The Spirit of Christmas in London and Thousands of Drunk Santas

I've noticed that they do Christmas a lot harder in London than we do in the US. Whether someone says "merry christmas"or "happy holidays" to you in the United States is a political statement. Here though, everyone says merry christmas, I feel like a dweeb reflexively saying happy holidays. I hear at least twice the amount of annoying christmas music than what I'm usually exposed to back home. This struck me as a little odd given that the UK is a much more secular society than the US, and that London in particular is more religiously diverse than Kalamazoo. Then I saw something that snapped all the pieces together.

At about 1 in the afternoon, I saw thousands of young men and women dressed as santa, playing drums, singing, and drinking prodigiously. They loudly proclaimed "merry christmas" and passed out candies as they walked by. I got two chocolate coins, two hard candies, and a sucker! One of the popular chants was "what do we want?" - "Christmas!" - "When do we want it?" - "Now!" People brought out their kids in strollers to watch, and the santas staggered over to put candy into the tikes' hands accompanied by a slurred ho-ho-ho, all of this viewed with approval by the parents. 

Apparently I had witnessed santacon, a world wide phenomena that's been becoming more popular in the internet age of flash mobs. Most everyone I saw seemed amused, except for a few drivers who were unhappy about all the people staggering across the street when the light was green. No one complained about a bunch of santas walking around drunk though - that's what Christmas is about in the UK! Good cheer, free candy, and fancy dress, what's not to like? I think public Christmas displays have become so secular in the UK that outside of homes and churches, Christmas does not have a primarily religious association. 

Make of that what you will, but merry Christmas! 

Cooking With Phil

One of the nice about living in High Holborn is that I get a generously sized kitchen. Even though it can be time consuming, I prefer cooking to relying on a food service system. Here's a sampling of some of my dishes.

The first thing I made, looks less tasty than it was 

Bangers and mash, had to make it! 

I was surprised by how easy this was to make 

A peanut/banana/chicken/broccoli/green onion stir fry

I Visit the NHS

I've used the National Health Service twice in the past week and come away impressed. As a student here for nine months, I'm entitled to full coverage by the NHS. Imagine something like that happening in the United States. I am paying 20% VAT over here though, so I don't feel too guilty.

My stock of medicine from home is running low, so I went into the NHS branch to talk about getting my prescription refilled. My appointment was for 10:30, so SUPER EARLY in other words, and I was embarrassingly 20 minutes late. Despite this, I ended up getting to my appointment in twenty minutes and even though all I had was my pill bottle, there were no problems getting me set up for a refill. The only catch was that I needed to get some blood work done - apparently they have some concerns about my medicine causing liver cancer sometimes or something, which I guess they're not too worried about in the States. I said whatever, it's not my money after all, so I scheduled another appointment to get my blood drawn.

I went into that appointment today, this time only five minutes late, and was seen right away. Getting my blood drawn took no time even though I forgot a paper I was supposed to bring. They had all my records digitized so they knew exactly what was up. Unlike the painfully awkward laptop carts I see them use at Borgess for electronic records, they're process seemed well integrated. The doctor was courteous, even offering a few comforting words to help with my apparent discomfort over getting poked (thanks dad!)

I'll be able to start getting my prescription when I get back from break, and they will cost less than a third of what my family pays back home. Go socialism!

So this is the part where I compare the NHS to the US's dismal system and talk about single payer. It's certainly worth pointing out that the editor of a leading libertarian magazine has written enviously of France's health care system. However, our government already spends more per capita on health care than the UK and other single payer countries! It's just that firms and individuals in the US also spend a ton on health care! I think that if we can get costs down to typical developed country levels, then we could make a smashing public or private health care system. The question is how to get those costs down. There certainly are appealing things about the single payer system in terms of cost control, but I think the issues are so intertwined and deep in the US system that no single reform will have a very large impact, and any major change could have unintended consequences.

The Economics of Ice Cream Revisited - this Time with Turkey

Long time readers may remember a post I made awhile back about why ice cream prices don't rise during the summer (or equivalently, don't fall during the winter) like we'd expect. Well, an article in the New York Times by the always interesting Catherine Rampell tackles the same question, this time from the perspective of cheap turkey around Thanksgiving.

Rampell touches on a number of theories for why we observe this kind of pricing behavior, including the one mentioned in the paper I discuss in my post. As Rampell writes:

Consumers might get more price-sensitive during periods of peak demand and do more comparison-shopping, so stores have to drop their prices if they want to capture sales. 

All the other reasons she discusses are plausible and interesting as well. Give it a read.

Only at LSE

Just wanted to share a few conversations I've had over the past few days that are pretty unique to the atmosphere at LSE...

1. A heated argument about QE in the US. One of my friends suggested that the Fed should've stopped with QE1, and thems fightin' words.
2. A discussion over the validity of purchasing power parity methods for comparing international GDP. Do all those 2$ a day statistics about global poverty take purchasing power parity into account?
3. A geek session about Scott Sumner and unorthodox monetary policy. Forward guidance? Psssshhhhh get back to me when we have some NGDP targeting!
4. Yet another heated argument, this time about the suitability of Germany's export strategy for long term growth. And with a German, no less! I wasn't directly involved in this one, but it did go on for a good fifteen minutes.

Wrapping a few things up

Before I switch this blog over to all London all the time, I should take care of a few loose ends from back in the States.

First, AidGrade has updated their website. I encourage you to play around with their meta-analysis app, it's got some fun information on it. There are still more updates on the way. They are still working on putting up quite a few meta-analyses, including some that I was working on such as HIV education. I'm most excited for when they add the feature for downloading their full data. There are lots of details from these meta-analyses that you can't see in the app. That data is what will be most useful to researchers and non-profits looking to direct substantial donations. AidGrade is also making an appeal through Indiegogo, a Kickstarteresque website. If you are looking to support an organization that supports making aid more effective, I encourage you to contribute. You can also support AidGrade by donating at least $12.99 ($16.99 if you're outside the US) for which you will receive a copy of the book "What Works in Development", covering AidGrade's first ten meta-analyses.

