Comment on "Choice, Choice, Choice!"

Somebody sent me email commenting on "Choice, Choice, Choice!" (see below). The comment reads:

"...Cool! One other point that shows Schwartz's argument is not logical...
More choice - > lower likelihood of purchasing (suppose that's right)
Lower likelihood of purchasing -> lower consumer satisfaction (What?!!! where on earth is a purchase the sign of satisfaction?)
Lowered satisfaction with the product A may as well signify increased overall well-being of the consumer. In many cases consumers "postpone" a choice, not "give up". The only loss at the consumer side is that they require more time to process information. But still the cost results because the consumer thinks it is worth their exploration. (Maybe aco thinks it is not worth to explore the varieties of cokes given the risk of ruining appetite). Schwartz should have stopped by saying giving more choice to consumers may not do good for the business.
And the example of job seekers. Isn't it more frustrating to sell a coat than to sell a pair of socks? Is it really because of the number of choices?
It's always fun to see challenges against economics. Makes me think. Thank you for the good reference..
..."

Finally: Exxon Valdez

Exxon Mobil Corp. has to pay severe punitive damages due to its 11 million gallons oil spill on Prince William Sound Alaska, 15 years ago. The federal judge imposed a total of $6.7 billion. This is historical decision by Judge Russel Holland of Anchorage. Exxon-Valdez case has been a classic example for explaining the rationale of contingent valuation in classrooms. Looking aback, today's decision is a culmination of economists long time debate on how to value this non-market damage (see the documented debates in Hausman, 1993: Contingent Valuation - A Critical Assessment. The editor, Jerry Hausman was one of the economists hired by Exxon. See also Richard Carson's new book. Carson led the contingent valuation study team at that time. The team proposed a severe punishment on Exxon).

The Maid Dilemma

The Jakarta Post reported that Indonesia has threatened not to allow export of maids to Singapore if the latter does not put more effort to protect the maids safety. Many Indonesian maids died fell from tall buildings (they were asked, e.g. to do tasks such as hanging wet laundry from a high-rise flat).
This is tricky. Those maids need money. They can't really get enough at home due to tougher competition. Meanwhile, the pay in Singapore is well above what they can earn in Indonesia. On the other hand, the Singaporean households cannot pay their own labor. Indonesians muscle are more competitive. Supply meets demand. Even if Indonesia puts ban on its maids, black market will work perfectly. Instead of issuing threat, Indonesia should help make home more attractive to those maids. Provide incentive to labor-intensive firms who employs more low-skilled workers.

Choice, Choice, Choice!

Barry Schwartz, a professor of psychology at Swarthmore College wrote an interesting article on why more is less. He argued:

"... [T]here is growing evidence that the emotional logic (the psycho-logic) is deeply flawed. Indeed, for many people, increased choice can lead to a decrease in satisfaction. Too many options can result in paralysis, not liberation..."

Albeit confusing, I for one, believe that (even too) many choices is good. Schwartz used some examples:

"...Sheena Iyengar and Mark Lepper, psychologists at Columbia and Stanford respectively, have shown that as the number of flavors of jam or varieties of chocolate available to shoppers is increased, the likelihood that they will leave the store without buying either jam or chocolate goes up. According to their 2000 study, Ms. Iyengar and Mr. Lepper found that shoppers are 10 times more likely to buy jam when six varieties are on display as when 24 are on the shelf.... In a study that Ms. Iyengar, Rachel Elwork of Columbia and I are working on, we found that as the number of job possibilities available to college graduates goes up, applicants' satisfaction with the job search process goes down. This is particularly true for job seekers whose aim is to get the "best possible" job — while people in this group receive more and better job offers than those who are aiming for "good enough" jobs, they also tend to be less satisfied with their career decisions than their less demanding counterparts. They are also more anxious, pessimistic, disappointed, frustrated and depressed.... In another study under way, Ms. Iyengar found that as the number of mutual funds in a 401(k) plan offered to employees goes up, the likelihood that they will choose a fund — any fund — goes down. For every 10 funds added to the array of options, the rate of participation drops 2 percent. And for those who do invest, added fund options increase the chances that employees will invest in ultraconservative money-market funds..."

