"Coupon Lady Money Saving Madness" is madness indeed.

So, I found a video on the internet which should have bargain-hunters, cheapskates, and economists (to be redundant) foaming at the mouth. By using coupons and mail-in rebates, a woman was able to cut her grocery shopping bill down from over $150.00 to just $9.43. Find the video here. So why isn't everyone saving 97% on their shopping, and putting the grocery stores out of business?

The reason most people don't do this (and never will) is because it's inefficient. Yes, it's very impressive to see someone save ~$145 off their groceries, but the real question is how much time did it take, in coupon saving, organization, and so on, in order to accomplish that? The woman in the video said she collects coupons, sends in rebates, and plans all her shopping in advance... If it took her 14 hours, she effectively earned $10/hour for her coupon-clipping work. However, I'm guessing it took longer than that, and her "wage" was actually much lower.

For people who have jobs, it'd be more effective to spend those extra hours working than clipping coupons. If you don't have a job or are paid a very low wage, coupon clipping could make sense. However, there are a variety of other ways to make money on the internet - filling out surveys, using ShortTask, or advertising on Twitter - to name just a few. For an hourly rate, you can almost certainly do better than coupons.

If you're a college student, spend that time studying instead -- you're going to school to make more money later, so focus on grades, not penny-ante coupons (unless you're studying english or sociology, in which case I suggest dropping out and coupon-clipping full time, because it'll be more profitable).

There's an efficient level of coupon saving, which depends on your income and how you value your time. For highly paid professionals, the efficient amount of coupons might be zero, while some others may gain a small benefit from spending their time that way. Taking coupons to an obsessive level, as this woman appears to have, is just wasting time for yourself and everyone in line behind you.

Scary statistics for the medical economics debate.

[The shaded box is around my response.] Survey Source.

Stumbling around the internet awhile back, I came across this medical ethics questionnaire. In addition to providing a haven for procrastinators, this survey also shows the distribution of answers that others have made. Most of the questions were fairly ho-hum with predictable splits of opinion. However, the skew of answers to an economics-related question startled me.

When asked "what level of involvement should the government have in setting prescription prices?" a whopping 56% of the responders said "Create Price Ceilings" and 8% more thought the government should set all prescription prices. Apparently, 64% of those polled trust bureaucratic regulators more than the market when it comes to pricing medicine.


I can appreciate the sentiment behind price ceilings on prescription medication: it's undeniable that many people can't afford treatment they need to stay healthy. However, price ceilings are just a bad idea. 

Source.

For those unfamiliar, a brief rundown on the economics of price ceilings. When the government mandates a below-market price for a good, it creates several negative side-effects. Most immediately, amount supplied decreases. Faced with a lower price, manufacturers will cut back on production. In context of prescription medications, this means less drugs being developed, tested and sold to the public. Ailments that could potentially be treated will continue to harm people. Slightly more subtle is dead-weight loss, which represents market transactions which could have occurred, but did not. In other words, some people could have benefited by paying the higher price to get the drug, but the price ceiling prevented them from doing so. As a result, both consumers and producers lose out, although the outcome for the person seeking medication is perhaps most tragic.

High costs for prescription medications are definitely a problem; health care costs in general have been rising much faster than the general rate of inflation, putting important treatments out of reach for many people. High drug prices have also helped drive up health insurance costs, presenting a large drag on businesses.

Instead of an artificial cap on prescription prices, it would be more productive to look at the supply-side factors which keep those costs high. The lengthy FDA approval process alone costs "about $800 million per approved drug" and creates instant pressure for the company to charge high prices and recoup their investment upon release. Taking aim at these restrictions would be better than capping prices and ultimately smothering the development of life-saving medications.

Fermi Paradox makes discovery of new habitable planet a good news/bad news situation.

In the latest science news, a planet has been discovered which could potentially support life. A neighborly 20.3 light years away, Gliese 581g has liquid water and enough gravity to maintain an atmosphere -- making it a fairly good imitation of earth.

Great news, right? Homo sapiens now has the potential to spread across the galaxy, leaving the barren rock of Terra behind as we forge into the great empty unknown. Unfortunately, the actual "getting there" part is still a ways off. Even worse, this discovery may not bode well for the future of humanity.

Laws against 'texting and driving' haven't made us any safer.

We've all seen it: alarming, dangerous driving behavior perpetrated while under the influence of cell phones. In response to this threat, many locales (including my home state of Washington) enacted bans on texting-while-driving. Has the menace of distracted drivers been curbed?

According to a USA Today article, traffic accidents have actually gone up in areas where anti-phone laws were enacted. To quote the most interesting part:

"Texting bans haven't reduced crashes at all," says Adrian Lund, president of the Insurance Institute for Highway Safety, whose research arm studied the effectiveness of the laws.

