Pick Up Lines for Economists

I like to prepare for worst-case scenarios. For example, let’s say you’re in an economics class and just happen to sit next to a very attractive female. And that she’s an aspiring economist. Let’s say this class is Introduction to Econometrics and that this fine specimen of a female is hanging on the professor’s every word. You know that you’re sitting next to the next Marianne Bertrand or Caroline Hoxby or another bad-ass economist that can’t use the mens bathroom.

Let’s use some simplified game theory, you have 3 options:

1. Say something normal. She will look at you, do a cost-benefit analysis of engaging in conversation with you, decide that she’d rather read her econ textbook which will maximize her PVLR and she terminates your conversation.

2. Choke and say nothing. You have already lost this game.

3. Use a witty pick up line that will appeal to her inner economist. You can only win her heart if you first win over her mind. But do you know any such pick-up lines? Probably not, thats why we prepare for such scenarios.

Here are 10 pick up lines to help you win over a budding economist:

10. I wish I could be your derivative so that I could lie tangent to your curves
9. Lets play a game where going out with me is the dominant strategy
8. I can stimulate you with my package
7. How can I lower your barriers to entry?
6. Your presence is one big positive externality
5. C’mon, it’s getting late, and we both know I’m your lender of last resort
4. I’m a pure public good…you can free-ride on me any time you want
3. You have a boyfriend? That’s ok. My girlfriend and I are into credit-swapping
2. I couldn’t help but notice your monetary base. Do you let a guy get to M3 on a first date?
1. I think you and me would have great potential output

(Note 1: Some of these are actually very suggestive, I recommend you use them wisely)

(Note 2: If you have any others, add them as a comment below!)

(Note 3: some of these lines were found on the internet)

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La Liga on top – Claims Refuted

I’m one of the many people around the world that check the SkySports football website multiple times a day. One of my favorite columns to read is that from Guillem Balague who is an expert on the La Liga. Like every week, I was delighted to see he had a new post – however some of the claims in this weeks post were worrisome. Now I don’t claim to know soccer as well as Guillem, after having taken one too many classes on applications of econometrics, I think I can spot some misleading statistics. Here is my 2 cents on why the stats he cites are misleading:

And to read the original article, check it out at:

http://www.skysports.com/opinion/story/0,25212,12087_6563395,00.html
Claim 1: La Liga is a more open league.

He cited for the last 6 years either Chelsea or ManU in the EPL or Barca or Real has won their respective leagues which suggests that both leagues are just as competitive. A better measure would be to calculate the variance between the league positions for both teams – I just did and its the same. This doesn’t mean he’s right though. If we were to calculate the variance for the top 6 teams for the last 6 years in both leagues, its much smaller in the EPL. He claimed the average points difference between the top 6 is closer, that doesn’t matter because it could be more skewed in La Liga (ie. the top two are close as are the next 4, but the difference between 2nd and 3rd could be 15 points – we should read the variance for better measure)

Claim 2: La Liga has no easy games

He cited the point difference between the top and bottom teams – but there is an endogeneity bias in this statistic, what if the top teams in La Liga know their final positions in the league several games in advance and hence field easier sides that lose points against weaker teams? What if the bottom teams do in fact play weaker sides against the top 2 in La Liga but are more likely to win their following games having rested their top players and hence the middle of the table is more densely populated – whereas in England bottom teams play their top players each weak who tire out faster and perform worse which leads a greater points game.

The statistic to support this claim does very little, we need to analyze the distribution and see what players actually play against top teams to understand this better.

Claim 3: La Liga has the best players

He says “judging by the 23-man shortlist for the Ballon D’Or, La Liga wins hands down. The Spanish competition had 11 Ballon d’or nominees out of 23, while the Bundesliga (five) and Serie A (four). The Premier League had three. And now that the winners have been announced, all three play for FC Barcelona.”

This one is probably the easiest to refute. No shit La Liga has the most nominees, its because Spain won the World Cup! Had England or Italy won it we would have had an entirely different story. Winning the World Cup does reflect on good players, but that is one of several elements. The fact that half of Barca’s first team played for Spain could suggest that Barca just have the best players, but I think what is more telling is the fact that they played together all year (as did Real Madrids’ Spanish players) and developed team chemistry over the years which was put to use at the World Cup. So its circular logic, better team chemistry (in addition to talent) among players wins the World Cup, and winning the World Cup makes Barca seem like a better team and their players as individually more talented. Obviously Barca is a great team – but please don’t underestimate these other variables.