Second, my research project with my fellow K students ended in September. We decided to investigate the viability of installing solar panels on K's campus. Our conclusion was that solar panels would not be a cost effective investment for the campus. Furthermore, the environmental benefits do not seem to justify the economic costs, and there are likely more effective environmental investments K could engage in. The project was loads of fun, and I count myself fortunate to have been able to work with such intelligent and inquisitive peers. Interdisciplinary research was a very unique experience, and I recommend it to anyone interested in research. But it can be exhausting and difficult! Still, it opens your eyes to other perspectives outside your field. I'm very proud that our team stuck by our conclusion. We all wanted to be able to recommend solar panels for K and see the array built, but that's just not what our analysis suggested. If you want to read our report, check out our tumblr. There, you can read our business plan, the article on our findings we published in the student newspaper The Index, and our cash flow analysis. If you have any comments or questions about our findings, I encourage you to leave them on the tumblr.

The Hunter Grayleer

Although I'm a little late to the party, I want to direct your attention to The Hunter Grayleer by Alex Billedeaux. As I'm sure most of you know, Alex and I have been friends for a long time, and I can't describe how proud I am to see my Alex's work out in the public. I remember playing games with Alex during recess in elementary school. My primary concern was always how the game worked while Alex focused on the characters and world. I can see the creativity I've always known in Alex in The Hunter Grayleer.

Unfortunately, a mountain of assigned reading for my history of Russia and economic history of Africa courses means that I'm only 2/3 of the way through Grayleer, but so far it is excellent. I will be sure to post a full review once I am finished. I encourage you to purchase the book, it is available in a number of formats. You won't regret it. Also, if you're interested in writing, Alex keeps a blog that will you see a link for on the right under my "things I read" section.

My Parents and Riley in London

Once again, I'm sorry it's taken me so long to update. I've made a promise to blog once a week, so my posts should be more regular.

Last week (November 3rd to 10th), both my parents AND Riley visited me! Even though I've been in London for just over a month, I was happy to see my parents and girlfriend. Plus, it was a great chance to explore more of the city. I made sure to get ahead on my work so I could spend time with my visitors.

View from atop St. Paul's 

My parents arrived first on Tuesday. We had dinner in Soho (my first time really exploring that neighborhood) and grabbed some gelato. My gelato was described as having pig's blood in it, and the server assured me it was actual pig's blood. I thought the flavor was quite tasty. On Wednesday night, we saw the musical War Horse. It's based on the movie and book of the same name, although I'm familiar with neither. The most impressive part was the "puppet" they used for the horse. Three actors controlled a giant wooden horse frame by standing underneath it. They moved the legs and head, doing a terrific job of making you see the horse as a character and forget the actors underneath. We also saw St. Paul's Cathedral, which remains my favorite destination in London. Although it costs a bit to tour, the fee is well worth it. In addition to stunning architecture, you can ascend to the top of the dome, providing a commanding view of the city. I might attend a service at some point, as they have an amazing pipe organ and choir (plus it's free when you're coming to worship!)

With my mom! Photo credit dad

With my dad! Photo credit mom

Riley arrived from Germany on Thursday, and despite our lack of working telephones and internet, we managed to find each other at the train station. Riley came to my swing dance class with me on Thursday night. Although we couldn't find a club hosting swing dancing after the lesson, it was fun to dance with her again after all this time! On Friday, we met back up with my parents for more touristy fun. We visited Twinings Tea, one of Britain's oldest tea suppliers. A knowledgeable hostess offered us free tea samples and shared the history of tea in Britain and facts about tea in general. We learned about the role of tea in the Opium War in China as well as the secret to why Brits prefer milk with their tea. Apparently, when tea was first introduced on the island, most people could only afford very crappy stuff. As a result, they had to drown it in milk and sugar to make it palatable. By the time it reached other countries in the western world, quality had improved, but British taste stayed the same. I picked up a good English black tea, but I'll have to return to purchase one of their more unique teas. We then stopped by the Cheshire Cheese, a historic pub in London, and my favorite so far. The pub had a cozy atmosphere, and we ended up getting into a conversation with some locals sitting next to us. It seemed like a place where Londoners come to relax after work. Next, we headed to the iconic London Eye. I was expecting to be a little bored, but I ended up enjoying the experience more than I expected. The rotation doesn't take as long as some people warn, and if you go up on a clear night there really is plenty to see. Finally, we had dinner at the Indian restaurant Mint Leaf. Unlike most Indian restaurants which are full of thick curries, Mint Leaf carried a wider variety of dishes. Although it wasn't the kind of food we were expecting, it was still delicious and a different way to experience Indian cuisine.

At Twinings Tea. Photo credit mom

My parents departed on Saturday morning while Riley stayed for the weekend. On Saturday, Riley and I visited the Portobello Road Market (yes, for you Bedknobs and Broomsticks fans out there, it's that Portobello Road). It had a fun flea market atmosphere with plenty to look at, but you won't find many deals (it is still London and a huge tourist attraction). However, right as Riley and I turned around, a baker that was closing for the day dropped their prices drastically to sell their remaining pastries; 2 large and delicious donuts or cupcakes for a pound! Needless to say, Riley and I loaded up. We then went to Chinatown to meet some friends for dinner. It was great for Riley and my friends here at LSE to meet over some delicious roast duck. Riley and I then went to Once the Musical, based on the movie. Even though it was my second musical in four days, I still loved it! War Horse was more theatrical than Once, relying heavily on a large ensemble and intricate props. Once was more focused on the music, with almost all the sounds coming directly from the actors onstage using guitars, drums, and violins. I thought they adapted the film well, giving it some needed spicing up to make it more interesting on stage while still retaining the great music.

