Posted by Marc Hodak on February 25, 2008 under Revealed preference | 
Today I went to my local federal court house for jury duty. Unlike the typical professional who sees jury duty as a nuisance, I actually like the idea of jury duty. As long as it doesn’t get in the way of certain client or family needs, I think hearing a case would be pretty cool. I actually sat on a jury once, and haven’t been picked since. According to lawyer friends, I should never expect to be picked again.
Since my last jury stint, over 20 years ago, the jury selection technology has gotten pretty sophisticated. Here’s how one lawyer friend puts it:
Defense attorneys don’t want smart people on the jury. They’re looking for people with barely enough reasoning to follow a Mother Goose tale, but also with enough sense to know that they can’t quite figure it all out.
Prosecutors and plaintiffs attorneys consider such people way too intelligent for their juries. They look for complete morons, people who don’t even know that they don’t know what the frig is being said by either side. They want people who believe conspiracy theories. It goes without saying that prosecutors like people who respond to authority figures with an “Uh huh. OK,” reflex.
What this means for justice depends on what is being prosecuted. In traditional criminal cases like burglary or homicide, the accused are generally not too far from the typical cross-section of jurors in terms of class and culture. In white collar criminal cases, modern jury selection practices guarantee that the defendant won’t have anything resembling true peers on their jury. They’re more likely to have jurors saying things like “I didn’t know anything about what they talked about.” or, “For a man who knew every aspect of the business, why didn’t he know what was going on?” The joke in the white-collar world is that you don’t want to be judged by twelve people who were too stupid to avoid jury duty.
All the same, I like our judicial system. While far from perfect, at least it’s not as politicized as our other branches of government. I think a lot of that benefit has to do with the randomness of jury selection. I actually believe that our legislature would be far better if congress-critters were selected by lot rather than by elections. What we’d lose in the quality of the individuals placed into office, we would more than make up for by the lack of influence peddling, false promises, savior complexes, and other cynical political theater that mark our current system.
I think I would be fine with the first 200 people in the phone book being our legislators for brief periods of time. Amateur lawmakers would know their temporary status, would probably not be too keen in working that hard in coming up with new rules, but would be keenly aware that they would be spending far more of their lives living under those rules than enjoying whatever gains they may have had in making them.
Posted by Marc Hodak on February 20, 2008 under Irrationality |
A friend of ours who knows Alan Alda recently recounted that many years after the end of M*A*S*H, the actor continued to get requests from individuals to be their doctor. Hearing this reminded me of Congressional hearings in 1985 into the “plight of the farmer” where they invited actresses Sissy Spacek, Jessica Lange, and Jane Fonda to testify…on the strength of having played farmers wives in film.
Congress arguably invites stars to hearings for their star power. But the fact that ordinary voters seriously identify actors with the skills, insights, or backgrounds of the characters they play is a serious concern for me. We share a vote with people unable to distinguish play from reality. At least some actors, like Alda, don’t confuse their acted abilities with their actor abilities.
Posted by Marc Hodak on February 19, 2008 under Self-promotion |
President’s Day marked a minor milestone in my academic career, such as it is. I scored my 1,000th download of a paper published to SSRN.
To give you an idea of how small a milestone this is, a real academic has thousands of papers downloaded; a successful academic, tens of thousands. Alas, I’m not a real academic, so 1,000 is not bad.
Among NYU professors, who collectively rank 4th among business schools in SSRN downloads, I am in the top quarter of professors, most of whom are tenured or on a tenure track. That and a dime…
Posted by Marc Hodak on February 18, 2008 under Revealed preference |
That’s a quote from a Serbian nationalist. What it looks like to rest of the world is that NATO and the UN have provided a space where Kosovars can express their collective preference about the locus of power over them, and they decided overwhelmingly to move it out of Serbia and into their own territory.
Kosovo has been recognized by some countries and denounced by others. The line of demarcation is pretty clear: If your country has managed to keep all its cultures and regions at reasonable peace with each other, then you are happy to see Kosovo gaining its independence. If your country is held together by raw power, and has a strong, separatist movement looking to pull power away from the center, then you are against the independence of Kosovo.
