The infamous quadruplicate papers of Frey, Savage and Torgler have caused a lot of grief for their multiplicity, yet they yielded a somewhat interesting, yet old result: women and children get priority on maritime disasters, crew are last, and there are some subtle differences among passengers from different nationalities. This result, however, was obtained using a sample of two: the Titanic and the Lusitania. And one also argue that there was some selection bias for the Titanic, as this was a much celebrated inaugural voyage with, let's say, an unusual set of passengers. It could therefore not hurt to increase the sample size.
Mikael Elinder and Oscar Erixson jack up the sample from 2 to 18. And the results are completely reversed. Women are at a distinct disadvantage, crew fare much better than the rest. This is the outcome you would expect from a free-for-all situation where weaker women get pushed aside on the run for the lifeboats. The lesson from this: do not trust a sample of two, even if amplified by four publications.
Showing posts with label Cultural Economics. Show all posts
Showing posts with label Cultural Economics. Show all posts
File sharing and the structure of the music market
For as long as music has existed, artists have lived from performing. The advent of packaged music (radio, TV, disk, tape or CD) has changed little to this, as the new medium has been more about promoting the artist than making money for the artist, with few exceptions. The ones making money from sales are the record companies, and the appearance on file-sharing is challenging their business model while not affecting the artist's way of living. In fact, the latter appreciate the zero marginal cost promotion. But the record companies want to survive.
Ralf Dewenter, Justus Haucap and Tobias Wenzel study the interaction of record and ticket sales under the assumption that both benefit from each other. Clearly, the impact of file sharing is ambiguous: it may increase record sales if people discover an artist through file-sharing and attend a show. But some potential sales are lost when a very close substitute is available for free. The solution for the record companies to to take over the management of concerts as well. Whether the artists want to go along with that is another question.
Ralf Dewenter, Justus Haucap and Tobias Wenzel study the interaction of record and ticket sales under the assumption that both benefit from each other. Clearly, the impact of file sharing is ambiguous: it may increase record sales if people discover an artist through file-sharing and attend a show. But some potential sales are lost when a very close substitute is available for free. The solution for the record companies to to take over the management of concerts as well. Whether the artists want to go along with that is another question.
The demand for theater
What determines demand for theater? Theater managers should be interested in understanding their market. Beyond this, this is also important for policy as theater is frequently and substantially subsidized. This the characteristics of those who go to theater and how frequently they do so may help understand whether it is worth subsidizing it. For example, if only rich people go to theater, one could leave the state out and let the public pay higher prices, which substitute for taxes (and would then improve efficiency). If it is mostly poor people who attend theater, then it may be worth subsidizing if there is some sort of positive externality from it.
Concetta Castiglione uses micro data from Italy to find results that are not very surprising: everything is driven by education and income. Rich educated people pay more taxes and get them back in part in theater performances. This is even more pronounced than for higher education, for which forceful arguments have been made that the state should stop subsidizing it.
Of course, all this ignores consideration about the supply. but that does not matter here. Demand should be essentially the same whether theaters are subsidized or not in Italy.
Concetta Castiglione uses micro data from Italy to find results that are not very surprising: everything is driven by education and income. Rich educated people pay more taxes and get them back in part in theater performances. This is even more pronounced than for higher education, for which forceful arguments have been made that the state should stop subsidizing it.
Of course, all this ignores consideration about the supply. but that does not matter here. Demand should be essentially the same whether theaters are subsidized or not in Italy.
The smart children of vengeance
As someone who has been raised in a non-violent environment, I am often surprised how people in some circles easily resort to vengeance and violence while a conciliatory attitude could have resolved "issues" quickly and efficiently. There is certainly a good deal of learned behavior that determines whether you are of a conflicting or conciliatory type, and this learning comes from example, in the family, among peers and in society. Society is important (say, compare Scandinavia to the Balkans) but there are also striking differences within societies. That is where parents may come in.
