Admittedly, I am not that big of a fan of the source material. Not even sure why, exactly. Maybe armor, robots, machinery, guns never appealed to me? I also wasn't crazy about Punisher, which suggests maybe that is true. I also don't like James Bond. I love Batman, but don't care about his gadgets. So maybe that is it. Regardless, this looks great. Jon Favreau may have made a great superhero movie. If so, this will definitely be a crowded summer - The Dark Knight and Hellboy 2 are also coming out this summer.
Iron Man Exclusive Trailer
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Friday, February 29, 2008
Hartford's Top 10 Undercover Economics Books
And what makes the top of the list? The Death and Life of Great American Cities by Jane Jacobs.
Interestingly, I have around here somewhere my application essay to grad school where I explained my reasons for wanting a PhD in economics. In it, I talk a lot about Jacobs' book. In my mind, both at that time seven years ago and today, Jacobs was the epitome of the scientist - observant, caring, involved with the very thing she was studying. She wasn't right on everything, but in that book, I can't think of a thing I would disagree with. I've always considered Jacobs, as well as Gary Becker, my biggest heroes, intellectually speaking, and even told my wife that that book was my favorite book.
Hartford's got a pretty good list. He's also got Robert Frost's poetry on there, which I too love, as well as popularized books of game theory by Axlrod and Schelling, both of which I also love. Everyone loves Adam Smith's Theory of Moral Sentiments, apparently. I should probably read it. Since I said "Probably," that is code for "I won't read it."
Interestingly, I have around here somewhere my application essay to grad school where I explained my reasons for wanting a PhD in economics. In it, I talk a lot about Jacobs' book. In my mind, both at that time seven years ago and today, Jacobs was the epitome of the scientist - observant, caring, involved with the very thing she was studying. She wasn't right on everything, but in that book, I can't think of a thing I would disagree with. I've always considered Jacobs, as well as Gary Becker, my biggest heroes, intellectually speaking, and even told my wife that that book was my favorite book.
Hartford's got a pretty good list. He's also got Robert Frost's poetry on there, which I too love, as well as popularized books of game theory by Axlrod and Schelling, both of which I also love. Everyone loves Adam Smith's Theory of Moral Sentiments, apparently. I should probably read it. Since I said "Probably," that is code for "I won't read it."
Thursday, February 28, 2008
1 in 100
That's the number of Americans in prison or jail - 1 out of every 100. The New York Times has an article reviewing a new Pew study, also of that name. This was not always such a high number. While the US has always had higher rates of imprisonment than other countries internationally, the increase in imprisonment began in the mid-1970s as part of the so-called war on drugs under Nixon. Below are two graphs. One is from Bruce Western's excellent book Imprisoning America, edited with Pattillo and Weiman.
As you can see, there was a dramatic increase both in the imprisonment rate (the top graph), and the convictions of drug-related crimes, particularly over the mid-1980s. Undoubtedly, some of this is not just an exogenous increase in enforcement of drug crimes, though some probably was. The increase in drug crimes would likely point to the appearance of the scourge of crack cocaine, which increased both violence and contributed generally to the decay of inner cities and destroyed numerous lives. Nevertheless, this increase continues even after the crack epidemic wanes by the early 1990s. Most of those in state prisons and jails are there fore violent crimes; drug crimes only constituted 20% of total crimes in recent BJS data. But as Jeff Miron, who is speaking in the article before this one on drug legalization, notes, our enforcement of drug prohibition actually leads to increased violence among drug users and particularly drug sellers. The connection between violence and black markets has been known for a long time, but it's important to note that in black markets, private property rights cannot be enforced by legal institutions like courts, but rather are routinely enforced through brutal force. Legitimate expansion of market share cannot happen through advertising but can happen by killing one's competitors.
The aggregate statistics are really eye-catching, but even more eye-catching are the racial differences in incarceration. As the Pew study notes, 1 out of every 15 Black men are in prison or jail. One out of every 9 Black men aged 20-34 are in jail or prison. Sixty percent of all Black men with a high school degree or less will have been in jail or prison at least once in their life by the time they are 35, leading Bruce Western to refer to prison as the "modal experience" of uneducated black males.
As you can see, there was a dramatic increase both in the imprisonment rate (the top graph), and the convictions of drug-related crimes, particularly over the mid-1980s. Undoubtedly, some of this is not just an exogenous increase in enforcement of drug crimes, though some probably was. The increase in drug crimes would likely point to the appearance of the scourge of crack cocaine, which increased both violence and contributed generally to the decay of inner cities and destroyed numerous lives. Nevertheless, this increase continues even after the crack epidemic wanes by the early 1990s. Most of those in state prisons and jails are there fore violent crimes; drug crimes only constituted 20% of total crimes in recent BJS data. But as Jeff Miron, who is speaking in the article before this one on drug legalization, notes, our enforcement of drug prohibition actually leads to increased violence among drug users and particularly drug sellers. The connection between violence and black markets has been known for a long time, but it's important to note that in black markets, private property rights cannot be enforced by legal institutions like courts, but rather are routinely enforced through brutal force. Legitimate expansion of market share cannot happen through advertising but can happen by killing one's competitors.
The aggregate statistics are really eye-catching, but even more eye-catching are the racial differences in incarceration. As the Pew study notes, 1 out of every 15 Black men are in prison or jail. One out of every 9 Black men aged 20-34 are in jail or prison. Sixty percent of all Black men with a high school degree or less will have been in jail or prison at least once in their life by the time they are 35, leading Bruce Western to refer to prison as the "modal experience" of uneducated black males.
Miron on Drug Legalization
I cite Miron's papers on drug legalization in most of the papers I write. Here he is talking in 2000 on the reasons for drug legalization.
Tuesday, February 26, 2008
Mazes
Mazes are getting scientific! And yes that was an exclamation mark. The writers are interested in answering two fundamental questions about maze design.
Complexity: What makes a maze difficult to solve? The more we consider this question, the more elusive it becomes. It's certainly possible to begin defining mathematical measures of a maze's complexity, but complexity must depend on aspects of human perception as well. For example, the eye can easily become lost in a set of parallel passages. Complexity also depends on how the maze is to be solved. Are you looking down on the maze, solving it by eye? With a pencil? What if you're walking around inside the maze? And of course, complexity isn't necessarily what we want to measure. Ultimately we'd like to generate compelling puzzles, which may or may not have a high degree of complexity.
Aesthetics: How do we construct attractive mazes, particularly mazes that resemble real-world scenes? Here, maze design interacts with problems in non-photorealistic rendering. There are many great projects for producing line drawings from images. Our goal is similar, except that our lines must also contrive to have the geometry of a maze. This additional constraint affects how we think about creating a line drawing in the first place.
Cowen on aesthetics
There's an interesting article on George Mason University's economics program. I particularly liked this part with Tyler Cowen where he opines on his approach to art, and ultimately his thoughts on aesthetics. They basically became my own, weirdly enough, and I think it did start with getting the training in economics. Economics tends to make you focused on processes, but grounded in rationality and subjectivism. So, for theories of beauty, I have lately been more interested in why certain forms show up or disappear than I have been in trying to develop a theory of why certain forms are intrinsically better/worse. The former is more interesting to me these days. Besides, I think Cowen's right that we'll probably never answer the question of what makes something good.
"His goal, however, has never been to develop a theory of aesthetics, a way to separate the good from the bad. If someone offers a principle of aesthetics, he said, “I think it’s pretty much always wrong.”
“Aesthetics is a big mystery, and I try not to get too metaphysical about it. I just try to be practical, like ‘How can I enjoy this story?’ I think it’s a more useful question. But they ask, ‘What really makes this beautiful?’ I’m not sure we’ll ever answer that other question.”
Obamanauts
That is what this writer calls the economic and foreign policy advisers of who will almost certainly be our next president. I was very encouraged by Obama's cadred of economic advisers, as they're the non-disputed kings of their respective hills - Austan Goolsbee of Chicago, David Cutler of Harvard. I was a little concerned (understatement) about his foreign policy. I am now officially downgrading that concern. Good article. Learned some things I didn't know.
Another Lost Theory
Ooh, just had another theory epiphany. We have two parallel tracks running on the show now (if that's the right metaphor). We have the present and the future. Each are progressing in their own time. The flash forwards are not flash backs - they are going to happen, but have they happened yet? Well, yes and no. If we think the stuff on the island is the present, then no they haven't happened yet. But if we think of the flash forwards as the present, then they're currently happening now. But then that means there are basically two presents. There's the present time period on the island and the present time period in the future. Two presents.
So, my theory is that the writers are going to close the "island present" down right and make the "future present" the new present. That is, the stories on the island are going to end with the Oceanic Six ending. We will learn why they left, who died, who is left, and ultimately what this organization is after. When the writers finally leave that time period, the current time period will be this new flash forward time period that they've been developing. And around that time, the story will have progressed enough that Jack and the others have some plan to get back on the island, and we'll then begin the path back to the island. The actual amount of screen time spent off the island (in terms of episodes) will therefore be small. There will be either no "off-the-island" gap, or it will be very small, because the writers will basically use this novel narrative technique of telling present and future simultaneously to close the present off, and thus automatically making the future story the present.
