Re: Advise to Journalists

[Chris Rasch]

Hi,

Some concepts I think that it would be useful for reporters to know:

"broken windows" fallacy.  
Wars don't create jobs on net--war-related jobs supplants jobs that 
would've been created by providing non-war related goods/services.

"seen vs. unseen"
How FDA regulations actually harm health by preventing drugs/products 
that would otherwise be developed but aren't because of the costs 
involved.  The asymetric incentives faced by regulators -- if they allow 
a drug that causes "babies with flippers", they face lot's of political 
flack; whereas, if they approve a drug that saves millions of lives, 
they don't participate in any of the upside.  Therefore, their incentive 
is to be excessively conservative.  In addition, the people harmed by 
FDA regulation may never even be aware that they were harmed so no 
consituency for political reform doesn't develop.

"rational ignorance/irrationality" -- why it doesn't pay voters to be 
informed

"unintended consequences/secondary effects"

-- Child labor laws in developing countries doom children to 
prostitution, starvation.
-- Minimum wage laws originated in the South to keep newly freed blacks 
from competing with whites--why should we expect them to have a 
different effect now?
-- ADA law makes it more difficult for handicapped to be hired, because 
it's easier to refuse someone a job in the first place, than risk 
getting sued if you fire them.
-- Rent control laws doom poor to expensive/crowded housing by 
destroying builder's incentive to create new housing.
-- Drug laws resulted in increased overdose death due to higher potency 
drugs, non-uniform doses, and inability of users to sue bad drug makers.
-- Anti-immigration laws result in sweatshops because illegals can't get 
other kinds of jobs due to fear of legal persecution.
-- "conservation of risk" -- Airbags didn't decrease fatalities as much 
as was expected because driver's took greater risks in cars in airbags 
than in cars without.
-- Banning alar and other pesticides may result in more deaths as fresh 
fruits and vegetables cost more without them, and therefore people will 
eat fewer.  

Chris

Alex Tabarrok wrote:

I will be giving a 15-20 minute talk to a bunch of journalists and 
proto-journalists ( most of them are editors of student university 
newspapers) about what economics has to offer journalism.  I am 
interested in the suggestions of list members as to what the most 
important lessons economics has to teach.  I have a number of thoughts 
myself, of course, including

comparative advantage (veneer of competition hides much cooperation)
public choice (qui bono? look for the organized exploiting the 
unorganized)
tradeoffs/all good are economic goods (e.g. safety)
amazing economic/business stories that are not told (I have in mind 
here "I Pencil"/"How Paris is Fed" stories about the great 
complexities of modern markets that people take for granted.

Other ideas?  Thoughts?  Specific examples?

Alex

Re: Incentives

[Chris Rasch]

I enjoyed Alfie Kohn's book "Punished by Rewards", which is a 
popularization of much of this research. 

http://www.amazon.com/exec/obidos/tg/detail/-/0618001816/qid=1037396034/sr=8-1/ref=sr_8_1/104-2976940-3732712?v=glance&s=books&n=507846

I haven't read them yet, but Deci and Dweck seem to be a couple of the 
principal researches in the effects of external rewards on intrinsic 
motivation.

Why We Do What We Do: Understanding Self-Motivation
Edward L. Deci, Richard Flaste
http://www.amazon.com/exec/obidos/tg/detail/-/0140255265/ref=pd_bxgy_text_1/104-2976940-3732712?v=glance&s=books

Self-theories: Their Role in Motivation, Personality, and Development 
(Essays in Social Psychology)
Carol S. Dweck
http://www.amazon.com/exec/obidos/tg/detail/-/1841690244/qid=/sr=/ref=cm_lm_asin/104-2976940-3732712?v=glance

Chris


john hull wrote:

Psychologists have conducted experiments where the
subjects are (randomly) split into two categories. 
They both perform the same task, perhaps a memory
drill, and then one group gets paid money for
participating and the other doesn't.  After the
"experiment," i.e. the task that the subjects were
told was the experiment, the subjects are interviewed.
One of the questions asks how much they enjoyed the
experiment.  Subjects who were paid money enjoy the
task significantly less than those who aren't.

The theory behind this is that when a person does the
task, their mind needs a reason to avoid cognitive
dissonance.  When they are paid, the money acts as the
reason; when they aren't paid, enjoying the task acts
as the reason.  To put another way, one's mind imposes
enjoyment ex post, so that it doesn't have to cope
with the disconnect of doing something for no good
reason and disliking doing it.

Hazing rituals are supposed to perform a similar
function.  If one puts up with the hazing, it must be
for a good reason.  Therefore, the group that does the
hazing, the frat, military academy, or whatever, is
seen in a better light to avoid the cognitive
dissonance.

Don't judge this theory based on my explanation of it.
As I've noted before, I'm a clumsy writer at best. 
But that is the theory as I recall it.

Whether grades fit the theory, I haven't a clue.

Hope that helps,

-jsh


--- [EMAIL PROTECTED] wrote:
 

The following appeared in an article on grade
inflation in the Chronicle of 
Higher Education:

 "Grades motivate (a fallacy
according to the article). 

 With the exception of orthodox
behaviorists,
   psychologists have come to
realize that people can 
exhibit
   qualitatively different kinds of
motivation: intrinsic, 
in which the task
   itself is seen as valuable, and
extrinsic, in which the 
task is just a
   means to the end of gaining a
reward or escaping a 
punishment.
   The two are not only distinct
but often inversely 
related. Scores of
   studies have demonstrated, for
example, that the more 
people are
   rewarded, the more they come to
lose interest in whatever 
had to
   be done in order to get the
reward. (That conclusion is 
essentially
   reaffirmed by the latest major
meta-analysis on the 
topic: a review
   of 128 studies, published in
1999 by Edward L. Deci, 
Richard
   Koestner, and Richard Ryan.)"

Is anyone on the list familiar with this literature?
It sounds like they are 
saying that incentives don't matter.

Cyril Morong

   



__
Do you Yahoo!?
Yahoo! Web Hosting - Let the expert host your site
http://webhosting.yahoo.com


 

Re: Nobels

[Chris Rasch]

I'd be curious to know where the researchers were when they actually did 
the work for which they won the prize.  For example, Smith was at Purdue 
when he began doing experiments in experimental economics.

http://reason.com/hod/fe.ml.smith.shtml

>
>  
>
>>I think Harsanyi is still at Berkeley. Also, I think Friedman is now at
>>Stanford. - - Bill
>>
>>
>
>The Nobel site lists Harsanyi as having passed on in 2000.  You're right
>about Friedman though -- he's currently at Hoover.  Updated list below.
>
>Eric
>
>Chicago: 5 Coase, Becker, Fogel, Lucas, Heckman  
>
>Stanford: 4Scholes, Spence, Arrow, Friedman
> 
>Berkeley: 3Debreu, McFadden, Akerlof 
> 
>MIT: 3 Samuelson, Modigliani, Solow
> 
>George Mason: 2Buchanan, Smith
> 
>Princeton: 2Nash, Kahneman
> 
>Cambridge:2Sen, Mirrlees 
> 
>Columbia: 2Mundell, Stiglitz
> 
>Baruch, CUNY: 1Markowitz
> 
>Harvard Business School: 1  Merton   
> 
>Washington, St. Louis: 1 North
> 
>Penn: 1Klein
>  
>
>>
>>
>>
>>
>>
>
>
>
>  
>

Fwd: Cato in Palo Alto

[Chris Rasch]

Hi, 

Thought this may be of interest. 

Also, a reminder that S.F. Bay Area members can sign up for the BA-armchair 
list by sending an e-mail to: 

[EMAIL PROTECTED]

Chris 

--  Forwarded Message  --

Subject: Cato in Palo Alto
Date: Mon, 29 Jul 2002 10:18:00 -0700
From: "Marianne Farag" <[EMAIL PROTECTED]>
To: 

Dear Friends of CSI,

Just want to relay this announcement for a Cato event this Thursday in Palo
 Alto.

Dan Klein
Civil Society Institute
Santa Clara University

>>> "Christine" <[EMAIL PROTECTED]> 07/26/02 14:28 PM >>>

Just a quick reminder about the upcoming seminar luncheon, "Copy Fights: Are
 Intellectual Property Rights Best Protected by Government Mandates or Market
 Solutions?" co-sponsored by the Cato Institute and The Economist on
 Thursday, August 1, from 12:00 p.m. to 2:00 p.m. at the Crowne Plaza Cabaña
 hotel in Palo Alto.  You can view the program and register on-line here:
 

This promises to be a lively and thought-provoking event with opening remarks
 by Rep. Zoe Lofgren (D-Calif.) followed by a debate on intellectual property
 rights featuring James V. DeLong, senior fellow, Project on Technology and
 Innovation at the Competitive Enterprise Institute; Mitch Glazier, senior
 vice president of government relations and legislative counsel at the
 Recording Industry Association of America; Joe Kraus, co-founder of
 DigitalConsumer.org; Gary Shapiro, president and CEO of Consumer Electronics
 Association, and Ronald Wheeler, senior vice president-content protection at
 Fox Entertainment Group.

I hope you'll be able to join us and possibly bring a friend or two along!

For additional information, please feel free to contact Samantha Dooley at
 202-789-5268 or [EMAIL PROTECTED] 

We hope to see you in Palo Alto!

Cheers, Christine
M. Christine Klein
Director of Sponsor Relations
Cato Institute
1000 Massachusetts Avenue, N.W.
Washington, DC 20001
(202) 218-462
fax: (202) 842-3490
[EMAIL PROTECTED]

Copy Fights: Are Intellectual Property Rights Best Protected by Government
 Mandates or Market Solutions? Thursday, August 1, 2002
Crowne Plaza Cabaña
4290 El Camino Real
Palo Alto, California
12:00 p.m. to 2:00 p.m.
11:30 a.m.-12:00 p.m. Registration
12:00-12:05 p.m. Clyde Wayne Crews Jr.-Introduction
Director of Technology Policy, Cato Institute
Coeditor, Copy Fights: The Future of Intellectual Property in the Information
 Age 12:05-12:15 p.m. Rep. Zoe Lofgren (D-Calif.)-Opening Remarks

12:15-1:30 p.m. Policy Debate: Copy Fights
James V. DeLong
Mitch Glazier
Joe Kraus
Gary Shapiro
Ronald C. Wheeler
1:30-2:00 p.m. Reception and Buffet Luncheon

---

David Friedman talk, June 15 in San Francisco

[Chris Rasch]

Note:

Since it's doubtful that S.F. Bay Area specific events are of interest to 
those of you in say, Fairfax, VA I've created a mailing list for Bay Area 
armchairs:

http://groups.yahoo.com/group/ba-armchair

It's intended for both discussion and announcements, though I expect that it 
will mostly be announcements. 

Chris 

Afternoon event:

*** PETER MCWILLIAMS MEMORIAL RALLY - SATURDAY 15 JUNE ***

The Libertarian Party of California Political Prisoner Support
Committee (LPCPPSC) is coordinating a special event in honor of the
passing of Peter McWilliams, who died of an overdose of government
on 15 June 2000. Peter McWilliams wrote Ain't Nobody's Business If
You Do and was an active supporter of the medical marijuana
movement. The Second Annual Peter McWilliams Memorial Rally will be
held on Saturday 15 June 2002 from 1pm-6pm. This simultaneous
statewide drug war rally in San Diego, Los Angeles, and San
Francisco will call attention to the federal government's ongoing
war on medical marijuana patients and the evil of the drug war.

Rally in San Francisco at:

   Burton Federal Building
   Golden Gate Avenue, between Polk and Van Ness

For more information contact:

   Chris Maden
   415-845-8202
   [EMAIL PROTECTED]


Evening event:

* F R E E   E X C H A N G E *

  for Saturday evening, June 15, 2002

   presents

  DR. DAVID D. FRIEDMAN

   on

   "A POSITIVE ACCOUNT OF RIGHTS
   or,
WHAT IS GOVERNMENT ANYWAY?"


What are rights and why do they exist?

   Most answers to that question are based upon either moral
philosophy or law.  This speech offers an explanation that is based
neither on a positive account of rights – nor is it an attempt to
justify them as features of human behavior.   Dr. Friedman argues
that it is based on ideas that grew out of the attempt to answer the
question, What is a government and what distinguishes it from other
institutions?

”David Friedman is currently a Professor of Law at Santa Clara
University in both the Law School and the Business School. During
the Spring semester 2002 he taught a seminar on “Legal Issues of
the 21st Century”as well as an introduction to economics course.
Dr. Friedman’s latest book is "Law’s Order: What Economics Has to
Do with Law and Why It Matters" (published by Princeton University
Press). His previous book was "Hidden Order: The Economics of
Everyday Life" (published by Harper-Collins).Copies are available
from Laissez-Faire books (order thru the ISIL store at

 – click on the Laissez-Faire Books logo).

Dr. Friedman's past academic work includes degrees from: Harvard
University, B.A., 1965 (Chemistry and Physics); University of
Chicago, M.S., 1967 (Physics); PhD., 1971 (Physics).

David has taught at . . . .
The University of Chicago Law School; Cornell Law School; Tulane
University; UCLA Dept of Economics; UC Irvine; Virginia Polytechnic
Institute; University of Pennsylvania School of Public and Urban
Policy; and Columbia University (Research Associate, Physics).

David's book, "Price Theory: An Intermediate Text," is now webbed,
as are some sample chapters of his excellent first book, "The
Machinery of Freedom: A Guide to a Radical Capitalism."

David's current writing project is "Future Imperfect," a book about
technological change in the near future and its consequences. A
partial draft is webbed; comments are welcome.

Dr. Friedman has recently written online drafts of articles on:
contract enforcement, drugs and violence, and economics and
evolutionary psychology, such as  "Why We are Getting Smarter?:
A Conjectural Explanation."

David's children go to Cedarwood Sudbury School, "an odd and
interesting place." If you are in the Bay Area and have kids, you
might want to investigate it.

In addition, David and his wife, Betty, still have time to
participate in Recreational Medievalism, as members of the Society
for Creative Anachronism (SCA).

For FEX's social hour, we are having a Medieval theme.

