Expense reports I'd want to audit

It might be incongruous to think of spies having to account for expenses, like any old suit on a business trip, but in reality, people working for intelligence services do have to keep track of the money they're spending, file expense reports, and even hound their company (the Company, in this case) to reimburse them. "They're the same as the reports any businessman would submit after meeting a client," says Chris Lynch, former FBI and CIA counterintelligence officer and author of The C.I Desk. "Meals, miles, parking, small gifts, other expenses, receipts if they had them, some kind of 'certification' if they didn’t."
 
Information about expense reports for intelligence operations is somewhat hard to come by, both because it's mundane and potentially revealing. Spy memoirs don't spend a lot of time recalling the hours spent on filling out paperwork, but, on the other hand, boring paperwork, if it included line-by-line accountings of expenses, could show how an officer operates—and how lavishly he or she spends. The expenses for setting up an operation might include sourcing equipment, creating supply caches, arranging safe houses, and training people; one court case in Italy revealed records of U.S. intelligence officers staying at luxury hotels and spending as much as $500 a day eating out.
 
But some of the most intriguing expenses that intelligence operations rack up come from the requests of agents—the well-placed people that intelligence officers recruit to secretly pass along valuable information. Some agents simply want to be paid for their efforts. But some have much more unusual requests. 
 

Spies have to submit expense reports, too.

Tumblr idea: imagined renderings of James Bond's expense reports from each of the movies.

Payroll matters in MLB

FiveThirtyEight notes that despite some small budget successes in MLB like the Houston Astros or Kansas City Royals, money correlates as strongly to winning as ever.

J.C. Bradbury, an economics professor at Kennesaw State University, found that winning more increases revenue exponentially. “Going from 85 wins to 90 is worth more than 80 wins to 85,” he says. As a result, while it might cost more per win for a team that wins 90 games than 85, it makes financial sense because the revenue reward will be higher as well. This leads to a self-perpetuating cycle. Additionally, fans of teams that win frequently expect them to continue winning, and management pays more to do so. For a team like the New York Yankees, paying 10 percent more than anyone else for a second baseman who is only 5 percent better than his closest peer is worth the money (and they can afford it).
 
...
 
Perhaps one reason for the renewed focus on the success of small-budget teams is the importance of playoff success versus the regular season. Postseasons in American sports offer a smaller sample size than, say, soccer’s English Premier League, where the winner is determined by 38 games. In baseball, the better team (the one with the higher payroll) is less likely to prevail over the course of a short playoff series than they would be over an entire season. That, combined with the expansion of the playoffs, means it’s easier for a small-budget team to reach the World Series, as the Kansas City Royals did in 2014, losing to the San Francisco Giants in Game 7. Winning a playoff series can come down to a few factors — a couple of good pitchers and luck — that are less important during the regular season. “The formula seems to be: limp through regular season, get into playoffs, then win,” said Rodney Fort, professor of sport management in the School of Kinesiology at the University of Michigan.
 

That's the compromise at the design of MLB. It's harder for a small-budget team to make the playoffs, but once they're there, the odds of them winning it all are better than they are in, say, the NBA. Much of the design of sports is arbitrary, you can have set things up to increase or decrease the role of randomness for your own narrative goals. If you're uncomfortable with the idea that you can just buy wins, you're not going to root for teams like the Dodgers, Yankees, or Red Sox.

I'm not a huge soccer fan, but it seems there are no salary caps for UEFA teams in Europe. Do fans there feel similar reservations about the effective monopoly on success for those with deep pockets?

I'm of mixed emotions on the topic. On the one hand, a salary cap that puts all teams on on equal footing seems equitable. On the other hand, its larger effect is to suppress player salaries, shifting those dollars into owners' pockets. Oddly, most sports fans I know seem more sympathetic to owners than players, not what you'd expect from people who are themselves laborers. That is, if their team gets a bargain on a star player, they're happy.

I generally side with players, even if their salaries are already high, because I like seeing people achieve fair market value for their contributions. I wonder if the prevalence of fantasy sports has made more fans more sympathetic to ownership than players since such games generally put fans in the position of being a general manager.