Teamster wisdom on political economy

If God allowed everybody to die in bed, the government would regulate that we'd have to sleep standing up."

-Alex (on History Channel show Ice Road Truckers, Season 2 Episode 4).

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For context: Alex is driving a big-rig and hauling a 45-ton piece of mining equipment across the arctic ocean. The road he's driving on consists of nothing but frozen ice, and there's a blizzard rapidly approaching.

In addition to steady nerves and a dry sense of humor, the man has an intuition for political economy. I'll just let the quote above stand on its own. Thoughts?

The reason why 99.8% of all 'get rich instantly on Twitter' claims are hoaxes.

I purposely exclude 0.2% of 'make-money-off-Twitter' plans from the "hoax" category, because I'm sure some very smart person out there will go and prove my generalization wrong. Until that blue moon arrives, I'll explain why all the Tweet-gurus offering to make you big bucks for doing nothing are just yanking your chain.

Not familiar with the "instant money on Twitter" phenomenon? In my endless quest for self-publicity, I've stumbled across a lot of statuses like

"Making $500 dollars per week from home off Twitter while on autopilot. Come see how!!!!" 

or similar. Sounds appealing, but is it too good to be true? Yes, yes it is. Some economic thinking can reveal why.

1)  There are no barriers to entry on Twitter. All it takes is an e-mail address and lack of respect for grammar (just kidding) and you can start a Twitter account. Economists would describe this as an open market. Entry and exit are free, and there are are large number of Twitter users - over 75 million now - but that number could easily grow (or decline) in the future.

Bedbugs. Yet another reason to hate Rachel Carson (aside from 800 million dead of malaria).

The history of malaria is interesting, in a macabre sort of way. A hardy parasite spread by insects, the cause of malaria was unknown for most of human history. The name we know today comes from the French phrase for "bad air," reflecting the common observation that malaria cases peaked around swampy areas. Their solution in Algeria - drain the swamps - was effective, but costly.

Malaria, the organism, is extremely difficult to kill. However its crucial vector, the mosquito, is vulnerable when combated with the correct chemical tool. In 1939, Paul Mueller discovered just that: DDT. This insecticide is cheap, effective, and quite safe for humans. Some claim it causes cancer, but their evidence has since been disputed. By comparison the malaria problem is undeniable and catastrophic, with millions dying on a yearly basis. As said by Wenceslaus Kilama, the Chairman of Malaria Foundation International "this is like loading up seven Boeing 747 airliners each day, then deliberately crashing them into Mt. Kilimanjaro."The imagery is hard to overlook.

The history of bed bugs is less interesting, but in a much more annoying way. Like malaria, bed bugs have plagued humanity since the dawn of time. They cause irritation, swelling, and definitely a terrible night's sleep. We're still combating this invasive parasite as well -- a national Pest Convention is meeting to discuss the issue. Exterminators have been caught by surprise as bed bug infestations have sprung up in the last several decades across the country, and surprisingly little is known about them.

What do malaria and bed bugs have in common? They've both been increasing since DDT usage was halted thanks to Rachel Carson's book, Silent Spring. Some people claim that bed bugs' modern upsurge is just due to increased travel. I think the facts say otherwise, given the almost total eradication of bed bug cases during the heyday of DDT's popularity. That issue aside, there's no disputing the deadly impact of malaria -- a plague that can easily be prevented by regular spraying of DDT.

The public outcry prior to the DDT ban is a classic example of action taken without full understanding of the consequences. Enough has been written on this already, so I won't belabor the point. Ultimately, Rachel Carson isn't the only one to blame; fault rests with the politicians and lobbyists who listened to her before all the evidence was in. Now, the public at large is feeling the consequences from decisions made forty years ago. With bed bugs infesting the Big Apple, maybe it will get people itching for change in our national pest control priorities.

Statistical Fallacy #002: Confusing Correlation with Causation. Does a strong handshake really make you live longer?

Even highly educated and intelligent medical researchers aren't immune to statistical errors. A recent study in the British Medical Journal referenced 33 other studies on personal mobility and life expectancy, and compiled their results. According to Reuters, 

They found simple measures of physical capability like shaking hands, walking, getting up from a chair and balancing on one leg were related to life span, even after accounting for age, sex and body size. 

While the phrase "accounting for age, sex and body size" makes this process sound very objective and scientific, there are obviously a lot of other factors that can play a role in life expectancy. Personal differences, such as leading a more active lifestyle, could cause someone to have both more hand strength and also better health in general which contributes to their longevity.


While statistics saying "the death rate over the period of the studies for people with weak handshakes was 67 percent higher than for people with a firm grip" sound very dramatic, it's hard to say if that relationship is reverse-causal; in other words, having a weak grip may signal your lifespan will be short, but will improving your grip really make you live longer? Probably not, which suggests it's far more likely that a common variable - for example, sitting on the coach all day - causes both weak hands and a lower life expectancy.