When you stop and think about it - assuming this is right - what other medium could you have done half the things that they have been doing on Lost? I mean, can you even tell a story like this in a book or a movie? There are things that you can do on serialized television dramas that you cannot do anywhere else. I present Lost as evidence #1 against Neal Postmman's theory that we are amusing ourselves to death. This is a level of sophistication in story telling never seen before. I think what is either happening is either that writers are learning that there are techniques available to them that they did not know, maybe because network executives were so risk averse. Or there has been some change in the population itself and they now suddenly crave more complicated stories. I strongly suspect we haven't changed (the Flynn Effect stuff notwithstanding) and instead suspect something is changing on the supply-side. I'm just not sure why and what and why now. It's not the technology, because for a sci-fi story, there's startlingly no CGI anywhere. So it can't be technology. And if it was just Lost, I'd chalk it up to, well, just Lost. But it's not just Lost. Everywhere you look on television, stories are growing in complexity and texture. Characters are deeply layered and interesting in a way that weren't 10 years ago, let alone 40 years ago. Stories run long, through multiple episodes, or in Lost's case, multiple season without dropping the ball. The question isn't how do they do it. They question is why is it changing, and why now and not 10 years ago?
So, my theory is that the writers are going to close the "island present" down right and make the "future present" the new present. That is, the stories on the island are going to end with the Oceanic Six ending. We will learn why they left, who died, who is left, and ultimately what this organization is after. When the writers finally leave that time period, the current time period will be this new flash forward time period that they've been developing. And around that time, the story will have progressed enough that Jack and the others have some plan to get back on the island, and we'll then begin the path back to the island. The actual amount of screen time spent off the island (in terms of episodes) will therefore be small. There will be either no "off-the-island" gap, or it will be very small, because the writers will basically use this novel narrative technique of telling present and future simultaneously to close the present off, and thus automatically making the future story the present.
When you stop and think about it - assuming this is right - what other medium could you have done half the things that they have been doing on Lost? I mean, can you even tell a story like this in a book or a movie? There are things that you can do on serialized television dramas that you cannot do anywhere else. I present Lost as evidence #1 against Neal Postmman's theory that we are amusing ourselves to death. This is a level of sophistication in story telling never seen before. I think what is either happening is either that writers are learning that there are techniques available to them that they did not know, maybe because network executives were so risk averse. Or there has been some change in the population itself and they now suddenly crave more complicated stories. I strongly suspect we haven't changed (the Flynn Effect stuff notwithstanding) and instead suspect something is changing on the supply-side. I'm just not sure why and what and why now. It's not the technology, because for a sci-fi story, there's startlingly no CGI anywhere. So it can't be technology. And if it was just Lost, I'd chalk it up to, well, just Lost. But it's not just Lost. Everywhere you look on television, stories are growing in complexity and texture. Characters are deeply layered and interesting in a way that weren't 10 years ago, let alone 40 years ago. Stories run long, through multiple episodes, or in Lost's case, multiple season without dropping the ball. The question isn't how do they do it. They question is why is it changing, and why now and not 10 years ago?
Thin-slice forecasting
Jesse Shapiro and Daniel Benjamin have an interesting new paper (forthcoming in Review of Economics & Statistics) entitled Thin-Slice Forecasts of Gubernatorial Elections. The abstract reads:
We showed 10-second, silent video clips of unfamiliar gubernatorial debates to a group of experimental participants and asked them to predict the election outcomes. The participants’ predictions explain more than 20 percent of the variation in the actual two-party vote share across the 58 elections in our study, and their importance survives a range of controls, including state fixed effects. In a horse race of alternative forecasting models, participants’ visual forecasts significantly outperform economic variables in predicting vote shares, and are comparable in predictive power to a measure of incumbency status. Adding policy information to the video clips by turning on the sound tends, if anything, to worsen participants’ accuracy, suggesting that naïveté may be an asset in some forecasting tasks.So maybe there is something to the story of the Nixon vs. Kennedy televised debates being the clincher for Kennedy. Those who watched said Kennedy won; those who listened to the radio broadcast said Nixon won. I suppose in an age of television, if more viewers watch than listen, then thin-slices in presidential debates can matter more.
Monday, February 25, 2008
Lost Theories
In "Eggtown," we learned that Aaron (Claire's baby) was one of the people who returned from the island. Whether he is one of the Oceanic six, I don't know. It depends on how the national press would've counted a baby. In his testimony, Jack said there were 8 survivors of the crash, but we've only heard about the Oceanic six, which suggests two people died in the crash. If one of the people who died was a pregnant mother, who first delivered the baby then perhaps died immediately afterwards, that would bring the total number of people to nine, with still only six who get off. So we'll have to wait and see who the other survivors are, but maybe Aaron is one of them and maybe not. It does seem like the show is interested in introducing these survivors one by one each week, though, so maybe we won't wait long. Regarding Claire's situation, though, I have a few theories. They're speculative of course.
First, some background as to my main theory. As a plot device, I think the writers are telling flash forwards absent of crucial context. Without that context, characters say and do things that seem to cast them in a horrible light. For instance, the season 3 finale gave me the distinct impression that numerous Losties got off the island with Naomi's freighter, but now regretted it. Kate indicated she was living with a man. In fact, only a few survived, and Kate is living with a baby boy, and not interestingly her own baby, though we'd been given plenty of suggestions she might be pregnant. Earlier in this season, I got the sense the writers wanted us to believe they may have gotten off the island to save themselves, and abandoned their friends. Why would Hurley be racked with so much guilt and regret for leaving the island? Guilt and regret are emotions associated with someone making a selfish decision. But now I've thinking that Oceanic 6 survivors got off the island to save their friends, not to abandon them. They purposefully took the helicopter (this is my theory) knowing that it's impossible to find the island from the outside unless you have a GPS tracker on the island, and even then, it's treacherous. So, having said that, I think we have to interpret flash forwards with a degree of salt, because without more context, we may be being misled by the writers through some kind of subtle suggestion. Nevertheless, I have three theories about what happened to Claire.
First, some background as to my main theory. As a plot device, I think the writers are telling flash forwards absent of crucial context. Without that context, characters say and do things that seem to cast them in a horrible light. For instance, the season 3 finale gave me the distinct impression that numerous Losties got off the island with Naomi's freighter, but now regretted it. Kate indicated she was living with a man. In fact, only a few survived, and Kate is living with a baby boy, and not interestingly her own baby, though we'd been given plenty of suggestions she might be pregnant. Earlier in this season, I got the sense the writers wanted us to believe they may have gotten off the island to save themselves, and abandoned their friends. Why would Hurley be racked with so much guilt and regret for leaving the island? Guilt and regret are emotions associated with someone making a selfish decision. But now I've thinking that Oceanic 6 survivors got off the island to save their friends, not to abandon them. They purposefully took the helicopter (this is my theory) knowing that it's impossible to find the island from the outside unless you have a GPS tracker on the island, and even then, it's treacherous. So, having said that, I think we have to interpret flash forwards with a degree of salt, because without more context, we may be being misled by the writers through some kind of subtle suggestion. Nevertheless, I have three theories about what happened to Claire.
1) Claire and numerous others died on the island. Ben says to Sayid, in "The Economist" (episode 3 from two weeks ago) something about how "what they did to your friends," presumably killing them or equally bad. Kate, from last week's episode "Eggtown" had seemed really uncomfortable with picking up Aaron when Claire asked Kate to do so. So, would Claire ever let Kate keep her child? Maybe, if she was dying or had died, Kate was forced to adopt the child and get the child off the island, per Claire's request before dying, or just simply de facto as a result of Claire dying. I think we're supposed to be considering that that is a possibility, though it's not the only possibility.I think #1 and #2 are clearly planted ideas by the writers. The writers want you to believe #2, but then if not #2, then #1. But I'm going with #3. It's a longshot, but I think it's got some legs. We'll no doubt see in a few months if I'm right!
2) Kate stole Aaron from Claire because she couldn't have a baby of her own, and that's why Jack is upset and won't see Aaron. This is clearly an idea that they wanted to plant, because they showed Kate thinking she was pregnant, then learning she wasn't and saying to Sawyer "would it really be so bad if I was pregnant?" more or less. But, I think this is one of those theories that is just a trick on the writers' part. Ultimately, I think we have to believe that no one's basic character has changed significantly. And Kate would never kidnap a poor woman's baby just because she can't have her own. But then, why can't Jack come by and see the baby? Why is he so uncomfortable? I think there's an explanation for this, but it's not that Kate did something wrong.
3) Jack is upset and can't see Aaron because he's learned that Claire is his half-sister, making Aaron his nephew. Remember that Christian Shephard (Jack's dad) fathered an illegitimate daughter in Australia. That was why he went there, though he has never himself met her (I don't think; I may be wrong here). So, the coincidence is that Jack's own half-sister is on the island, and neither knows the other exists, let alone that they are each other's half-sibling. But, maybe Jack is going to find out. How? Because remember, Christian Shephard's body is on the island somewhere. Jack was flying the body back to the US from Australia, but the body is missing. Well, the new guy from the freighter, Niles, talks to dead bodies. In this theory, Niles communicates with Jack's father, learns of the connection, tells it to Jack, Jack learns Aaron is his nephew and Claire is his half-sister. And then something bad happens to Claire, and Kate has to make the decision to take Aaron and with the others get off the island. So, what I suspect is that, going back to Aaron, either Claire is dead or she is one of the trapped, and Jack learned just before leaving that Aaron is his nephew, and Claire his half-sister. He's just not able to deal with this information, because by the looks of Sayid's situation, whatever they are doing in the flash forward requires cold, emotional detachment, and seeing Aaron only reminds him of what he's lost and left behind.
Sunday, February 24, 2008
They All Laughed
They All Laughed was directed by Peter Bogdonavich in 1980. It starred Audrey Hepburn, long after retirement, and a young scarlet named Dorothy Stratten. Bogdonavich fell in love with Stratten during the making of the film (not the first time that had happened to him while making a film), and Stratted reciprocated by all appearances. Then tragedy struck.
