The 40-Year-Old Freshman

Economics Loses Two of Its Best

2011-10-23T07:46:00.001-05:00

I just removed Greg Mankiw's and Paul Krugman's blogs from my feed reader's "Economics" section. While both of them are trained as economists and incredibly accomplished in the field, neither of them writes anything I find educational these days. They've both become shrill, hyper-partisan talking heads. Which is a shame.

The Ever-Increasing Productivity of Machines

2011-09-29T12:07:00.001-05:00

I have a lot to say about this but not enough time right now to say it. So this post is a placeholder for a future discussion.

But here's the short version: you need to get on the correct side of this curve. If you're competing with computers instead of benefiting from them, you're toast.

Also: Seth Godin nails it.

Bummer! I wasn't selected to attend the Startup-Onomics conference.

2011-07-18T08:40:00.001-05:00

I just got the email from the organizers of Startup-Onomics: The Behavioral Economics Summit for Startups:

At this time we have sent out the first round of invites. We had an overwhelming amount of startups apply to come and we were only able to invite 20% based on our space limitations. There will be a second round of invitations sent on a rolling basis. This will be limited. But don't worry. If you have not received an invite at this time, you can still participate. We will be live streaming the event for our friends abroad and those who cannot attend. We will send an update about this as the event comes closer.

Thanks for your interest in the StartupOnomics Summit and we hope to catch you next time around!

I'm totally bummed.

I was really looking forward to it, and thought I would be an ideal candidate to attend. I'm the founder of a startup in a space that is rife with behavioral economics issues, I'm an economics student with a specific interest in behavioral economics, and I'm already planning to be in San Francisco for a week immediately after the conference.

If anyone has an "in" with the organizers (Hal cough Varian cough Google cough cough) I'm certainly not above having strings pulled in my favor.

Economics I Can Believe In

2011-07-17T06:35:00.001-05:00

Son 1 has fixed my blog problem. I'm going to make him a carrot cake. Comparative and absolute advantage....Sun Jul 17 08:54:28 via Twitter for MacDiane Coyle
diane1859

Jeremy Grantham Goes Malthusian

2011-06-13T11:16:00.001-05:00

From Business Insider, JEREMY GRANTHAM: We're Headed For A Disaster Of Biblical Proportions

Specifically, Grantham says, the phenomenon of ever-more humans using a finite supply of natural resources cannot continue forever--and the prices of metals, hydrocarbons (oil), and food are now beginning to reflect that.

Now, I'm not as learned as Mr. Grantham, but I disagree. There are substitutes for metals and hydrocarbons, and anyone who has driven across the United States can tell you that we're nowhere near running out of capacity to grow more food.

Then again, the switch to substitutes takes time, as does bringing online new food production capacity. In the mean time, if demand significantly outstrips supply, things could get ugly.

Homo economicus?

2011-06-08T06:37:00.001-05:00

From How, and When, to Make a Decision in The Economist's More Intelligent Life magazine:

If all our decisions are so influenced by external factors, that raises an inevitable question: to what extent are we involved in our own decision-making? Professor Ackerman believes the answer is very little: “All of these subtle influences suggest that most of what is causing our behaviour we are really not aware of. People are just very good at post-hoc reasons for their behaviour.

Tastes and preferences, mentioned and then immediately set aside in most microeconomics courses, seem to me to be the overriding inputs in almost all personal decisions. Marketers figured this out a long time ago. What's taking economists so long?

ZMP's Revisited

2011-06-03T08:41:00.001-05:00

Tyler Cowan, following up on last summer's discussion of Zero Marginal Product workers (ZMP's, as he calls them), offers a proof point:

People unemployed over 6 months rose by a whopping 361k, 44% of all unemployed.

But again, unless each worker's productivity remains constant over time (it doesn't) it doesn't follow that the currently unemployed weren't productive when they were working. It could just be that the currently employed are working harder, which stands to reason.

ZMP's indeed. ZMV econ bloggers maybe.

Startup-Onomics: The Behavioral Economics Summit for Startups

2011-05-30T08:16:00.001-05:00

Has it really been more than seven months since I last posted to this blog? Yikes! Well, at least I have a good excuse: I've spun a new company out of Spanning Sync, raised a round of venture funding, hired an incredible team of engineers, salespeople, and marketers, and entered full startup mode.

