Quality Repartee: Louis Brandeis

My new colleague at the University of Colorado Boulder, Philip Graves, pointed me to this wonderful snippet. I can't vouch for its truth, but I want it to be true:

Louis Brandeis graduated from the Harvard Law School at age 20 with the highest grade point average in that school’s history and, after other academic triumphs, was appointed Supreme Court justice. When Brandeis was studying law at Harvard, an anti-Semitic professor by the name of Peters always displayed animosity towards him. One day Prof. Peters was having lunch at the University dining room when Brandeis came along with his tray and sat next to him. The professor said, “Mr. Brandeis you do not understand. A pig and a bird do not sit together to eat.” Brandeis looked at him and calmly replied, "Don’t worry, professor. I'll fly away," and he went and sat at another table.

Peters, decided to take revenge on the next test paper, but Brandeis responded brilliantly to all questions. Unhappy and frustrated, Peters asked him the following question: "Mr Brandeis, if you were walking down the street and found a package, a bag of wisdom and another bag with a lot of money, which one would you take?" Without hesitating, Brandeis responded, "The one with the money, of course." Peters, smiling sarcastically, said, “Just like a Jew. Unlike you I would have taken the wisdom." Brandeis shrugged indifferently and responded, "Each one takes what he doesn't have."

Prof. Peters hate for the Jewish student came to a finale when he scribbled on his student’s final exam the word "idiot" and handed it back to him. A few minutes later, Louis Brandeis got up, went to the professor and said to him in a dignified but sarcastically polite tone, "Prof. Peters, you autographed the exam sheet, but you did not give me a grade...”

Kfir Eliaz and Ran Spiegler: Incentive Compatible Advertising on a Social Network

My colleague here at the University of Michigan Kfir Eliaz and his coauthor Ran Spiegler have made the first ever theatrical trailer for a technical economics paper. He gave me permission to share this email with you:

Hi Miles,

I have a new paper with a colleague in tel-aviv (Ran Spiegler) called “incentive compatible advertising on a social network”. Though the paper is on a topic which is not related to your interests, we made a cinematic trailer for it (to the best of our knowledge, the FIRST EVER cinematic trailer for an academic paper), which you may still enjoy (full screen view and high volume is recommended). The trailer is posted here.

The actual paper is posted here.

Best, Kfir

Although I differ with John Rawls on details, I like John Rawls’s perspective very much. And this is a very cute kitten. So I love this econlolcats post by Ishita!  When uncertainty and randomness form the basis of your philosophy… This econlolcats…

Although I differ with John Rawls on details, I like John Rawls’s perspective very much. And this is a very cute kitten. So I love this econlolcats post by Ishita! 

When uncertainty and randomness form the basis of your philosophy… 

This econlolcats post is a harbinger of a Quartz column with the working title “How Low Can Interest Rates Go?” It is coauthored with my brother Christian Kimball, who as a top-flight tax lawyer is well equipped to help take down John Cochrane’s claim that tax arbitrage is enough by itself to create a lower bound on interest rates. 

Linda Sun: Change Airbags to Axes to Save Lives

blog.supplysideliberal.com tumblr_inline_nmexwoekTB1r57lmx_500.jpg

Link to Linda Sun’s LinkedIn page

I am pleased to host a guest post by Linda Sun, a student in my “Monetary and Financial Theory” class. This is the 11th student guest post this semester. You can see the rest here. Linda’s post is a work of economic analysis satire.

Update: Like Mike Smitka in a comment below, Paulo Mauro tweets that Linda was not the first to come up the essential idea: 

Great economist Mike Mussa used same analogy (he would say a “spike in steering wheel”) to dismiss concerns about moral hazard.

But I think Linda makes the point in a memorable way: 

The effect of seat belts and air bags on car crash outcomes has a long debated history. On the one hand, seat belt keeps driver and passengers in their seats and airbags make them much safer when a car crash happens, which decreases traffic fatalities. On the other hand, it has been suggested that due to compensating behavior, drivers drive faster and closer to the vehicle in front when they have security precautions, which increase the probability of an accident and therefore put non-occupants, namely pedestrians, bicyclists and motorcyclists at greater risk (Peltzman, 1975).

