Steven Landsburg has a blog

It's called The Big Questions. Assuming he keeps up a regular stream of posts it's sure to be a good one. He's an entertaining and thought provoking economist.

George Soros launches a $50 million effort to purge economics of its free-market zeal

Newsweek

George Soros is announcing a $50 million effort to speed things along. This week Soros is gathering some of the leading practitioners of the market-skeptic school, who were marginalized during the era of "free-market fundamentalism," among them Nobelists Joseph Stiglitz, George Akerlof, Michael Spence, and Sir James Mirrlees. He's also creating an "Institute for New Economic Thinking" to make research grants, convene symposiums, and establish a journal, all in an effort to take back the economics profession from the champions of free-market zealotry who have dominated it for decades, and to correct the failures of decades of market deregulation. Soros hopes matching funds will bring the total endowment up to $200 million. "Economics has failed not only to predict and explain what happened but has also failed to protect society," says Robert Johnson, a former managing director at Soros Fund Management, who will direct the new institute. "That's what the crisis revealed. The paradigm has failed. There is no guidance."

Read it here.

Fat fairness (updated)

Fat rights lobbiests argue for fairness in pricing. By their logic car companies should sell obese people SUVs at a discount.

Is it enough to argue that you can't tell whether obesity is a pre-existing condition therefore it's not fair to charge the obese more for health insurance?

You can't tell whether my lack of productivity is due to a pre-existing condition. Pay me the same as everyone else. (Yes, I'm just kidding.)

Addendum added Oct 27. I've stumbled on this written on October 26th by the health economist Uwe E. Reinhardt:

It sounds like a great idea until one thinks about exactly how such an idea would be implemented in practice – especially in a country with a tort system such as ours. I wish both had given us their thoughts on that problem.

To take account of smoking in setting premiums is easy. Life insurers already do it, and even under community rating within mandated health insurance it would be relatively easy to charge higher premiums to smokers. I would favor it.

But consider obesity. Presumably an insurance company would somehow ascertain an applicant’s biomass and then somehow determine how much of any overweight is due to avoidable unhealthy behavior, and how much is rooted in genetic factors.
...
And even if that could be easily and cheaply done in practice, before long tort lawyers would bring class-action suits, citing the growing body of scientific literature suggesting that many behavior patterns — including unhealthy lifestyles — are rooted in very early cognitive development and subsequent education....

Add to that list environment factors beyond the individual's control, such as access to nearby grocery stores selling healthy foods at prices comparable to those in richer neighborhoods. See my essay at Daily Episcopalian.

Addendum 2, Oct 30. The technology could exist soon for your mobile phone to send your insurer information about your eating and exercise habits. Insurers could offer two kinds of policies, one where you consent to being monitored and another where you do not. Those who do not reveal themselves to be prone to unhealthy habits and would pay more. The insurer in this case is not insisting you reveal. They are only giving you the opportunity to reveal.

Oh, and isn't Reinhardt caught in an inconsistency between approving of charging higher premiums for smokers and not for those who have bad eating behavior? Arguably you can't help it that you like tobacco either. You may think, oh, but we know tobacco is bad for you and society frowns on it. But we're coming to that point with food abuse, too. Eat all you want, just don't base my premiums on how much you eat.

Another reason to brush your teeth

It's all here. If you are a short A-framed male with an asymmetric face.

Controlled experiment: King Abdullah University of Science and Technology

John Gravois of the UAE state-sponsored The National, writing on the birth of KAUST. Long article. Here's a snippet:

Built in just 1,000 days from a seaside stretch of desert, the new university has already staked out one of the most ambitious research agendas in academia, and it has drawn its inaugural cohort of 71 professors from some of the world’s great universities. At a time when other research institutions are watching their finances dwindle, Kaust’s founding endowment of at least $10 billion – supplied by King Abdullah Bin Abdul Aziz Al Saud himself – immediately places it among the wealthiest handful of universities on the globe, in the rarefied company of Harvard, Yale, Stanford and Princeton.
...
But the successful construction of an ivory tower – or, as the case may be, an ivory gated compound – is only a first step. “The question is whether it will actually translate into something more permanent and durable in Saudi Arabia itself,” says Bernard Haykel, a Princeton historian who has studied the Kingdom extensively. The rest of Saudi Arabia’s education sector remains under the purview of the religious establishment, an influential bloc that is sceptical of the new university – if not overtly hostile to its approach. How much can Kaust push the limits of Saudi society from behind a security perimeter?

Arab education lag "alarming"

The Economist

Arab countries now spend as much or more on education, as a share of GDP, than the world average. They have made great strides in eradicating illiteracy, boosting university enrolment and reducing gaps in education between the sexes.

But the gap in the quality of education between Arabs and other people at a similar level of development is still frightening. It is one reason why Arab countries suffer unusually high rates of youth unemployment. According to a recent study by a team of Egyptian economists, the lack of skills in the workforce largely explains why a decade of fast economic growth has failed to lift more people out of poverty.

Read more »

In which Amazon changes price in response to changes in demand

Instapundit:

OKAY, SO I WROTE ABOUT these Sony noise-cancelling headphones a couple of weeks ago, but now I see that they’re vastly cheaper in white. Go figure.

UPDATE: Okay, it’s $39.95, which is 20 bucks less than I paid, and 25 bucks less than they’re asking for the ones I bought now. And the only difference is color.

ANOTHER UPDATE: Geez, that was fast. They’ve already raised the price — in less than half an hour. This is like some kind of Heisenberg-pricing, where if I point it out, it changes . . . .