After the production of the film, co-star Dorothy Stratten was murdered by her estranged husband, who was upset over his wife's leaving him for Bogdanovich. Studios were reluctant to release the film due to the negative publicity following the murder. Bogdanovich bought back the negative with his own money so that the film would be seen by an audience; by a wide margin it was the most ambitious role Stratten had played, and likely her best movie as well. But the film was released to tepid reviews and minimal business. Bogdanovich lost millions of dollars and had to file for bankruptcy.
Friday, February 22, 2008
Once
We saw a wonderful new movie the other night called Once, which has been nominated for an Oscar for one of its beautiful songs called "Falling Slowly" which I'm listening to now. Go see it.
Thursday, February 21, 2008
Never Gets Old
I think I'll always laugh when the Hubbard character mouths, "This book sucks" to the camera.
Petroleum Engineer Wages Rising with Oil Prices
Man, why didn't I freaking read the Wall Street Journal before teaching this morning? Today I taught on how economic growth and labor markets are connected via the market for labor and the demand for labor being a function of both output prices (firm output prices) and average labor productivity (the chief driver of economic growth). I showed students that firms hire workers up to the point where the marginal benefit of the last worker hired is equal to or greater than the marginal cost. That gobbleygoop translates into this, though: firms hire if and only if the worker's unique production (ie, marginal product) can be sold on the market at a price that makes his marginal revenues exceed or equal his own wage. When output prices increase, then holding wage constant, firms want to hire more workers than before, and this ultimately shifts the demand for labor to the right, causing wages and employment to rise. Well, I was trying to come up with a relevant, current example of output prices causing this kind of shift, and I thought, "Oil! Oil prices are rising so anyone who makes oil would be hiring more workers because the value of their marginal product is going up." But, then I couldn't for the life of me figure out who actually "made" oil. Saudi Arabia? I know it's a company, but I drew a complete blank, and it was the middle of class, so I changed gears and said, "hmm. Let's try gold instead. Companies that mine for gold hire more gold workers because gold prices have been rising which increases the value of worker's marginal product, causing a rightward shift in demand."
Well, what do you know. I open the freaking WSJ that I actually picked up this morning before class, but was too busy to read, and saw this article, "A Gusher for Oil Grads: As Energy Prices Soar, Petroleum Engineers Get Top Dollar." And, of course, it perfectly illustrates the point. From the article:
Well, what do you know. I open the freaking WSJ that I actually picked up this morning before class, but was too busy to read, and saw this article, "A Gusher for Oil Grads: As Energy Prices Soar, Petroleum Engineers Get Top Dollar." And, of course, it perfectly illustrates the point. From the article:
With energy prices soaring and oil-company ranks graying, petroleum-engineering graduates have become a hot commodity.I sent the article to students just now, but in my experience, students delete this stuff and only if I can connect it in class to the material do they really "get it." Oh well.
As a result, students are swelling the ranks of college engineering programs, positioning themselves for energy-industry jobs with salaries that make tenure-track professors envious. Top-ranking petroleum-engineering graduates this year can expect starting pay of $80,000 to $110,000, plus signing bonuses and other perks.
Mario on Atari 2600
Can we all just agree that while Obama is great, and promises to reunite America, that the real person who can and should do it is the fellow who programmed Super Mario Brothers into his Atari 2600 emulator? I want one so bad! It's perfect. It's eerily identical in ways I cannot understand to the NES version, even though it's basically flattened by the ginormous pixels and squares. Someone once told me that the reason Nintendo gave Mario the mustache was because he needed something on his face. I forget the rest. It had something to do with an optimal visual cue the person needed to recognize the face, and it was easiest to do a straight line across his face (ie, a mustache) to accomplish that, because of the limitations of the old hardware. When you see this faceless person, I can see his point. Still, I'm voting for HOPE this year, and his name is dude-who-programmed-his-atari-2600-to-play-a-sweet-Super-Mario-Brothers. Hopefully I can write that in somewhere.
Update: Alright, foul. I thought Atari 2600 had one button. But towards the end of world 1-1, this guy speeds up as he is racing up the steps to jump on the flagpole. He can only race and jump if he has two buttons, not one. Either the button on the 2600 is going to be a jump button, or it's a speed button, but he can't do both with it, can he? Or is he just that awesome that he can! Uniter!
Update Deus: Hmmm. Comments say this is something called an "old ROM hack" and could never function on a 2600 for various reasons that went over my head as soon as I started to read them. That said, I've grown sour on the uniting potential of this person. But deep down in my heart, I'm supporting him/her. Viva la Guy!
Update: Alright, foul. I thought Atari 2600 had one button. But towards the end of world 1-1, this guy speeds up as he is racing up the steps to jump on the flagpole. He can only race and jump if he has two buttons, not one. Either the button on the 2600 is going to be a jump button, or it's a speed button, but he can't do both with it, can he? Or is he just that awesome that he can! Uniter!
Update Deus: Hmmm. Comments say this is something called an "old ROM hack" and could never function on a 2600 for various reasons that went over my head as soon as I started to read them. That said, I've grown sour on the uniting potential of this person. But deep down in my heart, I'm supporting him/her. Viva la Guy!
Fedlstein on the recession
Martin Feldstein, President Emeritus of the National Bureau of Economic Research which among other things is responsible for dating the business cycle, opines on the imminent housing recession we (might) have before us. One choice quote is straight to the point and helpful, and comes right out of principles of macroeconomics (which means, in so many words, that I have the ability to understand it, since that's the extent of my knowledge of macroeconomics). He says:
The range of predictions on how bad this will be goes from forecasts of small, but positive, growth rates in 2008 to grim forecasts of 6 or more quarter negative growth rates. If the latter happens, it'll be the worst recession in decades, easily - by a long mile. I hope not. Update: Forgot to post the link. Here 'tis.
The unprecedented national fall in house prices is reducing household wealth and therefore consumer spending. House prices are down 10% from the 2006 high and are likely to fall at least another 10%. Each 10% decline cuts household wealth by about $2 trillion, and this eventually reduces annual consumer spending by about $100 billion. No one can predict the extent to which the coming fall in house prices will lead to defaults and foreclosures, driving house prices and wealth down even further. Falling house prices also discourage home building, with housing starts down 38% over the past 12 months.That's really the thing I've been worried about. The falling housing prices are worrisome because consumers spend out of permanent income, and primarily wealth, and that includes the value of their assets. The rising value of homes largely insulated the economy from a much worse recession in 2000/2001, because consumer spending never really took a bad hit. The decline in aggregate demand was mainly, from what I've read, among investment spending. But now consumer spending is falling because of falling housing prices, which is to say, household incomes are falling in a sense.
The range of predictions on how bad this will be goes from forecasts of small, but positive, growth rates in 2008 to grim forecasts of 6 or more quarter negative growth rates. If the latter happens, it'll be the worst recession in decades, easily - by a long mile. I hope not. Update: Forgot to post the link. Here 'tis.
Wednesday, February 20, 2008
No More Endnotes!
Or how about, "End to Endnotes!" I'm reading a book right now that has endnotes, and damnit, I want to strangle whoever it is that invented these things. Footnotes rule, and endnotes drool. It's that simple. Do not make me hold my place, find the appendix, and look up your little tangent. Let me just look down at the bottom of page, get lost in that text, and then return at my leisure. Do you not realize that footnotes are ultimately more efficient than endnotes, person-who-wrote-this-book? They are. They require less effort and therefore the benefit to cost ratio is higher for footnotes than endnotes. Perhaps you think the number of pages will increase with footnotes instead of endnotes, but I have to argue back that no study to my knowledge has yet to prove that. Besides, theoretically, isn't net neutral to move from endnotes to footnotes? Those pages previously used for your precious endnotes are cut up and distributed throughout the text to accommodate the shorter space for each page's main body text. You want to know what I am doing now with your endnotes? I'm not reading them. No seriously, I'm not reading them. And it's not out of spite. I just cannot be expected to keep turning the damn page to get to the freaking one or two sentence afterthought. I can't and I won't.
Scary Night
What an evening. After getting caught up on The Wire, my wife suckered me into a 30 minute Internet search into the above pictured woman, Ms. Jocelyn Wildenstein. Even scarier than her face, on which she has spent over $4 million in cosmetic surgery in her lifetime, is the story of why she actually began to carve her once very pretty face. This doesn't seem to be a story of a woman who had too much cosmetic surgery, because her first time under the knife pretty much made her look this bad. That's because after walking in on her billionaire husband in bed with a Russian model, she had the ambitious plan (some might call it insane, but they just lack vision) of winning her husband's love back. How you ask? By transforming her face into the look of a feline. No joke. She believed that since her husband loved big game lions and big cats, that if she looked like one, he would love her again. Talk about a tight syllogism. It is reported that when he first saw her post-op, he screamed.
Ultimately, the story is just one more example of how ruinous adultery and idolatry is. They transform us into people we can barely recognize. The new creation will put all this straight, but it's painful to live in the context of an incomplete world where suffering and sadness abounds.
Oil
There is no shortage of opinions on the likelihood of a recession. You get the full gamut with Roubini saying we'll end up a devestating depression that lasts six quarters to Jim Hamilton saying things aren't going to be that bad. I like Hamilton. Sensible man, wrote a painful time series textbook that I had to read (damn him). I do think he is generally right that the oil price increases is ultimately a good thing, most likely due to economic growth in the rest of the world, such as India and China, and not supply-side reductions by OPEC, etc. If so, then that would probably explain why we weren't catapulted into a recession when it all started several years ago. Ultimately, growth in the developing world is good for everyone.
Should You Walk Away?
