Saturday , January 22 2022
Home / [email protected] (Cyril Morong)

Articles by [email protected] (Cyril Morong)

Lawsuit Says 16 Elite Colleges Are Part of Price-Fixing Cartel

11 days ago

The federal lawsuit against Yale, M.I.T. and other colleges is the latest legal action to question admissions practicesBy Stephanie Saul and Anemona Hartocollis of The NY Times. Excerpts:"A lawsuit filed
in federal court on Monday accused 16 of the nation’s leading private
universities and colleges of conspiring to reduce the financial aid they
award to admitted students through a price-fixing cartel."[It] "takes aim at a decades-old antitrust exemption granted to these
universities for financial aid decisions and claims that the colleges
have overcharged an estimated 170,000 students who were eligible for
financial aid over nearly two decades.The universities accused of wrongdoing are Brown, the California
Institute of Technology, the University of Chicago, Columbia, Cornell,

Read More »

Joseph Schumpeter, Capitalism and Intellectuals

12 days ago

See Socialists, Knowledge of History and Agency.
These are letters to the editor of The WSJ in response to an article
about socialism by Joseph Epstein. The one below reminded me of a 1992
article by Robert Samuelson in Newsweek.
"Joseph Epstein’s “Socialists Don’t Know History”
(op-ed, May 30) on the abysmal historical knowledge of young people
brings to mind the prophesy of the keenest of economists, Joseph
Schumpeter, in 1942 when he said that capitalism would destroy itself by
breeding a “new class: bureaucrats, intellectuals, professors, lawyers,
journalists, all of them beneficiaries and, in fact, parasitical on
them and yet, all of them opposed to the ethos of wealth production, of
saving and of allocating resources to economic productivity.” The 77
years since then has

Read More »

Why Did Charles Dickens write A Christmas Carol?

26 days ago

Money might have been a big factor.See The Writer’s Almanac with Garrison Keillor.
Excerpt:"It was on this day in 1843 (Dec. 19) that Charles Dickens published A Christmas Carol. Dickens wrote the novel after his first commercial failure. His previous novel, Martin Chuzzlewit (1842) had flopped, and he was suddenly strapped for cash. Martin Chuzzlewit had been satirical and pessimistic, and Dickens thought he might be more successful if he wrote a heartwarming tale with a holiday theme.He got the idea for the book in late October of 1843, the story of the heartless Ebenezer Scrooge, who has so little Christmas spirit that he wants his assistant Bob Cratchit to work on Christmas Day.Dickens struggled to finish the book in time for Christmas. He no longer had a publisher so he published the

Read More »

Surging Inflation Has Workers Demanding Bigger Raises. Could It Lead to a Wage-Price Spiral?

27 days ago

Wage increases prompted by higher prices could protect workers while potentially fueling inflation, economists say By David Harrison and Sarah Chaney Cambon of The WSJ. Excerpts:"The COLA is making a comeback.

Higher prices, a worker shortage and a revitalized labor
movement are bringing about the return of pay increases tied to
inflation, known as cost-of-living adjustments, or COLAs.

On Tuesday, striking workers at food maker

Kellogg Co.

ratified a contract that
included a COLA, the second major labor agreement in recent weeks to
feature such pay adjustments. Analysts say COLAs could spread in future
negotiations between employers and unions.

Under a COLA, a worker’s pay rises to
compensate for the increase in

Read More »

Conflicting opinions from economists on the value of giving gifts

29 days ago

The battle seems to be over inefficiency (spending money on items others
might not want) vs. the idea that if you spent money on someone it is a
believable signal that they care about you or having a relationship
with you. A program on PBS recently stated that one of the more common gifts that King Henry the VIII got at Christmas was money.
See Holiday shopping? Consider the most economically efficient gift of all: cash, and avoid the deadweight loss of Christmas by Mark J. Perry. Excerpt:
"2. In a 1993 American Economic Review article “The Deadweight Loss of Christmas,”
Yale economist Joel Waldfogel concluded that holiday gift-giving
destroys a significant portion of the retail value of the gifts given.
Reason? The best outcome that gift-givers can achieve is to duplicate
the

Read More »

Is Increased Demand Causing Supply-Chain Problems?

