Social Econ Blog

For someone who has spent the vast majority of his life in Oregon, I've spent remarkably little time in Central Oregon (and essentially no time in Eastern Oregon). This weekend I started to remedy that by spending the weekend in Tumalo, OR (a short drive from one of the nation's fastest growing MSAs -- Bend, OR). While I am not a big fan of skiing down the white hunks of rock pictured below (technically one would ski down Mt. Bachelor which is not actually pictured below), I do enjoy gazing upon them. Further, I was very impressed with the quality of food I was able to eat in Bend. All in all, a good weekend.


Broken Top and the Three Sisters


Mt. Jefferson

On the ride to work this morning, I saw something I have not seen before -- Christmas lights ... on the inside of a car. Given how easy it is to access electricity inside of a car, I am not sure why I've seen this before. Pretty wild regardless.

Below is the video for U2's latest song "Window in the Skies." In it, some 100 clips of other artists playing drums, guitar, bass, or singing are spliced together in a way that makes it appear that they are playing the song. It is an impressive feat. I am curious if they developed some sort of algorithm that allowed them to find video clips that would roughly match the song -- particularly the words. Do you figure out a range of word/sound combinations that would be roughly similar to what's in the song and then search songs to find stuff similar, then search for video of these songs? That's my guess, but I couldn't find any articles or anything explaining the process.

Some simple advice -- don't try and read articles on your computer in the dark while descending hardwood staircases wearing socks. You might end up falling down the stairs.

On the bright side, the article I was reading was quite interesting. David Autor and Susan Houseman found a quasi-experiment in Detroit that they can exploit to inform about the role for temporary work in helping welfare recipients transition out of poverty. A nice Wall Street Journal summary is available here, and the actual article is here.

Here is the abstract:

The high incidence of temporary agency employment among participants in government employment programs has catalyzed debate about whether these jobs help the poor transition into stable employment and out of poverty. We provide direct evidence on this question through analysis of a Michigan welfare-to-work program in which program participants were randomly allocated across service providers (‘contractors’) with different job placement practices. We draw on a telephone survey of contractors and on administrative program data linked with wage records data on all participants entering the program over a three-and-a half-year period. Our survey evidence documents a consensus among contractors that temporary help jobs are generally easier for those with weak skills and experience to obtain, but no consensus on whether temporary help jobs confer long-term benefits to participants. Our analysis of the quasi-experimental data introduced in Autor and Houseman (2005) shows that placing participants in either temporary or direct-hire jobs improves their odds of leaving welfare and escaping poverty in the short term. However, we find that only direct-hire placements help reduce welfare dependency over longer time horizons. Our findings raise questions about the incentive structure of many government employment programs that emphasize rapid placement of program participants into jobs and that may inadvertently encourage high placement rates with temporary help agencies.

Hmmm. The main headline on MSNBC's website right now reads "Green Fatigue: Hybrid sales slip as gas prices dip." Clicking on the article one learns:

sales of hybrid vehicles have fallen sharply since August as the price of gas has declined and Toyota has run up against a federal limit for tax credits that have helped fuel sales of the vehicles.

We further learn that sales of Toyota hybrids fell 22.4 percent between September and October.

Of course, in September a federal tax credit of $3600 (and some state credits like Oregon's of $1500) expired for Toyota's hybrids. So which of the two hypotheses for declining hybrid sales seems more likely to explain the decline? Temporary marginal changes in gas prices or increase in price of nearly 20%?

Sadly, the article doesn't get any better. It goes on to quote an "expert" who argues (based apparently on his gut -- Stephen Colbert would be proud) that "consumers are burned out on all the hybrid hoopla" and that:

“Some think a hybrid will get the stated EPA mileage returns of 50 or 60 miles per gallon all the time,” Rosten said. “But if you are using the hybrid on the highway you are using the gas engine, and cars like the Prius are much better-suited for around town driving in gridlock — they are not meant to be long-distance driving cars.”

While it is true that the hybrids EPA mileages are inflated (in fact, the EPA just changed its rules for computing these things to make them reflect how people really drive), the claim that the Prius really only provides better fuel efficiency for in-town driving is ridiculous. Last weekend on a 250 mile round trip to Forest Grove, OR, my (still new and not broken in) Prius got 50 miles to the gallon. When I drive the 140 miles south to my parent's house (over more mountainous terrain), I typically get 44 miles to the gallon. This is still substantially better than even the inflated EPA sticker MPGs for comparable cars.

