Primary Sources

How car insurance causes death; the Brits and foreplay; how long could you survive without the Internet?


The Nuclear Option

Nearly everyone agrees that reducing U.S. dependence on foreign sources of energy is a good idea. But—the enthusiasm of technogeeks notwithstanding—producing hydrogen-powered cars may not be the best way to achieve that, according to a new study by two English researchers. Although replacing gas-powered U.S. automobiles with hydrogen-powered ones might slow global warming, generating the necessary hydrogen would require building either a million new wind turbines (enough to cover half of California) or a thousand additional nuclear-power plants. Neither approach is at all likely, but a recent analysis of Japan's energy-security policy suggests that maybe the United States should take a hard look at the nuclear option. According to a report published by the Baker Institute for Public Policy, at Rice University, 77 percent of Japan's energy needs were met by oil in 1973, when OPEC turned off the oil spigot and caused an energy crisis. Seeing the handwriting on the wall, the Japanese government worked rapidly to expand the country's nuclear capacity (it also developed programs aimed at substituting natural gas and coal for oil). The effort worked: by 2002 only 52 percent of Japan's energy came from oil—and whereas oil consumption in neighboring China and South Korea has more than doubled since the late 1980s, Japan's has been relatively stable. In the event of another oil crunch, Japan's investment in nuclear energy is likely to pay significant dividends. According to the Baker Institute's model, if the price of oil rose by 25 percent, Japan's nuclear capacity would save roughly $20 billion in GDP.

"The Arithmetic of Renewable Energy," Andrew Oswald and Jim Oswald, Accountancy; "The Role of Nuclear Power in Enhancing Japan's Energy Security," James A. Baker III Institute for Public Policy, Rice University

"Moral Hazard" on the Road

To the roll of highway perils—drunks, cell phones, teenagers—can be added one more: the insured. A new study suggests that requiring insurance coverage may lead drivers to take a cavalier attitude toward road safety. Economists from Columbia University and Harvard Law School's Olin Center for Law, Economics, and Business examined the effects of the compulsory-insurance laws and no-fault insurance systems that were gradually adopted in the United States from 1970 to 1998. (Under no-fault systems each driver's insurance pays for the damages that he or she inflicts, though all states give drivers some exposure to lawsuits for negligence. Under older, fault-based systems, the at-fault driver pays all the damages.) Forty-five states now have compulsory insurance, and fourteen have no-fault systems. The researchers found that relaxation of liability is correlated with a 10 percent increase in traffic deaths (or about 4,000 dead travelers a year). Uninsured drivers tend to drive more carefully (after all, they themselves have to pay for accidents): for every one percent decrease in the number of uninsured drivers, the number of fatalities increases by two percent. Despite the "moral hazard" posed by insurance, the authors concede that compulsory and no-fault systems aren't all bad: though more people may die, the victims' families are far better remunerated than in the past.

"The Effect of Automobile Insurance and Accident Liability Laws on Traffic Fatalities," Alma Cohen and Rajeev Dehejia, Journal of Law and Economics


Addicted to DSL

What happens when Internet users are taken offline? To find out, Yahoo and the media agency OMD commissioned a cruel study: a group of Internet users were unhooked for a two-week period and asked to record in diaries what they did and how they felt. The diary entries were almost uniformly miserable: the subjects discovered—doubtless to Yahoo's delight—that the Internet was more deeply embedded in their daily lives than they had realized. Activities such as checking box scores, e-mailing friends, booking travel, paying bills, and shopping were profoundly disrupted. Across the board, participants reported withdrawal-like feelings of loss, frustration, and disconnectedness after the plug was pulled. (The temptation to go online was so great that the participants were offered "life lines"—one-time, one-task forays onto the Web—to ease their pain.) A related survey of 1,000 online households supported the study's findings: 48 percent of respondents said they could not go without Web access for more than two weeks, and 64 percent said the Internet would be their first choice of medium if they had to live on a deserted island. As for how much one would have to be paid to give up the Internet for fourteen long days, the answers averaged $152. But this price may be something of an underestimate, since the researchers had a difficult time attracting guinea pigs for their Internet-deprivation experiment—they had to approach around 750 people just to get twenty-eight willing subjects—despite offering to pay participants $950.

