Derek Thompson

I like to make this chart of unemployment rates by education attainment every few months. And it's been a few months, so:

And high-five to employers who laughed off the fiscal cliff and accelerated their hiring

Why is this jobs report different from most other jobs reports? On most first-Fridays, we get estimates of jobs created in the previous month. On this Friday, we also get a revision of jobs created in the previous years. Good news: We're recovering faster than we thought. (Bad news: The pace of the recovery is still only fast enough to slowly bring down our high unemployment rate.)

The story we thought we knew was that the economy had added about 150,000 jobs per month over the previous two years. This would have put this morning's report for January -- 157,000 new jobs; unemployment rate up a tick -- perfectly in line. But today's revisions showed employers added more like 180,000 jobs per month in 2011 and 2012. Even better, we averaged something like 200,000 new jobs in the last three months when the country was supposedly frozen in fear, dangling at the edge of calamity.

Three quick takeaways:

(1) For the last 24 months, job creation in the real world has been 20 percent better than what the Bureau of Labor Statistics initially thought. Cool.

(2) The people re-branding the fiscal cliff "the fiscal slope" apparently won the metaphor debate in the minds of employers. Facing a purported swan-dive into oblivion, firms didn't pull back their hiring. They accelerated it. Awesome.

(3) Don't get too excited from any one job report. This morning's revision is a bit like thinking you're running a mediocre marathon time and checking the clock mid-way through to realize you're running just a little faster than you thought. There is still quite a lot of pace to be picked up.

Advertising is so ubiquitous that much of it is worth nothing. But for one night, crowded rooms huddle together, shushed before a TV, to watch and discuss ads. That's truly scarce. And nearly priceless.

Inflation adjusted Super Bowl ad prices via Brent Cox, The Awl

The typical conversation about Super Bowl ads and their sticker-price begins with a statistic and ends with tremendous skepticism. "$4 million for no more than half a minute of TV time, are you kidding me?" And then every year, companies make it clear that they are not kidding you, by buying every last spot many weeks before the big game, at a higher price, over and over again.*

It's been well documented that Super Bowl ads are quantitatively different from normal TV ads. And every other form of advertising you see in magazines, on billboards, or on your computer. In fact, here's a graph of digital ad prices, in dollars, versus the price of a single Super Bowl spot (data via Digiday):

And here's a graph of Super Bowl ad spots compared to the 30-second ad rates of the most-watched and most-notable shows on television:

The quantitative argument for Super Bowl ads being reasonably priced would proceed with some simple math. More than 100 million people watch the Super Bowl. Compare that to 20 million people, on average, watching Sunday Night Football in 2012; or 12 million watching The X-Factor; or 4 million watching 30 Rock. On a per-person, per-30-second basis, those numbers suggest that a Super Bowl viewer is worth twice as much as somebody watching The X-Factor or 30 Rock (which can be DVR'd, so the ads can be skipped) -- or 33 percent more valuable than somebody watching a Sunday Night Football game.

But the quantitative approach isn't sufficient to reveal the true value of Super Bowl advertising, because Super Bowl ads are qualitatively different from practically every other advertising event on your computer screen or television screen. To understand why, go back to the first sentence of this article: "The typical conversation about Super Bowl ads..." Stop right there. Appreciate how amazing it is that you didn't flinch when you read that phrase.

Despite marketers' best intentions, the fundamental relationship between consumers and ads is the act of ignoring. But people actually talk about Super Bowl ads, on purpose. They discuss them, analyze them, rank them. The New York Times, The Daily Beast, Entertainment Weekly, The Huffington Post ... sites that hardly mention Madison Avenue 364 days of the year suddenly transform, for one morning, into Ad Week and give drooling close-up coverage to Super Bowl ads.

When else do advertisements get their own advertisements?

Measuring the effectiveness of advertising is devilishly difficult, because it's practically impossible to pin-point the moment that millions of very different people made up their mind to buy something. It's easier to measure attention. And the attention bestowed on Super Bowl ads -- their art, their message, their brand-y-ness -- is qualitatively different from every other standard ad spot. By designating the Super Bowl as the Super Bowl of advertising, Madison Avenue has created something utterly unique: A national media event where people beg the room to quiet down so they can hear branded messages brought to them by multinational corporations.

At $4 million, that's not a rip-off. It's a steal.

____

*While the average price for an ad fell in the $3.8 million range, CBS CEO Les Moonves said many spots sold for more than $4 million ... and that he was willing to accept as much as $6 million for late-entries.

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You don't need any statistics to fully grasp the depth of Greece's economic crisis. You only need to know about the smoke.

Utility bills are now so expensive for Greek families that some have taken to burning wood to stay warm. The result is an eerie fog of smoke looming above the city. (Yannis Larios)

A specter is haunting Greece. It leers over rooftops, invades lungs, and nearly glows in the night. It's smoke. Smoke from fire used to warm the homes of Greek families too poor to afford heat any other way. Cut from the mountains surrounding Athens, charred in the stoves and fireplaces of middle class homes, and blown through their chimneys, the unnatural cloud hovering over the capital city has become a bleak metaphor for one of the worst economic depressions in modern European history.

It is the smog of austerity. Greece is literally breathing in the fumes of its recession.

When the country discovered soon after the global financial crisis that it would not be able to pay back its debts, Greece threw itself at the mercy of Europe. In exchange for bailouts, the country agreed to cut its deficit from both ends. Government spending went down. And taxes went up -- on income, on property, and on utilities. Combined with the higher cost of oil, these tax hikes pushed up heating costs by more than 40 percent at the start of Greece's coldest month.

Greek unemployment is the highest in the developed world. The country's GDP faces the worst peacetime contraction of any non-communist European country since the 19th century. Even workers with jobs often have to deal with delayed payments, furloughs, and lower take-home pay due to higher taxes. So, many families have made an understandable calculus: From now on, we'll make out our own heat with wood, a match, and a fireplace.

A BREATH OF AUSTERITY

A cloud of smoke looms over Athens with the Olympic stadium (R) as seen from northern suburbs (Reuters)

Summer smog is common in Athens, when vehicle fumes collect in the hot, still air over the city. But this is the first incidence in recent memory of "winter smog" from families lighting fires to keep warm in January, when the temperature at night can drop into the low 40s.

"It is present everywhere in the wider area of Athens," said Alexia Tsaroucha, an English teacher in Athens, in an email exchange. "The problem became particularly evident this year, since the number of people using stoves has increased dramatically."

The phenomenon is reportedly worst in big cities like Athens, with more than four million inhabitants, and Thessaloniki to the North. But the "smog phenomenon," as they're calling it, has been also recorded in smaller Greek cities, as austerity has enacted its revenge on every corner of the country.