If this housing recession turns out to be as bad as Roubini predicts, then we'll look back on websites like Should you Walk Away?, a website devoted to helping families with the shame of foreclosure, as obvious barometers of a coming disaster. Man I hope Roubini is wrong.
CGI Team Creates Realistic Oscar for Michael Bay
Oh Onion. Where would as a world be without you?
"Viewers are going to be blown away by how believable-looking we've been able to make Michael Bay accepting the highest award in film appear," said senior technical director Zsolt Krajcsik, who also worked with Bay on the 2003 film Bad Boys II. "The podium, the backdrop, the sense of creative achievement that hangs about him—it's all so vivid and detailed that you'd swear it was real."
Added Krajcsik, "When you see Michael thanking his talented cast and crew and raising the Oscar above his head, it's going to be hard to believe it never, ever happened.
"There is no way this would have been possible five years ago," Krajcsik said, later admitting that CGI technology is still decades away from making an Academy Award win for Rush Hour 3 director Brett Ratner look plausible."
Tuesday, February 19, 2008
Conservatives and the Academy
Conservatives are under-represented in the university, but it's probably not because of discrimination despite what Horowitz claims. It's mainly self-selection - conservatives for some reason by and large select into other parts of the market. That does raise an interesting question about why political views would slice so strongly on that one dimension, though. In a new paper, a husband and wife team argue that conservatives just aren't interested in academic work. It's basically preference, in other words. Since I hate explanations that are preference-based, I'll secretly mock this, but probably it's right.
Economics of Terrorism
Not really. But, this article does point to various social and economic factors that might make belief in jihad a rational decision. Namely, the difficulty of finding decent work, a place to live, and a wife.
Morning Reading
Best films to never have won a Best Picture Oscar. Pretty good list. But, really it's incomplete if we cannot see what did win each year that these lost. Although, in 1941, Citizen Kane lost to How Green Was My Valley, a John Ford directed film nominated for ten awards (winning five), and at least in terms of our collective memory, I think most people have seen or heard of Citizen Kane. I don't think you can say the same about How Green... Although, I'll admit this only because it's an anonymous blog. I thought Citizen Kane was okay. It's not the most moving film I've ever seen. There's an emotional heaviness to the film, and the search for Rosebud is fascinating - I can only imagine how much moreso had I not seen an SNL skit when I was a kid that basically gave away the ending! - but it's not the sort of movie I like to rewatch. Rear Window on the other hand? All day, everyday.
Now to macro class.
Now to macro class.
Saturday, February 16, 2008
Wikipedia discovery
You have to admit that Wikipedia has generated a ton of consumer surplus. Think about those guys coming door to door selling encyclopedias when you were kids? Every house had an encyclopedia, and they were all old and outdated. Except for stuff on animals or planets. That tended to never change, so of course the encyclopedias could be years old and still be fine. Today, though, they would stink since in a few short years we've lost Pluto as a planet, and constantly learning about new planets everyday in nearby solar systems. There's some error in Wikipedia of course, but it has amazingly efficient processes to minimize the errors on the more read entries (which really, if you wanted such processes, you'd want it on the most read entries), which is the strange open source tendency of the wikipedia community writers who are walking librarians correcting and revising entries.
Today I found an odd entry on Wikipedia. Last night we watched episode 3 of Lost, called appropriately "The Economist." I learned that Daniel Faraday, the odd scientist who reached the island with the 3 others, is named after the scientist Michael Faraday. Faraday's work was in electromagnetism apparently. It's long been speculated that electromagnetism or just something having to do with a magnetic field (is that the same thing?) is partly responsible for the weird occurrences on the island, like the healing, and the things crashing, and the compass with the spinning hands, and the weird light at times, and the fertility issues. So maybe that's a clue, though in Lost until they hit you over the head with something, you have to handle your clues carefully as they don't always lead to the things you think.
Looking around some more, I found this entry on a physicist at UConn named Ronald Mallett. Pretty bizarre entry in a way.
Today I found an odd entry on Wikipedia. Last night we watched episode 3 of Lost, called appropriately "The Economist." I learned that Daniel Faraday, the odd scientist who reached the island with the 3 others, is named after the scientist Michael Faraday. Faraday's work was in electromagnetism apparently. It's long been speculated that electromagnetism or just something having to do with a magnetic field (is that the same thing?) is partly responsible for the weird occurrences on the island, like the healing, and the things crashing, and the compass with the spinning hands, and the weird light at times, and the fertility issues. So maybe that's a clue, though in Lost until they hit you over the head with something, you have to handle your clues carefully as they don't always lead to the things you think.
Looking around some more, I found this entry on a physicist at UConn named Ronald Mallett. Pretty bizarre entry in a way.
Ronald L. Mallett, Ph.D. is a professor of physics in the University of Connecticut.Time travel! It's all theoretical apparently at this point, though I think I saw that he has some experiments going on.
Mallett was born in Roaring Spring, Pennsylvania, on March 3, 1945. When he was 10 years old, his father died, at age 33, of a massive heart attack. Inspired by a Classics Illustrated comic book version of H.G. Wells' The Time Machine, Mallett resolved to travel back in time to save his father, which became his life's dream. In 1973, he received a Ph.D. from Penn State University. Also that year, he received the Graduate Assistant Award for Excellence in Teaching. In 1975, he was appointed a job at the University of Connecticut as an assistant professor, where he continues to work today. His research interests include general relativity, quantum gravity and time travel.
Friday, February 15, 2008
Futures
So, all the volatility in the futures on candidates has made me think there's so little trading at this that these may have more arbitrage opportunities than I previously thought. For instance, take the futures on the probability of a recession in 2008. Intrade has that currently trading at 63.5 at of right now. So, the other day I looked at the fine print for this contract, as I realized I really didn't know how this thing would pay out. Would it pay out, for instance, if actual output fell below potential output, which is an estimated trajectory? Would, for instance, a slow growth recession count as a recession? Would they use the NBER business cycle dating group to determine if and a recession occurred? Turns out, they're using the more journalistic definition: two consecutive quarters of negative economic growth. Now, I'm sufficiently paranoid and pessimistic about the economy for a host of reasons. One of them is I'm teaching macro this semester, which tends to get me putting my business cycle hat on. The other is we're selling a house (unsuccessfully). Together, I get worried, looking at employment data, etc. But, I actually don't believe two consecutive quarters of negative growth is going to happen. I privately put that probability at closer to 30%, but the probability of a slow growth recession very high. Today I see that the CBO forecast for 4th quarter to 4th quarter 2007 to 2008 is 1.6. Now, that's consistent with negative growth over two periods, but you'd need some pretty sizeable growth in the other two to generate that, and I'm not confident about either direction. Plus, interest rates are going to be falling heavily soon and a fiscal package is coming through. So, when I get my act together, I may put some of my hard earned money into that contract and bet against it. I already am kicking myself for not making a million dollars on the McCain contract (it was trading at 7 not two months ago!). But I'm going to go out on a limb and say that the probability of two consecutive quarters of negative growth is way, way below 63.5%. A recession, sure. But a recession has many dimensions, and the newspaper definition isn't even the ones that economists use. I'm going to take the position that people are correctly pessimistic, but incorrectly forecasting the magnitude, and short this contract. At least, I think it's called shorting.
Thursday, February 14, 2008
Phreaking
Today in class I told the students the story about how Steve Jobs and Steve Wozniak raised capital for the early Apple computer by selling blue boxes to the mafia and to college students. It's such a cool story. Wikipedia has many interesting articles about the early phreaking devices. The blue box allowed you to make free long distance calls. The concept of the blue box was apparently discovered by a 7-year-old blind kid with perfect pitch named Joe Engressia. Joe, when he was seven, noticed that when he whistled at a certain frequency (technically at 2600 hz), that it would disconnect one end of the trunk line of the phone system, allowing the user to remain on the trunk and make calls without supervision (and ultimately without pay). Joe told his friend, John Draper, that there was a whistle packaged as a toy in a Captain Crunch box that emitted the 2600 hz tone. From there, Draper apparently became the architect of the blue box, and taught the skill to Wozniak and Jobs who sold them for a pretty penny to bookies and college kids. Joe Engressia has a sad ending to his story which you can read at that link.
Other boxes were created. There was, for instance, the red box, which simulated the sound of coins falling into a payphone, and thus fooling the system into thinking money had been deposited. There was also the black box, which worked similarly to the blue box. The black box would allow the receiver to cancel the charges to the sender when the long distance call was made.
These early phreakers were pioneers of the computing systems and phone systems. I always wanted to be one, and was technically doing some of that stuff in 8th grade, but the most sophisticated thing I ever did was set up my modem to randomly dial long distance dialing numbers all night, cycling through different numbers of a partially cracked 16-digit calling card. This was a brute force method, though, and required zero skill and sophistication. I was not a programmer, and thus was never able to get into the unix hacking. I also remember getting a username and password to TRW, and got a bunch of credit card histories, including numbers, for a ton of people in my town, including the mayors. That was cool. Of course, it required no skill, since I found the username and password on a message board. I never could figure out where the expiration dates were on the list, and so nothing ever came of it, but it was nonetheless fascinating to see these people's credit histories.
