Categories
economics

Pigouvian Horn Tax in Mumbai

A pigovian tax is a tax on any market activity that generates negative externalities. One such negative externality is the noise pollution that happens in Mumbai as drivers continually slam on their horns hoping to help speed up the wait at traffic lights. The Mumbia police have issued such a pigouvian tax on the honkers by setting up noise detectors that automatically reset the red light waiting time if the honking gets too loud.

From the article:

For the Mumbai’s perpetual honkers, who love to blare the horns of their vehicles even when the traffic signal is red, the Mumbai Traffic Police has quietly come up with an unique initiative to discipline them in order to curb the alarming rise in the noise pollution levels in the country’s commercial capital.

From Friday (January 31, 2020), it has installed decibel meters at certain select but heavy traffic signals to deter the habitual honkers through a campaign named ‘The Punishing Signal’.

Joint Police Commissioner (Traffic) Madhukar Pandey said that the decibel monitors are connected to traffic signals around the island city, and when the cacophony exceeds the dangerous 85-decibel mark due to needless honking, the signal timer resets, entailing a double waiting time for all vehicles.

Photo Credit – Adam Cohn CC 2.0
(Via Marginal Revolution)

Categories
economics

Money, Money, Money

This American Life LogoAs I’ve mentioned previously, This American Life has been presenting an ongoing series about the financial crisis and the economy. Below is a list of the relevant entries so far. I recommend you listen to them all.

Categories
economics

Political lobbying is like an all-pay auction

David Zetland teaches Environmental Economics and Policy 100 at UC Berkeley. In this YouTube clip from one of his lectures, he demonstrates how political lobbying is like an all-pay auction (an auction where you pay your bid regardless of whether or not you actually bid the final, highest bid).

[YouTube – Political lobbying explained through the example of all-pay auctions]

A sleazy online auction site, named Swoopo, uses a similar style auction to dupe suckers into creating a “sunk cost” and then extending the time, giving the competition time to recap their own sunk costs. Everyone is a loser in this game, do not play it.—see Metafilter’s writeup.

(via)

Categories
article economics psychology

Cocksure

Malcolm Gladwell’s new article, Cocksure, is about the psychology of overconfidence. In it he postulates that the brashness of experts caused the current financial crisis.

Since the beginning of the financial crisis, there have been two principal explanations for why so many banks made such disastrous decisions. The first is structural. Regulators did not regulate. Institutions failed to function as they should. Rules and guidelines were either inadequate or ignored. The second explanation is that Wall Street was incompetent, that the traders and investors didn’t know enough, that they made extravagant bets without understanding the consequences. But the first wave of postmortems on the crash suggests a third possibility: that the roots of Wall Street’s crisis were not structural or cognitive so much as they were psychological.

Categories
economics

This American Life on the Financial Crisis

If you’re confused about what caused the greatest financial crisis since the depression, let This American Life teach you in words you can understand, how the mortgage lending crisis started, with their episode The Giant Pool of Money and follow-up with their episode Another Frightening Show About the Economy in which we learn:

  1. How and why the credit markets froze?
  2. What are “credit default swaps” and how do they propagate hardship to every sector of the economy?
  3. Why aren’t “credit default swaps” regulated?
  4. What will the bailout do and is it a good thing?

If this interests you, you might also want to check out the NPR: Planet Money Podcast.

Update: Now there is a movie about all this (by Adam Davidson no less) called The Big Short. I highly recommend it.

Categories
economics Politics

The Dilbert Economy

Scott Adams, creator of Dilbert, wondered why someone wasn’t doing something that would give American voters useful and unbiased information about which candidate has the best plans for the economy.

Then he realized that he was someone.

He commissioned a survey of over 500 economists, drawn from members of the American Economic Association, a nonpolitical group, that had previously agreed to be surveyed on economic questions.

The economists were asked to rank the most important economic issues and pick which candidate they thought would do the best job on those issues.

Here are the results:

Rank Issues Obama McCain No Diff.
1 Education 59% 14% 27%
2 Health care 65% 20% 15%
3 International trade 26% 51% 23%
4 Energy 61% 22% 17%
5 Encouraging Technology/innovation 43% 23% 34%
6 Wars and homeland security 58% 30% 11%
7 Mortgage/housing crisis 41% 18% 41%
8 Social Security 40% 24% 35%
9 Environmental policy 72%  9% 19%
10 Reducing the deficit 37% 29% 33%
11 Immigration 33% 29% 38%
12 Increasing taxes on wealthy 79% 14%  7%
13 Reducing waste in government 16% 38% 46%

Adams is quick to point out that even though economists favour Obama in 11 of 13 of the most important issues (as decided by the survey) 48% of economists are Democrats and only 17% are Republicans.
It makes you wonder, are liberals more likely to go into economics, or are economists more likely to become liberals? Or is it just the simple fact that educated folks tend to be more progressive?

You can check out the full report (in Power Point format).

Categories
economics Health

Are Children’s Car Seats Over Rated?

Steven Levitt, of Freakonomics fame, at a 2005 TED Talk speaks about the economics of car seats. His data lead him to ask the morally difficult question, are children’s car seats worth the time and expense it takes to use them?

[ted id=30]

Hit play or watch Steven Levitt on child car seats at TED.com.

Categories
economics

Canadian Dollar Goes Par

Today, for the first time in my lifetime (and since 1976 if you want to get specific) the Canadian dollar was worth slightly more than the US’s famous greenback. If this trend sticks, I’m tempted to hit up Disneyland for a Christmas vacation, or maybe a pre-Christmas vacation.

Categories
economics

How Would You Attack?

Freakonomics Blog

Over on the Freakonomics blog, Steven D. Levitt asks the thought provoking question, what would you do to maximize terror if you were a terrorist with limited resources. Readers’ responses to the post were a mixed bag of terror suggestions and hate mail. In a follow-up post, Levitt says that, “The people e-mailing me can’t decide whether I am a moron, a traitor, or both.”

Personally I think it’s an interesting topic, and not one that will give “the terrorists” any ideas they never had before. Hopefully it will provide those in charge of terrorist prevention and response to be better prepared in the event of domestic terror attacks.

In Canada, I think the biggest vulnerability to terrorism would be if they took out a couple of train bridges and brought Canadian commerce to a stand-still.

Because of the layout of the country (something like 80% of our population lives within a couple hours of the border) the transportation networks run basically east to west. I”ve been told there are only two main lines that run parallel across the country. A huge percentage of our goods arrive via sea in Vancouver and are shipped across the country by train. Disabling the tracks in the middle of the country would cripple this process, and doing so probably isn”t much more complicated than a couple of properly placed explosives.

Removing just two very vulnerable bridges, one in Medicine Hat and another in Edmonton, would be enough that virtually no goods could travel across Canada. I have no idea how long it would take to rebuild a train bridge, but it would definitely be the worst terror attack in our country’s history.

So what could be done to prevent such an attack? Building bomb proof bridges is not exactly an option. Putting up security guards around the bridges probably would work, but who wants to pay for that — not to mention the fact that because on any given day the chances of a terrorist strike against the bridges is so slim, it might be ineffective anyway unless the guards are always particularly vigilant.

I guess the best I can do for peace of mind is try not to think about it.

Update: Levitt’s third post on terrorism.

Categories
economics

The Gapminder World 2006, beta

The Gapminder World 2006, beta is pretty cool. It also makes me a little more aware (maybe even uncomfortably so) of the world around me.