Category Archives: Economics

No News is Good News?

I came across this graphic this morning, which really tells the story of the decline and fall of television news. Check out “30 Minutes with CNN.” What is worse, there are other “news” stations that are worse, having mostly replaced factual reporting with talking heads screaming at each other.

(click on image for larger version)

With all of the news now ad-supported, the key financial goal of the “news stations” has become to keep viewers watching as long as possible so they see as many commercials as possible. Sadly, Americans would rather be entertained than informed, and so departed the news, international first, and then almost everything else.

It would seem to me that there MUST be an opportunity for a next-gen CNN with more factual reporting, even if we real news wonks have become a tiny niche…

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Filed under Economics, Media

Our Conflicted Government

Sometimes the right picture is worth more than a thousand words. There’s a fine art to representing data to clearly illuminate an issue, and this one takes my nomination for the graph of the year. This graphic comparing our government’s nutritional recommendations to its actual spending tells the story of money (from lobbyists) over morals.

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Filed under Economics, Graphics, Health

International Broadband Pricing

Here’s an interesting chart via Ohm Malik’s blog on the OECD telecommunications outlook report on the cost of broadband Internet in different countries. It’s an interesting metric on industrialization. Sadly, we’re not looking so good.


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Filed under Economics, Technology

More Posts Coming

Hi all,

Sorry for the recent sparseness in postings. Work got crazy for a bit, and now I’m in Davos Switzerland for the World Economic Forum as MobiTV was chosen as one of the Technology Pioneers of 2006.

More to come next week on how we techies got a chance to to rub elbows with the powerful and try to explain how technology could help make the world a better place.

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Aphabetical Bias ,or What’s In a Surname?

Judging by a recent paper from the Journal of Economic Perspectives, it would appear that I stand in good stead if I ever want a job in economics accedemia, and I have my father to thank for it.

And no, it’s not just because he was such a great dad and taught me how to fend for myself and all. Not that he didn’t help set me on numerous paths of opportunity. He did indeed. But one step would appear to have accrued simply from sticking with the country’s naming tradition.

A paper entitled “What’s in a Surname? The Effect of Surname Initials on Academic Success” by Liran Einav and Leeat Yariv (of Stanford and Caltech)showed some rather comprehensive data that showed measurable advantage to those with names starting with letters earlier in the Alphabet.

The more elite the selection criteria, the more the bias was evident. Check out the paper.

In retrospect, I can remember that just through the happenstance of my last name, I usually ended up first in or second in line whenever a class was organized, and got to start projects earlier than most. Maybe that sort of things add up. So all you teachers out there, start switching up and be sure to sort from the back of the alphabet half the time, or else suffer the risks and liabilities of unintended alphabetic discrimination.

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Filed under Economics, Math

Ever Wonder Where Your Tax Dollars Are Going?

Check out the Death and Taxes Poster in this zoomable Flash applet. It’s not the easiest interpretation to decipher, but it is packed with visually interesting information, and does attempt to show relative budgets by the circle sizes. (Also note that this just covers the discretionary budget that is voted on, and approved every year, and does not include service on ongoing programs like Social Security).

Here are a couple excerpts related to some of our recent foreign endeavors:

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And on the domestic front:

If all that doesn’t already depress you, just note that the circle for the national debt of over $9.3 trillion is larger than the entire chart in its expanded form. Wasn’t fiscal discipline supposed to be a fundamental plank of the Republican party? What happened?

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Filed under Economics, Graphics

Gas Up Before the Inevitable Price Increase

Now that election day is passed, I expect the Republican administration to re-start the filling of the Strategic Petroleum Reserve, which will inevitably drive up gasoline prices.

Most of the economists I know were a little surprised that the country would stop filling the reserve when the prices were already at a multi-year low and the reserves had been depleted already partly due to the Iraq conflict. But as we now know, politics trumps economics, and they needed any weapon in the run-up to the election. Even then, it looks like the artificially-induced lower gas prices weren’t enough to stave off congressional defeat.

The only real question remaining in my mind is when they will open the spigot, given the open-ended nail biters in Virginia and Montana to determine control of the Senate. It wouldn’t surprise me if for some reason the SPR intakes remain closed until the election is completely resolved.


Filed under Economics

The Gas Tax, Hockey Penalties, and Time-outs

I found an interesting chart on the Foreign Policy web site this morning that highlights some of the conflicted logic surrounding US energy and tax policies.

The gasoline tax rate within the US is literally less than one-tenth the comparable tax in Europe while per-capita gas consumption is more than four times higher. The anti-correlation is very illuminating. And while there are clearly many factors driving gasoline consumption relative to Europe such as the very area over which Americans much drive being larger than the average European roaming distance, even a quick glance at the chart shows that if the US is really serious about immediately decreasing the dependency on foreign, there is a very simple policy decision that could have broad and immediate impact, and is probably worth an experiment. The US administration could substantially raise the gasoline tax to a meaningful level, and see what happens.

