Absolutely Awesome

Some kid apparently is not sufficiently challenged by his differential equations exam...

Law of One Price Fail

I'm sure it was a signage mistake, but today I was driving down US11 into Lexington, and the Texaco just north of city limits had gas for 2.549 per gallon. Soon afterward I realized I needed something from home and as I was driving the other direction, and the same gas station had gas for 2.599 per gallon. This didn't seem too strange at first - they just changed the price, right? Wrong. On my way back into town, the southbound price was still 2.549. I couldn't help turning back to check - the northbound price was also still 2.599. Probably just an oversight in operation of the manual price sign, but funny to me...

The Hubbub about Teaching Evaluations

There is some interesting debate (Mankiw, Cowen, and Jeff Ely) going on about measuring teacher quality at the postsecondary level. A couple of good sentences from this article, which recently appeared in the Journal of Political Economy (ungated version here).

In primary and secondary education, measures of teacher quality are
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.

A 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:

[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.

Subprime Lending and Lobbying

Funny. Lots of "government failure" advocates for explaining the housing bubble point to all sorts of things that the democrats did in the 1970s and before (in addition to the horrible, horrible greed of poor people) for somehow precipitating the sudden rise in subprime loans. Few point to this (note the bill's sponsor), and even fewer likely want to see this (full, but gated, article here).

Some Links, Featuring Tourette's, Dilbert, and a Baseball Mystery

Advantages to Tourette's (British Psychological Society HT: TC @ MR)?
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."  

Mo' Money, Mo' Problems

For the Data Geeks

MacroData4Stata

No Competition Catch-All

Competition fixes a lot in markets; not everything, like this for example:

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!

Some Links (on Migration)

Russian Immigration Reform (RiaNovosti)
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)

Some Links, Featuring Conservatives for Higher Taxes, and Evil Cul-de-Sacs

Conservatives for Higher Taxes (Economix)
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.

Some Links, Including a couple of cool graphs

Gas price vs. miles driven over time (NY Times).














Explanations of grade inflation that can be ruled out: Hard work (Babcock & Marks, 2008).












China bubble watch (MR).

Stat Geek Post of the (Week?)

From Phil Price at "Statistical Modeling..."

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.

Some Links, Should Travellers to AZ take their Passports?

Menzie Chinn asks if he should (here; news story on the law here; resolution summary here). If you solve the subsequent subgame, I'm sure someone'll get the idea that only stoping people with different skin colors or accents is a violation of civil rights, and that'll mean I should, too.
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)

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)

and

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.

How much is a "Hella"?

Apparently, it's possibly going to be 10^27 (a billion billion billion). (The Economist) The current highest named number is a "yotta" or 10^24.

Some Links, Non-conserving Republicans and Onshoring

Wham-O returns to the USA (Daily Show).
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)

Two words

Pelzman effect.

More links, including more grade inflation and granger causation for hangover searches

A confession (here), grades for sale (here), and what my office is going to be like in about a week or so (here).
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)

Some links, Old news, but things I might still bring up in teaching

Self-hating Austrian Economists (here, here, and here)

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)

Don't teach if you don't know

I may not have the most finely-tuned pedagogical technique, but at least I don't get basic shit wrong, like this:

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.

Some Links: "Get to the point!"

Macroeconomics textbooks will need to be revamped;
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.