At Portobello Road

The stage of Once the Musical. Photo credit Riley 

Of all the days that I've been in London, Sunday was the most beautiful yet. The sun was up the whole time and it didn't rain at all. For London, that's a rare achievement. Riley and I decided to take advantage of the nice weather by exploring. We picked up a curry lunch box (a great deal at 3.50) from my favorite Indian restaurant and saw a bit of Covent Gardens. Then, we walked down to Trafalgar Square and ate our lunch sitting beneath the giant spire. It amazed me how beautiful the square was with the sun shining! It's sad that, because of its crappy weather, London can't express its full beauty more often. Our meal finished, we strolled to St. James Park, which proved to be an unexpected treat. Besides being beautiful, the park also features a host of eccentric animals. I've seen squirrels that are familiar with people before, but never anything like what Riley and I witnessed at the park. The squirrels at St. James will run up and hug people's legs if they have food and eat right out of their hand. There were also a large number of exotic birds. Apparently, there's a tradition for foreign ambassadors to gift birds from their countries to St. James Park. Riley and I even spotted a black swan, and I'm not talking about the book. We spent some time by a peaceful lake watching an older British man throwing sardines to waterfowl. With great weather, company, and surroundings, it was a perfect day.

A view from Trafalgar Square 

At St. James Park 

It really was a gorgeous day 

Riley sitting beneath the spire in Trafalgar Square enjoying a boxed Indian Lunch. You can see the National Gallery across the way, we stopped in for a bit. Photo credit Riley 

Riley and I at Trafalgar Square. Photo credit Riley 

Everyone has been gone for over a week now, and my nose has been back to the grindstone. Even though I'm a little sad to be on my own again, I am glad that my visitors reminded me of how many great things there are to do in London!

Check out facebook for more photos. Also, you can click on any photo here to see it larger.

An Overdue Update: Classes at LSE

Sorry that it took me so long to update! I'm hoping to start posting more regularly now. 

I just wrapped up my second week of classes at LSE. Much like Kalamazoo College, LSE operates on a quarter system of three ten week terms and then summer making the fourth quarter. Unlike K, you primarily take a single set of four classes that last you through all three of your quarters. The result is that each class ends up going into more depth than your typical semester or quarter long course. For example, LSE's year long introductory math course rolls together calc II, calc III, and linear algebra. Because signing up for a course is a year long commitment, students are encouraged to shop around a bit for the first two or even three weeks to make sure their courses are a good fit. Each course has two different kinds of meetings: classes and lectures. At lectures, the professor speaks to everyone signed up for the course. During class, the students meet with a class teacher (often different than the professor) and have discussions or turn/receive feedback on homework. Classes are capped at fifteen students, so there are often many different classes for a single course. Another difference between LSE and most US universities is that the third quarter is entirely about preparing for a big exam or final paper. Each course only meets a handful of times, and students spend the majority of the time studying independently while meeting with course teachers and lecturers to revise essays and ask questions. This final paper/exam makes up the entire grade for each course, so this time is generally a big deal. 

Anyways, the courses I've settled on are: History of Russia, Economic History of Africa, Game Theory, and Econometrics. A little about each:

History of Russia: 

I signed up for this course because it seemed unique from what's typically offered in the history department at K. We're covering the tsarist period from 1645-1825, not that I have a solid idea of what the different periods are in Russian history. It's a small course, so there's only one lecture and one class, both of which are taught by the same professor. There's a lot of reading for it, but I really enjoyed our first class discussion. 

Economic History of Africa:

LSE has an entire department for economic history, something that's pretty unique. I kind of picked Economic History of Africa at random from among the different economic history offerings, but it's turned out to be a very interesting choice. The field is relatively new and the data before 1960 (or even now, for that matter) is highly unreliable. Of course, the economic history of Africa raises many interesting questions ranging from the impact of the slave trade to why the continent's growth has generally lagged behind. The discipline itself is also interesting because you combine a historian's study of primary sources and broad historical trends with an economist's analysis of statistics and basic principles. 

Game Theory: 

This is a math course all about mathematizing scenarios where players are competing against each other. The most famous example of game theory is probably the Prisoner's Dilemma. While economists sometimes use game theory to model competing firms and political scientists use it to model competing countries, we're starting off with a more abstract game: Nim. Here's a video the professor showed us where some of the characters play Nim. I played it a bit with my friends and we got really into it, to the point where they could beat me pretty consistently (except now we've learned the formula for how to make the winning move, so it's not much competition anymore). The professor for the course is also my academic advisor and he seems really cool. When we first met, we ended up talking about our favorite board games, with him mentioning one I'd never heard of before, Wealth of Nations. I'm hoping I can get him to come to board game club sometime. 

More updates to come soon, hopefully! Check my facebook for pictures. 

First Week in London

Sorry it's taken me so long to update! I am in London now and have been for just over a week now.

First, a brief explanation of what I'm up to here. I'll be studying for the next nine months at theLondon School of Economics and Political Science (LSE) as a part of their General Course (GC) program. The GC is made up entirely of students from outside the UK who come to LSE. Normal LSE undergraduates spend three years completing their degree and are kept on a very rigid track where most of the courses they take are set in stone. In contrast, GC students can take whatever courses they want (assuming they have the prereqs) from any department. At the end of this, we receive a GC diploma and are considered LSE alumni.

Of course, this past week hasn't been about all that academic stuff but rather getting to know people during the British equivalent of orientation, known as "Fresher's Week". I got myself settled into my dorm at High Holborn, a pretty lucky spot as it's less than a ten minute walk from the school.

The school did a good job providing plenty of opportunities to meet new people. Every night there were free drinks in the basement of the dorm and the school sponsored trips to specific clubs around the city every night. The clubs seemed to attract more of the Freshers crowd, but the drinks were a great for socializing and making plans for the night.

On Tuesday we had a GC boat crews down the Thames that went by the financial district. This sounds very cool in theory, and it was pretty fun, but the execution of the event could have been better. We were told after a 5:30 meeting to make it to the cruise by 6:00. This was in the middle of London rush hour, and the result was that many (myself included) didn't make it there until 7:00. Fortunately the boat left late, but there was still another problem: no one had eaten dinner. Although the boat provided some "nibbles", these soon ran out. Luckily, we all had two free drink tokens! The cruise ended up lasting 4 hours, and when we got off we discovered that just about everything closes in London at 11:00. We barely managed to find a Turkish place where we enjoyed some delicious kebabs. So, all's well that ends well.

