Web site error rocks global oil markets

Web site error rocks global oil markets - Reuters:

"All it takes is a screw-up on a Web site to move the market. It just goes to show how tense this market is," said a Houston-based oil trader.

A string of refinery problems in the United States has propelled retail gasoline prices to record highs in recent weeks.

That last bit is what I found the most interesting. That is where the blame is said to lie, rather than tension in the Middle East, Venezuela, or specifically Iran...

SitNews: Vertically Privileged Alaskans Defended

SitNews: Vertically Privileged Alaskans Defended:

Mr. Mankiw and Mr. Weinzierl cite their own and others' research that there is a strong correlation between height and income. By their calculations, a tall person (six feet or higher) earns on average 16 percent more than a short person (five foot nine or less). The authors argue that according to theory, height is a great criterion for income redistribution: tax tall people more and give the money to short people.

Greg Mankiw's Blog: How to Become Rich

Greg Mankiw's Blog: How to Become Rich:

Finally, recall this lesson:

Stephen F. Venti of Dartmouth and David A. Wise of Harvard concluded that the primary reason for differences in retirement assets was differences in propensities to save. It is not unusual to see low-income households with high savings rates holding more financial assets at retirement than high-income households who saved a smaller fraction of their income.

The neoclassical theory of distribution teaches us that a person's earnings depend on his or her productivity. But earnings are not the same as wealth. The accumulation of wealth is mostly about the ability to exert self-control.

Ideas:

• earnings ≠ wealth
• earnings = productivity
• wealth = ability to exert self control

Re: ‘The Apprentice: Omaha Edition,’ Starring Warren Buffett

‘The Apprentice: Omaha Edition,’ Starring Warren Buffett - New York Times by Austan Goolsbee (Wikipedia, University of Chicago).

Against all advice from economists he had bought one share of Berkshire Hathaway:

Then I found out that the 76-year-old Mr. Buffett had asked for applications from people wanting to become his successor. Many hundreds applied. So at the annual shareholders’ meeting in Omaha this month, he announced his new search strategy: rather than decide from old-style résumés and interviews, he planned to choose three or four top candidates and then give each $5 billion or so to manage and see how they do. The winner gets the job.

When I heard about this, the romance died. For all of Mr. Buffett’s reputation as the ultimate nonmutual fund, he may have just fallen into one of the biggest mutual fund traps of all — forgetting how incentives affect fund managers’ behavior.

Two of the foremost economists in the country, Glenn Ellison of the Massachusetts Institute of Technology and Judith Chevalier of Yale have shown how important incentives are. In their classic paper “Risk Taking by Mutual Funds as a Response to Incentives,” for example, they showed that investors pour money into mutual funds in a highly skewed way. They chase winners, despite the evidence indicating that mutual funds that win in one year do not necessarily perform better in subsequent years. Funds with the highest annual returns get a huge inflow of money compared with funds that did almost as well but were not at the very top.

Arbitrage

Learned a bit about arbitrage from Mankiw's blog post: Arbitrage Opportunity?

Arbitrage is:

The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy. (Answers.com)

More at Wikipedia and About.com:Economics

Re: Greg Mankiw's Blog: Pay at the Top

In a brief post, Mankiw points to a NY Times article that says:

the share of concert ticket revenue taken by the top 1 percent of pop stars — measured by sales per concert — rose to 56 percent in 2003 from 26 percent in 1982.

The quote is interesting in itself, leading one to conjecture the various means by which the top is separating from the bottom, but the comments are quite compelling.

One commenter said:

talking about ticket sales for musicians ignores touring costs

Another:

If corp. execs account for only 8.5% - 20% of the top 0.01 percent of the income scale, who are the other people up there?

And the reply:

Tiger Woods, Michael Jordan, Barbra Streisand, Steven Spielberg, Mick Jagger, Julia Roberts....

There are 750 major league baseball players alone, a majority of whom probably earn over $1 million per year.

Me: It would be interesting to see a breakdown of the top 0.01 percent of the income scale.

Another commentator directed the conversation to another side of the issue:

What we should be concerned about [is] the difference between the poor and their costs of living.

As Jeff Sachs put it "inequality is rising because 200 years ago everyone was poor."

If Bill Gates stock goes up or down (resulting in greater or lesser inequality) that does not hurt me if my incomes and costs are constant.

This is because wealth is not a zero sum game. By having more money that does not mean that you are taking the money from other individuals.

Another:

Actually, inequality is presently rising because the middle class is shrinking.

Another give and take:

Every trip to the gas station reminds me that my costs are not constant, while my paycheck changes far less frequently, and not always for the better, especially when my diminishing medical/dental benefits are taken into account.

And the response:

We do not b[u]y gasoline for its intrinsic value but for an amount of travel at a level of comfort and prestige. So since car engines have for the last 15 years or so gotten about 1% more efficient each year (and hybridization make cars about 25% more efficient in one whack) and because the fuel cost is less than the other costs of driving and, for what you get, cars have been getting cheaper (they used to go 100,000 miles now they go more than 200,000 miles, air bags etc.) the cost of an amount of travel at a level of comfort and prestige is falling all the time.

Questions, questions...

Re: Greg Mankiw's Blog: Verbosity

Greg Mankiw's Blog: Verbosity:

One study found that a college professor's kids hear an average of 2,150 words per hour in the first years of life. Working-class children hear 1,250 and those in welfare families only 620.

From the Economist.

