Monday, November 1, 2010

Name That Economist

He's tall. He's ranked in the top 20 at IDEAS. He blogs. He's a macro-wonk.

Congratulations to Yang Yang for correctly identifying N. Gregory Mankiw as the mystery economist. A Harvard economist, Mankiw is a renowned macroeconomist and a former chairman of the Council of Economic Advisors for President George W. Bush. He is the author of two popular textbooks in the field and also blogs on a regular basis. And he is 6'2" tall.

Monday, October 18, 2010

Name That Model

Whenever the renters of self-storage units default on their payments, the owner has the right to sell the contents of the units to the highest bidder. In some states, potential buyers are prohibited from examining the detailed contents of the units; rather, they are merely allowed to "peek" inside before the bidding process starts.

The type of auction described above is an example of a more general situation that economists have studied and modeled. Can you identify the relevant model? What does the model suggest is the optimal bidding strategy in such situations? Winners of such auctions are often said to suffer from a particular fate--can you name it?

Congratulations to Yuan Tao--a three-time winner this semester--for correctly identifying the common value auction (and its associated "winner's curse").

Tuesday, September 28, 2010

Forecasting the Nobel Prize in Economic Sciences

The Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel (aka the Nobel Prize in Economics) will be announced on Monday, October 11, 2010. Of the 63 men and 1 woman who have won the award outright or shared in it since the prize began in 1969, 44 have been Americans. The leading university homes of the winners include the University of Chicago (10), followed by the University of California-Berkeley (5), Columbia (4), Harvard (4), and Cambridge University, England (4).

Now, let's see how well you can forecast. Who will be awarded the 2010 Nobel Prize in Economics? Your educated guess must be posted as a comment to this post before the Nobel Prize announcement is made. In the event that more than one person submits identical guesses, the earlier timestamp of the comment will determine the winner. The bonus points will be added to the winner's next exam score following the Nobel announcement on October 11.

Congratulations to Peter Diamond (MIT), Dale Mortensen (Northwestern), and Christopher Pissarides (London School of Economics) as the winners of this year's Nobel Prize in Economic Sciences for their work on search frictions in economic markets.

Unfortunately, nobody correctly forecasted this year's winners.

Monday, September 27, 2010

Highest Grossing Film Of All Time?

Appearing in 2009, James Cameron's Avatar has generated $2,768,529,651&0000002768529651000000 in world-wide gross revenues (according to this link). It is not, however, the highest grossing film of all time when you take into account inflation.

Using the most recent figures for the CPI, calculate the inflation-adjusted gross earnings using the figures supplied by the link above in order to determine the highest grossing film of all time as expressed in August 2010 dollars. Show all of your calculations.

Congratulations to Yuan Tao, our first two-time winner this semester. See his calculations on the top grossing film of all time, Gone With The Wind, in the comments section. Bottom line: $6,285,131,159!

Monday, September 20, 2010

Name That Economist

She's been an Engineer (MIT), a Tiger (Princeton), and a Bear (Cal-Berkeley). Primarily a macroeconomist, her research focuses on the determinants of business cycles and the impact of fiscal and monetary policies.

Congratulations to Keyuan Gu for being the first to identify Christina Romer as the mystery economist. Dr. Romer, the outgoing Chair of the Council of Economic Advisors, is well known for her early research on the volatility of the economy before and after WWII. Her later research examined the impact of government spending and tax policies on the macroeconomy.

Monday, September 13, 2010

Food Scarcity

The Worldwatch Institute regularly predicts an increased scarcity of grain worldwide in the coming years and warns that the world is about to run out of food. How could you use the commodity futures page in the newspaper to evaluate this prediction? If professional speculators disagree with the forecasts of the Worldwatch Institute, in who forecasts would you have more confidence? Why?

Monday, September 6, 2010

Name That Economist

Do you know who I am? I am a bestselling author of advanced microeconomics textbooks and a former Golden Bear academic official. I now work as the top economist for a private sector company on the West Coast.

Congratulations to Yuan Tao for being the first to correctly identify Hal Varian as the mystery economist. Varian is a microeconomist who specializes in the economics of information. He is the former Dean of the UC-Berkeley's School of Information and now serves as the Chief Economist for Google.

Sunday, August 29, 2010

CAFE, s'il vous plait.