I am not surprised. But take me as a counterexample. I noted there were so many old and new varieties of Coca Cola. Diet, strawberry, etc, etc. Yet, I stick with the original Coke, no matter what. Have I tried the others? Not necessarily. So why do I keep going with original Coke? Because I like it and I don't have any incentive to even try others. Easy. Schwartz should have told about taste. And those consumers in his example are simple yet real example of confused consumers. In fact they still can be modeled in economics. Just add an empty set as one of the alternatives for them and off you go.

As an aside, many choices means higher competition on the supply side (and demand side to some extent, but not as great). It will put downward pressure to the price. So those consumers in Schwartz examples might as well come back the next day buying whatever she ends up choosing but with lower price.

Non-market Valuation

Commenting on Cowen's provocative thought on the economics of fashion, Kiesling relates it to environmental economics. So much relevant to what I am working on now, here's a quote from Kiesling:

"... I think the consumer preferences underlying shopping and fashion are hugely complicated, and hard to disentangle. One reason for that is very similar to what I discussed with my students today about contingent valuation studies to determine the value of environmental amenities: our preferences are constructed, and are highly contextual; they aren't just written in a book or tattooed on the back of the neck. In many cases we don't even know what our preferences are over something until we are confronted with it. And then once we are confronted with it, we do the "compared to what" opportunity cost calculation, and choose whether or not we want to buy it. We may not be able to articulate all of the aspects of the choice, either... Just like the desire to preserve charismatic megafauna, fashion also has a very visceral, emotional component to consumer preferences, something that reaches into the core of our souls and taps into the human desire to do things with our resources that represent something about our individual beings...
Unlike fashion, though, environmental amenities are non-market goods; markets do not typically exist as mechanisms to enable us to determine how we value them, and whether others value them more or less than we do..."

Yup, that's exactly how it is. Non-market valuation. Kiesling is talking about using contingent valuation. My work is an extension of this approach, namely contingent valuation with conjoint eliciation process. This is more indirect than the standard contingent valuation. The latter has been subject to criticism for its common form, referendum choice, is subject to high protest response rates. The conjoint elicitation process tries to ease some pressure on the respondents by providing a set of repeated choice occasions meant to map the repondents preference over certain specified choice attributes.

Voucher or Affirmation?

Terry Moe of Stanford University writes in NYTimes in favor of public school voucher system. He reported, "... Washington's public schools got some very good news when Congress approved a plan to provide school vouchers to low-income families in the nation's capita...". Milton Friedman, Gary Becker, and the likes, sure are happy to hear about this. Vouchers are meant for students from low income families that could be spent at private schools (or public schools -- but in general, elementary private schools are in better shape, you do the math). Friedman proposed this policy long time ago. He believed that poorer students attended the worst public schools, since they could not afford either private schools or good suburban schools. Vouchers help level the playing field. Agreed.

Greedy Smarty

Can't believe this. Wrote the Daily Illini today, an ad posted in the NYTimes said that the Nobel prize awarded to Prof. Lauterbur a couple of months ago was a mistake. It says "The Noble Prize will make itself irrelevant to the true history of the MRI [magnetic resonance imaging -- Aco]. It will also lose its credibility as an award for scientific achievement". Lauterbur is a U of I professor. He co-won the Noble with Dr. Peter Mansfield of the U of Nottingham, England. This ad says, it should have been Dr. Raymond Damadian who got the Noble. I know nothing about MRI (newspapers teach: it is "a process in which a scanner picks up different tissue cells within the human body and projects them as an image in order to detect cancer cells earlier" -- whatever), but this news strikes me as that even high-level intellectuals can be so greedy. The poster, Fonar Corp (a manufacturer of MRI scanners) even dedicates a full page for the controversy. Fonar is Damadian's company. Money. But they say, it's not: "Sorry, we didn’t think the Nobel Prize is about money. We thought it is about the unprejudiced recognition of scientific achievement. So egregiously flawed is this policy that Alfred Nobel himself, who held 355 patents, would not qualify for his own prize!". Wow, that's a strong one. Dr. Lauterbur has no comment on this cheap campaign. He'd better not.

