Sound Economics

I’ve written a few posts over the past year about humor in economics. Humor in the field, it seems sometimes, is a desert. Not necessarily for its desolation, but for its dryness. However, this gem from APM’s Marketplace caught my eye for its extreme lack of moisture. A paper entitled “A Few Goodmen: Surname-Sharing Economist Coauthors” was presented at a recent American Economics Association in Boston. Its main finding:    We believe this paper is the first written by four economists who share a surname. From the conclusion section,   Future breakthroughs on this topic should be possible. We believe much could be Continue reading Some Arid Economic Humor→

Those of you who read Sound Economics last year might remember that in the spring we had a special column dubbed “Thesis Corner”. This semester we are bringing it back and this time we are featuring theses written by the class of 2015. If there are any seniors that you would like to see on the Thesis Corner, or if you are an Economics senior that would like to be, get in touch with me at cehoover@pugetsound.edu. Our first thesis on the column is by Taylor Smith, who also happens to be the ASAPS Director of Business Services. You can come see him present his thesis, along Continue reading Thesis Corner | Taylor Smith→

In 1982, Nobel Prize winning psychologists Amos Tversky and Daniel Kahneman conducted a study of how framing affects decision-making. They created a scenario and asked two groups of participants to choose the program that was most optimal. This scenario was called the “Asian disease problem” and it yielded surprising results. Try it for yourself: “Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume the exact scientific estimate of the consequences of the programs are as follows”:   Continue reading The Science of Decision-Making: Framing→

I thought Connor’s post yesterday was interesting in the way it took a game theoretic approach to the last play of Sunday’s Super Bowl. So, sorry if you were looking for something other than football, but you will have to give us a break just for this week. I wanted to look at the strategy choices of the team that won the game on the last play rather than the team who has been scrutinized so heavily this entire week. Every play in football is an instance of game theory. Teams are trying to keep their opponents off guard by changing and Continue reading Bill Belichick Knows Game Theory→

How many people can you name that legally own all of their music? I can name two– my parents. Websites such as pirate bay and many other P2P (peer to peer) networks make it simple and fast to illegally acquire almost any song or other form of downloadable media for no cost at all. Even with the demise of LimeWire, a popular media sharing application in 2012, an increasing number of file sharing websites are emerging at a rate that is seemingly unstoppable. The average teenager claims to have around 8,000 songs in their music library, yet at the 99 Continue reading The Price Tag on Free Music→

Last week, I wrote on the perverse incentive structure of gyms that encourages them to discourage (actively or passively) attendance. This week, I’m writing on commitment devices. These are mechanisms that people use to engineer an incentive structure to set them up for success with a difficult task. A few years ago I heard a story from RadioLab told by a woman who was struggling to quit smoking. She decided to set up a small payment to a cause she found repulsive, the KKK I believe, that would go through if she lit up again. I suspect that it wasn’t Continue reading Commitment Devices→

Every day we use our brains to interact with other people, solve problems and make decisions. Every decision we make has a potential impact on our next decision. A certain decision, and the outcome that follows, could stick with you long after the decision was made and unconsciously determine your next. To make decision-making more efficient, your brain creates mental shortcuts to help you make the right decision faster. These mental shortcuts are called heuristics, and are a main theme of behavioral economics. Heuristics are deviations from rationality formed by previous experiences. Instead of relying on the information at hand Continue reading The Science of Decision-Making: Heuristics→

How much of our success is determined by randomness? I would bet that it is more than most people would like to think. In light of the hotly approaching Super Bowl, I want to start by looking at The Seattle Seahawks over the past few years to demonstrate how success can sometimes be so dependent on chance and randomness. Note: I am not trying to say their entire two-year run has been based on luck and chance, although, my Packer fandom might explain my motivation for this… I am simply trying to point out how their recent success has been influenced Continue reading The Randomness of Success→

Getting vaccinated is an uncomfortable experience, but it remains one of the most important medical processes to go through, not only for yourself but for those around you as well. For some time, an anti-vaccination faction has been gaining popularity in the US, leading to more cases of nearly eradicated diseases (such as measles.) In a freakonomics podcast earlier this month on the flu vaccine, they explore why people opt not to get vaccinated, and why this is a bigger problem than it seems. Even beyond the public health realm, an increasing population who are unvaccinated against diseases is actually Continue reading Getting Shots→