That's after various government benefits and taxes, but the calculationOf course, the "calculation" also sandbags the tax credits: The EIEC is credited to the 14,000 family, but other tax credits are probably not credited to the 60,000 family. Also, what about retirement contribution matching? Doesn't seem like the "total economic benefit" of the family "earning" 60,000 is being counted (and in particular the portions that are tax-exempt!). Most folks who earn 60,000 have a total compensation (with health and retirement benefits) of upwards of 80,000, about a quarter of which they never even think much about!
seems incorrect to me. For instance, should the Medicaid and CHIP
benefits of the poorer household actually be valued -- to the user -- at
$16,500 a year? (Is that number coming from some kind of cost basis?
If so, is it adjusted for the age of the Medicaid recipients to rule out
nursing home expenditures?) Is the $60,000 per year family receiving
employer-supplied health insurance? The assumption seems to be that
they do not.
If we concede that the middle-income person would end up with lessWhat's funny about this is that the theorist (Cowen) disagrees on data-related grounds, whereas the statisticians (Fung and Gelman) dispute it on theoretical grounds.
disposable income than the lower-income person, then we'd expect that
the middle-income people will take lower-paying jobs so as to increase
their disposable income. But I have not seen reports of such reverse
social mobility. Theory needs to fit reality. This hole in the theory
needs to be covered.
What are companies doing with all the money they are making? For now, sitting on it.Seems like an example of the Thrift Paradox if I ever heard one.
the increase in lending was greatest in 2006 and the first half of 2007,In other words excessively low interest rates, the crux of the Austrian school's departure from the Keynesian school, does not go far in explaining the biggest increases in lending. That is not to say that there aren't useful insights from other aspect of the Austrian school's analysis, namely the fact that agent's rationality and ability to process information from market signals is imperfect. (But one could also correctly argue that these are views that the Austrians SHARE with the Keynesians.)
after the federal funds rate had already returned to a level consistent
with normal benchmarks.
Bruce Schneier, a security guru, calls all this “security theatre”. He suspects they merely prompt attackers to change targets, and reckons it makes more sense to invest in better intelligence.
A one-paragraph explanation of the Austrian theory of business cycles would run as follows. Interest rates are held at too low a level, creating a credit boom. Low financing costs persuade entrepreneurs to fund too many projects. Capital is misallocated into wasteful areas. When the bust comes the economy is stuck with the burden of excess capacity, which then takes years to clear up.
This means that the economy has been creating private jobs at an above-trend rate for three months now, but the total has been held back by government; besides shrinking census employment, local government payrolls shrank in October.
The President has struggled to get his agenda through a Senate with 59Gridlock = no tax increase + no spending cuts = high deficits until 2012.
votes on his side; the difference betwen 51, 50 and 49 votes might be
marginal. The deficit may be locked on autopilot as neither tax rises
nor spending cuts could gain a majority.
There was an actual economic reason about this. I went away in Michigan, where a lot of people lost their houses, mostly poor people already. When they had to move away from the prison, it meant they couldn't bring their loved ones as much contraband group, which meant the price of what there was sky rocketed....Bet you didn't read about that one in the Wall Street Journal.
I think we're in a recession until real per capita GDP gets back up to where it was before. That is not the way the National Bureau of Economic Research measures it. But I will tell you that to any-- on any common-sense definition, the average American is below where he was before, or his family, in terms of real income, GDP.James Hamilton defends the profession, conceding that it's a matter of semantics.
Economists have used the term "recession" to have this particular meaning-- the episode between a peak and trough-- for 150 years or so of data.
It turns out that major league hitters on the verge of a 3 handle batting average — .300 — hit an astounding .463 on their last at bat of the season.
If a .299 hitter gets a hit in his first AB of the last game of the season, his manager takes him out. If he makes an out, he stays in the game. If he goes 0-4, he finishes at .295 or so but doesn't count in the sample of how .299 batters do in their last AB.
