So cheap, there's hope

http://www.economist.com/node/21533407

I love articles about Detroit. Also, I think time is far overdue for another Detroit trip. Who's in?

Poverty hits the suburbs

http://www.nytimes.com/2011/10/25/us/suburban-poverty-surge-challenges-communities.html

I think one of the most remarkable shifts in America has been that inner cities have gone from poor and dangerous to gentrified. While we don't know all of the reasons for the shift (e.g. rising gas prices), there are certainly interesting consequences including the fact that the recent recession has hit suburbs particularly hard--especially in the Rust Belt and the Las Vegas burbs.

Come check out some of the metro Detroit suburbs. And then contrast them with the new condos springing up in midtown Detroit.

(Another reason) why you're (still) fat / Exercise RCTs

This article from the NYTimes cites evidence that the body gets used to having the same overall energy expenditure per day. Therefore if you switch from never running to running for half an hour each day, you'll likely be more languorous the rest of the day. Is this really true?

The article also points out that you can (maybe) get used to moving more. Rodents that had been subject to lots of exercise over generations get used to regular exercise, and will run around like crazy when they can't run on their mouse-sized treadmill. Presumably people in the long run can get used to having higher energy expenditure as well. But in the short run? Maybe, maybe not.

How does this relate to studies about the efficacy of exercise? If our bodies are only willing to move so much, why should we exercise? Are studies that find exercising leads to people losing weight somehow flawed? Two thoughts:

First, the hypothesis that bodies have a constant level of activity has not been tested with randomized control trials. A proper study to really test this would be to have a treatment group exercise more than the control group and then measure overall movement the rest of the day. The study looking at English school children is in particular a terrible study to draw any inference from, given that these children are coming from such different socioeconomic backgrounds.

Second, in randomized control trials, research has found that exercise--especially effective exercise--does lead to weight loss. For example, combining weights with high intensity interval training seem to be an effective way to shed pounds. The hypothesis is that high intensity interval training raises the metabolism (for the rest of the day), while perhaps the weights allow the body to devote any residual calories to muscle rather than fat.

One thing I wonder about: Why aren't there more exercise focused randomized control trials? It is easy to set these things up, and doing a RCT would be a quick and effective way to see what really works in exercise. With a little experimentation, we could possibly quite quickly find the ideal workout for all different body types.

Here are some possible issues:
(1) Researchers are often interested in the mechanism. Just trying different types of exercise routines doesn't get at the underlying metabolic and physiological mechanisms. Academic researchers may find studies that just test different exercise routines to be really boring.
(2) These studies are not really that easy or cheap to run: You have to pay people to participate. And you have to make sure they stick to the exercise regime. And you have to make sure the study is ethical, which sometimes takes quite a bit of effort to prove.
(3) Such studies also take time. This would be especially true for any RCT that would test the long-run treatment effects of a particular type of exercise. And lots of time means that the researcher also needs to have lots of money.
(4) Drug studies have a lot more money behind them. I doubt that there is some grand conspiracy here, but on the other hand markets matter: A company like Pfizer has a lot more interest in testing a drug that they can patent and sell than an exercise routine that they cannot patent and sell. Even if patenting was possible, they would have a hard time stopping people from sharing that routine with their friends and the internet.

Is there any study out there that compares the number of different types of RCTs? It would be interesting to see how these numbers respond to macroeconomic shocks and government funding cycles.

Some surprises with Gini coefficients

Gini Coefficient rankings of inequality of countries

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html

Not surprisingly, a lot of Scandinavian countries are at the bottom of the list. The highest ranking country? Namibia, which has a lot of mineral wealth, but clearly hasn't distributed it throughout the population. Botswana has a similar story.

As Kristoff reports in the NYTimes, levels of inequality are higher in the US than both Tunisia and Egypt. Notice that the US ranks slightly higher in inequality than Russia, the land of robber barons.

Most interesting to me is that so many former Soviet Bloc countries located on the Iron Curtain have surprisingly low levels of inequality: Hungary, Czech Republic, Slovakia, Slovenia. Presumably this results from a history of communist redistribution followed by effective democratization. Unlike Russia, these countries did not allow unscrupulous businessman to usurp massive amounts of national assets.

Marriage Market Trends in Asia

We've all heard about how because of sex-selective abortions China will have a surplus of guys. People speculate about how that will lead to all sorts of future consequences, including violence caused by sexually-frustrated guys and the importation of brides from other countries.

The Economist reports here and here two additional facts of interest:
     (1) Divorce rates are actually starting to rise in some Asian countries (though not in China)
     (2) In some Asian countries, many women, especially more educated women, are not getting married or even co-habitating (though again, this is not true in China).

