Alcohol in Muslim Countries

It is well known that Muslims don't drink alcohol, as it is haraam (sinful). Many predominantly Muslim countries have even banned alcohol. However, there still is some alcohol consumption in these countries. The Economist looked at alcohol consumption in the Middle East.

Source: The Economist

The number of drinkers varies by country, but some put the total at 5% of those identifying themselves as Muslim. Drinking may even be on the rise. Between 2001 and 2011 sales of alcohol in the Middle East, where Muslims dominate, grew by 72%, against a global average of 30%. That rise is unlikely to be accounted for by non-Muslims and foreigners alone. The black market for spirits flourishes in Libya, while Iranians are adept at producing home brew

Are more Muslims drinking, or are drinking Muslims just drinking more? Is alcohol becoming more accepted in the Middle East? Only time will tell.

Guilty Pleasures

Thanks to Freakonomics for sharing this great quotation from a New York Times book review with Ira Glass.

I don’t believe in guilty pleasures, I only believe in pleasures. People who call reading detective fiction or eating dessert a guilty pleasure make me want to puke. Pedophilia is a pleasure a person should have guilt about. Not chocolate.

We shouldn't be embarrassed about things we enjoy.

Unexpected Innovation: The Invisible Bicycle Helmet

Innovation often comes in unexpected places. I plan on making "Unexpected Innovation" a recurring theme on this blog, so expect more posts like this.

The bicycle helmet is clunky, uncomfortable, and unattractive, but also a crucial part of bicycle safety. Starting in middle school, I had absolutely no desire to wear a helmet when I biked. I was a bit nerdy, and didn't want to further my dorky image. I was lucky and never ended up crashing. My brother, on the other hand, fell off his longboard helmet-less and ended up fracturing his skull.

Enter the Invisible Bicycle Helmet. While not invisible, it is essentially an airbag that is worn around the neck which inflates in the event of a crash. It is a much more attractive and comfortable option than the traditional helmet. I'm sure there'd be high demand for it by casual bikers.

Check it out:
http://vimeo.com/43038579

Economists for Romney

While I'm still unsure who I will vote for in the upcoming election, it is interesting that over 400 economists have stated their support for Romney on the Economists for Romney site. (Thanks for the tip, Freakonomics). This number isn't very significant, 400 is a tiny number compared to the thousands of economics professors nationwide. It's also hard to quantify since there isn't a competing Economists for Obama site, but still it's interesting to see a large number of economists publicly backing a single candidate.

The statement starts off with:

We enthusiastically endorse Governor Mitt Romney’s economic plan to create jobs and restore economic growth while returning America to its tradition of economic freedom. The plan is based on proven principles: a more contained and less intrusive federal government, a greater reliance on the private sector, a broad expansion of opportunity without government favors for special interests, and respect for the rule of law including the decision-making authority of states and localities.

Here are some of the notable economists who have backed Romney. The list includes five nobel laureates: Gary Becker, Robert Lucas, Robert Mundell, Edward Prescott, and Myron Scholes. Greg Mankiw, a Harvard professor who has written best-selling economics textbooks (his backing of Romeny is not at all surprising, as he is one of Romney's economic advisors). Being a Claremont Colleges student, I want to make note that there are also two Claremont McKenna professors who have signed the statement, Janet Smith and Colin Wright.

Greece's Economy is Smaller Than Boston's

Source: ThereArePlaces.com

In 2011, Boston's GDP was $326 billion while Greece's was just $299 billion. Pretty astounding when you realize that the European Union and the International Monetary Fund have pledged €240 billion ($291 billion) to keep Greece floating.

Read more at the Atlantic.

U.S. Trade Deficit

We're currently experiencing the lowest trade deficit we've had in 18 months; due to both an increase in exports and a decrease in imports. Our trade deficit was $42.9 billion, down from $48 billion a month earlier. U.S. exports have been strong in most places except for in Europe, which is still in the middle of their debt crisis.

From the Wall Street Journal:

In June, the U.S. notched increases in exports of a variety of goods including pharmaceuticals, cars and industrial engines. Exports increased $1.7 billion to $185 billion, the highest monthly tally ever. Imports declined $3.5 billion to $227.9 billion, driven largely by a drop in oil prices that reduced the value of petroleum imports. Total U.S. exports are up 6% in the first six months of 2012 from the same period a year ago. In the first half of 2011, they were up 16% from the year-earlier period... 

For the U.S., a narrower trade gap would give a considerable lift to the economy at a time when growth has started to sputter, but many analysts were wary of ratcheting up expectations based on the June data. In coming months, a rising dollar, weaker demand in China and the euro zone's woes all are likely to weigh on U.S. trade. Other gauges of exports, such as an index tracked by the Institute for Supply Management, show demand already is slipping.  

 

In short, while this decreased trade deficit gave a slight push to our economy, it is unsustainable. Global demand is weakening. 

Centralization Causes Problems

Nobel prize winning economist Ed Prescott believes that centralization is a problem wherever it be located. Whenever we have too few competitors (too-big-to fail banks), or if a single organization gets too large (the government), things become less efficient. In these situations, more time is spent sticking to the status quo instead of innovating. Public or private, centralization leads to a bureaucratic mess.

