Archive for December, 2011

A sentence to remember for next year’s presidential election, found on Jason Volack’s blog for ABC News:

Like most aspects of running a national political campaign, style often outweighs substance.

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Judge Andrew Napolitano reminds us of the failure of the 2010 Tea Party movement:

Government is not a jobs program and government is not your caretaker. Government is an arrangement made by free individuals to protect their rights and their property. And it does not take $3.6 trillion a year to do that effectively in America today.

We must swallow the bitter pill of austerity now on our own terms, while we are still the undisputed leader of the free world and while we still have a Constitution.


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The Thomas Sowell Reader on the powerful role of words in politics and the meaning of social justice:

Is the person who has spent years in school goofing off, acting up or fighting, squandering the tens of thousands of dollars that the taxpayers have spent on his education supposed to end up with his income aligned with that of a person who has spent those same years studying to acquire knowledge and skills that would later be valuable to himself and to society at large?

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High unemployment rates are top of the agenda for policymakers in most Western countries these days. At the same time, the German labor market is doing surprisingly well. Many have called the relatively low and even declining unemployment rate a job miracle.

Unemployment rates in various countries // source:

In a recent article for VoxEU, Michael Burda (HU Berlin) and Jennifer Hunt (Rutgers) discuss the low unemployment rate in Germany and provide a much more subtle explanation:

The German labour-market miracle 

The extraordinary performance of the German labour market in 2008–2009 can most clearly be tied to a possibly one-off event with less favourable social welfare implications. In other words, firms had less need to lay off than in a typical recession, because an unusual lack of confidence in the preceding boom had made them reticent to hire.

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educational spending

It often seems to be common sense that children would receive a much better education if more (public) money was spent on schools. However, economic evidence is far less clear as Hanushek and Woessmann (2010) have shown in the Economic Policy journal:

PISA 2006 math scores and acc. educational spending per child in thousand US Dollar

Many of the traditional policies of simply providing more funds for schools or of adding specific resources such as smaller classes do not provide much hope for significant improvements in student achievement.

Instead, the authors emphasize the importance of teacher quality and school competition:

Evidence from both within and across countries points to the positive impact of competition among schools, of accountability and student testing, and of local school autonomy in decision making.

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merry christmas

Have a wonderful Christmas time with your loved ones!

I know it’s not too late
the world would be a better place
if we can keep the spirit
more than one day in the year.

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last man dead

The other day, there was an interesting article in the Washington Post about David Hickman, the 4’474th and probably last member of the U.S. military to die in the Iraq War:

In Iraq, the last to fall: David Hickman

How do you ask a man to be the last man to die for a mistake?

It is crazy that he died. No matter your position on this war – if you are for or against it – I think everybody thinks we should not have been over there anymore.

There is some truth in Stalin’s phrase that a single death is a tragedy but a million deaths are a statistic. However, sometimes statistics do reveal some interesting facts. Faces of the Fallen for instance reports that the average age of fallen soldiers was only 26, and more than 1’300 dead were aged 22 or younger.

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festive zurich

Short trip to Switzerland’s de-facto capital:





Christmas booth

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Two months ago, Jennifer Brown from Northwestern University published an interesting study in the JPE:

Quitters Never Win: The (Adverse) Incentive Effects of Competing with Superstars

The author analyzes the impact of superstars in sports competitions. Usually economists would argue that competition fosters incentives and efforts. However, there is quite some evidence that the presence of superstars (i.e. large skill disparities) worsens other players’ efforts.

As Brown only uses data from golf tournaments, the question is whether results would also apply to other (team) sports. With regards to soccer, a particularly interesting question is whether other English and Spanish teams would play better if it was not for Manchester, Madrid, or Barcelona. Clearly, this would open up a realistic opportunity to actually win the national championship.

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political accountability

Quite recently, James Snyder and David Strömberg published a brilliant article in the Journal of Political Economy:

Press Coverage and Political Accountability

In this study, the authors examine the impact of local newspapers on the political process in the United States. The driving force here is the congruence of media markets and congressional districts: The better the spatial match, the more articles are published about the respective congressman. Thus, people in highly congruent districts are better informed about their representative’s efforts. This causes an incentive for politicians to work harder in order to satisfy the electorate’s demands. As a result, Snyder and Strömberg find that local newspaper coverage plays an important role with regards to political accountability and federal spending.

From an economic point of view, however, one might put a question mark over the advantageousness of more federal money floating into highly congruent districts. It could be that this benefit occurs only at the expense other districts (see earlier post here).

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