But despite a fascination with hacking and phreaking, I always had a much smaller ambition. I basically just wanted to play games, manage my own bulletin board service and make friends. But, I had some high points too. Like when I made some hit list of hack BBSs and ended up in an issue of Phrack Magazine. I won't say which of those in the hit list is me, since this is still an anonymous blog, but for those who know me, they will recognize the area code. The issue of Phrack says that the hit list was put together by some vigilantes who were wanting to "take down" system operators of BBSs that distributed viruses (which my BBS had - about 100 or so. I have no idea why I distributed those. At the time, you really couldn't have a phreak/hack BBS and not, though). This was probably pure junk, made up by some random person who got my phone number and BBS name off one off the many lists out there where we advertised. My experience with phreakers and hackers, as limited as it was, taught me that they were incredibly petty, vindictive people doing essentially vandalism and unproductive things. I believe there were people doing interesting things, and whose work probably did ultimately lead to productive outcomes for society, in the form of strengthening security systems and through the kinds of side projects that Woz did with Apple. But I personally never met those people. The people I met were usually kind of creepy, and weird. And of course, I have to include myself in that category, too. Thankfully, this never materialized. I didn't realize I was on a hit list until a decade later when I randomly googled my old BBS and phone number, and saw it show up in Phrack! Reading the "Hit List" section is a little chilling, though, assuming that it happened the way the magazine said it did (which I take with a little grain of salt).
Sadly, it all ended somewhat abruptly when I made some actual physical friends in high school. But I spent my entire 8th grade completely obsessed with hacking, phreaking and credit card scamming.
Other boxes were created. There was, for instance, the red box, which simulated the sound of coins falling into a payphone, and thus fooling the system into thinking money had been deposited. There was also the black box, which worked similarly to the blue box. The black box would allow the receiver to cancel the charges to the sender when the long distance call was made.
These early phreakers were pioneers of the computing systems and phone systems. I always wanted to be one, and was technically doing some of that stuff in 8th grade, but the most sophisticated thing I ever did was set up my modem to randomly dial long distance dialing numbers all night, cycling through different numbers of a partially cracked 16-digit calling card. This was a brute force method, though, and required zero skill and sophistication. I was not a programmer, and thus was never able to get into the unix hacking. I also remember getting a username and password to TRW, and got a bunch of credit card histories, including numbers, for a ton of people in my town, including the mayors. That was cool. Of course, it required no skill, since I found the username and password on a message board. I never could figure out where the expiration dates were on the list, and so nothing ever came of it, but it was nonetheless fascinating to see these people's credit histories.
But despite a fascination with hacking and phreaking, I always had a much smaller ambition. I basically just wanted to play games, manage my own bulletin board service and make friends. But, I had some high points too. Like when I made some hit list of hack BBSs and ended up in an issue of Phrack Magazine. I won't say which of those in the hit list is me, since this is still an anonymous blog, but for those who know me, they will recognize the area code. The issue of Phrack says that the hit list was put together by some vigilantes who were wanting to "take down" system operators of BBSs that distributed viruses (which my BBS had - about 100 or so. I have no idea why I distributed those. At the time, you really couldn't have a phreak/hack BBS and not, though). This was probably pure junk, made up by some random person who got my phone number and BBS name off one off the many lists out there where we advertised. My experience with phreakers and hackers, as limited as it was, taught me that they were incredibly petty, vindictive people doing essentially vandalism and unproductive things. I believe there were people doing interesting things, and whose work probably did ultimately lead to productive outcomes for society, in the form of strengthening security systems and through the kinds of side projects that Woz did with Apple. But I personally never met those people. The people I met were usually kind of creepy, and weird. And of course, I have to include myself in that category, too. Thankfully, this never materialized. I didn't realize I was on a hit list until a decade later when I randomly googled my old BBS and phone number, and saw it show up in Phrack! Reading the "Hit List" section is a little chilling, though, assuming that it happened the way the magazine said it did (which I take with a little grain of salt).
Sadly, it all ended somewhat abruptly when I made some actual physical friends in high school. But I spent my entire 8th grade completely obsessed with hacking, phreaking and credit card scamming.
Bill Gates: The Entrepreneur or the Philanthropist
Well, today I did something I hadn't done in a while. I made a bold claim that I cannot back up with data, but which seems right to me in intuition. I was talking to students about the crucial role that average labor productivity has in increasing living standards, and I told them the various things that make workers more productive: capital, human capital, technology, land and resources, institutions. Then I told them that entrepreneurship and management are actually critical things. I told them the story about how Steve Jobs and Steve Wozniak raised money for the Apple by selling blue boxes door to door to college students and to the mafia. (I really hope it is true that they sold those things to the mob. I love that part of the story. Let's just call it apocryphal and move on). In those early days, it was not at all clear that they were on to something. Jobs was making promises he couldn't realistically keep, and it was so bad at one point, that the third member of the founding Apple corporation sold his stock to Wozniak and Jobs to get out. (Boy, talk about remorse! I'm sweating over the foregone profits from selling my house if I lower the price, and I think of this guy!).
But in the end, the general vision was dead on. The consumer surplus generated by the personal computer has been substantial. It's effect on living standards, may not be understood fully for a long time. But I made the rather bold statement that there is probably no other person in history who has done more for living standards globally or nationally than Bill Gates. In fact, I suspect that his vision to put a personal computer on every desk in the country has done far more to increase living standards in the world than his philanthropy projects will ever have. I'll be happy to admit I was wrong on it, but I doubt that I am wrong on that.
But in the end, the general vision was dead on. The consumer surplus generated by the personal computer has been substantial. It's effect on living standards, may not be understood fully for a long time. But I made the rather bold statement that there is probably no other person in history who has done more for living standards globally or nationally than Bill Gates. In fact, I suspect that his vision to put a personal computer on every desk in the country has done far more to increase living standards in the world than his philanthropy projects will ever have. I'll be happy to admit I was wrong on it, but I doubt that I am wrong on that.
Shooting Down Satellite -EV, I bet
How much you want to bet that the probability of the falling satellite actually killing someone is, in expected cost terms, much lower than the $100 million or whatever will be spent firing missiles. I'm not saying I know this. I'm just thinking it seems really, really unlikely to me that the fuel when it burns up really will turn into the death gas they're worried about. But what do I know. I'm a social scientist, not a real scientist, which is code for I really can't be of much value to anyone.
Jumper Hopes Squashed Like Flat Bug
Sigh. Well, doesn't this suck. First, I forget Jumper is coming out at all, and then read that Eminem almost had the lead role. That got me excited and curious, and I noted that the movie was playing tonight. Wow. Maybe I could sneak out after the wifey went to bed and see it. Then I said in my serious voice, "It's Valentines. Have you no soul? Have you no honor?" And besides, what if it's bad? So I went to my old faithful, my muse, Mr. Roger Ebert. And here's what the old soul had to say:
But, there is an upside to all this disappointment. Remember that weird advertisement for a new movie starring Colin Ferrell that you saw going into Juno, but couldn't really figure out what it was about because you'd never seen a trailer, and the ad only told you it had something to do with beer and hitmen? Well apparently, it's good.
In a world gone horribly wrong, where actions have no consequences, where all of humanity has become unaccountably oblivious to blatant violations of the time-space continuum, where rules exist not to be broken but to be disregarded, where continuity is irrelevant... anything is possible!Yes folks, you read that right. Ebert gave it one of his rare 1.5 stars. Which means, no matter how big of a big geek you are. No matter how much you love teleportation or think Nightcrawler is a tragic, undervalued member of the X-men. No matter how much you loved this trailer, and could watch it over and over. No matter how much you want this movie to be great, it just won't be. It will be horribly, horribly bad. You will hate Doug Liman for wasting your precious time. You will find yourself hating Hayden Christiansen (damn what is the correct spelling of his name!? Can we just call him Anakin?) even more - which you think to yourself, that's not easy after what he did to us in Attack of the Clones.
There you have the premise for Doug Liman's "Jumper: The Prequel," a movie so silly you may find yourself giggling helplessly even as you wish you could magically transport yourself almost anywhere else in the world but where you are, in front of the screen showing it.
But, there is an upside to all this disappointment. Remember that weird advertisement for a new movie starring Colin Ferrell that you saw going into Juno, but couldn't really figure out what it was about because you'd never seen a trailer, and the ad only told you it had something to do with beer and hitmen? Well apparently, it's good.
Today was like one of those fly dreams
Tuesday was bad. I gave my principles students their first exam. Seventeen questions total: 5 short answer, 12 multiple choice. The test was so hard, and so long, that one girl - one very hard working young student - actually was crying during the exam. You read that right: crying. I made her cry with my test. Well, I came out of it feeling defeated, because last semester's evals were bad. Like the worst evals I've ever had. And I just wanted to make the whole test problem go away. So based on conversations with colleagues, I decided to do something I'd never done. Rather than curve the test, I sent them the test in an email and told them "You have til next Tuesday. Redo the test, and any question that you got wrong but not get correct, you earn half the points back." It's kind of like I'm taking the average of every question, assuming they got it wrong the first time but right the second time. This accomplished two things. One, I kept promise not to technically curve. I wanted students to learn this material, and they have a week to do it. But two, I bought back good will. And after working with them today on the new material, I could see something I'd never seen before. And the adage is this: an instructor should never under-estimate the importance of good will with your students. When you lose the good will, you lose the class, and when you lose the class, you lose (because those evals are going to stink to high heaven) and they lose, because they'll give up. And throwing in the towel a little bit now ultimately let me get back into the right place with them. I also think I learned a little something new. It took me 45 minutes to finish my exam from start to finish. That means, if it takes them twice as long, they essentially had an hour and a half to finish the test. But the class is only an hour and 20 minutes. So way too long. But I've learned, and from now on, the longest my tests will be on an order of three, not two. That is, for every 1 minute it takes me to do a problem, it will require them 3 minutes. That means I have to write a test that is around 20-25 minutes for me to finish. The second thing I've done is commit to giving them my old exams. It was time to let those things go. They really were holding me back. I wanted to keep them hidden as an option to recycle them. But screw that. I'm rebuilding this pedagogy from the ground floor back up, and I'm cleaning house. So tests are gone to them. They'll need them to see where I'm going with this class. If my homeworks and lectures really are poor barometers for them, then this will definitely improve their ability to forecast the exams.