Ruby Henry studies how the use of retaliation is transmitted to children, first using a model of education effort by parents, and then using UK National Childhood Development Survey. The theoretical prediction is confirmed that high-cognitive parents are better able to transmit their values and override the peer culture, as long as the parents are retaliators. Indeed, if a child is told to retaliate and meet a forgiver, he wins and his values are reinforced. If he is a forgiver and meets a retaliator, he looses and is upset by the teachings of his parents. It the long run, this means that humankind will settle on a retaliating culture. But I do not think this is what we observe. In fact, there are less wars, people abide more to contracts and, I think, respect more the rule of law over time. Correct me if I am wrong.
Ruby Henry studies how the use of retaliation is transmitted to children, first using a model of education effort by parents, and then using UK National Childhood Development Survey. The theoretical prediction is confirmed that high-cognitive parents are better able to transmit their values and override the peer culture, as long as the parents are retaliators. Indeed, if a child is told to retaliate and meet a forgiver, he wins and his values are reinforced. If he is a forgiver and meets a retaliator, he looses and is upset by the teachings of his parents. It the long run, this means that humankind will settle on a retaliating culture. But I do not think this is what we observe. In fact, there are less wars, people abide more to contracts and, I think, respect more the rule of law over time. Correct me if I am wrong.
Revenue sharing in rock bands
Rock bands are often volatile associations. While there may often be conflicts about the creative orientation of the band, conflicts are too often about jealousies regarding free riders or members who attract too much attention. Fundamentally, these are issues about contracting who does what and who gets what. In particular, when a band member is doing more creative work, should he also be getting a larger share of income (to reward creativity) or the same as the others (to avoid some jealousies)?
This is the question that Cédric Ceulemans, Victor Ginsburgh and Patrick Legros ask. The trade-off is clear: you want to attract more creative band members for its success, and you want to give them credit for this by giving them a larger share of the pie. So you may want to associate one creative musician with less creative ones (in a complete contract) or only creative ones (in a incomplete, uniformly sharing contract) depending on what it means for the probability of achieving a hit, and the type of contract will determine who wants to form a band and whether the band will outsource song writing (and how much effort each member puts into it). The theoretical analysis shows that under a complete contract, the more disperse the credits are, the more successful the band is (reflecting very much the winner-takes-all features of show business?). The relationship is negative for incomplete contracts, which is apparently true in the data. This means that bands are driven to write incomplete contracts.
This is the question that Cédric Ceulemans, Victor Ginsburgh and Patrick Legros ask. The trade-off is clear: you want to attract more creative band members for its success, and you want to give them credit for this by giving them a larger share of the pie. So you may want to associate one creative musician with less creative ones (in a complete contract) or only creative ones (in a incomplete, uniformly sharing contract) depending on what it means for the probability of achieving a hit, and the type of contract will determine who wants to form a band and whether the band will outsource song writing (and how much effort each member puts into it). The theoretical analysis shows that under a complete contract, the more disperse the credits are, the more successful the band is (reflecting very much the winner-takes-all features of show business?). The relationship is negative for incomplete contracts, which is apparently true in the data. This means that bands are driven to write incomplete contracts.
Being rationally agnostic
What religion should people adopt if there is uncertainty about the existence of deity? If there were only one choice, to believe or not in a god, the choice would be rather simple as Pascal's wager taught us: believe in the god just in case he turns out to exist. Things become a bit more complex if one has also to choose in which god to potentially believe. First, the fact that they are multiple candidate gods means all but at most one may turn out to be frauds, and choosing the wrong one may have serious adverse consequences. What to believe then? Luckily, economists have you covered.
Tigran Melkonyan and Mark Pingle use decision theory to come to the conclusion that agnosticism, which is to not take a stand, is an optimal choice if any combination of the following hold sufficiently strongly: 1) in-life benefits of agnosticism are higher than "other" religions, 2) the after-life benefits of agnosticism are not too much lower, 3) none of the religions is very likely to be correct, 4) life is not too long or too short, or 5) transition costs from agnosticism to a religion are lower than between religions. These all make intuitive sense, except the fourth, which has to do with the fact that if life is short, you want to believe in a god right away. If life is still expected to be long, you want to believe in no god. Agnosticism is in the middle, where you postpone a choice when you can afford to do so.
