Making a Stat Less Significant

by Carl Bialik

Wall Street Journal
April 2, 2011

A group of mathematicians has been trying for years to have a core statistical concept debunked. Now, the Supreme Cout might have done it for them.

Last month, the court considered a case brought by investors in Matrixx Initiatives Inc. They alleged the company failed to disclose material information by neglecting to reveal it had received reports an over-the-counter medicine, Zicam Cold Remedy, caused a loss of sense of smell.

When those reports came to light, the company's stock fell. Eventually, the Food and Drug Administration warned consumers not to use certain Zicam products.

The company argued in court that the initial reports of the possible side effect didn't rise to the level of "statistical significance," and therefore didn't need to be disclosed.

Last week, the Court rejected that argument, ruling unanimously that the case against Matrixx pending in a lower court could proceed. In their opinion, the justices said companies can't only rely on statistical significance when deciding what they need to disclose to investors.

Amen, say several statisticians who have long argued that the concept of statistical significance has unjustly overtaken other barometers used to determine which experimental results are valid and warrant public distribution. "Statistical significance doesn't tell you everything about the truth of the hypothesis you're exploring," says Steven Goodman, an epidemiologist and biostatistician at the Johns Hopkins Bloomberg School of Public Health.

A point on which most statisticians agree is that statistical significance is difficult to explain.

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Microsoft's Antitrust Turnabout

Wall Street Journal
Editorial
April 2, 2011

Invoking Romeo and Juliet's Mercutio seems like the most natural response to Microsoft's complaint to the European Commission over Google's allegedly anticompetitive behavior—a plague on the houses of Gates-Ballmer and Page-Brin would be well deserved. Even Brad Smith, Microsoft's long-time general counsel, was compelled to call attention to the "irony"—his word—of Microsoft's calling in the Commission to investigate the search giant.

Microsoft, after all, suffered more than perhaps any other at the hands of Brussels's antitrust cops, and the company knows full well how difficult it is to run a business in the fast-moving tech space with regulators rummaging through your virtual file cabinets for evidence of ill-intent.

Not that Google is above playing pin-the-regulator-on-the-rival, either. It milked the net neutrality crusade for as long as it was useful in keeping Internet service providers at bay. And four years ago Google filed a brief in court arguing that Microsoft's Vista operating system violated the Redmond, Washington company's consent decree stemming from the Justice Department's interminable case against the software maker.

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Η σωτήρια αντιστροφή...

του Πάσχου Μανδραβέλη

Καθημερινή
2 Απριλίου 2011

H αλήθεια είναι ότι μόλις πεθάνουμε δεν έχουμε καμιά κυριότητα στο σώμα μας. Οχι νομικά, αλλά πρακτικά. Κάποιοι άλλοι αποφασίζουν, αφού δεν υπάρχει η δυνατότητα να μάς ρωτήσουν. Και μάς θάβουν. Ετσι κι αλλιώς αι βουλαί των νεκρών δεν είναι απλώς άγνωστοι· δεν υπάρχουν. Μόνο οι ζωντανοί μπορούν να ορίσουν τι θα γίνει το σώμα τους μετά τον θάνατό τους. Κι αν θέλουν κάτι εναλλακτικό από τα παραδοσιακά -κηδεία και ταφή- θα πρέπει να το δηλώσουν. Αν θέλουν να γίνουν δωρητές οργάνων πρέπει να απευθυνθούν στον Εθνικό Οργανισμό Μεταμοσχεύσεων.

Η δήλωση έχει κάποιο κόστος χρόνου, το οποίο υφίστανται μόνον όσοι θέλουν να ξεφύγουν από τον παραδοσιακό κανόνα, τον οποίο κάποιοι άλλοι έφτιαξαν. Αν κάποιος θέλει να γίνει δωρητής οργάνων πρέπει να υποστεί και την γραφειοκρατία που ενέχει αυτή η διαδικασία. Γι' αυτό πολλές φορές δεν το κάνει ή το «αφήνει για αργότερα»· τόσο «αργότερα» μέχρι που μετά το τέλος η παράδοση αποφασίζει την τύχη του σώματός του.

Γι' αυτό τον λόγο, πολλές ευρωπαϊκές χώρες (και τώρα η Ελλάδα) αποφάσισαν να μεταθέσουν αυτό το κόστος χρόνου και σχετικής γραφειοκρατίας από εκείνους που θέλουν να προσφέρουν σε εκείνους που θέλουν απλώς να θαφτούν. Οι σχετικές νομοθεσίες θεωρούν ότι όλοι οι άνθρωποι είναι δότες οργάνων, εκτός αν δηλώσουν το αντίθετο. Αντί να εικάζουν, δηλαδή, ότι κάποιος δεν θα ήθελε εν ζωή να γίνει δωρητής οργάνων μετά θάνατον, εικάζουν το ακριβώς αντίθετο. Και στις δύο περιπτώσεις έχουμε μία εξίσου αστήρικτη, αλλά ταυτοχρόνως εξίσου θεμιτή εικασία. Αλλά από την άλλη έχουμε μια μεγαλοφυή και σωτήρια για χιλιάδες ζωντανούς αντιστροφή. Η ελευθερία βούλησης του ατόμου δεν επηρεάζεται κατ' ελάχιστον· όλοι οι ζωντανοί έχουν την επιλογή τι θα κάνουν το σώμα τους μετά θάνατον. Απλώς ο νόμος δεν εγκολπώνεται την παράδοση, προσπαθεί να ικανοποιήσει τις σύγχρονες ανάγκες.

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Η εγκληματικότητα του «λευκού κολάρου»

του Τάσου Τέλλογλου

Protagon.gr
1 Απριλίου 2011

Ένα από τα κεντρικά πρόσωπα στην υπόθεση των γερμανικών υποβρυχίων έστειλε τον συνήγορό του στην εισαγγελία του Μονάχου για να μάθει τι υπάρχει εις βάρος του στη γερμανική δικογραφία. Οι γερμανοί εισαγγελείς ενημέρωσαν τον συνήγορό του ότι για την ώρα δεν είναι ούτε κατηγορούμενος αλλά ούτε και μάρτυρας και θα μπορούσε να παραμείνει έτσι ως το τέλος της υπόθεσης, αν διευκόλυνε τη γερμανική δικαιοσύνη στην αναζήτηση ενοχοποιητικών στοιχείων κατά μελών του Διοικητικού Συμβουλίου της εταιρείας Ferrostaal, του εμπορικού βραχίονα δηλαδή της κοινοπραξίας HDW/Ferrostaal που πούλησε τα υποβρύχια τύπου 214 στο ελληνικό δημόσιο.

Θυμήθηκα την ιστορία όταν διάβασα την επιστολή του υπουργού Δικαιοσύνης κ Χάρη Καστανίδη προς την ηγεσία της δικαιοσύνης με την οποία ζητούσε να μάθει τι έχει γίνει με την διερεύνηση των μεγάλων υποθέσεων διαφθοράς.Την ίδια επιστολή θα μπορούσε να έχει αποστείλει κάθε συνάδελφος του κ Kαστανίδη προς τους επικεφαλής των ελεγκτικών μηχανισμών, που εποπτεύει για όλες τις μεγάλες υποθέσεις καθώς καμμία δεν έχει προχωρήσει ουσιαστικά. Για πολλούς λόγους: και ο βασικότερος λόγος στα εγκλήματα «λευκού κολάρου» είναι ότι δεν δίνονται κίνητρα στους μάρτυρες της εισαγγελίας να συνεργαστούν με τους ανακριτές τους.

