Tuesday, December 21, 2010
Student in my class: Why are tests here at VMI so hard?
Me: What do you mean?
Student: My friend at (an institution about an hour north of VMI) took (a class in the business school) and her tests were 25 easy multiple choice questions and that's it. They get an easy A while we have to work for B's and C'sWhy is that?
Me: There are probably two reasons: First, there is a lot of grade inflation at other schools, which is very closely tied to whether professors get tenure. Second, the teachers there probably lazy - the cheapest way to get better teaching evaluations is to make the course easy and thus give higher grades.
Student: I wish VMI did that, too.
Me: No, you don't. In fact, you came to VMI knowing that it was a tougher place, and you made that choice anyway. If you want easy A's there are plenty of schools where you can get easy A's. Why didn't you go there instead?
Other Student: Because I don't want to get a shitty job.
There you go. Even students nearing final exams can get why grade inflation is bad, you just have to work them through the logic. Too bad incentives are so skewed the other direction.
Monday, December 20, 2010
So what? I don't say that to seem insensitive, but someone who chooses to ride on a motorcycle, and eventually gets in a wreck is often only hurting (sometimes fatally) himself. When motorcycle fights car, car wins. In economic jargon, there is seldom an externality involved with this sort of accident. The driver of the motorcycle knows riding is riskier, and chooses to do so. On the other hand, when someone is dicking around on his cell phone (let's say while driving a Yukon or comparable grocery-and-kiddie wagon SUV) he puts innocent, responsible drivers at risk. Policy makers should only intervene if an argument can be made that there is a social cost (or externality) to certain types of behavior. I don't see that argument in the case of motorcycles.
So, motorcycle accidents are accounting for the biggest increase in driving fatalities, but there is no theoretical reason that policymakers to give a rat's ass. My guess is that Mr. White and his boss at WSJ, Mr. Murdoch are simply reveling in finding some research that promotes their supposedly pro-liberty (of a certain sort) agenda, and they would probably claim that no policy action is warranted in the case of Motorcycle OR distracted driver traffic deaths. If that's the case, why not just repeal all drunk-driving laws? It seems highly unlikely that Mr. White would support this proposal. Given that the impairment from cell use rivals that of intoxication, that seems to be the better place for policy.
Thursday, December 9, 2010
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.
Andrew Gelman (who runs on the left side of the spectrum) isn't buying it either, for similar reasons as Kaiser Fung. From the latter:
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.
Sunday, December 5, 2010
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.
Saturday, December 4, 2010
Bill Easterly on the new Human Development Indicators: "The HDR addressed [a criticism of the previous human development indicators] by making the problem much worse. Previously we were all whining about differences in the value of life of 70 times between rich and poor – now it’s a differential of 17,000 to one. Sorry, Zimbabweans, UNDP thinks your lives are worth 50 cents. (Aidwatchers)
Lotteries don't have to have a negative sum for their participants. (Freakonomics)
Bayesian Bees. The author suggests 5 lessons we could learn from bees. Here are two:
1. Minimise the leader's influence on the group. Here we humans have much to learn.
2. Seek diverse solutions to the problem. Humans realised only recently that diversity is good for a group.
Thursday, December 2, 2010
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.
Saturday, November 27, 2010
Georgia seeks to keep immigrants' kids out of higher ed, while California seeks to give them a path to citizenship through education or public service (The Economist) I would say a reasonable compromise might be to let them be admitted, but charge full tuition.
SB1070 aftermath in Arizona. When neo-Nazis are among your most vocal supporters, it might be a sign that you're not doing the right thing, even if half of all Arizonans are on your side.
Using AI to data mine on the battlefield and optimize decision making. Proceed with caution.
Wine allergen found.
Do hands on my junk make me more safe? Probably not, but I don't care enough to complain (and certainly not enough to hassle a guy getting paid 15 bucks an hour.
