Thursday, September 28, 2006

Review of Suntec City Wi-Fi network

A CIO magazine blogger posted an informal review of the Suntec City Wi-Fi network created for the IMF/World Bank meetings. I previously posted on the economic inefficiency of the network here. Below is part of the review.

Accessing the Wireless@SG network was a breeze while seated outside a cafe in CityLink Mall. My search for a Wi-Fi connection turned up five access points within range, four of which were labeled "Wireless@SG." Once I had selected a Wireless@SG access point and connected, I opened my browser and found the welcome screen, which requires users to first agree to a set of terms and conditions before they can get online.

My expectations were high. After all, the IDA Web site promised Wireless@SG offers connection speeds up to 512K bps (bits per second), depending on the number of users accessing the network.

An informal test showed I could access U.S. Web sites at speeds of 150K bps, not quite the maximum promised but more than adequate for Web surfing and checking e-mails. That speed also matched the network connection of my laptop’s 3G (third-generation) data card when tested from the same location.

The Wireless@SG connection was fast enough for YouTube, allowing me to watch a video clip from "The Colbert Report." Similarly, I was able to call my Tokyo colleague using Skype’s SkypeOut service. However, the call volume on my side was low -- a common problem I have observed with SkypeOut -- and, amidst the noise of the busy shopping mall, made it difficult for me to hear. In the end, I gave up on SkypeOut and used my cell phone to finish the call.

At one point, my computer was dropped from the Wireless@SG access point, forcing me to reconnect. But once again the process was painless and within seconds I was online once more.

Wednesday, September 27, 2006

Economics podcasts at EconTalk

EconTalk contains "Economics podcasts for daily life." Each podcast contains a discussion between the host professor Russ Roberts and a guest economist on his/her area of research. The topics are usually quite interesting and are also accessible to non-economists. Here is a sample of what is available: the Economics of Medical Malpractice, Ticket Scalping and Opportunity Cost, an Interview with Gary Becker, the Economics of Inheritance.

Tuesday, September 26, 2006

U.S. Relaxes Air Travel Restrictions

The U.S. ban on liquids and gels in carry-on bags has been modified.

U.S. Relaxes Air Travel Restrictions
NY Times

Air travelers will be allowed to carry drinks bought at the airport onto planes and to have small amounts of liquids and gels in their carry-on bags, the Department of Homeland Security said today.

The new rules, which will go into effect Tuesday, allow travelers to carry liquids, gels or aerosols in containers of 3 ounces or less, as long as they all fit into a clear 1-quart plastic bag that can be screened at the security checkpoint. Drinks and other items purchased in the secure part of the airport, beyond the checkpoint, will also be allowed onto planes...

The decision slightly relaxes a broad ban on liquids and gels in carry-on bags. The ban was imposed last month after British officials arrested a group of people who they said were planning to bomb airplanes flying to the United States, using liquids combined on board to form explosives...
Security issues aside, what are the economic consequences of this change in policy? We should expect the retailers beyond the security checkpoint to benefit. Demand for drinks will increase and so will demand for carry-on hygienic products, causing prices and profits to increase. These benefits will be short-lived however. The property owners will charge a higher rent for the retail space as soon as contractually possible. When analyzing a change in the economic environment, a general rule is that the owner of the scarce resource is the one that benefits. Since the scarce resource is the retail space, not the retail know-how, we should expect the owners of the property to benefit exclusively in the long run from the policy change.

Monday, September 25, 2006

Markets in Everything

Dog food cooking class, offered in Seoul, of all places!

(via Japundit)

Friday, September 22, 2006

Survey Finds Widespread Cheating in M.B.A. Programs

More than half admitted to cheating. It's not just the business students --- 47% percent of nonbusiness graduate students also admitted to cheating. I wouldn't expect the percentage of cheaters to be very high in economics, not because the students are more honest but because the nature of economic education is not conducive to cheating.

Survey Finds Widespread Cheating in M.B.A. Programs
The Chronicle of Higher Education

More than half of the graduate business students surveyed recently admitted to cheating at least once during the last academic year, according to a report released on Monday.

