Preppy Wedding Attire

The perfect preppy wedding would be nothing without great preppy attire.

Upon deciding our colors were going to be a powder blue/chocolate brown, we had to make one of our larger wedding decisions . Are you ready?

Suit versus a tux. Long bridesmaids dress versus a short bridesmaids dress.

After lots of sleepless nights, we took the more casual approach. We have always been one to admire the beach wedding and really do like the thought of flip flops and a navy blue blazer. I just knew that would not fly in our church. Oh and did I also mention that I am from the South? Our mothers are very particular. About everything.

So, I took the middle of the road. Husband-to-be and I have been to MANY weddings. We've seen it all. But we like a more casual style. For almost the same price as renting a tux, our groomsmen bought these navy blue suits from Jos A Banks.

The guys don't know it yet, but they are getting these fabulous groomsmen gifts for the wedding from Brooks Brothers.

And my lovely ladies will be wearing this precious dress from J. Crew. (Which is now on sale for 39.99 - WOW).

So all in all we struck the balance of casual preppy, but not too casual. If I learned anything, it was to make a decision and stick by it. There are so many options out there for making choices and EVERYONE has an opinion. So we just took our taste and added my grandmother's favorite color (powder blue) and we could finally cross that one off the list!

The Perfectly Preppy Proposal

Wow. Let me digress from the monogram madness to tell you a little about the perfect proposal.

Well, the husband-to-be thought it would be fun to completely surprise me with a proposal. Now, I knew enough to know he was the guy (told my mom on the first date), but I didn't expect a proposal for a while. After all, we had only been dating 1 year and 1/2. However, the husband-to-be had other plans. He plotted with his mom, sister and my best friend to purchase this amazing ring:










Now what girl could say no to such a beautiful bauble?

To surprise me, he just asked me to go for a walk in the park with my perfectly preppy pooch, Dempsey. We sat at a bench and all of a sudden, he was on his knee. It was a great moment for us both. And Dempsey too!









We followed up the proposal with a surprise brunch with our families and then met up with our friends for a party that lasted into the night.

Since March, I have been overwhelmed with every detail of throwing the perfectly preppy wedding. Today, I think I am just going to remember that special day where I was the happiest girl in the room!

Keynes vs Friedman, not

Brad DeLong says:

From one perspective, Friedman was the star pupil of, successor to, and completer of Keynes�s work.

A very good point. People are often surprised when I say that I am both a Keynesian and a Friedmanite, because they view Friedman as the anti-Keynes. But that perspective is far too simplistic. In my view, unless you have learned a lot of economics from both of these great thinkers, you haven't learned enough. Brad does a nice job of explaining why.

Using Your Logo

The possibilities for using your wedding logos are endless.



I created my own save-the-date cards using our logo since it is the first thing most guests will see about the wedding. Working with a printer, I chose a stark white card and white envelopes. The printer worked out the rest. The font you'll see is high-tower and a personal favorite of mine.



I also created a little business card sized insert with the save-the-date that provided our wedding website. I've seen lots of save-the-dates that include information on lodging and tourism for out of town guests, but I wanted to keep everything simple. Since our website has all of that information, I just directed guests there.


One of the great things about using a printer is that we saved lots of money! For 130 invites with envelopes (with a return address), we only spent about 100 dollars.

There are lots of other uses for your wedding logo. Use it on...

• Favors. A label on a miniature bottle of wine or champagne. Personalized wedding CDs (this is our choice). Gift tags to accompany home-made or purchased baked goods.
  
• Welcome bags for out of town guests. I chose to create a fun brochure for our out of town guests that led with our wedding logo. You can include information on the schedule for the wedding along with information on what to do while visiting.
  
• Your program. We haven't designed ours yet, but you can bet our wedding brand will be there.
  
• Parking signs to the reception. We are having our reception in a downtown area, so I am working with a sign printing company to use our logo on all the direction signs.
  
• Napkins, cups, matchbooks.


• Gifts for those in the wedding party. Who wouldn't like a logoed wedding T-shirt or Koozie?
  

In the coming weeks, I will make sure to post pictures of all our crafty logoed wedding stuff.