My formal economics studies have been put on hold for the moment, but my extra-curricular studies continue unabated. Keynes, Varian, Harford, Ariely, Ahamed, Levy, Benioff, Hazlitt, Thaler, Cowan, Rosen, Carr. My Kindle runneth over.

And then this morning comes the uncannily-timed news of a summit on behavioral economics. For startups. Spooky. And it's in San Francisco just before Dreamforce, which is already on my calendar. Extra-spooky.

I've submitted my application and hope to be accepted to attend. If so, I'll document the whole thing extensively here. Our business, after all, is one that is greatly affected by our prospective customers' ability to gauge risk, a classic problem in behavioral economics. Fingers crossed.

The New York Times on Why Economists Disagree

2010-10-18T05:37:00.001-05:00

From The X Factor of Economics: People:

“But there’s a good reason that human irrationality isn’t part of the standard economic models, and this gets to the dilemma of economics. If you have a simple problem, you can offer a simple solution. But the economy is a hugely complex problem. So we either simplify the problem and offer a solution, or embrace the complexity and do nothing.”

Excellent article.

And yes, I'm still here. Sadly, I've had to put my formal economics studies on hold while (happily) I pursue an aggressive expansion of my business. I'll be posting thoughts about the economics of that business here on The 40-Year-Old Freshman, so don't unsubscribe from the feed just yet.

Intermission

2010-08-27T07:46:00.001-05:00

I'm taking this semester off from my economics studies to devote more time and thought to my business, and our new product in particular. I plan to resume my studies in the Spring.

Hard Economics Times

2010-08-15T09:18:00.001-05:00

From:	Kerry A Pasquale <kerry@austin.utexas.edu>
Subject:	INFORMATIONAL: ECO 351K Cancelled for Fall
Date:	August 13, 2010 12:07:00 PM MDT
To:	la-eco-students@utlists.utexas.edu

Dear Students,

If you are registered for ECO 351K- Current Issues in Business Economics for the Fall semester, please note that this class WILL BE CANCELLED. Unfortunately, the Department Chair was unable to find anyone to teach this class.

Once your next registration access occurs, please make any necessary adjustments to your schedule to accommodate this change.

If you are having difficulty finding another Economics class, please let us know and we’ll see how we can assist you.

Sincerely,

Economics Undergraduate Advising

Kerry Pasquale
Undergraduate Advising Center Coordinator
Department of Economics - UT Austin
512-471-2973

Diminishing Marginal Utility of Business School

2010-07-19T11:26:00.001-05:00

This ad for UT's MBA program is probably truer than it was intended to be:

Zero Marginal Product Workers

2010-07-19T08:44:00.001-05:00

There's an interesting debate going on over at Tyler Cowan's Marginal Revolution blog about Zero marginal product workers. Here's my theory, which I posted in the comments there:

Let's say Jack and John are both employed doing the same work while employment is high (and fear of unemployment is therefore low--if either loses his job he can likely find another one). Then the economy craters and Jack loses his job. John's fear of unemployment is now higher than it was, since he sees not only his colleague Jack get laid off but also dire unemployment figures in the news. Now fearful, John works harder to keep his job than he did when the economy was good, and by so doing makes up for the productivity lost by Jack's layoff.

To management, who measures only total productivity and not per-worker productivity, it looks like Jack was a zero marginal productivity worker. As the economy rebounds they're under no pressure to rehire Jack, so unemployment stays high.

I'd be interested in any reactions to this theory, and in finding out how one would formally describe it in economic terms.

NNT on engineers, mathematicians, and economists

2010-06-19T11:55:00.001-05:00

The Black Swan author Nassim Taleb makes so secret of his disdain for economics and most economists.

Engineers can compute but not define, mathematicians can define but not compute, economists can neither compute nor define.Fri Jun 18 11:50:04 via UberTwitterNassim N Taleb
nntaleb

Since I have a computer science degree with a math minor and am working on an economics degree, apparently I'm in the process of wiping out my abilities to compute and define. Ha.