* * * * * * * * * * * * * * * * * * * *

6:30 p.m. Social/Happy Hour/Potluck*

8:00 Speech

  Admission: $10

  Location:  Opera Plaza Homeowners Rec Room
  601 Van Ness Ave., San Francisco,
  between Turk & Golden Gate,
  Mezzanine Floor (take elevator in
  front of movie theatre)

  # # #

* Sponsored by Jeanie Kennedy with the help of the International
Society for Individual Lib

Fwd: YOU ARE INVITED: "Liberty for Women: Twenty-First Century Feminism" with Wendy McElroy

[Chris Rasch]

Among other things, McElroy is a leading propopent of economic freedom for 
sex workers.  Bay area armchairs may be interested in this lecture:

WENDY McELROY TO DISCUSS LIBERTY FOR WOMEN (San Francisco, Thursday,
May 2, 2002)
http://www.independent.org/tii/forums/020502ipf.html

Individualist feminist author WENDY McELROY (research fellow, The
Independent Institute; columnist, FoxNews.com) will discuss her new
Independent Institute book, LIBERTY FOR WOMEN: Freedom and Feminism
in the Twenty-First Century
(http://www.independent.org/tii/catalog/cat_LFW.html), at an
Independent Policy Forum, co-sponsored by the Commonwealth Club and
Charter 100, at the World Trade Club in San Francisco on Thursday,
May 2.

Ms. McElroy has pioneered the chronicling and defining of
individualist feminism through her numerous books and essays, which
span the history and current issue of women's issues. LIBERTY FOR
WOMEN offers a vision of contemporary feminism that asserts the
rights of consenting adults to their own sexuality, opposes
censorship, and defends every woman's right to self-defense. This new
vision supports unhindered expressions of individual choice in
economic well-being and employment, sex and abortion, the family,
technology, and much more. "Choice" is the key, and every woman's
choices and expressions of self-ownership must be equally and legally
respected, from housewives to CEOs.  In so doing, McElroy will also
argue that every woman's choices and expressions of self-ownership
must be equally and legally protected.

WHO:
  WENDY McELROY* (Research Fellow at The Independent Institute;
columnist, FoxNews.com; editor, LIBERTY FOR WOMEN: Freedom and
Feminism in the Twenty-First Century)

WHEN:
  Thursday, May 2, 2002
  6:00-8:00 p.m.
  Program 6:30 p.m.
  Dinner (optional) 7:30 p.m.

WHERE:
  World Trade Club
  1 Ferry Plaza (off Embarcadero),
  San Francisco, CA
  For a map and directions, see
http://www.mapquest.com/maps/map.adp?country=US&address=1+ferry+plaza&city=sa
n+francisco&state=ca&zipcode=&homesubmit.x=46&homesubmit.y=10

TICKETS: $32 per person (program and dinner). $9 (program without dinner).
To purchase tickets, please contact:
  The Commonwealth Club
  595 Market Street, San Francisco, CA 94105
  Phone: 415-597-6700
  Fax: 415-597-6729
  Email: [EMAIL PROTECTED]


*WENDY McELROY is a Research Fellow at The Independent Institute. Her
other books include Freedom, Feminism and the State; Sexual
Correctness; The Reasonable Woman: A Guide to Intellectual Survival;
Dissenting Electorate: Those Who Refuse to Vote and the Legitimacy of
Their Opposition; Freedom, Feminism, and the State; Queen Silver; and
Liberty 1881-1908: A Comprehensive Index.  Ms. McElroy was Series
Editor for Knowledge Products' popular audio-tape series, The World
of Philosophy, The World's Political Hot Spots, The United States at
War, andThe United States Constitution, and she authored the scripts
for Vindication of the Rights of Woman, The Liberator, Civil
Disobedience, and Discourse on Voluntary Servitude in the Audio
Classics Series. A weekly columnist for FOX News.com, she is a
contributing editor to several periodicals, the author of numerous
articles in various magazines and scholarly journals, and the editor
of the popular feminism site, ifeminists.com.


Acclaim for LIBERTY FOR WOMEN: Freedom and Feminism in the
Twenty-First Century, edited by Wendy McElroy:

"This provocative book powerfully demonstrates that feminism is
neither monolithic nor homogeneous. The interesting and thoughtful
opinions represented here deserve broad dissemination. I hope LIBERTY
FOR WOMEN becomes a must-read in every women's studies program in
America, and for anyone who is interested in issues of equality and
sexual politics."
   -- CHRISTIE HEFNER, Chairman and Chief Executive Officer, Playboy
Enterprises, Inc.

"Mainstream feminism long ago ran into a variety of false trails and
blind alleys . . . . LIBERTY FOR WOMEN offers just the sort of
intellectual barbs so sorely needed to jolt a near corpse back into
life."
   -- ALEXANDER COCKBURN, columnist, The Nation and Los Angeles Times

"LIBERTY FOR WOMEN is likely to provoke both left-wing feminists and
right-wing traditionalists. It is lively and provocative and adds
immensely to the debate on the role of women in contemporary life."
   --  LINDA L. CHAVEZ, President, Center for Equal Opportunity, and
former Director, U.S. Commission on Civil Rights

"There is an unwritten rule among many feminists: Only women on the
political left have the right to interpret the lives of women. This
unique and important, new book breaks that rule and provides an
excellent forum for civil libertarian thinkers. LIBERTY FOR WOMEN is
a matchless book on the most important issues facing women now and in
the future."
   --  CHRISTINA HOFF SOMMERS, Resident Scholar, American Enterprise
Institute; author, Who Stole Feminism? How Women Have Betrayed Women

"LIB

Bankruptcy?

[Chris Rasch]

Hi, 

Can anyone recommend some papers/books that cover the operational performance 
of companies following emergence from bankruptcy?

Thanks!

Chris 

Fwd: Announcing IP newsletter

[Chris Rasch]

Thought that some on this list might be interested in this:


--  Forwarded Message  --

Subject: Announcing IP newsletter
Date: Tue, 09 Apr 2002 13:20:26 -0400
From: James Bessen <[EMAIL PROTECTED]>
To: IP Newsletter <[EMAIL PROTECTED]>

You are invited to subscribe to a free newsletter called "Technological
Innovation and Intellectual Property" (TIIP). This new newsletter reports on
recent research in the economics, law, history and sociology of intellectual
property, including Free/Open Source Software. Written primarily by
economists and legal scholars, the newsletter contains brief, easy to
understand summaries of research papers. The newsletter aims to help
researchers and interested non-academics keep abreast of this rapidly
expanding literature.

If you would like to subscribe, please simply reply to this email or send an
email to [EMAIL PROTECTED] with "Subscribe" as the subject. You may
unsubscribe at any time.

If you would like to find out more about the newsletter, please visit
http://www.researchoninnovation.org/tiip/. The web site also includes
information about contributing to the newsletter.

Please feel free to forward this email to interested parties.

Thank you.

The TIIP Editorial Board
   James Bessen (Research on Innovation)
   Robert Hunt (Federal Reserve Bank of Philadelphia)
   Kristina Lybecker (Drexel University, Economics)
   Cecil Quillen, Jr., Advisor (Cornerstone Research, Law)
   Arti Rai (University of Pennsylvania, Law)
   Rosemarie Ziedonis (University of Pennsylvania, Wharton)

email: [EMAIL PROTECTED]
web: http://www.researchoninnovation.org/tiip/

---

THE FDA: A Healthy Examination -- Live Presentation (3/7/02)

[Chris Rasch]

This looks quite interesting.  I'm planning to go.  Any armchair denizens 
care to join me?

THE FDA: A Healthy Examination -- Live Presentation (3/7/02)

By federal law, all new pharmaceuticals and medical devices are 
banned until specifically permitted by the U.S. Food and Drug 
Administration (FDA).  What have been the consequences of this 
mandate? Do pharmaceuticals and medical devices need special 
controls? Or could health and safety be better achieved through 
non-bureaucratic, market-based approaches?

The Civil Society Institute, the Center for Science, Technology and 
Society, the Intercollegiate Studies Institute, and the Biotechnology 
Program at Santa Clara University present "The FDA: A Healthy 
Examination," a live presentation devoted to these questions, 
featuring Mary J. Ruwart, Alex Tabarrok and Henry Miller.

SPEAKERS:

   -- MARY J. RUWART, Ph.D. in Biophysics, was an Assistant Professor 
of Surgery at St. Louis University Medical School for two years, and 
a Senior Research Scientist at the leading pharmaceutical firm Upjohn 
Company for 19 years.  She is the author of the book HEALING OUR 
WORLD: The Other Piece of the Puzzle.  The book integrates 
philosophical principles of social organization and well being with 
analysis of health-policy issues.

   -- ALEXANDER TABARROK, Ph.D. in Economics, is Director of Research 
at the Independent Institute in Oakland, CA.  His is the author of 
numerous articles in leading academic economic journals, and the 
editor of several books published by top academic publishers.  He is 
the author of a groundbreaking article on the hidden lesson of 
*off-label* prescription practices (at 
http://www.independent.org/tii/content/pubs/review/tir51_tabarrok.html). 
Tabarrok is co-author of the extensive website on the FDA, 
http://www.FDAReview.org.

   -- HENRY MILLER, M.S., M.D., is a senior fellow at the Hoover 
Institute at Stanford University is a physician, molecular biologist 
and the founding director of the FDA's Office of Biotechnology.  He 
is the author or editor of three books and has written more than 
three hundred articles for scholarly and popular publications.  His 
most recent book is TO AMERICA'S HEALTH: A Proposal to Reform the 
Food and Drug Administration.

WHEN:
        Thursday, March 7, 2002
        7:30 - 9:00 PM

WHERE:
        Bannan Hall, Room 142
        Santa Clara University
        Santa Clara, CA
        For information about directions, parking (free), etc., please 
see http://www.scu.edu/map/parking/directions.cfm

This event is FREE and open to the public.

For more about the Civil Society Institute, see 
http://www.independent.org/tii/lighthouse/LHLink4-9-3.html.

Is that study really necessary?

[Chris Rasch]

From: http://www.nature.com/nsu/010906/010906-3.html

Is that study really necessary?

Economics helps decide if we should put our money where
researchers' mouths are.  3 September 2001

JOHN WHITFIELD

Stuck for a punchy conclusion to a
scientific paper?  Best avoid the mantra
'more research is needed' - a US
epidemiologist has now devised a way to
work out whether, for any given study,
this claim is justified.

Too often, says Carl Phillips, of the
University of Minnesota in Rochester, more
research does little to reduce our
uncertainty about the health effects of a
particular environmental risk or lifestyle
choice1. Witness the stream of
contradictory evidence on, say, whether
alcohol is good, or cholesterol bad, for
you.

It's assumed that repetition will bring confirmation or
refutation. Often it just brings confusion, as we struggle
for criteria to compare competing claims and policy
recommendations. There's also the danger that follow-up
studies are attempts to confirm, rather than test, existing
beliefs.

Rather than just repeat ourselves, says Phillips, "we need
to ask why we are not really sure of our results". He hopes
that his mathematical technique will help epidemiologists -
on whose evidence vast sums of money and the health of
millions ride - to design their studies better, and to
invest some of their efforts in self-assessment.

Such calculations might also help funding agencies to decide
between the many projects chasing after their cash, points
out Jay Kaufman, an epidemiologist at the University of
North Carolina in Chapel Hill.

"Society has an interest in reigning in unproductive
research," he says. "There's an idea that replication is
good, but that ignores the fact that studies cost money and
time, and the apparent benefit may not be justified."

But this approach could also cramp creativity, warns George
Davey-Smith, a public-health specialist at the University of
Bristol in England: "The results that are interesting aren't
necessarily the ones you set out to look for."

Less is more

'More research is needed', says Phillips, "is really an
economic statement". It's a claim that the benefit of the
new information to policy-makers would outweigh the cost of
the study.

For a follow-up to be worthwhile, it must be potentially
powerful enough to alter your initial decision. Phillips'
analysis aims to sniff out sources of systematic error not
addressed by statistical tests, such as measurement bias or
inadequate controls, and estimate their effects.

Some knowledge of systematic errors, however sketchy, allows
you to simulate the probability of each potential outcome of
a follow-up study, says Phillips. You can judge how likely
it is that pursuing a result - suggesting a link between a
chemical factory and a disease, for example - will confirm
or deny your suspicions. Confronting error also lets you
estimate how likely it is that a study will lead you to the
wrong conclusion.

To decide whether to go ahead, Phillips suggests you compare
the cost, and power, of the new study with the policy
consequences of each result - the cost of treating the
disease if you decide to do nothing versus the cost of
closing or renovating the factory. As either of these is
expensive, it's important to get the research right.

"We do these calculations in an informal way all the time,"
says Kaufman. "But an off-the-cuff guess might be quite
misleading."  Putting the question in formal terms is "hard
to argue with", he concludes.

Phillips hasn't tested his methods on real data yet. "It has
to be done by the researchers who did the original study,"
he says, as they are the only ones with intimate enough
knowledge of their results. He plans to collaborate with
strong-nerved epidemiologists, prepared to see their future
plans given the thumbs-down, soon.



References

  1.Phillips, C. V..The economics of 'more research is
  needed'. International Journal of Epidemiology, 30, 771 -
  776, (2001).


--
Web: http://www.openknowledge.org/

Julian Simon and the price of lumber

[Chris Rasch]

Hi,

Most of you probably know about the bet between Julian Simon and Paul
Ehrlich.  (In brief, Simon bet Ehrlich that the price of any five
commodity metals, of Ehrlich's choosing, would fall.  Ehrlich bet they
would rise.  The price on all five actually fell,  and Ehrlich lost the
bet.  For more details, see
http://www.overpopulation.com/faq/people/julian_simon.html.)

I've always admired Simon's willingness to back his ideas with real
money--here's an instance where it didn't work out as well as the
Ehrlich wager:

In 1996, Simon made a similar wager with David South (Professor, School
of Forestry, Auburn University) that the price of pine sawtimber would
decrease (after adjustment for the consumer price index) by May 1,
2001.  Simon withdrew from the bet in 1997, arguing that the price of
timber harvesting regulations in the Northwest would artificially
driving up the price of timber.  Simon paid $1000, the amount he would
have paid had he lost the bet.  See
http://www.forestry.auburn.edu/sfnmc/web/bet.html
for details.



Chris

--
Web: http://www.openknowledge.org/

Re: Does the stock market do better under Democratic orRepublicanpresidents?

[Chris Rasch]

Hi,

Yes, I agree that a decision/idea futures market would be a great idea for
resolving such issues.

Incidentally, any news regarding the implementation of a real money,
full-fledged idea futures market?  I heard rumors that someone was actively
working on an real-money exchange in England.