I've been meeting a wide variety of interesting people. About 2/3 of GC students come from a US university, but of those students many come from abroad originally. I've met people from Kyrgyzstan, Ukraine, China, Canada, India, Singapore, Mexico, and across the US. I'm surprised by how many people come from the coasts, especially schools in DC. I'm also surprised by how many people are interested in finance. I've met lots of other people studying math and economics who are planning on going into consulting or finance, but so far no others interested in pursuing a phd.

I've got more updates to come on my trip to Cumberland Lodge over the weekend as well as the start of my courses this week. Hopefully I'll be updating more regularly from here on out! Check out my facebook for photos.

My Summer Media Consumption

Here's a summer wrap up post about what I've been watching, reading, and playing for the past three and a half months. 

Books

The Road to Serfdom

by Frederick Hayek 

This is a classic piece in the pantheon of libertarian works written by a nobel laureate economist who served as the counterpoint to Keynes in the 20th century. Written during WWII in the 40s, it's basically Hayek arguing that the growth of socialism in Germany led to the centralization of power and the erosion of liberty necessary for the rise of the Nazi party. He warns that Great Britain and much of the rest of the Western World is heading down a similar path. Basically, it's the first ever "you're just like Hitler!" arguments (you know who else nationalized the steel industry? Hitler). 

I tried reading this book to get a better insight into the Austrian School of economics, but I just couldn't finish it. He engages in plenty of good ol' communist punching (prices are helpful, absolute power corrupts governments, ect), and in hindsight, it's not terribly surprising that a totalitarian government would also want complete control of its economy. I was just somewhat bored by some of the more lengthy discussions of 19th century German philosophers. I'll have to give the book another go sometime. 

A Deepness in the Sky

by Vernor Vinge

This is a great sci-fi book all about a big intergalatic trading fleet and this planet they discover. I found out about it on Noah Smith's blog post about science fiction novels for economists. I recommend reading his take on it there. Excellent writing. 

Makers

by Cory Doctorow

I also found out about this in Smith's post, so I recommend reading more about it there. This book is not science fiction in the starships and aliens sense, so I was a little surprised by it. It takes place in the near future and is more of a reasonable extrapolation of current trends in 3D printing and how that technology will affect businesses and entrepreneurship. It's well written and centers around some likable characters. Although it was different, I found it very enjoyable. 

Video Games 

Hotline Miami

I already wrote about it here, so check it out. 

Pyschonauts

This is a nifty adventure game that I've been playing on and off for awhile now and finally got around to finishing. The gameplay is fun and the levels creative, but my favorite part of the game is definitely the writing. I've never so thoroughly enjoyed listening to the characters in a game speak! I never once wanted to skip through any dialogue. Some parts of the game could be annoying, as I feel is all too often the case in platformers, but it was still an excellent game. 

Papers, Please

This game has to be one of my favorite document based immigration agent games of all time. Ignore that it's probably the only game of that type. In this game you are an immigration agent for the glorious nation of Arstotzka and you have to check the papers of everyone who wants to enter. You often face a trade off between being efficient and weeding out unauthorized immigrants in order to make money for your family or being generous and letting in the desperate masses while risking punishment. The documents you have to check grow increasingly complex. I have grown very good at cross checking a work permit with a passport after playing this game. The message of the game is also very relevant at a time when so many forget that a tight border is synonymous with an intrusive government. 

TV Shows

In the past, I haven't been much of a TV watcher outside of my regular Colbert, South Park, and Simpsons. However, when I realized that we're living in the golden age of entertainment, I discovered that there's plenty of great shows.

Firefly

This is one that's been recommended to me by many friends, and I've gotta say I liked it. The space western theme works well and I thought the writing was done well. Something about Joss Whedon's directing style was off putting to me at first, but I ended up warming up to it. 

The Wire

I'm presently wrapping up season 4, but I consider The Wire to be the best TV show I've ever watched (yes, better than The Sopranos). Besides having brilliant story arcs that suck you into every character and issue, this show explores so many ideas that are under appreciated in TV. This show teaches so much about sensitive topics like race, poverty, drugs, and police brutality that I think it should be mandatory watching in every high school. I think students would learn more from writing an essay on The Wire than Ethan Frome. 

Arrested Development

After hearing good things about season 4 on NPR, I decided to finally watch this show about which I've heard so much. I finished it a few weeks ago and enjoyed it a great deal. It has no laugh track which is great and the writing is snappy. Plus, there's Buster. Need I say more? I know there are a lot of mixed feelings about season 4, but I liked it, and suspect that I will enjoy it even more when I watch it again. 

September Updates: Art Hop and Chicago

My updates have been sparse this September, so I thought I'd put up an update on some of my activities here in the States as I prepare to leave.

Last Thursday I visited Art Prize in Grand Rapids with my mom and Laurel. For those who are unfamiliar, Art Prize is a yearly event in Grand Rapids where thousands of artists put up works across the city, inside and outside. The top pieces earn a hefty chuck of change, and viewers get to vote to determine the winners. 

An Art Prize piece made by sharpie 

I'd only been to Art Prize once before as a freshman at K. I was once again thoroughly impressed. The competition is a fun way to see a wide variety of art, ranging from abstract multimedia presentations, to a marble angel, to a giant quilt of a Michigan lakeshore. Best of all you get to explore the city of Grand Rapids, which I think is an under appreciated gem of southwest Michigan. I just wish I hadn't missed last year. Luckily I'll be back in time for the next one! 