Best Books

The National Review releases its list of the 100 Best Non-Fiction Books of the Century. The panel looks pretty balance. Economists included in the list: Hayek, Friedman, Schumpeter, Keynes, Myrdal, von Mises. Hm, score 4-2?

Honesty vs Revelation

The Jakarta Post reported, Singapore ends secrecy over data on Indonesian trade. Finally. What took them so long just to be honest?

"... [Indonesian t]rade with the city-state's neighbor totaled S$26.2 billion (US$15.4 million) last year, making Indonesia its seventh largest trading partner..."

Stubborn W

Even his fellow Republicans start worrying about him. Bush has gone too far with his spending. He just doesn't care. All he needs is to win again. An article in NYTImes describes how long time supporters (incl. Heritage Foundation, Club for Growth, WSJ) of Bush and the GOP in general have growing exasperation toward Bush stubbornness.

"... The government ran a deficit of $374 billion in the fiscal year ended Sept. 30, and the deficit is expected to be around $500 billion for the current fiscal year. When Mr. Bush took office three years ago, the Congressional Budget Office forecast a surplus of $5.6 trillion for the following decade..."The Republican party has long been the party of small government," an aide to a senior Republican senator said, "but the era of small government has ended for the Republican Party."...."

Greening the Wrong

Greenpeace and Walhi are campaigning to save Indonesia forest. Tell you, friends. You can't stop illegal logging by campaigning whatsoever. Why not do this: create an incentive not to log illegally: 1) Use your campaign budget to help enforce the monitoring and/or 2) Better yet, facilitate credit to small scale enterprise on transforming the raw wood into furniture and the likes.

Toyota (Un)Smart Product

Toyota Motor Corp. is offering automatic parallel parking mechanism. This is stupid. As Cowen pointed out, a person who cannot parallel park, should not be able to operate that mechanism either. As for me, not only this product is foolish, even the Prius itself is so unattractive.

Hayek

Virginia Postrel on Hayek. Brought to my attention by Kiesling. Indeed, many of those friends who claim themselves as market orientalists have underrated Hayek in the shadow of Friedman. Among all:

"...Hayek, who died in 1992, was not just any economist. He won the Nobel Prize in economics in 1974. His 1945 article, "The Use of Knowledge in Society," is a touchstone work on the role of prices in coordinating dispersed information. His 1944 bestseller "The Road to Serfdom" helped catalyze the free-market political movement in the United States and continues to sell thousands of copies a year.
... Economist Milton Friedman calls him "the most important social thinker of the 20th century." Hayek's most significant contribution, he explains, "was to make clear how our present complex social structure is not the result of the intended actions of individuals but of the unintended consequences of individual interactions over a long period of time, the product of social evolution, not of deliberate planning.... Born in Vienna in 1899, Hayek fought in World War I and earned degrees in law and political economy in the rich intellectual atmosphere of the University of Vienna. In the early 1930s, he was invited to join the faculty at the London School of Economics. There, he made his name as the leading intellectual opponent of John Maynard Keynes. (The two men were nonetheless friends.) Keynes believed that economic slumps could be cured by government deficit spending, while Hayek argued that those policies would only exacerbate the underlying problem of excessive production capacity...."

Can't be truer

The Boondocks today. Huey mumbled:

... So if the democrats are the "Justice League", does that make Bush and Cheney "The Joker" and "Lex Luthor", respectively?...