PARIS - jalouse in space, galerie playstation, place des vosges, 11/29/06

The Consensus of Economists

Robert Whaples surveys PhD members of the American Economic Association and finds substantial agreement on a wide range of policy issues. For example:

• 87.5 percent agree that "the U.S. should eliminate remaining tariffs and other barriers to trade."
• 85.2 percent agree that "the U.S. should eliminate agricultural subsidies."
• 85.3 percent agree that "the gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged."
• 77.2 percent agree that "the best way to deal with Social Security's long-term funding gap is to increase the normal retirement age."
• 67.1 percent agree that "parents should be given educational vouchers which can be used at government-run or privately-run schools."
• 65.0 percent agree that "the U.S. should increase energy taxes."

And, finally, the topic that generates the most consensus:

• 90.1 percent disagree with the position that "the U.S. should restrict employers from outsourcing work to foreign countries."

One issue that fails to generate consensus is the minimum wage: 37.7 percent want it increased, while 46.8 percent want it eliminated.

Thanks to Arnold Kling for the pointer.

The Wedding Logo

The first thing a girl does when she gets engaged is buy every bridal magazine she can find. Perhaps, we say yes first. But then we head to the nearest Barnes and Noble as a newly engaged person. No longer are you "jumping the gun" by flipping through the pages of Martha Stewart Weddings. Nope, now you have a ring. And instant justification to buy all 12 magazines with a bride on the cover.

But, to my point. One of the first things I read talked about the need to brand your wedding. Now, for the perfect preppy wedding, a brand lends itself naturally to the monogram. In my case, I decided to use my first initial, the husband-to-be's first initial and the initial of my soon-to-be last name. If you are totally traditional, stick with your fiance's initials.

Here's our wedding logo. In our perfectly preppy colors: blue and brown.

I had access to Illustrator and a best friend who is a graphic designer who helped me with the design process. However, there are lots of companies who can help you with the initial wedding logo design. Bliss Weddings has a great selection of create-your own wedding logos in many wedding styles. And for 50 dollars you really can't go wrong.

Here's a more classic design from Bliss Weddings:

And a more modern take:

On a tight budget? Don't worry. You can even create your logo in word. Browse or download your favorite font and away you go.

Next time I'll let you know what to do with your perfectly preppy wedding logo.

Welcome to The Preppy Wedding

Welcome! With four months until my wedding, I am starting this blog as a stress reliever AND a helpful tool for other brides to be out there who want the perfect preppy wedding.

I am a preppy girl. I like my pearl studs (Tiffanys, from the husband-to-be). I like my lacoste polos. I graduated from an ACC university. Well, the greatest ACC university if you ask me. So, it makes sense that I would have the perfect preppy wedding.

The wedding planning - not so perfect. It sometimes makes me want to tear my hair out. It sometimes makes me wish we would have considered eloping. But mostly, it makes me shudder when seeing just how many non-preppy wedding products there are on the market. 1980 was a great year for weddings. Just not my wedding.

So enjoy and please e-mail me with any comments or suggestions on throwing the perfect preppy wedding.

Advisers to Mitt

Mitt Romney gets advice from some of my favorite economists.

Update: Several readers have asked for more details about my involvement here.

I first met Governor Romney several years ago, but only briefly at that time. Recently, I have talked with him more substantively about a range of economic policy issues. I was impressed by his intellect, open-mindedness, and overall economic philosophy.

I was honored when he asked me to serve in a more formal advisory capacity. My role will be that of an outside adviser. My teaching at Harvard will continue to be my main responsibility and the focus of my attention, and the posts on this blog will reflect those priorities.

Update 2: The Harvard Crimson reports the news. And here is an article on Mitt Romney.

Kling on Inequality and Mating

Economist Arnold Kling says it's important to pick the right spouse. It certainly has worked for me.

What I'm reading

A reader asks me what research papers I've been reading lately. (Maybe this should be a regular blog feature.) This week I've been studying Optimal Sticky Prices under Rational Inattention. From the abstract:

This paper presents a model in which price setting firms optimally decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to aggregate conditions. When we calibrate the model to match the large average absolute size of price changes observed in the data, prices react fast and by large amounts to idiosyncratic shocks, but prices react only slowly and by small amounts to nominal shocks.

The aim of this paper is similar to some of my joint work with Ricardo Reis, which emphasized that monetary nonneutrality and plausible business-cycle dynamics can arise from "sticky information" on the part of price setters and other decisionmakers. Compared to our work, the framework in this paper has the benefit that price setters here choose how to allocate their scarce attention, whereas in our model sticky information is exogenous. Moreover, price setters here can choose to pay more attention to some types of information than others, whereas in our model when information is outdated, all of it is equally outdated. These significant benefits, however, come at the cost of substantially increased model complexity.

Anyway, this is how I have been allocating my scarce attention this week.