This Art Prize piece occasionally breathes fire 

Me with Matilda 

This past Sunday through Wednesday I was in Chicago seeing Bryan, Jessie, Matilda, Keith, and Lisa one last time before I leave. We got to go to a delicious restaurant called MK (pronounced in the style of Mr. Mackey). I also took another trip to the Beercade (a place I've blogged about before) with Keith. We went on a Monday night when drafts were a dollar off and there was actually enough room to play at the old arcade machines, although the pinball room was closed. Still, it was fun playing classics like Teenage Mutant Ninja Turtles and Mortal Kombat alongside my older brother (and the beer was delicious). We enjoyed a trip to the Chicago Children's Museum with Matilda, a bike ride along Lake Shore Drive, some delicious Intelligentsia coffee (best cappuccino I've ever had), and an architectural walking tour all about Art Deco. 

These past two weeks have been a fun way to wrap up my time in the USA. Now I just have to finish packing and get on a plane! 

Flags in the river for Art Prize 

One work was a miniature golf course

At MK I got a complimentary dessert! 

Building a skyscraper with Matilda at the Children's Museum 

Great Ronald Coase Story and Quote

I just wanted to share this great story about the recently deceased Nobel Laureate economist Ronald Economist from NPR's Planet Money. In particular, I'd forgotten that Coase had authored a book on the rise of China at the age of 101! I loved this quote from him at the end of the story,

"China's rapid emergence as a global economic power — one of the most important developments of the past generation — took him completely by surprise." 'I thought it would take 100 years, if not more,' Coase said."It seemed striking that an economic legend could be so wrong about such an important subject. I asked Coase what he made of this." 'I've been wrong so often I don't find it extraordinary at all,' he said."

South Park is Right on Syria

I made a post last week where I expressed my skepticism of a military strike in Syria doing much good. Well, things have changed significantly since then, with a statement (gaffe?) from John Kerry apparently offering the promise of a diplomatic solution. It's obviously too early to tell, but these recent developments seem promising. 

I find it funny that this breakthrough came about largely thanks to an offhand comment. I know that whole "give peace a chance" trope is overused...but in this case, I think it applies. Was the communication between the Obama administration and Assad regime really so poor that this solution never came up until now? 

As I thought about the division in public opinion on the Syria issue, I thought back to a great South Park Episode, "I'm a Little Bit Country". Released in 2003, this episode is all about the raging debate over the war in Iraq. The moral of the episode is that the different opinions are good for America. By having a pro war government, the US can go and kick butt when necessary, but all the anti-war hippies let them show the national community that all the US citizens didn't really support the war, allowing the country to not appear like a bunch of jerks and rednecks. This divided approach has (if all the negotiations go well) worked perfectly for the United States. The US was able to provide a credible threat of force, but the divided public opinion pressured Obama into seeking Congressional approval instead of just launching the strikes. The result was that Assad came to the table, and now we'll likely have a peaceful resolution where no more people get gassed and no one gets blown up by American cruise missiles. Even better, this seems like a huge win for US relations with Russia and China. This article from the NYT has a great explanation of the downward trend in US/Russian relations since the Obama administration's "reset". Maybe this can reverse the trend. 

But the larger point is that, as with so many things, South Park is right. 

The Economics of Ice Cream

With summer quickly on its way out, I realized this is my last chance to make a post I've been meaning to write since I started the blog.

Sometime in May, a few of my friends and I went down to the nearby Dairy Queen for a frozen treat. The day was sweltering but, in typical Michigan fashion, it had been in the low 60s and raining the day before. When we arrived at the DQ, there was a line of people spilling out the door. I thought of how the previous day there must have been nearly no customers.

As I sweated in line, I asked myself why the price hadn't adjusted between the two days. Every student in their second or third week of econ 101 encounters a classic supply and demand problem where  a heat wave increases the demand for ice cream, causing the price and quantity of ice cream to increase. In ideal Econoland, long lines don't exist because firms will jack up prices when demand exceeds supply and lower prices when the opposite is true.

However, as my wait extended into its fifteenth minute, I saw that this was clearly not ideal Econoland. Of course, econ 101 also teaches that prices do not instantly adjust for a wide variety of reasons. Customers feel betrayed when a firm changes its prices, especially when they're jacking them up right when the customer wants the item most. Prices also don't adjust because firms don't want to go through the trouble of changing they're menus and calculating new prices every month, let alone every day. In fact, many economists identify price stickiness as a main cause of recessions because firms can't respond to sudden changes in demand without laying off workers.

This econ 101 story, though a sufficient explanation of why DQ isn't changing its prices every day, still left me unsatisfied. I still wondered why there wasn't more variation in the price of ice cream from, say, winter to summer. The change in demand must be substantial enough to justify charging a bit more. I decided to do a search on google scholar for articles on the price changes of ice cream (or lack thereof) between seasons.

After a bit of sleuthing, I stumbled on this gem of an article in the Journal of Industrial Economics. It was ungated when I accessed it from K, but for whatever reason I can only get to the abstract now. The author hit onto the same thing I did but instead for a variety of goods. Turkey and stuffing at thanksgiving? Doesn't get more expensive. Chicken wings at the super bowl? Nope. Same thing for ice cream. In fact, the authors find that prices typically decrease at demand peaks! That DQ blizzard is probably cheaper on a hot July day than it is in the middle of December.

The traditional story for this phenomenon is that supply ramps up in anticipation of big demand. Farmers know that the super bowl creates a lot of demand for wings, so they raise a few more chickens. Supply and demand tells us that this increase in supply will lower prices, canceling out the price increase from the demand shift. This is one alternative to the econ 101 story and it seems to make sense. However, the authors reject this explanation, noting that retailers don't get much better deals from farmers.

The explanation that the author settles on is that it all boils down to competition and market concentration. One of the defining traits of Econoland is perfect competition. Any good you can imagine is being produced by tons of different producers, and consumers can easily choose between any of their many options. In reality, the production of most goods is dominated by a few firms, and real world competition is closer to an oligopoly than it is to perfect competition. When a market is dominated by a few players, they have the power set prices above what competition would normally push it down to. The result is that the normal price predicted by supply and demand no longer applies, and instead the firm or firms in control will be able to set a price that maximizes their profits. Part of the reason for this oligopolistic tendency is that customers aren't fully informed of all their options. They go with the brand they know best on the supermarket shelves, or just walk to the nearest ice cream store.

