Showing posts from April, 2010

Calorie posting at chain restaurants

Apologies for thin posting.  It's just been too busy for much posting given this blog is pretty low on my priority list these days.  I do have a number of on-topic things I'd like to blog about and hope to have a bit more time in the weeks ahead.  Today was my last lecture for a long time, and that helps a lot.  Just finals, a PhD prelim exam, research and a ridiculous stack of referee reports due.... Anyway. Here's some new interesting research by Bryan Bollinger, Phillip Leslie and Alan Sorensen on mandatory calorie posting in restaurants.  Here's the abstract: We study the impact of mandatory calorie posting on consumers’ purchase decisions, using detailed data from Starbucks. We find that average calories per transaction falls by 6%. The effect is almost entirely related to changes in consumers’ food choices—there is almost no change in purchases of beverage calories. There is no impact on Starbucks profit on average, and for the subset of stores located close t

Leonhardt says now is a good time to buy rather than rent a home

Way back in the midst of the housing bubble's peak, David Leonhardt wrote a nice (and very influential) article about it being better to rent than buy .  His colleagues at the New York Times also put together a very nice interactive calculator that allows people to easily make their own assumptions and calculations. Now that the bubble has deflated, Leonhardt has changed his tune. Now he says it's better to buy than rent.   At least in many parts of the country. I am humbled to say that I was actually critical of Leonhardt when he wrote his 2005 article.  I wrote a letter to the editor of the Times, and the Times even got back to me about publishing it, but I was slow to reply since I was on vacation at the time.  My basic point was that real interest rates were low and that it seemed risk premiums were low.  Under these assumptions, basic financial calculations suggested housing prices made a fair amount of sense.  I didn't see prices rising much further, but I certai

Should the government impose limits merchant credit card fees?

Albert Foer, President of the American Antitrust Institute , thinks the U.S. government should impose a limit of 0.5% on the fees charged by banks to retailers for use of credit cards.  Currently Visa and Mastercard charge about 2% of all transactions.  Is this a good idea? Interestingly, it seems Visa grew its market share buy raising their fee, which gave banks an incentive to push Visa on retailers and offer nice deals to consumers who used the card in the form of cash back bonuses, frequent flyer miles, etc. This does seem like a strange market.  Clearly there are market power issues stemming from network externalities and economies of scale.  When Australia capped the fee is didn't seem to cause many problems, or so Foer claims.  Is that true?  It seems like a simple enough thing to examine empirically.  What share of retail sales in Australia are credit card transactions?  How does this compare to the U.S.?  How did shares change in both countries before and after the

Life Insurance for Profit: A Story about Vinny and Vito

Update: I wonder if maybe this post is too obtuse.  In case it isn't clear to readers, I was trying to make up a playful parable that mirrors, at least in some ways, the situation with Mr. Paulson (Vito), Goldman Sachs (Vinny) and the SEC (FBI). The implicit fictional characterization of Mr. Paulson (at least) isn't quite fair.  But it did make the story a little more fun to tell. Vito, an underworld Chicago mob boss, is becoming increasingly concerned about his extended family of criminals.  Tensions with a rival gang have heightened and one of his boys recently got wacked.  Things are bound to get worse in the coming months. Vito is searching for an upside to this quandary.   So he seeks out his friend Vinny who works in the  insurance business.  Vito tells Vinny about his situation and that he’d like take out life insurance for all the members of his extended family.  A LOT of life insurance.  You see, he’s pretty darn sure at least some of his boys will get wacked.  Th

Warmest 12 months in recorded history, and then some

A picture stolen from Brad Delong , who writes: "We have just experienced the hottest twelve-month period in at least the past thousand years." So much for emailgate, which, as it turns out, only shows how bad scientists are at handling the politics in which they are immersed. Anyway.  It's clear the planet is warming and that it is almost certainly due to human caused CO2 emissions.  The recent volcano eruption may cool us off an iddy bit for an iddy while.  Much harder questions persist about the costs and benefits of curbing emissions and induced warming.  But as time goes on, it seems to me the costs of action decline and the cost of inaction increase.  Would it really be such a crime to develop a global system of property rights to manage this problem?  Maybe while we're at it we can work on development of property rights for the other big global commons, the oceans. Perhaps the largest issue here is not the price level we should put carbon but rathe

We need more evidence on impacts of genetically modified crops

Here's the story at the New York Times. One key sentence:  "The improvement in water quality could prove to be the largest benefit of the [genetically modified] crops, the report said, though it added that efforts should be made to measure any such effect" It amazes and disappoints me tremendously how little we know about the links between agriculture and water quality.  We know agriculture, broadly speaking, is perhaps a key source of all kinds of water pollution.  But which parts of agriculture are most important, and how much policies and structural changes ranging from conservation tillage, buffer strips, GM crops, shifts in cropping patters, and growth in confined livestock operations, really matter is, I think, a complete unknown.  There are some black box models that some have coaxed into spitting out numbers, but I really don't believe them.  I expect few do. What I'd love to see is hard data linking changes in agriculture to changes in water

Krugman on Environmental Economics

This is a really nice article by Krugman on the economics of climate change. There's not much new here for wonks who follow this stuff closely. But it's the nicest summary of issues that I know of written in a way that anyone can understand. I'll be making this required reading for my principles of economics class (ARE 201). What I would liked to have seen in the article but didn't: (1) Some discussion of carbon emissions besides burning of fossil fuels. Land use change, mainly deforestation, comprises about 20% of emissions worldwide. It's a lot harder to price sequestrations from trees, but that form of emission reductions is cheap. Without putting these emissions under the cap we'll have a large loss in efficiency, and possibly a big problem. For example, biofuel production could accelerate deforestation. (2) Some discussion of how unequal the likely costs of inaction will be. The DICE model and nearly all others obscure distributional issues wh