Sunday, February 27, 2011

Screen Capture versus "Guy in Front of White Board"

A couple of months ago, a friend of mine told me that I should try experimenting with the format of my YouTube videos, saying "I don't like guy-with-whiteboard videos as well as the screen-with-content videos." With a free software download and a little time, I figured it was worth a try.

Over the last week, I have made several screen-capture videos to see if the format works for people. The new format looks like this (a basic video on graphing a demand curve):

If screen capturing has an advantage in teaching economics on the web, the advantage is much greater for showing how to perform statistical/econometric calculations. On this front, I have already done three videos on basic statistical programming in R and I plan to do more. I think the format works well. That is, it works well if you're interested in learning how to use R.

Monday, February 21, 2011

Wikipedia on Presidents Day

I forgot that today is Presidents Day until I went to the bank, which was closed. In honor of the day, here's an excerpt from Wikipedia's article on Washington's Birthday.
As the first federal holiday to honor an American citizen, the holiday was celebrated on Washington's actual birthday, February 22.[1] On January 1, 1971, the federal holiday was shifted to the third Monday in February by the Uniform Monday Holiday Act.[2] This date places it between February 15 and 21, which makes the name "Washington's Birthday" in some sense a misnomer, since it never lands on Washington's actual birthday, February 22.
You may not get your mail, but maybe you can take advantage of a sale.

Friday, February 18, 2011

When a good sprinter optimally goes slowly

A big thanks to Ryan for commenting on my previous post and saying that I would "get a kick out of this:"

He's right. This is a fascinating video if you like thinking about odd strategies (which I do).

My favorite part of the commentary: "The world record for standing still on a bicycle is actually over 3 hours, but not at competitive level."

Teamwork and Drafting

This morning I saw an interesting story on a strategy in car racing: two-car teamwork by drafting (and trading off who goes first). Although the strategic two-car drafting is new, drafting from other cars is not new in professional car (or bike) racing.
Like the old adage "it takes two to tango," drafting can only be accomplished with two or more cars. When the lead car rockets down the track it pushes through the air leaving a disturbed, or "dirty," wake behind it. The second car can slip into that disturbed air stream and reap the benefits -- that is, if the driver is talented.

At superspeedways like Alabama's Talladega and Florida's Daytona International, where speed is limited by a restrictor plate rule, long lines of drafting cars take advantage of the car in front to allow greater speeds and better fuel efficiency.

These advantages create a strong motive toward cooperation within a pair, but what happens at the end of the race?

Let's say that a drafting pair is comprised of Bob and Steve. Conditional on making it to the final lap with enough gas to make a final push, assume that you would rather be in front than behind because you can obstruct the other driver. We can represent this choice at the final node in a game tree. At the conclusion of the second-to-last lap, suppose it is Steve's turn to give the lead back to Bob.

Let's translate this into some game theory. Here's what Steve's choice looks like in the final subgame of the race. Steve chooses which path to follow and he gets the payoff from the first number in the ordered pair.

The way I set the payoffs up, Steve likes saying in front better than giving the lead back to Bob. So, that's what he'll choose. As long as he prefers winning the race (and it is an advantage to lead the race going into the final lap), Steve won't want to give the lead back to Bob at the second-to-last lap.

Knowing this, Bob won't want to give his lead back to Steve at the third-to-last lap. Take this argument back 499 laps and you can see that this two-car pairing is a tenuous agreement. These tenuous agreements may form to the betterment of the pair in competition with other pairs, but the possibility that the agreement breaks down creates some interesting tension (I never thought I'd say that about car racing).

Yes, there are gains from trading who drafts, but if I am Steve, it would be even better for me if Bob just cut the wind for me and I didn't have to cut the wind for him. As long as Bob wants to win the race, Steve will have a hard time convincing Bob to go first.

What if Bob and Steve were on the same "team" with a shared objective that the team wins the race? As long as a win for the team is a win for both, Bob would be willing to cut the wind. But, the two-car partnership is still doomed because Bob will run out of gas sooner than Steve. Steve will have to go at least one lap without Bob's drafting services, and finding Bob's car again among the sea of competitors may be a tough task.

Maybe there's a way to add more cars to the team so Steve with a drafting buddy who will his wind (and save his gas). Switching front cars at full speed without disrupting Steve's racing sounds like a tough deal to me. I'll leave that to the professionals while I stick to the speed limit.

Monday, February 14, 2011


What should you do to romance the economist in your life on Valentine's Day? Make a credible commitment. That is, credibly bind yourself to do something you wouldn't have the short-term incentives to do, but will make your partner better off. It is the best way to show an economist how much you care.

