Worthwhile Canadian Initiative

Are those three words inherently boring? Somebody thinks so:

The New Republic once claimed to have discovered the most boring headline ever written: Worthwhile Canadian initiative . The editors argued that the headline ingeniously combined three inherently boring words in such a way as to dissuade even the most adventurous reader from forging ahead into the actual story.

Let me add that our favourite colour is grey and our favourite dessert is tapioca pudding.

[Thanks, I think, to Alex for the pointer]
Update: Brian Ferguson has pointed out to me that there is a distinctly non-boring blog with the title Worthwhile Canadian Initiative.

I Have a Ph.D. and so You Should Trust Me to Make Good Decisions on Your Behalf

To be quite honest, after I received my B.A., I thought I knew everything. I thought that I, and lots of people like me, could make the world a better place if only people would let us make more of the decisions.

This was waayyyy back in the previous century, before people talked about bounded rationality. But that’s what we had in mind. Essentially, our hubris permitted us to imply, “We’re smart, and you’re not, so let us run your world for you.”

And then when people in power continued to make decisions with which I disagreed, I made a rather precipitous slide into quasi-libertarianism.

This paper ($) summarizes the problems of hubris-laden paternalism. Here is a summary which helps explain my change, way back then:

Soft paternalism requires a government bureaucracy that is skilled in manipulating beliefs. A persuasive government bureaucracy is inherently dangerous because that apparatus can be used in contexts far away from the initial paternalistic domain. Political leaders have a number of goals, only some of which relate to improving individual well-being. Investing in the tools of persuasion enables the government to change perceptions of many things, not only the behavior in question. There is great potential for abuse.

[h/t to Tyler Cowen at Marginal Revolution. Be sure to read the comments, too!]

Speed Bumps and Slides

At The University of Western Ontario, students must take two years of courses before they can be admitted to UWO’s honours programme in business at the Richard Ivey Skool of Biznezz, a programme which is very highly rated and into which admission is extremely competitive.

I was speaking with one of my colleagues the other day, and we were bemoaning the fact that many of our students regard economics courses as speed bumps on their way to bizskool. The students need solid or high A averages to get into bizskool, and the economics department at UWO has traditionally had some of the lowest averages on campus [perhaps a reflection of the testosterone poisoning suffered by economists?].

At the same time, a professor in chemistry was commiserating because undergraduate students view chemistry courses as speed bumps on their way to med skool.

In contrast, socionomology courses are slides on the way to an MSW.

The Efficient Markets Hypothesis

This site provides one of the most masterful summaries of the Efficient Markets Hypothesis that I have ever read. It is well-written, and it uses little (if any) jargon.

Here is the opening paragraph [h/t to BenS]:

An issue that is the subject of intense debate among academics and financial professionals is the Efficient Market Hypothesis (EMH). The Efficient Market Hypothesis states that at any given time, security prices fully reflect all available information. The implications of the efficient market hypothesis are truly profound. Most individuals that buy and sell securities (stocks in particular), do so under the assumption that the securities they are buying are worth more than the price that they are paying, while securities that they are selling are worth less than the selling price. But if markets are efficient and current prices fully reflect all information, then buying and selling securities in an attempt to outperform the market will effectively be a game of chance rather than skill.

The Efficient Markets Hypothesis is in direct opposition to what is said in this book (a recent advertiser on An Econoclectic Perspective).

One of the best books I have read on this topic is Burton Malkiel’s A Random Walk Down Wall Street, though I know there are others that have been written more recently.

Note: I wrote earlier about my surprise that our pension fund managers seem to think there are aspects of the Canadian financial markets that cannot be described by the efficient markets hypothesis.

More on More BBC Bias

A BBC reporter told her audience that she cried during Yassir Arafat’s funeral:

She told listeners that “when the helicopter carrying the frail old man rose from his ruined compound, I started to cry…”
Her piece attracted hundreds of complaints from listeners.

… The corporation’s head of editorial complaints initially cleared From Our Own Correspondent journalist Barbara Plett of bias.

But a listener appealed and yesterday the Governors’ Programme Complaints Committee overturned that ruling.

Ms Plett’s mention of her tearful response “breached the requirements of due impartiality”, the governors said.

As one of the critics said, there is no way a reporter would dream of saying the same sort of thing during the funeral of Ariel Sharon.

In many respects, I am glad Ms. Plett said what she did because it reveals her underlying biases so clearly. I can imagine many others at the BBC share her views, too. I can only hope they will slip up and reveal their biases as she did.

Political Economy Compass

Former student, Ryan, sent me this test of one’s economic and political leanings. I ended up right-wing on economics (I presume this means market-oriented) and slightly libertarian politically (vs. authoritarian), according this test, just a shade to the left of Milton Friedman.