Moreover, the larger an organization, the more centralization and less diversity.   True, numerous business books have touted more of a decentralized “team” attitude in the last decade or so. But many large organizations are still very hierarchical, allowing little diversity of viewpoint.  Groupthink also commonly occurs. 

More importantly, when you have a couple of giant organizations in a given market, it means that there are less competitors.  In the banking space, for example, we have extensively documented that breaking up the giant banks would allow small banks to thrive. 

So – by definition – organizations that are too big decrease diversity in competition.

Decentralization and competition introduce solutions to many of our problems. Before making large corporations or the government bigger, we should consider other options to problems.

Academic Bias: Anti-Conservative Social Psychologists

Here is an excellent article on academic bias (thanks for the pointer, Tyler Cowen). Social psychology is a particularly liberal discipline, but does this actually have an effect on the few conservative social psychologists? Indeed, it does.

Researchers found significant willingness to discriminate against conservatives. The extent of this is alarming, as we often assume professors to be fair and professional.

The questions on willingness to discriminate against conservatives were asked in two ways: what the respondents thought they would do, and what they thought their colleagues would do. The pool included conservatives (who presumably aren't discriminating against conservatives) so the liberal response rates may be a bit higher, Inbar said. 

The percentages below reflect those who gave a score of 4 or higher on a 7-point scale on how likely they would be to do something (with 4 being "somewhat" likely). 

Percentages of Social Psychologists Who Would Be Biased in Various Ways

	Self	Colleagues
A "politically conservative perspective" by author would have a negative influence on evaluation of a paper	18.6%	34.2%
A "politically conservative perspective" by author would have a negative influence on evaluation of a grant proposal	23.8%	36.9%
Would be reluctant to extend symposium invitation to a colleague who is "politically quite conservative"	14.0%	29.6%
Would vote for liberal over conservative job candidate if they were equally qualified	37.5%	44.1%

The more liberal the survey respondents identified as being, the more likely they were to say that they would discriminate.

This anti-conservative bias is likely to keep any conservative ideas out of social psychology. Even if one disagrees with particular ideals, we all benefit from hearing other perspectives. A unilateral view can't be healthy for any academic discipline.

This research studies only one field, but it leads us to wonder if other academic disciplines are similarly biased. Academic bias is a problem that was always expected, but now that we can see the extent of it, it's time to look at it more seriously.

How American Food Got Bad

I recently read Tyler Cowen's new book, An Economist Gets Lunch. As an economics major and a self-proclaimed foodie, I can honestly say it is one of my favorite things I've ever read. I'd highly recommend it, even to those not interested in food or economics.

While the whole book is fabulous, one of my favorite chapters is "How American Food Got Bad." Don't get too offended; lots of food in the U.S. is good, and it is getting better, but we've definitely had some rough spots. Cowen explains how exactly we've come to be a "Cheez Whiz culture." Many people blame the demise of American food on commercialization, but Cowen has a different story. Here is a quick overview of his explanations:

1. Prohibition: Restaurants make huge profits on alcohol, and without those profits many of the best restaurants had to shut down. Through prohibition "expensive, high-quality food was hurt the most." The restaurants that didn't serve alcohol focused on "speed and convenience more than the quality of the food." Furthermore, underground speakeasies had no incentives to serve good food; people were there primarily for the alcohol. 
2. World War II: World War II led to a decreased food supply and a need for rationing, but Europe and America both dealt with this in different way. In Europe, people had to eat less, but all of the food they ate was fresh and local. Their rails were being used for war supplies, not commercial shipping. They ended up eating less food, but of better quality. In America, we kept up high levels of consumption by shipping processed food around the nation. We ate large amounts of low quality food. 
3. Discouraging Immigration: Most American food is immigrant food. As we can see by comparing the delicious Mexican food in Southern California to the mediocre Mexican in Maine, recent immigrants improve food quality. When we've gone through anti-immigration periods, our food has also suffered. 
4. Catering to Kids: The structure of the American family is detrimental to good food. In other parts of the world, kids are expected to eat whatever the parents serve them, but kids in America often make the calls themselves. By allowing our kids to be picky eaters, we cause all of America to be stuck with overly starchy, sweet, bland food.
5. Television: With TV came TV dinners and fast food. The best shows were on right at dinnertime, so families had to come up with quick, easy ways to get food on the table. Instead of cooking, American's started ordering pizza and eating microwavable meals frequently.

I found this to be a pretty convincing and comprehensive overview downturn of food in America. What do you think?

The Obligatory First Post

As an economics student, you deal with a whole lot of supply and demand, efficiency maximization, and basic problem with "rational" agents. However, what's most interesting are  real life applications of economics. That's what I hope to talk about on this blog.

My name is Amanda and I'm a rising junior at Scripps College in Claremont. I'm an economics major and have found that I'm utterly fascinated with economics. I read econ blogs constantly, I listen to Freakonomics podcasts on my way to work, and my on-campus job is being an economics tutor. (Have I said "economics enough in this paragraph?)

I plan on using this blog to discuss other articles I read, as well as including original content. So instead of rambling on about myself, let's get to some content.