The following is based on a book review I delivered on behalf of the Rochester Public Library’s “Books Sandwiched In” series.
Dan Ariely’s Predictably Irrational comes from a field called “behavioral economics,” a branch of cognitive psychology focused on economic decision-making. Folks in the field attempt to figure out why apparently rational people behave irrationally so much of the time.
That markets are influenced by irrational behavior is easily demonstrated. Let’s consider recent trends in oil prices. When oil was trading at over $140 per barrel, relatively few oil industry experts would defend the price on the basis of pure supply and demand. Sure, some would cite rising demand in China or the number of cars added to the road every day in Mumbai. Many authoritative voices had been saying for months that they while they could rationally explain a spot price around $100 per barrel, the arithmetic simply didn’t justify $140 per barrel. So why were apparently smart people betting big dollars on a higher price? How did the price get to $147 per barrel? Largely because they believed that other people believed that prices were going to rise. And they believed that they were smart enough to buy when prices were rising and to sell before the bubble burst.
Read more »
Gov. David Paterson wants state government to do more with less.
The rumblings started as early as March when the annual budget was completed. Then, last week, Budget Director Laura Anglin asked agencies to prioritize programs and match them to agency purpose, and allocate staffing accordingly. Presumably, this information will be used by the Budget Division to prepare for the Legislature’s mid-August emergency session.
Paterson’s alarm bell will have a familiar ring in state agencies Not so long ago, then-Budget Director John Cape asked agency heads to provide a one-page list of their top three strategic priorities for the 2005-06 budget. Certainly across-the-board cuts are easier for the Division of the Budget to administer, but taxpayers deserve better. Some state functions are more important than others and the cutbacks should reflect conscious priorities. Some cutbacks save more money than others. As an example, when state expenditures are partially funded by the federal government, cutting state staff can actually cost money if federal reimbursement is affected.
Read more »
When it comes to economic forecasts, I tend to be a “glass-half-full” kind of guy. Yes, there is some probability that gas will rise to $20 per gallon and we’ll start riding horses again. I think it more likely that gas prices will fall back to $3 per gallon and there will again (sadly) be a market for the Hummer.
My natural optimism was dealt a blow by a new assessment of fast-growing firms from the Small Business Adminstration (SBA). The study is an adaptation of the work of David Birch of Cognetics from the 1980s and 1990s. Firms with rapid revenue growth were dubbed “gazelles” by Birch. He found that these firms were responsible for most of the nation’s employment growth.
Read more »
Shouldn’t we at least talk about the notion of capping school property taxes?
A recent poll found 74% of New Yorkers think it’s a good idea. A commission appointed by our previous governor recommended it after several months of study and more than a dozen public meetings around the state.
And yet, the state Legislature is poised to adjourn for the year without seriously considering the idea. There were no legislative hearings on the commission’s report, and Gov. David Paterson couldn’t even get his bill to cap property taxes introduced in the Legislature.
Whether or not you think capping school property taxes is a good idea (full disclosure: I do), what does it say about our legislative process that an idea with such broad appeal addressing a problem that is clearly impacting on millions of New York residents isn’t taken seriously by our lawmakers?
Read more »
CGR recently recruited a staff member from out of town. After he and his wife had found a house they liked (comparable to the home they were selling), they were confronted with what is a familiar problem—the property tax bill. The house they were about to buy was going to cost them nearly 50% more in property taxes each year. Familiar story, right? Darn those folks in North Carolina and Florida and Utah for their low property taxes! How can we compete?
But my colleague was moving from Orchard Park, a Buffalo suburb, not from Raleigh or Tampa or Salt Lake City! That’s right—Erie County property taxes are lower than Monroe County’s.
Read more »