There is a reasonable likelihood that doubling the effective price of gas could dramatically reduce consumption just through price elasticity alone. For those of you not familiar with retail sales economics, price elasticity is the relationship between the price of goods and the volume of sales at that price. If you lower the price, you sell more (the volume increases), and conversely, if you price goods higher, your sales volume will decrease. So retail sales strategy is all about picking the right price so that your sales price times the volume of sales is maximized (to maximize total revenues). So if the US raises the price of gasoline with an aggressive tax, the sales volume should decrease substantially.

The other effect such a tax levy might induce is that alternative energy sources could immediately become more cost effective relative to gasoline, and that economic advantage combined with simple market forces would likely drive entire energy, automotive and aviation industries to undertake much more accelerated transitions to alternative renewable energy sources and further decrease gasoline consumption.

But of course, there is one giant sector of the US economy that has understandably dug in its heals at the prospect of such a tax. The Oil industry would clearly be decimated if the US’s per-capita gas consumption was cut to one-quarter of its current rate, and they have understandably invested hundreds of millions of dollars in lobbying efforts and supportive politicians to vigorously resist the introduction of any tax that would have even the slightest deleterious effect on consumption.

But government is supposed to be about understanding, planning for, and managing the larger-scale and longer-term consequences of suborning the national economy to a single (even an important) special interest. A committed and creative administration could even come up with solutions such as applying the proceeds of such a tax to support the very industries that might suffer through such a transition that is critical to national interests. Imagine if that flood of tax proceeds was directed solely to the energy industry companies for use in transitioning to renewable energy sources? Then Chevron and Exxon/Mobile would have a lot less to complain about. Would they come along willingly? Probably not, because that sort of sea change would put their core business at risk, and even with a generous R&D and new infrastructure tax subsidy they might have to sacrifice some of their record-breaking profits to stay ahead of some smaller and more aggressive companies that are starting from the same level as far as renewable energy investment goes.

But I’ve always said that you can tell how serious someone is about fixing a problem by how seriously they will impose penalties to change someone’s behavior. So far, our efforts at reducing foreign energy dependence strike me as so much lip service. Yes, the analogy is a stretch, but I find the situation strikingly similar to Hockey. The sporting industry’s half-hearted testimonials that hockey really is about the sport don’t jibe with the fact that purposefully splitting someone’s head open with your stick and then taking several swings at someone to start a bench-clearing brawl results in a few minutes in the penalty box. That just strikes me as not all that different from giving your toddler a 3 minute time-out for taking a switch blade to a playing companion. As they say in the Big House, the time must fit the crime. So examining the longstanding lax discipline in hockey, one can only conclude that they aren’t all that serious about fixing any problem with the sport and that perhaps they need the sensationalism to draw crowds, as with Circus Maximus at its peak. If someone is really serious about fixing problem behaviors, discipline must be meaningful.

If Brazil can become energy independent in about 12 years through strong government direction, how long should it take the US? When will our government finally begin to lead a concerted effort. I bet we could cut that time in half if we just quadrupled the gasoline tax.

Anyone else have other suggestions or comments?


Filed under Economics, Politics

Gang Economics

The TED blog has posted a great video of Steven Levitt’s talk on the economics of drug dealers. Levitt is the author of the NYT best seller Freakonomics, which I highly recommend.

Steven Levitt

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Filed under Economics, Math

Time is Money

David Coulter, a Harvard economist, has examined mortality and healthcare statistics to determine that there have been significant extensions to life-expectancy over the past forty years, but that the healthcare costs to support longer life spans are growing even faster.

In his paper due to be published tomorrow in the New England Journal of Medicine, Coulter reports that someone who reaches the age of 65 can expect to spend an average of $158,549 on healthcare over their lifetime. But this investment has increased a whopping 13.8 times (when adjusted for inflation) since 1960 when the costs would have amounted to $11,495. What does it buy the hopeful 65 year-old? Less than four more years. Today’s new retiree can now expect to live another 18 year instead of 14.4 years on average.

And while it might seem callus to discuss diminishing returns when thinking about life extension, there will clearly come a point when the additional spending for extreme measures will not significantly improve a patient’s quality of life or material extend life expectancy despite the investment. Tough decisions abound.

The study also points out that part of the driver for these cost increases might be that hospitals and insurance agencies have the wrong incentives. They are paid for their efforts and not for their results. So there is a strong incentive to perform a myriad of tests and expensive treatments of dubious benefit.

After running a couple of high-tech companies, I have come to appreciate that the alignment of incentives is THE most important tool to ensure proper results. I suspect rather broad changes would ensue if we could amend Medicare to compensate the healthcare industry based on how the patient does and how long they live, rather than on how much money they spend dancing around the patients.

Preventive medicine and lower cost treatments that demonstrate material benefits would abound, and more people could die peacefully in their homes surrounded by family when extreme intensive measures in hospitals would only provide limited benefits. And our economy would likely benefit as well.

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Filed under Economics, Health, Math