Dave Warsh shared his joy after reading a book on Eisntein (Levenson's "Einstein in Berlin"). This is interesting, about that magic equation:

"... Then in the single year of 1905, Einstein wrote three papers that demonstrated a capacity to revolutionize physics: the light quantum hypothesis in March, an account of Brownian motion in May, the relativity principle in June. Then in September, as a kind of an after-thought, he wrote up the startling insight into the deep connection between energy and mass that eventually would be expressed in the famous summary equation, E=mc-squared [sorry, Dave, you have typo there -- Aco]. ("This thought is amusing and infectious," he wrote to a friend, "but I cannot possibly know whether the good Lord does not laugh at it and has led me up the garden path.") By 1908 he was a professor at the University of Zurich, and in 1911, he was called to the German University in Prague and thus promoted into the top rank of world physicists...."

... and Dave thinks Germany has suffered from fatal brain-drain:

"... Before the war, German science was superlative. Planck, Nernst and other members of the scientific elite correctly intuited that enormous power, economic and military, awaited those who solved the mysteries of quantum mechanics and special relativity. And indeed, not just the atom bomb but radar, television, semiconductors and computers lay directly down the path that Einstein had discovered. German science generally and Einstein himself remained in place throughout the 1920s, amid the frustrations, humiliations and froth of the Weimar Republic. For a dozen years, it seemed to the best Germans as though things might get better..... Instead they got worse — disastrously worse. In late 1932 the Nazis finally won control of the government. Before Hitler became chancellor, Einstein and his wife slipped out of Berlin on their way to Caltech for a semester of teaching, never to return. The rest is tragic dénouement. Most of the most talented people in German science left, and leadership shifted to United States. The Einsteins moved to the Institute for Advanced Study at Princeton; he spent the rest of his life on the sidelines..."

Nice posting, Dave.

Krugman wrote this morning:

... Democratic candidate, no matter how business-friendly, will not be able to get lots of corporate contributions, as Clinton did... [T]hese days the Republicans control all three branches of government and exercise that control ruthlessly... Bush people really are Nixonian... [A]ny Democrat has to expect not just severely slanted coverage from the fair and balanced Republican media, but asymmetric treatment even from the mainstream media... A Democratic candidate will have a chance of winning only if he has an energized base, willing to contribute money in many small donations, willing to contribute their own time, willing to stand up for the candidate in the face of smear tactics and unfair coverage.... [W]hat the party needs is a candidate who inspires the base enough to get out the message that he isn't a radical — and that Mr. Bush is.

Paul, why do you care so much? These are just kids toy. Let them play. You talk economics, me listen.

From the Jakarta Post. RI to award at least seven new oil and gas contracts in 2004:

The Indonesian government will award at least seven new oil and gas contracts this year, while putting up 10 new oil and gas blocs for tender, an official said Tuesday.... "We now only have to study their offers and after these studies are completed, (the results) will be made public ... by March it is estimated that the contracts can be signed," director general for oil and gas, Iin Arifin Takhyan, said.

Well, do not repeat the old mistakes.

Krugman summarized Ron Suskind's book on Paul O'Neill, "The Price of Loyalty". Among all:

The money quote may be Dick Cheney's blithe declaration that "Reagan proved deficits don't matter." ... Mr. O'Neill and Alan Greenspan knew that it was a mistake to lock in huge tax cuts based on questionable projections of future surpluses....
Mr. Bush, who declared in the 2000 campaign that "the vast majority of my tax cuts go to the bottom end of the spectrum," knew that this wasn't true... Donald Rumsfeld pushed the idea of regime change in Iraq as a way to transform the Middle East at a National Security Council meeting in February 2001....
There's much more in Mr. Suskind's book. All of it will dismay those who still want to believe that our leaders are wise and good.

(From the Jakarta Post). The IMF has hopes on the 2004's Indonesia:

Indonesia may see inflation of only 5.0 percent in 2004 amid falling interest rates, lower than the 6.5 percent forecast by the government, International Monetary Fund (IMF) country director David Nellor said Monday.

"I have some optimism on the inflation outlook this year. It must be better than the budget projection," Nellor told reprters at the Ministry of Finance when giving his inflation estimate of 5.0 percent for 2004.

