Market Power

Causation vs. Correlation: The Antioxidant Edition

While awaiting the beginning of the end (the final lecture in Managerial Economics), I ran across this article on antioxidants.

Adding to a growing scientific consensus, results of a large Danish study released Tuesday found that vitamin E and other antioxidant supplements provide no health benefits and may even produce a small increase in the risk of death.

The report in the Journal of the American Medical Association was immediately criticized by vitamin makers and some researchers, but its findings are similar to other studies suggesting that supplements are not as quick and easy a way to improve health as their promoters claim.

The red flag that immediately came to mind was that antioxidant supplements, when taken, would not cause an increased risk of death.  Instead what may cause the increased risk of death would be poorer eating habits - a kind of Peltzman effect - of those who take supplements.  They think that by eating supplements, they do not have to get the antioxidants through "real" sources.  But those who take them should realize that they are called "supplements", not "substitutes."

What Did I Say About the Returns to Winter?

We have gotten quite a bit of snow this winter, especially since the end of 2006.  I don't have snow totals, but this past weekend we got about 1/2 inch of ice on Saturday and 12 inches of snow from Saturday until Sunday.  That necessitated the postponement of two birthday parties for PowerKid, the Youngest.  He and eldest didn't mind too much since they and dad got to play outside in the snow.  Dad got to hear the manly roar of the snowblower. 

But as *PowerSister, the Eldest would say, "I'm all funned out on winter."  So naturally, another winter storm is apparently heading this way. 

SIGNIFICANT SNOWFALL IS POSSIBLE OVER CENTRAL AND SOUTHERN
MINNESOTA FROM WEDNESDAY INTO FRIDAY. THE SNOW WILL COME IN TWO
ROUNDS. THE FIRST WILL BE ON WEDNESDAY WHEN SIX OR MORE INCHES ARE
POSSIBLE. THERE COULD ALSO BE SOME FREEZING RAIN OVER FAR SOUTHERN
MINNESOTA. A BRIEF BREAK IN THE SNOW MAY OCCUR WEDNESDAY
NIGHT..ESPECIALLY OVER WEST CENTRAL THROUGH SOUTH CENTRAL AREAS OF
MINNESOTA. HOWEVER...THE POTENTIAL FOR MORE HEAVY SNOW WILL
SPREAD BACK IN ACROSS THE AREA THURSDAY THROUGH FRIDAY AS
STRENGTHENING LOW PRESSURE MOVES FROM MISSOURI INTO WISCONSIN.
SIX TO 12 INCHES OF SNOW COULD OCCUR DURING THIS PERIOD. IN
ADDITION...THERE WILL BE INCREASING WIND...ESPECIALLY ACROSS WEST
CENTRAL THROUGH SOUTH CENTRAL AREAS OF MINNESOTA...WITH
CONSIDERABLE BLOWING AND DRIFTING SNOW OCCURRING.

What did I say earlier?  Diminishing returns to snow may be setting in.

*PowerSister, the Eldest notes in the comments that I forgot to refer to her by her rightfully-earned title "Powersister."  Obviously that has been fixed.  It should also be noted that said sister is one of two, and the eldest in the family.  Thus "the Eldest."

I Seek the Grail and the Grail Looks Like A Pirate

The "Holy Grail of baseball cards," the famous 1909 Honus Wagner tobacco card once owned by hockey great Wayne Gretzky, has sold for a record-setting $2.35 million, the seller of the card said Monday.

The buyer has only been identified as a Southern California collector. SCP Auctions Inc., a company that holds sports memorabilia auctions, said it bought a small share of the card. It is scheduled to be shown at a news conference at Dodger Stadium on Tuesday.

There are about 60 of the tobacco cards in existence featuring the Pittsburgh Pirates shortstop, one of the first five players to be inducted in Baseball's Hall of Fame.

The seller, Brian Seigel, in 2000 paid a then-record $1,265,000 for the prize card, which is in much better shape than the others.

"This particular one was preserved in spectacular condition," said Joe Orlando, president of Professional Sports Authenticator of Newport Beach -- the company that certified the authenticity of the card. "It's the Holy Grail of baseball cards."

Still, the Wagner cards are so rare that even tattered ones will sell for hundreds of thousands of dollars, Seigel said.

Here's the story. 