29 days ago

See An Insider Explains the Supply-Chain Crisis: Consumers flush with cash and pandemic restrictions combined to drive demand for goods through the roof. Economist Phil Levy doesn’t see a return to normal until at least 2023 by Tunku Varadarajan of The WSJ. He interviewed Phil Levy, chief economist for Flexport, a San Francisco-based tech company for global-logistic services. I like the point he makes about ports not being able to handle the surge in demand. It is like a restaurant that is sometimes so crowded you can’t get in. Why not build it bigger? It might be too costly because that extra room might sit empty most of the time. Also, he makes a point about inelastic supply for some goods. That is a steep supply line, so any increase in demand will mean big price increases

Read More »

Life Is Full Of Tradeoffs: If We Want To Do More To Fight Climate Change We May Have To Lower Tariffs On Solar Panels Which Might Put U.S. Firms Out Of Business

December 22, 2021

One of the fundamentals of economics is opportunity cost which is the value of the best foregone alternative. We often say "there is no such thing as a free lunch." If if you want more of one thing you give up something else. This article is a good example. It does mention that we could give solar firms tax credits instead of using tariffs. But again, that still poses a tradeoff as it means more taxes would have to be collected elsewhere.See Biden’s China and Climate Goals Clash Over Solar Panels: Expiring tariffs on Chinese imports have the administration facing a trade-off between cheap renewables and solar made in the U.S. by Josh Zumbrun of The WSJ. Excerpts:"The Biden administration faces a looming decision on solar-energy tariffs that pits its goal of combating climate change

Read More »

Striking out: estimating the economic impact of baseball’s World Series

December 21, 2021

By Victor A. Matheson
and Robert A. Baade. From International Journal of Sport Management and Marketing Vol. 3, No. 4."An empirical analysis of the economic impact of the Major League
Baseball’s post-season on host-city economies from 1972-2000 suggests
that any economic benefits from post-season appearances are small or
non-existent. An examination of 129 playoff series finds that any
increases in economic growth as a result of the playoffs are not
statistically significantly different than zero and that a best guess of
the economic impact is $6.8 million per home game. As a general method
of economic development, public subsidisation of a baseball team’s
attempt to reach the World Series in order to reap a city-wide financial
windfall should be seen as a gamble at best."

Read More »

Why Washington Won’t Fix Student Debt Plans That Overload Families

December 21, 2021

Lawmakers know federal Plus loans burden millions of parents and graduate-degree earners with balances they can’t afford, yet Congress repeatedly punts on changing the programs. Here are five reasons.By Rebecca Ballhaus & Andrea Fuller of The WSJ. This reminds me of the area of economics called "Public Choice." That is the economic analysis of politics and political decision making. One of the ideas it has is "concentrated benefits and dispersed costs." Key passages from the article are highlighted in red bold that demonstrate this. Universities benefit greatly from these student loan programs while the costs are spread over all Americans. So the schools have a big incentive to fight to keep these programs as they are while it will not be worth it for anyone else to work to change

Read More »

The EU forbids the use of gender to help calculate car insurance premiums, leading women to pay more and men to pay less

December 2, 2021

See The elusive equilibrium by Koen Smets. Excerpt:"Insurers only care about the risk, and not about gender. If a particular
category of people poses a higher or lower risk, all else being equal,
than another one, they will seek to reflect that in the premium. When,
as a society, we do not want to have inequity in the premiums, then we
should accept that a unified premium might lead to a different
disequilibrium and new inequities.Motor insurance in Europe forms a very interesting case study.
Traditionally, insurers charged women less, because they tend to be
safer drivers, and hence make fewer and smaller claims. Unlike life
expectancy, the factors determining the risk here are much more linked
to individual choice and behaviour. Since 2012, an EU directive forbids
insurers

Read More »

Strong U.S. Economy, Stimulus Spurs Migrants to Send Billions of Dollars Home

November 18, 2021

Global remittances to low- and middle-income economies fell 1.6% in 2020, defying expectations of a sharper drop By Eun-Young Jeong of The WSJ. Excerpts:"Foreign-born workers sent more than $500 billion back to their home
countries in the developing world last year, as the economic recovery
and generous government programs in areas such as the U.S. helped
sustain a critical lifeline for poor nations still battling the Covid-19 pandemic.

According to fresh data from the World Bank, global remittances
to low- and middle-income economies fell just 1.6% last year to $540
billion, defying expectations that the pandemic would squeeze overseas
workers’ ability to earn and send money to relatives in their home
countries.""Foreign direct investment in medium- or low-income

Read More »

NCAA Proposes Interim Policy for Athletes to Profit From Images

November 4, 2021

By Laine Higgins & Louise Radnofsky of The WSJ. I
posted something on this last week when the Supreme Court ruled that
limits on compensating college violate U.S. antitrust law (it is one the
links below for related posts).Excerpts from The WSJ article: "Under pressure to overhaul its vision of amateurism in college
sports, the National Collegiate Athletic Association on Monday indicated
that it would allow athletes in all 50 states to make money from their name, image and likeness as soon as July 1 without forfeiting their eligibility. 