Throwing Rocks in Our Harbors

Robert Samuelson chimes in on the bleak trade picture:

We are dealing with something new here. It transcends traditional protectionism, which tries to shield specific industries and workers from imports. It's trade obstructionism: a reflexive reaction against almost any trade agreement.

PARIS - opening of nouveaux photographes 2007 by getty images, palais de tokyo, 11/28/06

Politics Roundup

Here is some recent news:

• President Bush likes the flat tax.
• Paulson warns of rising protectionism.
• Obama and Edwards dis Wal-Mart.

"absurd even by Washington standards"

That's how the New Yorker describes U.S. policy toward the sugar industry. Another tidbit:

the Bush Administration proposed eliminating the ethanol tariff this past spring, but Congress quickly quashed the idea�Barack Obama was among several Midwestern senators who campaigned in support of the tariff�and the sugar quotas appear to be as sacrosanct as ever.

PARIS - colette local club: check and shake night, le paris paris, 11/27/06

Ec 10, Hyde Park style

Here's a profile of the introductory economics course at the University of Chicago.

How distortionary are taxes?

An ec 10 student emails me a question about taxes:

Dear Professor Mankiw,

I'm a freshman taking Ec10. Prior to taking Ec10, I had no experience or interest in economics and was convinced that I wanted to be a doctor and to major in neurobiology. Now, Ec10 is easily my favorite and most intriguing course, and taking it, in combination with my reading Freakonomics, has definitely caused me to rethink my interests, goals, and life in general. Thank you for teaching this course.

However, my intrigue in Ec10 has led me to question some of the principles of economics. The first regards the idea that high income taxes distort work incentives. In theory, this makes sense, but I feel that in practice, the idea doesn't apply well, especially to the income tax. Do the distortion of work incentives and the deadweight loss really have enough of an impact to be seriously considered while forming tax policy? The reason I think that high income taxes don't significantly distort work incentives in practice is that most people probably aren't thinking about how much of their income is taxed unless it's April 15. Most people probably believe that working more means more money and don't consider how much they're taxed unless they have to physically write the check (e.g. with property and excise taxes).

[name withheld]

The key issue is the elasticity of labor supply. Some economists do believe, as you suggest, that this elasticity is small and, as a result, that taxes aren't very distortionary. Others believe that the elasticity is larger. Economist Ed Prescott has suggested that the main reason Europeans work less than Americans is the higher tax rates they face.

Think of it this way. Imagine that you are a painter deciding whether to accept another painting job this weekend. I am willing to pay you $500 for the work. It is possible that you would do the job for $500 but not for $300 (the amount you would keep after paying payroll taxes, federal income taxes, and state income taxes)? If you think that all workers make such decisions without regard to remuneration, then the assumption of inelastic labor supply is correct. In this case, taxes are not distortionary. But if some people respond to incentives and would do the job for $500 but not for $300, then that response is what makes taxes distortionary.

There are other margins to consider besides the tradeoff between work and leisure. Another is market production vs home production. To continue with our painting example, imagine that you have a choice between taking the job and staying at home to rake your leaves and fix your car. As a painter, your comparative advantage is likely painting, and it might make sense to hire a lawn service and a car mechanic to fill your other needs. But if the tax rate on your painting income is too high, you might pass on the extra job and spend your time on your tasks at home.

Finally, there is the issue of career choice. An article in today's NY Times mentioned a Harvard PhD in economics who left an academic job for a better-paying one in private equity. Based on the article, he seemed a bit wistful about leaving an academic job behind. At a higher tax rate on his new higher income, might he have stayed with the perks of the ivory tower? Perhaps. But, based on market prices, his talents are more productively applied in private equity, where he is filling the important role of allocating the economy's capital stock. If he gave up that job because of a higher tax rate, the loss to the overall economy would be measured by the deadweight loss.

On a related note: I am delighted to hear that you are reevaluating your career goals and considering a switch into economics, That is what the first year of college is all about. But I think we can agree that this important decision should ideally be based on comparative advantage and personal preferences, and not marginal tax rates.

Bayes likes Obama

As I have noted previously, one can use Bayes theorem to evaluate the conditional election prospects of various Presidential candidates for 2008.

Here is the logic. Let A be the event that a candidate wins the general election, and B be the event that a candidate wins his or her party's nomination. Tradesports gives us the betting market's view of P(A) and P(B). It is a safe assumption that P(B / A) = 1, that is, a candidate can win only if nominated. We can then use Bayes theorem to compute P(A / B), the probability that the candidate will win the general election conditional on being nominated.