Chris

Robin Hanson wrote:

> or a coincidence is to get market estimates of stock and bond prices
> *conditional* on the party of the next president. (The mechanics of doing
> this are described at http://hanson.gmu.edu/decisionmarkets.pdf)  I predict
> that speculators would estimate a *much* smaller than 9pt difference,
> if any, between Republican vs. Democrat stock returns.
>
> Robin Hanson  [EMAIL PROTECTED]  http://hanson.gmu.edu
> Asst. Prof. Economics, George Mason University
> MSN 1D3, Carow Hall, Fairfax VA 22030-
> 703-993-2326  FAX: 703-993-2323

--
Web: http://www.openknowledge.org/

Does the stock market do better under Democratic or Republicanpresidents?

[Chris Rasch]

Found this at http://www.anderson.ucla.edu/alumni/assets/news.html.

Finance Professors Pedro Santa-Clara and Rossen Valkanov Find Higher
Equity Premium Under Democratic Presidents: Researchers conduct
analysis of the connection between presidential elections and the
stock market and find some surprising and significant results.

 The old adage that Republican presidents
 are good for business may be little more
 than a myth, according to research
 recently completed by Anderson finance
 professors Pedro Santa-Clara and Rossen
 Valkanov.

  A close examination by the two researchers of
  the stock market's average performance during
  Republican and Democratic presidencies reveals
  that returns are much higher when a Democrat is
  in office.

  The two researchers arrive at their findings by
  analyzing the returns an investor would receive
  from placing his or her money in the equity
  market rather than T-bills over the period from
  1927 to 1998.

  Under Democratic presidents, the average excess
  return of investments in the stock market over
  the three-month Treasury bill is about 11
  percent. Under Republicans, it is less than two
  percent; a nine percent difference. Examination
  of the risk-free interest rate produces another
  noteworthy result: under Republicans, the real
  T-bill rate is, on average, higher than the
  rate under Democrats by more than three
  percent.

  The difference is even more striking when
  Santa-Clara and Valkanov examine stock
  portfolios formed according to the companies'
  market capitalization. Small cap stocks realize
  an average excess return of 18 percent during
  Democratic presidencies; while under Republican
  ones, the return was -3 percent. The difference
  in returns for large caps was approximately
  seven percent.

  With hindsight, one can argue that those
  results are attributable to differences in the
  business cycle during Republican and Democratic
  presidencies, and a correlation between the
  business cycle and expected stock market
  returns. In fact, it is commonly accepted that
  the president's policies have an effect on the
  economy that, in turn, impacts the stock
  market. To take into account potential
  differences in economic conditions, the two
  researchers control for a vast number of
  macroeconomic variables, such as an indicator
  of recessions, the slope of the yield curve and
  credit spreads of bonds, that help remove the
  effect of business cycle fluctuations.  Their
  surprising results hold: returns under
  Democrats are still, on average, higher.

  Secondly, the researchers examine various
  subsamples to be sure that their results are
  not driven by any particular presidency or
  major event. The market data in the study
  covers the time period of 1927-1998. In order
  to remove the effects of any one particular
  presidency or event, Santa-Clara and Valkanov
  divide the sample into two smaller sub-samples:
  1946-1998 (excluding the Great Depression and
  WWII) and 1960-1998 (modern times). The results
  remain unaffected.

  Can the higher returns under Democrat
  presidents be explained as compensation for the
  potentially higher risk incurred by stock
  market investors? After all, Democrats and
  Republicans usually put into place different
  economic policies. If Democratic policies are
  seen as more risky, or at least make investors
  more uncertain, Santa-Clara and Valkanov
  conjecture, then perhaps that higher risk would
  explain the higher returns they discover.
  However, to the contrary, the two find that
  market volatility, a measure of risk, is
  actually higher under Republican presidents.

  Finally, Santa-Clara and Valkanov explore the
  possibility that the difference in excess
  returns may be localized in the period
  immediately before, during, and after election
  dates.

  In fact, the academic literature in political
  science as well as anecdotal evidence suggests
  that when the economy is strong, the incumbent
  party almost always retains ownership of the
  White House. "If that is the case," said
  Valkanov, "the incumbent would certainly have
  incentive to do everything possible to kick the
  economy into high gear right before the
  election.  We were hoping to observe an
  increase in excess returns right before,
  during, and after the elections, due to the
  manipulation of economic policies."

  A similar difference in excess returns could
  also occur pre- or post-election as investors
  may view the weeks surrounding an election as
  more risky and demand higher returns from their
  investments. "We do not find any evidence of
  statistically significant abnormal returns
  before elections or during any other particular
  part of the presidency. In fact, the average
  excess return appears to build up slowly and
  gradually throughout the term," said
  Santa-Clara.  "These results leave us with a
  puzzle to solve, and 

The Power of Play: Efficiency and Forecast Accuracy in Web Market Games

[Chris Rasch]

Via Joseph Sterlynne on the Extropy list:

NEC Research Institute Technical Report #2000-168.
A brief version appears in Science 291: 987-988, February 9 2001
(Letters).
The Power of Play: Efficiency and Forecast Accuracy in Web Market Games
David M. Pennock
Steve Lawrence
C. Lee Giles
Finn Årup Nielsen1
http://artificialmarkets.com/am/pennock-neci-tr-2000-168/


Abstract

We analyze the efficiency and forecast accuracy of two market games on
the World Wide Web: the Hollywood Stock Exchange (HSX) and the
Foresight Exchange (FX). We quantify the degree of arbitrage available
on HSX, and compare with a real-money market of a similar nature. We
show that prices of HSX movie stocks provide good forecasts of actual
box office returns, and that prices of HSX securities in Oscar, Emmy,
and Grammy award outcomes constitute accurate assessments of the
actual likelihoods that nominees will win. Similar investigations
reveal that FX securities prices serve as reliable indicators of
uncertain future events. We argue that, in certain circumstances,
market simulations can furnish some of the same societal benefits as
real markets, and can serve as acceptable substitute testbeds for
conducting experiments that would otherwise be difficult or
impossible.

Keywords: analysis of artificial markets, World Wide Web market games,
market simulations, forecast accuracy, economic efficiency, arbitrage,
Hollywood Stock Exchange, Foresight Exchange, utility for intangibles


Introduction

The core service of a market is to facilitate the exchange of items
between individuals. The use of prices for these items, denominated in
a common currency (e.g., US dollars), simplifies trading across
multiple markets, alleviating the combinatorial nature of direct
barter. Prices reflect an agreement between buyers and sellers, and
serve as a quantitative measure of the value of the item being
exchanged, as compared to other marketable items.

When markets attract broad participation, prices can encode the sum
total of a large amount of disparate and distributed information. The
prices reflect, in a very real sense, the consensus opinion of a
myriad of informed and well-motivated traders. As such, even
nonparticipating observers may stand to benefit from the informational
value of market signals. As an example, the odds in a horse race,
determined solely by market forces at the track, can be viewed as
assessments of the likelihoods that the various horses will
win. Empirical studies verify that odds on horses do indeed match very
closely with their observed frequencies of winning [1,18,19,20,22].

As traditional markets expand onto electronic platforms, and as new
electronic marketplaces emerge, price information will be available
and accessible in quantities previously unimaginable. Nevertheless,
markets will still only cover a miniscule fraction of arenas for which
informed forecasts might be valuable or interesting. Many barriers
exist for the establishment of new markets, including high costs,
government regulation, and the threat of lawsuits. Artificial markets,
on the other hand, suffer from no such difficulties. Web market games,
in particular, often feature moderate operating costs for setup,
maintenance, advertising, searching, and transacting, and benefit from
worldwide audience potential. Permission is not required from
government authorities or regulatory officials. Lawsuits are much less
of a concern. There is little need for carefully crafted disclaimers
or facilities for dispute resolution. Users can remain anonymous, and
record keeping can be somewhat lax. All of these factors have
contributed to a growing prevalence of market games on the web, some
enjoying widespread popularity. Of course, artificial markets cannot
satisfy societal demand for the exchange of items. However, in this
paper we present evidence that some market simulations can function
reasonably well in the dual role as aggregators and disseminators of
information.

Theories of market equilibrium, including the rational expectations
theory of information propagation, usually depend on the assumption
that participants maximize expected utility, where utility is derived
from consumables or monetary equivalents. Indeed, laboratory economics
experiments in which subjects are not ``paid to play'' are often
questioned on the grounds of a lack of true incentives. In a game
without monetary backing, utility is presumably extracted solely from
entertainment value, educational value, bragging rights, and/or other
intangible sources. Does market efficiency simply break down under
these conditions, or can non-monetary rewards actually drive price
coherence, information aggregation, and forecast accuracy? We find
evidence that, in some cases, they can and they do. In Section 3 we
quantify price coherence on the Hollywood Stock Exchange
(HSX). Equivalent portfolios trade at reasonably consistent prices,
and, over time, large inefficiencies disappear, as players presumably
take

ECON: The Tip: A Reward, But for Whom?

[Chris Rasch]

Despite the recent court decisions against Napster, free music file
sharing (and eventually software, images, film, and anything else that
can be digitized) will likely continue to grow, given the difficulty of
controlling de-centralized P2P systems like Gnutella and Freenet.
According to Dolfsma,  gross revenues for U.S. "recordables" in 1996
were about $12.3 billion.  See   ( How Will The Music Industry Weather
the Globalization Storm Wilfred Dolfsma, First Monday,
http://www.firstmonday.dk/issues/issue5_5/dolfsma/)

Given this likely reality, it might be useful to consider another social
institution where people freely given money: tipping.According to
this article, approximately $20 billion was spent on restaurant tips in
1998.  Why do people give so much money they don't have to?  How readily
will this behavior translate into the online world?

The Tip: A Reward, But For Whom?
By William Grimes, THE NEW YORK TIMES SERVICE.
Dated: February 24, 1999.


Many uncertainties surround the dining experience, but one thing is
sure. At the end of the meal, the diner, barring a near-nuclear
catastrophe, will leave a tip. Last year, North American diners left
an estimated $20-billion on the table. In the United States, the
average tip was 16.7 percent of the total bill. The Canadian
Restaurant and Foodservices Association does not keep a corresponding
figure, but Canadians are generally thought to tip slightly less, in
part because of higher food prices and sales taxes. In Manhattan, the
standard tip is closer to 20 percent at a good restaurant. Regardless
of the amount, the gesture may be mass delusion.

In theory, a tip is a reward for good service. But many restaurants
pool tips - putting them into one pot and evenly dividing them at the
end of the night - which means that the reward intended for a
particular server is shared among many. Under these circumstances, a
tip is a little like a declaration of love delivered over a public
address system.

And, in any case, the message may say more about the sender than the
receiver. A tip, social scientists seem to be discovering, has less to
do with the diner's opinion of the service than with his opinion of
himself, his need of approval or his desire to please the waiter. The
tip, in other words, is a puzzle. No one quite knows why diners tip in
the first place, or whether tipping serves any economic purpose.

One economic argument for tipping is that it gives restaurants extra
managers at no cost. Because a restaurant cannot possibly monitor its
staff as efficiently and accurately as the people being served, this
function has been delegated to diners. Tipping also allows restaurants
to keep part of the cost of labour off the bill. "It's a very
attractive way to support their labour force without having to pay
that cash up front," said Jayne Drennan, a faculty member in the food
and beverage management program of Toronto's George Brown School of
Hospitality and Tourism. The prospect of a good tip motivates the
staff to provide good service in the present, and the diner who leaves
a generous tip helps ensure good service in the future. But tipping is
not only, or even primarily, an economic transaction. It is also a
social event, and as researchers have discovered, a very complex one,
at times bordering on the perverse.

Michael Lynn, an associate professor of consumer behaviour at the
Cornell University School of Hotel Administration, has been studying
tipping since 1980, and although he readily admits that many mysteries
remain, one thing is fairly clear: The quality of the service has very
little to do with the size of the tip. "Bill size allows me to explain
70 per cent of the variability in tip amount," he said. "Less than 2
percent of the variability can be explained by how the diner rates the
service." Lynn and others have found that the social norm of tipping
dictates that a more or less predictable tip will be left, depending
on the size of the bill. "The primary motivation for tipping is social
approval," Lynn said "It's expected."

The peculiarities of the diner-server relationship also confound the
economic model. Researchers have found that, in most cases, diners do
not feel that they are judging the waiter, but that the waiter is
judging them. They tip to please. Theoretically, the tip is a weapon,
but as a social scientist named Leo Crespi found when he studied
tipping in the 1940s, "most people do not have the requisite nerve."
This may be a North American problem. Some researchers have theorized
that the tip is a way to defuse anxiety associated with the unequal
server-diner relationship, and a way of fending off envy and ill
will. In a country dedicated to the principle of social equality, this
anxiety takes an acute form. Indeed, over the years, many social
critics have attacked tipping as an insult to our society's core
values, a repellent holdover from the days when aristocrats would
fling coins at their servants.

In The Itching Palm, a 19

BIZ: Thanking Web Sites, With Cash

[Chris Rasch]

Thanking Web Sites, With Cash
By MICHELLE SLATALLA
February 15, 2001
New York Times
http://www.nytimes.com/2001/02/15/technology/15SHOP.html?pagewanted=all

   ALL me stingy, but I
   can't think of a single
time I suddenly got the urge
to pay for something I had
been getting free and could
continue to get free.

But that is exactly what
Amazon.com had in mind
last week when it instigated
a new scheme called the
Honor System. It's a way for
people to use the
one-click-shopping
concept to make voluntary
payments from $1 to $50 for
intangible things - humor,
advice, recipes - that they
usually get free from
Internet sites like Hearing
Voices.com, an archive of
radio clips, and SatireWire,
which publishes humorous
articles.

SatireWire's FAQ about
the program summed it up
nicely:

Question: If I give money,
what do I get out of it?

Answer: More SatireWire.
Better SatireWire. Maybe
both.

Question: That's it?

Answer: No, you can buy
one of those singing fish
wall plaques and pretend we
gave it to you.

I like to think I have an
open mind. So when
Amazon.com's founder, Jeff
Bezos, phoned to encourage
me to use the Honor
System, I asked in as nice a
tone as I could muster what
would ever possess me to pay for something I could get free.

"Well, if you get something of value, you should pay for it,"
Mr. Bezos said.

"Like love?" I asked.

"Like pineapples," he said.

Mr. Bezos explained that he got the idea for the Honor
System about two years ago while visiting Hawaii. "I
stopped at a roadside stand," he said, "and there was a little
sign that said: `Gone for two hours. Put money in the box
and take the pineapples you want.' The Web is sort of like
that. You can't just take the pineapples."