In making the move—which is still one step from final
approval—the NCAA bowed to the actions of numerous state legislatures
around the country, which have already moved to make it legal for
college athletes to profit from their

Read More »

How to Motivate Your Teen to Be a Safer Driver

October 29, 2021

Showing teenage drivers how to avoid being distracted behind the
wheel works better than nagging them to put their phones away, research
finds By Julie Jargon of The WSJ. Excerpts:"Through apps from insurers and other providers, parents can track their teens on the road and see how well they’re driving.""An age-old parenting quandary is whether and when to use positive
reinforcement or punishment with children. When it comes to teen
driving, the stakes for choosing the right approach are high. Do you
take away teens’ driving privileges if the tracking apps show them to be
speeding or using their phones too much while driving, or do you focus
on what they’re doing right?""Summer is the most dangerous time of year for auto accidents, and new
teen drivers are three times as likely as

Read More »

How Odysseus Started The Industrial Revolution

October 21, 2021

Factory work may have been a commitment device to get everyone to work
hard. Odysseus tying himself to the mast was also a commitment device.
Dean Karlan, Yale economics professor explains how commitment devices
work:
"This idea of forcing one’s own future behavior dates back in our culture at least to Odysseus, who had his crew tie him to the ship’s mast so he wouldn’t be tempted by the sirens; and Cortes, who burned his ships to show his army that there would be no going back.Economists call this method of pushing your future self into some
behavior a “commitment device.” [Related: a Freakonomics podcast on the
topic is called "Save Me From Myself."] From my WSJ op-ed:
Most of us don’t have crews and soldiers at our disposal,
but many people still find ways to influence their

Read More »

How Economists Put A Price Tag On Your Life

October 14, 2021

By James Broughel. He is a senior research fellow at the Mercatus Center. Excerpts:"One common metric economists rely on is the value of a statistical life
(VSL), which is a measure of how much money a group of individuals is
willing to pay to reduce the probability of its members dying. For
example, workers in a relatively dangerous industry like construction
receive higher wages than they might otherwise get elsewhere. Given the
statistical realities involved, one can add up the excess wages earned
by workers in exchange for taking a riskier job to ascertain how much as
a group they jointly place on a life lost in their industry.One claim sometimes made by public health experts, regulators, and even
from some economists is that when they use the VSL, they are only
putting a

Read More »

When Money Is No Object

October 7, 2021

Sure, using a credit card is easy, but paying with invisible money
makes saving harder and spending easier. People behaved differently
when they saved—and spent—cold, hard cash. By Jason Zweig of The WSJ. Excerpt:"Nowadays, zooming through with digital toll technology like E-ZPass,
you may have no idea how much you just paid. Once money is
dematerialized, using it doesn’t feel like spending.

“As we move away from paying with those gross motor movements,”
says Kathleen Vohs, a marketing professor at the University of
Minnesota, “we lose that sense of its being an exchange, the gravity of
using money.”

Dozens of studies have shown that consumers using credit cards rather than cash are less likely to remember how much they spent, take less time deciding what to

Read More »

The ariline industry looks competitive

October 1, 2021

See Air Travel Prices Have Barely Budged in 25 Years. (It’s True.) by Scott McCartney of The WSJ. Excerpts: "In the first quarter of 1996, the average domestic airline ticket
cost $284, according to the Transportation Department’s Bureau of
Transportation Statistics. Twenty-five years later—the first quarter of
this year—the average domestic ticket cost? $260.

Adjusted for inflation, air travel in the U.S. has gotten much
cheaper. That 1996 ticket in today’s dollars would be $482""But history suggests that inflation in airline tickets ends quicker than
your last vacation. Over time, prices have fallen, even after the
industry consolidated to four giant airlines commanding a large share of
the marketplace.Competition is a constant in the airline business. If prices in

Read More »

Energy Prices in Europe Hit Records After Wind Stops Blowing

September 24, 2021

Heavy reliance on wind power, coupled with a shortage of natural gas, has led to a spike in energy pricesBy Joe Wallace of The WSJ. In one of my classes this week we are reading the chapter about green energy in the book The Economics of Public Issues. It mentions that back up power (usually fossil fuel) is needed for when the wind does not blow. These backup power stations have to start and stop as the wind blows and that causes more pollution than if they ran constantly. Excerpts from the WSJ article:"Natural gas and electricity markets were already surging in Europe
when a fresh catalyst emerged: The wind in the stormy North Sea stopped
blowing.