Based on the most recent transaction prices, here is what you learn about the conditional probabilities:

Obama 88 percent
Gore 80 percent
Giuliani 65 percent
McCain 63 percent
Clinton 51 percent
Romney 50 percent
Edwards 44 percent

The market suggests that Obama would be the strongest candidate if nominated.

By the way, Steve Levitt likes Obama, too.

Dasgupta on the Stern Review

Partha Dasgupta reads the Stern Review of climate change and, like Bill Nordhaus, does not like what he finds:

the strong, immediate action on climate change advocated by the authors is an implication of their views on intergenerational equity; it isn't driven so much by the new climatic facts the authors have stressed....To give you an example of what I mean, suppose, following the Review, we set delta [the rate of subjective time preference] equal to 0.1% per year and eta [the elasticity of marginal utility with respect to consumption] equal to 1 [so utility is logarithmic] in a deterministic economy where the social rate of return on investment is, say, 4% a year. It is an easy calculation to show that the current generation in that model economy ought to save a full 97.5% of its GDP for the future! You should know that the aggregate savings ratio in the UK is currently about 15% of GDP. A 97.5% saving rate is so patently absurd that we must reject it out of hand. To accept it would be to claim that the current generation in the model economy ought literally to starve itself so that future generations are able to enjoy ever increasing consumption levels.

Dasgupta has the right title to opine on these issues: He is the Frank Ramsey Professor of Economics at Cambridge University.

Minimum Wage as a Symbol

Gary Becker and Richard Posner have good posts on the minimum wage at their blog.

In watching this debate unfold, I am moving toward the view that the issue is more symbolic than substantive. Posner asks, "why are the Democrats pushing to increase the minimum wage rather than to make EITC more generous?" Here is my answer: Many voters don't know what the EITC is, whereas the minimum wage is easy to understand. As Becker points out, "Most knowledgeable supporters of a higher minimum wage do not believe it is an effective way to reduce the poverty rate." True, but few voters are so knowledgeable. As a result, the minimum wage is an easily explained issue that says, "We Democrats care about poor people, unlike those Republicans."

Here is a question that I would ask any politician: If you could set your ideal policy to help the poor, wouldn't you prefer to expand the EITC and abolish the minimum wage? Any politician that fails to answer "yes" is either misinformed or engaging in demagoguery.

How Tax Cuts Affect GDP

Whitman on Friedman

Marina v.N. Whitman, in today's Wall Street Journal, recounts a story about Milton Friedman:

Nearly 30 years ago, my husband and I were guests at a dinner party in the elegant Palo Alto home of Stanford professor Ezra Solomon, who had been my colleague on President Richard Nixon's Council of Economic Advisers. Among the other guests were Milton Friedman and his wife, Rose. Milton was having a fine time baiting the wife of the dean of the Business School, a feminist whose conviction was unleavened by any sense of humor, by proclaiming the foolishness of affirmative action.

"If businesses are forced to hire and train young women, many of whom will leave for marriage and family," he proclaimed, "they should at least be allowed to discriminate in favor of homely women, whose opportunities for marriage are below average." As the dean's wife reddened with fury, I leaned over and said softly, 'Thank you, Milton. I've always wondered what accounted for my professional success. Now I know." Milton, always the courtly gentleman where women were concerned, was speechless.

Sachs on Hayek and Easterly

Jeff Sachs responds to Bill Easterly in today's Wall Street Journal:

William Easterly is correct that Friedrich Hayek wrote "The Road to Serfdom" in 1946 to warn that central planning and state ownership would lead to the collapse of freedom ("Dismal Science," editorial page, Nov. 15). Yet in 1976, in the Preface to the Reprint Edition, Hayek made perfectly clear that he believed that the same outcome would occur through the welfare state. Noting that "socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state," Hayek wrote that "In the latter kind of socialism the effects I discuss in this book are brought about more slowly, indirectly, and imperfectly. I believe that the ultimate outcome tends to be very much the same . . ." (While the editors at Scientific American used the shorthand that Hayek wrote in the 1940s, my detailed paper on the Nordic economies makes explicit that Hayek's critique of the modern welfare state came in the 1970s, in the Reprint Edition).