It will be interesting to see how these trends continue to evolve.

Is time up for Google Plus? part deux

Now, since posting that last post, I've had 3 people add me to Google Plus.

Perhaps
(1) that last blog posting reminded people that--"oh yes, there is that thing called Google Plus. Hadn't thought about that for a long time now. Maybe I should get on there and add EconEric"
(2) My blog is already becoming so influential that those people, super motivated to keep Google Plus alive, added me out of the hope that it lead me to rescind the last post, thus imbuing Google with new life.
(3) It was just randomness that my posting was shortly followed by 3 people adding me.
(4) Some combination of the above.

If you know the answer (e.g., you were one of those people who added me), please comment.

Is time up for Google Plus?

What do you think the future of Google Plus is? When it first came out, I got an early-ish invite, and plunged ahead into the alternative-to-Facebook social network scene. In some ways it was refreshing. I didn't have to de-friend my acquaintances from place ___ who I never talk to but always seem to show up on my Facebook feed. My friends who did add me on Google Plus were always sharing fascinating articles and were the savvy types I wanted to keep in contact with anyway.

In its early days (last month), Google Plus did seem to be the next big thing. I would get constant updates and lots of people adding me. Google Plus seemed to be doing really well and expanding quickly. (See this article from July, for example). Google Plus had a lot of gushing press about its new innovative  features.

But now I don't think the future looks so bright for Plus. Based on just a sample of one (me), I'm observing:
(1) No one is adding anyone to their Google Plus circles anymore. I've topped out at about 60 people who have added me. Contrast that to Facebook, where I've got on the order of 10 times that number.
(2) I'm not checking Google Plus regularly like I used to. It was fun for a while, but now I've realized that FB is a convenient place where pretty much all of my friends/acquaintances post stuff, rather than just a few of them. And who has time to check multiple social networking sites?

I'm guessing these trends are likely true for other people in my same demographic group as well. And a lot of other demographic groups (e.g., your mom who is still figuring out Facebook) will probably never try out Plus at all.

I therefore predict that Google Plus will go the way of all of the other competing social networking sites. There may be a few die-hards who stick it out at Google Plus, but I doubt there will be many. The only hope is that Google can establish for Plus some kind of niche (e.g., like LinkedIn has done). Perhaps Plus's niche is a sanctuary for FB haters. Sorry Google Plus, but you are to Dvorak as Facebook is to QWERTY*.

*This article would take issue with that comparison, arguing that Dvorak was never that great to start out with and arguments for its superiority mostly came from a small number of biased sources.

Will the Chinese innovate in politician image control?

Apparently a photo of the American ambassador to China buying coffee, on his own, at a Starbucks, without relying on a lackey to fetch it for him, is making waves in China. Apparently Chinese are used to their government officials living in luxury and so seeing the American ambassador living such a normal existence is a real eye opener. Adding further shock and awe are reports of Ambassador Locke carrying his own luggage at the Beijing airport. If these reports are really causing as big of a stir as the NYTimes suggests they are, it would be interesting to know what China does about it.

One fairly unique thing about Chinese government is that it actively uses experimentation to find effective new policies. It tries out a new policy in a few provinces, and then if those policies are successful, expands them to the country as a whole. For example, the creation of special economic zones--business parks where factories are encouraged to cluster--was the result of policy experimentation.

I wonder if China will try out any policy experiments to try to improve the image of Chinese officials to make them act more like Ambassador Locke. Unfortunately, unlike special economic zones that increase rents to government officials, such an image campaign, to really be legit, would decrease rents. So unless there is a significant threat of an uprising, such image-control policies are unlikely to be implemented any time soon.

Double-blind experiments when treatments are invasive

One of my favorite podcasts is the Nature podcast, produced by the same folks who produce the famous science journal. It's nice to have something to listen to that is fascinating and not (always) economics.

The first story of the August 11, 2011 Nature podcast reports on treating Parkinson's with an invasive technique where the skull is drilled open and new brain cells are implanted into the brain. Yet to keep such experiments "double-blind", people in the control group also experience surgery---they have a hole also drilled into their head, although unlike for the treatment group, the hole doesn't go all the way through the skull, and no new brain cells are implanted. The control group still ends up spending the same time in the surgery theater and the same gnarly bandage on their head. Both the patients and the researchers don't know who is in the treatment and who is in the control group--hence a "double-blind" experiment.

The podcasters discuss the pros and cons of this approach. However, one thing that they don't discuss is the fact that the control group does not capture the counterfactual--what would happen to a person who does not receive surgery. Rather people in the control group are receiving a somewhat invasive surgery and experiencing anesthesia, which possibly has serious health impacts, given that these are people with a severe stage of a degenerative nervous system disorder.

