Evidence for the Colbert “Bump”

A paper by a UC San Diego professor on the effect of an appearance of politicians on the show’s segment “Better Know a District” on their fund raising. The show gives a significant bump to Democratic congressmen who appear on the show — they earn 37% more than similar democratic congressmen who didn’t appear on the show. The analysis is merely suggestive of a causal link. The paper is written in ‘colbert style’ and is quite entertaining to read, and is a great resource about the colbert and its “disproportionate influence” in politics.

Another blog by juice analytics studied colbert’s influence on book sales. their analysis indicates that on-average, books sales increases by 10%, and that this effect comes from the increase in sales of pop intellectual book and liberal book authors that guest on his show. I’m pretty sure that if they study “The Daily Show”, they would get a TDS bump result as well.

I wonder how powerful this effect is vis-a-vis the authors’ other opportunities to market their book? From a professor in my school, i know that an appearance in either show was heavily encouraged by his agent.

Here is a video from AP about the same phenomenon and some choice words from the man himself.

Plan for the Lit Review

Deadline for the Lit Review is coming up soon. i’ve been thinking about how to attack it. i want to present a research program in the form of a lit review. Roughly (very), here is my view of my ‘research program’ thus far:

I. The Border Effect
I want to summarize the vast literature now on the border effect. Recent papers i’ve read/seen here are Lipsey and Swendenborg (NBER 13239, July 2007) “Explaining Product Price Differences Across Countries”
Gorodnichenko and Tesar “Border Effect or Country Effect” mimeo Aug 2006
Bergin and Glick “Global Price Dispersion: Are Prices Converging or Diverging” mimeo Sept 2006
Anderson and Van Wincoop “Trade Costs” Journal of Economic Literature Sept 2004

What i want to say: The Border Effect is confounded by the distribution of prices. From Bergin and Glick, there is a U-shaped pattern in price dispersion. they suggest oil, but i want to suggest industry dynamics instead.
Lipsey adn Swedenborg. They seek to explain price diversion as well. they find, similar to Gordornichenko and Tesar that the country fixed effects are very important (other than income per cap). so there is something happening at the country level. i think its industry dynamics, interacting w domestic demand side.

II. Multiproduct Firms
There are lots of stuff here. Mostly by Bernard and jensen, schott and kortum. Brambilla and weinstein too. Outline the empirical results

III. Trade and Firm Productivity
A. Begin with the theory, say melitz (2003)
B. Empirical — Bernard and jensen (1999), with the newest Trefler (2007).
C. Connect Multiproduct Firms and Firm productivity theory and empirics from A and B.

i think part I can be cut, if the choice is between a tight review of lit and an exploration of my ideas. i think i can write another document detailing what i want to do. But for the purposes of this exercise, i think i can come up w a decent review on II and III.

There is also a IV:
IV: Product Cycles and development
Industry structure has something to say about economic development and macro phenomena. the range of industries a firm can enter is wider is developed countries. this is an extension of the product cycles/quality ladder literature that is out there, but here the ladder is vertical AND horizontal. Macro phenomena, the business cycle and prices (linking back to part I, which is the border effect and price setting), can be linked with multiproduct firm, industry dynamics and reactions to shocks, national price setting etc.

yeah, in the midst of writing this, i’ll probably focus on II and III to come up with a more structured review of lit. develop my ideas in I and IV next week to show to some classmates and advisors. One baby step at a time…

Product Creation and Destruction, More Empirical Evidence from Market Research Data

More empirical evidence on product creation and destruction from Christian Broda and David Weinstein (BW).

They have an impressive dataset from AC Nielsen (which, my professor asked Prof Weinstein about, and she said it costs alot of money), which is a demographically balanced sample of households in 23 US cities. This data covers 40% of all expenditure in the CPI.

What are their findings?

1) Multi-product firms are the norm. The average firm sells 8 different UPCs (Universal Product Codes). The distribution of UPCs is skewed, with a large number of firms having small number of products.

2) The vast majority of product creation and destruction occurs within the firm. Over the last 4 years, 82% of product creation is done within firms, 87% for product destruction. ‘Creation’ is the ratio of value of new UPCs to Total Value. Destruction is the ratio of value of disappearing UPCs to total value.

Also,40% of household expenditures are in goods that were created in the last 4 years, 20% are in goods that disappear in the next 4. In BW, this is products in terms of UPCs, so it includes packaging and size as well. This is the most disaggregated data i have seen in an economics paper.

3) Product Creation is Strongly Pro-Cyclical — that is, it positively co-varies with aggregate measures of consumption. Consider the graph below:

In the recession of 2001, sales dropped and so did new product creation. In another graph, they document that destruction is  weakly counter-cyclical. During the same recession, destruction rose.