Newmark's Door

The MeFites consider stock market anomalies.

Joshua D. Angrist and Jörn-Steffen Pischke, Mostly Harmless Econometrics: An Empiricist's Companion. (Ya gotta love "mostly harmless".)

In addition to econometric essentials, Mostly Harmless Econometrics covers important new extensions--regression-discontinuity designs and quantile regression--as well as how to get standard errors right. Joshua Angrist and Jörn-Steffen Pischke explain why fancier econometric techniques are typically unnecessary and even dangerous. The applied econometric methods emphasized in this book are easy to use and relevant for many areas of contemporary social science.

Dora L. Costa and Matthew E. Kahn, Heroes and Cowards: The Social Face of War.

When are people willing to sacrifice for the common good? What are the benefits of friendship? How do communities deal with betrayal? And what are the costs and benefits of being in a diverse community? Using the life histories of more than forty thousand Civil War soldiers, Dora Costa and Matthew Kahn answer these questions and uncover the vivid stories, social influences, and crucial networks that influenced soldiers' lives both during and after the war.

The House passed a bill "allowing the Justice Department to sue OPEC members for limiting oil supplies".

Oh yeah, that'll work.

"The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation."

Which DOJ has been doing off and on for 35 years. But hey, if at first you don't succeed, try, try again. (But then quit; no use being a damn fool about it.)

(Link provided by Richard Warr.)

Better analysis of high gas prices is provided by John Lott:

Senator Obama sees part of the solution in a massive windfall tax on American oil companies. Putting aside the fact that having politicians blame oil companies is a bit hypocritical — U.S. oil companies have paid more than three times in taxes to the government than they have earned in profits over the last 25 years — higher taxes on profits will reduce production and increase prices. A higher tax on profits will mean fewer investments in producing oil and that in turn will mean less production in the future.

Ironically, Democrats won the 2006 elections and took control of both the House and the Senate by promising they would reduce gas prices. Yet, with regular gas now selling above $3.67 a gallon, Americans can only longingly remember the average prices of about $2.20 a gallon that Democrats were complaining about in early November 2006. The Democrats’ bigger sin is that they seem to have no understanding of how markets work.

Better--as well as funny--analysis is also provided by Mark Steyn.

But, before we start suing distant sheikhs in exotic lands for violating the NOPEC act, why don't we start by suing Congress? After all, who "limits the production or distribution of oil" right here in the United States by declaring that there'll be no drilling in the Gulf of Florida or the Arctic National Mosquito Refuge? As Rep. Wasserman Schultz herself told Neil Cavuto on Fox News, "We can't drill our way out of this problem."

Well, maybe not. But maybe we could drill our way back to $3.25 a gallon. More to the point, if the House of Representatives has now declared it "illegal" for the government of Saudi Arabia to restrict oil production, why is it still legal for the government of the United States to restrict oil production? In fact, the government of the United States restricts pretty much every form of energy production other than the bizarre fetish du jour of federally mandated ethanol production.

Finally, for a bit of optimism, see the UK Telegraph's "Oil's Perfect Story May Blow Over".

The Falls Lake dam, near where I live, is rated "conditonally unsafe".

The Falls Lake dam itself is sound and can be made even safer, according to the engineers who run it. But if it ever ruptured because of a structural failure, extraordinarily high water or sabotage, the result would be cataclysmic. . . .

But the federal engineers who manage the lake now are warning of an unlikely but conceivable catastrophe: If the lake's earthen dam ever burst, a freshwater tsunami would swamp the Neuse River valley from North Raleigh to Kinston, blasting away bridges, obliterating riverside homes, inundating parts of Smithfield and Goldsboro, and possibly drowning dozens or hundreds of people -- perhaps with no warning.

Added to my to-do list: checking out the local digital flood map.

From the New York Times:

When older people can no longer remember names at a cocktail party, they tend to think that their brainpower is declining. But a growing number of studies suggest that this assumption is often wrong.

