Conversable Economist–Timothy Taylor


Conversable Economist

Economics will bore you speechless, if you let it.   But you don’t have to let it be so.  and you do not have make it be silly to be interesting either (a la Freakanomics and its clones).  

Economics sheds light on many aspects of the organization of social life.  Having a good understanding why institutions like markets and exchange matter can help you make more informed public decisions.  

With that introduction, folks who areinterested in or are curious about what economics has to say about modern life, check out the blog by Timothy Taylor, one of my favorite writers out there in the world today.   Tim can explain any concept in economics to anyone.

I worked with Tim once.  He was the editor on a paper I wrote with G Brown about the endangered species act.  His editing of my writing was eye-opening. When he was done, I understood what I was trying to say 10 times better than when I first wrote it.   I realized how far I still had to go as a communicator.

T Taylor gets it.


Johan Bergmark, Savant


JohanBergmark J Okt 2013 Soder

i could not not help myself but to post this photo from today.

it is take by a friend in Stockholm, who just happens to be a genius—Johan Bergmark.

have a look at:

(how did he get Charlotte Rampling and Anton Corbijn to agree to these shots?)

Johan took the cover shot of American Holly back 5-6 years ago, after Linda contacted him and she agreed to no family portrait crap.


the photographic process looks so easy to an outsider.  but of course it seems easy when you work with a man who is at top of his profession.

he lined me up against the concrete wall, twisted me slightly, and in a few short minutes, done.   brilliant.


Carbon Footprint of a Music Festival, acoustic and otherwise


Today i am in Stockholm (jetlagging), a green city and one that pushes the carbon footprint idea.

and it got me thinking about a question i have had–One question i have been ponder was just how much electricity does it take to put on an acoustic music show?   and how does this translate into carbon emissions.   i ask this because for the last 3 years I have organized the Centennial Uptown Breakdown (CuB), a full day free music festival up in our mountain town of Centennial, Wyoming.    that is, what is the carbon footprint of the CuB?     kind of nerdy, i know.  we are supposed to be having fun at this festival.

the short answer is about 1.6 t CO2e per show (a lower bound).    and if we price this at a IPCC value marginal cost per tonne of $100….I should be paying at least $160 in a carbon tax for the CuB.

most of these carbon emissions are not generated by the show itself, but rather by the vehicles getting people to the show.   if i guess there are 100 cars at the Beartree during the day, who drove 30 miles from Laramie (1lb CO2e per mile), that gets me about 1.5 t of 1.6 t CO2e per show.      the actual show itself–the power used to electrify acoustic instruments and voices–only generates about 140 lbs of CO2e per show.

of course, there might be more cars driving more miles…suppose the size of festival doubled…the actual musical contribution would remain the same, but we might have 200 cars driving 100 miles on average.   now we are at 10.1 t CO2e per show, and i should be paying $1100 for the carbon footprint per show.

below are more examples for the curious.   the summary is that it is not so much the show itself but the transportation in getting folks to the show and back that is the main source of carbon–regardless of whether it is a big show or a small folky show like our CuB.

(actually the plane trip to Stockholm generated more emissions, that is another story of carbon offsets, and opting-in vs opting-out)


Several other researchers have been interest in this question too, long before i started wondering aloud,  I know now as I poke around the interwebs.

First, here is the abstract for a paper from researchers in the UK and US (CO) who estimate that the UK music industry generates about 540 000  t CO2e per annum, and 4/5 of this is generated by live performances.

Abstract. Over the past decade, questions regarding how to reduce human contributions to climate change have become more commonplace and non-nation state actors—such as businesses, non-government organizations, celebrities—have increasingly become involved in climate change mitigation and adaptation initiatives. For these dynamic and rapidly expanding spaces, this letter provides an accounting of the methods and findings from a 2007 assessment of greenhouse gas (GHG) emissions in the UK music industry. The study estimates that overall GHG emissions associated with the UK music market are approximately 540 000  t CO2e per annum. Music recording and publishing accounted for 26% of these emissions (138 000  t CO2e per annum), while three-quarters (74%) derived from activities associated with live music performances (400 000 t CO2e per annum). These results have prompted a group of music industry business leaders to design campaigns to reduce the GHG emissions of their supply chains. The study has also provided a basis for ongoing in-depth research on CD packaging, audience travel, and artist touring as well as the development of a voluntary accreditation scheme for reducing GHG emissions from activities of the UK music industry.

Second,even the folks at Harvard have considered the Footprint of a basic music festival with 40000 folks attending.

Third, Radiohead hired a firm to calculate its carbon footprint on its 2007 tour, and then did something about it.

