• Everyday economics for government pension plan

    When You Can Expect to Be Most Creative

    Sep 28 • Behavioral Economics, Economic Thinkers, Education, Government, Innovation, Labor, Macroeconomic Measurement • 132 Views

    Our econlife.com Sunday Charts

    Albert Einstein was not so far from the truth when he said, “A person who has not made his great contribution to science by the age of thirty will never do so.”

    The Age of Peak Creative Genius

    You can see below that Nobel Prize winners and great inventors did their best work when they were close to 40 years old.

    Human capital builds before a major research breakthrough that contributes to economic growth.

    From: “Age and Scientific Genius”

    Then, hypothesizing that “experimentalists” who depend on past empirical work need more time for a concrete foundation than the theorists whose work is abstract, scholars say peak performance age for Nobel Prize physicists was approximately 36 while winners of the Nobel Prize in Medicine averaged 41.

    After building human capital, we are most creative.

    From: “Age and Scientific Genius”

    Again changing their perspective, researchers also compared peak creativity in different centuries. Maybe because there was less to learn, the age of optimal creativity (below) has probably risen over time. After all, in 1639 Harvard’s Library had 320 volumes while the Library of Congress’s current count is closer to 35 million.

    Changes in Creativity Peaks Over Time

    From: Age and Scientific Genius”

    And here, from an Atlantic article, we have a creativity graph that could apply to many of us:

    Creativity potential

    From: “Why I hope to Die at 75″

    Our Bottom Line: Economic Growth

    The “when and how” of peak creativity has implications for economic growth and education policy. We’ve looked at “when,” For the “how,” let’s see what Malcolm Gladwell has to say:

     

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  • The econlife.com Weekly Roundup

    Weekly Roundup: From Lemons to Longevity

    Sep 27 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Growth, Economic History, Economic Thinkers, Gender Issues, International Trade and Finance, Labor, Lifestyle, Macroeconomic Measurement, Tech, Thinking Economically • 109 Views

    Our Posts Roundup

    Everyday Economics on the gender gap SUNDAY 09.21.14

    Different Views of the Gender Pay Gap…more

    Everyday Economics and baby boomer productivity MONDAY 09.22.14

    Why Baby Boomers are Less Creative…more

    Phasing out the penny from the money supply TUESDAY 09.23.14

    The Push to Phase Out the Penny…more

    Everyday Economics of the iPhone 6 supply chain WEDNESDAY 09.24.14

    A Long iPhone 6 Supply Chain…more

    Because of less supply and more demand, lemon prices are soaring. THURSDAY 09.25.14

    Looking at the lemon price squeeze…more

    Optimal human capital formation of warmth and competence varies for different jobs. FRIDAY 09.26.14

    Choosing between warmth and competence at work…more

     

    Economic Ideas Roundup

    • disposable income
    • dependency ratios
    • productivity
    • money supply
    • price system
    • supply chains
    • supply and demand
    • human capital

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  • Optimal human capital formation of warmth and competence varies for different jobs.

    Balancing Warmth and Competence at Work

    Sep 26 • Behavioral Economics, Businesses, Economic Thinkers, Education, Innovation, Labor, Thinking Economically • 137 Views

    After reading a paper on job warmth and competence from two Princeton scholars, I wondered about its broader significance.

    While the paper’s authors said their goal was to assess “communication credibility,” my takeaway was somewhat different.

    But first, let’s start with the researchers’ bubble diagrams that show where warmth (friendly, trustworthy and well-intentioned behavior) and competence (good with knowledge and skills) converge for different jobs. Indicating a survey group’s opinion, the paper’s authors emphasize the results do not represent facts about each profession. They just convey stereotypes expressed by 116 participants. (Interesting to note the position of politician.)

     

    Human capital images in selected jobs

    From: “Gaining trust as well as respect in communicating to motivated audience about science topics”

     

    The study also looked at social group images but not, the authors again point out, facts about each group.

    Human capital images

    From: “Gaining trust as well as respect in communicating to motivated audiences about science topics”

    Yes, the purpose of the researchers was to set the scene for assessing how successfully climate scientists communicate. However, I liked how these bubble diagrams provided a springboard for thinking about the learning that economists call human capital development.

    As Aristotle recognized centuries ago, learning is about more than knowledge. Adding character and emotion to a learning recipe takes you beyond logic and information. People who successfully combine all four attributes achieve what the study’s authors call communicator credibility. Not only can they perform their job but also they can convincingly influence others.

    Teachers’ Warmth and Competence

    Having just completed an hour-long econtalk podcast on teachers’ efficacy, I took their conclusions to the world of education.