The whole reason for having a double blind experiment is of course that it helps researchers avoid attributing a placebo effect to a treatment effect. But when surgery for the control group is this invasive, it doesn't seem worth it, especially when the counterfactual of interest (e.g., no surgery) is not observed.

One simple way to get around this problem is to simply have 3 groups: one treatment, one control with the half-way drill surgery, and one control with no surgery. This seems like an easy extension to do, especially because the costs of the 3rd group are going to be limited to check-ups.

I wonder if the medical community may have become so focused on the gold standard of double-blind randomized experiments that they have lost focus on meaningful experiments that have easily interpretable results and that minimize harm to patients.

Eating bugs

I happen to love eating strange and gross things. I've had Saudi roasted goat brain and Ethiopian raw ground beef that have been absolute food revelations. My memory of Moroccan snails, served in a savory broth with a safety pin to fish them out of their shells, is one of my fondest. But perhaps my favorite gross food are insects. I'm by no means a connoisseur, but I have tried a few things: I've had expensive yet disgusting grasshopper taco at Oyamel in DC. And during backpacking trips when the mosquitos were especially thick we often were so fatigued that we would just eat the ones that fell into our evening goulash rather than trying to pick them out.

And it's not only me that digs eating bugs: I once heard that during a particularly severe locust swarm, the Thai government started distributing recipes for locusts. While locusts were not formerly a part of the indigenous Thai diet, these recipes and the abundance of the bugs were just the sort of "big push" that was needed to make locust eating a part of the equilibrium. (I have no verification for this story--anybody know of any sources?). My bro-in-law talks fondly about eating live silkworms in South Korea. Well maybe not that fondly. Maybe he was just trying to gross us out.

So of course it was with great interest that I read the following article, which discusses why eating bugs is so great and why legal restrictions ought to be removed such that these delicious insects can become a bigger part of our diets and lives: http://www.theatlantic.com/magazine/print/2011/09/bug-nuggets/8599/

But the important question is: Will demand really catch on? Most of the bug products here seem to be highly processed to resemble other foods. But unless one's demand is highly price elastic or if the yuck factor is small, people seem unlikely to substitute from chicken nuggets to bug nuggets.


Another question is will this production become cheap enough that insect food can be competitive? Apparently the bug food industry is not advanced enough such that they can produce bug soup without sometimes admitting off-color flavors. On the other hand, the fact that production relies almost entirely of using food waste (e.g. wheat bran), and that farmers may be willing to pay for such food waster post-bug-production due to increased fertilizer content, means that this might be a fairly low cost industry. In fact, bugs could possibly be even cheaper to produce than plant sources of protein, such as tofu and lentils.

Finally, eating bugs may be good for the environment. If bugs take less resources to grow, and produce less emissions than typical livestock (have you ever smelled a cow fart?), then perhaps bug production should be subsidized to counteract the negative externalities of more traditional animal protein consumption and decrease global warming.

But whether such a subsidy works will depend largely on the demand function. The yuck factor may make such subsidies ineffective. Perhaps only a "big push" or major economic event will make bug eating popular. Like the case of Thailand, perhaps we need a lot of bug cookbooks and a locust swarm, where the relative price of meat to bugs rises precipitously. Or perhaps an advertising campaign featuring Angelina Jolie, her slender fingers sensuously shoving a chocolate-covered locust into her exquisitely lipsticked mouth, would do the trick.


And to end on a provokative note: One place where demand for insects is likely to be high is in poor countries and among poor populations. Lower incomes make them more likely to be willing to buy cheap bug products. Recent research suggests that demand for protein is high, as long as the household can achieve an adequate level of total calories. In contrast, more wealthy agents may need a negative price before being willing to consume such delicacies. Therefore for efficiency it is important to ensure that low-cost bug food is available especially among poor populations. The important thing as far as climate change is concerned is that aggregate demand for environmentally-unfriendly beef shifts to the left, not which populations start eating bugs---and it will be much less costly to implement such a policy if it is the poor who eat the bugs.



Thanks to MR for the heads up on the Atlantic's bug-eating article.

Fascinating Economics of the Middle East

To me this NYTimes article captures so much about what is fascinating about economics:

Some of the fascinating principles it captures:

• Cars contribute negative externalities (congestion, pollution) such that the free market equilibrium is not efficient
• Governing bodies can reduce the impact of the negative externality by taxing or, in this case, reducing the supply of cars
• Trade costs go up when there is policing and border checks
• Profit margins tend to go down with more competition.
• People will take advantage of new arbitrage opportunities

This article reminds me of my fabulous year in Egypt and why what I learned there got me so interested in studying economics