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"Disconnected: Life Without the Internet," Yahoo and OMD

Late Night for Smart People

With vulgar fare such as The Man Show, South Park, and Reno 911!, the cable network Comedy Central has earned a reputation for pandering to the Rabelaisian tastes of slackers, stoners, and frat boys. But is that reputation deserved? The Annenberg Public Policy Center set out to answer this question by comparing viewers of Jon Stewart's The Daily Show with those of David Letterman's and Jay Leno's (relatively) staid offerings. The findings are surprising. To be sure, Stewart's viewers are much younger and much more heavily male than his late-night competitors'. But they are also wealthier and better educated: 30 percent have annual household incomes above $75,000, compared with only 25 percent of Letterman's and Leno's viewers. Some 39 percent of The Daily Show's viewers have college degrees, compared with only 29 percent of Letterman's and 27 percent of Leno's. In a perhaps not unrelated finding Annenberg discovered that Stewart's audience is also more politically aware: 46 percent of Daily Show watchers follow politics "most of the time," versus 38 percent of Letterman watchers and 39 percent of Leno watchers. And when the researchers asked respondents six questions about contemporary politics, Stewart viewers on average answered 60 percent of them correctly; Leno and Letterman viewers on average answered only 49 percent correctly.

"National Annenberg Election Survey 2004," Annenberg Public Policy Center, University of Pennsylvania

The Fodor's Guide to Sex

We always suspected that the French were having the most sex, but now we have pseudo-scientific proof, thanks to an online study conducted by the renowned statisticians at the Durex condom company. But it's the British—to everyone's astonishment—who seem to be the world's most attentive lovers. Other key findings: the Chinese have the most partners, the Italians the most orgasms, and chilly Iceland the highest vibrator usage.

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"2004 Global Sex Survey," Durex


The Costs of Doing Business

You might think that in a Third World country the most significant bar to opening, say, a successful grocery store would be the risk of revolutionary violence, or maybe the crippling poverty of your client base. True enough, according to a World Bank report—but the economic misery of many poor countries would be somewhat alleviated by clearing away the vast thicket of red tape that holds back their would-be businessmen. In Albania, for instance, it takes about forty-seven days—nearly twice the Organization for Economic Cooperation and Development average—to register and launch a new business. (In the United States it takes about five days.) And the Albanian bureaucracy is speedy compared with those of Belarus (79 days), Angola (146 days), and Haiti, where it takes an average of 203 days to make one's way through a corrupt system. Meanwhile, opening a business in Bangladesh requires forking over 90 percent of what a Bangladeshi earns, on average, in a year; in Burkina Faso it takes 150 percent of per capita gross national income to get started, in Chad more than 300 percent. And once a business has managed to open, the regulatory burdens that poor countries have in place still make it difficult to get credit, register property, or hire and fire employees. Overall, the report says, the benefits of slashing red tape would be enormous: if the world's poor countries had regulatory structures as efficient as those of the top quartile of nations, their economic growth rate could average two percentage points higher.

"Doing Business in 2005: Removing Obstacles to Growth," The World Bank

The Wal-Mart Effect

Can a single retail company affect inflation? A recent National Bureau of Economic Research study argues that Wal-Mart's size and lower-than-average prices have pushed the U.S. inflation rate substantially below what official statistics indicate. According to the study's authors, the government's current inflation metric assumes that lower prices at big-box discounters mean products of lower quality. But as the authors point out, the food products available at Wal-Mart tend to be exactly the same as those at local supermarkets, so customers don't sacrifice quality by taking their business to the big discounter. When the authors corrected for Wal-Mart's impact on the cost of food around the country, they found that from 1998 to 2001 the government had overstated increases in food prices by 14 to 18.3 percent—meaning, in turn, that the Bureau of Labor Statistics had overstated nationwide inflation by about 15 percent a year.

"CPI Bias From Supercenters: Does the BLS Know That Wal-Mart Exists?" Jerry Hausman, Ephraim Leibtag, NBER