"The atmosphere has never been worse," said Marianna Filipopoulou, a social-anthropologist who has lived in Athens for four years. "It's getting more and more difficult to breathe. Even our eyes hurt because of the smog." She said the blame lies, not with families, but with their deplorable circumstances: "There is no other way given the scarcity of money."

A blogger for the site KeepTalkingGreece.com, who asked to remain anonymous, described to me the sensation of breathing in the smoke this way:

"First time, the penetrating smell hit me right in the face was late November 2012. I had just opened the balcony door in the evening when I felt thousands of unknown and invisible particles entering my nostrils and my lungs. An unpleasant smell of gasoline and something else. A pressure on my chest

...

"Since the start of the phenomenon, there have been times that I could not open the balcony door at night even to bring my own firewood inside. Worst was the smog over the city, during the holiday season, when families and friends got together to celebrate Christmas and New Year, when temperatures were low and fireplaces and stoves were working in full power. I personally had felt like I was having a stone sitting on my chest and gauze was blocking my nose."

BURN EVERYTHING

The Greek environmental ministry has warned families to not use their fireplaces as furnaces, but "families have lost workers and can barely make ends meet," said Tsaroucha, who has lived in Athens since she was born. "The increase in the price of heating oil ... and the increased amount of taxes that each household has to pay" have contributed to families' decision to heat their homes with old-fashioned fire from practically anything that will burn -- not only wood, but also lacquered furniture and old doors.

The second symbol of the economic crisis in Greece, after the smog, might be the denuded forests. Greece's environmental ministry estimates more than 13,000 tons of wood was harvested illegally in 2012. The environment ministry has reportedly seized "more than 13,000 tons of illegally cut trees" as families scramble to find something, anything, that will make a fire and heat a room.

"This new plague appears to be democratic," Greek commenter Nikos Konstandaras wrote, "but the veneer of universality is thin -- again it is the poor who suffer most: They live on lower floors, where the toxins congregate, they are forced to burn whatever they find, huddling around open fires and buckets of embers."

A worker chops firewood at a wood storage warehouse in Chalandri suburb north of Athens (Reuters)

Perhaps you've heard of the "Environmental Kuznets Curve." It's the basic theory that, although the initial burst of industrialization often degrades the environment (look at Beijing), the wealthiest societies tend to have the healthiest environments, as they develop sustainable living and cleaner, more expensive technologies (look at San Francisco).

But "Greece is regressing," said Iain Murray, vice president for strategy at the Competitive Enterprise Institute. "As it becomes poorer, its environment suffers more." Between 1961 and 1998, the concentration of particulates in London fell from an average of 160 micrograms per cubic meter to less than 20. That's what coming down the curve looks like. "The current levels in Greece are reaching 300 micrograms per cubic meter," Murray wrote. That's what going back up the curve looks like.

One Greek blogger compared the scene in Athens to a passage from Charles Dickens' Bleak House, dramatizing the fact that Greece faces a truly pre-industrial crisis in post-industrial country: "Smoke lowering down from chimney-pots, making a soft black drizzle, with flakes of soot in it as big as full-grown snow-flakes -- gone into mourning, one might imagine, for the death of the sun ... Fog everywhere ..."

Tsaroucha says families feel they have no choice but to harvest trees, tear wood from their walls, and throw furniture into their fires to burn it into the sky. They face the dilemma of "either saving the environment or keeping their households warm," she said.

In January, the Wall Street Journal reported a familiar scene in the woods surrounding the Greek capital. An environmentalist named Grigoris Gourdomichalis had caught an unemployed father of four illegally hacking away at a tree in the mountains. They had a confrontation. The property was government-owned, as Gourdomichalis told reporters Nektaria Stamouli and Stelios Bouras. But finally, the environmentalist relented. After the father began to cry, he let him walk back to his house to burn the wood from the tree.

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Here is the survey, from the Bureau of Labor Statistics. And here's what I found interesting:

(1) The hand-off between print and online publishing hasn't followed as smooth a trajectory as you might think. Software publishing jobs (e.g. developers, computer programmers) have grown by 174 percent since 1990 -- but by less than 1 percent since 2001. Newspaper, book, and directory publishing jobs have declined 36 percent since 1990 -- but there was practically no decline in this category until 2001.

(2) The typical reporter made $35,000 in 2011. The typical editor made $52,000.


(3) Boom times for ... photographers? "Over the 2010-2020 period, the number of photographers is projected to increase by 17,500, the largest increase among media-related occupations."

(4) Union membership is in decline across every media category, from movies to publishing and telecommunications. Even though less than one in ten information workers belongs to a union, they are still 50 percent more likely to be union members than the typical private sector worker.

(5) The BLS's measure of labor productivity (that is, output per hours worked) has come under considerable scrutiny by some economists, but this stat is a good reminder of the divergence of technological reform within the media industry. Productivity in the newspaper, magazine, and book publishing sector has grown 11 percent since 1990. Wireless telecom productivity has increased by 966 percent in that time.

(6) Is TV cheap? Depends on what you mean by TV. The consumer price index for television sets has fallen 91 percent since 1998. The CPI for cable and satellite television subscriptions has increased by 61 percent over the same time. In human speak: You can pay much less for better TVs today, while paying more to access live programming on that flat-screen.

(7) The real price of books basically hasn't changed since the late 1990s. The real price of newspapers and magazines, as a category, is up 40 percent in that time. 

(8) Total spending-per-person on newspapers and magazines has fallen 47 percent since 1999. Total spending-per-person on Internet has increased by 550 percent over the same time.

(9) The typical person who watches TV sits in front of the tube for three and a half hours every day -- the time equivalent of watching all of The Lord of the Rings: The Return of the King, each day, forever.

(10) 15 out of 16 Americans said they don't answer personal email on a typical day away from work. 6 out of 7 Americans said they don't use a computer for leisure outside of work hours. [I was skeptical of these numbers and called an economist from the BLS Time Use Survey. The explanation was that people might have under-reported computer use outside of work, because they weren't counting breaks from actual salaried work that lasted less than 15 minutes.]

College sports is a multi-billion-dollar business. Do its workers deserve to be paid?

It's a simple question taking a convoluted journey through our legal system. But student-athletes are closer to getting their day in court, since a judge ruled yesterday that NCAA athletes can legally pursue a cut of the billions of dollars flowing to college sports through TV deals.