Actually, it's not the same at all. People are used to paying
for pineapples. Pineapples are a tangible product with a
specific, market-driven price. Like, say, books.

"Why don't you implement an honor system for paying for
your books?" I asked. "Send me the book, and if I like it, I'll
send you money."

But Mr. Bezos, who perhaps saw my argument for the
callow attempt it was to get something for nothing, pointed
out that an honor system is a less efficient way to pay for
something like a book, where the marginal cost of supplying
the product is relatively high. An honor system works for
situations in which a supplier has a fixed up-front cost and
is in effect offering products that cost nothing extra - like
surplus pineapples left over after the rest of the crop went
to the grocery store, or humorous articles whose cost will
not change after they are posted on a site.

Mr. Bezos said he thought that the potential market was
big. Maybe, he said, it would help me to think of honor
system payments as tips, like the money that restaurant
diners leave on the table.

Mr. Bezos was not the first to have this idea. At a site called
Tipjar.com, in operation for five years, you can pledge
money to anyone with an e- mail address. Unlike
Amazon.com, which charges the recipient a 15-cent
transaction fee and then skims a 15 percent commission
from the total donation, Tipjar.com is a free service.
Donors mail checks to the founder, David Nicol, who puts
the money in an interest-bearing account, then mails the
recipients a check once a month. "About 10 people a day
send tips," Mr. Nicol said, "typically of $2 or $3. If more
people used it, I would earn enough money from the
interest-bearing account to pay for my postage costs."

That made me wonder if patrons leave tips based on what
they think the service is worth or, more likely, if they leave
15 percent to conform to a perceived price point
established by cultural precedent.

In fact, a recent study of tipping behavior at the Cornell
University School of Hotel Administration, conducted by
Prof. Michael Lynn, found the quality of service made only
a minor difference in the amount people left, suggesting
that diners feel they are paying a fixed price established by
custom. But in another study he conducted, in which diners
at a Mexican restaurant in Ohio were given a choice of four
tip prices for a dish they had eaten, Professor Lynn found
that about 40 percent of people chose to pay more than they
had to, perhaps because they had consumed big portions or
because they didn't want to appear cheap.

Curiously, diners who ordered a dish called El Puerco ("the
pig") most often felt compelled to pay the highest price.
Whether ordering something called The Pig heightens your
sense of needing to make a good impression, Professor
Lynn said he didn't know. "That dish was also a big
portion," he said.

Similar tipping behavior has been observed among people
who obtain shareware, Professor Lynn said, noting that at
least one shareware author reported that nearly 40 percent
of users sent a bigger payment than requested for a software
program they found particularly useful.

"There's a norm of reciprocity in nearly every country,"
Professor Lynn said, "the idea that when people do you a
favor, you

Digital Gold Offers Liquidity to Dollar-Spooked Investors

[Chris Rasch]

[Remarkable growth rate in e-gold accounts--3,000 to 130,000
in eighteen months.  They also charge much lower transaction fees than
credit card
companies.  And via OmniPay, you can pay bills from your e-gold
account.  It
will be interesting to see what happens when more and more transactions
occur
via these currencies.  One caveat: much of that growth rate appears to
be due to online Ponzi and MLM schemes.]


By John Rubino
Special to TheStreet.com
1/19/01 11:59 AM ET
http://www.thestreet.com/funds/strategies/1262395.html

"...Converted into bits in this way, gold once again becomes a viable --
some would say vastly superior -- kind of money.  Conceptually, it
works like this: You transfer some dollars or euros or whatever to a
firm that buys gold for you and deposits it in a super-safe vault. You
then make payments from this account via credit card or PC, and the
gold -- without ever leaving the vault -- is credited to the
recipient's account. If the recipient prefers dollars, the gold is
electronically converted by exchanges, which now do the same with the
world's other currencies.

The first attempt to turn this theory into reality is called e-gold,
and so far, so good. The number of e-gold accounts rose from 3,000 in
mid-1999 to 130,000 by the end of 2000.  The amount of e-gold in
circulation (which by definition is identical to the amount of gold
locked away in its vaults), has grown from 5,000 ounces in 1999 to
43,000 ounces. "We finally hit our millionth transaction in November,"
says e-gold founder Douglas Jackson, "and we hit a million and a half
in December." All, notes Jackson, with a marketing budget of zero"

BIZ/PSYCH: WHEN THE GOING GETS TOUGH: TOWARD A PSYCHOLOGY OF ENTREPRENEURIAL FAILURE AND RE-MOTIVATION

[Chris Rasch]

http://www.babson.edu/entrep/fer/papers99/I/I_B/I_B%20Text.htm


WHEN THE GOING GETS TOUGH . . . TOWARD A PSYCHOLOGY OF ENTREPRENEURIAL
FAILURE AND RE-MOTIVATION

Melissa S. Cardon, Columbia School of Business
Rita Gunther McGrath, Columbia School of Business

ABSTRACT

This paper extends a carefully developed perspective in the
psychological literature to the phenomenon of entrepreneurial failure
and motivation, with particular implications for entrepreneurial
behavior during the post-startup period. We develop a new instrument
to assess psychological predispositions concerning three key
constructs: attribution of the cause of failure; reactions to failure,
and goals for the achievement of personal acclaim or personal
development. Results from a sample of pre-entrepreneurial individuals
suggest that these constructs from psychology, appropriately
translated, may offer a richer understanding of how individuals are
likely to react to inevitable setbacks during the entrepreneurial
process. This has potentially important implications for the
discovery, training and preparation of entrepreneurs, as well as for
how they should be managed and monitored during the post-startup
period.

  INTRODUCTION

"Failure isn't fatal unless you let it be."-Mike Ditka 

Starting a business, growing a business and being in on the beginnings
of a new industry are by their very nature uncertain
undertakings. That some individuals voluntarily choose to make
themselves vulnerable to the risks of uncertainty in these situations
has long fascinated entrepreneurship researchers, leading to a
substantial literature on the topic of entrepreneurial motivation (for
instance, McClelland's (1961) seminal work on need for
achievement). In its focus on the motivation to start a business,
however, this literature is relatively silent on two additional
problems of equal importance to our understanding of the
entrepreneurial process.

First is the question of what happens to entrepreneurial motivation
after the startup phase. This is a non-trivial problem, as most
businesses require what MacMillan and Subba Narasimha (1987) describe
as long-term, sustained, effort on the part of the
entrepreneur. Second, there is relatively little discussion of
de-motivation, or those factors that might lead a formerly motivated
entrepreneur to become discouraged, disaffected or disgruntled. We
have little theory or evidence to guide us as to what qualities lead a
founder to persist in the development of a business, even after
start-up hurdles have been overcome. Both these issues are crucially
important if we are to understand the process through which
entrepreneurs engage in "fostering new combinations that improve our
economic life" (Bull & Willard, 1995: 5). Indeed, as Bull and Willard
point out, the intensity of the motivation of the entrepreneur will
inevitably affect the way in which the entrepreneur carries out
discontinuity-causing actions.

This suggests a fruitful intersection between the economic and
psychological aspects of entrepreneurship. Of particular concern is
how individuals respond to the inevitable setbacks and frustrations
(and even outright flops) of the entrepreneurial
process. Understanding the psychological aspects of entrepreneurial
failure and motivation are thus our focus. We borrow extensively from
psychological research, which suggests that how individuals attribute
their experiences influences how they react and whether they persist
(Weiner & Kukla, 1970).

On one hand, failure can be attributed to innate ability. Failure
signals that this ability is inadequate, creating a `helpless'
reaction. This impairs performance, and often results in individuals
seeking to end their involvement in future activities similar to the
one that failed (Weiner & Kukla, 1970). An alternative attribution is
to believe that failure is simply due to a lack of effort or planning,
and that a similar situation could be mastered in the future with a
renewed focus and drive. Such a `mastery' reaction usually involves
the individual increasing their effort level and remaining optimistic
even in the face of repeated failure experiences (Weiner & Kukla,
1970). Attribution theory might thus provide a useful means to
understand why some entrepreneurs simply give up when facing setbacks,
while others persist.

The purpose of this study is to identify first, whether attribution
theory might add value to our understanding of failure in the
entrepreneurial process, and second whether the techniques used by
psychologists on subjects in controlled, experimental environments
might shed useful insight to the behavior of entrepreneurs. In the
next section, we examine the first question, suggesting that
attribution theory might better help us understand the entrepreneurial
process. We then turn to the second question, and describe new scales
developed for this study to measure constructs from psychological
attribution theory and 

Re: U.S. income & wealth inequality

[Chris Rasch]

Hi,

Quoting a forward by Yann Le Du,

> * Between 1983 and 1995, only the highest-earning five
> percent of
> households saw an increase in their financial net
> worth. By 1995, the
> bottom 40 percent of families headed by those between
> the ages of 25-54
> had no savings. The middle quintile of income-earners
> (the middle
> class) have enough savings to sustain their standard
> of living for 1.2
> months, down from 3.6 months in 1989. (Federal Reserve
> data as analyzed
> by Edward Wolff)
>
> * Between 1983 and '89, the net worth of American
> citizens grew by $5
> trillion. About 54 percent of that new wealth went to
> the half-million
> families who make up the top one-half of one percent
> of the population.
> Federal Reserve and IRS data confirm that the net
> worth of the top 1
> percent of Americans now dwarfs that of the bottom 90
> percent--the most
> extreme wealth concentration since the 1920s. (Jeff
> Gates, "An
> Ownership Solution")

>From the home page of
Professor Steven G. Horwitz
Department of Economics
St. Lawrence University
http://it.stlawu.edu/shor/Good/myths.htm

If we compare two years [1975 and 1991], some/most of the people who were
poor in the
first year will not be the same people who are poor in the later year.
Some highlights of these last three tables: The biggest is the number
of people who start in the bottom quintile and work their way out.



In table 5, over 85% of the poorest quintile in 1979 were no longer in
that quintile in 1988.  In table 6, the number is almost 95% for the
longer period of 1975 to 1991.  The vast majority of the people poor
in year x are not going to be poor in the near future.

<



(If you are
thinking this is only a long-run phenomena, consider this: according
to the Census Bureau, between 1984 and 1985, 18.2% of families in the
lowest quintile had moved up one or more quintiles.  For 1985-86, the
number is 18.4% and it's 17.0% for 1987-88.  So there are steady
year-by-year gains.) Even for the rich, there's no guarantees.
Granted, if you started the period rich, you were more likely to stay
in your quintile than were the poor, but even there the odds were
roughly 50/50.  Over 1/3 of the top 20% of income earners in 1975 were
no longer in the top quintile by 1991, and the numbers are comparable
for the 1979-88 data.

Table 7 is fascinating as well.  This table shows the average income
gains of the specific households that were tracked over the 16 year
period.  The dollars are all converted to 1997 dollars to take out the
effects of inflation.  Families who were in 1975 in the bottom 20% had
an average income increase of almost $28,000 by 1991, while the folks
in the top 20% only gained an average of $4,354.  So the rich did get
richer over this period, but the poor's income grew substantially more
than that of the rich!  That is, the rich got richer but the poor got
even richer, not just in percentage terms but in absolute terms.
Again, this data is tracking specific families.

One footnote to all of this: among those who began in the lowest
quintile in 1975, 98% had higher incomes (in real terms) over the
course of the next 16 years, even if not all of them got out of the
lowest quintile.  Two-thirds of those who were in the lowest quintile
in 1975 had higher incomes in 1991 than the middle quintile had in
1975.  You need to remember that as the economy grows, the range of
the quintiles grows as well, so even those who remain in each quintile
are going better in absolute terms.

It also seems appropriate to mention that all of these gains by the
poor were during the so-called Decade of Greed, pillioried by those on
the left for its supposed cold-heartedness and mistreatment of the
poor.  You can make your own call on that claim.

A good deal of this is explained by demographic factors.  For example,
the bottom quintile tends to be disproportionately young people and as
they age, they move up the ladder.  Even if that explains a good deal
of what we see here, so what?  It still contradicts the usual
understanding of the data.  The real policy question here is income
mobility.  How easy is it for folks who start poor to move their way
up?  The answer to that is "pretty easy."  That paints a far different
picture of how the poor are doing over time than the static and
misleading idea that the poor are getting poorer that is taken from
year-to-year comparisons of the quintiles.

>

Re: We Aren't Seeing You in Court

[Chris Rasch]

When I prepped this article for posting I accidentally snipped the
proper attribution.  Hal Finney (from whom I received this article)
wrote this preface:

>> According to a Feb 1 article in the Los Angeles Times, "We Aren't
>> Seeing You in Court", America's litigation levels have levelled off
>> and actually been falling in recent years, especially in California.
>>
>> Furthermore, the so-called litigation explosion was actually not
>> much of
>> an explosion after all.  The article is available in the Times
>> archives
>> (with free registration) for another day or two.  Here are some
>> excerpts:
>

Chris Rasch

We Aren't Seeing You in Court

[Chris Rasch]

According to a Feb 1 article in the Los Angeles Times, "We Aren't
Seeing You in Court", America's litigation levels have levelled off
and actually been falling in recent years, especially in California.
Furthermore, the so-called litigation explosion was actually not much of
an explosion after all.  The article is available in the Times archives
(with free registration) for another day or two.  Here are some
excerpts:

   America's litigation explosion has fizzled.

   Americans are no longer suing each other as much.

   Californians are suing each other much less.

   After years of steady decline, the number of big-money personal
   injury lawsuits in California is roughly half of what it was a decade
   ago. Small claims have fallen to levels unseen in 30 years.

   "California may be a bit more precipitous," said University of
   Wisconsin law professor Marc Galanter, an expert on lawsuit patterns,
   "but this is the general picture in the United States."

   ...

   'Explosion' May Have Been Overstated

   Arguably, that image has always been overblown. Legal scholars
suggest
   that only a small percentage of those who suffered injuries ever took
   their claims to court.

   A massive study of the behavior of injured Americans in the late
1980s
   by the Rand Corp.'s Institute for Civil Justice found that only 2%
   of injured Americans sought compensation by filing lawsuits.

   A tort litigation "explosion" occurred in the 1970s and 1980s, when
   lawsuits increased by a little more than half, suggesting that 3%
   of those injured were filing them.