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 is reasonably accurate. Unfortunately, this explanation is not terribly unique to the Austrian school. The Keynesian school proposed that there could be a credit boom (although they were less apt to blame the government for the fact that interest rates were too low). In fact, in a bit more precise way of looking at it, uncertainty and adaptive expectations (what Mr. Keynes called "animal spirits") play a more prominent role in the boom and bust cycle in the Keynesian model. It turns out that this is also true of the Austrian school. In fact, both schools attribute some of the fluctuation in the business cycle to a "coordination problem" in the processing of information revealed by noisy market signals.
OK, so where are they different? Well, basically on the matter of policy response. There is some evidence that keynesian deficit spending can help. There is other evidence that shows that a more austere approach is better. As in all things it is probably simply the case that the devil is in the details. Government spending is probably most helpful when it is invested in things that would be useful to have anyway (like roads, bridges, and energy infrastructure), and not simply money transfers that just substitute for other spending now or in the future (like transfers to states, tax cuts, or entitlement spending).
Tuesday, November 16, 2010
Apparently, his business is doing quite well through the recession, and he gets a lot of business from future clergy.
Sunday, November 14, 2010
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.
In other words, government employment (partly due to the laying-off of census workers and partly due to stingy state and local governments) is SHRINKING as opposed to growing, as certain political narratives would have us believe.
Tuesday, November 2, 2010
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.
Sunday, October 24, 2010
Why is there room for arbitrage on used books? Many professors get desk copies of textbooks, and many professors sell these copies to book buyers. Usually the arbitrageur offers about 20-30 bucks for a book they can turn over for 90-100. It makes some sense that there will be enough individual small fish for whom the spread is not big enough to justify the costs of finding the market price and finding a buyer (which, is in fact not too hard with an Amazon Marketplace seller's account). But it amazes me that a used book store isn't researching it's market better. It seems like the bookstore's proprieter would be interested in picking up those extra bills off the sidewalk. (Marginal Revolution)
Finally, an interesting nerdy statistical criticism of seemingly contrarian findings about political momentum. (Freakonomics)
China's new five-year plan (the Economist).
Underwater (The Economist).
Trade Costs (Free Exchange).
The microeffects of the Arizona immigration law (Washington Post).
Meanwhile we send mixed signals (People Move).
Where the money is in the music industry (Economist).
Oil prices (Economist).
Tuesday, October 19, 2010
How is this different from the "optimal" tariff discussed in any undergraduate textbook? The optimal tariff is couched in the context of a tariff on imports. By restricting demand, prices (of imports) fall; rents accrue to the buyer(s) and/or the treasury in the tariff-imposing country at the expense of foreign sellers. One problem with this policy is that it can and often does lead to retaliatory tariffs by the country that sells those goods being targeted by the country that initially imposed its "optimal" tariff. The first country re-retaliates, and so on resulting in a trade war. Everyone loses; think Hoover, Smoot-Hawley, and competitive devaluations and tariffs that sank the world economy deeper and deeper into the Great Depression.
Popular opinion seems adamant that we "do something". Voters, politicians, and even some very bright economists are advocating some form of punishment against China. What most popular opinion neglects (and that very smart economists should be well aware of) is that restricting exports in the way China (and OPEC) has has a very similar effect as restricting imports. In fact, in relative terms, it has the exact same impact on prices, a concept known as Lerner Symmetry.
So what does one do about it? Well, we can do nothing and minimize our losses, or we can retaliate and instigate a potential trade war.
Monday, October 18, 2010
I don't doubt that taxes affect incentives to be productive, but N. Gregory Mankiw seems to be exaggerating them in last week's op-ed.
Read them all. They're a hoot. Here's one of my favorites.
5. You teach at Harvard and live in “Taxachusetts.” If state taxes are so important, have you considered teaching at Yale, and living in much lower state tax land of Connecticut?
Saturday, October 16, 2010
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.
Sunday, October 10, 2010
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.