Assembled in China

This study also confirms our earlier finding that trade statistics can mislead as much as inform. Earlier we found that for every $299 iPod sold in the U.S., the U.S. trade deficit with China increased by about $150. For the iPhone and the iPad, the increase is about $229 and $275 respectively. Yet the value captured from these products through assembly in China is around $10. Statistical agencies are developing tools to gain a more accurate breakdown of the origins of traded goods by value added, which will be attributed based on the location of processing, not on the location of ownership. This will eventually provide a clearer picture of who our trading partners really are, but, while this lengthy process unfolds, countries will still be arguing based on misleading data.
 
Those who decry the decline of U.S. manufacturing too often point at the offshoring of assembly for electronics goods like the iPhone. Our analysis here and elsewhere makes clear that there is simply little value in electronics assembly. The gradual concentration of electronics manufacturing in Asia over the past 30 years cannot be reversed in the short- to medium-term without undermining the relatively free flow of goods, capital, and people that provides the basis for the global economy. And even if high-volume assembly expands in North America, this will likely take place in Mexico where there is already a relatively low-cost electronics assembly infrastructure.
 

An interesting piece in AEI about how shifting assembly jobs back to the U.S. might not be the economic boost it's often made out to be.

It’s an important distinction that Apple products (and other electronic goods) are really only “Assembled in China,” and not actually “Made in China.” The value of the final assembly in China is pretty small compared to the value added in the U.S., and yet China gets credit for the majority of the value according to the way trade statistics are calculated.

Prime Day

More than 90 years ago, holiday shopping found its official start the Friday after Thanksgiving, eventually becoming Black Friday, the biggest shopping day of the year. Over the years, Amazon has helped make Black Friday even more of a global online shopping phenomenon. Next week, Amazon turns 20 and on the eve of its birthday, the company introduces Prime Day, a global shopping event, offering more deals than Black Friday, exclusively for Prime members in the U.S., U.K., Spain, Japan, Italy, Germany, France, Canada and Austria. On Wednesday, July 15, new and existing members in the U.S. will find deals starting at midnight, with new deals starting as often as every ten minutes. They can shop thousands of Lightning Deals, seven popular Deals of the Day and receive unlimited fast, free shipping. Not a Prime member? To participate in Prime Day, Amazon customers can sign up for a 30-day free trial of Prime at amazon.com/primeday.
 

Amazon is creating its own shopping holiday. Economists and retailers have long debated what would happen if there were two Christmases a year instead of one. Would that just move consumer spending around or would it increase the share of the pie? Amazon doesn't have to worry about that here because they're just focused on their own revenue, and if this shifts retail spending share to them, all is good.

It can be dangerous for a retailer to become dependent on sales, but Amazon is a special case. Restoration Hardware has a twice a year sale on its towels, also on its lighting. Customers feel a bit silly buying those items from them any other time of year. Criterion DVDs go on sale at 50% off from time to time. To buy one at any lower discount feels like you're leaving money on the table.

Amazon has such a large catalog of items, and the items it puts on sale are so random, that it's immune to creating artificial seasonality with its sales. Its customers buy from them so often that it's not practical to wait until items go on sale to shop there.

Besides, the core of Amazon's value is everyday low pricing, so most customers feel like they're getting a great deal on most everything purchased there anyhow. A bunch of random deals on Prime Day are just gravy. And if this goes off well and becomes an annual occurrence, it may drive more people to join Amazon Prime, even better for Amazon because of the loyal customers Prime memberships create and the increase in shopping volume and frequency from that cohort.

The end of information asymmetry (except when we want it)

Alex Tabarrok and Tyler Cowen of Marginal Revolution fame contemplate the implications of a diminishing information asymmetry.

Might the age of asymmetric information – for better or worse – be over?  Market institutions are rapidly evolving to a situation where very often the buyer and the seller have roughly equal knowledge. Technological developments are giving everyone who wants it access to the very best information when it comes to product quality, worker performance, matches to friends and partners, and the nature of financial transactions, among many other areas.
 