   That was not a big event in the long lens of American
   history. Litigation rates were higher in colonial and pre-20th
   century America than at the height of the modern "explosion," said
   the University of Wisconsin's Galanter.

   But the "explosion" may have been perceived as bigger than it was
   because it followed a period of decline in lawsuits that began during
   the Great Depression and continued through World War II and the
postwar
   recovery years. A law review article from that period reflected the
   concern of some lawyers and judges that they might not have enough
   to do. It was titled: "The Problem of Decreasing Litigation."

   ...

   Rand economist Stephen Carroll attributes the big slide here mainly
   to the long-term repercussions of a 1988 state Supreme Court decision
   that changed the rules under which injury lawsuits are brought.

   That decision took away a powerful negotiating tool that plaintiffs'
   attorneys had used to pry settlement offers out of insurers. The vast
   majority of lawsuits are settled before trial.

   Until the high court acted, a plaintiff's attorney could bring a
   lawsuit accusing an insurer of bad faith if the insurer failed to
   make a reasonable settlement offer.

   The high court took away that threat of punitive damages and
   insurers were freer to make low-ball settlement offers or none at
   all. Plaintiffs' attorneys, largely dependent on settlements for
   their own incomes, may then have become choosier about which cases
   they filed.

   After the high court decision, personal injury lawsuits filed
annually
   in California Superior Courts fell over a decade from 132,000 to
   70,000.

   The largest subgroup of the lawsuits, involving motor vehicle
injuries,
   fell from 91,000 to 42,000 per year.

Exuberance Is Rational

[Chris Rasch]

Roger Lowenstein recently wrote a NYT profile of Richard Thaler and his
work on behavioral economics:

Exuberance Is Rational
By ROGER LOWENSTEIN
February 11, 2001
http://www.nytimes.com/library/magazine/home/20010211mag-econ.html


"...I met Thaler two days after the election, and he was already
predicting that the country would be willing to accept Bush as the
winner, because "people have a bias toward the status quo." I asked
how "status-quo bias" affects economics, and Thaler observed that
workers save more when they are automatically enrolled in savings
programs than when they have to choose to participate by, say,
returning a form.  Standard theory holds that workers would make the
most rational decision regardless.

Savings is an area where Thaler thinks he can have a big impact. Along
with Shlomo Benartzi, a collaborator at U.C.L.A., Thaler cooked up a
plan called Save More Tomorrow. The idea is to persuade employees to
commit a big share of future salary increases to their retirement
accounts. People find it less painful to make future concessions
because pain deferred is, to an extent, pain denied. Therein lies the
logic for New Year's resolutions.  Save More Tomorrow was tried with a
Chicago company, and workers tripled their savings within a year and a
half -- an astounding result. "This is big stuff," Thaler says. He is
shopping the plan around to other employers and predicts that
eventually it could help raise the country's low savings rate.

Though Thaler, who comes across as a middling, Robert Rubin-style
Democrat, plays down the connection, such results could provide
ammunition to liberals who think government bashing has gone too
far. Since the Reagan era, a mantra for office seekers is that people
know what is best for themselves. Generally, yes; but what if not
always, and what if they err in predictable ways? For instance, Thaler
has found that the number of options on a 401(k) menu can affect the
employees' selections. Those with a choice of a stock fund and bond
fund tend to invest half in each. Those with a choice of three stock
funds and one bond fund are likely to sprinkle an equal amount of
their savings in each, and thus put 75 percent of the total in
stocks. Such behavior illustrates "framing" -- decisions being
affected by how choices are positioned. Political pollsters and
advertisers have known this for years, though economists are just
coming around"

Re: Years of education and job performance

[Chris Rasch]

William Dickens wrote:

> Be wary of numbers like this. As you might expect, they vary considerably from job 
>to job. There are big problems with restriction of range in most studies since, for 
>example, you don't see many highschool dropouts applying for jobs that require a PhD. 
> Also, is a correlation of .18 such a poor correlation? Relative to what? If 
>performance variance is high enough choosing only the top 10% of your applicants by 
>education can make a big difference in your bottom line. Schmidt and Hunter are 
>famous advocates of the use of IQ tests, and IQ generally is a better predictor of 
>job performance than just about any other single factor. But IQ isn't costless to 
>observe and for some jobs has a correlation with measures of performance that is as 
>low as the numbers cited above for years of education. Personnel Psychologists aren't 
>economists and a lot of the stuff they do would make an economist choke. -- Bill 
>Dickens

Thanks for the heads up.  If you have a moment, can you point me to one or two 
book/review articles (by someone whose methodology you respect) that covers predictors 
of long term on-the-job performance ?

Chris

Orchestrating Impartiality: The Impact of Blind Auditions on Female Musicians

[Chris Rasch]

I recently came across this recently in an article on bias in hiring
practices:

"Accounting for Unintended Bias

Even among the most well-intentioned of individuals, the possibility of
unintended bias is present. That is, without knowing that he or she is
doing so, those responsible for hiring may favor someone that  looks
like us  (for whatever definition of  us  is relevant). The hiring
managers may select a superbly qualified person who looks different in
contrast to an adequately qualified person who looks the same, but the
bias is most likely to come out in a choice between two nearly equally
qualified individuals.

Steps can be taken to reduce the likelihood of unintended bias as a
general rule, these steps involve separating the dimensions on which an
individual is evaluated from personally identifying (and irrelevant)
characteristics. Of course, such a separation is not always possible
(e.g., when an individual's ability to work in a team is being
evaluated), but it is possible more than it is practiced.

The impact of such steps can be quite significant. For example, in
hiring musicians, symphony orchestras require applicants to audition.
All auditions are  live,  but some orchestras conduct them with the
applicant behind a screen that prevents the judges from seeing the
musician. In doing so, the music that the applicant plays the relevant
part of the audition is separated from the irrelevant characteristics of
the applicant s sex, race, and age. Goldin and Rouse find that the use
of screen increases by 50 percent the probability that a female musician
will be advanced from certain preliminary rounds and increases by
severalfold the likelihood that a female musician will be selected in
the final round."

Goldin, Claudia, and Cecilia Rouse. 2000.  Orchestrating Impartiality:
The Impact of  Blind  Auditions on Female Musicians,  American Economic
Review 90(September):715-742.

cited in:

Building a Workforce for the Information Economy (prepublication copy)
http://www.nap.edu/html/IT_workforce/

Prepared by:

Committee on Workforce Needs in Information Technology
Computer Science and Telecommunications Board
Board on Testing and Assessment
Board on Science, Technology, and Economic Policy
Office of Scientific and Engineering Personnel

National Research Council
NATIONAL ACADEMY PRESS
Washington, D.C.


The report also contains a number of other fascinating statistics.  For
example, according to (Schmidt and Hunter, 1998) years of education and
years of job experience correlate poorly with measures of actual
on-the-job performance: 0.10 and 0.18, respectively.

Schmidt, F.L., and Hunter, J.E. 1998.  The Validity and Utility of
Selection Methods in Personnel Psychology: Practical and Theoretical
Implications of 85 Years of Research Findings,  Psychological Bulletin
124:262-274)

Why Do Political Action Committees Give Money to Candidates?

[Chris Rasch]

Why Do Political Action Committees Give Money to Candidates?  Campaign
Contributions, Policy Choices, and Election Outcomes

by Christopher Magee
Department of Economics Bard College
Working Paper 292

December 1999

INTRODUCTION

Rational political action committees (PACs) will give campaign
contributions to candidates for two main reasons. Either the
contributions are intended to influence the actions taken by winning
candidates once they are in office, or they are intended to affect the
outcome of the election.  Grossman and Helpman (1996) refer to the
former reason as an influence motive and the latter as an electoral
motive for campaign contributions.  Stated more blandly, a PAC can
manipulate government policies either by buying policies directly from
legislators or by buying elections. In the latter case, the PAC
attempts to sway the election in favor of the candidate whose views
are most in line with that of the PAC.

This paper attempts to answer the question: do political action
committees give money to candidates to influence the positions they
adopt or to influence the outcome of the election? Five major policy
issues in the 1996 congressional elections are examined: the North
American Free Trade Agreement, the Family and Medical Leave Act, a ban
on partial birth abortions, cuts in the B-2 bomber program, and gun
control. The results suggest that interested political action
committees give campaign contributions to challengers primarily in
order to affect the outcome of the election.  Campaign contributions
to challengers significantly affect the election outcome, but they do
not affect the policy positions adopted by challengers on any of the
five issues. The results about contributions to incumbents are less
clear-cut. Contributions received by incumbents do not raise their
chances of winning the election, and on only one of the six issues
examined do they significantly raise the probability the incumbent
will adopt a policy stance favorable to the interest
group. Contributions do, however, flow more readily to incumbents who
are able, by virtue of a leadership position in Congress or because
they are members of relevant committees, to provide important services
to interest groups.

The paper adds to the existing literature in a number of ways. First,
it is the only empirical paper to estimate the effect of campaign
contributions on both incumbent and challenger policy positions before
they are elected to office. Many studies examine the impact of
campaign contributions on legislators in office, but there is clearly
a sample selection issue involved in each of these studies since many
viable candidates are excluded from the sample by virtue of having
lost the election. Because it includes both candidates, this study can
also answer related questions of interest. Do interest groups consider
the policy positions adopted by both candidates in the election in
determining the campaign donations they will give to each one?  What
effect do candidates' personal characteristics, as opposed to the
characteristics of the congressional district, have on the policy
positions they adopt?

http://www.levy.org/docs/wrkpap/papers/292.html

Re: Coming from Good Stock: Where Do Innovative Ventures Come From?

[Chris Rasch]

Chris Rasch wrote:

> Coming from Good Stock: Where Do Innovative Ventures Come From?
> Research by Jesper B. Sorensen
> Capital Ideas
> Vol. 2, No. 2 Fall 1999
> University of Chicago Graduate School of Business
>

Oops, I forgot the URL for the rest of the research summary:


http://gsbwww.uchicago.edu/news/capideas/fall99/sorensen.html

Coming from Good Stock: Where Do Innovative Ventures Come From?

[Chris Rasch]

Coming from Good Stock: Where Do Innovative Ventures Come From?
Research by Jesper B. Sorensen
Capital Ideas
Vol. 2, No. 2 Fall 1999
University of Chicago Graduate School of Business

Some of the most radically innovative products and technologies
today are developed and commercialized not by existing companies,
but by entrepreneurial ventures. This is remarkable given the fact
that creating a new organization requires mobilizing a substantial
array of social and material resources. Innovative entrepreneurs
must not only overcome the skepticism that greets new, unproven
ideas, but must also conquer the reluctance of resource providers to
invest in ventures that have no track records. Understanding the
factors that shape the emergence of innovative ventures has
important policy implications. Where do innovative new ventures come
from?

One answer to this question can be found in Silicon Valley lore,
which is filled with stories of young kids with bright ideas who
become mega-entrepreneurs. Steve Jobs and Steve Wozniak founded
Apple Computers in the garage of Jobs' parents' home. Bill Gates
dropped outof college to found a software company. Michael Dell
launched a computer company out of his dorm room in
college. Inspiring as these stories are,however, they obscure the
fact that most start-ups today are not foundedby college drop-outs,
but by people in the middle of their careers, often mid-level
managers, salesmen and engineers, who have spent many years working
for established firms.

Intel Corporation was launched, not by a group of inexperienced
techies,but by a band of experienced engineers disaffected by
their work at Fairchild Semiconductor. Tivoli Systems, which
develops software, was founded bytwo former IBM engineers. Donna
Dubinsky capitalized on her successfulcareer with Apple Computer
and Claris Software to co-found Palm Computing,parent of the
first broadly successful handheld computer, the Palm Pilot.And
Kim Polese built on her career at Sun Microsystems to become CEO
ofMarimba, one of the most talked-about start-ups in Silicon
Valley.

Recent researchfrom the University of Chicago Graduate School of
Business suggests thatthe characteristics of established firms
have important implications forthe dynamics of entrepreneurial
activity. In "Coming From Good Stock:Career Histories and New
Venture Formation," professor Jesper B. Sorensen,together with
co-authors M. Diane Burton of Harvard Business School and
Christine Beckman of the University of California-Irvine, argue
that the experiences, information and credentials that
entrepreneurs accumulatewhile working for established firms play
a critical role in shaping the entrepreneurial
process. Specifically, the authors argue that entrepreneurs
receive crucial informational and reputational benefits from
having worked for employers that occupy prominent positions in
entrepreneurial networks.

Entrepreneurial Hotbeds

An important fact about established firms is that they differ in
the extent to which a firm is visible to those engaged in
entrepreneurial activity. One simple determinant of a firm's
visibility in an entrepreneurial context is the extent to which
it is a source of entrepreneurial ventures.Much as geographical
regions differ in their rates of entrepreneurial activity,
established firms differ markedly along this
dimension. Somefirms are entrepreneurial hotbeds, as perhaps
most famously exemplifiedby Fairchild Semiconductor, founded in
1957. Fairchild spawned ten new ventures in its first eight
years; moreover, most of the 31 semiconductor firms founded in
Silicon Valley in the 1960s could trace their lineage to
Fairchild. Examples of such "Fairchildren" include Intel,
Advanced Microdevices and LSI Logic. Other firms give rise to
relatively few, if any, new ventures. Today in Silicon Valley,
new ventures are particularly likely to trace their roots to
firms like IBM, Apple, Hewlett-Packard, Intel and National
Semiconductor.

Sorensen and his collaborators argue that innovative new
ventures are more likely to emerge from established firms that
are entrepreneurially prominent. In part, this is due to
differences in the types of employees they attract. However, the
authors found that employer prominence affects entrepreneurial
behavior even after these differences are taken into account.
They offer two primary reasons.

First, there are important informational and resource benefits
to being affiliated with a prominent firm. A central and
prominent position in an entrepreneurial network makes it
easier for a potential entrepreneur to scan the environment,
identify novel ideas, and explore new market possibilities. By
virtue of working for a firm that generates many start-ups,
employees of prominent firms are also more likely to have
personal contacts with members of the entrepreneurial
community. This helps facilitate access to ideas and resources.

Second, Sorensen and his co-authors argue that substantial
reputational benefits accrue to 

Competitive advantage through people

[Chris Rasch]

Hi, 

I came across a couple of articles I thought you might enjoy.

Competitive advantage through people 
California Management Review; Berkeley; Winter 1994; Pfeffer, Jeffrey;
http://www.facstaff.bucknell.edu/pagana/mg330/pfeffer.html

I believe this article summarizes a book of the same name:
Harvard Business School Press. 1994. 281 pages. $14.95. ISBN
0-87584-717X.