Posted by Marc Hodak on February 16, 2008 under Uncategorized |
That is the question that inevitably comes up whenever a mass shooting occurs. These things occur so infrequently, however, and their perpetrators are often so indistinguishable from millions of people like them who never resort to violence that there may be no practical answer to “Why?”
Nevertheless, the need to know “Why?” is powerful. It creates a hunger for news about these incidents that springs, fundamentally, from the desire to control dangers around us. News services are only too happy to try to satisfy that hunger with saturation coverage, crowding everything else from our consciousness for a while.
The fact is, we don’t know why. All the coverage and analysis in the world won’t tell us why. One thing, however, seems likely: the coverage itself contributes to certain types of news-worthy violence, like school shootings. It may not be possible in a free society to subdue such coverage. The best we might be able to do is honestly acknowledge that we can’t help ourselves, and that our futile desire to know “Why?” prompts immense media coverage. An inherently sensationalist media will naturally try to satisfy that demand, even if it means prompting copycat violence. Politicians will always use these spectacular incidents, and the media access these events give them, to express outrage in front of the camera because, somehow, that is a necessary part of the story.
Unfortunately, we have honesty on neither level. Political entrepreneurs promise to make our world safer if we only give them more money and more power. The media continually rationalizes its over-coverage of these events as a social benefit.
But if the media didn’t alert its audiences to mass shootings, the public wouldn’t know how to look for and interpret the warning signs of a potential shooter, Newman said.
That’s a Princeton professor quoted by ABC News. I’m less concerned by patent fatuousness of the comment itself than I am by ABC News’s trying it out on what they must pray is a credulous audience.
Posted by Marc Hodak on February 14, 2008 under Executive compensation |
The Comcast board has decided to cut founder Ralph Roberts’s salary to $1 per year, make him ineligible for bonuses, annual equity grants, as well as certain death benefits that would have accrued to his wife or estate. These changes follow a loss of about a third of the value of the company’s shares in the last year. As a result of that slide, Comcast has been under severe criticism from major shareholders. Besides concern about the founder’s pay, certain large shareholders have generally been critical of management’s apparent lack of focus on value creation, and have asked for more of the cash being returned to shareholders. So, along with the cuts in pay, the company responded yesterday with 25 cent per share dividend, and a commitment to buy back $7 billion of shares by 2009.
All this is evidence that, while the happiness of shareholders is proportional to a rise in share price, the power of outside shareholders increases with a decline in value. In other words, major shareholders seem to live with a balance of happiness or power, depending on the company’s fortunes. When performance falters, just about any board can put enough pressure on a controlling family to make significant strategic changes, and even rein in their compensation. Unfortunately, when things are going well, it’s easy for a controlling family to layer on additional compensation, and the Roberts family took advantage of that. No one I know has found a way around this dynamic.
So, when the company was riding high in prior years, the Roberts family accumulated beneficial ownership of millions of additional shares, including those that were part of about $50 million in compensation for 2006. The family now owns or controls nearly 40 million shares, not counting a couple million more unvested, underwater options. What that means now, however, is that the $1.50 increase that followed yesterday’s changes were worth about $60 million to them. So, in 24 hours the Roberts were able to increase their wealth with some shareholder-friendly moves by more than their total compensation from the firm for all of last year. Now, if they can recover what they had lost from their peak last year, they could make an additional half billion dollars.
For now, this family is completely on the shareholder’s side. The time to watch them again will be when the company makes a spectacular recovery, and management again becomes untouchable.
Posted by Marc Hodak on February 12, 2008 under Unintended consequences |
In the forthcoming Journal of Public Economics, a pair of researchers conclude that smoking bans in certain areas increase the number of deaths due to drunk driving.