In 2011, civil-rights historian Taylor Branch made a monster case for paying college athletes in The Atlantic. He predicted that law suits like this could could destroy the business model of the NCAA. To dig into the economics of paying college athletes, I called up Dave Berri, a sports economist with Southern Utah University and the author of The Wages of Wins, who cheekily called the NCAA's rule against paying its own athletes "the best business model in the world." A lightly edited transcript of our conversation follows:

THOMPSON: A judge has have given the green light to a class-action lawsuit brought by former college players to compel the NCAA to pay student athletes out of its TV revenue. Big deal? Or no big deal?

BERRI: It definitely means something. The NCAA has been opposed to the idea of sharing its revenue with its players for about 100 years.

Make the economic case for why college athletes ought to be paid.

The players are the workers who generate the money.

The NCAA is producing an enormous amount of revenue. The players are producing that revenue. It's ridiculous that we're not paying them. It's ridiculous what the NCAA does with respect to its players. They were selling [former Auburn quarterback and current NFL star] Cam Newton jerseys and Newton didn't get any money. At Michigan [basketball], the Fab Five used to say, 'We're walking down the street with no money, and you're selling our jerseys for profit.'

Okay, make the economic case for why the NCAA is right to not pay its athletes.

I don't have one, besides: They would like more money. And they don't want to share.

Right now, the big money is going to the coaches. What might happen if they have to pay the players is that the coaches and athletic directors will have to earn less, and you would stop investing in state-of-the-art facilities. Most schools really don't need an indoor practice facility.

What's preventing one renegade school from saying, 'These kids are working, they are producing real money, they deserve a cut of the revenue'?

NCAA teams are not allowed to pay the players. They passed a rule saying: We can't pay you. It's the best business model in the world. "I'm working hard, can I have some money?" "Sorry, I can't pay you, I don't want to break the rule."

The NCAA says we need these rules for balance. But there is no competitive balance. Alabama wins [the college football championship] every year. If they pay their players ... they'll still win every year!

Why are the players going after the TV money as opposed to revenue at the gate of each stadium?

Broadcast revenue is just the biggest pot of money. You would think the players would want a cut of all of the revenue. But it's the NCAA that negotiates the broadcast contracts, so if you're bringing a class action lawsuit, you sue the NCAA. You'd have to sue every team individually for gate revenue.

Okay, so let's say the players win. They get a cut of the TV money. Then what? 

If the court rules in the players favor, it's going to be difficult to figure out damages. I don't know how you decide that. I study wins and wages at the NBA level. The question we've asked is: How many wins does a player produce, and then we link that up to revenues. Once you know how many wins a player produces, you can say how much the wins are worth. But broadcast revenue is shared. It's not tied to players. So how will the courts decide who deserves how much money? And the answer is I don't know. Clearly the number is greater than zero.

What kind of economy might we have if Washington weren't dead-set on building an obstacle course for the recovery?

The economy surprisingly shrank by the smallest of margins -- a tenth of a percent -- in the last three months of 2012, as volatile defense spending took a tremendous 22 percent hit and companies pulled back on inventories.

As the president might say, let me be clear: This is bad economic report. The economy is still weak, unemployment is still high, consumer and corporate nerves are still frayed, and growth Just. Stopped.

On the bright side, this is probably the best bad economic report you will ever, ever read. And here's why. Underneath the headline figure of negative-0.1 percent, the news about the private sector is sturdy, even -- dare I say it? -- promising.

Compared to the previous three months, personal consumption accelerated last quarter. Personal consumption of durable goods? That's growing faster, too. Services? Growing faster. Equipment and software investment? Growing faster. And the all-important category of residential spending (houses)? Clearly accelerating.

You probably want to see that news in graphs for yourself, so here are two. First up, a look at percent-growth of three important categories of the economy: Personal consumption, which is a super-category, durable goods (which is one of its key components), and residential investment, which is clutch if we're going to have anything approximating a housing recovery. As you can see, the fourth quarter of 2012 doesn't exactly look like a nightmare ...

The Bureau of Economic Analysis weights these components to show how much they're actually contributing to total growth. Since personal consumption is a super-category, I've replaced it with another key sub-category: nonresidential investment (which is like new factories and offices, as opposed to new houses). Here's that picture.

Slightly different data, same bottom line: In the private sector, the last quarter of 2012 wasn't a disaster. In some ways, it was arguably our strongest three-month period in two years.

Here's where you say: Derek, stop it, you're comparing weak growth in the last quarter to weak growth in the previous two years and trying to pass it off like it's great news, but it only means we're bouncing higher than a dropped dead cat. And here's where I say you're right. I think of our private sector like a recently crippled fellow in physical training. But the insane trainers at the Government Rehabilitation Center insist on complicating the recovery by throwing pointless obstacles at our guy. Oh, you're standing now? We're going to kick out your crutch of state aid. Walking, huh? Here's a debt ceiling showdown. And here's another, because whatever. Nice jogging effort! Now please leap over these several sequester and budget crisis hurdles.

It makes you wonder: What kind of economy might we have if Washington weren't dead-set on building an obstacle course for the recovery?

The downside of a very useful short-cut

If you're unemployed, this will come as either great news or terrible news -- depending on how much you envy your friends' jobs.

The New York Times reports that referrals from employees make up a growing number of hires at some large companies that face the daunting task of wading through thousands of applications to fill a single position. At the accounting and consulting powerhouse Ernst & Young, nearly half of advanced hires these days were recommended by the company's own workers. (That's up from 28 percent in 2010, and the company's goal is to surpass 50 percent internal-referral rate.) In the what you know vs. who you know tug-of-war, personal connections are pulling stronger. 

It's both utterly predictable for companies and quietly dangerous for workers.

Companies like referrals because they're cost-saving, energy-saving, and people-saving. Picking through hundreds of resumes and cover letters is a tremendous investment of time, money, and human resources labor. Giving weight to internal referrals might not be the most comprehensive way to evaluate potential hires, but it's a not-entirely-crazy short-cut. As much as old-school economics likes to pretend that rational beings relish infinite choices, the research suggests people tend to be overwhelmed by them. What we really relish is taking short-cuts to prune our options. Exhaustive evaluation can be, quite literally, exhausting.

Like any short-cut, this one can lead companies astray. It's conceivable that if you rope off a majority of your hires for internal referrals, you're willfully ignoring applicants who could be superior employees, but happen to lack the arbitrary quality of "knowing Carl from Accounts Receivable." Still, in many companies, the culture-fit factor can matter as much or more than the strategic-fit factor. In other words: It's important to hire people who get along. Friends do count for something.

The greater danger would be to the broader economy. There are nearly 5 million Americans who have been out of work more than six months. These wannabe-workers are more likely to suffer from depleted networks of office buddies and other professional connections. "The more you've been out of the work force, the weaker your connections are," Mara Swan, executive vice president for global strategy and talent at Manpower Group, told the Times.

