Hat tip to Greg Mankiw.

Facebook | It’s time you experienced my positive externalities…

With prom right around the corner, it’s time to think about getting that perfect date. In this arena, it is undeniable that economics students have the upper hand. Our intelligence and wit is unsurpassed among our peers in other subject areas. Not only that, but our subject lends itself to several cunning and effective pick-up lines. Here’s a few from the Facebook group, “It’s time you experienced my positive externalities…”. Thanks to SAS senior David Xu for the tip:

I’ll maximize your utility.

What do you say we expand our production possibility curves?

What do you say I eliminate some dead weight loss and add to your consumer surplus.

Do you work for the Fed, cause your raising my reserves.

You’re like the village commons…*sigh* what a tragedy!

You won’t find any elasticity with my demand, cause there are no substitutes.

It’s OK baby…I’m a price taker.

You’ve been spending too much time with the invisible hand…time for some external intervention.

You can price discriminate against me!

I’m a pure public good…you can free-ride on me any time you want.

We’re like monopolistic competition…all we care about is the short run.

Our society is underproducing…but I’m sure if we hooked up we’d achieve an efficient allocation of resources.

My fiscal policy is all about contributing to your private sector.

Your industry shows promise…time for my firm to break the barrier of entry.

Think you can come up with something better? Follow the link above and join the group, add your own Economics pick-up line!

Economics focus | Feet, dollars and inches | Economist.com

Okay, so I’m not rich. Nor will I probably ever be rich. The best I can hope for as a teacher is for successful interviews at good paying schools. But might I have an evolutionary, biological advantage over some other teachers when it comes to getting those good jobs that pay well in the teaching field? I might… and not because of my good looks (hey, don’t roll your eyes!), but because I’m six feet six inches tall. Read on to see why:

The tallest quarter of the population earns 9-10% more than the shortest quarter, according to two recent studies. Nicola Persico and Andrew Postlewaite of the University of Pennsylvania and Dan Silverman of the University of Michigan think this is because height gives adolescents self-confidence and helps them learn valuable social skills. Anne Case and Christina Paxson of Princeton University, on the other hand, argue that people who grow to their full potential are smarter, on average. Both brains and build depend on the care and nourishment a child receives.

Either way, the future looks a little brighter for tall people than it does for the “vertically challenged” among us.

Beyond the observable relationship between height and income, there are some interesting macroeconomic observations relating to height. For example, studies have shown that not only are tall people richer, but wealth helps make short people taller: “Earning enough to buy plentiful calories and protein makes a big difference to stature.” One may deduce, therefore, that as a country becomes richer, its poeple will grow taller. This has been shown in India, where…

Indian men of 20 are about 1cm taller than 40-year olds, partly because the country was substantially richer when they were born.

More can be drawn from the relationship between height and income. For example, equality of income distribution can be seen in the average height of the citizenry.

…the stature of society may reflect equality as well as prosperity. Extra resources add more to poor people’s growth than they add to rich people’s. So if two societies, with the same income per head, were to line up next to each other, the more egalitarian society should be taller.

This may be one explanation among many for the shrinking America of the 19th century. Tax records show that wealth gaps widened in America as industrialisation took hold. From 1820 to 1900, the Gini coefficient (a standard measure of inequality) in Massachusetts rose by 24%, according to Mr Steckel. Even as average heights fell, the stature of senior students at Yale and Amherst rose from 171cm to 173cm.

Who knew that biology and economics were so interconnected? Anyway, sorry to bum you out, shorties!

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It’s Friday morning here in Shanghai. My AP students are in the middle of their Macro Unit 2 test on Aggregate Demand and Aggregate Supply. I’m reading SAS’s weekly Parent Talk newsletter that I handed out to my homeroom this morning, and on the back cover is an advertisement for the housing compound across the street from school, “Rancho Santa Fe”.

I just had to post this to my blog, as I think it captures well the trajectory that rich, suburban, Shanghaites are heading as Shanghai and the other Eastern provinces continue to develop and get rich.

“Success has many stages.

Acquiring a definitive territory counts as the ultimate one.

Embracing the best nature and humanity have to offer.

Rancho Santa Fe Phase 3 is a magnum opus of a villa residence.

Opulent in elegance. Bountiful in spirit.

The grandeur lies not only in heritage, but the entirety of all that is perfect.”

I hope you enjoyed this as much as I did. Happy Friday!

