Via Greg Mankiw:
“According to new research from Justin Wolfers and Betsey Stevenson:
The Paradox of Declining Female Happiness
By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women’s happiness has declined both absolutely and relative to men. The paradox of women’s declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging — one with higher subjective well-being for men.
I am not at all sure how to interpret this finding. It sounds like either the women’s movement was a mistake or subjective happiness is not the right objective.”
BusinessMinded: This further adds to my inability to understand women. This is a very interesting finding. Whenever you dig into anything a little further you may find out that things are exactly as they seem. Many people would probably assume that if the well-being of women is increasing that happiness would be increasing as well, but apparently this is not the case.
This is what is amazing about economics. It doesn’t JUST deal with money. It looks to explain relationships and tries to find causality. Economists, especially Steven Levitt, can sometimes show that society’s way of thinking is quite backward and flawed.
Below is an exert from NY Times (via Carpe Diem). Credit card companies make most of their revenues from charging late accounts, but now congress is stepping in to limit the amount of fees they can charge. Uh-oh. Now credit card companies will need to make up for this slack (They can’t make less money. How will they support their affluent life styles?). How will they do that? Read below:
“Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years. Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
“It will be a different business,” said Edward L. Yingling, the chief executive of the American Bankers Association, which has been lobbying Congress for more lenient legislation on behalf of the nation’s biggest banks. “Those that manage their credit well will in some degree subsidize those that have credit problems.” (Bold added via Carpe Diem.)”
BusinessMinded: Awesome!
Via Carpe Diem
“Here’s the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states.
Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.
We believe there are three unintended consequences from states raising tax rates on the rich. First, some rich residents sell their homes and leave the state; second, those who stay in the state report less taxable income on their tax returns; and third, some rich people choose not to locate in a high-tax state. Since many rich people also tend to be successful business owners, jobs leave with them or they never arrive in the first place. This is why high income-tax states have such a tough time creating net new jobs for low-income residents and college graduates.
~Art Laffer and Stephen Moore in today’s WSJ “
BusinessMinded: I wonder why taxes rate aren’t more similar across the U.S. if you get so many rich moving from unfriendly taxe states to friendly ones. You think these high tax states would like to keep the rich.
Why the rich move is simply explained by economics. You make things more costly and people move away to less costly substitutes. Therefore, if living in one state becomes more costly due to more taxes than people will move to a somewhat similar state that is cheaper (less taxes). This is what economists call the substitution effect.
Norway is doing something right. With the largest recession since the Great Depression, Norway’s economy expanded by almost 3% last year and its government currently has a surplus of 11% of GDP and is debt free. Wow! The U.S. on the other hand aren’t so impressive. The U.S. government will be racking up a deficit of 12.9% of GDP this year and it will grow its debts to $11 trillion (that’s a lot of zeros), which is roughly 65% of its entire economy. On top of all this, unemployment in Norway is 3% vs. 8.9% in the U.S.
One thing that contributes to Norway’s strong economic performance is the large amount of oil it continually exports and will continue to export into the foreseeable future. Also, the Government has intelligently and ethically invested Norway’s pension fund, which has put it to a worth of USD$ 300 billion or USD$ 62 000 per capita making it the largest capital reserve per capita in the world.
Norway thinks as a whole unlike the U.S. where it is survival of the fittest which has lead to people bettering themselves at the expense of others. That way of thinking brought the U.S. economy to where it is now. Rock bottom. Norway knows how to think. The future relies on people making actions that better themselves, but not at the expense of others and Norway, among many other European countries, has known this for some time. Norway is a free market economy, but at the same time it is somewhat of a socialist state. This allows for the proper allocation of resources while allowing for betterment of all people. Not just the rich and famous.
Case in point. Go Norway. Boo the U.S. We can learn from cases like Norway. And if we don’t I think we are doomed.
Check out how beautiful Norway is:
Who wants to move?
With the global economic slump, demand for diamonds is down which should mean falling prices but not if you cut supply too. If you can believe it, Russia has surpassed De Beers as the largest diamond producer and with that has gained an ability to control prices through its significant control of the world supply of diamonds. With demand down, the Russian diamond company Alorsa has cut its supply significantly - it hasn’t sold a single rough diamond on the market since December 2008.