As more companies turn away from public applicant pools to private worker recommendations for leads on new hires, the long-term unemployed will be even less likely to get interviews, and even more likely to remain unemployed. The Ernst & Young's of the world are well within their legal rights to trust the judgment of their own salaried workers. But an insular professional class, turned inward against the ranks of long-term unemployed Americans, could create a permanently poorer class of Americans whose lost productivity and reliance on government will all of us poorer in the long run.

Working in the United States has practically never been safer. Still, more than 4,500 people died on the job in 2011, the latest year the Bureau of Labor Statistics has reported their most grim report.

Here are some of the jobs with the highest rate of work-related deaths: In other words, the most dangerous occupations in America (via Planet Money).

That's right: Firemen are less likely to die on the job than the average U.S. worker.

There is no more dangerous mainstream job in the United States than being a fisherman, where the most common way to die is drowning. But there's good news: fishing deaths are down by half since 2009. Fascinatingly, Planet Money reports that "most pilots who die on the job are flying propeller-driven planes" and "the typical pilot killed in the line of duty is someone flying a crop duster, not a commercial jet."

People who do die at work are ...

1) MORE LIKELY TO BE DRIVING: Driving sales workers and truck drivers accounted for 16% of all work-related deaths. In general, transportation incidents account for two out of five work-related deaths in the U.S.

2) MORE LIKELY TO BE OLD: Workers who are 65 and older are almost five times more likely to die on the job than workers in their 20s.

3) MORE LIKELY TO BE MEN: Men account for 57 percent of the hours worked in the U.S. but 92 percent of on-the-job deaths.

Homepage image: Lucas Jackson (Reuters)

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Apple's stock fell 12 percent today, its worst tumble in four years. Nobody knows if this is the beginning of the end, or a lull between two glorious chapters of market dominance.

What we do know is that Apple lost an eighth of its market cap today, or $52 billion in stock value. That's more than the market cap of some very big, very famous companies (h/t Rebecca Jarvis for the first comparisons) ...

Big picture: This says as much about the monstrous size of Apple (which just "disappointed" with $54 billion in revenue last quarter) as it does about the size of today's sell off.

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(1) A 26% unemployment rate in the United States would mean 40 million people unemployed.

(2) In other words, it would be as if the entire population of California were unemployed, or as if everybody under 24 or over 75 years old in the U.S. currently looking for work could not find a job.

(3) The latest read on Spain's long-term unemployment rate is 9 percent -- which is even worse than the U.S. unemployment rate overall, Matt O'Brien reported. That number tells you that one in eleven workers hasn't been able to find a steady job for more than a year.

(4) "Spain is now home to a third of the euro region's unemployed."

(5) Since 1850, Spanish five-year growth has only been weaker once. It was during the Spanish Civil War.

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Two-year for-profit schools spend 87 percent less per student than the most selective colleges, but for low-income students, they cost almost 200 percent more ...

Consider this graph a coda for my earlier piece, "Why Smart Poor Students Don't Apply to Selective Colleges (And How to Fix It)". It's drawn from the appendix of a new paper by Caroline M. Hoxby and Christopher Avery. The school categories -- "most competitive" through "for-profit 2-year" -- come from Barron's Profiles of Americans Colleges. (That book is controversial for many of the same reasons that every college guide is controversial, but it provides a good direction.)

You would think that schools that charge the most tuition would cost the most for all students and spending the most per students. Instead, richer schools tend to charge higher tuitions, which are paid fully by some students, but they also have more money to reduce the sticker price for low-income applicants. As Dylan Matthews said, high tuition prices creates a mental block for low-income students, since it's advertising a price that has nothing to do with final cost.

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Our brightest low-income high schoolers are overwhelmingly unlikely to apply to our best colleges, and it's bad news for economic growth and for income equality

The furor over student debt in this country takes aim at a noble cause -- quality education at a good price -- but obscures an even nobler cause, which is getting more students to take on more debt to obtain more skills in a modern economy that doesn't pay living wages to uneducated workers. Seen in this light, the single most important issue in higher education isn't cost, it's really something more like advertising. If we want students from disadvantaged areas to attend good colleges and obtain modern skills, we should be thinking about ways to entice them, not scare them with blaring headlines: "SIX FIGURES IN DEBT AND UNEMPLOYED AT 22."

There's a quieter, more lower-case crisis that is potentially even more dangerous for the economy: Smart, low-income students who never consider applying to our best colleges -- even though the education would both cost less and lead to higher-paying jobs.

FINDING THE TOP-PERFORMING LOW-INCOME STUDENTS

Some of the poorest high schoolers in the country are also among our top-performers. These "low-income, high-achieving" students come from the poorest 25 percent of families, but their grades and SAT scores place them in the top 10 -- or even top 5 percent -- of all students. Getting these students in our best colleges should be a national ambition. It would increase social mobility, raise national productivity, increase taxable income, shrink our deficit, cut income-support payments ... you get the point.

But the point is, we're failing. In fact, the majority of these smart poor students don't apply to any selective college or university, according to a new paper by Caroline M. Hoxby and Christopher Avery -- even though the most selective schools would actually cost them less, after counting financial aid. Poor students with practically the same grades as their richer classmates are 75 percent less likely to apply to selective colleges.

Kids with richer, better-educated parents tend to have higher grades and test scores, as you might expect. But it might surprise you to learn that about 40 percent of the top-performing students come from the poorer half of the country.

Although a "critical mass" of the country's brightest students tend to live in country's densest and richest in urban areas -- New England, New York, southern Florida, coastal California -- the poor students who don't apply to selective schools are more likely to be scattered across the country. They aren't surrounded by a network of teachers and college counselors who know what advice to give a top-flight student. They're not part of a legacy and tradition of high-performing students reaching for the best colleges. Instead, they tend to "come from districts too small to support selective public high schools, are not in a critical mass of fellow high achievers, and are unlikely to encounter a teacher or schoolmate from an older cohort who attended a selective college."

THE QUIET CRISIS

If the antidote is more information and more encouragement for poor smart students, how do we reach them with more information and encouragement? This is trickier problem than it initially seems. There are four ways that most colleges reach out to students: (1) College board mailing lists; (2) College counselors; (3) College access programs; (4) High school visits. But some of the most common solutions aren't feasible for many low-income top-performers. It's not feasible to have admissions staff visit every high school in the country that might have a handful of smart, poor students (the researchers estimate you'd have to quintuple the number of trips). It's also not likely that poor families in rural America will be game to send their children on fact-finding missions to the Ivy League corridor.

