Joy’s Cartoon is in a French Textbook

This is my day in the sun. A decade ago, I started ecoNomNomNomics.com. Back then, I knew that my dream job was “economics professor”, but I was years away and also thousands of miles away from where I am now. I have barely updated the site since 2011, but every now and then new people find it. My hope has always been that it would be both helpful and happy.

A French publisher reached out to me and asked for permission to use one of my cartoons in their workbooks that will reach actual French students. I was delighted to say yes.

Allons-y! With their permission, I reproduce the page that has my picture:

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Growing a Financial Advisory Practice Using Data

Lance Rybka is a current finance major at Samford University. He hopes to start a business that uses data analytics to help fee-based financial advisers grow firms.

According to data from the most recent Tiburon Summit, small fee-based financial advisers are increasingly facing pricing pressures that place their businesses at risk. Since 2009 the average fees charged by these advisors have decreased from 1.2% of AUM to .96%,, and 86% of Tiburon CEOs believe that these fees will continue to decrease over the next five years. While robo-advisers and data analytics are partially responsible for this restrictive pricing trend, many traditionalists do not realize the potential they have to grow their practice by embracing this technology instead of resisting it.

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Teaching Economics with COVID

In many of my blog posts I address either issues related to COVID or teaching economics. In this post, I want to combine the two. One thing economists of a certain age struggle to do is find examples to illustrate economic concepts which will actually connect with 18-22 year olds. The silver lining of the pandemic is that we now have an example that everyone is familiar with, and can be used to illustrate a host of economic concepts.

A great new book by Ryan Bourne, Economics in One Virus, really pushes this idea to the limit. He uses examples related to COVID to explain almost every single concept you would cover in a typical introductory economics course: cost-benefit analysis, thinking on the margin, the role of prices, market incentives, political incentives, externalities, moral hazard, public choice issues, and more.

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Thank you Tyler and Alex

Tyler Cowen and Alex Tabarrok have done really good work on saving America and beyond from Covid and from bad Covid takes. It’s worth saying this in more places.

Here is Alex on how great Tyler’s work has been on advancing disease-fighting science. Here is Ezra Klein (NYT) on how Alex’s advocacy.

Recall how this all started, as per the Econtalk podcast record in March 2020:

Tyler Cowen: I have been hunkered down at home every day, with some quick trips outside, typically to use the printer at work or maybe to refresh some grocery supplies as quickly as I can. But, , I wake up; I get onto my sofa; I get into information-absorption mode, and just let it rip until it’s time to go to bed at night. And, I’ve been blogging and writing about this the whole time, and really not doing very much else. Although I am spending more time cooking.

So, what I see as the data come in is we ought to have greater concern as to the possible risks here, for this being a very large scale negative event.

… And in fact, I don’t think I’ve ever been busier in my entire life. Reading materials, writing, passing along advice, just processing information. Every day feels like an enormous rush of things I have to do, even though in the sense of my physical surroundings it’s quite static.

No one had all the right answers in the Spring of 2002. How many people devoted themselves to figuring it out? Who was reading dense medical research papers instead of watching extra Netflix, after being forced into semi-quarantine? There have been many heroes of the pandemic (see data heroes). The Marginal Revolution blogging team is certainly among them.

I have a virtual heap of notes on pieces I would like to write. I made notes a few years ago for an essay with the working title “Tyler Cowen as pro life economist” (which has nothing to do with abortion, by the way). I was going to construct an original argument and pull together disparate facts. Someday, maybe I will write it, but now I’ll be leading with the example of the pandemic response. It’s so obviously “a matter of life and death”. If they caused the vaccine to arrive a month sooner, then we can count the lives saved.

I didn’t plan to phrase it this way, in my original essay, but everything is life and death to economists. Occupational licensing is life and death. Deflation is life and death, because if economic output is lost due to deflation that will be someone’s prescription payment and someone else’s ability to live a full life. Economic growth is life and death. Tyler is one of the few people pointing out that it’s not only today’s low-income people but also future generations that will have longer fuller lives if economic growth is higher.

Created By

There is an old adage, I don’t know who to attribute it to (probably Norman Lear), that theater is for actors, movies for directors, and television for producers. The logic behind it is fairly straight-forward and compelling.

