Meeting on Thursday Oct 27 5pm @ Bombs

The Econ Club will be meeting this Thursday 5pm Oct 27 at Bombs Away Cafe. Our guest this week will be Professor Todd Pugatch, the department's newest faculty. Stop by and share drinks and food with your fellow econ majors while we slowly try to figure out the future of the club!

An Econ Club Meeting

Tomorrow, April 6th, the Econ club will be meeting with Professor Dan Stone at McMenamins at 5:45pm, after Behavioral Econ class. This blog post makes it official!

Tutors! Tutors!

Hey just in case you come to this website for actual news instead of blatherings, I'm proud to announce that the Department of Economics will still have regular tutoring during Winter 2011!

Tutors will be available from 11am-4:30pm at the Economics Undergraduate Lab on the third floor of Ballard Extension Hall. We're at the north end of the long hallway, and we can help you with ECON 201 and 202, principles of microeconomics and macroeconomics. We also have computers at the lab if you need help with blackboard or other internet material.

Comic books and misplaced incentives

I've started reading a new comic book called Chew, mostly because the main character is Asian, and how often does that happen? Chew is about detective Tony Chu, a cibopath. When he eats something, animal, vegetable, or mineral, he gets visions of the dead meal's life. This becomes useful when he's recruited by the FDA to be a lead investigator. In the world of Chew, the FDA is the largest and most powerful law enforcement agency in America. After avian bird flu turned out to be a dangerous plague killing millions of Americans, the FDA declared a prohibition on chicken, and became a tyrannical secret police force.

Though of course this comic book is a humorous exaggeration of real life, it does touch upon a weird problem government agencies have. The FDA both advises food and drug laws and enforces those laws passed by our legislatures. This gives the FDA incentive to push for laws that increase enforcement levels and argue against laws that require less enforcement. The FDA wants to survive, so obviously it may have incentive to tell a story more grim than may be true.

If this is sounding a bit like mad conspiracy talk, I'll try to respond with that I don't think the amount this conflict of interest causes poor governance is necessarily high. I have no proof of that. I do think though that most economically-educated people would agree that having an agency both in charge of advising policy and enforcing policy creates an unwanted incentive for the agency to overpromote enforcement.

Poor Economics at OSU's Library

I don't buy text books anymore. Whenever I think about buying a $300 text book I won't ever read except when it's eight hours before an exam, I imagine instead of buying a mountain of $1 Jr. Bacon Cheesburgers, a much better investment if you ask me.

So I'm forced to use course reserves at Valley library. It's normally a good system except that its late charges are horribly underpriced. A buck an hour? That's ridiculous! Find me this prat whose been holding on to "Public and Private Families" for the last four hours and I will pay him oodles of cash to have this book now so I can study and go to sleep at a reasonable hour.

Valley Library needs to realize that this price is resulting in market inefficiency. Certainly the damage of this jerk holding onto the book beyond the due date is causing me more than a dollar's worth of damage. I wonder how successful a floating overdue fee would work out. I may use this excess waiting time to draft just that kind of model.

Credible Threats and Murdering Children

While looking at my loan repayment plan today, I started thinking about the fairy tale of the Pied Piper.

For anyone who isn't familiar with the story, back once upon a time there was a town infested with rats. The townpeople hired an expert rat-catcher to lure the vermin out of town with his magic flute. The rat-catcher did his job, but when it came time for the town to pay him, they reneged on their payment. To retaliate, the Pied Piper came back, and used his flute to lure the children of the town away and into a cave, and one can only assume he ate them all.

The moral of the story is if you don't pay the man, he'll come and take your babies from you. The fault is almost always placed on the greedy, cheating villagers and rarely on the child-killing psychopath, but my inner economists sometimes wants to side with the town.

First, let's take this incident in isolation. Granted, defaulting on promised payments can have deleterious effects on long term growth (just ask any country that's had problems repaying loans), the town could have assumed that it would be a long time before they would have another rat problem, long enough that their bad credit history with rat-catchers would have been buried with age. That's not so hard to believe, as credit agencies back in once upon a time were probably rubbish at bookkeeping, and professionals would have been starved for work anyway.

Second, no one could have predicted that the duped rat-catcher would make good on his threats. It doesn't make rational, economic sense! In game theory we learn to analyze if threats are credible. In this case, the Piper threatens to kill the town's children if he isn't paid, and that's a textbook example of a non-credible threat. If the town doesn't pay, then the Piper is left with two options: kill the kids or don't. Neither of those options will get him his money back, so at that point he would have no reason to kill the kids. Really if he were a better hostile negotiator, he would have threaten to just kidnap the kids and hold them ransom. That is a much more credible threat, and would probably have gotten him paid in the first place.

Instead the Pied Piper makes an non-credible threat, and the town rightfully called his bluff. I fully support their decision; it was just unfortunate that the Pied Piper turned out to be an irrational, child-murdering agent. Economically, the town's logic was sound, but I'll be repaying my student loans in case my creditors turn out to be as irrationally homicidal as the Pied Piper.

Look at me, I'm reading The Economist! How reading The Economist is like drinking Indonesian cat poop coffee.

I only read three publications regularly: The Daily Barometer for its raunchy forums section, The Jakarta Post for news from Old Country, and The Economist because, as one Vanity Fair writer put it, it's "like that exotic coffee that comes from beans that have been eaten and shat out undigested by an Indonesian civet cat."

The Economist has an undeniable snob appeal, and I admit that's probably at least 50% of the reason I subscribe. One immediate indicator is its price, which has been consistently more expansive than Newsweek or Times, even after both American magazines had to update their prices due to reduced circulation. Another plus for The Economist is that its character is ostensibly that of a worldly, cynical quantitative social scientist. The magazine takes a center-right position, advocating economic liberalism, but also sensible government intervention where appropriate. These folks aren't your typical gun totting teabaggers, but you won't see them at a WTO protest either.

Lastly, The Economist insists upon itself with its cheeky petulance. Though obviously a magazine, it demands to be called a newspaper. Bylines are dropped, opting for an idea of a single, unified voice. The humor used is like an inside joke between readers and the writer. It's that kind of subtle, sarcastic wit that makes you smile smugly and go, "Heh." I bet you were beaten up a lot on the playground, too, nerd.

But while the smug appeal of The Economist might justify a slight premium, its content also excuses its price. My favorite sections of The Economist are actually its smaller articles, the ones that focus on events too local to make headlines. One article was about a woman in Washington who started a grassroots campaign to stop eminent domain, but was obstructed by bureaucratic regulations of political activism. The Economist writers often look at these minute events and interpret them from its consistent position of economism. The Economist is like that kid in your class who insists on talking about hair products from the perspective of microeconomics. You'll either hate it, or spend $120 on a yearly subscription.