Also if we are just going on Ballon D’Or nominations, at least present to us which countries have had the most nominations over a larger period of time – such as the last 10 years. And then please realize that teams that there is a spotlight bias – that is players in less competitive leagues are very visibly more talented than equally talented players in more competitive leagues.

Claim 4: The EPL has more money than La Liga (and yet it isn’t as good)

This was a more subtle claim as he tried to argue that La Liga has developed the best players instead of bought them, he said: “No doubt some will respond by stating that all of this proves that La Liga simply throws money at attracting the biggest players in the game.” And then went on to say that they hadn’t bought them.

If you disregard Real Madrid whose Galactico Policy had buying expensive players at its essence, I can agree with this – I think if you take down total amount paid in wages and transfers for all the teams in La Liga and the Premier League you would get the right answer. My gut says its probably the EPL teams that spend more.

Additionally I think the tangent claim that he has made over his last few posts about players from Barcelona’s Youth Academy has to be seen with respect to its selection bias. Yes I’m sure its a great academy that is great for development, but they also attract the best young players. I doubt that their academy can take some random child off the streets of Equatorial Guinea and turn him into the next Ronaldhino – though I’m sure he’d still be a lot better than if he were to continue to play street soccer. Also note that they recruit good young players from all over the world very heavily, where do you think Argentinian Messi and the Mexican Dos Santos brothers came from.

Claim 5: La Liga is more entertaining

He specifically said “Well, quite how you measure excitement is impossible to define; but if it’s in terms of goals scored, again, La Liga just about comes out on top over that same six year period.”

I quite agree with his framework here, excitement is an unobservable factor, and also one that varies greatly from person to person. So he used an observable variable, that is number of goals scored, which is correlated with excitement and so is a decent measure of it. However, I would say that just one measure is too simplistic of an analysis to measure excitement. Goals certainly have a strong correlation with excitement, but so do rivalries, derbies, importance of matches, clashes between players, etc. These all should be in some way analyzed to be able to come to a more holistic understanding of which games are more exciting. And then perhaps fuse that with some more economic measurements of excitement such as the percentage of stadiums that are filled, average stadium size relative to local population, how much spectators pay for seats in the stadium etc.

On a last note, Guillem seem to imply towards the end of the article that Jose Mourinho wanted matches to be more exciting, but that was a very weak point if that is indeed what he was trying to say.

Not that I know better than Guillem, I just don’t buy his arguments. He said at the beginning: “if you’re going to disagree with me, you’re going to have to avoid churning out the same old clichés!”

I don’t disagree with the argument that led to his post (the principal claim was that Barcelona are one of the top 3 teams throughout history), I do think that Barcelona are currently the best team in the world, and possibly one of the top 3 teams of all time (but not because I have quantified it, but because I know very little about the great teams throughout history). But I don’t buy the majority (if any) of the claims he made in his most recent blog post. And without some good analysis, I implore you to do the same.

The joyless or the jobless

Great article from the economist at:
http://www.economist.com/node/17578888?story_id=17578888

Here’s the first paragraph as a preview:
IN 2006 Richard Layard, an economist at the London School of Economics, argued that unhappiness was a bigger social problem in Britain than unemployment. In the “Depression Report”, which he co-wrote, Lord Layard pointed out that more people were claiming incapacity benefits because of depression and other mental disorders than were on the dole.

Listening to Doug Bernheim, he pointed out that there is a big problem with asking hypothetical questions like below:
“three economists from Cornell University, and Miles Kimball of the University of Michigan. They persuaded hundreds of people to answer conundrums such as: would you rather earn $80,000 a year and sleep 7.5 hours a night, or $140,000 a year with six hours’ sleep a night?”

The reporting bias in such questions is very high and people’s behavior is very different from their answers in many cases because. The reason is that they can fill in the hypothetical answer in any way they want and simplify it to an Option A or B answer for the interviewer.

I agree with Bernheim for the most part, but I think there is a weak correlation with such surveys and behavior, especially given they answered what they would actually do.