No matter how much the director works to make their vision come to life on the stage, when the curtain rises the production succeeds or fails based on the choices the actors make that night, in that moment. They have all the power. Cinema is a different animal, granting considerably more influence to the director. They place the camera, and therefore the audience, wherever they want. They can demand take after take until they fill the frame with the vision they hold in their mind. They can lean over the shoulder of the editor at every step, telling the story they want to tell. The director does not, by any means, hold unchecked power, but they are the high-leverage determinant of a project’s success or failure.

Television as a producer’s medium is, in my opinion, slightly out of date. When people spoke of the power of producers within television, they were speaking of network television; a landscape with limited channels where few would ever be so foolish to dismiss the power of the median voter theorem. Producers thrived because they made the high leverage decision: what gets to be on television. The actors, the writing, the (ha!) cinematography, those were all 2nd-order concerns, trivial concerns really, that lived in the shadow of the one decision that truly mattered: did you get to be on television?

Whole lines of economic research and theory center on the economies of scale and network effects. If you’ve ever wondered why books about old Hollywood have some of the craziest stories you’ve ever heard, it all comes back to the simple, but rich, economics of a marketplace with massive network effects for consumers (you want to watch what everyone else is watching), enormous fixed costs for setting up a network that absolutely trivialize the marginal costs of producing a show, the nearly zero marginal costs of broadcasting, and the enormous barriers to entry for potential rival networks. Coupled with the enormous status of associated with “being on television”, you arrive at an outcome where the artistic quality of content is almost irrelevant to market success, labor is willing to work for peanuts, and your capital inputs are almost exclusively fixed costs. Who’s the high leverage determinant of outcomes? The person who gets to decide what gets to be put on television.

That world is gone and I am grateful for it. Television is now the medium for writers.

We live in an endless wonderland of channels and content. The median viewer is still well served by a multitude of outlets, but it is within the microbiomes of this new ecology of entertainment that most of us are lured towards. If the defining attribute of the supply of entertainment has become its specificity, then the defining attribute of our demand is its depth. We demand 32 film superstructures with fully fleshed out worlds within worlds within worlds. We demand 6 seasons and a movie exploring the relationships between a community college study group and their metacommentary on film and television and how it has come to define how we view relationships. We demand 10th season callbacks to a sight gag from season 2 that was originally an homage something Truffaut did (which was itself an homage to Hitchcock). We want the story to keep going and going and going, and if has to end, it sure as hell had better not all been a dream.

Showrunners, who are typically the final typewriter that most scripts go through, and their teams of writers are producing the content that we voraciously binge. I don’t (want to) know how many hours of television I watch a year. but I have no doubt that I’m consuming 1000’s of manhours of writing, which makes it hard to complain about the price of HBOMax when I’m effectively paying pennies per hour for good writing. Maybe good writing has always been in short supply, but for the first time it is the the high leverage determinant of the success and failure of outcomes– good writing is the short side of the market. So if you want to make it as a writer, keep writing! But if you want to make a career and pay a mortgage as a writer, I suggest you bone up on your television story structure.

NB: for the couple dozen or so of you who read this, be advised that I am Mike Makowsky, the economics professor, not Mike Makowsky the talented screenwriter. Please do not blame him for my opinions, though I do encourage you to watch his movie Bad Education, which is excellent.

Tesla and Data Privacy

Samford business school student A.K. Vance writes:

As technology and data have become more prevalent in our daily lives, concern about privacy grows. Governments and countries now worry about “commercial espionage” on citizens. In a recent Wall Street Journal article, Trefor Moss discusses the implications of the ability for companies like Tesla to collect data on its consumers. China is currently attempting to restrict its citizens’ access to Tesla cars which have the capability to track and collect data on its owner. The Chinese government cites the fear that data including images which can be taken by the cars will be sold or given to the American government. Beijing has gone so far as to restrict the use of Tesla cars “by military personnel or employees of some state-owned companies”. Elon Musk has publicly stated that no data will be released to the United States or any other nation. The results of selling or giving such data or information to other governments could lead to many negative effects for Tesla and could cause a huge loss of Tesla’s business. In the last year, China made up a quarter of Tesla car sales. If Tesla did use their data capabilities to collect and give information to the United States government, they would risk losing a huge market for their product. Musk goes on to claim that such a violation of privacy could lead to a “shut down everywhere which is a very strong incentive for us [Tesla] to be very confidential”.