The sudden slowdown in wind-driven electricity production off
the coast of the U.K. in recent weeks whipsawed through regional

Read More »

Is There Economic And Political Meaning In “The Wizard of Oz?”

September 17, 2021

To get a handle on this, you can read Money and Politics in the Land of Oz
By Quentin P. Taylor.  Below is an excerpt from the Taylor paper:
"Dorothy, the protagonist of the story, represents an individualized
ideal of the American people. She is each of us at our best-kind but
self-respecting, guileless but levelheaded, wholesome but plucky. She is
akin to Everyman, or, in modern parlance, “the girl next door.” Dorothy
lives in Kansas, where virtually everything-the treeless prairie, the
sun-beaten grass, the paint-stripped house, even Aunt Em and Uncle
Henry-is a dull, drab, lifeless gray. This grim depiction reflects the
forlorn condition of Kansas in the late 1880s and early 1890s, when a
combination of scorching droughts, severe winters, and an invasion of
grasshoppers

Read More »

U.S. Population Growth, an Economic Driver, Grinds to a Halt

September 10, 2021

Covid-19 pandemic compounds years of birth-rate decline, puts America’s demographic health at riskBy Janet Adamy and Anthony DeBarros of the WSJ. Excerpts:"America’s weak population growth, already held back by a decadelong
fertility slump, is dropping closer to zero because of the Covid-19
pandemic. In half of all states last year, more people died than
were born, up from five states in 2019. Early estimates show the total
U.S. population grew 0.35% for the year ended July 1, 2020, the lowest
ever documented, and growth is expected to remain near flat this year.""What concerns demographers is that in the past, when a weak economy
drove down births, it was often a temporary phenomenon that reversed
once the economy bounced back.""Yet after births peaked in 2007, they never

Read More »

Another Semester Has Started

August 26, 2021

Welcome to any new students. The entries usually have something to do
with a basic economic principle that is related to a recent news story.Here is something I wrote for The Ranger (the school paper of San Antonio College where I used to teach) back in 2011 titled "Why is college so hard?"Students might wonder why college, and SAC in particular, is hard. This
might sound trite, but I think the faculty at SAC want students to
achieve success in life and that means that classes have to be hard if
you are going to learn and understand the concepts which provide a
foundation for that success.I think my own experience as a
community college student over 30 years ago helps me understand this. My
teachers took their subjects seriously and maintained high academic
standards. They got me

Read More »

Is Storytelling Important For The Economy?

August 18, 2021

"It’s the economy, stupid"-James Carville, strategist for Bill Clinton in the 1992 presidential campaign"The human mind is a story processor, not a logic processor."-from the book The Righteous Mind: Why Good People Are Divided by Politics and Religion by social psychologist Jonathan Haidt.Wouldn’t it be great if there was a blog that looked at the intersection
of the economy and storytelling or mythology? Well, there is! See Dollars and Dragons.Here is one example of how storytelling and economics come together. See Giving Your Brand Primal Power Through Storytelling by Nick Nanton & JW Dicks. Excerpt:
"At our agency,
we make what we call “story-selling” an essential component of our
branding efforts with our clients. We’ve seen firsthand that, when you
create the proper story,

Read More »

The ariline industry looks competitive

August 16, 2021

See Air Travel Prices Have Barely Budged in 25 Years. (It’s True.) by Scott McCartney of The WSJ. Excerpts: "In the first quarter of 1996, the average domestic airline ticket
cost $284, according to the Transportation Department’s Bureau of
Transportation Statistics. Twenty-five years later—the first quarter of
this year—the average domestic ticket cost? $260.

Adjusted for inflation, air travel in the U.S. has gotten much
cheaper. That 1996 ticket in today’s dollars would be $482""But history suggests that inflation in airline tickets ends quicker than
your last vacation. Over time, prices have fallen, even after the
industry consolidated to four giant airlines commanding a large share of
the marketplace.Competition is a constant in the airline business. If prices in

Read More »

When Money Is No Object

August 15, 2021

Sure, using a credit card is easy, but paying with invisible money makes saving harder and spending easier. People behaved differently when they saved—and spent—cold, hard cash. By Jason Zweig of The WSJ. Excerpt:"Nowadays, zooming through with digital toll technology like E-ZPass,
you may have no idea how much you just paid. Once money is
dematerialized, using it doesn’t feel like spending.

“As we move away from paying with those gross motor movements,”
says Kathleen Vohs, a marketing professor at the University of
Minnesota, “we lose that sense of its being an exchange, the gravity of
using money.”

