Young Economics.

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Scrip

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I recently entered the world of book swapping. For the uninitiated, these are websites that allow users to send and receive books with others without sending any money directly. The two major players, PaperBackSwap (bigger, but US only) and BookMooch, are quite similar. Basically, the user lists books s/he is willing to part with. The user receives a “credit” for sending requested books to others and pays a “credit” for getting a book from someone else. The shipper always pays postage. As the price of all books is equal and fixed (1 credit), I wondered about the possible effects of this “price controlling”. Unsurprisingly, there are longer waits for high-demand books (I’m 575 on one book’s waiting list). Although harder to determine, I would also expect there should be fewer people willing to supply high-demand books (alternative markets such as Amazon Used Books or “friends” providing higher value).

For the final effect, I must complete the description of these toy economies. PBS provides +2 credits for listing your first 10 available books and allows the purchase of additional credits ($3.45/credit). BM provides +0.2 credits per posted book and no possibility of purchasing credits (though intriguingly there is an unofficial bank that loans credits). My question to readers is whether inflation is possible on these sites? If so, under what situations would it manifest and what be its effects?

* – some other web sites do allow variable prices

Written by Brian Quistorff

March 9, 2010 at 8:30 pm

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Where economics and beer appreciation intersect

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Written by Alex

September 19, 2009 at 9:38 am

NBER Treasure Trove

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This post could well be called “The blog is dead!  Long live the blog!” since the blog has not been very active in recent weeks.  Now that we are all settled into our new lives as non-students, though, hopefully the blog will enjoy a renaissance.

The purpose of this post is just to express my satisfaction with the latest NBER announcement I received in my inbox a few days ago.  They really outdid themselves this time.  The set of new working papers includes no less than eight papers with abstracts that were interesting enough to make me click on them.

Obviously I can’t write about all of them, so I will just list them.  I think some of them will be of interest to one or two of our myriad of readers.

Written by Alex

September 15, 2009 at 3:02 pm

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Public Service Announcements

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“Don’t drink and _____” # of Google Hits
Deconstruct 0
Debug 4
Derive 12,800
Drive 332,000

Written by Brian Quistorff

September 9, 2009 at 1:48 pm

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Genealogy Problem

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Problem of the Day: Just to keep our minds nimble through the summer I thought I’d post a little probability puzzle. My dad has recently been studying genealogy. He remarked to me yesterday that in one line of our family tree the same last name persisted for 500 years. I was amazed at first, but then began to wonder what the expected number of generations a last name sticks around for. So here’s the setup/assumptions of this toy problem.

  • Each couple has C children that marry and reproduce.
  • There’s equal probabilities of those children being male or female.
  • Females don’t carry on the last name (there’s no incest, females marry males with different last names, and wives always take husbands’ last names).
  • We start with a married male with the last name EconLove.

Part 1: Work out the probability that the name EconLove will survive for at least Y additional generations. (Hint, I didn’t have a reduced form equation, but instead a recursive one.)
Part 2: For C=2, what is cut-off number of generations where the probability of EconLove surviving that number of generations drops below 1/2? For what values of C will the probability of EconLove lasting Y generations never drop below 1/2 for any Y? (Hint, there’s an intuitive reason for this last one).

I’ll wait a couple days to see if people have questions, and then I’ll post my answers.

Written by Brian Quistorff

August 19, 2009 at 12:02 pm

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A reading for the Beer Appreciation Society

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[A] study of almost 1,700 women, published in the journal Nutrition, found bone density was better in regular drinkers than non-drinkers.

Of course, there are caveats.  They are in the article, but for the purposes of beer appreciation propaganda, we need not report them here.

Written by Alex

August 17, 2009 at 6:15 pm

The Überdistortion

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From Create Your Own Economy, the new book by Tyler Cowen of the Marginal Revolution blog:

Standard behavioral economics views “framing effects” as distorting our decisions, but in many circumstances framing effects help make our lives real, vivid, and meaningful, just as Twittering can make our smallest choices more salient.  We choose to send or receive messages in particular ways, in part, to determine which kinds of framing effects will influence our thoughts and emotions.

. . .

The better way to understand human imperfections is to focus on what I call an überdistortion, namely that we, when selecting from a broad menu of options, don’t always make the right choice of framing effects.  In other words, if you want to make better decisions, you should be more self-reflective about how you are choosing to frame the messages you send and receive.

. . .

Competition gives you the chance to construct the whirlwind of influences that you most prefer.  For that process to work smoothly, try to avoid the überbias of picking the wrong framing effects.  Focus your wisdom on choosing the right media for your messages.  (pp. 78-79, 89)

(Obviously, the link to Wikipedia was inserted by me and is not in the book.)

Cowen is writing about the ways in which the information age allows us to customize our own individual relationship to the world by choosing particular ways of filtering the bits of information (cultural goods, friendships, news, etc.) that we consume.  In the above excerpt, he suggests that the meta-level choice of how we frame information is the important choice to get right if one wants to live a meaningful life in the information age — more important, perhaps, than the information itself.

Is this good advice?  What principles should one apply in choosing the ‘best’ frames for oneself as a consumer of information?  Does explicitly recognizing and embracing one’s own frames imply the abandonment of disinterested impartiality in information consumption (even if that was always just a pretence anyway)?  If everyone thought this way about the information they consume, would we all become dangerously postmodern?

The book is pretty good so far.

Written by Alex

August 17, 2009 at 3:13 pm

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