Related concerns over the Chinese application, TikTok, led to an attempt to ban the application in the United States due to its potential of collecting data on American citizens which could be used by the Chinese government to spy. As products become more integrated into the internet, privacy concerns may affect international trade. Companies might have a private incentive to protect customers, but that might not be sufficient. Legislation is still catching up to the changes in technology and new capacity to track individuals via “commercial espionage”.

Compulsory Schooling by Sex

My previous posts focused on the aggregate school attendance and literacy rates for whites before and after state century compulsory schooling laws were enacted. When aggregates fail to deviate from trend after a law is passed, the natural next step is to examine the sub groups.

How did attendance rates differ by sex before and after compulsory school attendance? I’ll illustrate a plausible story. Prior to law enactments, boys attended more school because girls were needed to perform domestic duties and the expectations for female education was lower. As a result, boys had higher literacy rates due to higher school attendance. After law enactments, both girls and boys attended school more and the difference between their attendance rates is eliminated. Similarly, literacy rates converge and differences are eliminated. In short, the story is consistent with an oppressed – or at least disadvantaged – position for girls that was corrected by compulsory schooling.

Formally, the hypotheses are:

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The Impact of the Pandemic on US States: GDP and Deaths

Following up on my recent post on country GDP growth rates and mortality in 2020, we now have the first look at state GDP growth rates for 2020 from the BEA.

As with the national data, I would look to caution against over-interpreting this data. I’m presenting it here to give a picture of how 2020 went for states (including a few months of 2021 for morality data). One thing you will notice is that there appears to be little correlation with the raw data between GDP declines and mortality. Lots of important factors (policy, behavior, demographics, weather, luck) aren’t controlled for here. Still, I think it’s useful to see all the data in one picture, given how much many of us have been following the daily, weekly, and monthly releases.

Here is the data. Below I’ll explain more how I created this chart, especially the excess mortality data.

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Moneyball for March Madness

Sinclaire Green, a Samford business school student, writes:

Since Billy Beane transformed the 2002 Oakland Athletics baseball team by utilizing data analytics, propelling the team to a 20 consecutive game win streak, sports fans, coaches, and players have all become more attuned to the role data can play in baseball. As a result, professional basketball teams also began to use data analytics to improve their game plans, skills, and recruiting. In the past few years, Colton Houston and Matt Dover have begun to use data analytics to help college basketball teams similarly to how Billy Beane helped transform the Oakland A’s in the early 2000s.

Houston and Dover’s company, HD Intelligence, provides a service to college basketball that was previously only feasible for professional teams. HD Intelligence eliminates the need for internal data analysts. Analysists at HD Intelligence compile data and present it to college basketball coaches to improve decision making. HD Intelligence prides themselves on making meaningful insights that coaches can understand. Instead of coaches having to rely on watching video and looking at statistics from box scores, HD Intelligence provides reports for teams. Coaches can know their team better, know their opponent better, evaluate recruits effectively, and optimize their schedules.

In the 2019-2020 basketball season, HD Intelligence had two primary college basketball clients, The University of Dayton Flyers and the University of Alabama Crimson Tide. Similar to the Oakland A’s, Dayton does not have quite as robust of a budget as many of the nation’s other top programs. Also similar to the Oakland A’s, the Flyers had a 20-game win streak last year and many basketball aficionados think that Dayton would have won the NCAA tournament had the COVID-19 pandemic not halted the tournament. Similarly, Alabama basketball has had an excellent 2020-2021 season. The program has risen within the SEC to win the 2021 conference tournament. More importantly, the Tide made themselves a legitimate contender for the national title by making it to the Sweet 16 in the NCAA tournament. Even though Alabama did not make it to the Elite Eight, they had a great season with many wins. HD Intelligence helped both Dayton and Alabama optimize their talent and resources by providing data analysis of each game and by assisting with pre-season non-conference scheduling for the two programs. Looking to next basketball season, Houston and Dover have over 10 schools who they will assist with data analytics.