So the researchers propose more ambitious ideas. First, they suggest turning alum networks into a proxy army of admissions officers. (A separate study showed that selective universities have at least one alum in the vast majority of U.S. counties.) Rather than advertise through brochures, which don't target low-income teens, the researchers wonder whether there might be opportunities in social media and digital advertising to directly appeal to talented students who could attend a top private institution but are more likely to apply to community college.

Colleges are good at looking for exceptional students from poor families where the college is "instead of looking for low-income students where the students are," Hoxby and Avery conclude. And the national media is good at telling scary stories about student debt from the very scariest 1 percent of the student loan population. If both institutions looked harder for our education system's quieter crisis -- the promising students who don't go to school or apply to non-selective colleges -- it would make the entire country richer.

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"The cat lobby here is just as feral, self-centered and as balmy as your gun lobby is"

It might strike you as a sick Internet joke, but Gareth Morgan isn't kidding: The prominent New Zealand economist and environmentalist wants his country 100 percent cat-free and he's willing to go extraordinary lengths to make it a reality.

Cats are a "friendly neighborhood serial killer" of birds and other wildlife, Morgan said in the New York Times. He has called for the neutering of all living cats in New Zealand to ensure that this is the country's last kitty generation and has gone as far as to encourage citizens to set up cage-traps on their properties to snatch wanderers.

We emailed Morgan to ask him about his campaign. A lightly edited transcript of our correspondence is below.

THOMPSON: New Zealand reportedly has the highest cat-ownership rate in the world. How come?

MORGAN: Because we have virtually no obligations on cat owners (bit like you guys with your guns) and so people own them, abandon them, and generally take no responsibility for the unintended consequences of their actions. The most oft-heard and erroneous utterance we get here from cat owners is, "Oh but my pussy only kills rats and mice, he'd never harm a native bird." As you can see this denial verges on explicit stupidity.

Why is it so important to protect bird species that are endangered by New Zealand's cats?

Because our natural environment is arguably our greatest asset. And because the economic value of [our environment] has hardly been capitalized on, and it is continuing to rise at an exponential rate, as the rest of the world cursed by high population density sits in its own nest.

I'm currently in Shanghai where wildlife is at a minimum because of callous disregard -- actually I think they eat cats over here. The environment here is not very pleasant at all, as pollution is horrible. When people ask where I'm from, and I say NZ, they immediately talk about our fantastic environment and how much better it is than theirs. [There was] an article was in the Shanghai Times yesterday on our campaign, and people have shown a lot of interest in the subject. I think they yearn for an environment that is now pretty much lost to them.

In NZ we have a ridiculously large opportunity to monetize our environmental assets and we are letting it slip away, as the government instead eases restrictions on resource exploitation and rolls back protection of our environment. I want to not just raise New Zealanders' consciousness about this but also make them think of the huge economic opportunity we are letting slip through our fingers.

What is your plan to eliminate the NZ cat population?

To educate the public and have them carry out the action. Here are the main elements of what would do it;

1. All cats to be registered, chipped & neutered -- raising the barriers to cat ownership to those similarly already faced by dog owners. Chipping instead of collars is because cats more easily slip collars. [Ed: Chipping, or micro-chipping, means inserting an implant under the skin for identification.]
   

2. Citizens to be encouraged to cage-trap cats wandering on their properties and turn them in to the local authority.

3. Cats surrendered to the local authority Pound, to be euthanized if unregistered, to returned to registered owner who is fined.

4. Councils to offer free disposal of cats. Vets are prohibitively expensive.

Does New Zealand have a history of tax and regulatory policy around cats, or is your suggestion blazing a new path here?

It's a new path, we are quite strict on dogs and prohibit lions and tigers but on cats we are totally negligent.

Do you wonder whether a campaign to eliminate ALL cats might be un-strategic? Why not press for a cat limit per household, or seek ways to preserve certain bird species that don't involve forcibly neutering the cat population? 

Neutered cats still kill for pleasure, and unless research has shown that neutering projects fail to reduce the size of feral cat colonies materially -- the problem being that getting 100% neutering coverage is too expensive for people and so they disobey such laws -- abandoned kitten litters and feral populations actually rise. Birds are only one of the species at risk, we have heaps of unique skunks, geckos, and insects that also are under siege from the cats humans have introduced to these islands.

Why not go through tax policy: Just tax cats more, or give people a tax credit if they neuter their cat?

As I said above, registering cats is one part of the approach, encouraging people to set cage traps on their properties to capture wandering cats and then have them euthanized is the other.

Are you looking to other public policy examples for lessons, for example gun control? Your ambition to take away a popular but lethal product from households seems similar in ways to the United States' (and particularly American liberals') ambition to strictly regulate gun ownership.

Agree totally, and the cat lobby here is just as feral, self-centered and as balmy as your gun lobby is. Have you been surprised at the groups that have come out in support/or against your cat elimination plan? Not really, the idea was to galvanize a public reaction, that has been achieved. Stage II will be released in the next month and will wind up the ante

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Uh oh: Apple's holiday sales missed analysts' projections; although, whether this sort of thing says more about the quality of the company or the quality of the projections, I can never be sure.

Taking the long view: Apple is a ginormous corporation that just set company records for revenue, earnings (barely, and that's the worry for some investors), iPhones sold, and iPads sold in a quarter. But as competitors nip at their heels in the phone and tablet race, Apple is making some analysts nervous that this historic market-maker is suddenly merely a market-share player.

To give you a better sense of the state of Apple, we've broken down their last quarter into four charts that explain how, where, and at what rate of growth Apple is making money. 

First, here is how Apple's first-quarter revenue breaks down by product. Fully 60 percent of Apple revenue comes from iPhones and iPads ... neither of which existed just six years ago today.

Second, this is where Apple sales came from in the last three months. China now accounts for more than half of European sales and more than one-third of American sales. According to the company, 61 percent of total revenue comes from overseas. Some sales categorized as "retail" are based in the U.S.

Now we're looking at year-over-year growth in Apple sales by product. iPhones and iPads both grew more than 20 percent around the world. Mac computer and iPod sales fell dramatically (no doubt, cannibalized by iPads and iPhones, respectively). The company explained that iMacs were not available for two out of three months of the quarter, which was one week shorter than the 2011 holiday quarter. On an adjusted quarter basis, iPhone units grew at 37% and iPads grew at 60%, Horace Dediu reported.

Finally, this is Apple's year-over-year growth around the world. iPhone sales doubled in China, pacing Apple's 67 percent revenue growth in that country.