But today? Well, today was unbelievable. Awesome. I had one of those days teaching where I felt like I changed students' lives. I basically successfully sold the notion to them that economic growth is one of the most important things that humans can care about. I found some great material online, and my own, showing just how the same the world was for thousands of years, and then in a mere 200 years, the world was turned upside down. This is from Brad DeLong, channeling Greg Clark.
What a stark graph! It's like all of human history was a runway, and finally in 1800, the pilot got off the ground. But notice the "great divergence" DeLong marks. Some countries climb so freaking steep - almost reaching a vertical climb, wherein the year-to-year changes are themselves dwarfing millenia changes. I told the students that the difference between 2007 and 2008 will be more different in terms of overall living standards than 8000 BC was to 1500 AD! You can see more of that in the table below (also stolen from DeLong's slides. Thanks Brad! I listened to his macro lecture last night on the Solow Growth model. I think that man is a genius. He was talking about the domestication of the cow versus the buffalo, and I was hanging onto every word he said. Maybe I was really just channeling Brad DeLong today.). Secondly, though, notice the different lines moving from 1800. The ones at the top are the US, Luxemburg, the UK, Australia, Japan, etc. In other words, the first world. The ones at the bottom, though - the ones where each year the relative gap in incomes between them and the first world get larger and larger - are your Sierra Leone, your Congo, your Kenyas. These poor people are only marginally better off than their primitive ancestors, where we practically look like aliens compared to ours.
And finally, I showed them some growth in per capita income for 1870-2000 for a few select countries. I thickened the lines for Australia, Japan and the US to show just how much shuffling there had been between then and now. Notice that in 1870, Japanese per capita income was around $900 per person. Australia, the wealthiest country in the world at that time, was over $5000. Japan grew, as all the countries in this series did, from 1870 to 1950, but something happened in 1950 that caused Japan to overtake almost everyone and become one of the world's most productive economies. Had the 1990s financial crisis in Asia not happened, who knows where Japanese incomes would be on this series. Point is, a poor country can catch up to a wealthy country by the power of compounding interest. It just takes time and consistent growth rates that are larger than others and that country will catch up. In Japan's case, average growth rates from 1950 to 2003 were almost 5% a year, compared to half that maybe for Australia? That means incomes were doubling every 70/5 years, or every 14 years. That's incredible!
Anyway, today was a good day. It was such a good day, I'm going to leave you with some verse.
But today? Well, today was unbelievable. Awesome. I had one of those days teaching where I felt like I changed students' lives. I basically successfully sold the notion to them that economic growth is one of the most important things that humans can care about. I found some great material online, and my own, showing just how the same the world was for thousands of years, and then in a mere 200 years, the world was turned upside down. This is from Brad DeLong, channeling Greg Clark.
What a stark graph! It's like all of human history was a runway, and finally in 1800, the pilot got off the ground. But notice the "great divergence" DeLong marks. Some countries climb so freaking steep - almost reaching a vertical climb, wherein the year-to-year changes are themselves dwarfing millenia changes. I told the students that the difference between 2007 and 2008 will be more different in terms of overall living standards than 8000 BC was to 1500 AD! You can see more of that in the table below (also stolen from DeLong's slides. Thanks Brad! I listened to his macro lecture last night on the Solow Growth model. I think that man is a genius. He was talking about the domestication of the cow versus the buffalo, and I was hanging onto every word he said. Maybe I was really just channeling Brad DeLong today.). Secondly, though, notice the different lines moving from 1800. The ones at the top are the US, Luxemburg, the UK, Australia, Japan, etc. In other words, the first world. The ones at the bottom, though - the ones where each year the relative gap in incomes between them and the first world get larger and larger - are your Sierra Leone, your Congo, your Kenyas. These poor people are only marginally better off than their primitive ancestors, where we practically look like aliens compared to ours.
And finally, I showed them some growth in per capita income for 1870-2000 for a few select countries. I thickened the lines for Australia, Japan and the US to show just how much shuffling there had been between then and now. Notice that in 1870, Japanese per capita income was around $900 per person. Australia, the wealthiest country in the world at that time, was over $5000. Japan grew, as all the countries in this series did, from 1870 to 1950, but something happened in 1950 that caused Japan to overtake almost everyone and become one of the world's most productive economies. Had the 1990s financial crisis in Asia not happened, who knows where Japanese incomes would be on this series. Point is, a poor country can catch up to a wealthy country by the power of compounding interest. It just takes time and consistent growth rates that are larger than others and that country will catch up. In Japan's case, average growth rates from 1950 to 2003 were almost 5% a year, compared to half that maybe for Australia? That means incomes were doubling every 70/5 years, or every 14 years. That's incredible!
Anyway, today was a good day. It was such a good day, I'm going to leave you with some verse.
Today was like one of those fly dreams
Didnt even see a berry flashing those high beams
No helicopter looking for a murder
Two in the morning got the fat burger
Even saw the lights of the goodyear blimp
And it read ice cubes a pimp
Drunk as hell but no throwing up
Half way home and my pager still blowing up
Today I didnt even have to use my a.k.
I got to say it was a good day.
The Economy Sucks
From Ben Bernanke (click here for all of it, which is a must read):
The outlook for the economy has worsened in recent months, and the downside risks to growth have increased," Bernanke said. "To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so."This is so depressing. I cannot believe our luck to be moving and selling a house right with this elephant walked into the room. But, in the scheme of things, we are quite lucky, given I have a job and a wife and three wonderful, healthy kids. So I won't complain about my petty problems since they are small in comparison to others. If we can sell this house, great. If not, we'll deal.
Bernanke also told senators that the "virtual shutdown" of the market for subprime mortgages given to people with blemished credit histories or low incomes -- and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 -- have aggravated problems in the housing market.
Unsold homes have piled up and foreclosures have climbed to record highs.
Monday, February 11, 2008
Oscar Predictions
Futures are predicting No Country for Old Men for Picture and Director, and Daniel Day Lewis for There Will Be Blood. The other big categories.
Sunday, February 10, 2008
Saturday, February 9, 2008
Differences in the Obama and Hilary Healthcare Proposals
The WSJ has a good article explaining what's different about their healthcare proposals. It focuses mainly on insurance mandates.
Friday, February 8, 2008
4 Months, 3 Weeks and 2 Days
With the Writer's strike almost over, this is a moot point, but if this had gone on much longer, I wonder if there would've been an increase in demand for foreign films to satisfy America's desire for stories. Since most of what gets imported into the US are the better foreign films, and since most of what would have been harmed by the strike were the bad blockbusters and other tripe, then I doubt it very much that in our desperation for stories, we would've been willing to watch endless Bollywood remakes of our favorite movies. Nevertheless, this new Romanian film, 4 Months, 3 Weeks and 2 Days, reviewed here by Roger Ebert sounds very moving and difficult. I will have to queue it.
Thursday, February 7, 2008
Weird Teaching Dynamics
I teach two days a week, both in the morning, both the same undergraduate introductory class, and one right after the other. I'm never quite prepared for the first class. I always need one chance to go through eveything, and when I do, then I feel ready. So the first class becomes my practice and the second becomes the real one. If students are equally likely to enroll in each class, then it means the differences in the class experiences are due to the fact that I teach a better class in the second period than the first. I notice that the first period students are really unengaged. It's 9:30, so maybe it's the hour, but I don't think so. I think it's because that class feels a little worse than the second, which feels really great. The first period's students seemed sometimes annoyed and lethargic, and the second period's students literally cannot get enough. Today they even asked me to keep lecturing, despite class being over. Do you know how easy it is to get people that interested in the calculation of the consumer price index that they actually want you to keep going? Not easy, let me tell you. Not easy for the instructor to get excited, let alone 30 non-majors.
Well, I started thinking the other day that small differences in experience start to compound over time for the students - a momentum ends up building. Students come in with the knowledge the previous classes had been really lame, and they expect this one to be lame too. The others come in with the memory of how great the class has been going, and they expect it to be the same today, and so they're more involved, interested, excited. This momentum is new to me. I've never taught two classes at the same time, same day, back to back. But I think it's probably an important dynamic. I'll be surprised if the class evals aren't significantly better for the second class than the first. But, I also need to figure out a way to make the first class much better. I've got to get them involved in lecture more. Our first test is on Tuesday, which is usually when the honeymoon ends and students realize what a jerk I can be.
Well, I started thinking the other day that small differences in experience start to compound over time for the students - a momentum ends up building. Students come in with the knowledge the previous classes had been really lame, and they expect this one to be lame too. The others come in with the memory of how great the class has been going, and they expect it to be the same today, and so they're more involved, interested, excited. This momentum is new to me. I've never taught two classes at the same time, same day, back to back. But I think it's probably an important dynamic. I'll be surprised if the class evals aren't significantly better for the second class than the first. But, I also need to figure out a way to make the first class much better. I've got to get them involved in lecture more. Our first test is on Tuesday, which is usually when the honeymoon ends and students realize what a jerk I can be.
McCain
McCain is now trading at 96 on inTrade. Two months ago, he was trading at 7. That's right, seven. Seven percent expected chance of being the Republican nominee, and now two months later, he's the only one left. Boy, don't you feel stupid for not spending thousand bucks on that contract? You would've made a fat fortune on it. One of these days, I'm actually going to bet on that stupid thing. Of course then I'll lose, because that's when market efficiency will actually work, and I'll realize I should've just read the numbers instead of thinking I knew better. But whatever.