Με απλά λόγια δεν γενικεύεται η διάταξη που ισχύει για τα εγκλήματα τρομοκρατίας ή και εκείνα των ναρκωτικών. Θυμίζω ότι ακόμα και σήμερα οι υποθέσεις διαφθοράς δικάζονται με τον 1608/50 περί καταχραστών του ελληνικού δημοσίου, ένα νόμο δηλαδή που δεν δίνει σε κανένα το κίνητρο να συνεργαστεί με τους ανακριτές του. Ένα δειλό βήμα έγινε για εκείνους που θα δεχθούν να «δώσουν» υπουργούς αν και το κίνητρο για πρώην υπουργούς δεν είναι αρκετά ισχυρό. Η υπόθεση των υποβρυχίων θα δοκιμάσει για μία ακόμα φορά το κατά πόσο το κράτος μας έχει τη θέληση και τη δυνατότητα να αντιμετωπίσει το σύνθετο οικονομικό έγκλημα, την εγκληματικότητα του «λευκού κολάρου». Αυτό που γίνεται στις χώρες της Δύσης δείχνει το δρόμο που πρέπει να ακολουθήσουμε.

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FCC net neutrality rules and efficiency

by Thomas W. Hazlett

Financial Times
March 29, 2011

The US Federal Communications Commission, seeing the internet as a fragile ecosystem under threat from opportunistic internet service providers, issued its “network neutrality” order on December 23. By January 10 it had received its first complaint – against an upstart wireless competitor providing innovative services, advanced technologies and new options for low-income consumers.

The targeting of socially valuable entrepreneurship is not an accident. The regulatory effort – “preserving the open internet” – as the FCC labels its regime, mistakes the benefits of market competition for designs of market planners.

The FCC sees danger lurking in the broadband ISP. It will steer you to websites it prefers, pocketing extra fees, either by flat-out blocking your path to others, or by “covertly blocking or degrading internet traffic” to rival sites. Special delivery deals – some sites working better than others – are seen as barriers for new, small-scale players in content and applications. “The harms that could result from threats to openness are significant and likely irreversible,” intones the FCC.

Regulation is to the rescue. ISPs will not be allowed to block access to (legal) websites, or unreasonably discriminate in the way traffic flows. Customers choose. ISPs are open. The network is neutral. What’s not to like?

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Τι προβλέπει ο νόμος για τους... νόμους

Το Βήμα
29 Μαρτίου 2011

Δίχτυ ελέγχου του νομοθετικού έργου, με τη θέσπιση κανόνων διαφάνειας στην κατάρτιση και επεξεργασία των ρυθμιστικών πράξεων, επιχειρεί να απλώσει η κυβέρνηση με σχετικό νομοσχέδιο που εισηγήθηκε την περασμένη εβδομάδα στο Υπουργικό Συμβούλιο ο υπουργός Εσωτερικών κ. Ι. Ραγκούσης, και αναμένεται σύντομα να δοθεί προς δημόσια διαβούλευση πριν έρθει προς ψήφιση στη Βουλή.

Με το νομοσχέδιο με το οποίο αποκτούν και «θεσμική ταυτότητα» σχετικές οδηγίες που έχει αποστείλει ήδη προς όλους τους υπουργούς ο Γραμματέας της Κυβέρνησης κ. Σωτήρης Λύτρας, θεσπίζονται συγκεκριμένοι κανόνες και αρχές που θα διέπουν την νομοθετική παραγωγή όλων ανεξαιρέτως των μελών του Υπουργικού Συμβουλίου.

Η νομοθετική αυτή πρωτοβουλία του κ. Ραγκούση, υλοποιεί, μεταξύ των άλλων, σχετικές δεσμεύσεις που έχει αναλάβει η χώρα μας απέναντι στην τρόικα για τη μεταρρύθμιση του.

Η έκθεση εντάσσεται στο πλαίσιο της αξιολόγησης της πολιτικής για την καλή νομοθέτηση 15 κρατών-μελών της Ευρωπαϊκής Ένωσης μετά και από σχετικό αίτημα της Ευρωπαϊκής Επιτροπής.

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The 0.00002% Privacy Solution

by L. Gordon Crovitz

Wall Street Journal
March 28, 2011

A digital milestone was reached last week, with news that more than half of Americans 12 and older now have Facebook accounts. The study by Arbitron and Edison Research raises this question: If most Americans are happy to have Facebook accounts, knowingly trading personal information for other benefits, why is Washington so focused on new privacy laws?

There is little evidence that people want new rules. The Federal Trade Commission has proposed regulations limiting how advertisers use behavioral and other tracking systems to deliver more targeted advertisements. There have been more than 400 formal responses since the FTC issued its plan in December, including many from advertisers hoping self-regulation will keep regulators at bay. Some in Congress want a Do Not Track system similar to the Do Not Call rules that limit nuisance phone calls.

Unlike intrusive telemarketing phone calls, people seem largely relaxed about behavioral targeting. The advertising industry is using a service called TRUSTe, which adds an icon to online advertisements giving consumers the opportunity to learn more about how they are being tracked and to opt out. A recent study by DoubleVerify found that of five billion advertising impressions, only about 100,000, or 0.002%, led to a click on the icon to learn more about the advertising system serving the advertisement. Of the people who clicked to learn more about information being collected about them, only 1% then opted out of behavior targeted advertising.

That's an opt-out rate of just 0.00002%. People seem to have adjusted to this new technology faster than regulators are willing to admit.

There's no doubt that some advertising companies have abused data, as a Wall Street Journal news investigation called "What They Know" made clear. Until recent industry standards, there was little self-regulation or transparency for consumers. This contributed to abuses such as spamming. But there is nothing inherently wrong about using technology to learn more about people.

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Venture: the economics of baseball

by Alex Keefe and Ashley Gross

WBEZ91.5
March 28, 2011

Amid all the economic news coming out this week, from manufacturing data to housing stats, there's another event that has just as much to do with dollars and cents: Opening Day.

Cable sports pundits and Las Vegas oddsmakers may not be divining a 2011 World Series championship for Chicago, but at least Cubs and White Sox fans won’t have to dish out too much more money to cheer for their chosen home team this season.

The cost for a family of four to attend a baseball game at Chicago’s Major League ballparks will remain nearly flat this season, thanks in part to ongoing sensitivity to the economic downturn, according to Team Marketing Report, a Wilmette-based sports research firm.

The company’s annual Fan Cost Index for baseball will be released Friday, the official Opening Day of the regular season. The index adds up the costs for two adults and two children to attend a Major League Baseball game: tickets, soda, beer, hot dogs, parking, programs and two souvenir ball caps.

And while Chicago fans may notice only nominal price bumps this season, they may still suffer major league sticker shock when they arrive at Wrigley or U.S. Cellular Field, said Jon Greenberg, who calculates the Fan Cost Index.

“We're not telling you this is what you should spend. We're saying, ‘Look out, this is what it could be,’” Greenberg said.