Thirty years on, we can see the results of Hayek's prediction. Despite government revenues above 50% of GNP in the Nordic countries supporting an extensive social welfare state, those countries are vibrant democracies with open, competitive, and high-income economies and low rates of poverty. That is precisely the point of my Scientific American piece and a longer scholarly paper that Prof. Easterly wrongly attacks. He actually makes my point for me by pointing out that the Heritage Foundation/Wall Street Journal Index of Economic Freedom ranks Finland, Sweden and Denmark as "free economies," with Denmark ranked ahead of the United States, despite the fact of their extremely high rates of taxation and social welfare spending. Similarly, the Global Competitiveness Index of the World Economic Forum puts these three countries at ranks two, three and four in global competitiveness, ahead of the United States at rank six.

Mr. Easterly also repeats his favorite canard that I believe in central planning. Anybody who is at all familiar with my life's work and writings knows that I believe in market-led and open economies and was a leading economic adviser on the conversion of the former Communist economies to market economies. I do not believe in pure laissez faire, however. Nor do I believe that an antipathy to foreign aid is correct at a time when millions of children are dying each year as a result of extreme poverty unattended by practical help from the rich countries.

Jeffrey D. Sachs

BERLIN - opening of "into me/out of me", kw institute for contemporary art, mitte, 11/25/06

BERLIN - robin's kids, weinbergsweg, mitte, 11/25/06

BERLIN - mutti, oderberger strasse, prenzlauer berg, 11/25/06

Recession Risk Rising

From John Fernald and Bharat Trehan of the San Francisco Fed. John was once a student of mine at Harvard.

Rubinomics on the Defensive

Today's New York Times reports, "With the Democrats now a majority in Congress, and disquiet over globalization growing, a party faction that has been powerless � the economic populists � is emerging and strongly promoting an alternative to Rubinomics."

Grandpa needs an HSA

Economist Bryan Caplan describes what happens when a third-party payer covers all medical expenses:

my grandpa got $300k of elective surgery in his last year of life - bad knee, plus complications. And he was a cheap, cheap man. I doubt that he would have paid for the first $10k out of his own pocket.

That is quite a bit of deadweight loss.

Women with graduate degrees...

...are more attractive.

As late as the 1980s, according to economist Elaina Rose, women with PhDs or the equivalent were less likely to marry than women with a high school degree. But the "marital penalty" for highly educated women has declined steadily since then, and by 2000 it had disappeared. Today, women with a college degree or higher are more likely to marry than women with less education and lower earnings potential. Highly educated women are also now as likely to have children as their less-educated counterparts -- and much more likely to have children born in wedlock.

From today's Washington Post.

BERLIN - artnews projects presents rio, mitte, 11/24/06

BERLIN - opening of karl lagerfeld one man shown, c/o berlin, mitte, 11/24/06

BERLIN - on the street, prenzlauer berg, 11/24/06

The Diminishing Trade Picture

Yesterday's Washington Post discusses how the new congress is likely to affect our southern neighbors:

Latin Americans Wonder If Democrats Are Traders
Anxiety High Over Stance of Incoming Congress

MEDELLIN, Colombia -- At the CI Jeans factory, where 3,900 people make their livings turning bolts of denim into trousers bound for the United States, the American market -- land of the customer -- appears to be slipping away.

In September, with a proposed trade deal between Colombia and the United States uncertain and orders flagging, the factory fired 320 workers. Now, the pact appears to be in peril. Democrats are set to take control of the U.S. Congress, speaking for a segment of the American public that is worried about globalization. The incoming leaders have pledged to redraft the terms of global trade.

Yesterday, the Bush administration signed the proposed deal, but leading Democrats promptly attacked it, underscoring growing doubts in Washington that Congress will approve the pact. Here in Colombia and next door in Peru, which awaits congressional approval for its own trade treaty, anxiety runs high.

"We watch the news and we're nervous about what might happen with what we send to the United States," said Janeth Palacio Ramirez, 35, who supports her 15-year-old daughter and her elderly parents by punching zipper stops onto 7,000 pairs of jeans a day, earning about $200 a month. "Everything we make here goes there, so if there are problems with exports, we'll all lose our jobs."

As Democrats prepare to reshape U.S. trade policy, the impact is being felt far from the Carolina mill towns and rust-belt factories that are a perennial focus of domestic concern.

Addressing fears that too many jobs are being sacrificed at home, the new Democratic leadership wants to slow the worldwide effort, which the United States has led since 1947, to lower import tariffs that hinder trade.

Sad news indeed.

Stiglitz vs Bush

Here is Joe Stiglitz, confirming his Pigou Club credentials:

A global externality can best be dealt with by a globally agreed tax rate. This does not mean an increase in overall taxation, but simply a substitution in each country of a pollution (carbon) tax for some current taxes. It makes much more sense to tax things that are bad, like pollution, than things that are good, like savings and work.