It would thus seem that many more people should be agnostic then there are (1-10% in the US). Why so? I would think this has to do with the fact that we do not make such choices from a clean slate: we are conditioned by the environment we grew up in, and kids are easily impressionable. Once they have been told to believe in a particular god, switching to agnosticism is very difficult: you face the disapprobation of the immediate family and peers. But their is also the fact that in any situation, it is very difficult to change the opinion of a person, even if the person is wrong. We are all conditioned that way, and while we easily adopt a first opinion, we rarely change it. This inertia will keep agnosticism, and atheism, a minority in the US for a long time still.
Tigran Melkonyan and Mark Pingle use decision theory to come to the conclusion that agnosticism, which is to not take a stand, is an optimal choice if any combination of the following hold sufficiently strongly: 1) in-life benefits of agnosticism are higher than "other" religions, 2) the after-life benefits of agnosticism are not too much lower, 3) none of the religions is very likely to be correct, 4) life is not too long or too short, or 5) transition costs from agnosticism to a religion are lower than between religions. These all make intuitive sense, except the fourth, which has to do with the fact that if life is short, you want to believe in a god right away. If life is still expected to be long, you want to believe in no god. Agnosticism is in the middle, where you postpone a choice when you can afford to do so.
It would thus seem that many more people should be agnostic then there are (1-10% in the US). Why so? I would think this has to do with the fact that we do not make such choices from a clean slate: we are conditioned by the environment we grew up in, and kids are easily impressionable. Once they have been told to believe in a particular god, switching to agnosticism is very difficult: you face the disapprobation of the immediate family and peers. But their is also the fact that in any situation, it is very difficult to change the opinion of a person, even if the person is wrong. We are all conditioned that way, and while we easily adopt a first opinion, we rarely change it. This inertia will keep agnosticism, and atheism, a minority in the US for a long time still.
Online dating and the business cycle
During an unemployment spell, people spend significantly more time on leisure and may thus be more interested in social activities like dating. It is simply a matter of available time. But for those who suffer from a reduction in wages during a recession, things are not so clear: the income effect would lead to a reduction in leisure, while the substitution effect would favor an increase. And this interest in dating is not trivial, as 10% of people in the US a registered with an online dating service at any time, while this is 18% in Europe.
Véronique Flambard, Nicolas Vaillant and François-Charles Wolff point out that this ambiguity is even stronger with the demand of dating services, as some would want to find more solace in a partner during hard times, while other feel less secure in dating. The impact of a recession on dating services thus needs to be sorted out empirically. They do this for France with a short monthly times series on economic sentiments, an indicator of dating services (searches for a popular online service on Google) and lagged fertility (as a proxy for those leaving the dating market for good). I am not completely convinced that 56 months of data are sufficient to capture what happens over business cycles (of which there is only one in the data), but let us take this seriously. Using a VECM using four lags (thus we are down to 41 degrees of freedom, they find evidence that dating services demand increases during a downturn. That should hardly surprise us given the impact of the unemployed. Using microeconomic data that distinguishes between the employed and the unemployed would have delivered more interesting results. In fact, using more direct observations of what is to be measured would make results credible.
Véronique Flambard, Nicolas Vaillant and François-Charles Wolff point out that this ambiguity is even stronger with the demand of dating services, as some would want to find more solace in a partner during hard times, while other feel less secure in dating. The impact of a recession on dating services thus needs to be sorted out empirically. They do this for France with a short monthly times series on economic sentiments, an indicator of dating services (searches for a popular online service on Google) and lagged fertility (as a proxy for those leaving the dating market for good). I am not completely convinced that 56 months of data are sufficient to capture what happens over business cycles (of which there is only one in the data), but let us take this seriously. Using a VECM using four lags (thus we are down to 41 degrees of freedom, they find evidence that dating services demand increases during a downturn. That should hardly surprise us given the impact of the unemployed. Using microeconomic data that distinguishes between the employed and the unemployed would have delivered more interesting results. In fact, using more direct observations of what is to be measured would make results credible.
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