You could forgiven for wondering why the tech world is freaking out about the possibility of "peak Apple" this afternoon. Well, these graphs are revenue and it's Apple's higher costs that are eating into earnings. "With the cost of redesigning its products, Apple's gross margins, the percentage of sales remaining after deducting costs of production, was 38.6 percent in the first quarter, above the 36 percent the company had predicted in October," Bloomberg reported.

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In the last 30 years, the country has become steadily more racially diverse -- and so have many American colleges. In 1980, more than 80% of the country was white, and whites accounted for about eight in ten students at Harvard, Yale, and Princeton. Today, less than 65% of the country is white, and it's non-whites who now account for a majority at all three of those institutions.

The four graphs below compare national racial composition averages in 1980, 1990, 2000, and 2010 to six elite universities: three top-flight private schools in the northeast -- Harvard, Yale, and Princeton -- and three top-flight public schools across the country -- the University of Michigan, the University of Texas, and the University of California, Berkeley.* (University data comes from the National Center for Education Statistics. National data comes from the Census.) It is notable that the data below starts in 1980, two years after the Supreme Court ruled in Regents of the University of California vs. Baake that race could not exclude a candidate but could serve as one of many factors in college admissions.

There are any number of conclusions various people could draw from the data -- the under-representation of blacks is, of course, striking; some might say the flattening out of Asians at elite private schools suggests an unofficial quota system -- but I'll let the graphs speak for themselves. This post isn't meant to be a polemic, but rather a starting point, a primary source.

*Some final notes about state demographics that will inform some of the public school figures, according to the 2010 Census.:

California: 40 percent white; 38 percent Hispanic 14 percent Asian; 6.6 percent black; 13.6 percent Asian.

Texas: 45 percent white; 38 percent Hispanic; 12 percent black; 4 percent Asian.

Michigan: 76 percent white; 14.2 percent black; 4.4 percent Hispanic; 2.4 percent Asian.

This sentence is a pithy summary of the centrist conventional wisdom about taxes, spending, debt, and health care:

"The political impasse facing the U.S. arises from one simple reality: Americans want an increasing government contribution to health care, but don't want to pay for it."

That's James Hamilton, an economic professor at the University of California, San Diego, at his excellent Econbrowser blog. It's an utterly reasonable-sounding judgment that can lead you to the wrong conclusion. Health care isn't just a government spending problem. It's an everybody's-spending problem.

First, some basic facts about government spending on health care. Federal medical spending as a share of GDP has increased from about 1 percent of GDP in 1950 to almost 9 percent of the economy today. 

Meanwhile, tax revenues have clung stubbornly to their long-run 19 percent average...

... and gross government debt (which is slightly different from publicly held debt) has retraced the path it took during WWII to 100 percent of GDP.

So, this creates the illusion that Americans are clamoring for more health-care spending from the government while steadfastly refusing to pay for it.

Public polling reveals a more complicated picture: Americans want affordable health care, above all, and are ambivalent or skeptical about both the current system and government efforts to change it. Overall public support for universal health care has declined to less than 50 percent in the last decade, and it has plummeted since 2007 by 20 percentage points. Support for Obamacare has struggled to rise above 50%. For the last 25 years, Americans have often said that the two most urgent health care issues have been access and cost.

Access and cost are exactly what families should be worried about. Since the 1970s, the share of the economy devoted to health care has increased from 7 percent in 1970 to 18 percent in 2010. Health care costs per capita have grown an average 2.4 percentage points faster than the GDP since 1970.

This is a government spending problem, because today's government is in the business of ensuring that the old and poor don't go bankrupt on health care. As you can see in the chart below, this has had the effect of taking out-of-pocket spending from practically half of health care spending in 1960 to merely a ninth in 2010. The growth in subsidized employer insurance and government spending has basically made up the difference.

But more broadly, it's an everybody's-spending problem, because if government gets out of the insurance -- for example, if we push seniors and poor people into private insurance, cut Medicaid to the bone, and turn Medicare into a premium support program -- we won't have changed the price of health care. We'll just change who pays for it, how, and how much access they have to high-quality care.

Hamilton's right that Americans want an increasing government contribution to health care and would prefer to not pay for it. But really, they want health care that they can pay for -- through premia, out-of-pocket spending, taxes, whatever -- and if medical inflation doesn't stop growing faster than wages, revenue and GDP, Americans won't be able to afford it, no matter what share of national health spending comes from the government.

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A eye-opening new paper comparing U.S. students to their international peers by social class finds that the richest Americans are world-class readers, and in math, our disadvantaged kids have improved more than almost any other country

Here's what everybody knows about education in the United States. It's broken. It's failing our poorest students and codding the richest. Americans are falling desperately behind the rest of the developed world.

But here's what a new study from the Economic Policy Institute tells us about America's education system: Every one of those common assumptions is simplistic, misguided, or downright wrong.

When you break down student performance by social class, a more complicated, yet more hopeful, picture emerges, highlighted by two pieces of good news. First, our most disadvantaged students have improved their math scores faster than most comparable countries. Second, our most advantaged students are world-class readers.

Why break down international test scores by social class? In just about every country, poor students do worse than rich students. America's yawning income inequality means our international test sample has a higher share of low-income students, and their scores depress our national average. An apples-to-apples comparison of Americans students to their international peers requires us to control for social class and compare the performances of kids from similarly advantaged and disadvantaged homes.

That's precisely what Martin Carnoy, a professor at the Stanford Graduate School of Education, and Richard Rothstein have done in their new paper, "What Do International Tests Really Show About U.S. Student Performance?" Carnoy and Rothstein dive into international standardized tests and compare U.S. performance, by social class, to three post-industrial countries (Germany, the UK, and France) and three top-scoring countries (Canada, Finland, and Korea).

"The US happens to have a very high fraction of low-social-class kids taking the PISA test," said Carnoy. "The composition of our test sample is very different from the higher-scoring countries and post-industrial countries. If you want to more clearly see how much students are getting from the school, you have to find some way to control for their families."

READING: A HAPPY STORY

One of the most heartening findings from the paper is that Americans are awesome readers. Literally, world-class. Our most advantaged students not only perform better than our European competitors, but also they perform about as well as any top-scoring country in the world, as the charts to the right show. [Hard lines compare most advantaged students; dotted lines are most disadvantaged.]

As you can see at the bottom of each chart, the story is equally inspiring for our poorest students, who are closing the gap in reading in Canada, Finland, and Korea.

"I was surprised that reading scores among our advantaged kids are so strong compared to all other countries," Carnoy said, pointing me to the graph on our right. "We're slightly lower than Finland, but it's hardly a difference. Our reading scores have gone up faster at the bottom, and they are as high or higher for advantaged kids as all other countries."