Finally, the article points out (although I am not sure how accurately) that one needs to drive alot of miles to recoup the higher costs of hybrids. This is true. Right now, if saving money is your primary motivation for buying a hybrid, you'll need to drive it alot to break even. Eventually, though, the prices will likely fall to a point where the higher costs roughly equal the expected fuel savings from a more typical driver. I think this will occur for a couple of reasons. Right now, Toyota faces very little competition for its hybrids, and demand for hybrids among "green" consumers is high currently. As long as there is limited competition and excess demand for hybrids, dealers will command a premium for hybrids above their fuel savings.

... even for introverts. The businesspundit offers some advice for introverts on how to network. It is all pretty basic stuff, but he does give a nice summary of some of the value he recoups on investments in social networks:

For better or for worse, connections make the world go round. Just this week I was reading about the importance of networks in the VC industry. It applies to all of business though. Knowing lots of people reduces your headaches by a factor of 10 when you need to get something done. Requests from strangers don't get filled as quickly as requests from acquaintances or friends. If you don't network, you find yourself in situations (particularly as an entrepreneur or business owner) where you need someone with a certain skill set and you don't even know where to start looking. Then you have to advertise a position or opportunity, and weed through the applicants to find the 5% that are actually worth talking to.

“Fix You” is one of my favorite Coldplay songs. I particularly enjoy the instrumental part that lasts from 2:35 to 3:30. However, I have a new appreciation for the words after listening to 81 year old Fred Knittle of the Northampton, MA chorus Young@Heart channel Johnny Cash in this moving performance. The Very Short List described it nicely:

It’s a simple, subdued, dignified performance, but somehow it gets to the heart of the song and outpaces the original. (Even die-hard Coldplay fans have been saying as much in their online forums.) Particularly when the chorus gets to the line “Tears stream down your face,” and Fred answers with “When you lose something you cannot replace.”

The performance was originally meant to be a duet — but Fred’s singing partner, Joe, had died of cancer two days earlier.

I hate waiting in lines. As such, I've never been that excited by product giveaways like Ben and Jerry's free cone day. I learned my econ 101 well. I firmly internalized that the cone Ben and Jerry are giving away is not free. Waiting in line costs me time (and more), and, for me, that cost is greater than the value of the cone. Many other people make different choices. They love free stuff. One person I know recently described the great joy she takes from a box full of free t-shirts she has that she has collected and never worn (typically because they don't even fit her).

Back in July, Tony V. highlighed a particularly crazy situation that erupted when Allstate gave away free gas in Milwaukee. He then further conjectured:

If I announced that I was doing the same thing, but instead of giving out gas, was going to give $50 to each car that came, do you think there would be more, fewer, or the same number of people willing to wait more than 6 hours overnight (and sleep in their car)? I think there'd be fewer.

A new paper by Kristina Shampan’er and Dan Ariely suggests he may be correct. People seem to get an extra benefit from free stuff:

When faced with a choice of selecting one of several available products (or possibly buying nothing), a standard theoretical perspective suggests that the option with the highest benefitcost difference will be chosen. This analysis applies to all prices including the price of zero. In contrast, we propose that decisions about free products are different than simply subtracting costs from benefits, and that in fact the benefits associated with free products are perceived to be higher. We test this idea by contrasting the demands for two products (types of chocolate) across conditions that maintain the cost-benefit difference for the goods, but vary on whether the price of the cheaper good in the set is priced at a low positive price or at zero. Contrary to a standard cost -benefit perspective, the results show that, in the zero-price condition, the proportion of participants choosing the less attractive chocolate dramatically increases, while the proportion of participants choosing the more attractive chocolate dramatically decreases. Thus, individuals seem to act as if pricing a good as free not only decreases its cost, but also adds to its benefits. After documenting this basic effect, we propose and test several possible psychological antecedents of the effect: Social norms, Mapping difficulty, and Affect. The results suggest Affect as the most likely source of the effect.

I am not an expert on the middle east. What I know about the situation, I learned merely by reading the news and various websites. I know I blogged about this before, but is it really that hard for members of congress -- especially those chosen to lead the intelligence committee -- to have a basic understanding of the differences between shites and sunni's? Maybe Speaker Pelosi should implement weekly classes so that her members have a clue about what they are voting on.

If they are this clueless about the really important stuff, I don't even want to think about how little they understand the little stuff they have enormous influence over.

It has been weird watching the sudden and rapid erosion of support for them. Iraq War among Washington insiders. Even though a majority of Americans have favored change in our Iraq policy for months, the position continued to be treated as outside the mainstream. For some reason, the cost of admiting the obvious (that staying the course was insane) was substantially higher for the chattering and political classes than for much of the rest of the country. Suddenly, though, it has become very cheap.

How cheap?

Republican senators are willing to get up on the floor of the senate and do this:

In an emotional speech on the Senate floor Thursday night, Sen Gordon Smith, a moderate Republican from Oregon who has been a supporter of the war in Iraq, said the U.S. military's "tactics have failed" and he "cannot support that anymore."

