Richard Thaler, Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at Chicago Booth, has spent his career studying the radical notion that the central agents in the economy are humans—predictable, error-prone individuals. He will discuss his latest book—Misbehaving: The Making of Behavioral Economics—in a Scholes Forum fireside chat, moderated by Steven Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at Chicago Booth.
Tip of the hat to Free Enterprise at The Baugh Center for posting this video of Dr. Brooks’ April 21 talk at Baylor University entitled “Capitalism Without Attachment: Creating a prosperous society without losing our souls”:
I never thought that I would ever live to see the day when interest rates turned negative, creating a world where investors pay for the opportunity to lose money over time and banks pay interest to borrowers…
“As Euribor, a key benchmark used to set interest rates, seems to sliding toward zero and below, banks in some European countries are looking at previously inconceivable problem: They may soon have to pay interest to customers who borrow from them.”
Steven Levitt’s nearly 1 hour long talk entitled “Thinking Differently about Big Data“ is quite exceptional; Professor Levitt gave this talk as part of the National Academy of Sciences “Drawing Causal Inference from Big Data” colloquium in Washington, D.C. on March 26, 2015.
Lately, futures prices for crude oil and refined products such as gasoline and heating oil have been in a free-fall. For example, the January 2015 futures contract for “RBOB Gasoline” is trading at the equivalent of around $1.64 per gallon. As shown in the following graph, this represents a price drop of roughly 85-90 cents per gallon since September:
AAA reports that today’s national average is $2.639 and could fall to $2.50 within the next couple of weeks. Nationally, the average markup from the near term futures contract price to prices at the pump has averaged 62 cents per gallon since January 2000 (which is when AAA began tracking this information). Therefore, if futures prices hold at (or fall further from) current levels it seems quite likely that the price at the pump may be headed even lower.
This 1 hour long presentation by University of Chicago economist Matthew Gentzkow is well worth watching; Professor Gentzkow explores the implications of new media technologies for the health of American democracy.
Clearly insurance is an enabling technology; without insurance many if not most large-scale commercial activities would grind to a halt. In a Business Week article entitled “The Unexpected Threat to Super Bowl XLIX“, Wharton professors Howard Kunreuther and Erwann Michel-Kerjan point out that that if Congress decides not to renew the Terrorism Risk Insurance Act (TRIA) (set to expire on Dec. 31), there is a chance that the Super Bowl might not be played. Will Warren Buffet step in as an insurer of last resort if TRIA is not reauthorized? Also, Gordon Woo raises some excellent points about possible private sector alternatives to TRIA in his blog posting entitled “RMS and the FIFA World Cup: Insuring Against Terrorism“.
In today’s daily USPS junk mail delivery, I was deluged (as is everyone these days) by a pile of political flyers. One of the flyers in particular caught my eye – it was entitled “Common Sense MMXIV” (why the Roman numerals? But I digress).
One of the supposed “common sense” proposals listed on this flyer was to “…. enact, as Australia has, a $20/hr. minimum wage”. Since I was not aware that Australia had a $20/hr. minimum wage, I googled this topic and found that in fact Australia does not have a $20/hr. minimum wage (source: http://www.wageindicator.org/main/salary/minimum-wage/australia). What Australia does have is a 16.87AUD/hour minimum which translates (at the current exchange rate) into 14.84USD/hour (AUD and USD are acronyms respectively for “Australian Dollar” and “US Dollar”). Furthermore, there are all sorts of caveats that apply; for example, there’s a schedule of minimum wages (expressed as a percentage of the 16.87AUD/hour baseline) based upon the age of the worker:
<16 years: 36.8%
16 years: 47.3%
17 years: 57.8%
18 years: 68.3%
19 years: 82.5%
20 years: 97.7%
For more on the economics of the minimum wage, I recommend reading the attached article by David Neumark; Dr. Neumark is an economics professor and director of the Center for Economics and Public Policy at the University of California, Irvine.