What's the explanation? Are American reading curricula the best in the world? Maybe. But there is a complicated story to be told, and it might start with immigration. Rich countries attract multicultural immigrants, Carnoy said, and it's predictable that immigrant children initially would have trouble with a new language barrier. In the U.S., a country with a long but decelerating legacy of Spanish-speaking immigrants, our schools along the border might be better prepared to deal with the language barrier than European countries whose African and Muslim immigration trends provide fresher challenges.

MATH: BEHIND, BUT CATCHING UP FASTER THAT YOU'D THINK

The single most surprising finding from the new paper might be in math. The conventional wisdom about U.S. math scores is that we're falling behind the rest of the world, and that's certainly reflected in our national averages, where we finished 25th in the last PISA test. But a closer look reveals that it's low-income American students who are clearly closing the gap with similar countries.

"It's not just [Americans] have been improving over time, but also that low-income students in similar countries have been getting worse, except for in Germany," Carnoy said. 

In the graphs to the left [again: hard lines are rich students; dotted lines are poor], U.S. math scores in dark blue are compared to France, Germany, and the UK.

"What's really interesting is that, at the bottom, disadvantaged kids actually do as well as disadvantaged kids in France, Germany, and the UK," Carnoy said. "The problem is that our top-scoring kids do worse than every country we compared them to, except Great Britain."

When you hear pundits and politicians lament our math program, he pointed out, it's interesting to note that the real story isn't how bad our low-income students are doing, but instead how our advantaged kids are falling behind our competitors. "That points to a policy that focuses on our top scoring kids," he said.

***

The lugubrious pundits and politicians aren't entirely wrong. No matter how you slice the data, Canada, Finland, and Korea are beating us, at every level. There is no social class in the U.S. that out-performs a similar group of students in these high-flying countries in either reading or math.

But by focusing on misleading national averages rather than apples-to-apples comparisons, U.S. education critics are missing lessons that could lead to good policy.

"The big takeaway is that we're not doing as badly as the pundits are claiming," Carnoy said. "Our advantaged kids are doing very well in reading, as well as anybody in the world, and in math, disadvantaged kids have improved more than almost any other country. We're making progress, and we should be finding out why we're making that progress, or identifying what appears to be working, rather than saying we should all run over to Finland. Don't run to Finland if you want to learn about disadvantaged kids, because they're going in the wrong direction."

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Ten years ago, Americans drank enough soda every year to fill a small aquarium. Fifty-three gallons of the stuff per person. That's half a liter of Diet Coke on an average day. Compare that to our other favorite liquid-caffeine companion. For every cup of coffee we consumed in 2003, we drank two cups of soft drink. For $1 we spent on joe, we spent $4 on soda.

Now look where we are: Soda is in a free fall, with domestic revenue down 40%. Coffee culture is ascendant, up 50% in ten years. In another decade, the United States could easily spend more on coffee than soda -- something utterly unthinkable at the turn of the century (industry data via IBISWorld)

Tea production and coffee shop revenue not included; soda data includes major industry players, including revenue from Coca Cola and Pepsico, who together make up 78 percent of the market; excludes still beverage):

Four factors behind this remarkable caffeinated convergence:

(1) The health thing. This hardly requires summary. Soda ain't cigarettes, but sugary soft drinks have faced a similar cultural and political backlash in the last decade. As obsessively healthy attitudes have osmosed from yoga yuppies to the general population, local governments have turned on soda, pressing school bans and cup-volume limits. Fading consumer sentiment has had twin impacts: pushing soda drinkers to switch to cheaper brands and encouraging soda companies to shift toward diet drinks, smaller bottles, and alternative drinks, according to IBISWorld.

(2) The water and energy-drink craze. Americans drink about 180 gallons of liquid every year. That number is practically carved in stone. It's zero-sum. When a soda drinker decides she wants to drink iced tea with lunch from now on, she's won't order a Diet Coke and an iced tea. She'll just switch. (The economic term for swapping one product for another is called, simply, substitution.)

When we drink more of one kind of beverage -- bottled water sales are up 50 percent in the last decade; sports and energy drink sales are up 100 percent -- those gains have been soda's pains. The rise of energy drinks is especially important because energy drinks directly replace (substitute) soft drinks among customers who buy Diet Coke and its ilk for an afternoon pick-up. Americans still drink more soda than any other "category" of drink, like milk or juice. But the gap is fading quickly.

(3) Ascendant coffee culture. Coffee consumption in the U.S. is basically flat, after two decades when Starbucks and other national coffee shops sprouted like a steroidal ragweed along urban and suburban sidewalks. But young consumers haven't yet had their fix, and as this demographic trades up for more expensive coffee when the economy recovers, IBISWorld projects the overall industry to continue buzzing. Just as studies showing the ill effects of sugary drinks have hurt soda, studies showing we can basically drink as much coffee as we want permit young people to go back for refills. Consumption has increased the most for consumers between 18 and 24, IBISWorld finds, and "younger consumers are more likely to drink coffee on a daily basis today than five years ago" and the most likely to drink espresso drinks.

(4) Rising coffee prices. Coffee's growth isn't just a matter of trading up to more expensive lattes, it's also a case of paying more each year for the same cup. "Much of the revenue growth in the past five years was stimulated by a 14.1% annualized increase in the world price of coffee," which were mostly passed on to customers, IBISWorld found.

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A new paper reviews how psychology, biology, and neurology are ganging up on economics to prove that, when it comes to making decisions, people are anything but rational

Daniel McFadden is an economist. But his new paper, "The New Science of Pleasure," shows the many ways economics fails to explain how we make decisions -- and what it can learn from psychology, anthropology, biology, and neurology.

The old economic theory of consumers says that "people should relish choice." And we do. Shopping can be fun, democracy is better than its alternatives, and a diverse and fully stocked grocery store ice cream freezer is quite nearly the closest thing to heaven on earth. But other fields of science tell a more complicated story. First, making a choice is physically exhausting, literally, so that somebody forced to make a number of decisions in a row is likely to get lazy and dumb. (That's one reason why stores place candy near the check-out aisle: They suspect your brain is too zonked to resist.) Second, having too many choices can make us less likely to come to a conclusion. In a famous study of the so-called "paradox of choice", psychologists Mark Lepper and Sheena Iyengar found that customers presented with six jam varieties were more likely to buy one than customers offered a choice of 24.

