Fruit Flies to Save Adam Smith?

I believe that research on fruit flies may be important to improving economics. And, I am not kidding. 

Let me start by saying that I am aware that almost no one agrees. One academic reviewer wrote, "why would I study drosophila when I can walk down the hall and study humans?"

If you believe something that no else believes you could be a genius or a kook. Given that there are probably a million kooks for every genius, the odds are against the flies. However, I had to have some level of self-deception during the project, and I thought about examples of genius.


Adam Smith is stuck without Charles Darwin

What would make you happier in 2016?

Charles Darwin (young) & Adam Smith

If you could change one aspect of your life during 2016, what would make you the happiest? Imagine yourself on December 31, 2016 looking back with satisfaction on 2016. What would it be?

Standard economics has an answer. It is illustrated by this anecdote conveyed to me by Professor Amartya Sen, Nobel Laureate in Economics. Walking through Harvard Square one day Professor Sen asked me, “What should you do if you see a person trying to cut his fingers off with a pair of dull scissors?”

My response: stop him from cutting off his fingers, call the police for help, etc.

“Offer him sharper scissors,” was Professor Sen’s answer. Standard (a.k.a. “neoclassical”) economics assumes that people know what they want. Professor Sen is a critic of some aspects of neoclassical economics, so his question (and answer) was a rhetorical maneuver designed to educate.

Let us to return to your happiness in 2016.  Did you secretly answer ...

Click on Professor Sen to read more


Challenging Year for Mutual Fund Investors

Here are the top ten mutual funds by size, and the return to owning them (including dividends) from January 1, 2015 through December 13, 2015. 

If you are feeling bad about your investments this year, you have a lot of company with the professionals running these funds. The average return (equal weighted) for these funds is a loss of 0.26%. So the smartest people in the world, with the best information, are being beaten by a snail. 

Federal Reserve Chair Janet Yellen has kept interest rates at 0% (for now)

NameTickerYTD return
Vanguard Total Stock MarketVTSMX0.64%
Vanguard 500 Index FundVFIAX1.67%
PIMCO Total ReturnPTTRX0.98%
American Funds Growth Fund of AmericaAGTHX5.88%
American Funds EuroPacific GrowthAEPGX-0.49%
Fidelity ContrafundFCNTX7.24%
Franklin IncomeFKINX-7.37%
Vanguard Wellington Fund VWELX0.28%
Dodge & Cox International StockDODFX-11.41%
Fidelity Cash ReservesFDRXX0.01%