The Cost of Seat Belts

Can we assume that seat belts make us safer? Maybe. Writing about seat belts in 1975, University of Chicago economist Sam Peltzman described what we now call the Peltzman Effect. Sam Peltzman said that yes, seat belts do make us…

Figuring Out Financial Regulation

Words cannot describe the 2300 pages of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In a way, because it says so much, it tells us very little. Still though, after looking at the bill and several news summaries,…

The Marshmallow Test and Financial Reform

Is it possible that the marshmallow test relates to financial reform? As described in a 2009 New Yorker article by Jonah Lehrer and a WNYC Radio Lab podcast, a marshmallow test given to 4 year olds might predict adult behavior.…

Airplane Crashes and Financial Crashes

When an airplane crashes, investigators rush to the scene, gather evidence, and ultimately hope to emerge with updated safety suggestions. It would be wonderful if we, when assessing the “flash crash” or slower stock market dives, could also diagnose the…

Max Bialystock and CDOs

Comparing the deal to Bialystock, Bloom, and Springtime For Hitler in The Producers, NPR’s This American Life looked at how a Chicago hedge fund made money on seemingly unprofitable CDO transactions. Available as a podcast, the story made the CDO derivatives world entirely understandable.  The…

A New Fed?

“Independent” is the first word that comes to mind when I think about the Federal Reserve. Overseeing the supply of money and credit, the Fed is supposed to be an independent Federal agency. I wonder how the following basics of…