They begin with a great example of how a market increased liquidity by driving down information asymmetry.

The market for used cars, however, has been one of the earlier examples where market institutions largely (albeit not completely) solved the problem of asymmetric information. Even in 1970, the market for used cars was extensive, and some institutions existed to make information more symmetric. Perhaps the most important of these was the odometer. First used by Alexander the Great to measure distances between cities, modern odometers were standard on almost all cars by 1925. The odometer reading is the single most important piece of information about a specific car that determines its value, and that is why used car prices are adjusted for mileage. The law contributes to this solution by making odometer tampering illegal and successive state and federal laws have increased the penalties and enforcement over time. In 1972, for example, the Federal Odometer Act made tampering a federal felony. As with other crimes, punishment doesn’t eliminate tampering but it does reduce it quantity thus making odometer readings more trustworthy and quality information more symmetric. Even more importantly, the Truth in Mileage Act of 1986 requires that sellers disclose and record the odometer reading on the title at every transfer of title. The 1986 Act greatly reduced the benefits of tampering because the odometer could not be rolled back prior to the reading from a previously recorded sale.
 
...

Perhaps the most telling fact is that the market for used cars is already some three times larger than the market for new cars (as measured by unit sales, see Bureau of Transportation Statistics). In 2012, for example, there were 40.5 million used car sales compared to 14.5 million new car sales (NIDIA 2013). On average, used cars sell for about a third the price of new cars, so the total size of the two markets is similar with both around $330 billion in sales. There just aren’t that many lemons to sustain such a high transactions volume. In fact both high-quality and low-quality used cars are available in fairly liquid, fairly transparent markets.
Information symmetry about the quality of automobiles is very likely to increase. Almost all vehicles today have “event data recorders” aka “black boxes,” similar to those found in airplanes. Event data recorders record data on vehicle performance and diagnostic checks but also speed, braking, seatbelt use and other information relevant to safety and car crashes. Some car companies, most notably Tesla, can collect such information remotely or stream it in real time. Tesla, for example, collects information on a vehicle’s odometer, service history, speed, location, battery use, charging time, braking, starting and stopping times, air bag deployment—even radio and horn use.[2] When a vehicle is sold the data transfers with the vehicle. It is now possible to prove that a used car really was driven by a grandma just on Sundays.
 

Even for new car purchases, reduced information asymmetry has vastly improved the purchase process, and it might be just as good for car dealerships, too. It's now possible to look up the dealer price for most any car on a variety of free websites. Instead of haggling back and forth with a car salesman, traditionally an unpleasant ordeal, you can simply offer to purchase a car at cost plus whatever margin you want the dealer to make.

I suspect it's only a matter of time before other traditionally unpleasant or inefficient marketplaces become less one-sided. One example, to stay in the automotive space, is purchasing auto insurance. Every time my policy comes up for renewal, I'll check around for better rates, and more often than you'd expect I find one. The insurance companies count on your laziness to minimize churn, and often they withhold discounts they could offer you based on your driving record. Someone is going to come along to either automate that process or offer to take a cut of any savings in exchange for doing the legwork.

I recently purchased my first condo, and shopping for a mortgage was also incredibly painful. Refinancing doesn't sound like much fun either. This is one area where good enough doesn't feel good enough; one always feels taken advantage of if there's money left on the table.

*****

Tabarrok and Cowen also discuss reduced information asymmetry in reputation in a variety of marketplaces.

Reputation is one very general way to think about solutions to moral hazard problems. A mechanic with a reputation for honest dealing can earn more business at a higher price. Cheating becomes less valuable when the price is a loss of reputation.
 
In recent times, information technology has made it easier to observe a seller’s reputation and to contribute to the formation of a seller’s reputation at low cost. Yelp, Angie’s List, and Amazon Reviews all make it easy for past buyers to report their observations on seller quality and for future buyers to observe a seller’s accumulated reputation. And of course it is not just sellers who are rated but workers too are evaluated in a variety of ways; for instance many employers check a worker’s credit rating, or on-line history, before making a hire. We may be creating some privacy problems with these techniques, but the old school issues of asymmetric information are drying up rapidly.
 