Sent with permission of the Director of Intercollegiate Athletics
The football office has approximately 250 new video tapes that we no longer need. If you can use these please contact me. Thanks!
Stories from NY Times (here) and Roanoke Times (here).A nice example of the potential value of regulation so that consumers have information on what they are buying.
Seven decades have passed since The Road to Serfdom was published. Social democracy hasn’t yet led Europe or any of its diverse countries into serfdom. On the contrary, they’re are among the most free and prosperous countries in the history of human civilization. I prefer the American system. It’s better, all things considered. In order to make the case for it, we need not pretend that the people of Europe are in chains.
Forced to choose, I’d rather live in the ACLU’s idea of the perfect America than a country where we repeal Obamacare, eliminate earmarks, and persist in chipping away at civil liberties to fight drugs and terrorists. The former may be a “road to serfdom.” The latter is a shortcut to the same place.
The upside to cash-benefits is that it forces policymakers to confront the trade-offs involved in delivering a certain subsidy and evaluate whether it makes sense.
A liberal arts education helps us think with greater subtlety, even if it does not improve our performance on subsequent standardized tests. I see an impact here even on the lesser students in state universities. It also helps explain how the U.S. so suddenly leaps from having so-so high schools to outstanding graduate schools; how many other countries emphasize liberal arts education in between?
I've certainly met my share of Econ 101 robots, who can't talk beyond the "markets are always right" models one gets in early economics classes.
Who has the longest interception return ever? Which running back ran for
the most yards in a single game? What team scored the most fourth
quarter touchdowns in a season?
Answer: I don't care.
That's trivia, not statistics. What I'm interested in is analysis. What
makes a winning team? Is it better to go for it or punt on 4th and short
at the 50 yard line? Which teams are most likely to make the playoffs?
How much does luck play a part in any game?
The sting in the tail is that by paying less attention, we are less able to counter-argue what the ad is communicating. In effect we let our guard down and leave ourselves more open to the advertiser's message.
Older people like reading negative news stories about their younger counterparts because it boosts their own self-esteem, according to a new study.
The West, that is from Oklahoma on up to Alaska, was settled with a large and expensive boost from the federal government, subsidies that often continue to this day. All of which complicates the Western (and Alaskan) self-idealization of themselves as craggy and libertarian individualists.
So whereas someone who can borrow and lend freely will spend very little of a temporary rise in income, someone who is liquidity-constrained — wanting to spend more right now, but unable to borrow — will spend all of that temporary rise.The graphs in the link help illustrate why this can be true. Also note that he is using a dynamic model - usually the tool of the neoclassicals - and not some trumped-up "in the long run we're all dead" argument. It also says a thing or two about why tax cuts (or, equivalently, transfers) to the lower segments of the income distribution might have a greater macroeconomic impact.
It seems feasible that a strategy of ignoring debt and focusing on growth could be as effective as ignoring growth and focusing on debt in breaking the debt-growth relationship.From Free Exchange.
The idea underlying comparative advantage is that a country always has one. The brilliance of the theory is that even when one nation is better at every last type of economic activity than another, it will still be advantageous for both nations to produce and trade. China isn't going to do everything.
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
| I's on Edjukashun - Loyola, Texas Textbooks & Wal-Mart<a> | ||||
| ||||
In primary and secondary education, measures of teacher quality areA lot of us question why this should be the case, and some of us actively doubt the competence of students when it comes to evaluating teacher quality. My own view is that these evaluations are a signal of some things the professor might be doing well and certain other things that the professor might improve, but they do a poor job of measuring how well the instructor did at teaching the actual material. Sometimes they measure little more than popularity (which is not altogether unimportant!). But here are some interesting results:
often based on contemporaneous student performance on standard-ized
achievement tests. In the postsecondary environment, scores on student
evaluations of professors are typically used to measure teaching
quality.