When demand for a product increases, the concentration of customers increases, making it easier for businesses to advertise. Because everyone is looking to buy chicken wings for the Super Bowl, every chicken wing retailer will want to run advertisements on TV leading up to the big game. The result is that consumers become better informed. A customer may become aware of a brand they had never considered before. The result is that these markets move a little bit away from oligopolistic competition and a little closer to perfect competition. As markets become more competitive, firms have less power to set prices, resulting in a better deal for the consumer. So we find ourselves with those lower prices even when demand is peaking, all thanks to our friend competition.

Sounds good in theory, but the story is a little complicated. The author backed up his assertion by running a statistical analysis on data from hundreds of different goods whose demand varies widely by the time of year. What the author finds is that markets where several brands are competing saw larger price drops than markets dominated by a single firm. This finding fits the theory, because markets with a few firms will see that spike in competition brought on by better informed consumers unlike markets where there's only one firm.

What I love about this paper is that it takes theory and applies real world data analysis. Is this the entire story? Probably not, but the author has made some intriguing observations that suggest it is part of the story. We started in ideal Econoland and observed something that cannot happen there. Rather than throwing up our hands and declaring economics useless, we asked why Dairy Queen doesn't fit into Econoland. There are many answers; increases in supply, price stickiness, behavioral factors, and as this paper explained, imperfect competition. By analyzing the unchanging price of the DQ blizzard through the lens of economics, we can better recognize the deeper factors at work.

AidGrade: Conclusion

I finished my internship with AidGrade last Friday. Working with AidGrade was a great experience and I'm really glad I had the opportunity to help their cause. If you want to know more about AidGrade and my experiences with them so far, check out this post or this one. 

In addition to research skills, more familiarity with Excel (I spent many an hour staring at spreadsheets), and exposure to economic research articles, the one important thing I've taken away from AidGrade is an increased passion for developmental economics. Economics is divided into a bunch of disciplines such as econometrics, finance, international economics, or economic history. Going into most fields involves taking the same broad range of math courses in graduate school, but development economics is apparently a little special. Those who go into development specialize a little earlier and not every school has a strong development program. The work developmental economists do is also different in flavor from that of typical economists. Development tends to be more hands on, with a little more field experiments and work with NGOs operating on the ground. I'm glad that I was exposed to the field early on so that I can think about whether it's something I want to pursue. 

I hope to stay connected with AidGrade going forward. I think a club centered around effective altruism could really have a place at K. The students tend to have a very international and socially conscious focus, so I imagine they'd be interested in the kind of work AidGrade does. I'm also trying to connect K's career center with AidGrade so that more students can learn about the organization's internships and possibly get some funding through the school (if only I'd been so lucky!) 

I encourage you to check out AidGrade's website in the next couple of months. As the work I was helping with wraps up, it should become available online so that you can use the web tools to build your own meta-analyses and compare aid programs. 

Great Economist Ronald Coase has Died

Oldest living Nobel Laureate Ronald Coase died today at the age of 102. Coase was still active in the economics community right up until his death. You can hear an interview of him on NPR here from when he was 101 years young.

Ronald Coase is famous for his ground breaking research on transaction costs. The University of Chicago has posted a great memoriam explaining the significance of his contributions to economics. One paragraph reads:

“Professor Coase’s research on property rights provided the academic underpinning for the establishment of the Acid Rain Program in the United States in the early 1990s, which virtually eliminated acid rain pollution in America,” said Richard Sandor, chairman and chief executive officer of Environmental Financial Products, LLC.

He was also a London School of Economics graduate. Most of the economics blogs I link to on the right will probably have some posts up talking about Coase.

Make Bed Nets, not Bombs

As President Obama beseeches Congress to approve military strikes in Syria, it's worth asking whether lobbing some cruise missiles is really the best way (or even a reasonably decent way) for the US to use its resources to help the international community. Matthew Yglesias does just this in several interesting posts. Yglesias makes several good points about the dubious efficacy of military strikes for humanitarian ends, but his best argument is that even under optimistic assumptions, you can get a lot more bang for your buck by donating money. Noting that many interventionists crow that the US saved tens of thousands of lives in Libya for only 1.1 billion dollars, Yglesias observes that giving money to the Against Malaria Foundation could do even better. 

 According to The Life You Can Save, handing out these bed nets saves about one life for every $1,865 spent. That's to say that if the United States was able to spend the $1.1 billion we spent on the Libya operation on long-lasting insecticide treated bed nets we could have saved almost 590,000 lives from almost certain destruction. America's other allies in Libya spent about $3 billion in total together. That's something to think about.

I've been disappointed by Obama's record on foreign aid. Although President Obama has overseen an increase in the foreign aid budget, less than 1% of our budget goes towards aid, of which much is spent buying bombs and guns for countries like Pakistan, Afghanistan, Egypt, and Israel. I appreciate concerns about the efficiency and effectiveness of aid programs, but we are now entering an age where researchers are rigorously evaluating international development programs. We should use that knowledge to help the global poor.

Luckily, you don't have to convince Congress to pass a law to help some people in need. I encourage you to improve some lives and give.

 

A Great Labor Day Update from Marginal Revolution

A favorite blog of mine, Marginal Revolution, featured a labor day update on what they call, "the most pro-labor policy in the world, open borders." The authors provide several links to interesting articles about immigration. My personal favorite is the third link from Bryan Caplan on dubious moral case for restricting immigration. In his article, Caplan examines whether any of the alleged evils of immigration are sufficient to justify trapping billions in third world poverty. I recommend reading his thorough examination of the different criticisms of immigration.

Happy labor day!

Huzzah for a fun weekend with friends!

One of the things about going to Kalamazoo College is that you know all of your friends will be scattered across the globe in your third year. This is because of K's popular study abroad programs which about 80% of the students take advantage of at some point during their four years. It'll be over a year before I see many of my friends, who, as I've mentioned before, are awesome. Fortunately, I had a chance to see many of them one last time in Chicago before our big travels. Adam (my roommate of two years) and his family were kind enough to host us in their house in Wilmette, a suburb just outside Chicago. Although not all of us could make it, it was still a fun gathering.