Early reputation mechanisms were one-way, namely that buyers would generate reputations for sellers, but now the ratings often go both ways. Many of the exchanges in the sharing economy, including Uber (transportation), Airbnb (accommodations), and Feastly (cooks) use two-way reputational systems. That is the customer rates the Uber driver, but in turn the Uber driver rates the customer. Dual reputation systems can support a remarkable amount of exchange even in the absence of law or regulation. The Silk Road marketplace for illegal goods, for example, supported millions of dollars of exchange through a dual reputation system. On the Silk Road it was possible to pay for goods in advance of delivery or to buy goods which were delivered before payment was made. In each case, honesty was maintained through reputation even without legal recourse for contract breach.[4] Thus, in these cases reputation maintained quality even when theories of information asymmetry would have predicted the problematic nature of any exchange at all.
 

Tabarrok and Cowen hone in on privacy as one problem with this world of two-way reputation. Privacy concerns and plain old cultural inertia may be the only things holding back more companies from implementing two-way reputation systems. Restaurants, hotels, airlines, car rental services, and almost anyone you transact with could start rating you as a customer and using that to determine whether they want your business in the future. Everyone deserves healthcare, I believe strongly in that, but maybe the jerk who always no-shows at a restaurant can and should live without a reservation.

*****

Given all this, why do we still tolerate so much information asymmetry when it comes to the people in our lives? Take the mating/dating market, for example. People spend money on fancy sports cars, exorbitant prix fixe meals, designer clothing, much of it just to signify wealth. Why not just show someone your bank statement?

How about signaling physical fitness? We spend a lot on gym memberships, Spanx, fad diets, all to look good for potential mates, but why not share the results of our latest physical from the doctor's office, along with a medical history?

Of course many technological advances have already started increasing the efficiency of such status signaling (a cursory scroll through your Facebook news feed would blow the mind of a sociologist from a previous era), but we still tolerate a surprisingly high degree of information opacity if considered purely from a market perspective.

I suspect it's not just cultural inertia, though that plays a part as in all technology dissemination. Instead, I suspect humans value the process of constructing narratives about themselves and about each other, and reducing information opacity to zero would remove all the pleasures of that activity. It would eliminate mystery, and ambling out of the fog of mystery  is one of the great pleasures of life.

That so many of us choose to derive so much of the narrative drama of life through the people around us is either natural or bizarre, depending on your personality. Even with someone you know so well, like your partner or spouse or child, one of the most pleasurable mysteries of life is learning new things about them every day, seeing how they evolve. If we have an insatiable desire for a certain level of narrative entropy, perhaps most of us would prefer to have it from the people in our lives than from, say, a new digital SLR, where we want to read every last bit of research and every last professional and consumer review to ensure we know what we're getting.

Perhaps some baseline level of relationship dissolution will always exist simply because we prefer a gradual diminishment rather than a sudden dissolution of information asymmetry when it comes to the people in our lives. 

Does surge pricing maximize consumer welfare?

Steve Randy Waldman makes one of the more persuasive arguments against surge pricing (a term which may have existed before Uber—the practice certainly did—but which now seems inextricably intertwined with their brand).

I don’t care all that much about Uber’s “surge pricing” — its practice of increasing its usual fare schedule by multiples during periods of high demand. I do, however, care about the damage done by a kind of idiot dogmatism that hijacks the name “economics”. Uber’s surge pricing may or may not serve Uber’s objectives of profit maximization and world domination. It may or may not increase “consumer welfare”. But it is not unambiguously a good practice, either from the perspective of the firm or as a matter of economic analysis. Its pricing practices impose tradeoffs that must be addressed with reference to actual, on-the-ground circumstances. Among prominent academic economists there may well be a (research-free) consensus that surge pricing promotes consumer welfare (ht Adam Ozimek), but that reflects the crude selection bias of the profession much more than actual analysis of the issue. The dogmatism which has arisen in support of Uber’s surge pricing is quite analogous to the case of urban rent regulation, a domain in which there is incredible heterogeneity across localities and nations, both of circumstance and policy, and a wide range of legitimate values that conflict and must be reconciled. (Here’s an interesting case in the news today, in Spain, ht Matt Yglesias.) Almost as a right of passage, economists drone in every intro course that rent controls are bad. By preventing price signals from working their magicks, they prevent the explosion of real-estate supply that a truly free market would deliver. This is stated as uncontroversial fact even while economists who research and opine prominently on housing policy have endlessly documented that housing supply is not in fact price-elastic in the prosperous cities where rent controls are typically imposed. None of this is to say that rent controls are good or bad, or that non-price barriers to construction are good or bad. These are complex questions involving competing values textured by local circumstance. They deserve bespoke analysis, not pat dogma imposed by distant central planners economics professors.
 
