Reflections on a Bumper Sticker

There's a red minivan in my neighborhood that has a bumper sticker that reads, "Socialism isn't Cool." What didn't occur to me until today is that this person also has a special license plat that says "Keep the Lighthouses Shining." I'm pretty sure the irony is lost on her.

Some links, including some drunken research

I can imagine a situation where I might do research after a beer or two. All that would lead to is miscoding of data. These jackwagons made a breakthrough on superconductors.
Coffee in meetings: good for women, bad for men.
The costs of the war on drugs; cartel wars.
A couple of links on education and inequality.
Why seniors should favor immigration (legal or otherwise).
A couple of links on commodidty prices and growth: Econbrowser and The Economist.

Huh?

A couple of articles from this weeks Economist have me puzzled. There seems to be a bit of contradiction or confusion in their editorial office.
First, we have the Economist lending credibility to the idea that the "redback" might become a player as a reserve currency. I'm skeptical.
Seocnd, hedge funds are shorting China (i.e. betting on the notion that their boom is about up). On the one hand, this might be self-fulfilling; on the other hand it might explain the US-China trade deficits in terms of the standard inter-temporal current account macro model (if you expect the US to grow in the future, our running trade deficits today is optimal; if you expect China to shrink in the future, their running of trade surplusses today is optimal).
More on the Yuan from Econbrowser.

The Deficit We Want

Via Economix:

Herein lies the political problem. We want to cut spending. We just don’t want to cut the benefits that the spending pays for.

We want to cut the vague notion of spending ahead of raising taxes, but when given the choice between cutting specific spending (on the "big three" - Medicare, Social Security, and Defense - for example) versus funding it with higher taxes, people choose higher taxes in each case.
Cognitive dissonance?

Some links: Climate, China Trade, and Inefficiency

Exchange rates (if relevant in the first place) aren't the whole story with China (Economix)
Rebalancing (Brookings)
Green energy won't create jobs (Economix)
Green energy shouldn't be used to create jobs (Free Exchange) Right. A carbon tax (or if an international mechanism can be designed, cap and trade) would nudge the market to do the job with fewer unintended consequences.
Inefficiency in the tax code; good for somebody (Economix)

One Need not Move to Somalia...

...to appreciate the economic benefits of an active, competent public sector. According to Eric Crampton, New Zealand is "freer" in the libertarian sense (e.g. by the Heritage Foundation's definition) than the U.S.; yet, it seems they are not better off, economically.

By the general axiom of revealed preference, the increment of liberty isn't worth the loss of income (and inconvenience of moving and living abroad) for the vast majority of libertarians.

At what margin is liberty for liberty's sake worth it?

Advice to Right-Wing Bloggers

TC asks where the left-wing bloggers went, and wonders if the sphere promotes moderation. He also sees a few ways things can go: more moderation, or less. He seems to favor the former. Here's one option he proposes:

Hold strongly to a pure free market line, but not much consider the toughest issues, starting with Social Security, Medicare, and Medicaid, and finishing with the inability of government to precommit to a lot of policies which might work as rules but never can be rules. There are plenty of easy issues to focus on, starting with farm policy and free trade and on those the market-oriented point of view is a slam dunk.

That's free-market conservatism I can believe in. There are sosme areas where freer markets are not necessarily a win-win proposition.

An Interesting Market Failure

Will the market mechanism evacuate efficiently? George Stigler says yes; Tyler Cowen is not so sure.

If you are evacuating a city suddenly, along a constrained road or path, ideally (at least by economic standards, which may or may not be your final moral theory) you wish to favor the people who are young, productive to others, and people who value their own lives highly and are risk-averse. A market auction tends to favor the wealthy and in this context many of the first leavers in line will be inefficiently old

TC also notes that the old may also have a higher discount factor for spendig their current wealth, adding to the dilemma.

3 Links on Bayesian Probability; 2 Links on Teaching

Another reason Bayesian statistics might be intriguing. (Gelman)
Conditional expected productivity and benching players with fouls. (ESPN)
A Bayesian rational for a situation where high variance might be a good thing. (MR)
Paying for grades isn't easy. (Freakonomics)
Ugly fonts and material retention. (Wired) This gives me my quote of the day:

making material harder to learn — what the researchers call disfluency — can actually improve long-term learning and retention

...and worsen teaching evaluations.

The Illogic of Debt Ceiling Politics

One interesting sentence:

If the government is (a) required by the deficit legislation to spend,
and (b) precluded by the debt legislation from borrowing, the Treasury
would be forced into default.

From James Hamilton. There is more; all of it is good.

A Couple of Links about Children

Steven Landsburg's Big Answer about preferences for boy children and the proportion of boys and girls. (The Big Questions)
A game theoretic solution to child punishment. (Freakonomics)

Some Links on Trade, Immigration, and Income Distribution

(Unlike immigrants) will robots permanently drive down real wages? I agree that immigrants will not necessarily drive down wages, but am skeptical as to whether robots will. (Modeled Behavior)
Increasing opposition to immigration - is it inversely correlated with the actual immigrant population? (Cleveland Plain Dealer)
Baby steps to promote free trade in 2011. (WSJ)
Are the poor worse off when the rich are better off? Not always. (Economist)
Could you be richer if you really wanted to be and if so what does that do to income distribution at the macro level? (Gelman)
Giving back the Bush tax cuts for jobs and fairness (Freakonomics)

Some links

Poverty-reduction matters globally. Chalk one up for redistribution, a.k.a. "socialism." It's not just about money. 
American public opinion, then and now.
Happy old people. It beats the alternative.

Lazy Academics

Hamermesh has a post out on Freakonomics saying that he's paying the price of other professors' laziness at his own institution. My colleagues and I at VMI are paying the price for the laziness of professors at other institutions. VMI credibly fights grade inflation; many schools don't. It affects teaching evaluations.

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.

A Political Question I don't quite Understand

Here. If the tax increase on folks making $250k + is based on AGI, and those folks are really making $315k on average, why wouldn't Democratic politicians phrase it that way when they stump for it? Wouldn't that make it less unappealing?

Ryan-RivlinCare

The Republicans hate ObamaCare so much that they want to expand it. I guess that makes sense, since ObamaCare was really the Republicans' idea... in 1993.

Sometimes the biggest factor is the least important

This WSJ editorial tries to make the case that we shouldn't care about distracted driving in a strange way. The author argues that even though distracted driving fatalities are up, overall fatalities are down. But then he seems to argue that  makes is that growth in fatal motorcycle accidents lead all categories for increases in road deaths and that many of these deaths involve inexperienced cyclists.

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.

Stunning "Results" about "Entitlement America"

There's a bogus calculation circulating today claiming that poor folks are making out like bandits due to all of the subsidies they're eligible for. I don't buy it, but neither does Tyler Cowen (who runs on the right side of the economic ideology spectrum):

That's after various government benefits and taxes, but the calculation
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.

Of 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!

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 less
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'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.

Profits in the Great Recession

Seems that if profits are booming (and they are), firms "should" be hiring (that is, if markets are efficient and quick to adjust). They're not, based on data from JP Morgan Chase and analysis from The Economist.

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.

Some Links: Sometimes, kids will cooperate.

Careful how you try to introduce game theory to your kids. They may seem competitive with each other, but they will cooperate against a common foe. (Marginal Revolution)
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.
(Marginal Revolution)