The report, "Academic Dishonesty in Graduate Business Programs: Prevalence, Causes, and Proposed Action," is based on survey responses from 5,331 students at 32 graduate schools in the United States and Canada, and is scheduled for publication this month in Academy of Management Learning & Education. The survey found that 56 percent of graduate business students -- most of whom are pursuing M.B.A.'s -- had cheated, compared with 47 percent of graduate students in nonbusiness programs.

Things that drive econ professors batty

From ElectEcon:

Did the High Price Reduce the Demand for Oil?

We struggle, year in and year out, to teach our students the difference between a change in demand versus a change in the quantity demanded, and we are undercut at every turn by people who say things like the following:
[I]t is becoming clear that the laws of economics still apply to the world oil market. High prices should reduce demand and encourage new investment in supply capacity, and we can see that happening.
The above quote is from Steve Polos, writing about oil markets.

High prices did NOT cause a reduction in demand, though. What happened was that time passed. The short-run demand curve for oil is steeper than the long-run demand curve. It is now and it was a year ago. All that has happened on the demand side of the market is that we are now seeing those longer-run effects, namely a much larger reduction in the quantity demanded in response to higher prices. the short-run demand curve has shifted, but that is in response to the passage of time.

The rest of Steve's piece is interesting and good analysis about other influences on both supply and demand; too bad it confuses a change in demand with a change in the quantity demanded

Tuesday, September 19, 2006

Milton Friedman on licensure

I have posted a couple of items concerning the societal cost of supply restrictions, namely that restricting entry raises wages and prices. In response, several readers left comments “explaining” how restrictions are needed to protect consumers. This passage from Milton and Rose Friedman’s Free to Choose nicely illustrates how common and how dubious this justification is:

Licensure is widely used to restrict entry, particularly for occupations like medicine that have many individual practitioners dealing with a large number of individual customers. As in medicine, the boards that administer the licensure provisions are composed primarily of members of the occupation licensed – whether they be dentists, lawyers, cosmetologists, airline pilots, plumbers, or morticians. There is no occupation so remote that an attempt has not been made to restrict its practice by licensure. According to the chairman of the federal Trade Commission: “At a recent session of one state legislature, occupational groups advanced bills to license themselves as auctioneers, well-diggers, home improvement contractors, pet groomers, electrologists, sex therapists, data processors, appraisers, and TV repairers. Hawaii licenses tattoo artists. New Hampshire licenses lightning-rod salesman.” The justification offered is always the same: to protect the consumer. However, the reason is demonstrated by observing who lobbies at the state legislature for the imposition or strengthening of licensure. The lobbyists are invariably representatives of the occupation in question rather than of the customers. True enough, plumbers presumably know better than anyone else what their customers need to be protected against. However, it is hard to regard altruistic concern for their customers as the primary motive behind their determined efforts to get legal power to decide who may be a plumber.

Monday, September 18, 2006

Wheaton on U.S. Housing Bubble

Professor William Wheaton weighs in on a popular subject - the existence of a housing bubble in the U.S. - in the following National Public Radio interview: In Real Estate, Mind over Market Momentum?

Professor Wheaton is a well-known expert on urban economics, the author of Urban Economics and Real Estate Markets, and co-founder of Torto Wheaton Research, an affiliate of CB/Richard Ellis.

Friday, September 15, 2006

Economic vs. accounting profit

Suppose that you are currently job hunting. Being a kind chap, your friend offers to give you his sock monkey business. He tells you that each month the business earns $3,000 in sales and costs $3,000 in wages for one worker. Suspicious, you ask your friend, “Why would I want to have a business that earns no profits?” Your friend says, “Look, you can dismiss the worker and make the sock monkeys yourself. Then, your profits will be $3,000 because you won’t have to pay any wages.”

Do you take the offer? If you do, you will earn $3,000 in what is called accounting profit. Your friend thinks that he’s helping you out. But your friend, by using accounting profit as a guide, is ignoring any salary you could earn working for someone else. Economic profit, on the other hand, does factor in the foregone salary as a cost. (The foregone salary is an example of opportunity cost, a fundamental concept in economics.) Suppose you could earn a salary of $4,000. Because the economic profit, $3,000 - $4,000 = -$1,000, is less than 0, you shouldn’t make sock monkeys. You should work for someone else.

Your friend may have your best interests at heart but you shouldn’t trust his financial advice. Would you heed financial advice from a newspaper that makes the same mistake?