Gasoline Pricing Puzzle

For the past two weeks, Mac’ Milk, a variety store in our town (with hi-tech gas pumps) has been selling gasoline for about 7 cents/litre less than the other stations in town. The price at this station has been about 10 cents/litre below that of gas stations in other towns within a fifteen minute to half-hour drive from here.

Why?

They always had cars at their pumps. There were sometimes short line-ups (which grew longer when pay-at-the-pump wasn’t working). There were also stories that one of the other gas station proprietors in town called the manageress of this station to encourage them to raise their price [which, most likely, would be illegal, especially if successful].

When I asked someone in town why they persisted in charging such a low price, they said,

The woman said the company told her to keep the price low. They want to increase the gallonage.

Does that make sense? Why would senior managers of a major variety store chain (Mac’s Milk) want to increase its “gallonage” of gasoline at a one particular outlet? And why didn’t the other gasoline stations in town follow their low price? And why did people fill up at the other stations at all?

Whatever the reason, I kept the top half of the tank full while this odd pricing strategy was occuring.

100 Notable Books of the Year

Here is the list from the NYTimes (reg. req’d) that will be published next month. At that site, there are links to reviews. Here are some brief notes and questions:

1. I have actually heard of one or two of these books.
2. Is it incestuous for them to list so many books by NYTimes op-ed writers?
3. How many of them do you think this man has read? My guess is about 35.
4. Are there any Canadian writers on the list?

The Benefits of Melatonin

Melatonin is hormone normally created by the body while you are asleep. I strongly recommend that you read the Wikipedia write-up about it.

Ms. Eclectic swears it helps with insomnia. So does JA who wrote to me:

I have been using it for years.

Melatonin level decline is a major issue with age, hence sleep problems for so many older folks.

1mg tablet is more than sufficient (that’s many times ‘natural ‘ output).
Problems include:

1. You never know what you are buying; early product was from pineal gland of animals. Now we are told it’s almost all synthetic. Assays of product out there would, like many nutraceuticals , reveal a wide range of substances and potencies I’m sure. I use Puritan Pride’s 1mg tablet (must import but cheap)- find it works best for me, whatever it is.
2. Slow onset of action – some physiologists claim it’s not a ‘hypnotic’ (sleep inducer) at all but just sets your sleep ‘clock’. I disagree from personal experience, even if that effect is placebo .
3. It’s a complex hormone and we don’t know nearly enough about its other actions to know if they are good (Cancer prevention??? as article suggested) or bad stuff.
   Nevertheless, I’m still alive – sort of – after more than a decade of use.

This seems like an efficient health supplement. JK’s message to me was in response to this article to several friends who suffer from sleep disorders of varying degrees.

…the first clues that otherwise healthy people who do not get enough sleep or who shift their sleep schedules because of work, family or lifestyle may be endangering their health emerged from large epidemiological studies that found people who slept the least appeared to be significantly more likely to die.

“The strongest evidence out there right now is for the risk of overall mortality, but we also see the association for a number of specific causes,” said Sanjay R. Patel of Harvard Medical School, who led one of the studies, involving more than 82,000 nurses, that found an increased risk of death among those who slept less than six hours a night.

As a result of these recommendations, I’ve started taking melatonin…. when I remember to take it…. along with scotch or red wine… etc.

Wal-Mart and the Minimum Wage

There has been considerable discussion in the blogosphere of Wal-Mart’s call for an increase in the minimum wage (e.g., see here and here). For a very cogent discussion of Wal-Mart’s advocating an increase in the minimum wage, see this piece by T.J. Brooks:

Wal-Mart and the early 20th century progressives are not the only ones to try to use minimum wage laws to achieve their own ends. Unions and organized labor are also often at the forefront in support of raising the minimum wage.

Surely their motives are beyond recourse? The Neumark paper suggests that this is not the case. As it turns out, minimum wage laws raise the earnings of relatively low-wage union members at the expense of the earnings of the lowest-wage nonunion workers. Firms that face the higher labor costs are forced to fire some people, which tend to be the nonunion employees, allowing the union employees to step in and take on some of the extra work.

Now let me be very clear. I do not think our local progressives or our city council had the same nefarious motives the others have had. I really believe they want to help the working poor. But I also believe that a higher minimum wage will not achieve that goal. Economic theory, empirical evidence and nearly 100 years of history are on my side.

The purported rebuttal to T. J. Brook’s piece was a boring and typical exercise in irrelevant, non-sequitured Bush-bashing coupled with a call for a higher social safety net without regard for the changes in incentives that would result.