Fourth, the last U2 tour generated the equivalent of sending Bono and the boys on a mission to Mars

Econobots & the Nobel critics

good morning

last night I read most of the comments by readers of the NYTimes about the Nobel committee’s selection of the efficient market idea proposed by Fama, measured by Hansen, and criticized by Shiller.    the bulk of the comments focused on the idea that economics is not a science, and that the Nobel selection wrongly promotes the notion that markets “work” well, which ignores the pain and suffering of people caught up in transitions and bubbles.

Recall Fama’s “efficient market” idea means that financial markets collect, aggregate, process, and reflect back all available information that exists today, both the laws of man and the laws of nature.   Based on this idea, Fama argue that passive management of financial assets will be as effective as active management by brokers trying to pick winners.   The key point is that the institution of the “market” is more powerful than the whims of people.  Shiller’s criticism is based on the idea that people are not ECONOBOTS–but instead humanity can overwhelm the  power of the market, and our tendency to herd together can create “irrational exuberance”, which leads to too much speculation which can create valuation bubbles that pop, leading to pain and suffering.   Fama does not believe in bubbles–rather he argues that this blips in asset prices are just the market doing its job of reflecting back what people believe, even if it is wrong in the short run.

The readers were offended that this idea of rational and efficient ECONOBOTS deserves a Nobel.   But their criticism toward economics and markets is not new and is in fact what economics is all about–the blending of science and art to understand better the power and limits of using a decentralized scheme to organize the free will of some 7 billion conflicting human needs.

remember what ECONOMICS actually is about–the study of VALUE created by EXCHANGE (trade and coordination).   the term “value” makes economics an art because values are subjective–what you “value” I might loathe, and visa versa.   But we have markets that allow us to trade what you want for what i want.  we both gain value.    the science is to understand how markets actually work to create value (or not).

I have spent most of my life studying when markets fail, usually applied to environmental problems like climate change and biodiversity and clean air and water and so on.   Obviously markets fail.  But in studying the downside, I have come to appreciate the upside as well.   what I have learned is that markets do fail, yes…but I also appreciate that they can work too.  Our standard of living has increased significantly as societies learn that economics is not a zero-sum game.  rather with  free exchange based on self-interest regulated by competition can work to help improve our lives.

the art is understanding/defining VALUE, the science is understanding/defining the EXCHANGE mechanisms that create or destroy value.  this Nobel winners help us all better understand the EXCHANGE part of the equation.






Econ Nobel 2013

Fama, Hansen, and Shiller were awarded the Riksbank Econ Nobel prize today for arguing/demonstrating that financial markets are impossible to fool in the long run–that is, all available information will be captured and reflected by the price of a share on the stock market.     So even if we have booms, bubbles, and busts in the short term, the long-run price will reflect the true state of the economy (ignoring environmental degradation).   of course, managing the pain in the transition from the short run to the long run is why we have supposedly politicians and priests, not economists.   


here is the full announcement that came by email this morning:

The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2013 to
Eugene F. Fama
University of Chicago, IL, USA
Lars Peter Hansen
University of Chicago, IL, USA 
Robert J. Shiller
Yale University, New Haven, CT, USA
“for their empirical analysis of asset prices”
Trendspotting in asset markets
There is no way to predict the price of stocks and bonds over the next few days or weeks. But it is quite possible to foresee the broad course of these prices over longer periods, such as the next three to five years. These findings, which might seem both surprising and contradictory, were made and analyzed by this year’s Laureates, Eugene Fama, Lars Peter Hansen and Robert Shiller.
Beginning in the 1960s, Eugene Fama and several collaborators demonstrated that stock prices are extremely difficult to predict in the short run, and that new information is very quickly incorporated into prices. These findings not only had a profound impact on subsequent research but also changed market practice. The emergence of so-called index funds in stock markets all over the world is a prominent example.
If prices are nearly impossible to predict over days or weeks, then shouldn’t they be even harder to predict over several years? The answer is no, as Robert Shiller discovered in the early 1980s. He found that stock prices fluctuate much more than corporate dividends, and that the ratio of prices to dividends tends to fall when it is high, and to increase when it is low. This pattern holds not only for stocks, but also for bonds and other assets.
One approach interprets these findings in terms of the response by rational investors to uncertainty in prices. High future returns are then viewed as compensation for holding risky assets during unusually risky times. Lars Peter Hansen developed a statistical method that is particularly well suited to testing rational theories of asset pricing. Using this method, Hansen and other researchers have found that modifications of these
Another approach focuses on departures from rational investor behavior. So-called behavioral finance takes into account institutional restrictions, such as borrowing limits, which prevent smart investors from trading against any mispricing in the market.
The Laureates have laid the foundation for the current understanding of asset prices. It relies in part on fluctuations in risk and risk attitudes, and in part on behavioral biases and market frictions.