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Τι αλήθεια μας αξίζει;

του Τάκη Μίχα

Protagon.gr
28 Μαρτίου 2011

Όλοι αναμφίβολα γνωρίζουν «τι δικαιούνται» και δεν αφήνουν ευκαιρία να μην το διατυμπανίσουν: καλό μισθό, δωρεάν παιδεία, αξιοπρεπή σύνταξη, δωρεάν νοσοκομειακή περίθαλψη, καθαρό αέρα κλπ κλπ.

Παραδόξως όμως, πολύ δύσκολα θα ανταμώσει κανείς ανθρώπους που προβληματίζονται με ένα πολύ πιο βασικό ερώτημα: «Τι μου αξίζει;» Όχι με τη μεταφυσική θρησκευτική έννοια αλλά με την πρακτική έννοια του «Τι αξίζω για τους συνανθρώπους μου». Είναι με άλλα λόγια οι υπηρεσίες που προσφέρω ή το προϊόν που παράγω χρήσιμο και ελκυστικό στους συνανθρώπους μου έτσι ώστε να έχω ένα κοινωνικό λόγο ύπαρξης; Αυτό το ερώτημα το οποίο σπανίως θέτει κανείς στον εαυτό του είναι πολύ πιο βασικό από οποιοδήποτε αίτημα αναγνώρισης δικαιώματος. Διότι αν δεν προσφέρει κανείς τίποτα το οποίο να επιθυμεί ο υπόλοιπος κόσμος, τότε το μόνο αίτημα που δικαιούται κανείς να διατυπώσει είναι ένα αίτημα ελεημοσύνης και να ελπίζει στην φιλευσπλαχνία των συμπολιτών του.

Για όσους εργάζονται στον ιδιωτικό τομέα η απάντηση στο ερώτημα «τι μου αξίζει» είναι σχετικά εύκολη και δίνεται καθημερινά. Κάθε ημέρα, κάθε ώρα, κάθε λεπτό δισεκατομμύρια ανθρώπων σε όλο τον κόσμο συναποφασίζουν τι αξίζει η υπηρεσία ή το προϊόν που προσφέρεις και η απόφαση τους αυτή σου μεταφέρεται με αστραπιαία ταχύτητα μέσω του μηχανισμού των τιμών. Όσοι περισσότεροι συνάνθρωποί σου επιθυμούν αυτό που προσφέρεις τόσο περισσότερο ανεβαίνει η τιμή του-και αντίστροφα. Όσο πιο ποιοτικό και διαφοροποιημένο από τα άλλα ομοειδή προϊόντα είναι το δικό σου -είτε είσαι ο τενίστας Ρότζερ Φέντερερ είτε ο ποδοσφαιριστής Λιονέλ Μέσι- τόσο πιο πολύ οι συνάνθρωποι σου θα σπεύδουν να αποζητούν τις υπηρεσίες σου. Είναι ιδιαίτερα ενδιαφέρον ότι ποτέ δεν μπορείς να γνωρίζεις εκ των προτέρων τι αξίζεις. Αυτό το μαθαίνεις μόνο εκ των υστέρων. Πρόκειται για μια «διαδικασίας ανακάλυψης» ανάλογη με τις επιστημονικές ανακαλύψεις. Όταν ο δημιουργός της Apple Στιβ Τζομπς είχε την εκπληκτική ιδέα για το ipad οι περισσότεροι πίστευαν ότι θα αποτύχει. Όμως το νέο προϊόν έσπασε ρεκόρ πωλήσεων.

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For Young, the Shock of Old Age Spurs Saving

Wall Street Journal
March 25, 2011

Young people typically don't care about saving for their retirement, since it feels so far away. A Stanford project seeks to close this gap by showing people how they'll look when they are old. WSJ's Jason Zweig explains.

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Happy? Statisticians Aren't Buying It

by Carl Bialik


Wall Sreet Journal
March 26, 2011

Governments, academics and pollsters are hot on the trail of happiness.

U.K. Prime Minister David Cameron has launched an initiative to measure the national mood in a way that isn't captured by traditional economic statistics. French President Nicolas Sarkozy and German legislators are looking into similar programs. U.S. government researchers and Gallup pollsters are asking hundreds of thousands of Americans each year how satisfied they are with their lives.

But statisticians' efforts to measure happiness are ridden with uncertainty. Around the world, people tend to describe themselves as happy even when they express many specific complaints and doubts about their lives or their government. Some economists say that even if a reliable happiness test could be devised, it would be risky to craft policy based on a broad metric. Instead, they say, happiness is more reliably reflected in things that are objectively measured, such as income, health and living conditions.

Simon Chapple, senior economist with the Organization for Economic Co-Operation and Development's social-policy division, has doubts about whether it is possible to measure how happiness is influenced by public policy. "This is an academic field in an enormous state of flux," Dr. Chapple says. "Controversy is still out there."

But other economists see little downside in the efforts. Richard Layard, an economist at the London School of Economics, is an advocate of trying to track happiness as "a basic measure of the progress of a society." Its subjectivity isn't a problem, in his view: "The most important things in life are subjective."

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Stomach staples: People’s spending choices are a good way to assess levels of hunger

Economist
March 24, 2011

For most people in rich countries hunger is a temporary inconvenience, easily solved by popping out to the shops or raiding the fridge. But chronic hunger is part of everyday life for many people in poorer places. Halving the proportion of people in developing countries who do not get enough to eat is one of the United Nations’ Millennium Development Goals.

Reducing hunger is a complicated task. There is no global shortage of food. Less poverty does not always mean better-nourished people. In India, for example, real incomes rose and the price of food fell between 1980 and 2005. Yet evidence suggests that Indians, even those who were originally eating less than recommended, reduced their calorie consumption in that time. Such findings have long puzzled economists.

A recent paper by two economists, Robert Jensen of the University of California, Los Angeles, and Nolan Miller of the University of Illinois, Urbana-Champaign, suggests that part of the problem may lie in the way governments and international agencies count the hungry. This typically involves fixing a calorie threshold — 2,100 calories per day is a common benchmark — and trying to count how many people report eating food that gives them fewer calories than this number. Since calorific needs differ from person to person, a universal number is clearly only a guide. What’s more, concentrating on calories ignores the important role of micronutrients such as minerals and vitamins. But the economists argue that this approach to measuring hunger also does not accord with how people themselves think about it. They propose a new way to use people’s eating choices to tell whether they are hungry.

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Read the Paper

People can exercise only so much self-control

USA Today
March 22, 2011

People who overtax their self-control may find they have less in reserve for later, suggests an intriguing new study that may have implications for people trying to lose weight or make other behavioral changes.

But lack of sleep does not appear to affect self-control, say the researchers, whose study of 58 subjects is in the March issue of the journal Social Psychological and Personality Science.

The subjects — half had stayed awake for 24 hours and half were well-rested — were shown scenes involving vomit and excrement from two movies, Monty Python's The Meaning of Life (1983) and Trainspotting (1996).

Some were allowed to express reactions; others were told to show no emotion. Later, they played an aggressive game in which they won or lost by chance. Winners were allowed to blast their opponent with a loud noise.

Those who had suppressed their emotions blasted their opponent at a noise level about 33% higher than those who were allowed to show emotion, regardless of how much sleep they'd had, researchers found.

