Hypothetical Bias

An independent Hubbie

From the WSJ's Afternoon Report:

R. Glenn Hubbard, the economist who once served as one of the Bush administration's top public advocates on tax cuts and other financial matters, broke with his former employer in a Wall Street Journal-sponsored online exchange with Robert B. Reich. Mr. Hubbard, now president of the Columbia Business School, criticized the administration for pushing for a Medicare prescription drug plan without first reforming the Medicare system, calling it "unwise fiscal policy." The controversial plan takes effect next year, but many seniors are having a hard time figuring out how to sign up for benefits. Critics, including many conservatives, say the plan will add to already swollen federal budget deficits for decades to come. Mr. Hubbard, who as chairman of President Bush's Council of Economic Advisers almost never publicly opposed his boss, agreed with those critics in his exchange with Mr. Reich, who served as labor secretary under President Clinton.

Hubbie's not doing a heck-of-a-job. The penalty for this lack of loyalty is 4 more years serving as a B-school dean/pres or 1 month at Gitmo!

Gooberburgers, Steakburgers and Free Refills

1. Never buy large drinks.

2. Tip less or zero while out of town.

The above are observed behavior by economists that are consistent assumptions of monetary self-interest and rationality.

While eating lunch with two economists at Goody’s Steakburgers, we noticed that the small milkshake (10oz) sold at 97 cents but the large milkshake (20 oz) sold at more than twice the price of the small. Since there was no search cost and full information was available, most economists would be troubled by the pricing (never buy a large; just buy two small shakes). Of course, marketing is the basis of the 97 cents milkshakes since the "under a buck" milkshakes are a prominent hook on the billboards (yes, Missouri has tons of billboards).

Along the same lines, I have noticed the "never buy the large drink if eating in with free refills" rule. "Why should I buy a large drink if I can get free refills?" Large drinks are substituted by additional trips to the drink dispenser. (Personally, I avoid the large size (vat or tub) of soda since the drink sizes have expanded. But if it was oatmeal stout,....)

Also, I have had economist friends question my motivation to tip while eating out in a town that I do not frequent. "Why tip if you are not returning?" "There are no reputational effects to worry about."

In general, many economists are troubled by behavior (social norms and altruism) that appears to conflict with assumptions of monetary self-interest and rationality. However, there are many economists who address social norms and/or altruism and a sample of who do great work include James Andreoni and Robert Frank.

What am I thankful for?

My beautiful family and ... Ben Stiller movies.

Mystery Men: A Review

Starring: Ben Stiller, Jeneane Garofolo, William H. Macy, Pee Wee Herman, Greg Kineer, Hank Azaria, etc.

A story of a hapless group of superhero losers turns into a fight of good vs evil. During their classic struggle Mr Fury (Stiller), paralleling the experiences of the hypo-bias guys, finds the love of a beautiful woman. The bowler (Garofolo) comes to peace with the death of her dead father (note: intentional doubling of dea__ words). The shoveler (Macy) wins the respect of his family. Along the way the superheros learn the value of teamwork. The Sphinx says it best: "You must be like the wolf pack. Not like the six pack." Indeed. An excellent date movie ... and don't forget the tissues (you'll cry like a baby).

And if you are ever looking for more Sphinx-like quotes, here is the script.

And, yes, this is an economics blog, so here are the numbers:

Released in US	August 6, 1999
Total US Gross	$29,762,011
Production Budget	$68,000,000

Looks like a dog, right? Well, don't forget the all important overseas box office and video sales. Otherwise, what do movie goers know anyhow. This is one great movie!

Kwyjibo

Kwyjibo is a fictitious word made up by Bart Simpson during a game of Scrabble with his family. In the episode "Bart the Genius," Bart puts "Kwyjibo" on the board, scoring more than 150 points. When Homer demands Bart say what a Kwyjibo is, Bart replies, "A big, dumb, balding North American ape… with no chin." Marge adds in, "…and a short temper." At this point, Homer chases Bart away, causing him to exclaim, "Uh oh! Kwyjibo on the loose!"

Source: http://en.wikipedia.org/wiki/Made-up_words_in_The_Simpsons

Mr. Nobody is a Kwyjibo.

A college football playoff

Here are the I-AA football brackets with AppState seeded #2 (more evidence that I'm an idiot). I'll be contributing to the economic impact of this Saturday's game by taking my 3 year old, my sister and her family. With a multiplier of 12, the local economy will be about $1000 better off. That translates into 3 permanent jobs and an increase in the local tax base that will improve the school system by a quartile.

Why doesn't I-A football see the economic gain of a playoff (e.g., a multiplier of about 12, or 13)? All they get is odd-colored sports coats, several games that only alumni care about (I used to try to watch the other bowls but nevermore [a subtle Balmer ref since I am stuck in the free state for a few holi-days]) and free Tostitos.

Update: I-AA.org's GPI (i.e., BCS-style rankings) has ASU ranked #1 for the first time all year. Wouldn't it be great if I-AA could have a one game championship with ASU vs. New Hampshire following a month long layoff?

Sarc.