30 December 2010

Health Insurance in the US

This (http://bit.ly/eR9hmH) is a short blog on health insurance in the

The situation regarding health insurance in the US is complicated, but
the main fact is that health insurance through companies is subsidized
by tax breaks. The costs of health insurance have sky-rocketed. Even
with tax breaks, companies are opting for less expensive insurance for
them, with higher deductibles and so on. So, your company decides what
insurance you get.

My son had a trip to an ER in Ecuador for an asthma attack. It ended
up costing less than $200. The cost in the US for equivalent service
would be 10-20X more.


States hold universities accountable for graduation rates

I feel like Alaistair Cooke, reporting on US news to people outside
the US.

There are a lot of colleges controlled by state governments. They're
called "public universities."

Sometimes this is good. For instance, in regards to First Amendment
rights. The First Amendment protections applied to Federal Government
actions. A subsequent Amendment extended these rights or protections
to State and Local government actions. Court decisions have broadened
the protections to include public universities. So, a student
attending a public university in the US has First Amendment

The bad side of this is that public universities are subject to the
whims of government actions, which are often put into place without
considering the unintended consequences. It's not tough to imagine
what the unintended consequences of this action (http://n.pr/fRHgdn)
will be.

Aren't students responsible for their own graduation?



I like this story (http://n.pr/hWrSbf ) about the Environmental
Protection Agency and Dioxin because it concerns risk.

There's risk you can identify beforehand and risk that sneaks up on

When you try to identify risk, you use tests. These tests will have
false positives and false negatives. In other words, you're going to
identify some things as risky that aren't, and vice versa.

Once you identify a risk, you have to gauge how severe is the risk. In
other words, what is the risk that something bad will happen to you,
how severe are the bad things that could happen to you, and what is
the overall risk you calculate from those numbers?

It's in the nature of government bureaucracies to use tests that have
a high false positive rate, and to act first, think later. So, you end
up with plenty of examples like dioxin, like saccharin, ...


The Dutch Sandwich

The Dutch sandwich shows up in the Dilbert cartoon:

Bloomberg Businessweek explains the tax strategy: http://bit.ly/eVxk7w.

Abraham Briloff, an emeritus Professor of Accounting I hugely admire,
agrees with Dilbert and says these strategies are evil.

Judge Learned Hand says: "Anyone may so arrange his affairs that his
taxes shall be as low as possible; he is not bound to choose that
pattern which will best pay the Treasury; there is not even a
patriotic duty to increase one's taxes." In other words, if it's
legal, it's OK.

I am with Learned Hand on this one, but the debate will be


Happiness and Suicide

I have been interested in the happiness literature ever since I found
out that citizens of Denmark consistently score among the happiest in
the world. Totally baffling.

This is a short blog post (http://bit.ly/e0Crw3) reports an article
that finds that suicide rates and happiness scores correlate in
geographic areas.





Marginal Utility

The Austrian economists emphasize the individual's marginal utility:
in other words a person will evaluate the value of something to them.
So two people will make a deal based on differences in marginal
utilities. The end result is both gain from the deal.

Anyway, here is the concept of marginal utility in action: http://bit.ly/hvYa5h.


27 December 2010

Tuberculosis in Prisons


A tuberculosis (TB) epidemic would be very very bad.

Antibiotic resistant TB is a major problem.

The concern is that resistant organisms are forming as a result of
social processes: prisons and HIV infections.

The US has a good proportion of its population in prisons. I wonder if
the US is 1st in the world now.


Click and Clack, the Tappet brothers

Car Talk is a well-known auto repair show from Boston: http://bit.ly/ggvpWV.


Real Estate cycle

I remember Charles-Henry Monchau said "The real estate cycle is 9 years."

This is data, mainly from Ireland but also from other areas in the EU,
about the downward plunge of the housing cycle: http://bit.ly/flqagq.


Economic cycles

Here is an article that finds that cycles are real: http://bit.ly/hwUT8i.
They do a spectral analysis of GDP data. In other words, they
transform data in a time series to a spectrum and find cycles,
significant statistically speaking.

There are reasons to think that cycles might not be real.

There's the Slutsky proposition (getting "slut" and "proposition" in
the same name supposedly helps as a mnemonic device), which states
that "the moving average of a random series fluctuates." In other
words, a simple mathematical manuever on a random series can produce
meaningful-looking cycles.

There's the cluster illusion, where humans, given random data, will
think it's not random and will try to ascribe meaning to the data.

There's the efficient market hypothesis, which states that, if a
market has predictable cycles, people will act to remove the cycles.


The 1970s

Murray Edelman wrote this in in the 1970s: http://bit.ly/hvAfUs.

Although the article, like me, is a product of the US in the 1970s,
Edelman makes the point that language, one's choice of words, is in
itself biased.


Human Rights

The US concept of human rights goes back to the Declaration of
Independence, which states "endowed by their Creator with certain
inalienable rights,... life, liberty, and the pursuit of

The Rights are enumerated in the Amendments to the Constitution. One
thing the First Amendment guarantees is Freedom of Religion. In other
words, the government should not prescribe what religion a person
should practice.

Here's Gene Policinski on a practical case involving Freedom of


Search Funds

I'd never heard of Search Funds. They are for entrepreneurs. The idea
is that, for entrepreneurs, it is sometimes easier to buy a company
rather than start a company.

Probably some of you are involved in Search Funds.

Here's information:


Books by Martin Osborne and Ariel Rubinstein

If you register at this site (http://ping.fm/Nj0W3
books/index.php/index), you can download, for free, books by Ariel
Rubinstein and Martin Osborne.


