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    What Can An N-Gram Tell Us?

    Dec 20 • Economic History, Economic Thinkers, Innovation • 625 Views

    For laughing and learning this TED talk is wonderful. 

    Having digitized 15 million books, Google enabled us to access a mammoth body of knowledge. However, just reading the entries from the year 2000, without eating or sleeping, absorbing 200 words a minute, would take someone 80 years. How then to learn from an information avalanche that could easily bury you?

    Culturomics.

    A new discipline focusing on the frequency of selected words and phrases, culturomics conveys trends and I suspect much more. The TED researchers told us, for example, that the word “women” appears much more frequently than “men” after 1970. They also compared the date that that an innovation appeared to when its name became common usage. As you might expect, since 1800, the time span has narrowed considerably. Even censorship in Nazi Germany can be displayed through their database.

    You can see why their website is addictive. Entering apple, for example, I observed when its usage skyrocketed. Then I compared it to PC to see how their trajectories differed. I also tried stock market, 1929 and Adam Smith.

    What is an n-gram? It is the word(s) that their database tracks. For example, “the United States of America” is a 5-gram and 1929 is a 1-gram. 

    The Economic Lesson

    As the U.S. economy grew, so too did the “infrastructures” that facilitated its expansion. A transportation infrastructure of roads, canals, and railroads moved people and goods. Our financial infrastructure moves money and credit. Google’s accomplishments and n-grams relate to our information infrastructure.

    An economic question: What might compose a financial and information infrastructure?

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    Inheritance Issues

    Dec 19 • Economic Debates, Economic History, Economic Humor, Regulation, Thinking Economically • 1265 Views

    From 1941 to 1976, for $10 million and more, the top federal estate tax rate was 77%.

    • $10 million in 1941 would equal $153,897,959.18 today.
    • $10 million in 1976 would equal $39,759,226.71 today.

    Referring to new federal estate tax legislation (1916), Supreme Court Justice Louis Brandeis said, “We can have concentrated wealth in the hands of a few or we can have a democracy.”

    Focusing on individual incentive, Calvin Coolidge told us that, “The wise…course to follow in taxation is …to create conditions under which everyone will have a better chance to be successful.”

    Our bottom line: Which goal should federal estate tax legislation support?

    • Raise revenue or…
    • Preserve equality or…
    • Encourage capital accumulation and economic growth. 

    You might want to read these articles, here and here, for current estate tax issues. This econlife post also looked at inheritance dilemmas. 

    The Economic Lesson

    In the colonial U.S. colonial inheritance laws diverged considerably between North and South. Most northern colonies, except for New York and Rhode Island had multigeniture laws meaning that a family’s sons divided its affluence. By contrast, the South, New York and Rhode Island favored primogeniture whereby the oldest son received the inheritance. What about daughters? A dowry was her source of the family fortune.

    One economist explains (p. 59) that in the South, the planters who controlled the legislatures wanted to retain larger plantations and the efficiencies of scale.

    An Economic Question: Using cost/benefit analysis, explain why you would support a high or low approach to federal estate taxes.

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  • Affecting the cost of animal feed and lowering the amount of milk from cows, the drought is pushing up milk prices.

    A Happy Story From Greece

    Dec 18 • Businesses, Demand, Supply, and Markets, Economic History, Environment, Innovation, International Trade and Finance, Labor, Macroeconomic Measurement • 576 Views

    Greece is helping to solve the unemployment problem in upstate New York.

    When you see a small white container of Fage Greek yogurt (pronounced fa-yeh), instead try to picture a 220,000 square foot U.S. production facility, close to 200 jobs and lots of busy cows (every pound of yogurt uses 3 times as much milk). In addition, yogurt waste creates methane gas that creates electricity and reduces local taxes.

    Fage is an Athens based multinational that started in 1926 as a small dairy store. After expanding in Greece, they started exporting to Europe during the 1980s and to the U.S. in 1998. Their first U.S. plant opened in Johnstown, N.Y. in 2008. Chobani, #1 in Greek-style yogurt sales, is also located in the area.

    All of these yogurt facts were in the news recently because Fage’s proposal to build a new multi-million dollar whey treatment plant was blocked by local bureaucracy until New York’s Governor Cuomo intervened.

    Our bottom line: Fage Yogurt is a good example of foreign direct investment.

    The Economic Lesson

    So often true with the market system, people respond to the profit motive with behavior that is not readily evident but amazingly productive. The Fage story involves jobs, innovation, the environment, international trade and a ripple of industrial development. 

    An economic question: Specifically, how does Fage add to the U.S. GDP?

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    China’s Nine Nations

    Dec 17 • Demand, Supply, and Markets, Developing Economies, Economic History, Financial Markets, International Trade and Finance, Macroeconomic Measurement • 2725 Views

    With this map of China, less is more. Called “The Nine Nations of China,” it resembles a simple color-coded jigsaw puzzle. 

    Each of the 9 areas has a label that concisely states size, population, per capita GDP and the balance of trade. Consequently, scanning from west to east, you can compare affluence. For the balance of trade, you can quickly see that 7 of the 9 areas have surpluses. And the names, including “The Rust Belt,” and “The Frontier” and “The Metropolis” give economic clues. Meanwhile, if you want more information, the author provides a description of each of the 9 areas from his article in the Atlantic.

    The Economic Lesson

    Having nudged Japan out of the #2 spot, China has the world’s second highest GDP. While the total value of the goods and services produced in China during 2010 totaled $5.9 trillion, U.S. production was almost $15 trillion.  

    And here, in a marvelous TED talk, as a sportscaster narrating a horse race, Dr. Hans Rosling describes the ascent of China and India. 

    An Economic Question: As #3, how close is Japan’s GDP to China’s? 

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    Marriage Data

    Dec 16 • Behavioral Economics, Demand, Supply, and Markets, Economic History, Gender Issues, Households, Thinking Economically • 647 Views

    When a valid research study with dependable numbers says the marriage age has climbed to historic heights, should we assume its conclusions are valid?

    Not necessarily.

    In Economix, Catherine Rampell describes the problem. Her story begins with a Pew Research Center study telling us that a typical bride (age 26.5) and her new husband (age 28.7) are much older. As a result, “In 1960, 72% of all adults ages 18 and older were married; today just 51% are.”

    However, a University of North Carolina sociologist points out that the base year, 1960, is misleading. A marriage age graph between 1890 and 2010 looks like a flattish “u” with 1956 the low point and 1960, close. By selecting 1960, the study placed our current marriage age in a misleading time frame.

    You also might want to listen to this econtalk discussion about other studies with conclusions that could be re-examined.

    The Economic Lesson

    Fiscal, monetary and regulatory policies depend on accurate statistical research. After Nobel Prize winning economist Simon Kuznets (1901-1985) developed the concept behind the GDP, the country could respond to the business cycle more appropriately. Also because of Dr. Kuznets’s work, we could reallocate resources more appropriately during the Second World War.

    An economic question: How might later marriages affect government’s economic policies?

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