But what is the ultimate overall effect of seat belt and airbags on traffic fatalities in practice? There is many paper examining the effect of mandatory seat belt law and airbags, reaching different conclusions. In Alma Cohen and Liran Einav’s paper(2001), they control the endogeneity of seat belt usage and find that it decreases overall traffic fatalities. In their paper, the compensating behavior theory (which suggests that seat belt use also has an adverse effect on fatalities by encouraging careless driving) is not supported by the data. Bhattacharyya and Layton(1979) similarly find that seat belt law have significant negative effect on traffic fatalities overall. On the other hand, McCarthy (1999) finds that a mandatory seat belt law increases the number of fatal accidents. 

Though there is no common conclusion on the overall effect of seat belt and airbags on traffic fatalities, in the spirit of the compensating behavior theory, I think there is a surefire way to force drivers to drive more carefully, and reduce traffic accidents: changing all  cars’ front airbags to axes.

Just imagine, what would you do if you know that your car has an axe installed in front of you, which would pop out if there were a harsh impact? You would drive as carefully as possible and try to avoid any potential car accident. In fact, installing an axe is like having a police car right beside you, only more effective because the penalties imposed by the axe are so much more sever than a ticket. By making the cost of careless driving almost infinitely large, no one will drive carelessly.

Second, unlike airbags–which save occupants’ lives but increase the risk on non-occupants by compensating behavior theory–an axe concentrates the cost on the person whose behavior controls the risk. Threatened by the axe, drivers will drive more consciously and cautiously, and they will not compete with pedestrians, bicyclists or motorcyclists any more. (Drivers are the “disadvantaged” group under this plan.) Thus this change saves the lives of non-occupants of a car. 

Third, installing an axe helps by discouraging bad drivers from driving at all–positive selection. If someone is a rookie, will he dare to risk his life in traffic before practicing on low-traffic roads? No! The total number of miles driven by rookie drivers in tough situations would decrease significantly, leading to increases in traffic safety. Indeed, many people who know they would be bad drivers will simply choose to use public transportation instead. Riding the bus can look awfully good compared to facing a threatening axe.

Installing airbags and seatbelts is a way to try to minimize the damage after a car accident has already happened. But an axe can prevent an accident from happening in the first place.

Jonathan Zimmermann: The Quest for Uselessness

A large share of all the things that human beings want are things that are experienced in the mind. So it should not be too surprising that people will sometimes spend money or time on an idea that they find entertaining or humorous. Such was the pet rock craze a few years back. I was intrigued to learn that my student Jonathan Zimmermann accomplished such a feat of marketing an entertaining idea in a smaller way. His report on that is the 5th student guest post this semester. (Jonathan had another guest post a few weeks back that you might be interested in: “Swiss Franc Shock: Time to Take Advantage of Return Policies.”)

or the first time, Google Play (the Android app store) has surpassed the Apple app Store for the total number of published apps. Of course, among the almost one and a half million available applications, a lot of them, if not a majority, are of relatively little use. But usefulness is not a requirement for a successful app, as we saw for example many “fake razors” encounter a huge fame in the earliest days of the Apple app store.  So what exactly is the limit of “uselessness”? How far could a developer go, and especially, do people need to at least believe that the app will be useful to want to download it? In this post I want to share my experience on an interesting experiment I conducted a few years ago.

It was a few years ago and I had just started to learn how to develop Android app. But coding wasn’t the part that interested me; I wanted to create, to publish. So I asked myself “What is the most simple, the most elementary app that I could develop and publish with my very limited newly acquired coding skills?”. The answer was easy: an app that doesn’t do anything. How would I call that app? “Useless”, because it has no features and is of no use. How to market it? Well, what is the only way to market nothing? Simply being honest and telling people not to expect anything from a nothing.

I published the app (still available with its description on Google play). I didn’t advertise it, and just waited for some organic traffic to come. In a few days, hundreds of people downloaded it. After a few months it had tens of thousands of downloads, for a total of more than 120 000 users today! Did I produce value? It seems like it: the average rating, by more than 4000 users, is 4.5/5, a very high rating for an Android app! But there is more: the ratio of review per download and the ratio of comment per review were extremely high!

Not only did the app satisfy its customers, but the average user seemed to be a relatively highly educated person. In one comment, a high school teacher even said he shared this app with his whole class.

