Finding the Most Expensive Book on Amazon

Quite aside from Walmart Stores, I am sure that Amazon is one corporation with a very large number of goods available for purchase. This occurred to me as I discovered that the number of publications available for purchase with a Kindle e-reader device goes beyond 600,000 titles. And this is very impressive when viewed against the fact that Amazon also has a large database of physical books, furniture, music, software, computers, watches, furniture and other products available for shipment.

Coupled with the very large number of stock units is an effective search machine that allows for convenient search across the virtual store. It just occurred to me that it is far more difficult to find stuff on Amazon based on the costs than it is to find by name or use. For instance, I have concluded that textbooks are among the most expensive items on the Amazon bookstore. What I am unable to confirm is which single publication is really the most expensive throughout the book store today. Why is it that the search engine does not offer this capability?

Views On BART Movie Prediction Model

I spent the last weekend reading carefully the paper by three professors discussed in this blog post a week ago. They use a complicated statistical technique known as the Bayesian Additive Regression Tree (BART) model to work out a prediction of the receipts from the box office for movies based entirely on the script. The main factors that the model assesses are the Genre and the content variables which includes the storyline, kind of conflict all in the 23 content questions form. 

One need not be a studio manager or movie director to immediately understand the implications of this model on informing investment decisions across given scripts that are being considered for funding. I also think that this reiterates that a well-considered model can still beats so-called experts at making this kind of decision. To my surprise the model provides guidelines on possible Box Office receipts when the dollar value of making films varies over time. So the question I would ask the authors is how this time function was accounted for and whether the model can be tweaked to predict the number of tickets sold instead. As I have mentioned in a separate blog post, comparing movies by the number of tickets sold is more accurate when they are made in different time periods. 

Houses Not Special in UK Too

I asked here whether real property is still a special category of property and my answer tended towards saying that in the US, it appears that those days are long gone. The same fixation on the part of the public and their governments seems to have afflicted the United Kingdom where taxation policy tended to tilt in favour of home ownership. In spite of the fact that the slump in the UK appears to have been corrected and home values have not fallen precipitously, Larry Elliot of the Guardian argues convincingly that house prices will fall for a while yet.

Indicators of the underlying difficulties in real property markets are seen in the fact that first time buyers are unable to afford property and there is a big generational difference in the ability to acquire home. iIn essence, the ownership of homes favours the elderly citizens together with wealthier individuals. In a sense, that house prices in the UK and the US have faced difficulties and are bound to remain low for a while is a good case study for students of economics. One wishes that the laity understands that the problem was the belief pushed by interested lenders and brokers that home ownership is special.

Is Austrian School of Economics Back?

While I would not say that Austrian economics is mainstream again, this story in the Wall Street Journal profiles one of its main high priests and dedicated thinkers. I noted the resurgence of Austrian School theorists a while back when von Hayek's The Road to Serfdom was top of the Amazon bestseller list. And while I have read a much smaller number of Peter Boettke's works, than I would like, I readily concede that the austrian School is a powerful approach to explaining the limits of central planning on one side and the lottery nature of industrial policy.

My introduction to the Austrian School was an encounter with Von Hayek's Road to Serfdom which I found quite impressive in its rendition of the inherent weaknesses of statism especially in the area of economic management. I have since then considered it as one of the most ideal ways to introduce students of economics to the Austrian School generally and to an appreciation of the limits of state action on the other.  It is also a gentler way of introducing students to the subject political economy by avoiding the large models driven by mathematics. As most of the Austrian School theorists believe, understanding the first principles of economics is important in itself and the mathematics should aid understanding and not undermine it.

As the article concludes, the major problems for Austrian School economists is that while they are able to identify why state action may be harmful, they are not often able to generate much policy advise to fix problems. And that explains why Keynesians fall from favor but always arise again. the Austrian School is one of the most important and ne to which I am most partial.

Louisiana Monks Take On the Casket Cartel

For a country as free as the US, I still get surprised by the degree to which even the state governments try to regulate economic behaviour and choices. The WSJ reports that the Louisiana State Board of Embalmers and Funeral Directors has sent a subpoena to St. Joseph's monks for violating a state regulations by independently manufacturing and selling caskets within the state. I reiterate that regulatory institutions with such long names tend to be useful for nothing. However the membership of this institution set to regulate the sale of funeral merchandise is comprised overwhelmingly of persons with direct interest in the business.

Its nice to see the St. Joseph's trying to bust the casket sellers cartel under the guise of protecting the public and enforcing standards. That the colluding undertakers are so brazen is a sound lesson that the board is largely a conspiracy against the bereaved. These monks should and must win and be allowed to compete.

Houses Not Special Property Anymore

I am not a resident of the American continent but I think that the financial crises has clarified a point that beautifully illustrates the value of first principles in economics and how markets function. While there is understandable argument about the causes and the trajectory of the causative factors, what is clear to me is that the big myth and fallacy that housing as a category of property is not subject to downward price fluctuation has been shown to be untrue. David Streitfield of the NYT files a report whose basic argument is that the magic of house ownership as a sure and superior form of property is being painfully revised.