>From the introduction:

"Suppose that in 1972, someone asked you to pick the five companies
that would provide the greatest return to stockholders over the next
20 years. And suppose that you had access to books on competitive
success that were not even written. How would you approach your
assignment? In order to earn tremendous economic returns, the
companies you pick should have some sustainable competitive advantage,
something that 1) distinguishes them from their competitors, 2)
provides positive economic benefits, and 3) is not readily duplicated.

Conventional wisdom then (and even now) would have you begin by
selecting the right industries. After all, "not all industries offer
equal opportunity for sustained profitability, and the inherent
profitability of its industry is one essential ingredient in
determining the profitability of a firm."(1) According to Michael
Porter's now famous framework, the five fundamental competitive forces
that determine the ability of firms in an industry to earn
above-normal returns are "the entry of new competitors, the threat of
substitutes, the bargaining power of buyers, the bargaining power of
suppliers, and the rivalry among existing competitors."(2) You should
find industries with barriers to entry, low supplier and buyer
bargaining power, few ready substitutes, and a limited threat of new
entrants to compete away economic returns. Within such industries,
other conventional analyses would urge you to select firms with the
largest market share, which can realize the cost benefits of economies
of scale. In short, you would probably look to industries in which
patent protection of important product or service technology could be
achieved and select the dominant firms in those industries.

You would have been very successful in selecting the five
top-performing firms from 1972 to 1992 if you took this conventional
wisdom and turned it on its head. The top five stocks, and their
percentage returns, were (in reverse order): Plenum Publishing (with a
return of 15,689%), Circuit City (a video and appliance retailer;
16,410%), Tyson Foods (a poultry producer; 18,118%), Wal-Mart (a
discount chain; 19,807%), and Southwest Airlines (21,775%).(3) Yet
during this period, these industries (retailing, airlines, publishing,
and food processing) were characterized by massive competition and
horrendous losses, widespread bankruptcy, virtually no barriers to
entry (for airlines after 1978), little unique or proprietary
technology, and many substitute products or services. And in 1972,
none of these firms was (and some still are not) the market-share
leader, enjoying economies of scale or moving down the learning curve."



An Interview with Jeffrey Pfeffer 
By Joel Kurtzman 
Journal of Strategy and Business 
Booz, Allen & Hamilton
Third Quarter, 1998
http://www.strategy-business.com/thoughtleaders/98308/page4.html
Reprint No.98308

"JEFFREY PFEFFER: What I have learned over and over and over again, and
it's brought home to me forcefully whenever I visit organizations, is
that individual rewards for performance are not enough. In many cases,
you also need to have something, or a set of somethings, that gives
people a sense that their success depends upon the success of the
collective. 

 Some form of collective incentive system -- profit sharing, bonuses,
stock ownership -- is needed so that my success does not depend solely
on how well I do. 
The organizations I have cited always have some collective element to
their rewards. In many instances, they even do some things to
de-emphasize individual performance. To go back to Men's Wearhouse,
while I was doing interviews there for a case study the company fired
its best salesperson, which was very traumatic for them. 

This was a guy in one of their stores in the Northwest who was an
exceptional salesperson. But the company's managers believe in the
concept of team selling -- they believe in this idea of human
development that you always succeed when your colleagues around you
succeed, and that you ought to participate in all this training. And
this guy said, "I'm not going to do any of this stuff." 

The company's big measures are the number of transactions and the
dollars of sales per transaction. This guy was way above on the number
of transactions but not doing very well on dollars per transaction. What
that meant was that people would come in the store and he would steal
them. Finally, they said to this guy, "We want you to get with the
program," and he wouldn't. 

So they fired him -- and guess what? Sales in the store went up 30
percent. His replacement, of cour

Re: More Guns, Less Crime?

[Chris Rasch]

jsamples wrote:

> -Original Message-
> From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of
>
> I agree with you--I don't believe that public health bureaucrats will
> necessarily be more impartial.  The point of Ropeik's article was that,
> initially,  the EPA and the automobile industry each wasted millions of
> dollars funding studies that the other side would not accept as valid
> (precisely because, as you write, the automobile companies didn't trust
> the EPA bureaucrats' impartiality, and vice versa).So they agreed to
> jointly fund the Health Effects Institute to perform the studies.
> Neither side could then claim that the studies were skewed by
> ideological motivations.
>
> For this strategy to succeed, don't we have to assume that there are no
> principal-agent problems, that both funders could monitor the work and thus
> be tied to the results? How likely is the absence of principal-agent
> problems?

Hi,

I think that there would be potential principal/agent problems.  Would
such principal/agent problems be insurmountable?  I'm not sure, but I think
that they could be overcome.  Corporate managers incentives do not always
align with those of ill-informed stockholders for example, yet many companies
still manage to succeed and prosper.I would imagine that both funders
would need to be satisfied that principal/agent problems could be reduced to a
manageable size before they would agree to fund the research in the first
place.


As an aside, I found a nice annotated bibliography on transaction cost
economics at:
http://uhavax.hartford.edu/~hjames/tce-bib.html

It was prepared by
Harvey S. James, Jr., Ph.D.
University of Hartford


http://www.willamette.edu/~fthompso/pubfin/ECON&PA.html

Dealing with Bias was Re: More Guns, Less Crime?

[Chris Rasch]

 increased gun ownership.  However, given our
values and mission, if we fund such studies ourselves, we're afraid that while the
results of such studies may give succor to our existing supporters, they will be
unpersuasive to those who have yet to make a decision on the issue.  How can the
NRA fund research that won't be easily dismissed as thinly veiled NRA propaganda?"

How would you answer him?  (Substitute the HCI, if you support gun control
regulations.)


Chris Rasch

Re: More Guns, Less Crime?

[Chris Rasch]

Hi David,

> Unfortunately, as the reaction to Lott's work demonstrated, that
> perception has very little connection to reality. Opponents claimed
> that the work was funded by the firearms industry--on the grounds
> that the Olin foundation got its money long ago from the Olin
> Corporation, which at one time owned Winchester. It was that, not the
> Chicago connection, that was the main argument for rejecting the work
> as biased.

Whether or not Lott's work is  dismissed due to his U. of C. connection, or his
Olin Fellow connection,  and whether or not that distrust is fair, the point is
that his work is not trusted outside of pro-gun circles because of his
ideological associations.   Wouldn't you agree that had Lott had a collaborator
who gun-control advocates believed to be one of their own, they would have found
it much more difficult to subsequently dismiss his study?

> I doubt your version is doable--because if the study was clearly
> coming out one way or the other, the more ideological people on the
> other side would bail out.

You may be right.  However, HEI exists and the participants have not dropped
out.

> What you really need is a piece with
> coauthors, one of whom one side will find it hard to attack, the
> other the other side. You can get that by picking authors who are
> identified with one side or another in general, but are not committed
> on the particular issue. I actually have a project along those lines
> I am trying to get going--and I hope that if it does happen, I'll be
> able to persuade John to be one of the researchers.

This makes sense to me and I wish you the best of luck with the project.  My
primary interest is to encourage well-designed studies that both sides of the
gun control debate would find difficult to dismiss due to bias.   I think that,
all other things equal, a study funded/managed roughly equally by individuals on
opposite sides of the gun control issue will  be trusted more widely than a
study funded/managed by individuals from a single side of the gun-control
issue.Whether such studies are done by a academics at a newly formed
institute or academics at existing institutions doesn't matter to me.

> That isn't at all clear. Suppose you were given the job "design a
> pollution public policy that is in the interest of both the EPA and
> the automobile industry." Do you think it would be that difficult? Do
> you think it likely that it would be in the public interest?

Yes, the EPA and the automobile industry may fund studies to their mutual
benefit.   The EPA is susceptible to "capture" by the auto industry.But to
what extent is this happening with HEI?  I don't know.


> I would not trust any of them. What I would trust, more or less, is a
> competent scholarly study done by someone who had published lots of
> articles in top ranking peer reviewed journals.

Of course, but given two equally high quality studies, one funded/managed by NRA
alone, the other funded/managed jointly by NRA/HCI which do you think would be
more widely trusted?  Which do you think HCI would find harder to dismiss?

Chris

Re: More Guns, Less Crime?

[Chris Rasch]

Hi David,

> To begin with, neither John Lott nor David Mustard is or was a
> University of Chicago professor. Mustard was, I'm pretty sure, a grad
> student, and Lott was an Olin Fellow--a visiting position.

Thank you for the correcting my error.   I don't think that my error(s)
detract from my main point however.  Do a search for "Olin Fellow" on
Google.  Here are some of the names that pop up on the first page:

William J. Bennett, John M. Olin Fellow in Cultural Policy Studies, The
Heritage Foundation
Dinesh D'Souza,  John M. Olin Fellow, American Enterprise Foundation
Rachel Bronson, Olin Fellow, National Security Studies, Council on Foreign
Relations
Serguey Braguinsky, Olin Fellow, University of Chicago Law School

Imagine for a moment that Lott and Mustard were "Carnegie Fellows" at
Berkeley, and that other "Carnegie Fellows" were prominent liberal scholars
at places like the Economic Policy Institute,  Institute for Policy Studies,
and the Alliance for Justice.  Would you not suspect that ideology might
play a role in their research?


> >As a model of how to help break this deadlock, I would like to see more
> >studies funded by organizations modelled along the lines of the US
> >Environmental Protection Agency's Health Effects Institute.
>
> Why do you regard that as more neutral than the University of Chicago
> Law School, even assuming (contrary to fact) that the University of
> Chicago Law School controls the research done by a faculty fellow on
> a one or two year visiting appointment?

I did not mean to suggest that U. of C. Law school apparatchik's hand down
memo's dictating the results of the day's research.  Rather, I think that
people self-select for environments where their existing biases will be
supported.

Hypothetical FRI researchers  may be no more neutral than U. of C.
scholars.  However, as far as widespread acceptance of the study is
concerned, it is the perception that counts.   I would suggest that no
matter how scrupulously Lott and Mustard avoided bias, their methodology
would be hotly contested because of the U. of C.'s status as the namesake
instition for the "Chicago school of economics", as well as the "law and
economics" movement.  Those bodies of thought are, after all, well-known for
their general hostility toward government regulation.

Therefore, I think that the results of a studies done by a Firearms Research
Institute, jointly funded by the NRA and HCI, would be regarded as more
credible than a study done by researchers supported by the Olin Foundation
at the University of Chicago.

I believe that a hypothetical FRI-managed study would produce results that
corroborate Lott and Mustards findings.  But I think that you would see much
less post-hoc bickering over the methodology,  as both opponents and
proponents of gun-control would have vetted and approved the methodology
before funding it in the first place.


> Insofar as people at U of C Law School have any ideological bias on
> these issues, it is in the opposite of the direction of Lott's
> research; while Chicago is less left wing than other major law
> schools (and the left wing people it has tend to be more
> interesting), that doesn't make it a hotbed of NRA support. I would
> be surprised if the Republican candidate for president had gotten a
> majority of votes of the law school professors at Chicago in any
> election over the past fifty years, or if as many as a quarter of the
> faculty were opposed to gun control laws. To the University's credit,
> its scholars produce research across a wide range of ideological
> positions.

You may be correct--U. of C. Law School may be less free-market oriented
than I imagined.  But what do you think pop's into the heads of most
educated lay person's when they think of U. of C.?  I'd bet that phrases
like "Chicago school of economics", "Milton Friedman", and "free markets"
would rank high on the list.  U. of C. may not be a hotbed of NRA support,
but I think that few people were surprised that a U. of C. study came out in
favor of reduced government regulation.

> Don't you find something a little odd about comparing HandGun
> Control, Inc. to the University of Chicago, with the implication that
> they are both organizations pushing an agenda? Surely the comparison
> should be to the NRA. Or, if you prefer, you could compare work done
> at Chicago to work done at Harvard.

Yes, a comparison to Harvard would be a better choice--I picked HCI simply
because it would be obvious that results of HCI-funded research should be
looked upon with a jaundiced eye.  I didn't intend to suggest that U. of C.
and HCI were co-equal in terms of bias.

> If anything, the institute you describe strikes me as more likely to
> act on a political agenda than a major university is. As you describe
> it, it is directly funded by the EPA and the automobile industry,
> both parties with large axes to grind. While there are many issues on
> which the two disagree, there may others on which

Re: More Guns, Less Crime?

[Chris Rasch]

Hi Pierre,

>
> I don't see how the incentives of government, public-health
> bureaucrats, or the way they are selected, makes them more impartial.
> The EPA's manipulation of evidence in the secondhand-smoke case
> illustrates this quite strikingly. U.S. District Judge William Osteen:
> ?The court is faced with the ugly possibility that EPA adopted a
> methodology for each chapter, without explanation, based on the
> outcome sought in that chapter. ? The record and EPA?s explanations to
> the court make it clear that using standard methodology, EPA could not
> produce statistically significant results with its selected studies?
> (Flue-Cured Tobacco Cooperative v. EPA, No. 6:93CV00370 at 60, 77,
> M.D.N.C. July 17, 1998).
>

I agree with you--I don't believe that public health bureaucrats will
necessarily be more impartial.  The point of Ropeik's article was that,
initially,  the EPA and the automobile industry each wasted millions of
dollars funding studies that the other side would not accept as valid
(precisely because, as you write, the automobile companies didn't trust
the EPA bureaucrats' impartiality, and vice versa).So they agreed to
jointly fund the Health Effects Institute to perform the studies.
Neither side could then claim that the studies were skewed by
ideological motivations.

Unfortunately, in my initial post, I implied that the Health Effects
Insitute was a part of the EPA--I believe that it's actually an
independent non-profit organization.   I'm sorry for the error.

Chris

Re: More Guns, Less Crime?

[Chris Rasch]

I would suggest if you already have strong belief's about the value of
gun control laws, your opinion on the issue is unlikely to be swayed by
statistical studies counter to your belief, regardless of the quality of
the study.  Research by Jonathon Haidt and others suggest that most
people form emotional moral judgments first, then look for evidence to
support their beliefs afterward.  However, people _think_ that their
beliefs arise from a rational evaluation of the issue.  This helps
explain the rancor that often develops during discussions of emotionally
hot issues like gun control.  If, after carefully laying out the
evidence for your case, your opponent still retains beliefs that
contradict yours, then you're likely to believe that either a) your
opponent is irrational, b) your opponent is lying, c) your opponent is
an idiot.