Although President George W. Bush says he believes in markets, in this case he has called for voluntary action. But it makes far more sense to use the force of markets � the power of incentives � than to rely on goodwill.

On matters of economic policy, I am more likely to side with Bush than Stiglitz, but not this time.

Road Pricing

The Seattle Times reports on an experiment in road pricing:

Tolls could cut congestion, test shows

For about eight months, drivers in 275 Seattle-area households agreed to pay for something the rest of us get for free: The right to drive on the region's freeways and streets.

They were guinea pigs in a pioneering study that explored how motorists' behavior might change if they had to pay tolls � not just on a few bridges or highways, but on almost every road with a yellow center line. Researchers established virtual tolls ranging from a nickel to 50 cents a mile. They gave participants pre-paid accounts of between $600 and $3,000, and told them they could keep whatever the tolls didn't eat up.

The experiment ended in February. Preliminary results, released this month, suggest that if such so-called "road pricing" were widespread, it could make a significant dent in traffic....

Participants in the Puget Sound Regional Council's "Traffic Choices" study had devices mounted on their dashboards in late 2004 and early 2005 that tracked their travel and transmitted the information to a central computer. Tolls, which varied by road and time of day, were deducted electronically from the pre-paid accounts, which were funded by the study's sponsors and sized to match how much participants had been driving before the study.

The promise of keeping some of that money proved to be a powerful incentive. Nearly 80 percent of the participants drove less than they did before, or they changed their routes or travel times to avoid the highest tolls, said Matthew Kitchen, the study's director. When the study was finished, the average payout was nearly $700 per household.

When other variables are factored out, Kitchen said, participants took 5 percent fewer auto trips and drove 2.5 percent fewer miles each weekday because of the tolls. The drop was even more dramatic during peak-traffic periods, when tolls were highest: 10 percent fewer trips and 4 percent fewer miles in the morning, 6 percent fewer trips and 11 percent fewer miles at night.

Note that road pricing can be viewed as a Pigovian tax on congestion externalities.

Nordhaus on the Stern Review

Yale economist Bill Nordhaus, an expert on climate change, reads the Stern Review of the topic and does not like what he finds. The Review's apocalyptic conclusions are, according to Nordhaus, severely overstated because of its assumption of a near-zero discount rate (0.1 percent per year) and log utility (so marginal utility does not decline much as technological progress causes consumption to rise). Here is an excerpt from Nordhaus:

The Review proposes using a social discount rate that is essentially zero. Combined with other assumptions, this magnifies enormously impacts in the distant future and rationalizes deep cuts in emissions, and indeed in all consumption, today. If we were to substitute more conventional discount rates used in other global-warming analyses, by governments, by consumers, or by businesses, the Review�s dramatic results would disappear....

Suppose that scientists discover that a wrinkle in the climatic system will cause damages equal to 0.01 percent of output starting in 2200 and continuing at that rate thereafter. How large a one-time investment would be justified today to remove the wrinkle starting after two centuries? The answer is that a payment of 15 percent of world consumption today (approximately $7 trillion) would pass the Review�s cost-benefit test. This seems completely absurd. The bizarre result arises because the value of the future consumption stream is so high with near-zero discounting that we would trade off a large fraction of today�s income to increase a far-future income stream by a very tiny fraction.

Thanks to Tyler Cowen for the pointer.

Why do all movie tickets cost the same?

In today's Washington Post, business writer Steven Pearlstein examines a fascinating economic puzzle:

Why will movie theaters charge the same $9.50 to see "Casino Royale" this Saturday night that they charged to see the disappointing remake of "All the King's Men" on a Wednesday night in the middle of September?....It wasn't always so. Back in the golden years of Hollywood, before PG and XXX, there were "A" movies, "B" movies and "C" movies, distinguished not by their sexual content, but by the box-office appeal of their stars. Not only did it cost more to see Clark Gable in "Gone With the Wind" than Ronald Reagan in "Bedtime for Bonzo," but the ticket price also varied depending on whether you saw them in a first-run movie house downtown or a second-run theater in the suburbs, and whether you took in a matinee or an evening showing.

The article is based on research by Barak Orbach (University of Arizona law school) and Liran Einav (Stanford economics department). Einav is a recent Harvard PhD in economics.

BERLIN - bon magazine and ideal party, rio, 11/23/06

bonmagazine.com