It states that the belief was reinforced by the fact that for more than a whole generation, real returns on housing were sufficiently high. This allowed many US citizens to take mortgages from which they would build household wealth due to price appreciation. Dean Baker of the CEPR buttresses the argument with the estimate that it will take at least two decades to recover the US$ 6 trillion in wealth lost since 2005. In other words, there is a surfeit of houses and making money out of homes is highly improbable.  Demand and supply do rule but those with an interest in selling houses and whose income comes from selling houses will obviously try to convince people that housing is a special category of property.    

Governments Find Blackberry Devices Too Secure

Soon after President Obama was elected, it was a matter of concern that he was reluctant to accept the surrender of his famous Blackberry phone and communication device. At the time, the concern was that the nature and extent of presidential communication required a high degree of security that would not be guaranteed by such a service. I blogged here that the Research In Motion, the corporation that manufacturers the device would take that as a challenge to assert that the degree of security for that device would make it fit for presidential communication.

Some two years later, a different set of governments have pressured the RIM into some concessions on security based on the thinking that the device provides a very tight level of security that national governments of a number of Asian countries cannot reach.  As the dated piece in the NYT states here, governments of the United Arab Emirates, Saudi Arabia and India are concerned that by guaranteeing a high level of privacy in communication, the security of states may be compromised. It seems that the device is not fit for a president but is too safe for citizens half a world away.

Images are subject to copyright and extracted from RIM website.

Another Formula For Box Office Receipts

To my mind, predictive analytics represents an interesting intersection between statistics, economics and other disciplines, all for the purpose of making decisions about the likelihood of certain events. One of the most impressive models of predictive analytics has been the model built by the firm called Epagogix. This algorithm uses only the script of a movie to make a forecast of the expected receipts at the box office. More recently, a number of financial houses converted their models and used them to predict the outcome of the soccer World Cup that ended last month.

And now two professors from the academy have published a paper here in which they discuss the value of an algorithm that would guide movie houses on the potential box office receipts by application of their mathematical formula. From Sarah MCBrides, blog post here, it looks like they have identified some useful nuggets for making the most out a script and studio bosses may be calling on them shortly. My concern though is not about the ability of a cold model to predict fairly complex business outcomes but that the sample of movies (200) appears to be small and  much less as compared to the number of movies produced worldwide.

As I undertake to read the full paper, I have no doubt that this algorithm is definitely more useful than the gut instincts of seasoned movie making experts.  As I had noted a while back, experts so called, are not as sophisticated thinkers as they claim. There's competition for Epagogix now and that can only be good for the movie industry.

HT: Freakonomics Blog

Rodrik on Authoritarian Development Models

A couple of days ago, I was attending a small meeting that was discussing the role of the state in society. As a libertarian, i was not surprised that many people take it for granted that the existence of the state means that it must undertake any activity that it chooses or that people urge it to take upon itself. tThe more surprising part for me was the poor reading of history by educated people. This was because an uncomfortably large number of people took it for granted that China and the east Asian countries have proven that there is a special formula for quick economic growth.

I have stated it here for a long time that China's development record is unprecedented and certainly impressive. What I am unwilling to yield is that there is a "China Model" which proves that political liberalization is a secondary matter in the quest for economic growth.  As I heard, China is very organized and provides a model worthy of emulation by Asian, African and other low income countries. I therefore find immense comfort in the more accurate and sensible interpretation of history by Dani Rodrik in this informative  article.

As it is, the piece is self-explanatory. Authoritarianism is mnot a short cut to growth and any leader who tries that model is more likely to fail than succeed.

FA Quotas Have Unintended Consequences

England's performance during the last World Cup was a great disappointment to the Football Association and it is understandable that they may want to change the situation. Predictably, they have gone for the most obvious excuse which states that young English players are denied a chance to improve by virtue of the large number of foreign players in that English Premier League. In an earlier blog post here, I suggested that this view is convenient but is ill-informed and suggested that the FA bosses should look at this book. In spite of that, the FA introduced a new rule that limits each team in the premier league to a squad of 25 players of which places an upper limit of 17 players that are not home grown. the ostensible reason is that the number of English players in the squads is bound to go up and thereby improve the performance of the English team in international tournaments.

It is difficult to argue with such a knee-jerk reaction especially since it resonates with a number of English supporters and players. And yet as Arsene Wenger reasons, it is bound to generate unintended consequences in the form of court cases especially when considered together with other rules.From that explanation, it seems that the FA did not carefully consider the adverse consequences of that rule and how players and managers may adapt to its imposition. The quota rule already looks like a bad idea even before it is in operation for a full season.