Leads me to 2 thoughts:
1. Either conformity bias is ridiculously high – people get high paying jobs because everyone else says more money is good
2. Or Utility and happiness are qualitatively two different things. Utility is more like excitement, like a sniff of cocaine, and happiness is not simply long term utility but something we haven’t quite specified in a model. Need to study some Buddhist monks to understand more about the economics of that sort of happiness.

Pain for Gain? Should work make us unhappy?

Going back my Econ 52 days (Advanced Macro taught by Pete Klenow) – we’d have a standard utility function for people. In summary the function implied that working was painful for humans and that leisure is what we prized – and that we worked at the level when the marginal pain from working was equal to the marginal gain from leisure.

I guess it makes a lot of sense from an econ point of view especially when we are solving equations – but its kinds of sad to think that our job which might consume anywhere from 60-100 hours of our week doesn’t really give us pleasure.

But when you think of people who have found ‘their calling in life.’ Do they also experience marginal pain for each hour worked? Maybe they enjoy the first 30 hours and then they’d rather be doing something else for the next 30. Who knows.

But as a thought experiment, think about having a job that you truly loved doing and were willing to devote yourself to. It could have positive diminishing marginal utility so you would stop working when the last hour worked was as pleasurable as an extra hour relaxing. But wouldn’t that have a serious implication for our general happiness?

Like anything else that gives us pleasure, such work would also have diminishing returns. And you would only stop working when the last hour worked gave you as much pleasure as other things such as working out, eating, sleeping, spending some quality time with your friends etc.

So even if your work made you happy (had a positive but diminishing marginal utility), you’d never work for all 168 hours in a week. But in general that would make you a lot happier over your lifetime than a job which gave you negative marginal utility – but that’s just intuitive.

Any thoughts, criticisms, comments on the topic are welcomed.

This is also another pondering on utility, the first edition is at: https://uchumist.wordpress.com/2010/06/17/ponderings-on-utility/

The Business of Sperm-Banking

I wrote a piece on the “Objectification of Sperm Banking” and the economics behind it. I thought I’d piece together a few parts of my paper in order to summarize it:

$$ SPERM DONORS WANTED $$ Earn up to $1,200/month.

Give the gift of family through the California Cryobank’s donor program

The Stanford University newspaper has been printing the above advertisement for several years. In order to make it easier for students to join the donor program, the California Cryobank has strategically positioned a deposit collection facility on the Stanford University campus. Why does the California Cryobank desperately want to recruit Stanford students? This particular sperm bank has been in the business long enough to understand that most mothers strongly prefer the sperm of a well-educated man, such as a PhD candidate at a prestigious university, to the sperm of a high-school dropout. And this is why the Cryobank recruits students almost exclusively at prestigious universities: to conform to consumer preferences and reach a wider audience. One of the Cryobank’s founders said, “if our customers wanted high-school dropouts, we would give them high-school dropouts”. The growth of the sperm marketplace has been a recent phenomenon in the history of artificial insemination, and has been made possible by our treatment of sperm as a tradable commodity.

The rise of the American sperm banking industry

In 1884, Dr. William Pancoat successfully inseminated an infertile woman using the sperm of one of his medical students. Since then and until the 1970’s, only medical research universities practiced artificial insemination by donor (AID), initially for academic research. As awareness and the success of these practices grew, infertile couples flocked to doctors for this reproductive treatment. The process of AID in its early days was very crude. A couple would consent to the doctors terms of insemination, and then the doctor would choose a medical student from his or her class that most resembled the husband. This resemblance criterion was only established so that the donor-conceived child would appear similar to the social father and preserve the secrecy of the procedure. Secrecy was in the best interest of the couple so as to avoid both the stigma surrounding the husband’s infertility and legal repercussions.

The formation of formal sperm banks would not be possible until the 1970’s, when the legal and technological structures had finally been put in place. The University of Iowa established the first sperm bank in 1953 following the discovery of cryopreservation. This technology allowed the freezing and thawing of sperm – essentially the ability to store the sperm until a later date. Also around this time, a geneticist named Sheldon Reed developed a screening test for semen . These two technological innovations allowed for the creation of banks that could store genetically superior sperm. Soon, legal restrictions would also slacken and gave way to the establishment of formal sperm banks. In 1973 the Uniform Parentage Act was instated, and this law gave the paternal rights of the donor-conceived child to their social father. Despite the fact that all legal and technological barriers had been removed, only slightly over 10 sperm banks existed in the early 1970s. In 1978 an article was published in the American Fertility Society’s Journal that described how despite having the ability to freeze donated samples, “the commercialization of sperm banking has not been developed”. The industry had yet to take off.