Have cash to spare? Invest in a coffeeshop
The Straits Times
By Fiona Chan Sep 10, 2006

IF YOU are among the lucky ones to have made a small fortune selling your home in a collective sale, you may be wondering what to do with your newfound wealth.

Instead of taking the conventional route and reinvesting the money in another new residential property or two, you may do well to consider the unusual alternative of putting your money in a coffeeshop instead…

Homes generally fetch rental yields of 3 per cent to 4 per cent, but some coffeeshops can boast yields of as much as 14 per cent…

Many coffeeshop owners also manage the drink stalls themselves, thus adding to their income as these stalls usually have the highest profit margins. (my emphasis)
Maybe we shouldn’t be too hard on journalists (on second thought, they deserve it). Although the above example is straightforward, economists sometimes disagree on the proper application of opportunity cost.

Wednesday, September 13, 2006

Singapore escort agencies love IMF

Everyone knows how economists like to party.

Singapore escort agencies love IMF

Singapore (dpa) - Escort agencies were on a recruitment drive Tuesday to provide companionship for International Monetary Fund (IMF) and World Bank (WB) delegates in Singapore for the week-long annual meeting.

Advertisements have sprung up in Singapore newspapers seeking women or "young, outgoing girls." The ads are also on the Internet.

Sought after are applicants from Singapore and other Asian women who are in their 20s, tall, "athletic" and "confident."

A check by The Straits Times found one agency looking for as many as 10 escorts, while most of the others sought five...

Agency managers told the newspaper that escorts are not obliged to offer sexual services, but what happens between women and their clients is a private matter. Prostitution is not illegal in Singapore.

The anticipated demand for escorts is expected to attract women from neighbouring countries who usually hang out at nightspots and pubs.

Tuesday, September 12, 2006

Optometrists behaving badly

Time to stop picking on attorneys and their rent-seeking ways. Let's pick on optometrists instead.

From Division of Labor:

The other day I headed off to LensVisionDOC to get a new pair of eyeglasses being sure to take along my last prescription. I'm having no trouble with my eyesight; I just need new glasses since I stepped on this pair a couple months ago and one of the lenses keeps popping out.

I get there, pick out a nice new set of frames, sit down, wait, wait, wait, and finally someone comes by to do the transaction. But nooooooo!!!! My presciption is more than two years old and has "expired." They can't do it they say. I say, "My eyes are fine with this prescription." They say it "doesn't matter--it's the law" Of course, they have an optician right there on sight site who can do an eye exam. I left. GRRR. Libertarian blood pressure rising. Take...deep...breath.

Ok here's the question for all you students of political economy. Which of the following two statements is most accurate.

1. It is important for people to get regular eye exams and therefore prescriptions should expire after a time. Without this requirement, people would wear prescriptions too long and would jeopardize public safety and their own health.

2. The Opticians lobby Optometrists lobby wants more business for its clients and knows that requiring current prescriptions will increase the incomes of opticians.

If you think (1) is most accurate, can you tell me why eye exams aren't mandatory for all people every two years and why it is not against the law to wear eyeglasses for more than two years? If you think (2) give yourself an A in my class.

Sunday, September 10, 2006

IMF and World Bank rebuke Singapore

The Singapore government has said that it will shoot violent protestors. Let’s hope that this is an empty threat and that, for everyone’s sake, the authorities practice proper restraint.

IMF and World Bank rebuke Singapore
Financial Times
By John Burton in Singapore and Shawn Donnan in Jakarta
Published: September 8 2006

The International Monetary Fund and World Bank on Friday issued an unprecedented rebuke to Singapore over a ban on accredited activists invited to attend the annual meetings of the two financial institutions next week.

The IMF/World Bank suggested that Singapore had violated the terms of its agreement to host the event by blocking the entry of 19 civil society representatives, who allegedly posed a security threat.

"Singapore had promised to faciliate the entry of accredited representatives under the memorandum of understanding with us," a World Bank official said. The IMF/World Bank was only informed this week of Singapore's plans.
Article continued:

The crackdown is part of tough security measures that Singapore will implement during the September 11-20 meetings. The government will also ban all outdoor demonstrations and has warned it will shoot at violent protesters, citing the threat of terrorist attacks.

The incident represents a setback to the IMF/World Bank, which has sought to improve relations with non-governmental organisations that have accused them of conducting policies that have ignored the plight of the world's poor. A record 500 NGO representatives are accredited to attend this year's meeting...