Chinese leader offered women to U.S. in 1973 – CNN.com

China’s demographic challenges have proved difficult to overcome for much of the last century, and indeed, throughout its long history. Feeding, employing, and sheltering 1.3 billion people has recently been made less difficult thanks to China’s economy opening up since 1978, but as recently as the early 1970′s scarcity posed a serious threat to the country’s health and strength.

So how did Mao, in 1973 and elderly leader on the brink of senility, propose solving China’s population growth problem? He made visiting US Secretary of State an enticing offer:

Amid a discussion of trade in 1973, Chinese leader Mao Zedong made what Secretary of State Henry Kissinger called a novel proposition: sending tens of thousands, even 10 million, Chinese women to the United States.

“You know, China is a very poor country,” Mao said, according to a document released by the State Department’s historian office.

“We don’t have much. What we have in excess is women. So if you want them we can give a few of those to you, some tens of thousands.”

A few minutes later, Mao circled back to the offer. “Do you want our Chinese women?” he asked. “We can give you 10 million.”

After Kissinger noted Mao was “improving his offer,” the chairman said, “We have too many women. … They give birth to children and our children are too many.”

“It is such a novel proposition,” Kissinger replied in his discussion with Mao in Beijing. “We will have to study it.”

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xkcd – A webcomic of romance, sarcasm, math, and language – By Randall Munroe

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Wow, what can I say? America’s rich are becoming “disenfranchised” as the super rich leave them behind. While the rich can barely afford one family boat and vacations to Martha’s Vineyard, the super rich keep yachts in multiple harbors and jet off to Italy at their whim. This is an outrage, and more should be done to narrow the gap between these disparate groups!

Cutting through the satire, this story does get at some interesting core economic principles, namely the impact of taxes on productivity and output growth. What arguments could seriously be made for cutting taxes for the rich? What role to taxes really play in redistributing wealth from one bracket of income earners to another?

In The Know: Are America’s Rich Falling Behind The Super-Rich?

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All the talk about economics being the “dismal science” is totally wrong. In fact, this subject is more funny than people know! Have you heard of the Stand-up Economist? He actually does shows in which Economics jokes get laughs from non-economists… now if we high school teachers can’t learn from a guy like this, then who can we learn from? While making econ funny isn’t always easy, it should certainly get our kids attention! So, add humor to your list of tools in your attempt to make economics stick with your students. Ladies and gentlemen, the Stand-up Economist!

National Geographic News Photo Gallery: Week in Photos: Monster Hog

Near Delta, Alabama, May 3, 2007—Hogzilla may be headed for horror-movie heaven, but the massive swine that became an Internet sensation in 2004 may have been bested, size wise, by this reportedly wild pig killed May 3 by Jamison Stone, 11, and reported by the Associated Press on Wednesday.

From tip to tail, the newfound hog—dubbed “Monster Pig”—measures 9 feet, 4 inches (284 centimeters) and weighs in at 1,051 pounds (477 kilograms), according to Stone’s father.

At a 150-acre (60-hectare), fenced hunting range, Stone said, he shot the huge beast eight times with a revolver before tracking it with his father and guides for three hours. Finally, the boy shot the hog at point-blank range, killing the animal, the AP reported.

While hunting by children is legal in Alabama, officials are investigating whether anyone had transported and released the live feral pig into the hunting preserve, which would violate state law.

Okay, so maybe this one’s a stretch for a blog about economics, but sometimes when you see something in the news this amazing, you just have to share it with the world! Let’s see if I can come up with some questions about this one!

Discussion Questions:

1. What impact would “monster hog” have on the price of pork (assuming it goes to market)?
2. What will happen in the beef market once “monster hog’s” meat reaches the market? Explain.
3. Can you think of a product that might be a compliment to pork? Describe
   what will happen in that product’s market thanks to “monster hog”.

Looks like China could use a few monster pigs of its own to relax the steep increase in pork prices recently!

Tighter supplies lead to big price rises for pork, eggs-21food.com

THE prices of pork and eggs have soared in past weeks across China due largely to tighter supplies and increasing production costs…Food products account for 33 percent of the CPI in China with meat, poultry and related products making up about 20 percent.

According to the Ministry of Agriculture, live pigs nationwide were 71.3 percent more expensive than a month earlier, and pork, 29.3 percent higher.