Results suggest that "people have a diminishable supply of energy that the body and mind use to engage in self-control," says study author Kathleen Vohs, a consumer psychology professor at the University of Minnesota's Carlson School of Management. "When people use this energy toward achieving one goal, they have less of it available to use toward achieving other goals."

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[ungated]

Europe prepares for governance green paper

Financial Times
March 20, 2011

Next month the European Commission will publish a corporate governance framework for companies, laying out its views on the subject.

The green paper, which is expected to focus on shareholder engagement, boards of directors and the comply-and-explain approach to corporate governance, follows guidance on board effectiveness published by the UK’s Financial Reporting Council earlier this month.

It comes as the role of corporate governance is under increasing scrutiny by politicians and the public after the financial crisis, and follows an EC green paper last summer that focused on corporate governance in financial institutions.

“In the crisis, boards failed to do their job, to carry out checks of high risk strategies pursued by some financial institutions,” says Lutgart Van den Berghe, chairman of the policy committee at the European Confederation of Directors’ Associations.

Not all the blame should be laid at the door of directors. Ms Van den Berghe believes shareholders had a part to play. “They allowed boards to carry out high risk strategies without intervening, including leveraging with high debt levels,” she says. As a result, “confidence in shareholders has been severely shaken. It is clear shareholders have to do more. They are the final monitors of companies and their boards,” she adds.

It is not yet clear what will be on the EU’s list but experts expect stewardship will be one of the issues. A formalised code setting out shareholder duties would be a positive proposal, some institutions say.

Carl Rosen, executive director at the International Corporate Governance Network, hopes the EU “will promote a stewardship code across all 27 countries”.

Greece launches a corporate governance code today, the last of the EU countries to do so (Ireland shares the UK’s code).

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Για ποια Δικαιοσύνη, αλήθεια, μιλάμε;

του Βασίλειου Φλωρίδη

Καθημερινή
20 Μαρτίου 2011

Πριν από δύο μήνες περίπου, είδαμε όλοι στον Τύπο ότι τρεις Αγγλοι βουλευτές τιμωρήθηκαν από αγγλικά δικαστήρια σε ποινές φυλάκισης από 12 έως 18 μήνες για παραποίηση στοιχείων, σχετικά με τις φορολογικές τους δηλώσεις δηλ. για πλασματικά έξοδα από 10.000 έως 35.000 ευρώ, περίπου. Αμέσως μετά οδηγήθηκαν στη φυλακή. Οι δικαστές και εισαγγελείς έκπληκτοι αναρωτηθήκαμε τι είδους ποινική Δικαιοσύνη επιτέλους απονέμουμε εμείς σ' αυτήν τη χώρα. Ποιους Ελληνες πολίτες δικάζουμε και καταδικάζουμε. Ποιοι τελικά είναι αυτοί που καταλήγουν στα σωφρονιστικά καταστήματα. Ας κάνουμε λοιπόν μια ενδοσκόπηση στο δικανικό μας σύστημα.

Το καθεστώς βέβαια που διέπει την ποινική δίωξη των πολιτικών είναι λίγο πολύ γνωστό. Εφτιαξαν ένα Σύνταγμα, το οποίο αντί να είναι ο χάρτης που εξασφαλίζει την ισονομία και ισοπολιτεία σε όλους τους Ελληνες πολίτες, κατάντησε να είναι το εργαλείο για τη συγκάλυψη των εγκλημάτων κάποιων συναδέλφων τους. Αυτό αδικεί και την πλειοψηφία. Το πιο απογοητευτικό όμως είναι ότι οι ελάχιστοι διεφθαρμένοι ακόμη αντιστέκονται σε ό,τι τους απειλεί. Μετράει ακόμη ο λόγος τους.

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Patent reform: The spluttering invention machine

Economist
March 17, 2011

For all America’s anxieties about its decline as a superpower, its deficits and its weak economy, it can still be proud of its strength as an innovator. Americans make four times as many patent applications per head as Europeans. Patents spur innovation and lay the foundations for future growth, by assuring inventors that they will reap the rewards of their effort and by publicising their discoveries.

But worries have grown that excessive patenting may now be having the opposite effect: businesses and other researchers may be discouraged from innovating in areas that depend heavily on prior discoveries, for fear of being sued for patent infringement. Besides making it too easy to bring patent lawsuits, it is argued, America hands out patents too readily: an often-quoted example is the one granted to Amazon for its “one-click” online-shopping button. Last year the Supreme Court restricted the scope of such business-process patents, but not by enough to satisfy critics.

Big technology companies complain of “patent trolls”—companies that buy lots of obscure patents and then bombard alleged infringers with lawsuits. (The “trolls” argue that by making patents valued they are helping to create a market in invention that will encourage inventors.) Surging patent activity has overwhelmed the US Patent Office, which is taking ever longer to process applications (see chart).

After years of failed attempts to remedy the situation, on March 8th the Senate passed the biggest overhaul to patent law since the 1950s. Its bill would give the patent office the right to set its own fees, and keep all the proceeds (the Treasury swipes some of these now), so it can hire enough examiners to cut its backlog. It would also align America with international practice by granting patents to the first person to file them. Now, they are awarded to the first to invent a product or idea. This was intended to give small inventors a fair chance against big companies better equipped to file applications. But businesses complain about having their patents challenged, years after they were granted, by people claiming to be the original inventor.

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Schumpeter's Hand: The Impact of Banking Deregulation on Economic Growth

Research by Marianne Bertrand

Capital Ideas
March 2011

Many economists have consistently found a strong link between a well-developed financial market and robust economic growth. This suggests that liberalizing a heavily regulated banking system is one way to fuel growth. However, there is a limited understanding about how this relationship works. How would removing government intervention in bank lending decisions lead to a change in firm behavior as well as the structure and dynamics of industries?

The idea of "creative destruction" first noted by economist Joseph Schumpeter plays an important role in this process, according to a study titled "Banking Deregulation and Industry Structure: Evidence from the French Banking Reforms of 1985" by University of Chicago Booth School of Business professor Marianne Bertrand, Antoinette Schoar of the Massachusetts Institute of Technology, and David Thesmar of HEC Paris.

In a deregulated banking system, banks are less willing to provide loans to poorly performing firms, many of which may eventually be forced to close without the help of subsidized loans. In addition, new companies will find it more attractive to enter the market if they know that incumbent firms no longer have easy access to cheap credit. In this competitive environment, a higher rate of entry and exit of companies allows credit to be distributed more efficiently across firms, which, in turn, leads to faster growth.

The deregulation of the French banking industry in 1985 abolished subsidized loans almost entirely and gave banks the freedom to decide which companies to lend to and how much to charge. Competition between banks provided the incentive to sharpen their screening and monitoring practices so that only credit-worthy firms were given loans. Indeed, the study by Bertrand and her co-authors finds that after the reforms, French banks put more emphasis on the credit quality of borrowers when determining loan size and interest rates.

Moreover, companies that belonged to more bank-dependent industries prior to the reform engaged in more cost-cutting and restructuring after deregulation in order to improve their credit rating. Many more firms entered and left the market, especially in industries that relied heavily on bank loans. Stricter lending seems to force underperforming firms to shut down, allowing bank capital to be allocated to its most productive use.