Some NGOs alleged that the IMF/World Bank, which holds its annual meetings outside Washington every three years, had selected Singapore as the venue for this year's meeting because of its authoritarian reputation. Previous IMF/World Bank meetings have been marred by violent protests...

Among those banned by Singapore were representatives from the UK-based World Development Movement, Thailand's Focus on the Global South, the Freedom from Debt Coalition in the Philippines and the Forum on Indonesian Development (Infid).

The IMF/World Bank said these "individuals have been cleared to attend the annual meetings by their respective governments and we have accredited them according to our standard procedure."

"We strongly urge the Singapore government to act swiftly and reverse their decision on entry and access to the meetings for these representatives," the IMF/World Bank said in a joint statement…

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Saturday, September 09, 2006

Doing business: Singapore is No 1

From New Economist:
Singapore overtook New Zealand as the most business-friendly economy in the world in 2006, while the United States held steady in third place, according to the World Bank's Doing Business 2007 report - published today.
a singapore economist: I added a table of Singapore's ranks from the study.

New Economist post continued:

The dominance of the Anglo-Saxon and Nordic countries continues (see my post on last year's report). Other economies in the top ten for ease of doing business were: (4) Canada, (5) Hong Kong, (6) the United Kingdom, (7) Denmark, (8) Australia, (9) Norway, (10) Ireland.

The top 10 reformers were, in order, Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana and Tanzania. In Africa, a more business-friendly approach has seen the region move up from last place to the middle of the pack among world regions in carrying out changes that make it easier to start and run a business.

The report praised China's acceleration of reforms, which saw its ranking improve from 108th to 93rd:
Watch out, rest of the world: China is a top-10 reformer. The government sped business entry, increased investor protections and reduced red tape in trading across borders. China also established a credit information registry for consumer loans. Now 340 million citizens have credit histories.
Although reforms improved India's ranking over last year, "it still ranks relatively low at 134 and lies 41 places after China, which is reforming at a faster pace than India."

Among Europe's biggest economies, Germany ranked 21st, France 35th and Italy 82nd, down from 69th in the previous report. Meanwhile, Venezuela plunged to 164th from 144th.

Why does this matter? As the report notes:

Publishing comparative data on the ease of doing business inspires governments to reform. Since its start in October 2003, the Doing Business project has inspired or informed 48 reforms around the world. Mozambique is reforming several aspects of its business environment, with the goal of reaching the top rank on the ease of doing business in southern Africa. Burkina Faso, Mali and Niger are competing for the top rank in West Africa. Georgia has targeted the top 25 list and uses Doing Business indicators as benchmarks of its progress. Mauritius and Saudi Arabia have targeted the top 10.

Comparisons among states or cities within a country are even stronger drivers of reform. Recent studies across 13 cities in Brazil and 12 in Mexico have created fierce competition to build the best business environment. The reason is simple: with identical federal regulations, mayors have difficulty explaining why it takes longer or costs more to start a business or register property in their city. There are no excuses.

You can download a 12 page overview (PDF, 1.8Mb), press notice, rankings, country reports and details of the methodology used from the extensive webite:

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Friday, September 08, 2006

Thanks, Blogger

My blog was locked because of some spam-bot. Blogger was kind enough to send me an email:

This system has detected that your blog has characteristics that resemble spam. Since you're an actual person reading this, your blog is probably not a spam blog. Automated spam detection is inherently fuzzy, and we sincerly (sic) apologize for this erroneous result.

You won't be able to publish posts to your blog until we review your site and verify that it is not a spam blog.
This next part was reassuring:
We'll take a look at your blog and unlock it in less than one business day.
Well, it actually took 3 business days. Thanks, Blogger.

Tuesday, September 05, 2006

Free Wi-Fi at Suntec City

Free Wi-Fi at shopping malls around Suntec City
Channel NewsAsia

Singaporeans will be able to get free Wi-Fi internet at shopping malls around Suntec City this month.

The InfoComm Development Authority has set up the service to coincide with the IMF-World Bank meetings…

The IDA is confident the service is stable and Singaporeans will be able to use it during the busy IMF-World Bank meetings…

The IDA says it has doubled the capacity of the network to handle the high amount of users expected during the IMF-World Bank meetings.

