| Every once in a while someone in the trivia-fixated world of economics decides to focus on something that is really important. Then my esteem for the tribe floats up, from my sandals to my head. |
| Three examples of what causes such upliftment are cited below. But a quick search through the National Bureau of Economic Research (NBER) site (and, I hasten to add, many others as well) will show you several other examples, especially on boozing and other nice things like, say, drugs and so on. |
| And though they haven't got round to F1 yet, I would think it is only a matter of time before someone does. But I have seen one on gambling in American football. |
| It says that the price setting mechanism allows the bookies to make very much higher profits than if they played the role of the typical market maker. Bookmakers, it seems, are more skilled at predicting the outcomes of games than bettors. |
| So they systematically exploit bettor biases by choosing prices that deviate from the market clearing price. How they do it, of course, is something else again. |
| Art, too, has become a subject for discussion by economists, and artists have been in a faint ever since. But it is a no-contest between data and a palette, as indeed it is a no-context between the Fisher's Index and a Fender Blonde (which is not what you think but a guitar brand, most famously used by Mark Knopfler but others as well). |
| So Marie Connolly and Alan B Krueger have written a paper* that, well, rocks. They have taken a very serious look at the "economic issues and trends in the rock and roll industry and focused on price measurement; concert price acceleration in the 1990s; the increased concentration of revenue among performers; reasons for the secondary ticket market; methods for ranking performers; copyright protection; and technological change." |
| They then go on to suggest 11 areas for future research (which encourages me to be less disapproving of my son's desire to become an economist). |
| Some of these are: |
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| The paper** by Joshua Aizenman and Eileen Brooks compares wine and beer, both of which go well with rock music, though not as well as dope. The authors have used data from 38 countries over the period 1963-2000. |
| They find that "There is clear convergence in the consumption of wine relative to beer between 1963 and 2000." In English, that means more people are drinking more wine now. |
| But that is not all. They also say that their analysis confirms a key prediction of trade theory: "greater trade integration weakens the association between production and consumption patterns." |
| Equally importantly, it is not just the medical angle that is driving the consumption of wine. "There is also a cultural angle," they say. |
| Frank Chaloupka and Adit Laixuthai's paper*** is 11 years old. They had looked at, well, what the title says: do youngsters substitute booze with drugs? |
| They concluded that "drinking frequency and heavy drinking episodes are negatively related to beer prices, but positively related to the full price of marijuana." In English that means something we all know: kids will consume whichever is cheaper. |
| The policy implication is quite straightforward. "The results imply that the reduction in accidents resulting from substitution away from alcoholic beverages and other intoxicating substances to marijuana as its full price is lower and more than offsets the increase in accidents related to marijuana use." |
| In short, let them smoke grass. |
| *Rockonomics: The Economics of Popular Music, NBER Working Paper No. 11282, April 2005, http://www.nber.org/papers/w11282 |
| **Globalization and Taste Convergence: The Case of Wine and Beer, NBER Working Paper No. 11228, March 2005 |
| ***Do Youths Substitute Alcohol and Marijuana? Some Econometric Evidence, NBER Working Paper No. 4662, 1994 |
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