[O]ur results indicate that professors who excel at promoting contemporaneous student achievement, on average, harm the subsequent performance of their students in more advanced classes.In other words, students of harder professors for introductory courses (who may struggle and give lower evaluations of that professor) do better in subsequent courses. Higher rank and experience (and thus lower pressured to get good evaluations for tenure) are negatively correlated with current "value-added" in introductory coursework, but positively correlated with value-added in subsequent courses.
Professor Miron writes that “antipoverty spending is the most defensible kind of redistribution,” because “the goal of this redistribution – helping the poor – is reasonable and the costs of a well-designed limited antipoverty program (e.g., a negative income tax set on a state-by-state basis) are modest.”Another interesting quotation on libertarianism (From Raj Pate's "The Value of Nothing"; HT to Atin Basu and Greg Lippiatt):
"There are two novels that can transform a 14 year old kid's life: The Lord of the Rings and Atlas Shurgged. One is a childish daydream that can lead to an emotionally stunted, socially crippled adulthood in which large chunks of the day are spent inventing ways to make real life more like a fantasy novel. The other is a book about orcs."
A recent NY Times article/blog post discusses a classic Bayes' Theorem application -- probability that the patient has cancer, given a "positive" mammogram -- and purports to give a solution that is easy for students to understand because it doesn't require Bayes' Theorem, which is of course complicated and confusing.The comment Phil made is priceless. Here is an excerpt:
I'm both perplexed and frustrated by your characterization of the "common sense" cancer calculation, because (except for the rounding) you have indeed applied Bayes' Theorem, whether you know it or not. ... Your calculation is EXACTLY as "labyrinthine" as Bayes' Theorem, because it is EXACTLY THE SAME as Bayes' theorem. Rather than telling your students that you have a better way of doing the calculation that avoids the complexities of Bayes' Theorem --- a claim that isn't true --- you should tell them that you can explain why Bayes' Theorem makes sense.These journalists are one and the same who excoriate bloggers who provide information for free because it cannot possibly be "as good" as information that goes through the lens of journalistic editing. Riiiight. Or maybe experts are sick of being misquoted and taken out of contexts by journalists and figure the only way to do something right is to do it yourself.
andTaxi drivers boast of owning multiple flats for investment. (LA Times)
and"My maid just asked for leave... She's rushing home to buy property. I
suggested she borrow 70% so she could cap the loss." (Business Week)
It's somewhat reassuring that buyers are plunking down sizeable downpayments. (Economist)
Will your house appreciate? (here) Maybe, but as I've said through the whole thing, a house's value is in what you use it for.
Houses pay hefty dividends to their owners in the form of living space — that’s
the real return on housing investment
And finally, more on curbing grade inflation (here)
Some years ago, my (now ex-) wife was involved in a "trivia night" fundraiser at
her elementary school, and they wanted me on their "teacher team" to round out
their knowledge. They had almost everything covered except some
technology-related topics and I was an IT guy. In round four, my moment to shine
arrived, as the category was "Math & Science" and one of the questions was,
"give the first five digits of pi." I quickly said, "3.1415." The 9 teachers at
the table ignored me and wrote down "22/7" on scrap paper and began to divide it
out. I observed this quietly at first, assuming that 22/7ths gave the right
answer for the first 5 digits, but it doesn't. It gives something like 3.1427. I
said, "Whoops, that won't work." They ignored me and consulted among themselves,
concluding that they had all done the division properly on 22/7ths out to five
digits. I said, "That's not right, it's 3.1415."
A great murmur arose at a few other tables as well, and my wife returned
with the text book. The teacher with whom I had been butting heads the most
grabbed it, thumbed through to the area of a circle chapter, jabbed her finger
at a sentence, and shoved the book across the table at me. The sentence said,
"Pi is an irrational number approximately equal to 22/7ths." The teacher sat
back, crossed her arms triumphantly, and said, "I hope they taught you to read
with your English degree." I read it, and slid the book back across and said,
"They also taught us to read the footnotes." As she read looked back at the
page, the blood drained from her face. At the end of the sentence was a little
"1" in superscript, and dutifully noted in the footnote were the first 20 digits
of the actual value of pi. Of which the first five are 3.1415.
