The Bowtie Economist's Daily Dose of 70-Word Wisdom

The 2015 Nobel Prize in Economic Sciences has been awarded to Angus Deaton of Princeton University. His work focuses on the individual, not the economy. He concerns himself with consumption (not incomes), including caloric intake, education, discrimination and healthcare and…

The Friday File: Being on the cover of Sports Illustrated has been a jinx to many. The cover isn’t the culprit. Rather, the individual or team chosen has enjoyed a particularly good run of recent success, necessarily abetted by luck,…

This past Monday, twelve Pacific Rim nations (excluding China) that comprise 40% of world trade closed the Trans-Pacific Partnership free trade agreement. Assuming it’s ratified by all twelve nations, it should, by the year 2025, raise global GDP by 1%,…

The FDA uses one statistical standard when deciding whether to approve a new drug. The rule is designed to prevent bad drugs from being sold and good ones from being rejected. Instead, the rule should be based on illness severity…

The labor force participation rate (LFPR) is 62.4%, its lowest level since 10/77. Its peak was 67.3% in 4/00. Immediately following the Great Recession it was 65.5%. Amazingly, the male LFPR peaked in 10/49 at 87.4% and is now 68.7%,…

Last Friday’s September employment numbers were weak. Net new jobs were just 142,000, well below expectations, prior months’ employment gains were revised down, wage growth was flat, overtime hours fell, and the labor force contracted by 350,000. But with energy…

The Friday File: Ever wonder why supermarkets offer sale items with an absurd limit of 12/person? Anchoring bias and arbitrary rationing! Anchoring bias says that just seeing the number 12 in relation to soup will boost demand. Arbitrary rationing (any…

The economy goes through periods of higher and lower inflation and earnings. During these cycles different investments outperform, leading to changing asset allocations. When growth is good and inflation is low, debt and equity generally do well. When growth and…

At the height of the 2013 coal boom, the trading firm Glencore purchased mining firm Xtrata forming Glencore-Xtrata. The thought was combining low volatility Glencore with high volatility Xtrata, and in the process making a bigger firm, would improve results.…

While college students have borrowed over $1.2 trillion and seven million students are in default, more debt doesn’t appear to increase default rates. Of students that borrow less than $5,000, 34% default, those that borrow between $5,000 and $10,000 have…