Instead, the research finds, the aging brain is simply taking in more data and trying to sift through a clutter of information, often to its long-term benefit.

"Hope on the horizon":

As the economy appears to falter and as more Americans fear that the country is on the wrong track, here's something to keep in mind: There is hope on the horizon.

History is filled with examples of how technology helped usher in new eras of prosperity. The rise of the Internet is a good case in point: Few people who experienced the economic recession of the early 1990s could have foreseen how the Web and related information technologies would improve their lives and unleash whole new industries within a few short years.

To help build the case for optimism, the MIT News Office asked a collection of MIT faculty and researchers for their thoughts on the potentially life-altering technologies that lie just around the corner. Here's a sample of what they said . . . .

Link via Instapundit.

A columnist living in the People's Republic of Vermont writes:

OK, so America is getting greener and fitter in spite of itself. But can we be happy in a recession?

I can only say I have been.

I lived in New York in the 1970s, when the city was teetering near bankruptcy. The place was weedy, seedy, wild, raunchy, cheap, creative and, in many ways, far easier to live in than its current corporatized, manicured, hyper-policed incarnation. Back then, the landlord might have neglected to send up the heat now and then. But he wasn’t trying to force you out to make room for the next sports-stadium-cum-luxury-condominium mega-development.

Friends who grew up in Vermont or moved here in the 1960s or ’70s admit to similar feelings. Back then, good jobs in the state were few. Land was literally dirt-cheap; 25 years ago, my partner bought his house and 40 acres in Hardwick for $36,000. Vermont was poor. But a limited number of decent-paying jobs and low property values also kept communities stable. Generation after generation could buy homes and take up their fathers’ and mothers’ trades, plant a garden, volunteer at church, and drop the kids off after school at Grandma’s a few houses away. Nobody was renovating the farmhouse down the road, then demanding that the farmer next door clean up that smelly manure.

I don’t want to rewrite history all fuzzy and nostalgic.

As I've written before, you can't make stuff like this up.

Link courtesy of Art Wolff (who works in Vermont but who bears absolutely no responsiblity for the columnist's views).

Way less over the top, but still a little strange, is this LA Times writer's hurrah for a recession:

But for the moment, I can't help but feel that this recession -- or at least the evanescent moment before it kicks into high gear -- offers a kind of coziness you rarely feel in a booming economy.

. . . business models have to change. Anybody's who's read Carl Shapiro and Hal Varian's Information Rules knows this, as does anybody who took NC State's ECG514, "The Economics of Information Goods".

But if you haven't had those opportunities, and would like to a way to quickly catch up--and also learn a little about the history of disposable razor blades--I recommend Chris Anderson's "Free! Why $0.00 Is the Future of Business", (Wired magazine, three months ago; link courtesy of my older daughter.)

. . . and it's very rewarding": encouraging kids to read.

True dat.

Theresa Fagan, mother of eight, lists some of her family's favorite books.

I'll add, for little kids, the all-time classic, Goodnight Moon, and for middle-schoolers, the magnificent, Pulitizer Prize-winning novel by Marjorie Kinnan Rawlings, The Yearling.

(In 7th grade I wrote Ms. Rawlings a fan letter, and she wrote me back. Eat your hearts out.)

From CBS News, your tax dollars at work:

The salmon population is mysteriously dwindling in California and Oregon. . . .

Consider that the lost salmon catch amounts to $22 million dollars. Federal officials put the economic ripple effect including businesses like charter boats and ice houses at $82 million.

But taxpayers are being forced to shell out $174 million. That's on top of $60 million given out last year.

The salmon bail-out is so huge, it might not have survived debate in Congress. But it didn't have to, thanks to California's own Congresswoman Nancy Pelosi. She used her clout as Speaker of the House to insert the massive salmon relief into the Farm Bill as an earmark without a vote.

(The Door has much love for salmon and therefore for Pacific salmon fishermen, but thinks there almost certainly has to be a more cost-effective way to address the problem.)