Suppose the government raises the fuel economy standard for automobiles from its current 27.5 MPG to 35 MPG by 2020. Will this necessarily mean that Americans will use less gasoline in 2020? Explain why or why not.

Congratulations to Yang Yang for identifying the often overlooked behavioral response that is likely to happen when fuel economy increases. While Tao Yuan correctly identifies a number of other factors that could influence the ultimate consumption choices of gasoline buyers, it was the impact of the rule itself that I was looking for.

Wednesday, March 31, 2010

Ugly Criminals

An economist friend of mine made the following claim: "Criminals are uglier than law-abiding people--it's simple economics at work."

Provide an economic explanation for the above claim. Also, provide one testable hypothesis regarding this claim.

Thursday, March 18, 2010

Tequila flavored beer, anyone?

Alcohol is illegal in the dorms at Abstinens College. Why are students more likely to sneak in a couple bottles of, say, tequila, rather than cases of beer, even though most would rather drink beer than tequila?

Congratulations to Yuan Tao for being the first to provide a plausible economic analysis of the drinking dilemma described above.

Thursday, March 4, 2010

Name That Economist

While Keynes is often thought of as the "father of modern macroeconomics," this Scandinavian economist could also lay claim to the title. Known for his socialist leanings, he favored the development of a welfare state that sought to redistribute income to those less fortunate. Our mystery economist was also known to espouse provocative views on various social issues...even leading to some time in jail because of his views.

Congratulations to Yang Yang for being the first (and only) person to correctly identify Knut Wicksell as the mystery economist.

Friday, February 19, 2010

Gasoline boycott?

The price of gasoline is now exorbitant. A good scheme for solving the problem is for consumers to boycott gasoline, driving down its price; when the price is low, consumers can resume their higher purchases.

True or False? Explain your answer.

Congratulations to Jennifer Wolfe for being the first to provide a correct answer to this week's question.

Friday, February 12, 2010

Name That Economist

Here is a haiku to describe the mystery economist:

His foundations told,
a math story of econ,
and led to a prize.

Your answer must also come in the form of a haiku!

Congratulations to William Hamilton for correctly identifying Paul Samuelson as the mystery economist (and using a haiku along the way).

Thursday, February 4, 2010

Simpson's Paradox......Doh!

Professor Neo Klassikle asked his research assistant to find out if the average wage of women rose or fell over a ten-year period. The following morning, the assistant returned and said, "I wasn't able to find anything on women, but I found out that the average wage for all workers fell during that period while the average wage for men rose. It must, therefore, be true that the average wage for women fell." "Not necessarily," said the professor. "It's possible that the average wage for women rose during that period, too." How could that happen? Use a numerical example to support your answer.

Congratulations to Yuan Tao for correctly explaining the seemingly odd set of facts described above. The problem presents an application of Simpson's Paradox.

Thursday, January 28, 2010

The Real Reason Dinosaurs Became Extinct

If doctors became better at curing lung cancer what would happen to the number of people who smoke cigarettes? What would happen to the overall number of people who died from lung cancer? Explain.

(The title to this blog post is in reference to a The Far Side cartoon by Gary Larson in which several dinosaurs were standing around smoking cigarettes--very funny stuff.)

Congratulations to Yang Yang for being the first to submit a reasoned answer to this week's question.

Thursday, January 21, 2010

Professor Salaries = f (Student Evaluations)

Imagine that starting next year, professors' salaries become determined entirely by student evaluations. Professors with the highest ratings will earn around $140,000 a year, while those with the lowest scores will receive about $30,000 a year. What will happen to teaching quality?

Congratulations to Elizabeth Ekey for providing a cogent analysis of the professor compensation scheme. Read Elizabeth's arguments in the comments section.

(This question is borrowed from James D. Miller's Principles of Microeconomics. The "winning" answer will exhibit concise and complete analysis.)

Thursday, January 14, 2010

I am a famous economics major. Who am I?

Detroit and Philadelphia were my playgrounds when I was younger, but Washington D.C. is where I play now.

Congratulations to Josh Bibb for being the first to recognize Senator Jim Bunning as the famous econ major. Bunning is a Hall of Fame baseball pitcher who mostly played for the Detroit Tigers and the Philadelphia Phillies.