Chapter 4 of Freakonomics “Where Have all the Criminals Gone?” discusses the relationship between increased crime rates and legalized abortions in the United States. According to Freakonomics, without the existence of legalized abortion there were many “undesired” births. This in effect caused these children to be more violent and it has been shown that amongst these children there was a higher incidence of criminal activity. Subsequently, there were decreases in individual states’ crime rates after the legalization of abortions in that state. Freakonomics does a good job of explaining not only correlation in the data but causation as well.

My critique of this chapter is a subjective one. An area that I had trouble buying into was the theory that outside sources such as increased police presence and economic boom did not contribute to a decrease in crime rates. In my opinion this area was mentioned, but overlooked and dismissed as a non-effective theory.

In my mind factors such as economic boom can have a large negative effect on crime rates and again, as well as increased police presence. I would challenge Freakonomics to compare economic growth data and individual states’ budgets pre and post legalization of abortion in order to gain a better picture of what is actually going on. While legalization of abortions may have a significant effect on decreased crime rates it does not paint the entire picture of what is going on. In my opinion, the effect was explained thoroughly in detail but the authors attributed too much credit to the legalization of abortions.  

Natural disasters can happen without warning, without discrimination and can have a wide range of effects on a society as well as an economy. Physically, the consequences of natural disasters vary from disaster to disaster but commonly, disasters of this type are known to destroy property, infrastructure, and human capital. Infrastructure damage is the most widely known and publicized type of damage due to a disaster. However, disasters can also affect people by injuring, killing, even taking away their homes as well as their jobs. Recently, in Colorado, a controlled burning of forest vegetation turned for the worst, when wind gusts increased unexpectedly, and spread the fire into undesired areas. This fire has killed over a dozen people and left many others homeless and jobless. In addition to disasters of the latter, the lasting effects and publicity from Hurricane Katrina has fueled an ambition to raise public awareness of the destructive powers of natural disasters. It is also in the interest of economists to study the potential net economic losses and gains from these disasters. Hopefully in the future, economists can use this knowledge to prevent economic losses resulting from these disasters, and provide new policy measures to ensure economic growth.

Chapter five of Poor Economics details the story of why poor families seek to have large families as well. This is considered a population policy issue and it has troubled policy-makers and economists alike. If these families are exposed to contraceptives, why are they choosing not to use them? The problem lies more in family practices and dynamics, rather than economic or physical access to contraceptives. Therefore, family planning is a pressing and pertinent issue.

A statistic that I found interesting was that of China’s one-child policy. “Households that had their first child after 1972 have one less child on average than those who had children before 1972 and their savings rates are approximately 10 percentage points higher.”

For this statistic I would test whether the one-child policy actually worked in effect by reducing the amount of overall children that are born.

Regression Model: AverageChildren= B1 + B2(SavingsRate)+B3(Dum_year)+ u

I would create a dummy variable denoting the years after 1972 as Dum_year=1 and the years before 1972 as Dum_year=0. This would allow us to see the changes from the different time periods. To find out whether these values are statistically significant we would have to run regressions and look at out t-statistics as well as F values and Rsquared to make a decision.

http://ehis.ebscohost.com/eds/Citations/FullTextLinkClick?sid=9b2e8bde-59e9-4f8a-a583-a0b0712ad009@sessionmgr13&vid=2&id=pdfFullText

The article I read can be summed up in the following sentences. Many economists were pulled together to share their thoughts on whether natural disasters had a positive or negative impact on economic growth. There is much debate on this subject, even in this article as many of the economists frequently do not agree with each other but support their arguments in various ways.

This article clarified a couple of things for me about my research topic. Through reading the article I noticed that a central theme was the pre-existing “condition” that the economy specified is in before the natural disaster. This has made me realize that there may be many other exogenous variables that could affect the outcomes of my regressions. The linear regression model obviously could still work for my project, but some minor adjustments need to be made in terms of my estimation of the regression line. At this point I am unsure as to what exactly y dependent variables are going to look like.

http://www.usatoday.com/money/markets/story/2012-02-29/stocks-february-29/53298782/1

In this article, USA Today notes that stock prices fell although forecasts for the economy in terms of GDP looked up. Stock prices fell after Ben Bernanke announced that GDP was performing better than the fed had expected in the last few months. This is pertinent to my project because I am looking at certain affects on GDP. After reading this article I am inclined to believe that I am missing some data in terms of stock prices as well as federal bond purchases.