Wednesday, February 6, 2008
Delegates
I don't know why I keep going to InTrade Predictions Market, since it has been totally contradictory over the last few months (no better/worse than polls, though). I just read that Obama has a slight delegate lead after SuperTuesdsay of 847 to Clinton's 834, though, and inTrade shows the two at the closest I've ever seen: last traded price on Clinton was 49.9, and last traded price on Obama was 49.4. So really, it's a complete tie. It's a tie after SuperTuesdsay, and it's a tie in the predictions market. This is turning out to be one of the more exciting political races to watch, I'll have to admit. First, McCain comes out of nowhere and basically clinches the Republican candidacy out of Romney and Giuliani's fingertips. Then, the Obama-Clinton race is in a dead sprint with no clear winner between the two.
Thoma on heterdox economics
Mark Thoma has a good explanation of neoclassical vs. heterodox economics, noting that:
Economists would like to find the set of laws that will allow us to explain the great diversity of economic behavior we see in the world, and the neoclassical model is one such attempt. It is a hard model to beat. One reason the neoclassical model has survived as long as it has is because it is pliable, maybe too pliable as it is difficult to find economic behavior that can't be explained by tweaking some element of the model. Pretty much any maximizing behavior can be rationalized using some variant of the neoclassical model. But the model is not perfect and there are certainly things it cannot explain very well.
In our quest to discover the laws of economics, we propose and use many different models. Those that work best survive and their inventors become well-known within the economics community, and those models that don't work are discarded. It's an imperfect process, but the process moves us forward and, over time, our models have improved.
I think there is "one economics," a set of core economic principles that apply anywhere and everywhere and, when embedded within the existing institutions, customs, power relationships, technical knowledge, etc., these principles can explain the world we see around us. Unfortunately, however, we don't know what that "one economics" is, not for sure - we're not even close in some ways - and because of that there is room for many variations of the core neoclassical model (e.g. fixed price and wage macro models with monopolistically competitive players as an alternative to real business cycle models), and for challenges to the core model itself.
It's always hard for the new (heterodox) model to upset and eventually displace the traditional theoretical model. One reason, of course, is that there is lots of resistance from those vested in the current model and they will not let go easily. But it's not impossible and if the heterodox economists really do have a better model, they should keep sounding the horn, improving their models as much as possible so the superiority of the new model becomes more evident, and be persistent until people begin to notice and want see for themselves if the claims have any validity. If the heterodox economists are right, if they really do have a better model, then they will eventually carry the day, become entrenched as the new establishment, and be the target of a new set of heterodox economists upset that they cannot get a proper hearing for their ideas.
Exchange Rates
The Internet channels the great Milton Friedman here, as he explains a little bit about exchange rates.
Ahoy Matey! (Or, How Apple is a Pirate!)
That title cracks. me. up! I need to calm down before I can even finish. Okay, seriously, though. Apple's iTunes has been selling this guy's music and pocketing all the money, paying no royalties to him at all? I'm not a lawyer, but isn't that illegal, called scare-quotes "piracy" by some?
Tuesday, February 5, 2008
Gap Minder
Gap Minder is such an awesome tool for viewing cross-country data. Edward Tufte would be proud ([ed]: Is Tufte dead or something? Me: No, I just like saying it that way). Today in class we used it when talking about GDP, and how while Gross Domestic Product is not itself a measure of economic well-being, it is nonetheless highly correlated with and predictive of economic well-being. Well, saying it is one thing, but seeing it is another, and Gap Minder says in a few pictures what I couldn't say in an entire lecture.
Some of the really interesting things in here, though, don't have anything to do with GDP. For instance, plot "fertility rate" on the vertical axis with "child mortality rate" on the horizontal axis, and see the relationship between higher survivorship of children with fertility. I asked students, "Why would a family in a developing country choose to have (for example) 8 children when child mortality is very high, but then actually reduce the number of children they have when mortality rates fall?" I offered as an explanation that there's a certain kind of rationalizing over children in which parents, knowing there's a positive probability their child will die, will produce more children than they want so that in expectation they have the number of children they need. If the odds of death start to fall, then this means they can adjust their optimal fertility risk lower to maintain the same level of children needed. These are, of course, just correlations in the raw data, and I told them they should be cautious in making inference of causality from simple bivariate correlations, but I told them that nonetheless many studies have suggested that this is a causal relationship in which mortality rates actually drive up selected fertility rates.
One other interesting part on here is to plot life expectancy on the vertical axis against time, and look at Rwanda. The genocide has a noticeable drop (understatement). I also did not realize that CO2 was so strongly related to income levels. I knew that many particulate emissions operated by Kuznets curve, wherein increases in income causes increases in pollution up to a point, but after which pollution levels fall with higher levels of income. But apparently this is only for some particulate emissions, because as you can see in Gapminder, CO2 is pretty strongly positively related to income at all levels and for all countries. That is, unless the curve is beyond the level of the US, it does not appear to predict CO2 levels. Of course, I'm not entirely sure what the impact damage of CO2 levels is, but I'm assuming it's something to do with global warming? Anyway, play around with Gap Minder. It's a great resource, and especially helpful as a teaching tool for talking about development and macroeconomics.
Update: Thinking about the problem of correlation and causality and the problem above. So we see higher child mortality being correlated with higher fertility rates, and when mortality falls, so does fertility rates. I then told a story that might explain this - that the lower mortality rates allow parents the option to choose a lower fertility rate because now the "expected" number of children can be chosen with more accuracy, more or less. But, of course, if you plot GNP per person and child mortality, you find more income, lower child mortality. And if you plot GNP per person and fertility, you find (wait for it) higher income, lower fertility. So now I'm asking myself - how much of that correlation between child mortality and total fertility is really just the omitted variable, income? We could find out easily enough using multivariate regression, but not with Gap Minder. Sigh. Such a sweet program nonetheless. Hell, bivariate correlations are valuable, even if all you learn are patterns and relationships. Causality is another matter, and if I wanted to find evidence for causal links between mortality and fertility, then I'd need find a unique shock to mortality that was independent of income. Say, for instance, malaria caused high rates of child mortality, and mosquito nets reduced child mortality. If we could ship nets to developing countries, and observed declines in child mortality (ed: but don't you also need the nets to only affect child mortality, and not adult health, because if the nets also increase adult health, then you're back with the confounding effect of income. Me: Oh shut up you, this is a blog, not a journal. Who are you my conscience now?), then we'd look to see if fertility rates fell too. If not, given some acceptable window of time to observe the change, then we would conclude the mortality-fertility link is not all that strong. But, as my conscience just noted, finding these unique child mortality shocks that are not themselves shocks to adult health is going to be very hard. This is really the challenge with all instrumental variable approaches though. You can move the world if you have a good IV, but unfortunately, they don't really exist. They're like unicorns.
Some of the really interesting things in here, though, don't have anything to do with GDP. For instance, plot "fertility rate" on the vertical axis with "child mortality rate" on the horizontal axis, and see the relationship between higher survivorship of children with fertility. I asked students, "Why would a family in a developing country choose to have (for example) 8 children when child mortality is very high, but then actually reduce the number of children they have when mortality rates fall?" I offered as an explanation that there's a certain kind of rationalizing over children in which parents, knowing there's a positive probability their child will die, will produce more children than they want so that in expectation they have the number of children they need. If the odds of death start to fall, then this means they can adjust their optimal fertility risk lower to maintain the same level of children needed. These are, of course, just correlations in the raw data, and I told them they should be cautious in making inference of causality from simple bivariate correlations, but I told them that nonetheless many studies have suggested that this is a causal relationship in which mortality rates actually drive up selected fertility rates.
One other interesting part on here is to plot life expectancy on the vertical axis against time, and look at Rwanda. The genocide has a noticeable drop (understatement). I also did not realize that CO2 was so strongly related to income levels. I knew that many particulate emissions operated by Kuznets curve, wherein increases in income causes increases in pollution up to a point, but after which pollution levels fall with higher levels of income. But apparently this is only for some particulate emissions, because as you can see in Gapminder, CO2 is pretty strongly positively related to income at all levels and for all countries. That is, unless the curve is beyond the level of the US, it does not appear to predict CO2 levels. Of course, I'm not entirely sure what the impact damage of CO2 levels is, but I'm assuming it's something to do with global warming? Anyway, play around with Gap Minder. It's a great resource, and especially helpful as a teaching tool for talking about development and macroeconomics.
Update: Thinking about the problem of correlation and causality and the problem above. So we see higher child mortality being correlated with higher fertility rates, and when mortality falls, so does fertility rates. I then told a story that might explain this - that the lower mortality rates allow parents the option to choose a lower fertility rate because now the "expected" number of children can be chosen with more accuracy, more or less. But, of course, if you plot GNP per person and child mortality, you find more income, lower child mortality. And if you plot GNP per person and fertility, you find (wait for it) higher income, lower fertility. So now I'm asking myself - how much of that correlation between child mortality and total fertility is really just the omitted variable, income? We could find out easily enough using multivariate regression, but not with Gap Minder. Sigh. Such a sweet program nonetheless. Hell, bivariate correlations are valuable, even if all you learn are patterns and relationships. Causality is another matter, and if I wanted to find evidence for causal links between mortality and fertility, then I'd need find a unique shock to mortality that was independent of income. Say, for instance, malaria caused high rates of child mortality, and mosquito nets reduced child mortality. If we could ship nets to developing countries, and observed declines in child mortality (ed: but don't you also need the nets to only affect child mortality, and not adult health, because if the nets also increase adult health, then you're back with the confounding effect of income. Me: Oh shut up you, this is a blog, not a journal. Who are you my conscience now?), then we'd look to see if fertility rates fell too. If not, given some acceptable window of time to observe the change, then we would conclude the mortality-fertility link is not all that strong. But, as my conscience just noted, finding these unique child mortality shocks that are not themselves shocks to adult health is going to be very hard. This is really the challenge with all instrumental variable approaches though. You can move the world if you have a good IV, but unfortunately, they don't really exist. They're like unicorns.