It's no Honus Wagner card, but maybe there's still hope for my torn and tattered Tony Dorsett rookie card - then again, maybe not.  Back in the day when my friend Ray and I collected football cards and hated the Dallas Cowboys, we took particular delight in defacing a TD rookie card, poking out his eyes and blackening his teeth.  We might have even put the card in the spokes of our bikes.  We had no idea he would be a hall of famer nor did we care.  He was the enemy and we took it to his likeness.  Besides, we had high discount rates.

Cost-Benefit Analysis

What can Brown do for you?  It can fatten your city's coffers if you live in San Francisco:

International courier UPS receives an average of more than one San Francisco parking ticket every hour, giving the company the unenviable distinction of being the city's No. 1 parking violator. 

Last year, United Parcel Service paid $673,334 in fines for 11,788 tickets --  an average of one ticket every 45 minutes throughout the year.

The company is not alone. Eighteen companies have special accounts with the city to pay off parking tickets in bulk. Together, they racked up 27,395 tickets and paid more than $1.5 million in fines for the fiscal year that ended June 30.

McMillan Electric Co. contributed $74,375 toward the total. The family-owned San Francisco firm, which does most of its business downtown, received 1,497 tickets over the year.

"It's a business decision,'' company president Pat McMillan said. "Is it cheaper to pay the ticket, or is it cheaper to pay the guys working for me to spend time looking for a legal parking space?"

McMillan pays his workers about $80 an hour and said risking a parking ticket often wins out. "I don't like it, but we've got a job to do, and we have to get our guys in there to work."

What a cool example of decision-making under uncertainty, cost-minimization, and law and economics.

A Novel Way to Subsidize Local Providers

The folks in Southern Berkshire, MA have devised a novel way to privately subsidize local providers:

Susan Witt is an unassuming middle-aged woman who drives a Volvo around her quaint Rockwell-esque town and has somehow managed to foment a small revolution.

After years of  planning, Witt started printing her own money and spending it  around town.

She is not a counterfeiter. She is the founder of Berkshares, a local currency that was introduced last fall in Southern Berkshire, Mass. (where Normal Rockwell lived out his later years).

"The Berkshares are pretty simple to operate," she said. "You walk into a local bank, put down $90 federal and get 100 Berkshares, and then those Berkshares are spent at full value at regional stores."

In Praise of Price Gougers

Long-time readers know I cringe when I hear the term "price-gougers" or something similar.  When I hear that term, I see visions of populist demagogues dancing in my head.   A Las Vegas Review Journal editorialist explains:

Even though she admits the "problem" has not arisen in Nevada in recent memory, state Sen. Dina Titus, D-Las Vegas, now offers Senate Bill 82, which seeks to ban "price gouging" by classifying as an illegal "deceptive trade practice" the sale of a consumer good or service "for an unconscionable price before or during a state of emergency."

What's "unconscionable"? Selling at a price 25 percent higher than the average price of said good or service over the past 30 days "unless approved by an appropriate government or governmental entity." Or so the bill says.

Though, reading further down, there's an exception if the price hike is justified by "an increase in the costs incurred" by the seller.

I wonder if the "costs incurred" include opportunity costs.  Some say price gouging is unfair.  What's unfair about people engaging in voluntary exchange at the prices they face?

Then there's the unintended consequences:

"Consider -- if a gas station owner has gas, someone has to decide who gets it. If the price remains at pre-hurricane levels, many will fill their tanks, because they can afford to do so, against the chance (and even likelihood) that gas will later become completely unavailable (a self-fulfilling prophecy if the price is not allowed to rise).

"Many will do so even if they have no immediate need for it. But after the first few people do this, the gas will be gone, and none will be available for those who come after, because it's now tied up in the gas tanks of those who didn't really need it.

And what about anti-price gouging laws?

The best -- in the long run, the only -- way to sustain price-gouging is to give the activity the imprimatur of a government guaranteed monopoly -- which Sen. Titus and her cohorts do, all the time.

If you don't believe this, just try to offer some lower-priced competition to Nevada's taxicab operators, or barbers, or any of a hundred other "regulated" professions, without first seeking a government license or permit -- a permitting process that often requires you to demonstrate to a regulatory board made up of the very people with whom you hope to compete, that you won't hurt the people with whom you want to compete by stealing away any of their customers or undercutting their prices!