But it's not semantic, it's common sense. Think of a patient in a hospital. Don't we say a patient is "recovering" once the problem is identified, treated and beginning to improve? Sure, during your recovery you may still not be working or doing certain things the same as you did prior to your illness or injury, but things are moving in that direction. You're no longer getting sicker, you're getting well. In this context, the economic definition makes perfect (common) sense.
Thursday, October 7, 2010
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.
Why? I saw several explanations, but this seems the most plausible (from the MR comments):
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.
Seems like Tyler's assignment of the phenomenon was a jump to conclusions by an economist looking under the light instead of looking where the keys were.
Monday, October 4, 2010
Wednesday, September 29, 2010
Tuesday, September 28, 2010
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!
Monday, September 27, 2010
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.
I'm not a expert in the economics of regulation, but I do a bit of political economy in my research, and I did OK in the game theory portion of my micro sequence in grad school, so here's how I'd see this one playing out. Regulation will ultimately be lobbied for most by big players in the organic/local market (think whole foods, etc.). My thinking here is that the big producers actually have less incentive to "cheat" by outsourcing produce advertised as local and/or using pesticide-enhanced produce, because everyone will remember it if Whole Foods gets busted; no one will remember if Johnny Farmer does. Consumer groups will support it, but the final product will mainly serve to: (1) bar entry for small sellers; and (2) help the same big players signal their reputation cheaply. It will go over great for a while, but eventually, enough of the relatively honest small producers will collectively complain about the onerous opportunity-killing regulations. If they succeed, we'll be right back at square one.
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.
There are real threats to liberty, but they have less to do with Obamacare, bailouts, or taxes. Which does the conservative Friedersdorf prefer?
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.
I recommend the whole piece, but I do disagree with the statement, "The last two presidents have asserted authority unprecedented in American history." Sadly, the current circumstances are not particularly unprecedented or even extraordinary. We had the internment camps during World War II, McCarthyism, J. Edgar Hoover's domestic spying, Watergate, Iran Contra... There is a seemingly endless list of landmark historical instances where our government acted in contradiction to the liberties proscribed in the constitution. On the broader issue, however (that we need to guard our civil liberties much more than we need to worry about some perceived injustice stemming from our personal disagreements with a particular economic policy, the author hits it right on the head.
Thursday, September 23, 2010
Do I see an unholy freedom alliance between Teapartiers and NORML in America's future (420 Tribune)?
Is more vote-buying a good thing or a bad thing (Marginal Revolution)?
If you pay someone to help you cheat, do you deserve a refund when you discover that they cheated (Dan Ariely)?
How to eat a muffin (Incidental Economist). The second I read this, I realized that I already eat muffins this way, even when I'm not walking.
Imperialistic (or, mercantilistic?) Economists (Justin Wolfers).
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.
Tuesday, September 21, 2010
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 wonder how Tyler (a libertarian, Austrian-leaning economist) feels about the fact that a significant portion of that liberal arts education is heavily subsidized?
Thursday, September 9, 2010
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.
I know some Ph.D. trained economist robots, who also can't talk beyond the "markets are always right" mantra. Some economic problems, as it turns out, are more complex than the "X marks the spot" pirate logic (AAARRGH!) of simple supply and demand.
Wednesday, September 8, 2010
Tuesday, September 7, 2010
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?
Wednesday, September 1, 2010
Friday, August 27, 2010
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.
Tuesday, August 10, 2010
Monday, August 9, 2010
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.
A thing or two on the Bush tax cuts here.
Thursday, July 29, 2010
Tuesday, July 27, 2010
OK, so most of you know where things are going here, but indulge me; there's some interesting economics behind the strategy. If any more milk was to be drunk, I needed an incentive scheme. What I came up with had two parts:
(1) About a half a handful of Cheerios (kids like the Cheerios!) to start with to get him back on-board; and
(2) A few Cheerios after every 2-3 drinks of milk.