Mexico Must Sustain Drugs Legalization Debate

Reno Gazette Journal reports that Vicente Fox, a former president of Mexico openly stated that legalization of the drugs trade in Mexico would break the power of drug selling organized criminals. It is clear that the series of drug wars that Mexico and a number of South American countries have had did not wipe out the brutal traffickers but instead led to far too many deaths that were altogether avoidable. As I have stressed here, this hardware approach to fighting drug production and sale sounds good for moral absolutists but it has been demonstrated to be impracticable when balanced against social safety and freedom.

While a reversal of drug prohibition policy will not necessarily wipe out all the costs of drugs use, it will definitely save many Mexicans from the effects that arise from high profits being sought by illegal drug sellers. Whatever one's moral persuasion, Mexico's president should take the opportunity to follow up the discussion opened by a predecessor and advance debate to prepare for ultimate reform. The picture described by the Economist Magazine here means that Mexicans who neither consume nor trade drugs will continue to bear the cost of a politician's intransigence. And as implied, the drug gangs have the wherewithal to last for long. Saving lives and restoring peace should not be seen as succumbing to criminals but rather bowing to the force of reason.

John Kay on Economic Value of Arts and Culture

"Similarly, the economic value of the arts is in the commercial and cultural value of the performance, not the costs of cleaning the theatre. The economic perspective does not differ from the commonsense perspective. Good economics here, as so often, is a matter of giving precision to our common sense. Bad economics here, as so often, involves inventing bogus numbers to answer badly formulated questions." John Kay 

Boom Time for British Think Tanks

A story in the Economist magazine this week highlights the work of a number of new and older think tanks in the UK. The gist of the story is that the recent change in government in the UK has provided opportunity for a number of centre right of centre think tanks to influence policy. This is primarily because there is not only a new policy dispensation but that the magnitude of economic and social problems lend themselves to the adoption of reforms or new ideas.  

As a person who respects ideas, I think that this is indeed an auspicious moment for think tanks and a majority of those mentioned seem to have prepared for a change of government in order to bring forth fresh ideas. Equally impressive is the disclosure of the fact that the time horizons for IEA and Reform are completely different. In addition, they are not only prepared to provide new ideas for policy but are also alert to what they see as "Intellectual incoherence" in policies being accepted by the new government. 

To my mind, it is altogether a positive thing to see slightly dispassionate people dedicate intellectual firepower to a society's problem. And this is important even if not all those ideas are new or necessarily acceptable to me. The most important insight I extract from the piece is the view that perhaps intellectuals and policy wonks make an error by taking government functions as a given.  As the article states, Mr. Littlewood of the IEA thinks that government should have started on a fresh sheet of paper to define what are its functions and then wipe out all other programmes falling outside that remit.  As a Libertarian, I find that quite refreshing. More brainpower to think tanks of the world. 

Fiscal Sins of America's Political Parties

Whenever I go through analytical pieces and summaries of the state of the US economy, I never fail to notice the stated assumption that main difference between its two political parties is that one party is a better economic manager given to prudence with public finances. And quite unfortunately the majority of blog seem to proceed on this premise and often add to that the view that president Obama's administration is a huge spender of public funds like other administrations led by Democratic Party presidents.

I always muse to myself that as a grown up, the sharp distinction between the two parties is one that only partisans of one side or the other want to believe. And that is why I see this very informative and well-argued piece by David Stockman about the contributions of the Republican party in the fiscal mess that the US finds itself in today. I am reluctant to summarize it because the piece is worthy of careful study but its main idea is that too much expenditure is an equal opportunity error by both parties. In addition, the main assumption of the Supply side arguments of the Reagan administration seem to be catching up with the US as the tax cut fetish alone does not pay for itself as is argued simplistically.   

Of the four points that he makes, I disagree with the assertion that the suspension of the Gold Standard made inflation and too much expenditure inevitable. This point requires some contesting because there's no evidence for it in his illuminating piece. 

Indian Entrepreneur Urges Use of Markets Against Bribery

Corruption in both its grand and petty forms is a defining character of the public sector in many low income countries throughout the world. As a recognized problem, it is often quantified and its manifestations recorded and lots of books published about it. In spite of all the talk and discussions about corruption, the responses that have been adopted tend to be generic. These solutions often require ethical training for policemen, better surveillance, establishment of specific anti-corruption agencies, mandatory disclosure of income for politicians and tightening of rules and new laws against corruption. not only are these ideas uninteresting, they have had little effect in most corrupt countries.

An Indian lawyer and entrepreneur named Shaffi Mather has an idea that has stunned me both for its freshness but also because it introduces a profit element into the fight against corruption. In the TED talk on this page, he talks about having designing a business that uses a number of innovative tools and approaches by trying to fight corruption by adoption of a private and fee-based service to citizens who are faced with demands for bribery in order t receive public services. While the talk is slightly less than a year old, I find this a fantastic approach to a very serious problem that undermines growth in Africa and Asia in particular. Perhaps I should take a sabbatical and study his approach because he seems to have something to teach about business solutions to corruption.