Inflation hit a four-year low of 5.06 percent in 2003, with the benchmark interest rate of one-month Bank Indonesia Certificates (SBI) ending the year at 8.31 percent.

Bank Indonesia estimates 2004 inflation at 5.0-6.0 percent, also better than the government's forecast...

(From the NYTimes) When at last, the Fund points its finger on Uncle Sam's nose:

The International Monetary Fund has long been accused of failing to sound the alarm before countries with reckless fiscal policies implode. So it was nice to see staff members of the fund's Western Hemisphere department hold a press conference last week to publicize one nation's worrisome trends, which threaten foreign investors and the global economy.

Who was in for the scolding? Haiti? Argentina? Mexico? Not exactly. It's the United States the fund is worried about. An economic slowdown and President Bush's huge tax cuts conspired to swing America's federal budget from a surplus of 2.5 percent of gross domestic product in 2000 to a deficit of some 4 percent in 2003. Add the states' own budget shortfalls and the country's trade deficit, the I.M.F. report notes, and the United States faces an "unprecedented level of external debt for a large industrial country."

Here is the official release from the IMF.

In San Diego meeting, the "UK's Greenspan", Mervyn King gave the Ely Lecture. Excerpt:

The core of the monetary policy problem is uncertainty about future collective decisions resulting from the impossibility and the undesirability of committing our successors to any given monetary policy strategy. The first stems from the fact that is is impossible to commit to future collective decisions; the second reflects the fact that we cannot articulate all possible future states of the world.... The relevant theoretical framework could be described as "public goods meet incomplete contracts"... [all emphasis are Mervyn's] So the ideal is a framework that will implement what we currently believe to be the optimal monetary policy strategy and will deviate from that only if collectively we change our view about what the strategy should be.. [my emphasis]

King's speech gives a clear exposition of what is known as commitment/credibility problem in monetary textbooks. He drew some real examples using the cases of Brazil and UK (credibility problem), Iraq (the role of expectation), and Japan (institutional arrangement did not match economics). Worth reading. Thanks to Dave Warsh who brought this to my attention.

Meanwhile, still in San Diego meeting, Robert Rubin warned about U.S. Budget problem. Among all:

The U.S. federal budget is on an unsustainable path. In the absence of significant policy changes, federal government deficits are expected to total around $5 trillion over the next decade. Such deficits will cause U.S. government debt, relative to GDP, to rise significantly. Thereafter, as the baby boomers increasingly reach retirement age and claim Social Security and Medicare benefits, government deficits and debt are likely to grow even more sharply. The scale of the nation's projected budgetary imbalances is now so large that the risk of severe adverse consequences must be taken very seriously, although it is impossible to predict when such consequences may occur

Different issue. Tyler Cowen argued:

Children who are born during economic booms live longer than their counterparts born during leaner times. The result holds for a Dutch data set of 3000 individuals born between 1812 to 1912. Here is a summary of the research. Here is the paper itself. A ten percent improvement in economic product added three years to the average life in the data set. OK, that is not so shocking on its own terms. The surprise is that the beneficial effects of wealth are most determined by the level of national wealth in the first seven years of life. In other words, good child care pays off for a very long time. And bad macroeconomic conditions take their biggest toll on the young and the elderly. If you are born in poor times, your chance of dying early has its greatest spikes during your childhood or after the age of fifty. It remains to be seen whether these results generalize to current levels of wealth in the United States. To be sure, a bad macroeconomy raises stress and damages health, but I know of no modern data on whether the effects on children persist through time.