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Read the Paper

Steven G. Medema, "The Hesitant Hand: Taming Self-Interest in the History of Economic Ideas"

Adam Smith turned economic theory on its head in 1776 when he declared that the pursuit of self-interest mediated by the market itself--not by government--led, via an invisible hand, to the greatest possible welfare for society as a whole. The Hesitant Hand examines how subsequent economic thinkers have challenged or reaffirmed Smith's doctrine, some contending that society needs government to intervene on its behalf when the marketplace falters, others arguing that government interference ultimately benefits neither the market nor society.

Steven Medema explores what has been perhaps the central controversy in modern economics from Smith to today. He traces the theory of market failure from the 1840s through the 1950s and subsequent attacks on this view by the Chicago and Virginia schools. Medema follows the debate from John Stuart Mill through the Cambridge welfare tradition of Henry Sidgwick, Alfred Marshall, and A. C. Pigou, and looks at Ronald Coase's challenge to the Cambridge approach and the rise of critiques affirming Smith's doctrine anew. He shows how, following the marginal revolution, neoclassical economists, like the preclassical theorists before Smith, believed government can mitigate the adverse consequences of self-interested behavior, yet how the backlash against this view, led by the Chicago and Virginia schools, demonstrated that self-interest can also impact government, leaving society with a choice among imperfect alternatives.

The Hesitant Hand demonstrates how government's economic role continues to be bound up in questions about the effects of self-interest on the greater good.

Steven G. Medema is professor of economics at the University of Colorado Denver. His many books include Economics and the Law: From Posner to Post-Modernism and Beyond (Princeton).

Γιατί οι «κάφροι» κυριαρχούν!

του Τάκη Μίχα

Protagon.gr
16 Μαρτίου 2011

Μια από τις πιο ευρύτατα διαδεδομένες απόψεις στον χώρο των φιλάθλων είναι ότι ο παράγων «έδρα» παίζει ένα σημαντικό ρόλο στην έκβαση ενός παιχνιδιού π.χ. ποδοσφαίρου η μπάσκετ. Τα αίτια συνήθως αποδίδονται στην υποστήριξη του κοινού που «ανεβάζει» τους παίκτες καθώς και στην εξοικείωση με το γήπεδο που έχει η ομάδα που παίζει στην έδρα τους. Τις απόψεις αυτές εξετάζουν αναλυτικά σε ένα πρόσφατο βιβλίο τους ο μαθηματικός οικονομολόγος Tobias Moskwitz και ο αθλητικογράφος Jon Wertheim. Τα αποτελέσματα είναι ιδιαιτέρως ενδιαφέροντα.

Κατ’ αρχάς η άποψη ότι η έδρα παίζει ένα σημαντικό ρόλο στην έκβαση ενός παιχνιδιού δεν είναι μύθος. Έτσι π.χ. στο NBA η ομάδα που παίζει στην έδρα της κερδίζει το 54% των αγώνων ενώ στο αμερικανικό κολεγιακό μπάσκετ το 63%. Ανάλογα είναι και τα αποτελέσματα στο ποδόσφαιρο: στο Αγγλικό πρωτάθλημα οι ομάδες που παίζουν στην έδρα τους κερδίζουν στις 63% των περιπτώσεων.

Όμως από την άλλη πλευρά οι λόγοι που θεωρούνται ότι εξηγούν αυτή την έκβαση δεν ισχύουν. Έτσι οι συγγραφείς μετά από εξονυχιστική στατιστική ανάλυση δείχνουν ότι ούτε η «εμψύχωση» των φιλάθλων παίζει κανένα ιδιαίτερο ρόλο, ούτε και η εξοικείωση με το γήπεδο. Ούτε φυσικά παίζει ρόλο η κούραση λόγω ταξιδιού της επισκεπτόμενης ομάδας.

Ο παράγων που παίζει τον καθοριστικό ρόλο είναι οι αποφάσεις του διαιτητή. Οι διαιτητές τείνουν να παίρνουν αποφάσεις σε κρίσιμα σημεία του παιχνιδιού που ευνοούν την ομάδα που παίζει στην έδρα της. Έτσι στους ποδοσφαιρικούς αγώνες οι διαιτητές τείνουν να δίνουν ευκολότερα πέναλτι στην ομάδα που παίζει στην έδρα της, να αποβάλλουν δυσκολότερα παίκτες της και επίσης να ρυθμίζουν τον χρόνο των καθυστερήσεων ανάλογα με τις ανάγκες της ομάδας που παίζει στην έδρα της.

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Is Happiness Overrated?

by Shirley S. Wang

Wall Street Journal
March 15, 2011

The relentless pursuit of happiness may be doing us more harm than good.

Some researchers say happiness as people usually think of it—the experience of pleasure or positive feelings—is far less important to physical health than the type of well-being that comes from engaging in meaningful activity. Researchers refer to this latter state as "eudaimonic well-being."

Happiness research, a field known as "positive psychology," is exploding. Some of the newest evidence suggests that people who focus on living with a sense of purpose as they age are more likely to remain cognitively intact, have better mental health and even live longer than people who focus on achieving feelings of happiness.

In fact, in some cases, too much focus on feeling happy can actually lead to feeling less happy, researchers say.

The pleasure that comes with, say, a good meal, an entertaining movie or an important win for one's sports team—a feeling called "hedonic well-being"—tends to be short-term and fleeting. Raising children, volunteering or going to medical school may be less pleasurable day to day. But these pursuits give a sense of fulfillment, of being the best one can be, particularly in the long run.

"Sometimes things that really matter most are not conducive to short-term happiness," says Carol Ryff, a professor and director of the Institute on Aging at the University of Wisconsin, Madison.

"Eudaimonia" is a Greek word associated with Aristotle and often mistranslated as "happiness"—which has contributed to misunderstandings about what happiness is. Some experts say Aristotle meant "well-being" when he wrote that humans can attain eudaimonia by fulfilling their potential. Today, the goal of understanding happiness and well-being, beyond philosophical interest, is part of a broad inquiry into aging and why some people avoid early death and disease. Psychologists investigating eudaimonic versus hedonic types of happiness over the past five to 10 years have looked at each type's unique effects on physical and psychological health.

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Mandatory Mediation in Italy? Mamma Mia!

Wall Street Journal
March 14, 2011

Lawyers in Italy are preparing to go on strike Wednesday to protest a new law requiring mediation in commercial cases.

As a way of calling for changes in the law, Italy’s lawyers are being asked to abstain from attending hearings in any civil, criminal, tax, or administrative proceedings, and to send their clients letters urging them to sign a form letter of protest.

The strike—if it takes place—is supposed to end Monday, and has been called for by Italy’s national union of lawyers, the Organismo Unitario dell’Avvocatura Italiana.

It’s worth noting that the strike period in essence extends a long weekend during prime skiing season, as several American blogs have pointed out. Nevertheless, at least one mediation proponent contends that the strike itself is evidence that mediation “is being treated as a serious threat by a constituency with a stake in judicial inefficiencies.”

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Irreconcilable Claim: Facebook Causes 1 in 5 Divorces

by Carl Bialik

Wall Street Journal
March 12, 2011

Upon further review, Facebook and marriage aren't incompatible.