Smith said he is at, "the end of my rope when it comes to supporting a policy that has our soldiers patrolling the same streets in the same way, being blown up the same bombs, day after day.

"That is absurd," he said. "It may even be criminal."

Smith said he has tried to quietly support President Bush during the course of the war -- and doesn't believe the president intentionally lied to get the U.S. into the war -- but now recognizes, "we have paid a price in blood and treasure that is beyond calculation" for a war waged due to bad intelligence.

Moved this week by the findings of the Iraq Study Group, Smith said he needed to "speak from my heart.

"I, for one, am tired of paying the price of 10 or more of our troops dying a day. So let's cut and run or cut and walk, but let us fight the way on terror more intelligently that we have because we have fought this war in a very lamentable way," he said.

sunset[1]
Originally uploaded by tracer14.

My brother counters my sunrise from a couple days ago with the sunset from his house last night. (If I could open the window in my office, I would reverse counter with my own photo of last night's sunset here which was a bit more pink and purple than what he captured down in Grants Pass.)

Late update -- The sun and sky have teamed up to put on quite a show outside my office for the past hour. There've three distinct color phases. I am kicking myself for leaving my camera at home.

Last Spring, I wrote this:

Should you ever find yourself in the region I grew up in and wanting to travel between the Southern Oregon coast and the I-5 corridor between October and April, don't try and take one of the crazy mountain roads over the Coastal Range. First, while beautiful, the roads are not for the faint of stomach. I've never crossed these roads without puking. Second, and more importantly, you might get stuck in the snow and no one will ever find you because they don't expect anyone to be dumb enough to travel these roads outside of summer. This family got stuck there for 2.5 weeks before someone found them. A few years ago, some guy got stuck up there and starved to death. In both cases people were looking for them and knew where they started from and where they were trying to go.

Well, another family failed to heed the warning, so let me reiterate -- don't take Bear Camp Road anytime when snow is even a remote possibility.

At work, I recently had them remove all of my office furniture. I went from having this massive built in "P" of table and desk space to one very small desk. While I have since been saddled with a larger desk (because the office it was in was too small to handle it), during the small desk days, people thought I was crazy. They kept peering into my office quizzically and asking what happened or when I was getting new furniture. Their confusion would grow when I would tell them that this is what I wanted; that I was going to put an armchair in the corner and that would be it.

Like lawns and traditional house plans, adherence to traditional office configurations perplexes me. When I work from home, I seldom work at a desk. Right now, I am sprawled on a couch with the computer on my lap. I could work at a desk. There is one not 6 feet away, but I choose to work like this consistently. Why would I make a different choice in the office? I don't think I am alone in choosing more comfortable accommodation. My roommate consistently works from his bed. My father works from his big cushy chair and ottoman. If this is how we choose to work when given a large set of alternatives, shouldn't we strive to make the office environment (where we spend large amounts of time) mimic our revealed preferences? This is what I am striving to do with my office. (Further, my body apparently knows what's up because my choices are also apparently better for my back.)

Just as I am challenging traditional conceptions of office space, others are challenging the basic notion of work. Many firms have started to shift from input-oriented work (where a key determinant of performance is attendance) to output oriented work (where what you accomplish not where and when is important). This article on Best Buy's "ROWE -- Results Only Work Environment" program is a nice look at this change. Just like there is no reason to contort your body into a chair at a desk simply because this is what people have always done, there is no reason to contort your life to a rigid work schedule if your ability to do you job doesn't require it.

Obviously, the success of these types of programs hinge on the ability to measure individual output with some degree of accuracy and certainty and the lack of substantial negative productivity spillovers from imperfectly correlated work schedules. These are both non-trivial problems, but hopefully they can be managed successfully to allow output oriented work to become more common.

Disturbing:

In fact, only 33 of the FBI’s 12,000 agents have even a limited proficiency in Arabic, the agency says.

Previously, I blogged about the fact that the State department only increased its full-time Arabic speaking staff from 198 to 231 post 9/11.

Combine this with the fundamental lack of understanding of the key issues in the Middle East (something mentioned in the article above and discussed in this previous post) and you really have to wonder, "What the heck is going on inside our government?"

Maybe this sounds somewhat heartless, but, when setting Iraq policy, we must ignore the costs we've already sunk and calmly assess the relative marginal benefits and marginal costs of different policy options. The only role for the past in those calculations is providing information about the distribution of expected benefits and costs.

IMG_0823
Originally uploaded by tracer14.

The view from the back deck this morning.

Here's another:

IMG_0825
Originally uploaded by tracer14.