In Mechanism Design (a branch of economic game theory) (1) is intended to overcome the Participation Constraint (get the kid to stop crying and play ball); (2) is intended to overcome the Incentive-Compatibility Constraint (keep the kid drinking the milk after the first offering is eaten). I'm surprised how well it worked, and I'm thinking that I may have overpaid on the participation constraint. By the time we got into it, all I really had to do to get a second or third drink was open my hand and show him the reward (as long as I remained credible with my payouts!).
Sunday, July 18, 2010
Online gambling: End prohibition, begin regulating it... and taxing it (Economist)
Trade: (1) Freight costs on the decline (Economist); (2) should we fear offshoring? (Economist) A couple of good sentences (in response to a claim that the US will have "little left in the comparative advantage department"):
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.
Supersize me, Wal-Mart (Working paper)
Taxing "capital" - the devil is in the details (Economix)
Climate Change Reform (Economist)
The old joke is true: Colleges are becoming bars with a $100,000 cover charge - the country-clubification of colleges. (NY Times)
Thursday, July 15, 2010
(Link here for the script-impaired.)
One interesting part is how the published exchange rate for these local currencies is 1:1 with the Euro, but that they depreciate at a fixed rate. Then, you can purchase stamps from the local government to "re-charge" the value of the notes. This is quite literally an inflation tax, although it is somehow seen as a positive thing for the local residents because they can see and connect with the public goods and services those taxes purchase.
Wednesday, July 14, 2010
Monday, July 12, 2010
Migration the crisis (People Move)
Remittances vs. private capital flows (People Move)
Protectionism: Deadly but Tasty, especially during depressed times (Free Exchange)
Also: Did trade restrictions lead to the depression (as Hayek asserted) or vice versa? (Paul Krugman)
Ruminations by Menzie Chinn
Saturday, July 10, 2010
Friday, July 9, 2010
How does parent gender matter?
Ending teacher tenure? Crap, now that I might actually have the security of tenure, some other a-hole with tenure wants to pull it out from under me!
Is academic freedom dying?
Stephen Colbert makes fun of grade inflation, education budget cuts, and Wal-Mart on-the-job college credit.
|The Colbert Report||Mon - Thurs 11:30pm / 10:30c|
|I's on Edjukashun - Loyola, Texas Textbooks & Wal-Mart<a>|
Thursday, June 24, 2010
Wednesday, June 23, 2010
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
[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.
Tuesday, June 22, 2010
Monday, June 21, 2010
Dilbert, "cheaper" copies, and teaching managers about opportunity cost (Freakonomics).
Why are there so many power-hitting middle infielders these days (Economix)?
A couple of links on "cap and trade" vs. the carbon tax (Economix and Economist)
Libertarianism explained: a review of Jeffrey Miron's "Libertarianism, from A to Z." (Economix). Here is an interesting excerpt:
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."
Tuesday, June 1, 2010
Thursday, May 20, 2010
In the case of the credit ratings agencies competition seems to be exactly what the problem is! As long as the credit ratings agencies' customers are the companies seeking a rating, and as long as those same ratings agencies have a stake in the success of the raising of financial capital for the bond issue, there will be moral hazard in the market. Competition will not improve the problem, because as the piece notes, companies are already shopping around for the "best" deal!
Wednesday, May 12, 2010
Is Russia the second-largest remittance sender? (PeopleMove)
Immigraion reform on both sides of the pond (PeopleMove)
Might the Arizona debacle do some good by being so bad? (Economist)
Internal Migration restrictions in China (Economist)
Cul-de-Sacs may not be evil but they are inefficient (Infrastruturist)
Facebook's progression of suckiness over the years (AllFacebook)
Awesome Dinosaur shirt for kids
Which type of cognitive bias are you? (via Freakonomics)
No Reservations (more here)
Gas tax or hybrid subsidies? Free Exchange makes economic sense of why a gas tax is better for the environment.
Monday, May 3, 2010
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.
Monday, April 26, 2010
High-skilled immigrants make the economy go (here); maybe not for long (here).