...
 
As in the case of rent control, the stereotyped economist’s case for surge pricing is based on a conjectured elasticity of supply. With higher prices, the reasoning goes, more drivers will hit the road, more customers will be served, and the world will be better off. And that’s a good case, as far as it goes. But it doesn’t go very far, without some empirical analysis. It doesn’t justify Uber’s actual practice of surge pricing, which is far from the transparent auction our stereotyped economist seems to imagine. It doesn’t account for the trade-offs imposed by price-rationing (as opposed to time- or lottery- rationing), both between customers and for the public at large.
 
First, how price elastic is driver supply? If we presume that Uber is a Walrasian auctioneer, a disinterested matchmaker of supply and demand, apparently supply is not very elastic. Uber surges prices by multiples, two, three, even four times “typical” pricing in periods of high demand. That’s extraordinary! If supply were in fact elastic, small increases in price would lead to large increases in supply. The supply-centered case for dynamic pricing is persuasive in direct proportion to actual elasticity of supply. Uber’s behavior suggests that the supply-based case is not so strong. Of course, we cannot make very strong inferences about driver supply from Uber’s behavior, because they are not in fact a disinterested Walrasian auctioneer. When Uber surges, it dramatically raises its own prices and earns a lot more money per ride, whether ride supply increases not at all, or whether it spikes so much that drivers end up competing heavily for riders and suffer long vacancies. As a profit maximizer, Uber’s incentives are to impose surges primarily as a function of demand, and say nice things about supply to con economists and journalists.
 

This is one of the paradoxes of surge pricing. It is supposed to attract more drivers to the road, but if you live in SF as I do and have tried to call an Uber at the end of the workday (say 5-8pm), or on a weekend night, you know that Uber will inevitably be in surge pricing. And yet it still happens every day. If surge pricing worked, you'd expect drivers to learn that those are great times to drive to maximize their earnings, and that as more drivers did so surge pricing would wane as supply matched demand.

Perhaps there are still not enough drivers in total to match these spikes in demand. Or perhaps driver supply isn't as price elastic as claimed.

Or perhaps the cost of maintaining even the normal supply of drivers on a Friday night is just higher. Driving in rush hour in San Francisco isn't exactly pleasant work, and more importantly, drivers want to go out on Friday nights, too. The price to get them on the road may just permanently be higher on that night, like how evening movie tickets cost more than matinee tickets, or dinner costs more than lunch at restaurants even if the food is the same, or how Monday morning flights with Friday evening returns cost more to target business travelers. Completely plausible, but different from the story that ride sharing PR departments continue to put out, which is that surge pricing attracts more drivers until supply matches demand.

If that were the case, from a brand perspective, it would be better to just put those higher rates into effect permanently and call them peak rates and call the pricing at other times off-peak rates. Surge pricing is already a dirty word. If for some reason demand was even higher than normal peak demand, then put in surge pricing, and if for some reason it happened to be lower, you could offer a discount off of peak rates (ebb pricing?) and gain some consumer goodwill.

The other argument for surge pricing is, of course, price rationing. That is, by raising prices, we ensure that the scarce resource of Uber drivers goes to those who most need it.