Posted at 8:27 pm by Glenn Reynolds

Some interesting trade-offs in breeding decisions

Lowly females choose mediocre mates BBC:

"The main reason, we think, could be that the two individuals just accept each other faster - they just go for it.

"The really amazing thing is that the females are able to recognise what 'category' they are in. We'd like to investigate further to find out how they do this."

Joseph Tobias ... said the findings were interesting.

"While [this] doesn't overturn evolutionary thinking, it does reveal some interesting trade-offs in breeding decisions," he said.

"It also raises the intriguing possibility that the environment in which individuals are reared strongly influences their mating preferences as adults."

The study by Marie-Jeanne Holveck and Katharina Riebel is published here.

Isn't this confirmation of assortative mating? Why chase someone you are unlikely to attract?

TBTF meets TNAF

Left meets right, or shall I say, libertarian. From the Reason blog, Out of Control Policy:

The left leaning Center for Economic and Policy Research released an interesting study last week that looked at the implicit benefits that banks have received from The Bailout and associated Fed programs. The report finds that banks have received up to $34.1 billion in benefits, beyond the TARP infusions, from cheap access to credit due to their too big to fail (TBTF) status. Here is the gist of the study:

A predicted result of a formal TBTF policy is that the gap between the interest rate that smaller banks must pay to obtain deposits and otherwise borrow funds and the interest rate paid by the TBTF banks would increase, since the TBTF banks are now effectively able to borrow all their funds (not just smaller deposits) with the backing of the federal government.

Note that the "subsidy" mentioned here is not direct cash taken from taxpayer coffers, but rather is a benefit that is gained by the promised use of taxpayer monies to insure against losses/failure. This is the government using policy to redirect resources in the marketplace.

[The CEPR report continues,]

It is worth noting that the TBTF subsidy is substantial compared to other items in the federal budget that have often provoked controversy. [...] As can be seen, in the high-subsidy scenario, which uses the entire seven-year period as the comparison, the TBTF bank subsidy is more than twice as large as the TANF block grant for 2009. The bank subsidy is almost 20 percent larger than spending on foreign aid.

...
In an editorial on this subject, The New York Times accurately concludes:

FORCING policy leaders to dismantle too-big-to-fail banks will not be easy. These institutions want to maintain the status quo, and they wield enormous power. Still, taxpayers have a right to know the extent to which those institutions are benefiting from the backstops that are in place. The analysis provided by Mr. Baker and his colleagues is an important step in this direction. Too-big-to-fail is already an extremely costly policy; the longer it is allowed to persist, the heavier this taxpayer burden will become.

Read it all.

Artificial virginity: markets in everything

Slate has uncovered more details on the wedding night deception product:

Joseph Freeman of the Associated Press reports:

The Artificial Virginity Hymen kit, distributed by the Chinese company Gigimo, costs about $30. It is intended to help newly married women fool their husbands into believing they are virgins—culturally important in a conservative Middle East where sex before marriage is considered by many to be illicit. The product leaks a blood-like substance when inserted and broken. Gigimo advertises shipping to every Arab country.

On its Web site, Gigimo explains more about the product:

Artificial Virginity Hymen is created from Kyoto, Japan at 1993. it was first introduced to the locals, then it gets famous and spread to Thailand at 1995 and now available in South East Asia, South Asia and in the Middle East countries....

Read it all.

More on the kerfuffle this has caused in Egypt.

Our previous post on the product is here.

SEWA raises rates

Sharjah Electric and Water Authority is raising rates. Rates for electricity and water have long been heavily subsidized across the UAE, with nationals often paying little -- or nothing if they refuse to pay and SEWA does not shut off power to the residence. An increase is rates is necessary to rationalize usage, otherwise these resources are being wasted. SEWA says it is raising rates to cover costs and to build facilities to meet a growing demand. To put it another way, SEWA no longer has the funds to subsidize rates. Recent shortages in electricity have resulted in outages. Note that an increase in rates will expand the quantity supplied and trim the quantity demanded. This is a good thing.

Gulf News:

"The reason behind the hike was due to the increase of production cost because it has now risen substantially. On average, production in the industrial sector per year can cost up to 95 fils per kilowatt per hour," said Bin Deemas [Ebrahim Bin Deemas, acting director of Sewa]. "The cost per kilowatt in the industrial sector is now 65 fils, but they are only required to pay 40 fils because the Government of Sharjah will pay the difference."

Bin Deemas stressed that power in Sharjah has always been subsidised by the government and will continue to be supported by them. During the radio interview, he pointed out that production cost of one kilowatt per hour in the residential and commercial sector is currently 65 fils. Residents will pay 30 fils per kWh and the government subsidises the remaining 35 fils.

"The private homes of UAE nationals will not be affected and they will continue to pay the same tariff, which is at 7.5 fils per kilowatt hour," said Bin Deemas.

Not surprisingly, residents are complaining.

Not all foreign residents pay for electricity, at least not directly. Many live in company-provided housing.

Markets in everything: faking it

BBC:

The contraption is seen as a cheap and simple alternative to hymen repair surgery, which is carried out in secret by some clinics in the Middle East. It is produced in China and has already become available in other parts of the Arab world. The device is reported to be on sale in Syria for $15. Professor Bayoumi, a scholar at the prestigious al-Azhar University, said it undermined the moral deterrent of fornication, which he described as a crime and one of the cardinal sins in Islam. Members of parliament in Egypt have also called for banning import of the item.