If you've read the work of Dan Ariely or Daniel Kahneman, you know exactly how far from perfectly rational we are when faced with a decision. Many of our mistakes stem from a central "availability bias." Our brains are computers, and we like to access recently opened files, even though many decisions require a deep body of information that might require some searching. Cheap example: We remember the first, last, and peak moments of certain experiences. So when we make a choice about how to spend a certain amount of time -- say, by going to Six Flags -- we forget that most of the time at an amusement park is spent waiting around doing nothing. Instead, we remember the thrill of the roller coaster. (This has been previously used to explain why people sometimes go back to disappointing old romantic partners, but that might be for another article.)

The third check against the theory of the rational consumer is the fact that we're social animals. We let our friends and family and tribes do our thinking for us. In a fascinating example, McFadden presents a study that shows Korean peasant women within the same village tend to use the same contraception -- even though there is "substantial, persistent diversity across villages." This pattern could not be explained by income, education, or price. Word-of-mouth explained practically all the difference.

In another corner of the ivory tower (or, more likely, across campus in a glassy lab), neurologists are finding that many of the biases behavioral economists perceive in decision-making start in our brains. "Brain studies indicate that organisms seem to be on a hedonic treadmill, quickly habituating to homeostasis," McFadden writes. In other words, perhaps our preference for the status quo isn't just figuratively our heads, but also literally sculpted by the hand of evolution inside of our brains.

A final example to show how other fields of science are ganging up on classical economics: The popular psychological theory of "hyperbolic discounting" says people don't properly evaluate rewards over time. The theory seeks to explain why many groups -- nappers, procrastinators, Congress -- take rewards now and pain later, over and over again. But neurology suggests that it hardly makes sense to speak of "the brain," in the singular, because it's two very different parts of the brain that process choices for now and later. The choice to delay gratification is mostly processed in the frontal system. But studies show that the choice to do something immediately gratifying is processed in a different system, the limbic system, which is more viscerally connected to our behavior, our "reward pathways," and our feelings of pain and pleasure.

And there's much more. To explain it, here's Daniel McFadden himself. The following transcript of our email conversation has been very lightly edited for clarity.

Let me try to sum up your paper for readers, because it covers a lot of ground. Classical economists used to posit that, since consumers are rational, we make decisions to maximize our pleasure, end of story. But your paper reviews all the ways we know that consumers aren't in fact rational but prone to all sorts of biases and habits that pull us from any strictly rational view of the consumer. Is that alright?

This is a good summary, but I think the final message is that neither the physiology of pleasure nor the methods we use to make choices are as simple or as single-minded as the classical economists thought. A lot of behavior is consistent with pursuit of self-interest, but in novel or ambiguous decision-making environments there is a good chance that our habits will fail us and inconsistencies in the way we process information will undo us.

Choices are good. Trade is good. That's the view of neoclassical consumer theory. But it turns out that people don't really like making decisions. We have habits, we like thinking automatically. So sometimes we avoid making choices altogether because it stresses us out. Why is that? And how might, say, a company use that superior understanding of consumer theory to make consumers behave a certain way?

Trade is a contest, with a chance of coming out on the short end. Animals in "fight or flee" situations often find it safer to flee. Similarly, people in situations where trade is possible, or even promising, may find it safer to turn away. It takes trust to trade. McDonald's is successful because it has created a brand people trust - they know what to expect. A "30-day free trial" or "satisfaction or your money back" or "bring us a better price and we will refund the difference" are offers by merchants intended to promote the idea that they can be trusted, and that the risk of an unsatisfactory trade is low.

Real estate agents take advantage of people's discomfort with decision-making. Since buying a house is highly consequential and difficult to reverse, rational people should look at a great many options and think them through very carefully. A good agent will show you a few houses that are expensive and not very nice, and then one at almost the same price and far nicer. Many buyers will respond by stopping their search and jumping on this bargain. Our susceptibility to "bargains" is one of the cognitive devices we use to simplify choice situations, and one that companies are conscious of when they position their products.

One of the observations that most struck me was "economic choices can make us uncomfortable." That seems like a very powerful idea. How might I see it in my life?

If two "rational" people meet and disagree on the probability of an event (e.g., the AFC team wins the super bowl, the price of Google stock goes up), then both can gain by wagering on the event. In the real world, however, wagering is the exception, not the rule. On the one hand, you could say that getting someone to bet on an event, pay attention to the outcome, and finally make the payoff, is too much work. But actually, if you ask people why they don't bet often with their friends, they will simply say that it would make them uncomfortable to do so.

I'm a big procrastinator. Why does that fall under the category of "hyperbolic discounting" rather than "rational way to spend a Sunday afternoon"?

Procrastination is a way of avoiding uncomfortable choices. Hyperbolic discounting seems to be related to our subjective perception of time, and to the way the brain parses current and future pleasure-seeking - waiting for an hour right now is more painful than our perception of waiting for an hour in the future.

Here is an example of how hyperbolic discounting works: You go to your car dealer seeking a model that has a sound system you want. He says it will take 3 days to get that exact model, but you can drive away right now with one that has a better sound system and costs $300 more. Most buyers will choose to pay a little more and take their new car now. However, if the dealer said that no car is available right now, and he can get the model you want in 33 days, but a model costing $300 more with a better sound system in 30 days, most buyers will choose to wait the 33 days and get the exact model they want. This is hyperbolic discounting at work. Rational consumers with consistent intertemporal evaluation should treat the trade "$300 for an attractive but unneeded accessory versus 3 days" the same whether it is executed right now or executed in 30 days.

I felt like this sentence at the end of your paper was really important -- "Specialized brain circuitry processes experience in ways that are not necessarily consistent with relentless maximization of hedonic experience" - but I didn't really understand what it meant.

Our brains seem to operate like committees, assigning some tasks to the limbic system, others to the frontal system. The "switchboard" does not seem to achieve complete, consistent communication between different parts of the brain. Pleasure and pain are experienced in the limbic system, but not on one fixed "utility" or "self-interest" scale. Pleasure and pain have distinct neural pathways, and these pathways adapt quickly to homeostasis, with sensation coming from changes rather than levels. Overall, presumably as a product of evolution, our brains are organized well enough to keep us alive, fed, reproducing, and responsive to but not overwhelmed by sensation, but they are not hedinometers.

You make the case that humans are social animals more than economic machines, which sounds right to me. So do social network like Facebook and Twitter help us make better choices?

This is complicated. Social networks are sources of information, on what products are available, what their features are, and how your friends like them. If the information is accurate, this should help you make better choices. On the other hand, it also makes it easier for you to follow the crowd rather than engaging in the due diligence of collecting and evaluating your own information and playing it against your own preferences. In net, the information provided by social networks probably improves choices. The down side is that it may make you a lazy decision-maker. There is also a problem that if social networks encourage herd behavior, then they increase the risk of panics and stampedes that lead to market bubbles and instability.

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