Related, but more on celebrity lifestyle. Brad DeLong reminded:

From Adam Smith's Theory of Moral Sentiments:

When we consider the condition of the great, in those delusive colours in which the imagination is apt to paint it. it seems to be almost the abstract idea of a perfect and happy state. It is the very state which, in all our waking dreams and idle reveries, we had sketched out to ourselves as the final object of all our desires. We feel, therefore, a peculiar sympathy with the satisfaction of those who are in it. We favour all their inclinations, and forward all their wishes. What pity, we think, that any thing should spoil and corrupt so agreeable a situation! We could even wish them immortal; and it seems hard to us, that death should at last put an end to such perfect enjoyment. It is cruel, we think, in Nature to compel them from their exalted stations to that humble, but hospitable home, which she has provided for all her children. Great King, live for ever! is the compliment, which, after the manner of eastern adulation, we should readily make them, if experience did not teach us its absurdity. Every calamity that befals them, every injury that is done them, excites in the breast of the spectator ten times more compassion and resentment than he would have felt, had the same things happened to other men. It is the misfortunes of Kings only which afford the proper subjects for tragedy. They resemble, in this respect, the misfortunes of lovers. Those two situations are the chief which interest us upon the theatre; because, in spite of all that reason and experience can tell us to the contrary, the prejudices of the imagination attach to these two states a happiness superior to any other. To disturb, or to put an end to such perfect enjoyment, seems to be the most atrocious of all injuries. The traitor who conspires against the life of his monarch, is thought a greater monster than any other murderer. All the innocent blood that was shed in the civil wars, provoked less indignation than the death of Charles I. A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than to those of meaner stations.

Upon this disposition of mankind, to go along with all the passions of the rich and the powerful, is founded the distinction of ranks, and the order of society. Our obsequiousness to our superiors more frequently arises from our admiration for the advantages of their situation, than from any private expectations of benefit from their good-will. Their benefits can extend but to a few, but their fortunes interest almost every body. We are eager to assist them in completing a system of happiness that approaches so near to perfection; and we desire to serve them for their own sake, without any other recompense but the vanity or the honour of obliging them. Neither is our deference to their inclinations founded chiefly, or altogether, upon a regard to the utility of such submission, and to the order of society, which is best supported by it. Even when the order of society seems to require that we should oppose them, we can hardly bring ourselves to do it. That kings are the servants of the people, to be obeyed, resisted, deposed, or punished, as the public conveniency may require, is the doctrine of reason and philosophy; but it is not the doctrine of Nature. Nature would teach us to submit to them for their own sake, to tremble and bow down before their exalted station, to regard their smile as a reward sufficient to compensate any services, and to dread their displeasure, though no other evil were to follow from it, as the severest of all mortifications. To treat them in any respect as men, to reason and dispute with them upon ordinary occasions, requires such resolution, that there are few men whose magnanimity can support them in it, unless they are likewise assisted by familiarity and acquaintance. The strongest motives, the most furious passions, fear, hatred, and resentment, are scarce sufficient to balance this natural disposition to respect them: and their conduct must, either justly or unjustly, have excited the highest degree of all those passions, before the bulk of the people can be brought to oppose them with violence, or to desire to see them either punished or deposed. Even when the people have been brought this length, they are apt to relent every moment, and easily relapse into their habitual state of deference to those whom they have been accustomed to look upon as their natural superiors. They cannot stand the mortification of their monarch. Compassion soon takes the place of resentment, they forget all past provocations, their old principles of loyalty revive, and they run to re-establish the ruined authority of their old masters, with the same violence with which they had opposed it. The death of Charles I. brought about the Restoration of the royal family. Compassion for James II. when he was seized by the populace in making his escape on ship-board, had almost prevented the Revolution, and made it go on more heavily than before.

