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.
Category: Economics
Are Shareholders Obsolete?
In his January 2, 2015 Wall Street Journal essay, columnist Holman Jenkins makes a compelling case for the principle of shareholder value maximization by noting that owners seeking to maximize the value of their businesses end up doing a pretty decent job of satisfying customer and employees along the way. Think of this essay as a 2015 sequel to Milton Friedman’s famous New York Times Magazine essay (published September 13, 1970) entitled “The Social Responsibility of Business is to Increase its Profits” (see http://bit.ly/Social_Responsibility_of_Business for Friedman’s essay; Thomas Coleman provides important context in his recent (2013) essay about Friedman entitled “Corporate Social Responsibility: Friedman’s View @ http://bfi.uchicago.edu/feature-story/corporate-social-responsibilty-friedmans-view)…
What's the "future" for price at the pump?
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.]]>
What’s the “future” for price at the pump?
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.
Media Bias, Echo Chambers, and the Future of Democracy
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.
Terrorism risk insurance
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“.
On Australia's minimum wage policy
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% | AUD6.21 | USD5.46 |
| 16 years: 47.3% | AUD7.98 | USD7.02 |
| 17 years: 57.8% | AUD9.75 | USD8.58 |
| 18 years: 68.3% | AUD11.52 | USD10.13 |
| 19 years: 82.5% | AUD13.92 | USD12.24 |
| 20 years: 97.7% | AUD16.48 | USD14.49 |
On Australia’s minimum wage policy
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% | AUD6.21 | USD5.46 |
| 16 years: 47.3% | AUD7.98 | USD7.02 |
| 17 years: 57.8% | AUD9.75 | USD8.58 |
| 18 years: 68.3% | AUD11.52 | USD10.13 |
| 19 years: 82.5% | AUD13.92 | USD12.24 |
| 20 years: 97.7% | AUD16.48 | USD14.49 |
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.
New MRU Course: Trade and Prosperity
I just received this email from Professor Don Boudreaux, who chairs the Department of Economics at George Mason University. It is a (free) course announcement – the title of the course is “Everyday Economics”. I highly recommend this course and plan to “sit” through it myself!
From: Don Boudreaux
Sent: Wednesday, June 25, 2014 4:04 PM
Subject: My New MRU Course: Trade and Prosperity
Dear Friends,
I’m excited to announce a new video series at Marginal Revolution University on Trade and Prosperity.
These videos are part of a new course, Everyday Economics, where instructors take a look at everyday scenarios to illustrate the role economics plays in our day-to-day lives.
In these videos on trade and prosperity, we’ll answer questions such as:
- How is it that human prosperity flatlined for most of history and then exploded in the last few hundred years?
- What can we learn about division of labor from the simple example of hamburgers being made at home versus at a restaurant?
- How did specialization of knowledge help my son overcome a life-threatening illness?
- What can we learn about cooperation and trade from the tragedy of Tasmania?
One of the key features of this course is that the viewer decides what we should cover next. Do you have questions about trade? Anything specific you’ve wondered about? Submit your ideas and vote on topics submitted by other viewers.
Also, keep an eye out for future Everyday Economics sections. Up next is Tyler Cowen’s section on the economics of food, to be released later this year.
See you in class,
Don Boudreaux
MRUniversity.com
This week’s Initiative on Global Markets (IGM) Economic Experts Panel statements
This week’s IGM Economic Experts Panel statements:
- Employers that discriminate in hiring will be at a competitive disadvantage, if their customers do not care about their mix of employees, compared with firms that do not discriminate.
- Rising market wages are an important reason — over and above any changes in medical technology, social norms or preferences — why family sizes have fallen over the past century in rich countries.
See http://bit.ly/Trzm4k for poll results!