to your friend. Even though it costs you more to think of a gift and go get it, you also get the bonus of a longer "emotional high." Everybody wins.

Second point being: Everybody loves Build-a-Bear

Mazi's Link O' the Day

A rebuke to the claim that we should increase gas-efficiency for cars because people want better mileage. I agree that people don't necessarily want said improvement, but I also agree that we should still have efficiency mandates:

Friday, December 16, 2011

Mazi's Link O' the Day

Remember Emerson? No? Well, here's a recap. Naturally, brought to you by the libertarians:

Thursday, December 15, 2011

Mazi's Link O' the Day

Well, Nouriel Roubini certainly doesn't have a rosy view of 2012. You don't need a PhD in economics to see that much of what he's talking about is already in the works:

Wednesday, December 14, 2011

Mazi's Link O' the Day

Ok, I'm not opposed to leveling criticisms against my discipline of choice, but people, PLEASE do your research first. This new group, Econ4, wants to challenge the way we think about economics. (Radical)! For example, what if we had "true cost pricing?" (Wait... Have ever taken a microeconomics class? They're called externalities).

The point is, everybody thinks they've figured it out, as if economics is something you can just "think about." Whatever... Let them eat cake:

Tuesday, December 13, 2011

Mazi's Link O' the Day

Good piece about the different schools of thought on the Great Depression. However, I like his side-point at the end  best: What happens when statism is aligned with scientism? Corruption of a discipline:

Monday, December 12, 2011

Is It Worth It?

So, I've been thinking recently about a question inspired by my time at the London School of Economics. The students of this institution tend to be highly "career-oriented." In so many words, people are falling over just to get an interview with Goldman Sachs, Morgan Stanley, JP Morgan, etc... Luckily, I already have summer employment, so I get to watch this carnage from the outside. I can't help but wonder how these kids expect to distinguish themselves in this atmosphere, and how do they stay motivated? I decided to to go to my friends for answers:

I posed the following question to three people who are/were interested in working in the financial industry. I asked, "Do do you think as the process and competition become more intense, people will be discouraged from applying? Is the glamour of Wall Street fading?"

Here are the answers:


"I dont think people will be discouraged from applying, but I do think the glamour is fading. It seems the hot new jobs are at Facebook and Google now."


"It is really hard to predict, but I think if people are indeed interested  in interning in the sector they will not be discouraged from applying. Especially since there isn't really anything to lose. Also, if Wall Street will manage to keep its glamour, the competition will become more intense (as in every sector will, because internships become more and more popular/"mandatory"), and the people will not become discouraged by that. After all, you know it's hard to get there, but as long as you eventually make it, you know you can stick there for awhile. 

As for people who aren't indeed interested, they might become discouraged from applying; this can also be an opportunity for them to actually figure out what their primary occupational/career interest is."


"I don't think either is really the case, at least at Duke. The profession is attractive to undergrads because you have an opportunity to be financially independent immediately after college. I think in fact that its competitiveness increases its appeal. Students at competitive institutions want to be perceived by their peers to have the "best" internships or the "best" jobs. At Duke specifically 67% of my class was premed as freshmen, and now 13% of the class is still premed. Obviously medecine is a fine profession, albeit hard work, but not comparable to financial services in initial compensation, and thus, prestige.

I think the biggest argument to be made for it losing prestige is through support for movements like Occupy Wall Street that a re largely a reflection of dissatisfaction with the economy as a whole. In other words, I bet less than half of Zucotti Park could tell you what TARP, Simpson Bowles, or Dodd Frank did, or what a mortgage backed security or credit default swap is."

My take is in line with the other three. Mainly, I think we can turn to economic theory for our answer: SPECIALIZATION. Already, all sorts of programs are being created at universities seemingly to get students into banks. I think it's going to be more difficult for your typical liberal arts student to "just apply to banking jobs." Prospective employees are going to need more skills in order to make it. But, this is not a bad thing. It's going to save a lot of uninspired candidates the time of application. Banks won't have to sift through so many people, and will give more time to each candidate. And the people who will endure this ordeal will be TRULY interested in finance. Specialization is always good for an economy, as a whole and on a micro level.

Mazi's Link O' the Day

Chocolate crisis!

Saturday, December 10, 2011

Friday, December 9, 2011

Mazi's Link O' the Day

He's right: America has changed, although I'm not sure about the glib comment about the size of government. Click on the link to see just how much it's changed:

Thursday, December 8, 2011

Mazi's Link O' the Day

An argument for compensation for organ donation: I think it's a good idea. As they say in the article, a district court just allowed compensation for bone marrow transplants:

Tuesday, December 6, 2011

Mazi's Link O' the Day

A post about the minimum wage. Specifically, in 2006 (I think) the nominal minimum wage was raised from $4.25 and hour to $7.25 an hour. Has this increased GDP?

Monday, December 5, 2011

Mazi's Link O' the Day

The Fed is set to announce its long-run inflation goals (apparently). They think  we can get to 6% unemployment without a large increase in inflation. Well, that would be nice...

Thursday, December 1, 2011