Friday, September 01, 2006

If only Iraq were more "squiggly"...

On, Amity Shlaes discusses an article by three economists that looks at how a country's borders determine how successful the country is. They claim that national borders that are determined by natural boundaries (mountains, deserts, rivers) result in a more stable and successful country. Therefore, countries that have boundaries that are arbitrarily determined straight lines are more likely to split up or combine ethnic groups in ways that cause conflict for the country.

They use the word "squiggly" to represent natural boundaries and measure the "squiggly index" to determine how much of a country's border is determined by natural boundaries. In the article, Shlaes claims that Iraq will always face turmoil because their borders were arbitrarily determined (they have a low "squiggly index").

This is just an interesting example of applying data anlysis techniques to questions that push the boundaries of economics.

After reading the article, what do you think of the study? Do you agree with the recommendations of the authors? (Any comments that are too politically-charged or in any way disrespectful of both sides will be deleted)

(Source: Greg Mankiw's Blog)

A Unique Tourist Attraction

In a nature park in Hidalgo, Mexico (700 miles from the border), a local tribe runs a tourist attraction that allows people to pay 150 pesos (about $15) to spend the night as an illegal immigrant crossing a mock Rio Grande and running from a mock Border Patrol. The tribe says that they run the enterprise as an educational experience to “build empathy for migrants by putting people in their shoes.”

Here is a full description.

(Source: Marginal Revolution)

Wednesday, August 30, 2006

Less kids = economic growth?

This may be too early in the year for you guys to talk intelligently about the determinants of economic growth since we have not studied any Macroeconomics, but you can take a stab at it anyway:

On his blog, Economist Tyler Cowen summarizes a debate about whether the strong economic growth that Ireland has been experiencing is due to its "youth dependency ratio" being low. This means that there are less children per each working adult (therefore, there are less children that must be supported). Dr. Cowen explains the reasons why the youth dependency ratio might have an effect on economic growth here.

Also, here is the original article by Malcolm Gladwell in the New Yorker that started the debate, which might give a less techincal explanation and may be a better place to start..

(Source: Marginal Revolution)

Tuesday, August 29, 2006

Economics of Haircuts

Economist Bryan Caplan has posted an interesting question at his blog:
When is demand for haircuts higher? When short hair is in fashion, or long hair? Or is the relationship more complex?
When you talk about demand for haircuts, I think you can talk about two different things: the number of haircuts demanded from professional barbers and stylists or instead the amount of money spent on haircuts from professional barbers and stylists.

(Source: EconLog)

Economics Makes You Fat

There have been a lot of debates recently about why people are so much fatter than they used to be. Well, the answer has a lot to do with the law of demand as you can see by this discussion in the Wall Street Journal by economist Darius Lakdawalla, and it basically boils down to the fact that food is now cheaper and and work nowadays demands less physical activity:

It's no secret that Americans have been getting fatter over the last several decades. But in fact, weight has been rising for more than 150 years, as shown by the economic historians Dora Costa and Richard Steckel. From the Civil War to the 1990s, the weight of a 6-foot-tall American male increased by about 30 pounds on average.

These historical trends are not hard to understand. As we have gotten wealthier and more technologically advanced, food has gotten cheaper and work more sedentary. Both these factors have contributed to rising weight over the time-frame of centuries, and the recent rise in obesity has likewise been fueled by reductions in the price of food.

Since 1976, food has fallen in price by more than 12% compared to other goods. My colleague Tomas Philipson and I have shown that this reduction in price can explain at least half the recent growth in obesity. Shin-Yi Chou, Michael Grossman and Henry Saffer reached similar conclusions about the importance of price. In addition to its overall price, they stressed the increasing availability of food service establishments.

While it is not entirely clear whether restaurants make people heavier, or heavier people attract more restaurants, there is no question that eating is cheaper and easier than it used to be. As if that were not enough, the most calorie-dense foods have seen the biggest price reductions. David Cutler, Edward Glaeser, and Jesse Shapiro have shown that technological advances have especially lowered the price of processed and snack foods -- like french fries and vending machine treats -- which are particularly high in calories.

The evidence above suggests that obesity is a by-product of prosperity and technological advance.

(Source: Greg Mankiw's Blog)

Why it seems like everyone goes to college

A minor detail that I found interesting in the map from the previous post on Starbucks and McDonald's, is that I did not know that KFC and Taco Bell had higher revenues than Starbucks. I expected Starbucks to make more money than either because I know a lot more people that spend a lot of money at Starbucks as opposed to KFC or Taco Bell.

The problem with my logic is an idea called selection bias. This is where you come to the wrong conclusion due to the fact that the sample of people you know or study does not represent the population as a whole. So just because I don't know many people who eat at KFC or Taco Bell, that might just mean that the type of people I know don't eat there as much as the general population.

Another example of this bias is how students at Walker are surprised to find out that only 60% or so of high school students go to college right out of high school. There is a selection bias at work here since almost everyone you know at Walker or other Cobb county schools plan on going to college, but that does not represent the country as a whole. If you went to an inner city public school or lived in a very rural area, that percentage may seem high instead.

Can you think of any other cases where you had a misconception due to selection bias? Or perhaps a common selection bias amongst Walker students or people you know?

Monday, August 28, 2006

Starbucks and McDonald's

Here is a map that shows the number of Starbucks and McDonald's outlets in each country around the world. A couple of interesting details is that 3 new Starbucks outlets open daily, and McDonald's has annual sales that double Afghanistan's GDP.

The main question that springs to mind when I see these two graphs is why it is these companies that have such a global reach? Why aren't there as many Burger King and Kentucky Fried Chicken outlets in foreign countries as there are Starbucks?

(Source: Marginal Revolution)