Governments move to regulate remittances (here); what central bankers think of it (step one: keep better data here); mobile remittances might help keep better data (here).
How do temporary shocks affect modern economies? (Not much - here)
China's real estate bubble? (Economist, here; LA Times, here; Business Week, here) Some excerpts:
Taxi drivers boast of owning multiple flats for investment. (LA Times)
"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)
On #3, two comments: (1) ... for now; and (2) is it? If folks are leveraging 70% on speculation about the value of an asset that has had a historical real appreciation close to zero how much does it matter that they own a meager 30%? Again, you buy a house for the dividends of its use value. Investment value is speculation. and eventually a bubble.
A program in California makes Democrats conserve, and Repulicans anti-conserve (Slate summary, gated original paper here).
Tolerance lowers HIV rates (MR summary here, ungated research paper here).
Trade surplusses are not always good (FE explains how to shrink them).
Chickenomics of Health Care (Krugman)
The State of Macroeconomics (Economist)
Friday, April 23, 2010
Wednesday, April 21, 2010
Searches for "mixed drinks" empirically cause searches for "hangovers" on google (HT to Hal Varian, here).
Yuan-na revalue? (Ouch! here)
5 private sector bureaucrats per doctor (here)
Should I rent or should I buy? (here)
Five cool graphs, in case you wonder why fuel efficiency hasn't improved (read: don't blame producers, here)
Tuesday, April 20, 2010
Potonomics (Ok, probably won't come up in class, but here)
Are government salaries really that relevant? (here)
Broken windows, or broken record? (here) Seriously. Austrian wannabes really need to find a new argument. Broken windows doesn't necessarily apply to every form of government spending, and with the environment, a subsidy to change over might be better for society in resolving the externality - as long as we price/tax future damage appropriately.
Cartel enforcement does decline when prices are high. Go figure. (here)
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)
Tuesday, April 6, 2010
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."
What follows is some neat storytelling on the escalation of the argument. It is revealed that the hero of the story (Mr. 3.1415) has an English degree, and (god help us) one of the "22/7 stooges" has a flippin civil engineering degree. Ultimately the teachers (who insist that 22/7 is the "correct" value of pi), get out the textbook that started this falsehood:
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.
Sunday, April 4, 2010
War impedes trade;
Shadow bank regulation;
The "Nixon Shock";
Recycling carbon credits;
Cell penetration: 2001, 2004, and now;
Get to the point:
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.
And my favorite:
Think of it this way: If everybody wears increasingly high high-heels, no one looks tall, but everybody’s feet hurt.
Thursday, April 1, 2010
As RA puts it:
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
Trust me, I've hoped more than once on my drive home the last few weeks, "boy, wouldn't it be nice if some redneck rearended me just enough to total my car?" Or, since I'm theoretically gonna save tons with compact flourescent bulbs, why haven't I replaced my incandescents?
Tuesday, March 30, 2010
Education externalities (Ed Glaser at Economix).
Blogginheads with Glen Loury (HT to MR)
Does unemployment insurance raise unemployment? (And, even if it does, there's a strong argument that longer durations of unemployment facilitate better job matches once a job is found.)
Tuesday, March 23, 2010
More on China's Currency (by the Economist, here; and Menzie Chinn here)
Immigrants' unemployment surpasses natives' for the first time since 2003 (Economix)
Sunday, March 21, 2010
- Should we ban bluefin trade? (No, we should find a way to allocate marine property rights more efficiently, but there's some discussion here, here, and here)
- (Locally) upward sloping demand for spending time playing video games?
- A very bad response to Krugman's China-bashing
- Where does US foreign aid go? (Hint: The "Pottery Barn" rule)
- Think term limits will curb special interests and improve government? Think again.
Thursday, March 18, 2010
The Harvard undergraduate thesis everyone's talking about.
Does taking the first, possibly temporary, job in a crisis hurt future EP?