24 December 2010

Feliz Navidad



A happiness map

from the University of Leicester



Book Reviews, Book Notes, Literary Criticism

Here are book notes on the book Why Smart Executives Fail:

It is a good idea to write or at least to consider writing a book review or book notes after reading a book.

Regarding book reviews, here are clips from the movie Metropolitan


Key quotes:
“I prefer good literary criticism”: 5:20 to 6:15.
“For me, ceasing to exist is failure”: 2:25 to 3:00.
“Downward social mobility”: 3:00 to 4:15.
“It still means having your mother go out on dates”: 0:00 to 0:40.

The movie is chock-full of quotable moments.


Business School opening in Ivory Coast



Christmas Songs (Jazz, mostly)

Duke Ellington Orchestra – Jingle Bells http://bit.ly/g6Kf4e

Eartha Kitt – Santa Baby http://bit.ly/gzAch5

Doris Day – White Christmas http://bit.ly/eWr7TO

Ella Fitzgerald – Sleigh Ride http://bit.ly/g0Mkzf

Vincent Guaraldi Trio – O Tannenbaum http://bit.ly/fHdvKO


21 December 2010

A.G. Gaston

The baseball manager Leo Durocher said, "Nice guys finish last."

A. G. Gaston was a nice guy who finished first (http://n.pr/hOacj3).
He was involved in the change in racial attitudes in the South (in
Birmingham, Alabama, where I lived 1987-1994) during the Martin Luther
King days in the 1960s.


Peer Review

Randomness, or luck, plays a large factor: http://bit.ly/iazE8O.

People perceive randomness as unfair: http://bit.ly/gEzG6H.


Costs of driving and owning a car

in various US cities, in a graph: http://bit.ly/gZe859.

You'd have to factor in public transportation, a big consideration in
New York City.

There's data concerning costs of flying in and out of various cities,
but I don't know where to access that.

It reminds me of our discussions in Economics concerning corruption
and where to locate a company.


Best Business Blogs

I use Google Reader A LOT.

This is one compilation of Best Business Blogs: http://bit.ly/fpgzIH.


20 December 2010

Chess-type of economic analysis

The idea is to determine where you are and then figure out what
happens when you try to move from there.

This is Michael Munger looking at political science: http://bit.ly/fyFSey.

This is looking at Malthus from an equilibrium standpoint using the
same type of analysis: http://bit.ly/i5maJP.



Funny story: http://bit.ly/dECQ2w.

I know Matthew May as author of The Elegant Solution, a book about


Blowing in the wind






Cutting edge of medicine



Leaders and followers

Nice, short article on leaders and followers: http://bit.ly/hLkKx4.


Insider trading

why laws banning insider trading are bad ideas: http://bit.ly/hJr01w.


18 December 2010

Prepublication Book

Networks, Crowds, and Markets by Easley and Kleinberg: http://bit.ly/eifjX7.


Christmas in the Mall


It's the Hallelujah chorus. People are supposed to stand,

This is from my friend, Jay Canchola. I don't know where he gets these things.


1938 World Cup on film



Privacy issues with Facebook



13 December 2010

I'll pay you Tuesday for a hamburger today

This is Wimpy's famous line, from the Popeye comic strip.

David Friedman (http://bit.ly/hr8QyH) points out it's not just Wimpy,
but also politicians who would like to make promises but put the debts
off to the next administration.


Is the awareness test relevant?

The awareness test (http://bit.ly/fr2qoX) and change blindness (http://
bit.ly/g5laiC) are simple and popular. The tests seem to imply that
most of the time we walk around unaware and that there are gorillas
around (we just don't see them).

My question is: Is the test relevant to everyday life? In other words,
if you meet a person who says "I see a gorilla," what are the chance
that the person is correct, versus the chance that he's crazy?

I don't know. I guess, if you're in a business that is subject to
frequent surprises, you've got to think he might be correct.


Are books cheap now?

This (http://bit.ly/fRVNSL) is a list of business books for sale from
Zubal Books. It's probably US, so it would ship from the US. I would
guess that there might be a similar company for Europe. The books are
mainly English, it looks like to me.

It's not an easy site to navigate. I went to Business or Economics,
set it to list books from earliest to now. There was a 4th edition of
Adam Smith's Wealth of Nations. Carl Schurz's Honest Money and Work
(was a follow-up on Dishonest Money and Work?).

A lot of the books are $50 or less. It looks to me like people are
selling their books and prices are low, but it's not my area...


A life among the econ

William Allen's story of academic life in the UCLA Department of
Economics. http://bit.ly/evYVND.

There's a lot of good stories here: journals that won't publish your
work unless you stick in some mathematical formulas, the trials of
being a department chief, etc. He tells the stories well. I am not
sure that he gets the moral of the story right, though.



Cheating in a business school class: http://bit.ly/eve6vz.

Cheating in Association football: http://bbc.in/eiVbos.


Siegel's paradox



12 December 2010

Optimization in business school

They're studying optimization at MIT Sloan. You can download a program
called AMPL.



Berserker equilibrium

The idea behind berserker equilibrium is that there is a multiple-
players prisoners' game going on. The game payoffs are set so that, if
you make a move, everyone else will kill you. Your rational play is
not only to refrain from making a move, but to be so quiet no one else
knows you even exist to play the game. So everybody stays silent.


The concept comes from a set of science fiction stories by Fred
Saberhagen: http://bit.ly/fjDtgd. Not from the berserkers, who were
Norse warriors.


Take Five

Dave Brubeck quartet: http://bit.ly/fSIgY0.


Ivo Welch's Corporate Finance

You can read it online (http://bit.ly/fAtj7g).