So I actually earned that A after all

2010-06-07T13:29:00.001-05:00

Last week I sent this email to Dr. Watson regarding my ECO 420K grade:

Dr. Watson-

I'm happy and relieved to see on the registrar's site that I received an A in your 420K class, but I have to say I'm a little surprised too. I wasn't at all sure I had done well on the final exam. I don't see a grade for it on Blackboard--can you tell me how I did?

Thanks,
Charlie

This morning he responded:

Charlie,

On the final exam you scored 73.5 out of 90, compared with a class average of 44. That is an excellent score, and it was in fact the second highest score in a class of 48 students.

Congratulations on your overall performance, which was well deserving of your A. Thanks for your participation in the class, and best of luck with your future studies.

Randal Watson

Whew!

Blackboard for iPad

2010-05-24T15:05:00.001-05:00

UT uses an online system called BlackBoard that lets instructors post assignments, grades, course documents, etc. Blackboard now has an iPad app:

Cool!

420K Grade

2010-05-21T09:50:00.001-05:00

I'll be collecting my thoughts about this course and posting them later. But for now, I'll just say I'm glad it's over and that I did well.

Just registered for the Fall semester

2010-04-25T09:57:00.001-05:00

I had planned on taking statistics next semester, but after micro theory I need something more interesting to keep me engaged. So instead of 329 I registered for Dr. Miravete's 351K: Current Issues in Business Economics. Here's a syllabus (PDF) from the last time he taught this class.

I'm really looking forward to it. Plus, after three classes in a row in the detestable UTC building, Waggener Hall will be a welcome change.

Train wreck

2010-04-09T11:52:00.001-05:00

I'm not sure I've ever done that badly on a midterm exam before. It was brutal.

I counted 16 points worth of questions (out of 100) I didn't even get to attempt to answer before time ran out, and at least that many that I left partially answered. If we had been given three hours in which to complete the exam, I still would have been rushed. We had 75 minutes. It was not pretty.

This weekend I will make a sacrifice on the alter of the God of the Curve.

Update: I got a B on the exam. Looks like I'll have my work cut out for me on the final, which is three weeks from Friday.

Still not a freshman, but finally 40

2010-04-02T08:52:00.001-05:00

When I started this blog I was 38, so the title "The 40-Year Old Freshman" was wrong on two counts. (I wasn't a freshman, but rather what the University calls a "degree-holding senior", which I still am.) Now it's only wrong on one count.

Also, I've now attended UT in four of out of the five decades in which I've been alive. Ha!

Cost vs expected utility? Ha! We do what feels good.

2010-04-01T12:27:00.001-05:00

From Costco by Jonah Lehrer:

As I note in How We Decide, this data directly contradicts the rational models of microeconomics. Consumers aren't always driven by careful considerations of price and expected utility. We don't look at the electric grill or box of chocolates and perform an explicit cost-benefit analysis. Instead, we outsource much of this calculation to our emotional brain, and rely on relative amounts of pleasure versus pain to tell us what to purchase.

Is it true that UT has no undergraduate classes in behavioral economics? If so, that's a shame.

Finally, the theory of the firm

2010-03-23T08:05:00.001-05:00

Just as I was about to give up hope that micro theory could be interesting, yesterday we finished the Theory of the Consumer section and turned to the Theory of the Firm.

Looking back I see that just over one year ago, I was just as excited when we made the same shift in my principles class.

Mid-semester update

2010-03-22T07:36:00.001-05:00

I scored a 46.5/50 (93%) on the first midterm, which is OK but not great. Ironically, I got all the economics right but flubbed some of the algebra.

I'm finding Micro Theory to be a bit dry. I suppose that should come as no surprise, since it's really just a rehash of Micro Principles but with more math. I'm eager to get on to some of the upper-division electives.

The second midterm is in two weeks. The last day of class is May 7.

Hal Varian speaks!

2010-03-01T08:00:00.001-06:00

Well, writes! This time, on Computer Mediated Transactions. Set ye your coffee down and read and become smarter.

Tell me more lies

2010-02-24T14:57:00.001-06:00

I was so hungry I ate until my stomach hurt, at which point I realized I had actually been thirsty. Tell me again about rational consumers.