Rise of the 'Zombie Banks'

The Financial Post ran an article called "Central Banks Warned Low Rates May Create 'Zombie Banks'".

Awesome! The article reminded me of a day in first year contract law when a student asked if a contract can ever come back after it has been rescinded. The Professor responded sternly "no, there are no zombie contracts." This prompted one of my friends to say - in their best zombie voice, with arms outstretched - "you promised me braaaaaaaaaaaaaaaains." Hilarity ensued.

Wait, I just googled "zombie bank" in an effort to find a sweet image for this post and discovered "zombie bank" is actually a thing. Investopedia defines zombie bank as "a bank or financial institution with negative net worth. Although zombie banks typically have a net worth below zero, they continue to operate as a result of government backings or bailouts that allow these banks to meet debt obligations and avoid bankruptcy. Zombie banks often have a large amount of nonperforming assets on their balance sheets which make future earnings very unpredictable.

How Businesses Create Wealth

Uwe E. Reinhardt is an economics professor at Princeton. He's got a great post (with useful picture below) exploring how companies create “value” and distribute it among various stakeholders. It's a great introduction to understanding how business activity ramifies in society. More here.

Cognitive Bias Song

I'm in love with behavioural economics. If I weren't a law-student, I'd be a PhD student studying this subject. As such, I read the Freakonomics blog regularly. Today, I found this awesome "Cognitive Bias Song" on their blog. It catalogs and musically explains a useful list of cognitive biases uncovered by behavioral psychologists. Amazing! Listen and Enjoy!

The Economics of an Ugly Boyfriend

I found this little gem on the Freakonomics blog: turns out there may be a reason all those supermodels date ugly guys.

Daniel Hamermesh argues that human capital matters in the love matching market that is dating. Turns out looks aren't the only thing we match, "we also supply personality and the ability to get ahead, both of which are valued by the labor market and thus by potential spouses."

He adds that, "careful research shows that, compared with average-looking women, good-looking women marry guys with an extra year of education. Today, an extra year of education is associated with about an extra twelve percent annual earnings."

Women and Name Changing

Women who choose to adopt their husbands’ surnames may be penalized in the job market, a new behavioural economics study from the Netherlands suggests.

The NYT has picked up the study and provided commentary here.

The big news? (1) There were demographic differences between women who chose to take their partners’ names and those who did not. Marital name-changers were generally older and less educated, for example. And, (2) Even when name-changers and maiden-name-keepers are demographically identical, they still may be judged differently.

Blondes

The Telegraph has an article called "Blondes paid more than other women."

While they have a reputation for being long on looks and short on intelligence blondes are actually paid more than other women. A study in the journal Economics Letters reported that having blonde hair boosts pay by £1,600 a year. And in addition to their preferential pay packets blondes also marry wealthier men, who earn an average of six per cent more than the husbands of other women.

The author quotes Olga Uskova, president of the "International Blondes Association" who claims that "Blondes have wealthier husbands because we are more fun and outgoing, and men are more attracted to us." She must be delightful at parties.

Economists vs. Historians

The Washington Post has an interesting article on why economists are more prominent than historians.
Possibilities examined in the article include:
- economists make their discipline more comprehensible to outsiders
- economists are into prediction, which people love to hear
- many historians deal with stuff that has little or no current relevancy (Niall Ferguson excepted)