Ok, so they don't know the analytical definition of pi. Surely they haven't seen the proof that 22/7 > pi, like this one. Great. But, in this case, they're just not reading, or maybe don't know what "approximately" means, or maybe too damn lazy to read a footnote.
If your paper is more than 30 pages (double-spaced), hurry up and get to the point. If your paper is approaching 40 pages, it will not be accepted (you might get a recommendation for a revision that says "Get to the point." If your paper is over 50 pages, you've pissed me off. Your paper will be rejected.
In the end, it probably turns out to be a wash, with everybody receiving meaninglessly high grades and feeling disappointed and demoralized by the lack of competitive advantage they were promised.
Think of it this way: If everybody wears increasingly high high-heels, no one looks tall, but everybody’s feet hurt.
can we really say, in a world in which the sunk cost fallacy has power, that the
broken windows fallacy is a fallacy? Let's say my old window is a cruddy window,
and I would derive net benefits from replacing it, but I am reluctant to because
I've already paid for the original window and throwing it out would seem like a
waste. If some delinquent then throws a rock through my window, I'm made better
off.
Dear Fellow State Employee:
I want to personally thank you again for your hard work effort serving the
people of the Commonwealth, especially over the course of my 7 weeks in office.
... [O]ver the last several years before I became Governor the state work force
experienced a reduction of 1,651 positions, with an additional 664 recommended
layoffs in the new biennial budget introduced by Governor Kaine. When I took
office, I was faced with a $2.1 billion budget deficit. ...
Sincerely,
Robert F. McDonnell
Governor
Professor Stephen Schneider, Professor of Climatology, Stanford University: I got to put down the blogosphere. The blogosphere is one of the worst places to go for information, because, unlike Paul and others, most public people are not going to spend three hours a day doing this. We really need to reestablish the mainstream media in putting some specialists back in who can smell the north end of a southbound horse, because most general assignment reporters can't and certainly their editors can't.Now, I could care less what people think of this blog, and it probably isn't even in the top 100 for blogs by professional economists. But I can probably name 10 economics blogs off the top of my head that cover important issues in economics far, far better than any economic journalist, and many of them link over into science, technology, and humanities blogs that are equally good for their fields and subfields. True, within the blogosphere exists a substantial amount of crap, but finding a well-done blog by a professional in the field is not too tough, and many of these professionals blog, in part, because they are weary of science journalists, many of whom are barely even functionally literate in the fields they cover, consistently misquote their work or take their results horribly out of context.
Bush stopped weighing the costs and benefits of deregulation ... providing industry lobbyists with a back door to block regulations. OIRA also instructed agencies to discount the value of future lives in constructing cost-benefit analyses by 7 percent a year, so that 100 lives in 50 years would only be worth 3.39 current lives. (Such logic can be used by conservatives to argue that the present cost of regulating greenhouse gases outweighs the future benefits of stopping climate change.)
Over the last five years, the ten-year Treasury yield has generally been between 4 and 5 percent. Call that 4.5 percent. Inflation has been in the low 2 percent range, so at best this is a risk-free return of 2.5 percent. ... Since the legal value of a life is primarily based on future income, this means that the real value of a life increases roughly with productivity. Productivity growth runs at about 2% per year. So if you are getting 2.5 percent on your risk-free investment, 2 percentage points of that just goes to make up for the fact that the people your policy is killing are getting more expensive, which means your discount rate should be 0.5 percent. ... Shouldn’t we also be discounting for risk? The textbook says you should adjust your discount rate based on that probability distribution — the wider the distribution (the riskier the investment), the higher the discount rate. This makes sense because of basic risk aversion. ... That leaves us with a discount rate of about 1 percent, not 7 percent. And instead of 3.39 lives today, you get 60.80 lives today.