In the past two weeks, the idea that the popular social-networking site plays a role in one in five divorces was reported by many news organizations. This wasn't the first time that surprising number has surfaced—it has appeared in news reports periodically for the past year and a half.

Some lawyers do say that they see Facebook and other social media playing a role in divorce these days, as people rediscover old flames online or strike up new relationships that lead them to stray from their marriage vows. But lawyers and marriage researchers say there isn't much evidence to support the notion that social-networking sites actually cause marriages to sputter.


In fact, both the marriage and divorce rate in the U.S. have declined as Internet usage has risen, according to the Centers for Disease Control and Prevention's National Center for Health Statistics. An annual survey of U.K. matrimonial lawyers by the accounting and consulting firm Grant Thornton has found that during the Facebook era, infidelity's role as the primary cause of around one-quarter of divorces has been stable. In an email, a Facebook spokesman called the notion that the site leads to divorce "ludicrous."

Yet the 1-in-5 number has thrived in part because it helps fill a vacuum: There isn't much reliable research about what does cause divorce. Academic researchers don't even agree on how to approach the question. Some have searched for predictive demographic factors, such as age and income. Others have studied married couples' relationships to see which characteristics presage a split. Determining whether a couple is likely to break up, though, is different than identifying the actual cause.

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Japan's Tsunami - The Broken Window Fallacy Returns

by Steven Horwitz

Nightly Business Report
March 11, 2011

The earthquake and tsunamis in Japan have already led otherwise smart people, including economists like Larry Summers, to fall for one of the oldest fallacies in economics: the broken window fallacy. Summers has already said that this may temporarily benefit the Japanese economy. The argument that such disasters are good for economies are as old as the fallacy they rest on.

The fallacy was first identified by the French economist Frederic Bastiat in the 19th century with his story of the young hoodlum who breaks a window in a tailor's shop. The townsfolk grumble about it until one person points out that it means more business for the glazier. They then note that the glazier will spend that income on something else, and that income will in turn get spent and so on. Soon they've convinced themselves that breaking the window is a boon to the town.

Of course the fallacy here is that all of that spending just replaces the very same stream of spending that the tailor could have initiated by buying anything else, but also having a functional window if the boy never breaks it. All the boy does is force the tailor to spend $100 cleaning up a mess rather than actually adding to his wealth.

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Accounting for the Unaccountable: The Case of Externalities

by Predrag Rajsic

Mises Daily
March 10, 2011

Some theorists claim that externalities are probably the most legitimate reason for state intervention in human interactions. The ethical case for intervention is that it can presumably increase overall economic efficiency. This article demonstrates that, even if one accepts this ethical principle, the usual choice of externality-generating actions that are believed to justify state intervention is purely arbitrary.

In fact, according to the definition of actions with external effects, any human action in a multi-individual society would qualify for regulation under the banner of improving economic efficiency (i.e., internalizing externalities). However, the nature of human existence renders this internalization impossible. Thus, we end up with a paradoxical situation where every action inevitably fails the ethical criterion we have put in front of ourselves.

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Ten Reasons Not to Abolish Slavery

by Robert Higgs

Mises Daily
March 8, 2011

Slavery existed for thousands of years, in all sorts of societies and all parts of the world. To imagine human social life without it required an extraordinary effort. Yet, from time to time, eccentrics emerged to oppose it, most of them arguing that slavery is a moral monstrosity and therefore people should get rid of it. Such advocates generally elicited reactions ranging from gentle amusement to harsh scorn and even violent assault.

When people bothered to give reasons for opposing the proposed abolition, they advanced various ideas. Here are ten such ideas I have encountered in my reading.

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Gender Rules Trip Up Insurers

by Hester Plumridge

Wall Street Journal
March 2, 2011

Discrimination on grounds of sex looks unfair. But it's hard to see how a new ruling against it will benefit either Europe's insurance industry or its consumers. The European Court of Justice says insurers can't offer men and women different priced products. That could lead to higher premiums and lower demand for insurance. It also sets a worrying precedent for the industry in an upcoming debate on age discrimination.

Because women cause fewer car accidents and live longer on average than men, insurers across Europe currently offer them cheaper car insurance, and lower annual income from annuities in retirement, since they'll be drawing on it for longer. The new ruling means equal prices must be offered to both sexes on all insurance products sold from December 2012.

That's bad news for consumers, since insurers say premium increases are likely to be passed on. Young women, among the hardest hit, could see the cost of car insurance rise by a quarter. And because insurers won't know the relative proportions of men and women taking their cover, total price increases could be more than just averaging them our between the sexes. In the U.K., the biggest market for annuities, the use of "unisex" rates could see retirement income fall by 2% or more, estimates the Association of British Insurers.

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EU Closes Insurers' Gender Rate Gap

Wall Street Journal
March 2, 2011

The European Union's highest court declared illegal the widespread practice of charging men and women different rates for insurance, setting in motion an overhaul of how life, auto and health policies are written across Europe.

Two Belgian men had challenged the higher life-insurance premiums charged to members of their sex, arguing that it was discriminatory. In a ruling Tuesday, the Luxembourg-based European Court of Justice agreed.

The judgment can't be appealed. It will have vast implications: Insurers routinely charge women, who live longer, lower premiums for life insurance; young male drivers, who statistically cause more accidents, pay higher premiums for auto policies.

In short, the victory for equality of the sexes will end up costing women money.

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EU Insurance Ruling: More Pain for Women?

by Vladimir Guevarra

Wall Street Journal
March 1, 2011

To all women out there: Which would you rather have – cheaper or more expensive car insurance? Or if I can sharpen the question a bit, would you pay more for car insurance in the name of the struggle against gender discrimination?

Well, today, the European Court of Justice has answered that for you.

The EU’s highest court declared illegal the widespread practice of charging men and women different rates for insurance, in a major decision which would overhaul the pricing of insurance policies across Europe.

Generally, insurers charge cheaper life and car insurance premiums to women because statistics show that women live longer and cause less car accidents.

But no, the ECJ said that’s gender discrimination and it needs to end by Dec 12, 2012. That means, ladies, you’ll have to get ready for more expensive premiums.

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Privacy and the Invisible Hand

by Robert Hahn and Peter Passell

Forbes
February 28, 2011

Some four decades ago, Nobel economist George Akerlof argued that markets didn’t get it right when sellers knew a lot more than their potential customers. In the used car market, for example, buyers can’t readily distinguish lemons from non-lemons without investing in the services of an independent mechanic. So they are forced to assume the worst. Bad cars, in effect, drive the good ones from the market, leaving both buyers and sellers worse off.

To many economists, this problem of “asymmetric” information constituted a solid justification for regulating car sales. State legislators agreed, passing a spate of laws that guaranteed buyers the right to return lemons. But this consumer protection was hardly free: it added to the cost of transactions in the used car market.

What nobody noticed at the time, though, was that one man’s market failure was another’s market opportunity. CarMax pioneered the used-car guarantee, which finessed the information problem. And many other used car dealers followed suit.

These dealers have a strong incentive to discover faults and repair them before they put them up for sale. Of course, guaranteed cars sell for higher prices. But that’s just the point: the market found a way to separate the good cars from the bad ones.

Why are we telling you this? Because, given a little time, markets have a way of fixing themselves in more situations than you might imagine.