These variables could seriously affect the regressions that I will run for my project. For example, if economic well being is to be measured, GDP is simply not enough. I am going to incorporate some of the data from the S&P 500 and the Nasdaq in order to determine the true effect on the economy. Natural disasters can have a myriad of unwanted affects, and a priori I think that they might also have an effect on the stock prices in the U.S. financial system.

The struggle to find the reason behind increasing absentee rates for children in schools has led to a supply demand debate about where the problem lies. For the supply side, more government involvement is needed to provide better schools, books, and teaching aids. For the demand side, the problem lies in parents that feel that school is unnecessary unless one is going to work in a government job. So is the problem on the supply side, or the demand side of education?

The answer most likely is on both sides. It is hard to incentivize children to go to school especially when it is perceived as “boring,” while at the same time, parents tell their children that going to school is a waste of time unless they work for the government which requires secondary schooling. In addition, the “average” student is discouraged from participating and learning in schools because teachers tend to focus mainly on the elite students. This fact can seriously limit the amount of educated people who schools graduate.

The article that I related this chapter mostly to is an article in the Huffington Post about Education being a major factor in escaping from a poverty trap. One of the major points to this article is the fact that education is the “passport out of poverty.” However, the article states that the system of education is flawed, much like in poor economics. Similar to poor economics this article states that one fundamental flaw of the system is that schools “fail to engage the students in a meaningful way.” (Article)
It is here that poor economics and the Huffington Post find a solution to the problem of the school system. For students to be engaged and interested, emphasis must be placed on skills that will be used for the future of the students. School after all, is something that is supposed to prepare someone for real life. This fact is taken too lightly in our school systems. Most children are focused on the here and now aspects of their lives and sometimes fail to see the future benefits from education. This is also the fundamental problem that Poor Economics describes.

Another issue that Poor Economics and the Huffington Post agree on is the inequality due to the disparity between elite and average students. The Huffington Post claims that a child as young as nine can realize when his/her education is inferior. Therefore, because these children know their education is inferior, they will be exposed to lower-paying jobs, so there is no incentive to continue their education.

A solution, in my opinion, could be to focus on strictly the basics when teaching subjects. That way, it allows the student(s) to decide what their personal strengths and weaknesses are as a student and what subjects interest or bore them. Another solution in my opinion is to provide better schooling and training for teachers. I could only imagine that a more rigorous training program for teachers would have some sort of positive effect on keeping kids interested and staying in school.

How Does Legislature and Regulation Affect Economic Growth in the U.S.

Regulation can be seen as a helpful tool or a inhibiting agent. Free market economists are inclined to believe that all regulation, or most regulation has a negative impact on the economic growth of the country. However, is there some correlation between policy and economic growth? Regulation may have more of an impact on the economy than we originally thought. There might be some benefits to pushing forth legislation that may increase economic growth. For example, the U.S. financial bailout plan may have had a positive impact on our economy in the long run and this paper seeks to find a correlation between policy and economic growth.

I am interested in this topic not only because the results could be potentially revealing, but because it is a current topic that is up for discussion today. We are living through a time where things in the financial world are moving so quickly and changing everyday. I also think its important for myself, as well as others to understand what is exactly going on with some of the legislature that gets passed that affects the economy. I think a lot of people take what politicians say to heart and are not experiencing the true scope of the situation. In addition, I am curious myself to see what results I might come up with.

One of the variables that I have carefully considered before taking on this project is the variable of “human-awareness.” I think in most economic discussions this factor is left unchecked and could be the driving factor for many unwanted results. There is no way to measure human awareness, but in a social science it is extremely important to know how human psychology can affect the variables that one is working with. For example, in my project, human awareness can have a major affect on some of the GDP variables that I am using. If the bailout, or legislature is featured on mass media, there is likely a chance that peoples individual economic concerns and incentives will change. Another difficult aspect to measuring this data will be actually finding some of the data. Some of these acts and bailouts are so new that there is not much data to work with to prove that they have some sort of lasting affect on the economy.

The data sets I will be using for this research project are the NIPA Nominal GDP Tables and the NIPA Real GDP Tables. I want to see the differences in nominal and real GDP that is affected by the different policies.

Something I found (actually Larry D. found) that is particularly interesting and has to do with the mass psychology problem I explained earlier is Princeton’s Global Consciousness Project. Basically, random data is collected by this team and they examine the level of human consciousness between everyone in the world at times when there is a big event. For example, the Princeton team found a significant increase in human consciousness right after the 9/11 attacks. This is pretty interesting stuff.

http://noosphere.princeton.edu/
Here is the link if anyone wants to read further about the project.