Common sense says that working with a stress ball or doing forearm exercises to develop a crushing handshake probably won't substantially reduce your chance of death from heart disease, cancer, stroke, or the other leading causes of death for adult Americans. However, this is exactly the impression given by the Reuters article title "Want to live longer? Get a grip!" Heavens forbid someone took this seriously and developed gorilla-like forearms only to find out their fitness investment had been in vain.

Private funding for prison rehabilitation -- latest British innovation.

Say what you will about eccentricities in the United Kingdom's political structure, they aren't afraid to try some new things. Particularly, in the area of penal reform.The U.K. prison system is struggling with extremely high recidivism rates; according to the BBC "60% of criminals who serve short sentences reoffend within a year of leaving prison."

So what's the plan? Much like purchasing a bond, investors can put money into the rehabilitation program (currently limited to male inmates with sentences less than one year). If reoffenses among the subject group drop by a specified amount, the investors receive dividend payments.

Quoting the BBC:

Attention Undergrads -- you're still paying for all those classes you skipped.

Graph made by Mark Kantrowitz of FinAid.org

We've reached a momentous, but little celebrated moment in financial history. Credit card debt has been surpassed by student loans (including both federal and private). Let's give a big 800 billion cheers for education!

You can see this trend in the graph to the left. Notice how in 2008, credit card debt peaked and has now declined, while student loan debt has gone up at a steadily increasing rate. The modern family unit (mom, dad, and the federal government) have been paying a larger and larger bill, and for those who can't afford it, the slack has been taken up by private lenders. Unlike credit card bills, which fluctuate with the larger economic climate, student loan debt just kept going up and up.

Education is always a good investment, right? With costs of tuition rising by 8% per year, one might expect students would soak up every valuable minute of classroom instruction. That hasn't been the case. While tuition rates have gone up steadily, student attendance has gone down. This trend has been especially strong in recent years. According to Blair Hedges, a biology teacher,

The 'Landes Law' on imperialism and its domestic corollary.

Historian David S. Landes

In his New York Times bestseller The Wealth and Poverty of Nations: Why Some are so Rich and Some so Poor, David Landes claims

"a law of social and political relationships, namely, that three factors cannot coexist: (1) a marked disparity of power; (2) private access to the instruments of power; and (3) equality of groups or nations." [63]

Penned in 1998, this writing still sheds some interesting light on our recent foreign policy adventures in Afghanistan and Iraq. Conspiracy theories and "blood for oil" slogans aside, private companies did have a large involvement in immediate invasions as well the as follow-up occupations. Along with industry lobbying and corporate connections in the White House, condition (2) seems to have been justified. The marked disparity of power and inequality between groups hardly even need discussion.


On face, the principle at work here seems accurate. As Landes argues, "Where one group is strong enough to push another around and stands to gain by it, it will do so." However, this incentive isn't limited to foreign policy. I'll propose the following corollary to Landes Law:

Welfare State Corollary: three factors cannot coexist: (1) a marked disparity of specialized interests; (2) private access to the instruments of government; and (3) national government running a balanced budget.

In other words, when an interest group (e.g. farmers, doctors, bus-drivers, etc.) has enough political influence, it will push others around through the legislative process, as long as it stands to gain by doing so. When a multitude of such interests exist, satisfying all their demands will flout any efforts at a balanced budget (unless taxes are incredibly high, and there's an interest group against that too).

While Landes' Law poses a serious challenge to efforts at global peace, the Welfare State Corollary has implications on our current political system's ability to respond to the current financial crisis. I'll leave it to the reader to decide on the accuracy of this analogy.

Statistical Fallacy #317: Holding Constant that which Changes. See: 'median household income'.

Alternately, 

"Torture numbers, and they'll confess to anything."*

  Our inquisitionist of the day hails from Bloomberg. In an article today, Venessa Wong wrote the following:

While many Americans dream of a windfall that will take care of their financial needs for life, the sobering reality is most of us are not getting far: U.S. Census Bureau data show median household income barely changed in the 10 years following 1998 as the price of housing and other goods increased. In consumer price index-adjusted dollars, the median household income in 2008 was $50,303, compared with $51,295 in 1998. [Emphasis added.]

 What's wrong with the above? In a fairly common maneuver to paint a doom-and-gloom image of the times, average household size is treated as a constant to compare incomes over time. That just isn't the case.

The problem with using 'median household income' as a measuring stick is that it's actually a factor of two other variables: combined income, and number of people per household. The latter aspect is conveniently overlooked by pessimists, who are looking to demonstrate a negative trend over time. When everything is considered, a different picture emerges.