Unfortunately, the argument for price-rationing (as opposed to lottery-rationing, or queue-rationing) of goods as being welfare-maximizing depends (at the very least) upon a rough equality of wealth so that interpersonal dollar values can stand in for interpersonal welfare comparisons. In an unequal society, price rationing ensures disproportionate access by the rich, even when they value a good or service relatively little. There is no solid case that price-rationing is optimal or even remotely a good idea when dispersion of purchasing power is very large. I’ve written about this, as has Matt Yglesias very recently. Matt Bruenig has two excellent posts relating this point to Uber specifically (as well as another post on ethical claims about Uber’s pricing).
 

The service is still scaling (incredibly), so it may not be fair to judge the validity of the price-rationing argument. However, based on the three times I've seen crazy surge pricing multiples for Uber (I'm talking 8X to 9X, for example during a blizzard in NYC the day after the Super Bowl two years ago), price rationing meant Uber was only available to price-insensitive wealthy folks. Great for maximizing Uber's profits, but not exactly what people claim when they say the market is the best way to allocate scarce resources during times of peak demand, for example an emergency. Unless you want to argue that because the wealthy were willing to pay more, they deserved or needed the service more than poorer folks. Pursue that line and next thing you know, you're dancing with a woman in a mask at your masquerade ball and she's whispering in your ear:

There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us.
 

Matt Bruenig explains this with a very clear example:

Suppose that, in a given location, 10 people will normally hail an Uber cab, and 10 drivers will normally be cruising about to accept them. Now suppose that, because of an emergency, the number of people trying to hail a cab shoots to 100 people. In response, Uber jacks up prices very high, which has the effect of bringing 10 additional drivers on to the road. That means there are now 20 drivers (a doubling of supply) and 20 of the 100 people trying to hail an Uber cab succeeds in doing so.
 
Under Econ 101 analysis, you say that there was a welfare increase here. See, there were 20 people who got Uber cabs rather than 10 people. But, as I keep pointing out, this argument is not determinative if we assume the 100 people vying for Uber cabs have unequal economic resources. Further, the more unequal the resources are among those people, the more likely using prices like this actually decreases aggregate utility.
 
To see why, consider these two scenarios:
 
Non-Surge
  • Rider Demand: 100
  • Cab Supply: 10
  • Chance of Getting a Cab: 10% for all 100 riders
Surge
  • Rider Demand: 100
  • Cab Supply: 20
  • Chance of Getting a Cab: 100% for wealthiest 20 riders, 0% for other 80 riders
From a glance, you can immediately see that for the bottom 80 riders, the rational preference should be the Non-Surge. In Non-Surge, their odds of getting a cab are 10%. In Surge, their odds of getting a cab are 0%. Don’t let stupid journalists confuse you on this point.
 

Did more cars hit the road in response to the 8x or 9x surge pricing that snowy night in NYC? Without data from Uber, it's impossible to say. Given that Uber has been under a bit of a public relations siege, at least in the tech press and locally here in the Bay Area, if surge pricing increased supply of drivers in any meaningful manner in times where demand outstrips supply, I would've thought they would've released data proving that point.

This isn't to say I'm not a fan of Uber and other ride-sharing services. I love ride sharing, I use Uber and Lyft all the time. They've undoubtedly produced a great deal of surplus consumer and societal welfare, especially in this time of a heavily subsidized price war for market share. What taxi drivers and the government are doing in Paris to fight off Uber is just one more reason I've fallen deeply out of love with what was once one of my favorite places in the world.

And I don't doubt some of the grumbling about surge pricing is just the usual consumer noise greeting any price increases, however reasonable. It would be more bizarre if consumers didn't complain simply as another signal to suppliers of their preferences.

But the argument that surge pricing always maximizes consumer welfare is a more complex one, and not a premise that should be accepted at face value.

Wife bonuses

And then there were the wife bonuses.
 
I was thunderstruck when I heard mention of a “bonus” over coffee. Later I overheard someone who didn’t work say she would buy a table at an event once her bonus was set. A woman with a business degree but no job mentioned waiting for her “year-end” to shop for clothing. Further probing revealed that the annual wife bonus was not an uncommon practice in this tribe.
 