I received this birthday gift from Adam, a touching memorial to Chairman Meow, a golden waving cat of mine who passed away in a tragic accident freshman year. Adam has video coverage of the event. 

I had a great time going to the Sushi Station, a "rotating sushi bar", where plates of sushi roll by your table on a conveyor belt and you grab plates as they go by. You pay at the end based on how many plates you grabbed and what colors they are. It was my first time trying sushi outside of the occasional california roll and I was pleasantly surprised! I also had some sake (rice wine) to go with my meal. I believe it was the first time I've ordered an alcoholic beverage at a restaurant. Special shout out goes to my friend Bo who managed to down ten plates of sushi.

The hero of the faire 

Now we'll never get to study abroad! 

The next morning brought a trip to the Bristol Renaissance Faire on the Illinois/Wisconsin border, which Adam's parents graciously bought us the tickets for. At the faire, it's huzzah this and huzzah that, hence the title of the post. The faire has the immersion and fantasy of Disney World combined with some of the hocky countryness of a state fair. The fairgrounds are huge and covered with hundreds of stores that sell armor, weapons, books, music, and just about any medieval knick knack you can imagine. There are also plenty of games, rides, and events sprinkled around the area. We had a good time watching an entertaining minstrel and listening to a few bawdy tunes. There was one station called "vegetable justice", where a man caught in stockades insulted passing visitors who could then purchase tomatoes to chuck at him. The insult comic was pretty good at pushing peoples' buttons. My favorite activity of all was the jousts. At the very end of the fairground lies a large jousting court with wooden stands set up along the sides. Much like a real 16th century joust, the crowd spilled out of the stands, so we watched in a large crowd surrounded by dirt, dust, and cheers. The actual joust was quite exciting. I can't be 100% sure, but I think the competition was authentic. There were some satisfying views of riders getting knocked flat onto the dirt by a well placed lance, and one round that featured quite a few broken lances and shattered shields (which means a mighty good joust, or so I'm assured by Game of Thrones). Unfortunately, we ran out of energy before the 5:00 joust to the death, which I didn't know was the kind of thing you could just schedule. That night, Adam's parents treated us to some classic Chicago deep dish pizza, a prerequisite to any visit to the area.

Heading to the faire for a good olde time 

It was a highly successful trip! The group that made it included people who will be studying in the UK, Germany, Spain, three different sites in Japan, and Kalamazoo. I'm sure we'll all come back senior year with fascinating stories to tell.

The gang

The Macroeconomics of a North Korean Collapse

While I was weekend with some of my friends from K this past weekend in Chicago (post about that pending), we had an interesting conversation about North Korea. It started with this article that I read about an ongoing crystal meth epidemic in the hermit kingdom itself. My friend Adam, who's an East Asian Civilization major, was surprised by this downslide in social stability in North Korea. This led to us talking about the possibility (inevitability?) of a regime collapse in the North and how South Korea and China would respond. We all speculated about what impact the flood of North Korean refugees would have on the neighboring countries. One thing that I forgot to mention is what macroeconomics has to say about those refugees.

Let's say that the Korean peninsula becomes reunified. The first thing an economist would note is that South Korea is much more productive than North Korea. By this, we don't mean that North Koreans are lazy, just that their workers don't have the same level of capital - things like machines, roads, and knowledge - to produce goods and services. In economics, workers are paid by their marginal productivity, or how much extra stuff is made by having one more worker (this is of course a simplification, but there are good reasons to think this is approximately true. Watch this video for more info). The productivity of a worker is determined by the capital per worker. If you have a lot of workers, you're going to need a lot of capital to keep them employed productively. Clearly, South Korea has a lot more capital per worker than North Korea, as evidenced by their higher GDP per capita.

So what's going to happen when the Koreas merge? Well, South Korea is going to have a lot more workers but not much more capital. Because the number of workers has grown significantly while the amount of capital has not, we can expect wages to fall for South Korean workers. But it's not all bad! North Koreans will get to take advantage of all that great South Korean capital, so their wages will likely go up.

Plus, this is only the short term we're talking about. You see, in the long run (which has a notoriously vague definition) capital doesn't just stay at some constant level. Much as workers are paid by their marginal productivity, the owners of capital are paid by the marginal productivity of their capital. What determines the marginal productivity of capital? How many workers there are! A factory is much more useful if it can be fully manned than if there's only one person to work it. Thus, when all those North Koreans flood south, we can expect the marginal productivity of capital to shoot upwards. This means owning capital becomes quite profitable, so we can expect entrepreneurs to invest in new factories and machines. It would also behoove the government to beef up its spending on roads and education to accommodate its larger workforce. Eventually, we can expect to get back to the same capital per worker we had before, bringing wages for everyone back to their old high.

Unfortunately, this increase in investment doesn't come free. The government and entrepreneurs will have to borrow in order to finance their investments, and that means someone will have to save instead of spend. Either the citizens of Korea will have to tighten their belts for awhile or the country will have to borrow from foreigners. Either way, it won't be fun for a bit. But, once that great long run comes around, everyone will be happy once again (assuming, as Keynes quipped, they're not dead).

Overall, I'd say this economic analysis is positive for Korean reunification. North Koreans should be able to attain the prosperity enjoyed by their southern brethren, and although there will be a brief period of falling wages for the South Koreans, they should be able to build back up to their old lifestyle. Plus, this model makes some simplifications that ignore some potential benefits of a united Korea. First of all, there's trade. North Korea and South Korea have limited economic interaction, and as we know from comparative advantage, trade can make everyone better off! The extra workers may allow for more specialization and efficiency. Plus, I've been ignoring technology this whole time, which affects the marginal productivity of both labor and capital. There's a good reason to believe that technology is positively impacted by population size. Thus, we can expect the incoming North Koreans to spur innovation, helping make Korea richer than ever before. The possibilities for how North Koreans could become more productive by becoming integrated into the global economy are numerous. One possibility that enters my mind is that Japan could use some North Korean immigrants to fill the holes in its workforce left by its rapidly aging population.