With such control, one can expect diamond rings, necklaces, and everything else diamond to remain pricey. It is economics 101. If you control a significant amount of production, then you can be a price setter. So for those of you who were/are waiting for diamond prices to fall due to the belief that the recession is demand driven you can stop waiting. Prices will remain high and may even go higher. Sorry to break the news.
Could there be another NHL team coming to Southern Ontario?
Jim Balsillie, CEO of Research in Motion (maker of Black Berry), sure hopes so. Balsillie has made his third attempt to get an NHL team into Southern Ontario.
In the past he had made offers to both the Pittsburgh Penguins and the Nashville Predators, but both were rejected. Now Basillie has made the “third time is a charm” $212.5 million US offer to the Phoenix Coyotes with the condition that the now bankrupt Coyotes move to Southern Ontario (Hamilton or Kitchner-Waterloo).
According to the CBC, “Moyes, [former owner of the Phoneix Coyotes], told the newspaper that the court process will attach a new owner and location to the Coyotes by June 30, but the sale of the franchise will still need league approval.”
Balsillie has made an excellent offer, but it all lands on Gary Bettman, NHL commissoner, to decide what will happen with the Coyotes. Bettman is somewhat notorious for wanting to further develop the NHL in the U.S. and not Canada so it should be interesting to see what happens.
To support Belsillie’s attempt to bring a seventh NHL team to Canada, check out his website makeitseven.ca.
Interesting post by Greg Mankiw:
“Via the WSJ, here is the view from a “secured (sic) creditor” of Chrysler:
“Like many others I made the mistake of buying what I believed was ‘value,’” Mr. Gwin says, adding that investors who bought at the time believed the loans were worth more than their market price. “We did not contemplate having our first liens invalidated by a sitting president,” he adds.
As the President intervenes in more and more industries, a key question is how he does it and what he is trying to achieve. Is he trying to reorganize insolvent firms while, as much as possible, preserving the rights of stakeholders as established under existing contracts? Or is he trying to achieve a “fair” outcome as he judges it, regardless of preexisting rules and agreements? I fear it may be the latter, in which case politics may start to trump the rule of law.”
Very interesting Article I stumbled upon:
The Fuel Efficiency Paradox by Jeff Jacoby:
It seems intuitive: Increasing the fuel efficiency of automobiles - or anything else that runs on gas - should lower the demand for oil.
It was with precisely that expectation that Congress enacted the Corporate Average Fuel Economy (CAFE) standards in 1975, following the Arab oil embargo. At the time, US oil imports amounted to a little more than one-third of consumption. Today we import two-thirds. After more than three decades of CAFE standards, heightened environmental awareness, and steady improvements in fuel efficiency and engine technology, America’s demand for oil is greater than ever. In 1975, highway fuel consumption amounted to 109 billion gallons, according to the Federal Highway Administration. By 2006 it had climbed to 175 billion.
“It seems obvious that rising efficiency in cars, furnaces, and lawn mowers should, in the aggregate, significantly curb demand for energy,” write Peter Huber and Mark Mills in “The Bottomless Well,” their perceptive 2005 book on the supply, demand, and pricing of energy. “Sad to say, however … efficiency doesn’t lower demand, it raises it.”
Why? Because improvements in fuel economy effectively make fuel less expensive, and when costs fall, demand tends to rise. As driving has grown cheaper in recent decades, people have done more of it - choosing to drive to work instead of taking the bus, for example, or buying a second car, or moving to a house with a longer commute, or sending the kids to college with cars of their own. Between 1983 and 2001, data from the Energy Information Administration show, the number of annual vehicle-miles driven by the average American household rose from 16,800 vehicle-miles to more than 23,000.
“Efficiency may curtail demand in the short term, for the specific task at hand,” Huber and Mills acknowledge. “But its long-term impact is just the opposite. When steam-powered plants, jet turbines, car engines, light bulbs, electric motors, air conditioners, and computers were much less efficient than today, they also consumed much less energy. The more efficient they grew, the more of them we built, and the more we used them - and the more energy they consumed overall.”