Do the great seem insensible of the easy price at which they may acquire the public admiration; or do they seem to imagine that to them, as to other men, it must be the purchase either of sweat or of blood? By what important accomplishments is the young nobleman instructed to support the dignity of his rank, and to render himself worthy of that superiority over his fellow-citizens, to which the virtue of his ancestors had raised them? Is it by knowledge, by industry, by patience, by self-denial, or by virtue of any kind? As all his words, as all his motions are attended to, he learns an habitual regard to every circumstance of ordinary behaviour, and studies to perform all those small duties with the most exact propriety. As he is conscious how much he is observed, and how much mankind are disposed to favour all his inclinations, he acts, upon the most indifferent occasions, with that freedom and elevation which the thought of this naturally inspires. His air, his manner, his deportment, all mark that elegant and graceful sense of his own superiority, which those who are born to inferior stations can hardly ever arrive at. These are the arts by which he proposes to make mankind more easily submit to his authority, and to govern their inclinations according to his own pleasure: and in this he is seldom disappointed. These arts, supported by rank and preheminence, are, upon ordinary occasions, sufficient to govern the world. Lewis XIV. during the greater part of his reign, was regarded, not only in France, but over all Europe, as the most perfect model of a great prince. But what were the talents and virtues by which he acquired this great reputation? Was it by the scrupulous and inflexible justice of all his undertakings, by the immense dangers and difficulties with which they were attended, or by the unwearied and unrelenting application with which he pursued them? Was it by his extensive knowledge, by his exquisite judgment, or by his heroic valour? It was by none of these qualities. But he was, first of all, the most powerful prince in Europe, and consequently held the highest rank among kings; and then, says his historian, 'he surpassed all his courtiers in the gracefulness of his shape, and the majestic beauty of his features. The sound of his voice, noble and affecting, gained those hearts which his presence intimidated. He had a step and a deportment which could suit only him and his rank, and which would have been ridiculous in any other person. The embarrassment which he occasioned to those who spoke to him, flattered that secret satisfaction with which he felt his own superiority. The old officer, who was confounded and faultered in asking him a favour, and not being able to conclude his discourse, said to him: Sir, your majesty, I hope, will believe that I do not tremble thus before your enemies: had no difficulty to obtain what he demanded.' These frivolous accomplishments, supported by his rank, and, no doubt too, by a degree of other talents and virtues, which seems, however, not to have been much above mediocrity, established this prince in the esteem of his own age, and have drawn, even from posterity, a good deal of respect for his memory. Compared with these, in his own times, and in his own presence, no other virtue, it seems, appeared to have any merit. Knowledge, industry, valour, and beneficence, trembled, were abashed, and lost all dignity before them.

1. Have to miss the 2004 AEA meeting. Sudip and John will present our paper. Can't wait to hear comments and suggestions.

1. Refined the first paper: the key difference between standard multinomial logit (individual characteristics matter), conditional logit (alternatives' attributes matter), and mixed model (both matter). Also in technical terms: CLM is conditional on the sum of positive (or "failure" in medical term) outcome, MNL is unconditioned. CLM lends itself to fixed effects treatment, MNL doesn't. Independence from irrelevant alternatives matter, but there is no way to test it in the context of two options only. Problem in RP dataset: our ASC predicts the outcome perfectly.

2. Got a "public warning" from my little sister in Tokyo. Alright, Sis, it's 2004.

3. Music: Dave Brubeck (p) with Paul Desmond (as), Eugene Wright (b), and Joe Morello (d). Recommendation: "Take Five" (Original. Definitely superior than Al Jarreau's vocal version) and "Blue Rondo" (Turkish tone?)

Argh. It's new year already.. Time to go home...

1. While running OxGauss to compute compensating variations, I used the time to also run Latent Class Model using Limdep. (Stata cannot do this. Their GLLAMM program is too complicated; yet, not specifically written for the kind of problem I am dealing with). But in Limdep, somehow I constantly got this error message saying "Divided by zero... " -- before even finished reading that popup message, the whole program crashed. This is frustrating. I remembered the same thing happened when I tried to run Random Parameter Logit less than a month ago. I contacted Bill Greene the author and sent him my code. He didn't think my code suggested any inherent problem. So it might have been the way I constructed the data, he probed. Fortunately I could finally do that using Gauss and OxGauss. Now, for the Latent Class Model, I again keep encountering the same problem in Limdep! Time is running and this program keeps crashing! I have tried two specs so far. Same results: crash.

2. Music: Sonny Rollins (Colossus). Too bad, I'm too burnt out I can't enjoy it very well.

3. Happy new year. Welcome 2004. 2003 has been nice but also very devastating. Somebody out there knows exactly what I mean.