Statistical evidence is only likely to be persuasive if you do not
already have strong opinions on the matter.  Indeed, some research
suggests that directly arguing against someone else's beliefs will tend
to entrain them even deeper.  For a more extensive discussion see
Haidt's review, The Emotional Dog and its Rational Tail: A Social
Intuitionist Approach to Moral Judgment  at
http://www.people.virginia.edu/~jdh6n/intuition.html.

Even if you have no a priori strong opinion, I think it would be wise to
be skeptical of studies funded by ideological organizations.  For
example, I would be quite skeptical of a study performed by HandGun
Control, Inc. and I am sympathetic to those on the opposite side of the
issue who find a study by two University of Chicago professors
unpersuasive.

As a model of how to help break this deadlock, I would like to see more
studies funded by organizations modelled along the lines of the US
Environmental Protection Agency's Health Effects Institute.  From a
Washington Post article by David Ropeik:

   Some years ago, the Environmental Protection
Agency and the
   automobile industry declared something of a truce
in their war
   over the science of automobile emissions. Instead
of each side
   spending millions on self-funded research the
other side wouldn't
   accept, they each put in 50 percent of the money
necessary--a
   total of $6 million--to create something called
the Health Effects
   Institute. HEI was not created to make policy,
but to give
   policymakers credible, trustworthy scientific
information on which
   rational policy could be based. It was set up to
be an impartial
   scientific review board--an agency of neutral
arbiters, outside the
   government, beholden to nothing but the truth. To
conduct its
   evaluations, it appoints panels of scientists,
representing their
   various fields somewhat as a jury represents the
community in a
   trial, so that no one with an ax to grind can
control the process.

For example, it would be nice if HCI and the NRA could jointly sponsor a
Firearms Research Insitute, funded equally by both parties, to carry out
the research.  I think that the gun control debate would rage on,
because individuals vary in their judgments of "acceptable risk", but at
least both sides would be arguing using studies that both believe to be
valid.

(Source:   Let's Get Real About Risk
David Ropeik, director of risk communication for the Harvard Center for
Risk Analysis
Sunday, August 06, 2000, pg. B01
Washington Post
http://washingtonpost.com/wp-dyn/articles/A41017-2000Aug5.html )

The Wall Street Performer Protocol: Using Software Completion Bonds To Fund Open Source Software Development]

[Chris Rasch]

Hi,

I've written an essay outlining a method for funding
open source software development that I think offers a solution to the
"free rider" and "assurance" problems caused by the "public good" nature
of open source software.

In brief, it involves creating a market for
tradable software completion bonds.  A software completion bond is a
promise to pay the bond owner the face value of the bond when anyone,
anywhere in the world, completes software that meets the bond specs.


Here's the URL:

The Wall Street Performer Protocol: Using Software Completion Bonds To
Fund Open Source Software Development
http://www.openknowledge.org/writing/open-source/scb/

I would welcome any suggestions, questions, or criticisms you may have. 
I'm especially interested in your thoughts regarding my analysis of the
public goods problem in free software development.

Chris Rasch

More anti-patent references

[Chris Rasch]

THE CASE AGAINST THE PATENT SYSTEM
by Pierre Desrochers
Senior Research Fellow, Urban Studies, Institute for Policy Studies,
Johns Hopkins University   
http://www.quebecoislibre.org/000902-3.htm

"As many psychologists and historians of technology have shown,
innovation does not proceed through major breakthroughs by specific
individuals, but rather through the collaboration of different people
who, through small and cumulative improvements, yield novel and useful
artifacts over time (Basalla, 1988). All of patent law, on the other
hand, is based on the assumption that an invention is a discrete and
novel entity that can be assigned to the individual who is determined by
the courts to be its legitimate creator. The associations of an
invention with other existing or past artifacts are therefore obscured.
Despite its philosophical foundation, however, the patent system cannot
entirely obscure the true nature of technological change. As I have
already mentioned, virtually every new patent infringes in some way on
other patents. Furthermore, most patented innovation are typically very
minor improvements. As the economist F.M. Scherer (1987: 124) has noted:
« As the bleary-eyed reviewer of some 15,000 patent abstracts in
connection with research? I was struck by how narrowly incremental
(adaptive?) most "inventions" are. » Even an anonymous author writing in
a brochure of the Canadian Intellectual Property Office (1994: 8) had to
admit that 90% of all patented inventions are minor improvements on
existing patented devices." 


Are "Intellectual Property Rights" Justified?
by Markus Krummenacker
available at:
http://www.n-a-n-o.com/ipr/extro2/extro2mk.html

Contains a fairly good summary of the sordid history of patent and
copyright law, as well as a number of references to good
academic studies arguing against copyright/patent validity.

CONTRA COPYRIGHT
by Wendy McElroy
June 1985.THE VOLUNTARYIST
http://www.mmsweb.com/eykiw/pf/contra.txt

Argues that copyright laws give others control over what you think.

The Growth of Intellectual Property:
A History of the Ownership of Ideas in the United States
William W. Fisher III*
forthcoming in Eigentumskulturen im Vergleich (Vandenhoeck & Ruprecht,
1999)
http://eon.law.harvard.edu/property99/history.html

Very good history of IP laws in the U.S. by Harvard Law professor, that
is generally sympathetic to reducing their scope.
It contains this astonishing quote:

"Last year, a group of intellectual-property lawyers argued in an
article in the National Law Journal that athletic maneuvers could and
should be patented. A method "for sailing an America's Cup yacht wherein
the yacht sails 10 degrees closer to the wind, for
high-jumping higher or for skiing downhill 10 percent faster,' they
claimed, could easily be classified as a "useful process" within the
meaning of the federal patent statute. If nonobvious and novel, such a
technique should qualify for patent protection. After all, if one
can patent a new surgical procedure, why not the Fosbery Flop? n2 The
chances that the courts would adopt this proposal are not
great, but the argument is colorable."

Re: fairness

[Chris Rasch]

Hi

>
> Not true.  If the audience is randomly distributed, then even a
> sequential selection of questioners gives everyone an equal chance of
> being chosen.  I admit that it would appear biased, which is
> important to the audience, but from a purely rational viewpoint, is
> it helpful to choose from different parts of the audience?
> John

With the method you propose, after the speaker picks the first member of
the lucky group, the chance that other members of the audience have to ask
questions immediately falls to zero.   Although your method is technically
fair, I think speakers prefer to choose questioners at random because all
audience members continue to have a  chance to ask questions throughout the
q & a period.

Chris

Re: Why Are Courting Signals Ambiguous?

[Chris Rasch]

I agree with Bill that people flirt because it's "fun"--but I agree with Robin, that 
the reason that people find flirting "fun" is because it is an aid to finding high 
quality mates.

>From what I've read, for the most part, women drive the courship process (1).  Both 
>male and females seek the highest quality mates they can get.(2)  Women however, 
>invest much more in their offspring  than men do, so they have a much greater 
>incentive to be picky about their mates.  I think that one purpose flirting serves is 
>to separate the verbally fluent, socially adept males from their clumsier brethren.  
>Verbally fluent, socially adept males are more likely to succeed at forming 
>alliances, avoiding punishment, and
otherwise moving up the local hierarchy, thereby securing more food, money, etc. for 
the female's offspring.  Ambiguity also allows the female to test the male with less 
risk of direct conflict if she chooses not to go any further in the relationship.


(1) http://socpsych.lacollege.edu/flirting.html (Lay article from American Airlines 
magazine about flirting research conducted by Dr. Marianne Moore in singles bars)

(2) I found David Buss's arguments about the evolutionary origins of human desire to 
be quite compelling.  I highly recommend his book  _Evolution of Desire_  You can read 
an interview with him at: http://www.clark.net/pub/ogas/evolution/INTERVIEW_buss.htm 
(Interview with David M. Buss, author of Evolution of Desire)  See also this Edge 
interview with Geoffrey Milller:  http://www.edge.org/3rd_culture/miller/index.html

Chris

How much do firms benefit from noncompete agreements?

[Chris Rasch]

Does anyone know of any studies examining how much firms benefit (if
any) from non-compete agreements?


While doing research on that question, I found this interesting paper:

BIASES IN THE INTERPRETATION AND USE OF RESEARCH RESULTS
Robert J. MacCoun
Richard and Rhoda Goldman School of Public Policy, University of
California, Berkeley, California 94720-7320,
[EMAIL PROTECTED]

"When self scrutiny fails, we rely on institutional safeguards such as
peer reviewing, research replication, meta-analysis, expert panels, and
so on. A
detailed review of these topics is beyond the scope of this essay, but
it should be noted that many of these practices have themselves been
scrutinized
using empirical research methods. For example, Peters and Ceci (1982 and
accompanying commentary) provided a dramatic demonstration of the
unreliability of the peer review process. A dozen scientific articles
were retyped and resubmitted (with fictitious names and institutions) to
the
prestigious journals that had published them 18-32 months earlier. Three
were recognized by the editors; eight of the remaining nine not only
went
unrecognized, but got rejected the second time around. (Though one
suspects that many articles would get rejected the second time around
even when
recognized.) Cicchetti (1991) and Cole (1992) provide equally sobering
but more rigorously derived evidence on the noisiness of the peer review
process,
citing dismally low interreferee reliabilities in psychology journals
(in the .19 to .54 range), medical journals (.31 to .37), and the NSF
grant reviewing
process (.25 in economics, .32 in physics). To make matters worse, at
least some of this small proportion of stable variance in ratings is
probably
attributable to systematic bias, though the limited research base
precludes any strong conclusions (see Blank, 1991; Gardner & Wilcox,
1993; Gilbert,
Williams, & Lundberg, 1994; Laband & Piette, 1994; Rennie, 1997). "

available  at:

http://socrates.berkeley.edu/~maccoun/ar_bias.html

Economic History Services

[Chris Rasch]

Just thought I would offer a pointer to www.eh.net, the Economic History
Services web server.  It has several dozen book reviews, an abstract
database, and a number of other useful services.

http://www.eh.net/bookreviews/title.php

Chris Rasch

Patent Quotes

[Chris Rasch]

I found a number of anti-patent quotes posted by Gordon Irlam in the
Coalition for Networked Information mail archive
at http://www.cni.org/Hforums/cni-copyright/1994-04/0648.html.

Message-Id: <[EMAIL PROTECTED]>
From: [EMAIL PROTECTED] (Gordon Irlam)
Subject: Re: Articles, Books Against Copyright, Trademark, Patent
To: [EMAIL PROTECTED]
Date: Mon, 12 Dec 1994 20:07:15 -0800 (PST)


Most of the work critically examining the functioning of different
forms of intellectual property has been performed by economists.  The
Winter 1991 issue of the Journal of Economic Perspectives contains
several readily accessible articles worth reading.

In a previous life I spent some time studying patents.  Large parts of
the patent system are badly broken.  I maintain a collection of quotes
I find interesting, some of which may serve as pointers for further
study.

  Enjoy,
 Gordon.
 <[EMAIL PROTECTED]>

==

The advantages ... [of not having patents] in the machine industry
generally, lie less in the free use of developments themselves, than
in the free scope for engineers in general.  With great complicated
machinery, individual, perhaps not very essential, parts can be
patented, thus preventing a complete and perhaps much more valuable
construction and forcing better engineers to an exacting study of all
such little patents.

-- Bureau der Kaufmannischen Gesellschaft Zurich, 1886.

==

Watt refused applications for licenses to make engines under his
patent: he discouraged experiments by Murdoch with locomotive models;
he was hostile to the use of steam at high pressure; and the authority
he wielded was such as to clog engineering enterprise for more than a
generation.  If his monopoly had been allowed to expire in 1783
England might have had railways earlier.  If a similar privilege had
been extended to Arkwright - if, indeed, his wide patents had not been
annulled in 1781-5 - it is at least possible that a dead hand might
have rested on the cotton industry also, and that forces tending to
raise the standard of life of the poor would have been stifled.

-- Ashton T.S.,
   An Economic History of England: The 18th Century.

==

In the electronics industry, patents are of no value whatsoever in
spurring research and development.

-- vice-president of Intel Corporation,
   Business Week, 11 May 1981.

==

Few writings on the subject of intellectual property expose the
circular and issue begging use constantly made of the word 'property'.
'Property', of course, means little more than legal protection for a
claim made by a person.  It usually refers to the guarantee of an
entitlement to exclude.  The reasons for finding such an entitlement
necessitate, in intellectual property law as in all other areas of
law, an enquiry as to whether the conditions of protection are met.
But whatever the precise definition of 'property', the point here is
that it is not 'reason' to say that something deserves protection
because it is 'property'; 'property' is a shorthand description for a
'conclusion' of law.  It is meaningless, for example, to claim
protection on the ground that one has 'natural property rights' in
something.  Land and moveable goods are commonly called 'property'
because they are typical subjects over which exclusive rights are
recognized by law, but whenever the existence or extent of a right to
exclude is challenged no assistance is gained by stating that one's
interest is 'property'.  Particularly must all fog be lifted for the
next few years when some copyright law reform in Canada may reasonably
be expected.  Wringing hands or raising voices over 'expropriation of
property' or 'piracy' or quoting the eighth commandment, will not
contribute to the settlement of issues beyond providing an
inarticulate point of view, without reasons, on policy questions
concerning both the fact and form of incentive to be provided to
creators.

-- Bruce C. McDonald,
   Canadian Bar Review, vol. XLVII, 1969, p.  145.

==

It is indeed an entire climate and environment that must be sought --
an environment characterized by good access to information of all
kinds, intellectual curiosity, eagerness to learn, speculative
thinking, experiment, enterprise and the entrepreneurial spirit.  To
obtain all this, there must be efficient distribution as well as
production of knowledge, information and innovation -- a spreading
about of these things.  From this process will derive the kind of
advancing society that benefits, firstly, consumers; secondly,
artists, resear

Re: Software Patents

[Chris Rasch]

cle Against Intellectual Property may have some references of
interest:

http://www.uow.edu.au/arts/sts/bmartin/pubs/95psa.html

Not directly related to software patents, but Hal Varian and Carl Shapiro's book
_Information Rules_ may be useful:

http://www.sims.berkeley.edu/~hal/people/hal/articles.html

Hope this helps!

Chris Rasch

APA reviews of The Bell Curve

[Chris Rasch]

>From http://www.apa.org/journals/bell.html


Views Two of The Bell Curve


The following book reviews will appear in the May 1995 (Volume 40,
Number 5) issue of Contemporary Psychology, APA's journal of book
reviews.