A wife bonus, I was told, might be hammered out in a pre-nup or post-nup, and distributed on the basis of not only how well her husband’s fund had done but her own performance — how well she managed the home budget, whether the kids got into a “good” school — the same way their husbands were rewarded at investment banks. In turn these bonuses were a ticket to a modicum of financial independence and participation in a social sphere where you don’t just go to lunch, you buy a $10,000 table at the benefit luncheon a friend is hosting.
 
Women who didn’t get them joked about possible sexual performance metrics. Women who received them usually retreated, demurring when pressed to discuss it further, proof to an anthropologist that a topic is taboo, culturally loaded and dense with meaning.
 

Finally got around to reading this piece in the NYTimes on Upper East Side moms. Is this real?

The author wrote the piece to promote her new memoir titled, no joke, Primates of Park Avenue.

An Upper East Side wife penned this response with about as virally-optimized a title as even the greatest minds in the Buzzfeed labs could concoct: I get a wife bonus and I deserve it, so STFU. 2015 is shaping up to be the year every one tried to break the internet.

Al came out in favor of the idea of the wife bonus almost as soon as we moved to Australia. He’s got a very politically incorrect sense of humor and joked it was to reward me for being a “good little wife,” which made me laugh out loud. Seriously, though, we settled on the exact terms: When he received his bonus every year at the end of April, we’d each take a fifth after tax and bank the rest.
 
I’m exceptionally lucky to have a husband who values how important a job it is to stay home and take care of a child, as well as understanding how difficult it is to leave friends, family and career prospects behind to further his career. He was actually pleased to have a tangible way to recognize the contribution that I also make to the success of our lives.
 
The wife bonus gives me not only financial freedom, but freedom from guilt too. We have a joint account, and before we started the system, I was reluctant to spend our money on myself, even though my husband insisted he was happy for me to. Now that I have a quantifiable amount to treat myself with, I don’t feel guilty doing so.
 
The five-figure amount has pretty much stayed the same despite the economy. Last year, I bought a Prada handbag and Burberry raincoat for about $1,500 each. I tend to wait until I’m back home in London to spend my bonus because I can leave Lala with a member of the family and go on a week-long splurge to upscale stores like Selfridges. My favorite labels include Bottega Veneta, Chanel, Prada, Smythson, Erdem and Stella McCartney.
 

I will leave aside any personal judgment here and just observe that the furor reflects the evolving conception of marriage. Whereas once they were largely seen as economic arrangements, now we expect more from marriage, from our spouses. They must fulfill us in every way. I can't tell what the model of hedonic marriage has to say about wife bonuses, perhaps an economist out there has an analysis.

If the couples observed here just had shared bank accounts and the money flowed the same way otherwise, we wouldn't have any such furor. The framing is everything here.

Competing against robots

Some scholars are trying to discern what kinds of learning have survived technological replacement better than others. Richard J. Murnane and Frank Levy in their book “The New Division of Labor” (Princeton, 2004) studied occupations that expanded during the information revolution of the recent past. They included jobs like service manager at an auto dealership, as opposed to jobs that have declined, like telephone operator.
 
The successful occupations, by this measure, shared certain characteristics: People who practiced them needed complex communication skills and expert knowledge. Such skills included an ability to convey “not just information but a particular interpretation of information.” They said that expert knowledge was broad, deep and practical, allowing the solution of “uncharted problems.”
 
These attributes may not be as beneficial in the future. But the study certainly suggests that a college education needs to be broad and general, and not defined primarily by the traditional structure of separate departments staffed by professors who want, most of all, to be at the forefront of their own narrow disciplines. But this old departmental structure is still fundamental at universities, and it is hard to change.
 

Full article here from Robert Shiller.

A few random thoughts. Disciplines which are purely about knowledge accumulation are risky if the type of knowledge acquired is that which computers can accumulate in a fraction of the time. Lots of Ph.D's seem unlikely to be economically worthwhile considering the cost of higher education.

Watch the virtual assistant on your phone. Siri or Google Now are good benchmarks for what skills are becoming obsolete, and which are still of great value.

Most humans still prefer a bit of entropy and warmth from those they interact with, especially in the service sector, and indexing high on that still commands a premium.