The Nobel Prize Sperm Bank – An Experiment in Eugenics

The number of sperm banks eventually grew to 135 by 1990, and today at least one can be found in every state. But it took twenty years for sperm banking to become a widespread service. What led to the realization of sperm’s commercial potential? The drastic transformation of the sperm banking industry began with the opening of the Repository for Germinal Choice, otherwise known as the Nobel Prize Sperm Bank.

Robert Clark Graham was the founder and visionary behind the Repository for Germinal Choice. He used the repository as a way to pursue his passion for positive eugenics, which is the practice of selective breeding with the aim of improving the human race. Graham justified the sperm bank that he found in 1971 by claiming that the Darwinian notion of natural selection had been defied by our society. Graham reasoned, “cradle-to-grave social welfare programs paid incompetents and imbeciles to reproduce”. To save the human race from a “genetic catastrophe”, Graham founded the Repository for Germinal Choice, which recruited only donors with the highest genetic potential. In Graham’s eyes these donors were mainly Nobel Prize laureates and henceforth the sperm bank had been dubbed the Nobel Prize Sperm Bank (NPSB).

Though Graham’s eugenic beliefs may have been extreme, he has had numerous benefits for the growth of this industry. Graham was obsessed with providing women with only the best of sperm in order to produce the smartest and healthiest babies. For his donors it meant that they “endured physicals and endless blood tests. They completed massive medical family histories. [And any] serious illness disqualified them”. Charles Sims, one of the founders of the California Cryobank, conceded that the repository “changed the face of sperm banking forever”. Sims described how at the time most sperm banks told the mother only the eye color, hair color and blood type of their donor. Graham, on the other hand, gave mothers full control to choose their donor. He introduced donor catalogues, which profiled not only the biological but also the social characteristics of the donor. For example, the profile page of Donor Red describes how this donor was an “Outstanding physicist at a large university,” he had a “Nice appearance, winning smile” and was “happy and radiant”. This information was provided in addition to his biological data such as height, weight and hair type. Graham might not have known it then, but he had inadvertently revolutionized the business of selling sperm.

David Plots, the only historian on the NPSB, uncovered that the majority of Graham’s customers worked in healthcare or counseling. This was no coincidence and Plotz found that “health-industry parents preferred the repository to other sperm banks because it screened candidates carefully for genetic and other illnesses”. The health benefits, coupled with the newfound agency given to women, started a consumer revolution within the sperm bank industry.

Many more for-profit sperm banks were established after the Universal Parentage Act. The California Cryobank, now the world’s largest sperm bank, was founded in 1977. The Cryobank, like many for-profit sperm banks at the time, sought to attract customers but did not know how. Sperm banking was a new industry and many of its basic market practices had yet to be established. Though the NPSB was never considered a financial success, women had begun to express a preference for this particular sperm bank and it’s popularity had grown steadily over the years. The California Cryobank, along with other sperm banks, had become sensitive to consumer preferences and anxieties, which led them to understand the appeal of the NPSB to women. As an economically strategic decision, the California Cryobank followed the NPSB’s lead and gave customers both donor catalogues and health guarantees; and soon they too saw the benefits of these practices. Eventually many more sperm banks adopted these strategies, though this process of adoption was slow and it took a few decades until they came to fruition.

Through a rigorous process of iteration, the Cryobank developed more advanced medical and advertising practices and grew to become the industry leader. Today, it’s customers extensively search for donors on their website and can order frozen sperm directly to their hospital rooms. Customers can evaluate donors by purchasing extra essays, audio interviews and even a description of their facial characteristics. The few innovations by the NPSB made sperm banking a consumer-centered practice, and this eventually sparked the consumer revolution that has changed the practice of sperm banking today. After adopting these innovations the California Cryobank has demonstrated that sperm banking can be a lucrative business; which has led to the rise of more than a hundred sperm banks open since 1975.

If you’d like to read the entire paper, shoot me an email!