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MFI conference salutes ‘economists’ economist’ Gary Becker

The University of Chicago News
February 25, 2011

The President of the Czech Republic, a former U.S. Secretary of State, a Nobel laureate, and distinguished economists saluted the work of Gary Becker as they took part in a daylong conference held in honor of his 80th birthday.

University faculty joined with other leading scholars in the Weymouth Kirkland Courtroom at the Law School to discuss the role of markets in the modern economy, economics and government policy, and new directions and continuing breakthroughs in the field.

The remarks frequently referenced the pioneering contributions of Becker, University Professor in Economics and 1992 recipient of the Nobel Memorial Prize for Economic Sciences.

“Gary Becker is not only one of the world’s leading economists, he is also one of the most influential scholars in the world,” said President Robert J. Zimmer in his opening remarks at the Friday, Feb. 11 gathering organized by the Milton Friedman Institute for Economic Research.

"In his intellectual fearlessness, which he has demonstrated time and time again, he is an exemplar of the aspirations of the University of Chicago," Zimmer continued.

Former U.S. Secretary of State George P. Shultz, who served as Dean of the Graduate School of Business, now Chicago Booth, was the first presenter at the conference. He discussed one of Becker’s proposals—confronting the failure of the war on drugs by legalizing and taxing drugs—and made suggestions for further research.

Shultz urged Becker to study the experience of Portugal, where drugs have been decriminalized and treatment programs offered to addicts, and to explore other ways to shift the demand curve. Shultz, who recently turned 90, joked that at 80, Becker is a promising younger scholar who has years ahead to follow up on these research suggestions.

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The canon of economics

Economist
February 24, 2011

One hundred years ago, in March 1911, the American Economic Review (AER) published its first article—on irrigation in the “sun-blistered” deserts of the western United States. The article described how the “fervid suns of May and June” melted “vast beds of snow and ice”, so that “springs and torrents rush down to the lowlands” and “the rivers overflow their banks”.

It is fair to say that the journal’s prose style has rushed downhill since those first lyrical pages. But if the AER’s opening article ranks among the best-written in the review’s history, it does not rank among the best. To mark its centenary issue, the journal asked six eminent economists to trawl through the thousands of papers that followed and pick the top 20. The results, with links to all 20 papers, are available online.*

The links are worth clicking on. Many of these papers are more cited than read. They are known not by their full titles, but by the author-and-date shorthand (Modigliani and Miller, 1958; Friedman, 1968; Diamond and Mirrlees, 1971) used in references. Reading them in the original yields some pleasing rediscoveries.

Unsurprisingly, the list includes the 1955 paper by Simon Kuznets explaining why inequality might first rise then fall in the course of economic development. Surprisingly, nowhere in the paper did he actually draw the “Kuznets curve” that is now inseparable from his name. (He described the arc of inequality as a “long swing” instead.) Robert Mundell’s 1961 theory of “optimum currency areas”, which lays out the conditions for a workable currency union, is now often cited by the euro’s critics. Ironic, therefore, to note that Mr Mundell wrote the paper to show why flexible exchange rates were impractical because many nations are not optimal currency areas either. Should every local “pocket of unemployment” have a “separate currency”, he snorted.

With one or two exceptions, the chosen papers convey an impression of economics as a tidy, coherent discipline. The subjects covered are traditional: consumption, tax, currencies, inflation, that sort of thing. There are no excursions into sumo or intestinal worms. The furthest off-piste they go is Anne Krueger’s 1974 article on rent-seeking, explaining why people may lobby for governments to distort the economy.

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See also

Huck and Jim and Law

by Eric A. Posner

New Republic
February 21, 2011

There is a story about the University of Chicago economist who complained in a seminar that he did not have any friends. “Buy one!" came a call from the back. A similar response will greet Ethan J. Leib’s new book, which argues that friendship should be promoted as a matter of public policy and subjected to legal regulation. If you think that friendship should be legally regulated, you just don’t understand friendship.

Leib anticipates this reaction and spends a great deal of time trying to refute it. Courts already do regulate friendships, he observes, and no one seems to have a problem with this. In many states, friends owe fiduciary duties to each other. This means that if you sell your old car to a friend, you have an obligation to mention the leaky carburetor and perhaps to charge a fair price—obligations that one does not owe to strangers. Friends who form business ventures and then fall out may discover that courts hold them to a higher standard of conduct. Since friends trust each other, they are vulnerable to being taken advantage of, and some courts take this factor into account when resolving cases. A stranger who breaches a contract is not as odious as a friend who betrays his trust: although their behavior may be identical, a court might come down harder on the friend than on the stranger.

Leib also points out that the most intimate relationships are shot through with legal regulation. We sometimes think that marriages are “outside” law. In fact, husbands and wives owe countless legal obligations to each other. They must provide care and support, and if the marriage falls apart, the state intervenes and arranges the most intimate details of their lives, such as how long each may spend with the children. In return, spouses get tax breaks (although sometimes they have a heavier tax burden) and they enjoy special legal privileges—to make life and death decisions when the other is in a coma, to refrain from testifying against each other at trial, to take leave from work when the other is sick. If husband and wife, why not friend and friend?

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Read the Response by Prof. Leib

Monopoly, Milton Friedman’s Way

by Damon Darlin

New York Times
February 19, 2011

When Hasbro showed a new version of Monopoly last week at the Toy Fair, people were aghast that an infrared tower in the center of the board would squawk instructions, track players’ money and make sure that everyone abided by the rules.

A generation of children may never learn to make change. They may never learn to argue about rules and change them. And they may never, as I and a group of Monopoly fanatics in college did in a great all-night game, learn important economic lessons. “There might not be the attention span for that anymore,” said Mike Zelenty, one of the players.

Monopoly was taken seriously in Shorey House at the University of Chicago in the late 1970s. A room was set aside as “The Monopoly Room.” But in that post-Vietnam, pre-Reagan era, all assumptions were questioned and a game our parents played was no exception. Rules were meant to be altered. The house even convened a “constitution convention” to change the official rules of the game to allow a person to build a hotel on a property without first having to own four houses. Mr. Zelenty, now a corporate lawyer in his native New Jersey, remembers holding a sign that said, “New Jersey Espouses / Hotels Without Houses.”

The other thing taken as seriously in that dorm was free-market economics or, more precisely, Milton Friedman, the University of Chicago economics professor. This was a house that frequently invited Professor Friedman and his wife, Rose, to sherry hours. House members ran a snack bar in the basement of the dormitory called Tanstafl, an abbreviation of a saying favored by Mr. Friedman, that “there ain’t no such thing as a free lunch.”

Mr. Zelenty owned the greatest of treasures any of us could imagine because it combined those two passions. He had asked Mr. Friedman to sign his Monopoly board at one of those sherry hours. The Nobel laureate did so, writing, “Down with” above the game’s name. We didn’t play on that board. No one ever played on that board. (Mr. Zelenty said he still has it and wants to donate the relic to the university one day. “It’s in a place of safety more than a place of honor,” he said.)

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Information Overload

by Carl Bialik

Wall Street Journal
February 18, 2011

The latest information about information overload is a lot to handle.

Wielding numbers that stretched to 20 or more digits, researchers recently reported on the world's massive ability to store, communicate and compute information. All three have grown at annual rates of at least 23% since 1986, according to a study published this month in Science.