Richard J. Herrnstein and Charles Murray The Bell Curve: Intelligence
and Class Structure in American Life New York: Free Press, 1994. 845
pp. ISBN 0-02-914673-9. $30.00

Reviews by Thomas J. Bouchard, Jr., and Donald D. Dorfman


Breaking the Last Taboo

Review by Thomas J. Bouchard, Jr.

"We hold these truths to be self-evident, that all men are created
equal, that they are endowed by their Creator with certain inalienable
Rights, that among these are Life, Liberty, and the pursuit of
Happiness." With these words Jefferson introduced one of America's
most treasured documents, the Declaration of Independence. Successive
generations of Americans have not only embraced Jefferson's noble
sentiments, they have embellished them.  Equality of political rights
and legal standing has been expanded into a belief in literal
equality; today, differences in outcome are taken as prima facie
evidence of unequal opportunity. In an egalitarian society such as
ours, the existence of significant and enduring individual or group
differences in intelligence is seen as a challenge to our highest
ideals. This challenge is taken up by Richard J. Herrnstein and
Charles Murray in The Bell Curve.

The Bell Curve has a simple but powerful thesis: There are substantial
individual and group differences in intelligence; these differences
profoundly influence the social structure and organization of work in
modern industrial societies, and they defy easy remediation. In the
current political milieu, this book's message is not merely
controversial, it is incendiary. As scholars such as Daniel Moynihan,
Arthur Jensen, and E. O. Wilson have learned, the mainstream media and
much of the scientific community have little tolerance for those who
would question our most cherished beliefs. Herrnstein and Murray have
received similar treatment. They have been cast as racists and
elitists, and The Bell Curve has been dismissed as pseudoscience,
ironically by some commentators who broadly proclaim that their
critique has not benefited from a reading of the book. The book's
message cannot be dismissed so easily. Herrnstein and Murray have
written one of the most provocative social science books published in
many years. The issues raised are likely to be debated by academics
and policymakers for years to come.

The emergence of a cognitive elite

Commentators from across the political spectrum have documented the
profound social changes that all industrialized societies are
undergoing at the end of the 20th century--erosion of the middle
class, loss of well-paying manufacturing jobs, and an emerging
information age in which individual success will depend on brains not
brawn. The Bell Curve tells a similar story regarding the United
States. It differs from other works by focusing on intelligence,
rather than education or social class as a causal variable. The
authors tell us that true educational opportunity as a function of
ability (measured by IQ tests) did not arrive in the United States
until about 1950. Until that date only about 55 percent of high school
graduates in the top IQ quartile went directly to college. From 1950
to 1960, this number jumped to 72 percent, and in 1980 over 80 percent
of graduates in the highest ability quartile went to college. In
addition, sorting by cognitive ability continues as students move
through college. It also occurs across colleges, with the elite
schools selecting the more intellectually talented students. Finally,
it continues across careers in the world of work. The authors argue
that intellectual stratification through occupations is driven by
powerful economic pressures. This argument is based on a number of
different and compelling lines of evidence. If Herrnstein and Murray
are correct, current social inequalities reflect, in large part, the
achievement of a meritocracy based on cognitive ability.

The notion of a meritocracy is not, in itself, an affront to American
sensibilities. Social scientists have carefully documented that social
mobility does occur from one generation to the next and that cognitive
ability is a major factor in determining whether an individual will
achieve greater or lesser social status than did his or her parents
(Waller, 1971). When each generation resorts in this way, the elements
of fairness and opportunity are preserved. If, however, as The Bell
Curve asserts, the heritability of IQ is quite high and there is a
strong tendency for those similar in ability to marry, there will be
less regression toward the mean in the cognitive ability of children
of the intellectually talented and, therefore, less intergenerational
reassortment. Under these circumstances a meritocracy begins to look
like an aristocracy, a perception that is strongly reinforced when the
int

Re: Murray/Hernstein

[Chris Rasch]

My current level of understanding of econometrics and statistics is such that I
don't feel qualified to evaluate the arguments presented in the recent exchange
between Brian and Chris regarding the merits (or lack thereof) of Murry and
Herrnstein's research in The Bell Curve.  Assuming I wanted to remedy that
situation, what texts would you recommend I study to learn the vocabulary and to
at least recognize when a good (or bad) argument is being made?

Chris

Hard wired economic strategies...

[Chris Rasch]

http://www.guardianunlimited.co.uk/Archive/Article/0,4273,4054474,00.html

Cashing in on biology Money problems? Blame evolution, says John L
Casti.
Some economic strategies are hard-wired

John L Casti
Guardian

Thursday August 24, 2000

How do our concepts of economic exchange arise out of our evolved brain?

Hard-core economists would argue that we are all ultra-rational profit
maximisers, each out to get as much as we can with the minimal
investment
of resources. But in such a world of egoists, how can it be that
cooperation ever comes about? Are there good evolutionary reasons for
the
behaviour we see every day, in which people forego selfish profits in
favour of altruistic acts of charity?

According to the evolutionary biologist John Maynard Smith of Sussex
University, several major evolutionary transitions have occurred, each
one
leading to a stunning biological breakthrough. Economic concepts make
their appearance in many of these long-ago transitions. For instance,
cooperation is found in co-evolving viruses, division of labour appears
in
the form of cellular differentiation, and communication occurs in
chemical
signalling.

Language and emotions are two central prerequisites for human economic
transac tions. Homo economicus, the mythical rational utility maximiser,

has been unmasked by experimental economist Ernst Fehr of the University

of Zurich.

Fehr demonstrated how cooperation emerges among humans using The Public
Goods game, which illustrates how self-interest hampers economic
exchange.
The game involves four players, each given #10 by an experimenter, and
asked to independently invest any part of this money into a common pool.

The experimenter then adds a similar amount to the pool and it is
divided
equally among the four participants. So if all four invest their total
fortune they can each double their money.

But there is a very high temptation to freeload, since if one person
invests nothing, while the others invest their total fortune, each
contributor will receive #15, including the one who invested nothing. If

this game is repeated, the players quickly learn to contribute very
little, leading to minimal earnings.

The game changes dramatically, though, if at the end of each round the
players have the option of punishing any player by imposing a fine. This

is economically irrational, as the fines return to the experimenter, not

to the punisher. The rules actually require that punishers have to pay
half as much as the fine they impose (rather like informers to the tax
authorities, who have their own tax return audited).

Nevertheless, the tendency to impose this kind of costly punishment is
widespread, and has a very beneficial effect: players invest for fear of

being punished.

It is economic ties more than genetic ones that underpin human
interactions. The division of labour, cooperation, and the exchange of
goods and services take place between unrelated individuals all the
time.
The principal force driving these interactions is what biologists term
'reciprocal altruism': I help you today because I expect you will help
me
tomorrow. However, this is direct reciprocation.

In modern economies the link between donor and recipient is broken. Why
bother to redress wrongs directed against third parties? The work of
Manfred Milinski at the Max-Planck Institute in Ploen, Germany, offers
insight into how this form of indirect altruism stems from the world of
biology through the mechanisms of reputation and status.

In Milinski's experiment, players interacted in pairs, each having the
chance to perform an act of altruism or to be selfish and not do so.
Each
individual had a score, which rose if a player performed an altruistic
act
and fell in they did not.

In a social group, those who are discriminating in their choice of
strategies soon channel help to individuals with high scores. The
assumption is that such help provides recipients with a benefit - four
Swiss francs in the experiment - but at a cost to the donor - one or two

Swiss francs.

When the number of rounds of play was not known before the experiment
began, and the number of players was large so that no two players were
likely to encounter each other twice, the results were clear. Helping
behaviour became widespread, and those who refused to help mostly did so

when the player they were engaging had a low score. This showed that
cooperation can be established as long as players have some way of
knowing
the score of whoever they interact with.

The social and economic decisions of real-world humans are determined by
a
constellation of feelings and impulses, rather than cold, analytical,
rational calculations. In all cultures there exist similar, and equally
irrational, ideas of fairness. Behaviour deemed unfair inevitably leads
to
bitterness, anger, and conflict. Evolutionists convincingly argue that
the
capabilities for friendship, gratitude, and empathy are adaptive traits,

since they increase reproductive success u

Economist Olympics?

[Chris Rasch]

Does anyone know if anyone has held an "economist Olympics?"  via one of these
games (e.g. Sim City)?  It seems like it might be a fun tool for evaluating
policy proposals.  For example, suppose two economists disagreed about the
effects of a given policy proposal.   To resolve the issue, they have their
students play a series of simulations (Ultima, Sim City), some of which
implement the proposal in the meta rules of the game, some of which do not.  To
give it some teeth (a la Robin Hanson's idea futures proposal), prior to the
games,  each economist must bet on their predicted outcome.


Can such games model reality well enough to give interesting results?
Would economists agree on the meta-rules enough to agree to participate?

Re: Xerox machines and book prices

[Chris Rasch]

Bernard Girard wrote:

> That's an idea almost as old as xerography. Does anyone knows of a company (or
> library) that markets this type of service?
>
> michael gilson de lemos a *crit :
>
> > Hmmm. What about on-demand publishing, which is JIT, controlled set-up costs
> > and dependent on photocopying technology?
> >
> > Best Regards,
> > MG

There are several companies that offer "books on demand" publishing services.
See:

http://www.lightningprint.com
   Lightning print is a division of Ingram/Micro.  They recently printed their
millionth book on demand.  Unfortunately they don't appear to deal with
individuals.
http://www.upublish.com/upb02a.htm
For $500 will publish how to manuals, academic texts, etc.
http://www.bookmachine.com
  Makes a $60,000 book vending machine that can create paperback books on the
spot, in the bookstore.
http://www.xlibris.com
  Similar to upublish--seems to target fiction authors, rather than the technical
book market.
http://www.backinprint.com/
  Available only to author's guild members (author's get 15-20% of list price)
www.toexcel.com
  Similar to Xlibris--appears to be down at the moment.


A couple of articles:

The New Digital "Demand Publishing" Industry
by Kenzi Sugihara and Eugene G. Schwartz
http://www.pma-online.org/newsletr/august02-99.html


http://www.pubspace.com/toexcel.html

Re: Xerox machines and book prices

[Chris Rasch]

fabio guillermo rojas wrote:

> 1) Has the invention of the xerox machine suppressed book prices
> by offering a cheap (illegal) substitute for new books?

I'm not sure that copying is a cheap subsitute for most books.  Assuming
that you're copying a 300 page book,  and that copies cost 10
cents/copy, the resulting pile of pages would cost you $30.00.  Add
another $2.50 for a 3 ring binder.  Assuming it takes you an hour to
copy the book, hole-punch, and collate, and assume that you make minimum
wage, add another $5.25.  So now you've spent $37.75 for a 300 page
"book" that's twice as bulky as the original, with poor picture quality,
and pages that are easily ripped out.  Most trade softcover book prices
fall around in this range, and you get a truly bound book.

> 2) If so, any empirical data? How much woul a book cost in a world
> with no easy copying?
>
> 3) Have tape decks, CD burners, etc suppressed music CD prices
> in a simialr fashion?

To test the hypothesis that easy copying suppressed music prices, you
might look at sale prices of classical music records both before and
after the introduction of the tape cassette.

This ZDNet article discusses some of the studies that examine the
effects Napster has had on CD sales:
http://www.zdnet.com/intweek/stories/news/0,4164,2605961,00.html


>
> -fabio

Re: Preaching to the Converted

[Chris Rasch]

Daljit Dhadwal wrote:

> I was just looking at the Liberty Fund Website and they have a large suggested
> reading list. Why is it that they essentially leave out any books that could be
> considered contradictory to their ideology? (I'm sure it's the same for websites
> affiliated with groups on other parts of the political spectrum)  When reading
> peer-reviewed journals even in overtly ideological fields like Public Choice,
> there's usually a healthy debate. Is there anything about the WWW in particular
> (as opposed to say USENET) that makes websites bad places to debate ideas. Most
> seem like mutual admiration societies.
>
> Daljit

Would presenting alternative books serve the interests of most of the readers of
the Liberty Fund site?  If I were particularly interested in defenses of socialist
economics and ethics I would go to a pro-socialist site--presumably the list on
that site would serve me better than any list on a free-market site, since the
socialists would likely know their own literature better than the free market
crowd.  Likewise, including the pro-socialist books on a principally
pro-free-market site would lower the signal to noise ratio for someone looking for
book recommendations from a free-market perspective (most of the Liberty Fund
site's readers, I presume).

Can web sites foster healthy debate as well as other media?  Sure.  Good bulletin
board software helps, as well as competent moderators.  See Philips and Alex's
Guide to Web Publishing by Philip Greenspun at
http://www.arsdigita.com/books/panda/ for a superb discussion on the mechanics of
building such communities.

Chris

Re: Extremists due to strong priors?

[Chris Rasch]

Robin Hanson wrote:

> The June 2000 American Economic Review has an article by
> Blomberg & Harrington,  "A Theory of Rigid Extremists and
> Flexible Moderates with an Application to the U.S. Congress".
>
> They offer data showing a correlation between political
> extremism and inflexibility in changing one's opinions.
> They refer to a 1950 army survey with a correlation
> between extreme views and holding those views strongly.
> And they present new data on US congressfolk explaining
> variance in ADA scores in terms of longer tenure and
> being closer to the median view.
>
> Their explanation is that opinion extremism and confidence
> are initially independent, but those who are less confident
> are more responsive to information, and thus move toward
> some common value, while those who are more confident stay
> put.  Harrington has a larger research program on the
> evolution of flexibility and inflexibility
> (see:  http://www.econ.jhu.edu/People/Harrington/)
>
> Since some people on this list might be considered extremists,
> what do you think of this explanation?  Are you extreme
> because you are inflexible?
>
> It bothers me that his results seem so symmetric - it should
> be unusual for the ex post information to be smack in the
> middle of the prior distribution.

I suspect that most people regard the labels "extremist" and
"inflexible" to be perjorative.  You're unlikely therefore to elicit
many responses, since most people don't identify themselves as such.
Someone you might label an "inflexible extremist" is likely to consider
themselves "consistent" and "principled."

Regarding the issue of flexibility, one explanation is that someone who
has spent a lot of time thinking about his/her belief system, and
believes it to be logically consistent,  is likely to believe it more
strongly, and be more resistant to change than someone who hasn't given
it much thought.