Ok. Questions? This 'data' is going to be used to argue something...but what exactly?
First of all I did not read the economist article but only the context for the quote.

One commenter on Mankiw's site said:

The insinuation that children ultimately benefit from this is belied by adoption studies.

Another:

Read Judith Rich Harris's The Nurture Assumption, where she addresses this example. An alternative hypothesis to the implicit one presented (read to kids and they become smarter) is that the kids inherit a genetic advantage in verbosity. Adoptions studies show very little correlation between the IQ of families and non-biological children, whereas identical twins raised apart have very similar verbal skills.

Harris's bottom line: parents can't do nearly as much as they would like to make their kids super smart: there's nonlinear aspect to childrearing.

My Response: Clearly the above to comments show there is perhaps more research to be done.

Another:

if you actually watch the way kids learn language, you'll see why it doesn't make a difference whether parents use 600 or 6000 words per hour, in either case it's way more than enough.

My Response: The data and the assumed assertion has nothing to do with learning the language in the limited functional sense of first language native fluency. Rather, it most likely might be assumed that such a phenomenon might be an instrument in the development of intelligence.

Another interesting comment was:

Those taciturn Swedish farmers on the Minnesota prairie must not have been raising their chillens' properly, or something.

My Response: the comment does not truly say anything against the assertion from the data.

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Trying to find more about the article I put the quote into Google. There were a number of interesting items:

What’s Holding Black Kids Back?, by Kay S. Hymowitz, of the Manhattan Institute, in City-Journal, appeared to reference the study and the findings more fully.

The difference between middle-class and low-income child rearing has been captured at its starkest—and most unsettling—by Betty Hart and Todd R. Risley in their 1995 book Meaningful Differences. As War on Poverty foot soldiers with a special interest in language development, Hart and Risley were troubled by the mediocre results of the curriculum they had helped design at the Turner House Preschool in a poor black Kansas City neighborhood. Comparing their subjects with those at a lab school for the children of University of Kansas professors, Hart and Risley found to their dismay that not only did the university kids know more words than the Turner kids, but they learned faster. The gap between upper- and lower-income kids, they concluded, “seemed unalterable by intervention by the time the children were 4 years old.”Trying to understand why, their team set out to observe parents and children in their homes doing the things they ordinarily did—hanging out, talking, eating dinner, watching television. The results were mind-boggling: in the first years of life, the average number of words heard per hour was 2,150 for professors’ kids, 1,250 for working-class children, and 620 for children in welfare families.

Another interesting remark from that article was:

how do you shape children into citizens in a democratic polity and self-disciplined, self-reliant, skilled workers in a complex economy? It didn’t take all that much solicitude to prepare kids to survive in traditional, agricultural societies. That’s not the case when it comes to training them to prosper in an individualistic, commercial, self-governing republic.

I only skimmed the article but it probably merits a closer inspection.
-
Marriage and Caste in America: Separate and Unequal Families in a Post-Marital Age by Kay S. Hymowitz is a post by Mike Ralls in Mike's Book Notes, that is a very detailed review by page of the above noted author's book.
-
Successful Kids Are Talked-To Kids is a Seattle Times article by Carey Quan Gelernter from April 27, 1997. This was a very interesting article, worth reading. It more fully describes the study and the findings referenced in the quote. From the article:

By measuring vocabulary growth, because it is strongly associated with rates of intellectual development, they found that by age 4, patterns of growth were already established and intractable.

Loathe to conclude the explanation could be simply heredity, they decided to track the growth rates to their source: what was happening in children's homes, at the very beginning of their vocabulary growth.

For 2 1/2 years, they regularly visited and monitored each word spoken to the child in a chosen group of professional, working-class and welfare families.

And:

When the children were in third grade, their school performance was measured and compared against the amount of language they'd heard before they were 3. Socioeconomic status was an important predictor of which children were doing better in school. But by far the biggest predictor was how much the children were talked to before age 3 - and this was independent of socioeconomic status, and of race.

Now, this part is very compelling:

But by far the biggest predictor was how much the children were talked to before age 3 - and this was independent of socioeconomic status, and of race.

Now, that is an interesting correlation. Referencing the adoption studies cited in the comments above, it would be enlightening to see comparisons with adoption studies that focus on how much children were talked to before age three to see the results with genetics factored out. That is because it could be that those parents that talk a lot were those possessing greater intelligence and so simply passed on those genes to their kids. Another track would be to study results of experiments where welfare children were talked to a lot before age three. That is, to look at the results of Early Head Start programs mentioned in the article.
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Lost Script, by Mike Metzger of the Clapham Institute, adds something interesting after mentioning the study:

But children of single mothers on welfare hear their mother use only 620 words per hour, according to Ms. Hymowitz. These children find it particularly difficult to thrive in a knowledge-based society. They rarely learn the art of conversation. And conversation, Thomas Aquinas once wrote, is what constitutes civilization.

Supposedly, I cannot find the source, Thomas Aquinas wrote: "civilization is constituted by conversation."
--
The study mentioned in the quote was one performed by and referenced in the 1995 book, Meaningful Differences in the Everyday Experience of Young American Children, by Betty Hart and Todd Risley.

The Early Catastrophe: The 30 Million Word Gap by Age 3 is an article by the two of them that summaries their study as well as offering this tidbit:

Vocabulary use at age 3 was equally predictive of measures of language skill at age 9-10.

Also: There is an expansive interview with Dr. Todd Risley here.