    With teachers you can see on the above diagram that relative warmth somewhat exceeds competence. The podcast–a discussion of teacher competence–points out that loving children is not the most important attribute for a teacher. Rather, it is competence that makes a good educator. To nurture that competence, we should emphasize the classroom. We can help future educators practice learning and disciplinary techniques and the skills needed for decomposing learning into smaller steps. We can value the art of teaching as much as we respect the knowledge of an academic discipline.

    Our Bottom Line: Human Capital Formation

    Indeed, every job has its naturals. But most professionals need to have had the human capital training that has always been about more than depositing facts into people.

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  • Because of less supply and more demand, lemon prices are soaring.

    Are We Getting Squeezed by Lemon Growers?

    Sep 25 • Businesses, Demand, Supply, and Markets, Economic History, Economic Thinkers, Households, Thinking Economically • 156 Views

    Recently, my lemons have been less juicy and more expensive. The reason is a classic supply and demand story.

    The Lemon Story

    On the supply side, we can focus on California. The source of 92% of the lemons grown in the U.S., California has had drought problems and a freeze that struck some lemon growers during December and January. As a result, production dipped 8.8%.

    Meanwhile, demand has soared. Think lemon soda, citrus salad dressing, lemony sauces and lemon dishwashing liquid. Always, lemons are more popular during the summer but now, consumers, beverage makers and restaurants all say people are clamoring for lemons. At the same time, tripling lime prices created a switch to lemons.

    We could say the result has been a zesty lemon rally. Currently averaging $34.20 a box, lemon prices are 80% higher than last year. Restaurants report paying $50 for a case of 165 lemons, up from $30 or $35 a year ago. Correspondingly, the retail price of lemons has reached its highest since 1980, up 36% to $2.33 a pound in August.

    Three years of lemon supply and demand history:

    Supply and demand boost lemon prices

    From: USDA

    With supply decreasing and demand up (below), you can see why lemon growers are smiling.

    Supply and demand increase lemon prices.

    Our Bottom Line: The Invisible Hand

    When Adam Smith explained how consumers and businesses interact in his Wealth of Nations (1776), he transformed a seemingly chaotic market into an orderly process. First, as with the lemon market, when supply decreases and demand goes up, prices rise. Then though, nudged by an invisible hand, businesses decide to produce more while consumers are willing and able to buy less. With only the invisible hand influencing how consumers and producers behave, the market adjusts.

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  • Everyday Economics of the iPhone 6 supply chain

    What Do iPhones & Pencils Have in Common?

    Sep 24 • Demand, Supply, and Markets, Developing Economies, Economic History, Economic Thinkers, Innovation, International Trade and Finance, Labor, Tech • 257 Views

    In a 1958 essay, a pencil says to us, “Pick me up and look me over. What do you see? Not much meets the eye–there’s some wood, lacquer, the printed labeling, a graphite lead, a bit of metal, and an eraser…”

    Continuing, though, we learn a pencil is not as simple as it first appears. Made from trees in California and Oregon, it requires trucks, saws, rope, logging camps and coffee. Some millwork is next where the logs are cut into “pencil-length slats” and tinted. In a pencil factory, the slats receive graphite “lead” from Ceylon (now Sri Lanka) that was mixed with clay from Mississippi, some brass made of zinc and copper and rubber-like erasers from Malaysia.

    What are we really talking about? Global supply chain links.

    The iPhone 6 Supply Chain

    Composed of design and development, sourcing, manufacture, warehousing and a distribution infrastructure, the iPhone 6 supply chain links people around the world.

    By showing all of the countries that play a role in the creation of the iPhone 6, this section of an awesome infographic only begins to convey mind-boggling worldwide cooperation.

    Globalization and the iPhone 6 supply chain

     

    You can see below that China and the U.S, at 349 and 60, respectively, have the most suppliers.

    iPhone 6 Suppliers:

    The iPhone 6 supply chain

    But, naming countries separately obscures what really happens. A company based in South Korea or Japan or Taiwan, for example, outsources to lower cost facilities, perhaps in Malaysia or Thailand. And then, they send components that range from antenna switches to SDRAM memory mostly to China and some to Brazil.

    In China, two firms have contracted to complete 50 million iPhone 6s by the end of 2014:

    Apple iPhone 6 Chinese supply chain  links

    And, we have not even mentioned some of the minerals that are shown in the following section from another amazing infographic called “The Periodic Table of iPhones.”

    Globalization and the iPhone's minerals

    Our Bottom Line and the Price System

    As a final step, we should ask why so many people around the world cooperate to make a pencil and an iPhone. Answering our question, Nobel Laureate Milton Friedman (1912-2006) said, “the price system.” Prices are the incentives that encourage us to form the worldwide supply chains that compose globalization.

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