Should Bad Predictions Be Punished?
What do Wall Street forecasters and Romanian witches have in common? They usually get away, scot-free, with making bad predictions. Our world is awash in poor prediction — but for some reason, we can’t stop, even though accuracy rates often barely beat a coin toss.
But then there’s the U.S. Department of Agriculture’s crop forecasting. Predictions covering a big crop like corn (U.S. farmers have planted the second largest crop since WWII this year) usually fall within five percent of the actual yield. So how do they do it? Every year, the U.S.D.A. sends thousands of enumerators into cornfields across the country where they inspect the plants, the conditions, and even “animal loss.”
This week on Marketplace, Stephen J. Dubner and Kai Ryssdal talk about the supply and demand of predictions. You’ll hear from Joseph Prusacki, the head of U.S.D.A’s Statistics Division, who’s gearing up for his first major crop report of 2011 (the street is already “sweating” it); Phil Friedrichs, who collects cornfield data for the USDA; and our trusted economist and Freakonomics co-author Steven Levitt. Read More »
Why Adult Adoption is Key to the Success of Japanese Family Firms
What happens when the heir to a family business isn’t up to the job? Not great things, apparently. But the Japanese have a solution: adult adoption. Rather than hand the firm to a less-than-worthy blood heir, Japanese families often adopt an adult to take over. This tradition is the subject of Vikas Mehrotra‘s paper “Adoptive Expectations: Rising Sons in Japanese Family Firms,” which is featured in our latest podcast and hour-long Freakonomics Radio special “The Church of Scionology.” (You can download/subscribe at iTunes, get the RSS feed, listen live via the media player, or read the transcript here.)
America and Japan have the highest rates of adoption in the world – with one big difference. While the vast majority of adoptees in the U.S. are children, they account for just 2% of adoptions in Japan. The other 98% are males around 25 to 30. Mehrotra believes this is the key to one of Japan’s unique differences. Across the developed world, family firms under-perform professionally-run businesses. But in Japan, it’s the opposite. Japan’s strongest companies are led by scions, many of them adopted. Read More »
Do We Overvalue Our Desire to Live Among People of Our Own Race?
A new working paper from a quartet of economists proposes a new method of estimating how we value the “non-marketed amenities” of neighborhood choices such as avoiding pollution and living among people of our own race. The old static method, they say, underestimates our willingness to pay to avoid air pollution and crime, but overstates how much we value living near neighbors of our own race. Here’s the abstract: Read More »
From the Comments: A Market for Skipping Class
We got tons of responses to our Bleg last week on how professors should incentivize classroom attendance. Thank you everyone for your suggestions, a few concerns kept coming up in the comments:
- Is the student a consumer?
- Does attending class equate learning?
- Are students a fair market to judge professors?
- Do bonus/penalty systems work?
Most readers encouraged making the class interesting enough so that the professor is the sole incentive for students to show up. Others suggested an attendance incentive — ranging from points for showing up, to test questions handed out at the beginning of class — or a policy that puts students’ grades at risk for not showing up. Read More »
and 
. If you haven’t seen it yet, the movie features Steven Levitt and Stephen Dubner, and was made by a dream team of documentary directors. Paste Magazine named it one of the 