Centives

Does income inequality generate financial crises? It rose before the Great Depression of the 1930s and before the Recession of the 2000s. The Economist reviewed the causal mechanisms of several economic models that suggest they do. They include:

• As income inequality rises politicians feel pressured to help the middle class and do so by expanding consumer credit. This leads to unsustainable amounts of debt triggering a financial crisis.
• As the rich get richer the poor feel the need to emulate their lifestyle and so borrow money to buy the finer things in life.
• The government borrows more adding to sovereign debt, with the intention of spending that money to help the low and middle-income people.

To read other theories, as well as why income inequality might not be a problem at all, and what all of this says about the responsiveness of the government, click here.

Source: The Economist

Monkeys in New Delhi have caused havoc for local businesses and have even led to the deaths of individuals. In 2007 the courts ordered New Delhi’s government to transport all wild monkeys to a wildlife sanctuary. Stephanie Nolan reports on why the government has been unsuccessful and other details of the problem:

• The city has tried upping the price paid per monkey caught from $8 to $15 but only one person applied for the job despite extensive advertisements.
• This is partly because of the reverence attached to monkeys due to Hanuman, the monkey form of the Hindu God. But most people are just too scared of the monkeys.
• Companies have taken to hiring individuals to patrol the perimeters of their complexes and throw pebbles to keep monkeys away.
• The city reports that “the monkeys are winning.”

To read more details of the problem, where the monkeys prefer to live, and other initiatives that have been taken to solve the problem, click here.

Source: The Globe and Mail

Via: Marginal Revolution

Should we really be trying to hunt down Kony of Invisible Children fame? Daron Acemoglu and James Robinson argue that we should not because:

• The Colombian Civil War demonstrates that if you kill one ‘bad-guy’ then another will come along to take their place.
• The international community should want to not only remove the current Kony, but eliminate the possibility of any future Konys rising up.
• This requires understanding the complex history of Uganda and its politics.

To read more about why Kony exists in Uganda, what Angelina Jolie thinks about him, and the role that colonialism played click here.

Source: Why Nations Fail

Michcael Cooper reported on an initiative by San Francisco to reduce the time spent looking for a parking spot through utilization of the laws of supply and demand. Highlights include:

• San Francisco is slowly implementing variable rate parking meters – meters that raise or lower their prices based on supply and demand.
• Prices could soon reach as high as $6.00 an hour for the most sought after spots.
• The overall aim is to have at least one open spot in each parking area.
• People have raised concerns that this could segregate the poor and the rich since it might close off certain areas from the poor.
• City officials respond that the money raised goes into providing mass transit and so ultimately benefits the poor.

To read more about the Professor that started it all, the role that mobile phones have to play, and what the evidence so far suggests about the effectiveness of the policy, click here.

Source: The New York Times

Via: Marginal Revolution

The Economist’s Free Exchange blog recently discussed some of the puzzles of the contemporary American economy. They include:

• GDP is growing slower than economists expect.
• The existing rates of GDP growth should lead to around a 2.5% decrease in unemployment. Yet unemployment has actually decreased by 5.1%.
• Inflation is higher than it should be.

Free Exchanges goes onto note that one explanation that would be consistent with all of these statistics would be a permanent long-term reduction in American potential output. While the author is uncomfortable with this explanation because it suggests that Americans woke up one day to “find their left arms had fallen off” the explanation has the advantage of simplicity.

To read other explanations for the phenomena, Japan’s experience, and why the failure to deliver more monetary and fiscal stimulus might have been more tragic than we realized, click here.

Source: The Economist

There are a lot of eligible mates around so why is it that men and women become anxious about relationships in their early-20s and lose all patience? Datingwise reports:

• The phenomenon is mostly due to the transformation of courtship from “romance” to “relationships”
• In romance you limit yourself to people who are your age and single.
• In the more modern relationship system it’s normal for people of vastly different ages and martial statuses to be in a relationship with one another.
• Moreover in romance there is a clear evolution and destination. In the relationship system the relationship might be the end unto itself rather than a stepping stone to a wider commitment.
• After a few bad relationships individuals become increasingly cynical and disheartened by relationships and seem to give up.

To read why this is not a huge social problem, why our society will just have to evolve and create a new social script, and the role that gender identity plays, click here.

Source: Datingwise

Via: Newmark’s Door

Yes. Yes it is. That, at least, is how Libby Copeland answers the question. Researchers have found that it’s bad for men, women, children, and society. Here’s why:

• Women: Since polygyny – the specific practice of one man taking on many wives – is so common one would imagine that it would, in fact, be a better arrangement for women because they are in higher demand. But that’s not how it works out because:
  • The high demand and subsequent pressures this creates causes women to get married at younger and younger ages.
  • Fathers and brothers realize that having a young female in the family is valuable and thus become controlling, selling girls to the highest bidder.
  • Once married women are trapped in households where they’re competing against other women for their husband’s attention, making life a constant struggle.
• Men: Older, richer men hog all of the women leaving none for the majority.
• Children: Polygamous arrangements are associated with higher rates of child mortality. This might be because in polygamous relationships there is less investment in any one child as the husband normally has many wives and many children.
• Society: Men are more likely to engage in rape. Moreover without any families to invest in other, non-sexual, crimes also rise.

To read more about the effects of polygamy, why our culture is fascinated with it, and certain conditions where polygamy may not really be so bad, click here.

Source: Slate