Just in time for Valentine's Day, William Spaniel has a great video on the game theory of commitment problems.

There is no reference to Valentine's Day in the video, but we do learn about an interesting encounter that Spaniel had with a Texas Ranger (and, not a baseball player or Chuck Norris).

For more reading on commitment problems, check out my previous post on when to burn a bridge, or how economics can wake you up. Have a great day celebrating your commitments!

Saturday, February 12, 2011

Highlights of Reading This Week

As it is midterm time, I have been doing a lot of reading (and grading), but not much writing. Here are two links/excerpts of the most interesting things I have read this week:

The Annals of Taxation:
I’m lecturing at the University of Essex and going from office to office chatting with people about their research. This is hard physical labor — I repeatedly go down one or two flights of stairs in this rabbit warren, walk down a hall, up the stairs in the adjoining building, then back down another hall. What a waste — why?
Click through to find out.

Via Greg Mankiw, Jobs, Jobs, Jobs. The concluding paragraph:
Bashing piƱatas labeled China, banks and corporations may allow us to vent and politicians to preen, but it is generally not helpful. The familiar political refrain on both sides of the aisle of “jobs, jobs, jobs” is misleading, disingenuous, hollow, and likely injurious to the long-run health of the nation. Serious situations demand more serious thought and rhetoric.

Monday, February 7, 2011

Save the Money

With statements like "not all deforestation is bad," Groupon made a play for being the most controversial Super Bowl advertisement this year.
Money is one of our most important natural resources. Sadly, thousands of dollars are wasted every year. Until now.
I watched the Super Bowl last night. I saw these ads the first time around, but I didn't think much of them. I thought the one with Cuba Gooding Jr. was cheesy (fit for a Packers' Super Bowl). The ads didn't make a huge impression on me until this morning when a Facebook friend wrote on her wall that she is outraged about the Groupon commercials (and she was unsubscribing from Groupon).

I had to look at what was so offensive, and I have to admit, I thought the ad was pretty funny this morning (especially when I was paying attention). Was this a plan by Groupon? My Facebook friend has 612 friends. By posting on her wall about how outraged she is, she gave Groupon a second round of exposure to over 600 people.

The way I see it, this is purely an attention grab. With all the effort that goes into making Super Bowl commercials funny, competition for "favorite Super Bowl" ad is tough. The easiest way to stand out is to offend a vocal group of people with a lot of friends (and get them talking). That's exactly what Groupon did.

As a sidenote, it is not like they're actively degrading the environment. They're poking fun at a tired cliche. In the process, they might raise money to save the environment too.
And while some people won’t like the joke, Groupon isn’t being mean-spirited about it: its Save The Money site has offers for a variety of charity organizations. For example, making a $15 donation to GreenPeace will score you $15 in Groupon Credit (it’s essentially a free donation on your part).
Save The Money to save the environment? I don't know if it will work to stop deforestation, but it will get me a better price for that restaurant I have been meaning to try.

Thursday, February 3, 2011

Economics and Marriage

Here's an interesting article about the economics of married life:
As a business-news editor, I was already mired in news about housing bubbles, market noise, and incentives—which, oddly, seemed to have parallels at home. My relationship bubble had burst not long after I said “I do.” Were we insufficiently compatible—or just reacting to screwed-up incentives?
The author's blog has a great recent post called 10 Things I Can Do for You That Won't Make Me Any Worse Off.

The lesson? A good marriage (or relationship) is about finding Pareto improvements.

Economic Morality

In response to a blog post by Ed Glaeser that I found especially good, Nancy Folbre offered a rebuttal:

We humans experience periods of dependency at the beginning of our lives that largely determine our access to resources – including the development of our own human capital – as adults. We remain subject to unexpected illness, disability, unemployment, accident and assault as adults, and if we survive these, we eventually become dependent on others in old age.

Individual freedom doesn’t necessarily conflict with the care of those we love, because love itself shapes our preferences, our utility functions. We often freely choose to sacrifice for others.

But preferences alone don’t provide a secure basis for the care of dependents. That’s partly why societies develop concepts of social responsibility and legal obligation that often infringe on individual freedom.

She makes some good points, but I am not sure her good points undermine Glaeser's key idea: Freedom is cherished among economists. As nearly as I can tell, he didn't say that no economists value other moral qualities. He also made clear that there are trade offs:

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Many regulations can even be seen as force for freedom, like financial rules that help give all investors the freedom to invest in stocks by trying to level the playing field.

The belief in freedom does, however, create a predilection for human interaction and trade.
That said, I'm not sure the two would universally agree about economic morality. Read the two articles to judge for yourself.