In Beijing, the price of slaughtered pigs went up more than 30 percent in recent days…

An outbreak of blue ear disease, also known as Porcine Reproductive and Respiratory Syndrome, among pigs in Guangdong Province and the Guangxi Zhuang Autonomous Region, causing many deaths and a large amount of pigs to be culled, according to the National Development and Reform Commission…

“This sent a strong signal for distributors to jack up prices,” said Xu, adding that this exacerbated the unbalanced supply and demand.

“Pig raisers have lost money in the past couple years and they are reluctant to raise pigs. This led to a marginal decline in live pigs this year.”

Still worse, edible oil and grain prices rose at the beginning of this year, and feed prices followed suit.

Grain prices have risen largely due to an anticipated decline in output this summer and will continue to increase slightly in the coming weeks, boosting the prices of pork

Discussion Questions:

1. What is the “CPI” and why has it risen in China recently?
2. Does this article discuss the determinants of demand or the determinants of supply? Which determinant is being affected in the pork market?
3. What is happening in the market for pork in China? Which curve is shifting, supply or demand?
4. What “strong signal” led pork distributors to “jack up prices”?
5. If the price of pork continues to rise, what should happen to the supply of pork? Explain.

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Freakonomics: Monkey Business: Keith Chen’s Monkey Research

No I’m not talking about the latest freshman class at an Ivy League school… rather a group of monkeys at Yale that have been taught how to use money:

The essential idea was to give a monkey a dollar and see what it did with it. The currency Chen settled on was a silver disc, one inch in diameter, with a hole in the middle — ”kind of like Chinese money,” he says. It took several months of rudimentary repetition to teach the monkeys that these tokens were valuable as a means of exchange for a treat and would be similarly valuable the next day. Having gained that understanding, a capuchin would then be presented with 12 tokens on a tray and have to decide how many to surrender for, say, Jell-O cubes versus grapes. This first step allowed each capuchin to reveal its preferences and to grasp the concept of budgeting.

Turns out the law of Demand is not only true for humans but for monkeys too. When Chen “lowered the price of grapes”, monkeys would buy more grapes and less Jell-O, following the basic rule of utility maximization. Interestingly, the introduction of money led to more than just the simple exchanges of currency for candy and cucumber; the monkeys were also taught to gamble. Through their observations of several gambling scenarios, the researchers found monkeys tended to display “loss averse” behavior in games of chance, leading to an amusing conclusion:

The data generated by the capuchin monkeys, Chen says, ”make them statistically indistinguishable from most stock-market investors.”

Sadly, gambling was not the only vice that accompanied the introduction of money in to monkey society:

Then there is the stealing. Santos has observed that the monkeys never deliberately save any money, but they do sometimes purloin a token or two during an experiment.

But the debauchery does not stop with gambling and theft:

Perhaps the most distinguishing characteristic of money, after all, is its fungibility, the fact that it can be used to buy not just food but anything. During the chaos in the monkey cage, Chen saw something out of the corner of his eye that he would later try to play down but in his heart of hearts he knew to be true. What he witnessed was probably the first observed exchange of money for sex in the history of monkeykind. (Further proof that the monkeys truly understood money: the monkey who was paid for sex immediately traded the token in for a grape.)

As if we needed any proof beyond the widespread immorality and loss of values that distinguish many rich human societies, the steep decline of monkey morality observed at Yale can only be attributed to the introduction of currency! The implications of the Yale study on economics are clear: humans are not necessarily unique in our understanding of currency as a means of exchange. As long as money has imbued human societies, the wont to enrich ourselves through immoral means such as gambling, theft and prostitution has stained civilizations from ancient Mesopotamia to modern America.

When taught to use money, a group of capuchin monkeys responded quite rationally to simple incentives; responded irrationally to risky gambles; failed to save; stole when they could; used money for food and, on occasion, sex. In other words, they behaved a good bit like the creature that most of Chen’s more traditional colleagues study: Homo sapiens.

To make a more poignant observation, one thing is clear and disturbing, among the human societies today, Americans are most like monkeys when it comes to saving.

Discussion Questions:

1. Of the various functions of money, which role does money play for monkeys?
2. What gives the money used by the monkeys its value?
3. Discuss the evidence from this article suggesting that monkeys follow the law of demand.
4. What is the utility maximization rule and what evidence from this article supports the suggestion that monkeys follow this rule?
5. How are monkeys more similar to American consumers than to, say, Japanese or Chinese consumers?

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