Dozens of studies have shown that consumers using credit cards rather than cash are less likely to remember how much they spent, take less time deciding what to

Read More »

Does drinking after work work? (that is, does it lead to higher salaries)

August 13, 2021

By Paul J. Zak. Excerpt:"Employees
who drink after work have higher salaries.  Drinkers make 20% more than
abstainers–an huge effect.  This effect is thought to come from the
social connections one makes by socializing with work colleagues.  The
original research was based on a survey of U.S. adults. 
But, is it really true that hanging out with your work buds will get you a salary bump?"Dr. Zak did a controlled study but concluded there is no causation. Other posts about economist Paul Zak:Adam Smith vs. Bart Simpson. Great New Book On Neuroscience By Economist Paul Zak What Do Wall Street Traders Need Just The Right Amount Of? Can The Way You Tell A Story Affect How Willing People Will Be To Donate Money To Charity? Adam Smith, Marriage Counselor

Read More »

U.S. Population Growth, an Economic Driver, Grinds to a Halt

August 12, 2021

Covid-19 pandemic compounds years of birth-rate decline, puts America’s demographic health at riskBy Janet Adamy and Anthony DeBarros of the WSJ. Excerpts:"America’s weak population growth, already held back by a decadelong
fertility slump, is dropping closer to zero because of the Covid-19
pandemic. In half of all states last year, more people died than
were born, up from five states in 2019. Early estimates show the total
U.S. population grew 0.35% for the year ended July 1, 2020, the lowest
ever documented, and growth is expected to remain near flat this year.""What concerns demographers is that in the past, when a weak economy
drove down births, it was often a temporary phenomenon that reversed
once the economy bounced back.""Yet after births peaked in 2007, they never

Read More »

COVID-19’s Economic Impact around the World

August 11, 2021

By Juan M. Sánchez. He is an economist and assistant vice president at the Federal Reserve Bank of St. Louis. He presents a good overview with informative charts. Excerpt:"KEY TAKEAWAYS

Although the COVID-19 pandemic affected all parts of the world
in 2020, low-, middle- and high-income nations were hit in different
ways.In low-income countries, average excess mortality reached 34%,
followed by 14% in middle-income countries and 10% in high-income ones.However, middle-income nations experienced the largest hit to
their gross domestic product (GDP) growth, followed by high-income
nations."

Read More »

Does the U.S. have a firefighter shortage?

August 10, 2021

There are several fires that have been in the news lately. The Forest service has more than 100 openings for firefighters that it does not seem to be able to fill.Normally, in a shortage, the price (in this case wages) would get pushed up until there are no more openings. But the government does not work by market forces. Someone has to make a policy decision to raise wages. If that does not happen, the shortage will persist.The article also mentions how potential firefighters can get better pay and benefits elsewhere. That is something I talk about when I cover labor markets. How many people offer their services in one market depends partly on how much they can get paid somewhere else.See As the Dixie Fire and Others Burn, the U.S. Struggles to Find Enough Firefighters: Low pay and a

Read More »

Strong U.S. Recovery Aids Growth in Canada, Mexico

August 5, 2021

Americans are spending more on imports and travel, giving neighboring countries a boost By Kim Mackrael and Anthony Harrup of The WSJ. Excerpts:"The U.S. economy is so strong that its neighbors, too, are getting a boost. Businesses and consumers are buying more products from Canada and Mexico, and Americans flush with savings are going back to traveling
and sending more money across the southern border, helping to bolster
two countries whose economies were hit hard by Covid-19 infections and
lockdowns.Central bank officials have raised their forecasts for economic growth this year to 6% for Mexico and 6.5% in Canada, in part because of the strong U.S. rebound. The $1.9 trillion U.S. stimulus plan
enacted in March is expected to increase each country’s output by
between half a

Read More »

Target to pay 100% of college tuition and textbooks in bid to attract workers

August 5, 2021

By Melissa Repko of CNBC. Excerpt:"Target said it plans to invest $200 million in the education program
over the next four years. It developed the program with Guild Education,
a company that manages corporate education assistance programs."That sounds like education brokers that came up in a post from 2019, which I put below. Of course, with competition for workers and some workers still looking for jobs due to Covid and getting unemployment insurance, firms have to find new ways to get and keep them. But this is not totally new and there may be some interesting economics behind this.Here is the post from 2019 "Some Companies Offer To Pay All College Expenses For Their Workers."See Now Hiring, With Attractive New Perk: Free College Degree: Companies say benefits of a happy,

Read More »