But with most networks, the high amount of users can slow the Internet speeds.

The free service finishes at the end of September…

Wi-Fi access at Suntec City is an example of the tragedy of the commons. The tragedy occurs when a common-property resource is overused. For example, a lake is overfished if it is accessible to all. What does it mean to overfish a lake? In economics, to put it simply, it means that there are fishermen who fish the lake even though from a societal cost-benefit analysis they shouldn’t. The problem arises because fishermen, like most of us, only care about themselves; they decide to fish as long as the benefit of fishing, say the revenue earned from selling the fish, is greater than the private cost of fishing, say the cost of driving to the lake. But when a fisherman decides to fish he also imposes a cost on others by reducing the number of fish they can catch. This is the social cost of the decision to fish. From a societal standpoint it would be best if each fisherman decides to fish only if his benefit is greater than the sum of the private cost and social cost of his action. Since fishermen don’t count the social cost in their decision, there are too many fishing the lake.

The tragedy is solved if there is a single owner of the resource. In trying to maximize profits from the lake, the owner will choose an entry fee to the lake that takes into account all costs. The outcome will be fewer fishermen and fewer fish taken from the lake.

In the case of Wi-Fi access at Suntec City, the Wi-Fi network is the common property. Each potential network user will only consider his or her private cost and not the cost imposed on others, namely, slower download speeds for everyone. Since access to the Wi-Fi is free, there will be too many users and the download speed will be slower than if the Wi-Fi network were privately owned and managed.

Monday, September 04, 2006

Some cool graphs: Starbucks vs. McDonald's

The number of Starbucks stores worldwide, with three new stores opening daily.

Here is a breakdown of the number of Starbucks per country.

Starbucks still has a long way to go before obtaining McDonald's ubiquity.

Via Marginal Revolution

Friday, September 01, 2006

Does Abortion REALLY Lead to Reductions in Violent Crime?

In 1973, the United States Supreme Court ruled in the case Roe vs. Wade that a woman has a constitutional right to an abortion during the first six months of pregnancy. From MSN Encarta:

The Roe decision aroused extreme reactions in the public. The decision was strongly endorsed by many women’s rights groups that had long sought to guarantee a woman’s right to choose an abortion. However, the decision was fiercely opposed by others, many of whom maintained that life begins at conception…

Since the Roe v. Wade decision, abortion has become one of the most divisive political issues in the United States…
Naturally, when economists Steve Levitt and John Donohue supposedly found evidence that a drop in the crime rate was linked to the decriminalization of abortion, the research was hotly debated by both economists and non-economists alike.

From EclectEcon:

Most of us by now are familiar with the hypothesis put forward in Freakonomics by Steve Levitt and Stephen Dubner (summarizing earlier research by Levitt et al.) that following the decision in Roe v. Wade, violent crime rates declined.

Fewer of us know that there was a coding error in the original work that cast some doubt on the original results. Levitt redid the study and found even stronger results, but those are now being questioned. One among those who have questioned Levitt's most recent results is, guess who, John Lott. Here are excerpts from a recent news story about his results.

Freakonomics, co-authored by Stephen Dubner and published last year, says legalized abortion led to a large drop in murder and other violent crime in the late 1980s and early '90s, and continues to reduce crime.

The book suggests that if the aborted fetuses had instead been born, they would have become adults more likely to commit crimes because they were unwanted by their mothers.

Article continued:

... But Lott says the Levitt study did not fully consider the increase of children born out of wedlock. His theory is that with the option of abortion, women became more likely to have premarital sex, but then had their babies and raised them as single parents.

Children born out of wedlock have had smaller investments in "human capital" by their parents and are more likely to get into trouble when they grow older, Lott says.

... Before legalized abortion, more than 70 percent of children born out of wedlock ended up in families with a father, but the fraction fell to 44 percent in 1984, according to the paper.

In an interview, Lott acknowledged that legalization of abortion in the '70s did have a "slight impact" on reducing crime — but not when the effect of unwed mothers is included in the analysis. Levitt, on the other hand, estimated abortion will account for declines of 1 percent a year in crime over the next two decades.
My own priors have been revised -- they're pretty flat now.
Side note: Lott is suing Levitt for defamation for a passage in Freakonomics about Lott's research. For all the gory details click here.

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