Most positive comments looked something like that:

I love it, great job android market. This app has changed my life for the better. I used to wake up every morning crying, but now I have hope again. Finally something real, consistent, reliable, trustworthy. This app has shown me that there are things in the world that are truly what they claim to be. Simple, humble yet sophisticated. A Monk in the app, a world leader among its kind for having integrity. This app is a masterpiece. It is what it says, does what it’s supposed to do and comes with a 10×1 return policy.

by savage santana (edited)

So what about the people that didn’t like it? The only reason why it has a score of only 4.5/5 is that most users would either put the best rating (5) or the worst (1). Only a few would put an average rating, like 2, 3 or 4. And what were the reasons behind most of those 1-star ratings? Most of the time, they were written by unsatisfied customers that found some use in an app that what supposed to be useless:

I downloaded this app, with hope of finding no usefulness whatsoever, that hope was lost when I found it had many. I noticed the moment I opened the application, I had something to read. I enjoyed reading about how the creator of this app did not like how the Android Market had it’s name changed and the purpose of the apps creation. I also found how useful this would be for people who found it difficult to spell (Apart from some spelling mistakes). It also had enough light to see objects in the dark.

by Carl-Michael Hammon (unedited)

So think absurd, and don’t be afraid to be absurd. Downloading this app was perhaps, for some people, a right to be irrational for a few minutes. Sometimes, it feels good to not make sense. And this feeling is more logical than it seems.

And on a final note, for the capitalist skeptics who think that doing art is great but making money is better: do not worry, I didn’t lose my business acumen and carefully placed a discrete ad inside the app. It generated a few thousand dollars of revenues. Not too bad for a few hours of “programming”.

Fixpoint Cat Can Has Fixpoint Cat on Fixpoint CatReblogged from econlolcats: Terminated recursion has never been this cuddly. By yeltsin.Fixpoint cat is just right as a harbinger of my new Quartz column revisiting the topic of negative int…

Fixpoint Cat Can Has Fixpoint Cat on Fixpoint Cat

Reblogged from econlolcats: Terminated recursion has never been this cuddly. By yeltsin.

Fixpoint cat is just right as a harbinger of my new Quartz column revisiting the topic of negative interest rates in Switzerland, slated to appear today. I will post a link as soon as I see it up. 

If you haven’t seen my first column about negative interest rates in Switzerland, “The Swiss are now at a negative interest rate due to the Russian ruble collapse,” take a look. I realized I was wrong in predicting the Swiss National Bank would continue to defend its ceiling on the Swiss franc, so a wrote a new column as an update.

The Future of Dough: A Rap Video for Money20/20

This is an entertaining rap video about the dramatic changes coming for payment systems. One prediction I think is a bit off target is the second sentence in this part of the rap lyric: 

You can pay by finger, by eye or Google glass. The next evolution: PayByAss. …

By the way, you can see my rap video about the monetary policy possibilities opened up by electronic money here (and here is Tom Grey’s better rendition of the same lyrics).

My Father's Trash Can

My father, Edward Lawrence Kimball, is 82 years old to my 52. To honor him on this father’s day, I wanted to give you an example of his wry sense of humor. (I warned him a while back that this was coming, so he won’t be totally surprised.)

In her February 2, 2012 post “Move Over Harvard: BYU Law Has Got Memorial Trash Cans,” in the online magazine Above the Law, Staci Zaretsky reports receiving an email saying:

While other law schools memorialize their noteworthy alumni with their name on a moot court room or on a co-curricular competition, BYU has stooped to a new low and now memorializes its alumni on trash cans.

Staci then continues:

The trash can isn’t dedicated to an alumnus, but rather, a professor emeritus of the law school. Professor Edward L. Kimball, who retired in 1995, used to teach criminal law, and was one of the original members of the BYU Law faculty. Here’s how the law school has chosen to honor Professor Kimball… [See the illustration above.]

The plaque on the Little Garbage Pail That Could reads: “The Edward L. Kimball Memorial Trash Can.” How freaking insulting. Professor Kimball is 82 years old, and according to his list of publications, he seems to be the master of all things Mormon. And all you’re going to give him is a trash can?

It took until the next day for Staci to figure out what was going on. She got this response from Brigham Young University’s J. Reuben Clark Law School: 

Professor Kimball was noted for two things: First, he had a dry sense of humor; and second, he did not take himself too seriously.

When he and his wife, Bee, gave a generous gift to the law school, the development officer indicated that there would be a plaque honoring them on the wall near the Moot Court Room. Professor Kimball objected and indicated that he would prefer to have a large, gold trash can placed in the foyer of the law school with a very small plaque stating: The Edward L. Kimball Memorial Trash Can.

Professor and Mrs. Kimball hoped that the “trash can” would bring a smile to students or visitors who read the plaque.“