So here come the biggest "price-gougers" of all, offering to make it illegal for some small-time entrepreneur to load his pickup with bottled water and baby food, race the stuff to the scene of a disaster days before bumbling government bureaucrats can get there, and compensate himself for the risks thus sustained by selling these life-saving supplies to those who need them most for whatever the traffic will bear.

All to "protect Nevadans" by making sure that instead of being charged more for vital supplies at times of emergency -- there won't be any to buy at all.

Who's going to protect people from the bureaucrats and politicians?

HT to Craig Newmark

RIP Damien Nash

Damien Nash, who led Missouri in rushing in 2004 and once said playing football gave him a “swagger that nobody can take from me,” died Saturday in St. Louis.

No official cause of death was forthcoming. Nash, 24, had complained of not feeling well after taking part in a charity basketball event for a foundation formed in honor of his brother, a heart transplant recipient.

Here's the rest of the story.  Nash is the second Bronco to die this offseason.

Update 1:  Here is the Denver Broncos' rememberance of Damien Nash.

Update 2:  The preliminary autopsy was inconclusive.

Happy Birthday, PowerKid

Today is PowerKid, the Youngest's 5th birthday.  Happy Birthday, big guy

Playing in the dirt with toy tanks.  Like father (at age 5), like son.

Letterman Bleg

A friend told me that a person from Minnesota State University was on the David Letterman show last night.  She was an audience member who apparently was interviewed in some kind of Show and Tell skit.  Did anyone see the same skit and catch her name?

Update:  Austen tells us in the comments that the woman's name is Betty Holdvogt.  Here's what happened on Letterman's show - complete with a picture of Ms. Holdvogt and a scultped likeness of her.

Betty Holdvogt of Melrose, Minnesota.    Holdvogt – it’s German for “good land owner.”  Does it fit?  Betty says her folks are farmers, so perhaps it does.
Betty is a human resources intern at an automotive tool making company called, the SPX Corporation. Dave ponders a moment and exclaims, “Oh, the SPX Corporation . . . they make. . . . sunscreen?” No, Dave is thinking of SPF.

So what does Betty have for us tonight? Back in 2003, Betty was selected to be a Minnesota Dairy Princess. So impressed was Dave that he led a standing ovation for Ms. Holdvogt. And then she became a finalist in the Minnesota Dairy Queen Competition. This led Dave to encourage another standing ovation. And from all this, she had a sculpture made of herself . . . made of butter! And she has the butter sculpture here tonight. Biff brings down the 50-pound head of oleo and it looks magnificent. Such a tribute having your head in butter! Nice job, Ms. Holdvogt.

The Growth of Women's Sports: How Not to Do It

According to the Chronicle of Higher Education ($$$), the NCAA's Committee on Women's Athletics wants to force women's basketball programs to practice against women, not men.

The defending national champion Terrapins are rotating in and out of a vigorous scrimmage against their male practice squad, calling their own substitutions every couple of minutes. At this practice, Maryland's reserves get as much playing time as the starters do. But some athletics officials worry that, on many campuses, male practice players are taking opportunities away from female athletes.

To try to keep second-string players off the sidelines, the NCAA's Committee on Women's Athletics has recommended banning male practice players in all women's sports. The proposal has touched off a fierce debate in all three divisions of the National Collegiate Athletic Association.

Coaches and players, on the other hand, are adverse to this ban.  They want to prepare against the best so the players can play their best.  The ban forces them to do something they otherwise would not do, for somebody else's cause.  It also affects the men adversely.  The men who practice against the women are not being forced to practice.  They get to compete and they get to play a game they presumably enjoy playing.  But the committee wants to force them out, once again for the committee's cause.

But what about the effect on the game of women's basketball?  There's a positional externality-arms race argument to be made:  if all programs go towards using women practice players the relative quality of play will likely not suffer. 

But as I've pointed out before, relative quality of play is not the only meanigful type of quality of play.  Absolute quality also matters. Not allowing players to practice against the best available opponents hamstrings their ability to improve, something that affects all teams.  This, therefore, lowers the growth rate of the absolute quality of play and fan demand for the sport. 

If advocates of women's sports really want to improve the standings of women's sports in society, they need to push to improve the absolute quality of play in women's sports, not lessen it.