A rigorous statistical examination has found that smoking bans increase drunken-driving fatalities. One might expect that a ban on smoking in bars would deter some people from showing up, thereby reducing the number of people driving home drunk. But jurisdictions with smoking bans often border jurisdictions without bans, and some bars may skirt the ban, so that smokers can bypass the ban with extra driving. There is also a large overlap between the smoker and alcoholic populations, which would exacerbate the danger from extra driving. The authors estimate that smoking bans increase fatal drunken-driving accidents by about 13 percent, or about 2.5 such accidents per year for a typical county.
The ban on smoking in bars has had several unintended consequences. But this research is among the first to demonstrate that one of those consequences may be a higher death toll. And getting involved in an accident with a drunk person is far more damaging than second-hand smoke.
HT: Tyler Cowen at MR
Posted by Marc Hodak on February 8, 2008 under Revealed preference |
A city council outside of St. Louis was the target of a disgruntled citizen who went on a shooting rampage. This story recounts the unfortunate loss of life that ensued. Two police officers just doing their jobs were slain. Two council members and the Public Works commissioner were killed as well. The mayor was also shot and is in critical condition. The story relates how the gunman was apparently aiming for council members, especially the mayor.
Now is not the time for jokes about how one might get to this point versus City Hall. I was reading this story for the tragedy that it was, for the Kirkwood community where this happened, for the families of those slain, and especially for the cops who were at the wrong place at the wrong time. Then I come across this:
Deputy Mayor Timothy Griffin said this morning. “This is a tragedy of untold magnitude.”
Now, I would be much more than upset at losing friends and colleagues. But I would hope that I wouldn’t publicly lose my sense of proportion, especially if I were a public official.
Read more of this article »
Posted by Marc Hodak on under Executive compensation |
Even Megan McCardle laments:
I wish someone had a better answer to the question of why large institutional investors aren’t more active in corporate governance.
Here’s two reasons:
1) Rational apathy
2) Lack of comparative advantage in doing so
Posted by Marc Hodak on February 4, 2008 under Revealed preference |
McCain gets down to brass tacks:
“I can lead this nation and motivate all Americans to serve a cause greater than their self-interest,” he said while campaigning at a fire station in New Jersey.
So, what could he mean by that?
A) Some other individuals’ interest (not you or me or John McCain)
B) Some collective interest
C) John McCain’s self-interest
“A,” of course, is a dummy variable that makes this list comprehensively exhaustive; we can safely dismiss it out of hand. It’s highly unlikely that John McCain intends to make your or my self-interest subservient to some particular for John Smith’s self-interest.
“B” seems plausible. Almost everyone falls for it, but it can’t be “B.” “Interest” is a characteristic of consciousness, and a collective has no consciousness. No matter how much we’re “all in it together,” we can’t taste each other’s food, experience each other’s triumphs, or (no matter how much our politicians try) feel each other’s pain. Collective “interests” can be more loosely defined as the product of decision rules accounting for the interests of distinct individuals, but even with that semantically sloppy substitution of one kind of “interest” for another, that doesn’t save “B.” Decision rules can’t yield rational results without defaulting to the decisions of a dictator. In other words, the “collective interest,” if we attempt to glean it through a collective decision-making process like voting, is really just the leader’s interests in disguise, or, at best, the interests of the most powerful agenda-setters.
So, the correct answer is pretty close to “C.” Fortunately, it’s easy to understand what John McCain’s self-interest is; John McCain is all about getting elected. No one gets this far in politics by accident, without being acutely, intensely aware of where their personal interests intersect with the voter’s willingness to hand them power–not McCain or Romney or Hillary or Obama. Each of these politicians has survived this far in an extraordinarily demanding tournament for power by selling the interests that motivate them as somehow more noble and worthy than yours or mine. Amazingly enough, they achieved this by disguising their self-interest as “something larger than our self-interests.” And, more amazingly enough, tens of millions of individuals buy it.
UPDATE: BTW, Mr. McCain, Reagan would not have said that. His pitch was about how the government should serve the people (largely by getting out of their way), not the other way around.
