Economics

People outside of academia may notice that professors move from one school to another from time to time, but what they probably don't realize is how competitive (and organized) the academic job market is. This article does a pretty good job of shining some light on how schools compete with each other for both new and established professors in the economics world. The best part of the article is probably the last paragraph:

"I tell our PhD students, you're fortunate to have chosen economics instead of philosophy or English," says John Cawley, professor of economics at Cornell University in Ithaca, New York. "Because the reality is, everyone gets a job."

I think that is the first time I've heard someone say that it's good to be an economist, but the numbers do in fact back up Professor Cawley's statement. This article (if you scroll to the bottom) shows professor salaries in different fields as compared to the salary of an English professor. Economics professors do pretty well on this scale, not only beating the benchmark salary consistently but also increasing their lead over time, resulting in a 41.2% pay premium for the 2009-2010 academic year. Only business and law professors do better, which is particularly interesting since a pretty significant number of those are technically economists as well.

The John Bates Clark Medal, awarded each year by the American Economic Association to the most promising economist under the age of forty, is sometimes referred to as the "Baby Nobel," since 12 out of 34 previous winners have gone on to win the Nobel Prize in Economics. (In addition, it's worth keeping in mind that the John Bates Clark Medal has been around since 1947 but the first Nobel Prize in Economics wasn't awarded until 1969. That said, the John Bates Clark Medal was only awarded every other year before 2009.)

This year's winner of the John Bates Clark Medal is MIT's Amy Finkelstein, who specializes in the economics of health care. From the AEA:

Amy's research is focused on health insurance markets. Within this area, she has had three main interrelated lines of research: (a) Tests on the presence of asymmetric information in insurance markets; (b) Structural estimation and analysis of welfare implications of models with asymmetric information; (c) Effects of public intervention in health and long-­‐term care insurance markets.

In other words, Professor Finkelstein looks at the ramifications of the fact that individuals know more about their own health than insurers do when people choose whether or not to sign up for health insurance. she also investigates whether improving access to health care makes individuals healthier and happier. Can't really argue with the importance of that.

Most people who have studied economics know that the Prisoners' Dilemma is one of the classic problems in game theory. But what happens when the theory is put to the test?

Economists have found an unexpected lesson via a British game show that essentially replicates the Prisoners' Dilemma game in front of a viewing audience, with one minor difference- if one player chooses to defect, the other player doesn't get any money regardless of what he chooses to do. This detail has interesting implications, as you can see here.

What would you have done in this situation? Why did this strategy work? You can see a discussion of the outcome here.

There are a lot of economists out there in the Twitterverse, but it can sometimes be difficult to find and follow them in an organized way. Luckily, onlinecollege.org has put together a list of what they consider 50 Useful Twitter Feeds for Econ Students. The tweeters are organized into categories such as "Economists," "Entrepreneurship," and "Personal Finance," and they include accounts such as Freakonomics, The World Economic Forum, and The Economist.

Alternatively, you could just follow me, or, better yet, check out my check out my economics Twitter list.

Here are this week's new articles for you to check out:

• The Arguments Against Free Trade - Why do people argue against free trade? Are their arguments justified?
• Introduction to Natural Monopoly - What are natural monopolies? How, if at all, should they be regulated?

Enjoy!

Starting tomorrow, Federal Reserve Chairman Ben Bernanke will deliver a series of lectures entitled "The Federal Reserve and the Financial Crisis" as part of an undergraduate course at George Washington University. (Man, those D.C. kids get all the good stuff.) Luckily, the miracles of technology make it possible for the general public to view these lectures live as well, and you will be able to view them here. The lectures will be given at 12:45pm Eastern Time on the following dates:

March 20
March 22
March 27
March 29

You can also see more information on the Federal Reserve web site. If you're going to check out these series, I recommend pre-gaming with an article on what the Federal Reserve does.

In case you haven't already heard, there is an online game theory course offered by two Stanford University professors starting March 19th. One of the best things about the course is that it's free, you just have to sign up by March 25th.

Game theory is the study of strategic interaction, and it is relevant to many scenarios in economics. Therefore, it's not surprising that the online course is taught by one professor from the economics department (Matthew Jackson) and one from the computer science department (Yoav Shoham). The course consists of online lecture segments as well as a number of ungraded and graded exercises, including a final exam.

If you want to see a bit more about what game theory is about and decide whether the course is for you, check out the article on the Prisoners' Dilemma.

There's an old joke that all religions can be explained using the "s**t happens" saying. Economist and comedian Yoram Bauman has brought this idea to the economic sphere with his bit S*** Happens: The Economics Version, which he debuted at the annual meeting of the American Economic Association back in January.

As an economist, I can attest to the fact that the jokes are spot on, but they are also a little specific for a general audience. Luckily, there is a version with a handy reference guide that explains everything. And, trust me, the Marty Weitzman joke is too good to just let it go over your head.

Here are this week's new articles for you to check out:

• The Federal Reserve System - what is the Federal Reserve system and what exactly does the Fed do?
• Economist Ben Bernanke - Who is Ben Bernanke and what does he do?
• Economic Equilibrium - How do supply and demand come together to reach an equilibrium price and quantity?
• Calculating Economic Equlibrium - How can a supply and demand equilibrium be found mathematically?
• The Prisoners' Dilemma - What is the prisoners' dilemma and what is the equilibrium outcome of the game?
• The Costs of Inflation - What are the economic costs of inflation?
• The Efficiency-Wage Theory - What is the efficiency-wage theory and how does it affect labor markets?

  Enjoy!

It's probably not shocking that, even when thinking about entertainment and the arts, economists are always thinking at least a little about the numbers behind the art. The Oscars are no exception, and economists have put quite a bit of work into trying to understand the monetary value of an Academy Award.

The results, however, are a little mixed. Economist Randy Nelson and his colleagues found that both nominations and wins for best actor/actress and best picture have significant financial benefits, whereas awards for best supporting actor or actress have modest, if any, impact on box-office revenue. (Unfortunately, they were unable to look at broader measures of revenue such as DVD sales and on-demand purchases.) For example, they estimate the average payoff for a Best Picture nomination to be about $4.8 million and place the payoff for a Best Picture win at $12.7 million.

On the other hand, economist Eva Deuchert and her colleagues looked at a newer sample of movies and concluded that, while an Oscar nomination does in fact have a significant impact on box-office revenue, the win itself has a much smaller effect on the financials. Furthermore, Gerda Gemser and her colleagues point out that the boost in revenues is likely to be simply due to exposure rather than due to any sort of credible signal, since they estimate the impact of an Oscar for mainstream films to be roughly the same as the impact of less prestigious viewer selected awards.