Wednesday, March 17, 2010
Some links, featuring abortion-reducing universal coverage, and deferred benefits payments in Virginia
Virginia slashes public services, including an agreement "to defer $620 million in contributions to the state pension system over the next two years." Does that mean I should worry about my 403(b)? Or, does it mean that bankers don't have to pay their bills, the state doesn't have to pay its bills, so I don't have to pay my bills? (Roanoke.com)
Microinsurance (The Economist)
China's hidden debt (The Economist)
Blogonomics (Economist's View)
National Security argument for amicable trade with China (Free Exchange)
Germany's trade surplus - somehow not as controversial as China's (Free Exchange)
If radical free market ideas can't win in the free market of ideas, use government intervention to push them on students (Economist's View)
Hardest logic puzzle ever? (FT)
Egads, a shamrock shortage on St. Patrick's Day !
Put off changing your password! You're not lazy, you're rational (HT to TC)!
Picking your bracket on earnings potential of the schools' graduates (Economix).
Do we need more drunks or economists in government (why not both!)?
Monday, March 15, 2010
Libertarian Alex Tabarrok would probably oppose daylight savings if proposed today; since we have it, he admits that it works, and he likes it. I wonder how many other government intrusions he feels similarly about? (Public education, o ye of public university employment?)
On a less thoughtful note - PM at Market Power thinks collecting sales taxes on actual sales is destroying activity - a keener observation would be that tax differentials and discriminatory taxes shift economic activity from jurisdiction to jurisdiction. (Another anti government curmudgin employed by a public university btw.)
Chinese stimulus. Shit, there's another thing they might be doing better than us (note that China is already well into its recovery).
Is the Yuan still actually undervalued? (Menzie Chinn)
More on Yuan-bashing from the Economist. (Free Exchange)
Some thoughts on durables and world trade (Menzie Chinn)
Modernizing Russia - Do they need Democracy? (The Economist thinks so, sorta - I don't, but I agree that they do need to reign in corruption)
From microcredit to microsavings (The Economist)
Tuesday, March 9, 2010
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. ...
Robert F. McDonnell
That was a form letter sent to all state employees. I don't blame him for not mentioning the public primary and secondary schools that will be closing in rural Virginia, or spending millions to re-open several seldom-used highway reststops statewide. But the bigger point here is that I don't expect to hear John Boehner or Mitch McConnell to call him out for passing the buck to his predecessor (a democrat, incidentally). And, if you think I'm being harsh, I left out the part where he blamed bad snowstorms (oops, coulen't resist).
New Index of Financial Conditions (I would prefer a factor analysis approach to a components analysis approach, so we could isolate underlying dimensions of financial conditions, but it's a start)
Property Rights for Indian Emigrants
Remittances to Tajikistan during the Downturn
Old People should Love Immigrants (but my guess is that they don't, for non-economic reasons)
How (and When) Best to to Cut Deficits?
A Couple of Dead, Liberarian Economists in Support of ARRA (the Bastiat excerpt here, courtesy of the right-leaning, Austrian-school-supporting, libertarian Library of Economics and Liberty)
Carbon Emission Policy
Tuesday, March 2, 2010
An annotated guide to the Keynes-Hayek rap, "Fear the Boom and Bust"
How to grow a college beard when dress codes forbid it (at BYU, not VMI)
If the net increase in government spending since the recession began = zero, are we still being robbed of our liberty?
Okun's law, alive and well
Saturday, February 27, 2010
Friday, February 26, 2010
Sunday, February 21, 2010
Friday, February 19, 2010
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.
Thursday, February 18, 2010
From Ezra Klein:
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.)
7 percent! Can you imagine earning 7 percent real return on a risk-free bond (after inflation, so nominally, about 9-10 percent nominal return!)? Ridiculous!
From James Kwak:
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.
Is that a pro-life policy?
WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.
Calling it "basically no more than five rectangular strips of paper," Fed chairman Ben Bernanke illustrates how much "$200" is actually worth.
What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.
"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."