This sort of speculation is one of my favorite parts of economics. The models applied here involve breathtaking simplifications - assuming all workers and capital are the same, for one - and yet it gives us some pretty actionable predictions about a very complex and specific topic. I don't think the falling wages, rising return to capital, and long term return to the old capital per worker are immediately obvious to anyone who thinks about North Korean refugees flooding into South Korea. Best of all, I think we can be pretty confident that this is roughly how the story would (will?) play out. And if it doesn't, we can look for what went wrong to make these models non-applicable. We also have some policy recommendations from this model's prediction - more investment and saving if the refugees arrive. To be clear, I'd be highly skeptical of any specific prediction like wages will fall by X based on these models. But, this kind of an analysis can certainly point to more specific promising areas of research. I'm sure there are people smarter than me who are already thinking beyond the scope of this model on the economic impact of Korean reunification.

I know East and West Germany went through a very similar process with the fall of the Berlin Wall, so I'd be curious to learn more about how that played out economically. I'd say that the sooner North Korea collapses the better. There will surely be some unrest in the short term as wages fall and capital is built up, but the welfare gains for the impoverished North Koreans will be huge, and even those living outside of Kim Jong Un's control could benefit.

The Economics of Eritrean Kidnapping

I listened to a fascinating This American Life while driving back from Chicago entitled "This Call May be Recorded to Save Your Life". It tells the (true) story of a journalist who gets pulled into helping to rescue an extensive network of kidnapped Eritrean refugees. I recommend giving the episode a listen before reading the rest of the post.

But, for those of you short on time, I'll give a brief summary here. The journalist, Meron Estefanos, is put in contact with the kidnapped individuals via cell phone. Talking to them, she is told stories about how they are being tortured and will be killed unless someone can pay $20000 (each). She begins talking to the hostages daily, and their plight slowly consumes her life. She ultimately speaks to hundreds of captives and learns that there is an industry built around ransoming refugees. Meron tries to raise awareness of the issue with her radio program, but finds the NGOs and governments who could help are ineffective. And as if raising the hundreds of thousands of dollars necessary to free the captives isn't enough, the nature of the kidnappings make the issue even more complex. How can she be sure that she isn't being lied to? Allegedly, paying up will get the captives freed from where they are being held in the Sinai Desert into Israel, but how does she know the kidnappers will play fair? And of course, paying up only encourages the kidnappers to commit more kidnapping. Ultimately, Meron does get many hostages free by raising money and working with the families involved, but to this day she is still actively working to free an ever increasing number of hostages.

This story was fascinating to me not just because of the human elements, but also because of all the great economics involved. First of all, you have some serious asymmetrical information problems at play. In his famous "Market for Lemons" paper, economist George Akerlof uses used car sales to illustrate how uncertainty over the quality of a product can drive down an entire market. Consumers of used cars have a hard time knowing if the car they're buying will be a "lemon", one that will break down quickly. Thus, they aren't willing to pay very much for a car. This drives out the people with good used cars to sell, leaving a greater proportion of lemons on the market. This further drives down the price consumers are willing to pay, driving out more good cars, and so on and so on until all you have is a market where the product is cheap and the quality highly suspect. The root problem is asymmetric information - the car owner knows a lot about the quality of the car while the car buyer knows very little.

Asymmetric information also plays a key role in Meron's kidnapping dilemma. How are the hostages being treated? Meron can't be sure all the tales of torture and threatening are true - what if the hostages are being forced to tell her lies, or it's all part of some hoax? When she pays the money, will the hostages be freed? The kidnappers are trying to create a market for the people they've captured, but information asymmetry makes it a tough market to operate efficiently. Sure enough, the $20,000 price tag gets dropped to $5,000 at one point, and even when Meron pays the hostages aren't released at first, although the kidnappers attempt to fool her into thinking they are. Just as in any market for lemons, shady dealers dominate the market while quality and price drop. Understandably, all these issues make it difficult for Meron to raise money.

The kidnapping tale is also a great illustration of incentives at work. The only reason the thugs Meron deals with engage in kidnapping is to get rich, but they only get rich if Meron gets them ransoms. One of the hostages Meron frees relates how the kidnappers' moods would rise and fall with Meron's reports on her progress in raising funds. Meron is not only the hostages' main source of hope, but also the kidnappers'. Since she's had success freeing dozens of hostages, it's not surprising that Meron is the first person the kidnappers contact when they capture a new group.

This leads to an illustration of another economic principle: collective action problems. If all of Eritrea could sit down and create a binding pact for how to deal with these kidnappers, they'd probably agree to just stop all payments altogether and send in some guys with guns to kill the criminals. Either way, would-be kidnappers would realize there is only danger and no reward in kidnapping. But of course, all of Eritrea has not created a binding pact for how to deal with kidnappers. Instead, each family is more or less on its own. The families of those who are kidnapped are concerned with saving their loved ones. They are less worried about how their payments will create incentives that will lead to others being kidnapped. Ideally, Eritrea would have a security force that would stop these things, but it's not a stable country at the moment. This is also a piece of evidence against the libertarian theory that markets will overcome collective action problems. Theoretically, instead of paying thousands of dollars to these kidnappers, the families should pool their money to hire some mercenaries. Of course, it's difficult and costly for the families to cooperate, so nothing gets done. Notably, the kidnappers made sure to get Meron emotionally attached to a few of the hostages in particular so she would become compromised by the collective action failure. As an independent observer, Meron was hesitant about perpetuating the kidnapping by paying into the system. But as she came to sympathize with the hostages she spoke to, she became determined to raise the money to free them. Apparently, Meron now has formed a semi-official organization for freeing the hostages. She tries to pressure governments into action, but I believe the money is still flowing. Maybe Meron could organize the hiring of some mercenaries?

As long as I'm typing up these economics posts, I'll write sometime soon about the mystery of why Dairy Queen doesn't raise its prices on hot days.