Translated to a human scale, the massive numbers mean that the average person in 2007 was transmitting the informational equivalent of six newspapers per day, and receiving, in turn, 174 newspapers of data.

For data engineers, this might seem like cause for celebrating humanity's expanding universe of information. For the rest of us, it is another reminder that information is piling up at overwhelming rates.

But the digital avalanche isn't as massive as those numbers suggest. Much of the growth reflects the surge in high-resolution video and photos. In addition, while there is much more information available, each piece is being consumed, on average, by far fewer people than in the past.


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Fool Coverage

with Daffy Duck and Porky Pig

Story by Tedd Pierce
Directed by Robert McKimson

Not Having Enough Sex? Economic Theory May Help

Wall Street Journal
February 12, 2011

Couples have long squabbled over things from who does the dishes to how often to have sex. Kelsey Hubbard speaks to WSJ Editor Paula Szuchman who has co-authored a new book called Spousonomics which uses economic theories to solve everyday marital conflict.

Milbank Sending Midlevel Associates to Harvard Law for Business Training

National Law Journal
February 11, 2011

Associates at Milbank, Tweed, Hadley & McCloy are heading to Harvard.

The firm has agreed with Harvard Law School to launch what it believes is a first-of-its-kind associate development program. Midlevel associates will attend annual eight-day training sessions focused on business principles at the Cambridge, Mass., campus.

The program is called Milbank@Harvard.

It's not uncommon for law firms to send attorneys through intensive executive training courses at top academies such as the Wharton School and the University of Pennsylvania, but those programs often are geared toward leadership development for partners. Milbank's program will be open to all third- through seventh-year associates.

"We don't know of anyone who is doing something like this," said Milbank Vice Chairman Scott Edelman. "For one thing, it's going to involve every associate in the firm and a commitment over a period of years. It's not a one-year program."

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Influential economists The contemporary Keynes

Economist
February 10, 2011

Dismal economies are often dismal for economists. Respected figures find themselves defending discredited theories or justifying why they failed to see trouble coming. But calamity can also clear paths for new ideas. The Depression was the backdrop for the work of John Maynard Keynes. The stagflationary 1970s vindicated Milton Friedman: a generation of liberalisation followed.

The Economist asked members of “Economics by invitation”, our online forum of more than 50 prominent economists, to nominate colleagues with the most important ideas for a post-crisis world. The respondents came up with nearly 20 different names. None won an absolute majority, but a few cropped up more often than others (see table).

First among them is Raghuram Rajan of the University of Chicago, whose book Fault Lines argues that rising inequality led governments to facilitate credit growth, contributing to the crisis. Robert Shiller of Yale University has long warned of the dangers of irrational exuberance, and urges colleagues to consider “animal spirits” in assessing economic fluctuations. Kenneth Rogoff’s work on debt bubbles with Carmen Reinhart placed the crisis in an 800-year continuum of borrowing and collapse: his papers have earned the most academic citations of the table-toppers in our poll. Barry Eichengreen has written excellent works on the history of the gold standard and the danger of fixed-exchange-rate regimes. Nouriel Roubini earned the nickname “Dr Doom” for warning of an impending global crash.

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9+ 1 Μύθοι για τη Θεωρία της Ορθολογικής Επιλογής

Διάλεξη Αριστείδη Χατζή

Πανεπιστήμιο Αθηνών
Τμήμα ΜΙΘΕ
4 Φεβρουαρίου 2011

Στο πρώτο video θα βρείτε την διάλεξη (λείπουν τα πρώτα 12 λεπτά) και στο δεύτερο την συζήτηση που ακολούθησε.





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The Poverty of Dictatorship

by Dani Rodrik

Project Syndicate
February 9, 2011

Perhaps the most striking finding in the United Nations’ recent 20th anniversary Human Development Report is the outstanding performance of the Muslim countries of the Middle East and North Africa. Here was Tunisia, ranked sixth among 135 countries in terms of improvement in its Human Development Index (HDI) over the previous four decades, ahead of Malaysia, Hong Kong, Mexico, and India. Not far behind was Egypt, ranked 14th.

The HDI is a measure of development that captures achievements in health and education alongside economic growth. Egypt and (especially) Tunisia did well enough on the growth front, but where they really shone was on these broader indicators. At 74, Tunisia’s life expectancy edges out Hungary’s and Estonia’s, countries that are more than twice as wealthy. Some 69% of Egypt’s children are in school, a ratio that matches much richer Malaysia’s. Clearly, these were states that did not fail in providing social services or distributing the benefits of economic growth widely.

Yet in the end it did not matter. The Tunisian and Egyptian people were, to paraphrase Howard Beale, mad as hell at their governments, and they were not going to take it anymore. If Tunisia’s Zine El Abidine Ben Ali or Egypt’s Hosni Mubarak were hoping for political popularity as a reward for economic gains, they must have been sorely disappointed.

One lesson of the Arab annus mirabilis, then, is that good economics need not always mean good politics; the two can part ways for quite some time. It is true that the world’s wealthy countries are almost all democracies. But democratic politics is neither a necessary nor a sufficient condition for economic development over a period of several decades.

Despite the economic advances they registered, Tunisia, Egypt, and many other Middle Eastern countries remained authoritarian countries ruled by a narrow group of cronies, with corruption, clientelism, and nepotism running rife. These countries’ rankings on political freedoms and corruption stand in glaring contrast to their rankings on development indicators.

In Tunisia, Freedom House reported prior to the Jasmine revolution, “the authorities continued to harass, arrest, and imprison journalists and bloggers, human rights activists, and political opponents of the government.” The Egyptian government was ranked 111th out of 180 countries in Transparency International’s 2009 survey of corruption.

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The Politics of Revolutionary Surprise

by Timur Kuran

Project Syndicate
February 8, 2011

In setting himself ablaze following a humiliating encounter with the police, the university-educated Tunisian vegetable seller Mohamed Bouazizi triggered a wave of protests across the Arab world. Several Arab dictators who had held power for decades have already been ousted or forced to announce that they will retire.

But protesters in Cairo, Tunis, and Sana want much more. They also seek efficient governance, economic reforms to stimulate growth, the ouster of collaborators, democratic rights, freedom of religion (and perhaps also from religion) – in short, a comprehensive social transformation.

Everywhere, incumbent regimes have mounted resistance. The unforgettable scene of camel- and horse-riding Mubarak supporters beating tech-savvy Egyptian protesters signals that the old order will not yield without a fight.

The revolts themselves caught seasoned observers, even Arab leaders, off guard. Had the United States known what lay ahead, Secretary of State Hillary Clinton would not have remarked, after demonstrations broke out in Egypt, that the Egyptian government was “stable.” Arab leaders now showering their key constituencies with pay raises and food subsidies would have done so earlier, thus avoiding the impression of vulnerability.

Longtime regime opponents, too, were caught off guard. For days after Egypt erupted, the Muslim Brotherhood did not know how to react, making it seem out of touch with the “Arab street.”

For decades, most Arabs, however unhappy, kept their political grievances private, for fear of persecution if they turned against their leaders publicly. Through private discussions with trusted friends, everyone sensed that discontent was common, yet no one knew, or could know, the extent of it.

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