Me Quoth DeLong Quoth Tabarrok Quoth Google
I saw this the other day, but until I read it on DeLong's website, I didn't really read it, but I get what Tabarrok is saying he says (through DeLong):
Alex Tabarrok observes that if Microsoft-Yahoo really were anticompetitive and likely to generate monopoly rents for the merged entity, Google would be being very quiet right now:In other words, if buying Yahoo reduces competition, then Google and Microsoft-Yahoo would split rents from it, and thus gain from the purchase. That's the basic result from moving towards monopoly - the two duopolists get the higher rents. But Google hates it, suggesting Google is harmed by it, suggesting this is more competitive maybe.Marginal Revolution: Antitrust Protectionism: Best evidence that the merger between Microsoft and Yahoo will increase competition?Publicly, Google came out against the deal, contending in a statement that the pairing, proposed by Microsoft on Friday in the form of a hostile offer, would pose threats to competition that need to be examined by policy makers around the world.
Susan Athey Interview
Richmond Fed interviews John Bates Clark Award Winner, Susan Athey, and it's online. This is a nice interview. She sounds like a deeply intelligent person. I want to say that she was the first female John Bates Clark award winner (given every two years to the most important economist under 40, and highly correlated with future Nobel Prize winners), but don't quote me on that. What's interesting is that her explanations of her theoretical work is very readable, and sounds very important and interesting, but very intimidating too. One highlight in the interview is here, though.
RF: You are the co-editor of the American Economic Journal: Microeconomics, one of four new journals launched by the American Economic Association. What niche do you aim to fill that is not currently served by the many and varied academic journals already in existence?Man, I hope she can do something about this. The turnaround on papers for good journals is obscene. My colleague in an email told me he had a paper under review at one journal for 23 months before getting a rejection letter with one lame and worthless referee report. It's now at another journal and has been there fore 13 months, and still nothing. I really don't know anyone in any other field that has problems like we have on publishing. In the sciences, it seems like things get sent, accepted, and published within about 3 months. In economics, the mode is probably more like 9-12 months, just to get a revise and resubmit.
Athey: There are a lot of journals, but there are not a lot of really good journals. Most of them are fairly secure in their position. So there is not a lot of competition on service. An enormous amount of time is wasted with slow refereeing processes and revisions that may improve the paper but are not worth the time required to make them. So a big goal for me is to have an outlet for the kind of work that I like, where people can get good service in a general-interest outlet. A secondary issue is that for more technical work there are not that many options from a general-interest perspective. Your papers fall to the field journals very quickly. Basically, what I want is a journal that gets the cost-benefit analysis on revisions right, that turns around papers fast, and that reaches a broad audience with technically rigorous work.
Smoking and SIDS
A grad student in Biology at McMaster University believes he and his team have discovered why smoking is related to SIDS. It sounds like it may also help explain why campaigns like Back to Sleep were so successful, since as the researcher says, "When a baby is lying face down in bed, for example, it should sense a reduction in oxygen and move its head. But this arousal mechanism doesn't work as it should in babies exposed to nicotine during pregnancy."
Again, I go to the lowest hanging fruit research opportunities when I read something like this, but I wonder if anyone thought to look at the effect of smoking on SIDS using the Big Tobacco legislation in the 1990s that resulted in significant price increases on cigarette packs as instruments for smoking. I did a quick google search, but I can't find anything, which means nothing since I tried two different searches. I could sick my grad students on this, but something tells me I'll lose interested in the project as soon as I hit publish.
To do that kind of study, what would you need? Preferably, monthly data on cigarette prices, monthly data on child mortality (probably the NBER Natality Data Files is what you'd want), and use the months after the legislation ended as the treatment variables, which I'm suspecting caused increases in prices of packs due to the huge settlement by Tobacco corporations. Also, the data would need to be geographically disaggregate, preferably by county. You would estimate a two-stage least squares model with price, which is endogenous, instrumented using the aforementioned treatment variables, which are then included as predicted values in the second stage of the regression in a child mortality regression. You would be looking for negative correlations between tobacco prices (per pack) and child mortality. You would to net out the Back to Sleep campaign, which was national, using year dummies.
Again, I go to the lowest hanging fruit research opportunities when I read something like this, but I wonder if anyone thought to look at the effect of smoking on SIDS using the Big Tobacco legislation in the 1990s that resulted in significant price increases on cigarette packs as instruments for smoking. I did a quick google search, but I can't find anything, which means nothing since I tried two different searches. I could sick my grad students on this, but something tells me I'll lose interested in the project as soon as I hit publish.
To do that kind of study, what would you need? Preferably, monthly data on cigarette prices, monthly data on child mortality (probably the NBER Natality Data Files is what you'd want), and use the months after the legislation ended as the treatment variables, which I'm suspecting caused increases in prices of packs due to the huge settlement by Tobacco corporations. Also, the data would need to be geographically disaggregate, preferably by county. You would estimate a two-stage least squares model with price, which is endogenous, instrumented using the aforementioned treatment variables, which are then included as predicted values in the second stage of the regression in a child mortality regression. You would be looking for negative correlations between tobacco prices (per pack) and child mortality. You would to net out the Back to Sleep campaign, which was national, using year dummies.
Monday, February 4, 2008
Candiru Fish, or "From the Scary Fish Files No. 1"
The candiru fish is also called the "penis fish," and for all the wrong reasons. Not because it looks like a penis or because it has a penis, but because it swims up the urine stream into the man's penis, latching itself into the man's bladder, and basically causing a lot of problems that ultimately require surgery. But the best part? At least we don't have to depend on these excellent treatments anymore.
A traditional cure involves the use of two plants, the Jagua plant (Genipa americana) and the Buitach apple which are inserted (or their extract in the case of tight spaces) into the affected area. In theory, these two plants together will kill and then dissolve the fish. More often, infection causes shock and death in the victim before the candiru can be removed.
Journal of Human Capital, vol 1, no. 1
Chicago's new Journal of Human Capital has hit the stands. Subscription, PROBABLY, required. A couple of Isaach Ehrlich pieces, a Becker and Murphy piece, and a Petra Todd and Ken Wolpin piece. Otherwise, a short journal. One thing I like about this journal is that it has the same typeface as the Journal of Political Economy. That's a pretty shallow statement, but it's true - I love the font of the JPE for some reason.
Intrade has Hillary but barely
This looks weird, because the one on the right is a little bigger than the one on the left (ha ha, laugh it up Matt), but anyway, point is, inTrade.com has Hillary's most recent price trading at 55, and Obama's at 45, which to me, is close enough for chance factors to determine the winner. It sounds like it'll be a big day tomorrow, so even though your vote doesn't count, you should believe that your vote will be the one, idiosyncratic event that determines our next President and go out there and vote!
Two Papers For You
First, Miron, Dills and Summers offer up this provocative paper (provocative, anyway, to anyone who works on crime) entitled "What Do Economists Know About Crime?" Answer? Not a damn thing.
In this paper we evaluate what economists have learned over the past 40 years about the determinants of crime. We base our evaluation on two kinds of evidence: an examination of aggregate data over long time periods and across countries, and a critical review of the literature. We argue that economists know little about the empirically relevant determinants of crime. Even hypotheses that find some support in U.S. data for recent decades are inconsistent with data over longer horizons or across countries. This conclusion applies both to policy variables like arrest rates or capital punishment and to less conventional factors such as abortion or gun laws. The hypothesis that drug prohibition generates violence, however, is generally consistent with the long times-series and cross-country facts. This analysis is also consistent with a broader perspective in which government policies that affect the nature and amount of dispute resolution play an important role in determining violence.Second, this is unlike me, because sex and drugs appears nowhere in the paper, but teaching macroeconomics to undergraduates does weird things to my head, which is why I think this paper caught my eye.
We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy. The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.So now i can say to someone that taxes levied on mid-size domestic reduces aggregate investment by firms and entrepreneurial activity. Good to know, since that's basically what I would hope to be true, otherwise my degree isn't worth the paper it's printed on, but now at least I have a number and a study I can tell the students later this semester when I talk to them about investment and economic growth.
Venom: The Movie
Marvel is in alleged conversations about developing a spinoff of the Spiderman series based solely on Venom. Did I tell you I hated that movie? Did I also tell you Spiderman 2 was work of pure genius? So imagine my excitement when I learn Topher Grace is going to have his own story. Not that you can't do a Venom story, but something tells me this one will absolutely suck. Man, I hate Hollywood executives sometimes. On the one hand, I respect their ability to deliver stories people want at low cost to the firm. Socially efficient right? Besides, it's stories like Spiderman 3 that make it financially possible for Wes Anderson or Woody Allen to keep making movies, since their stories barely break even, if at all. Cross-subsidization of products or something like that. Still, that was really a bad movie. Spiderman 3 was everything I hate about superhero movies, and Spiderman 2 was everything I love about them, so when I learn the bad movie is spawning a venom movie, I get a little grossed out. But whatever, life goes on. What do I care.
Mac Air Review
Ars Technica rolls up their sleeves and reviews the new thin Air. It's 7 or 8 pages long, so of course I did not read it, but I found one useful graph that I bet a million bucks summarizes everything for you (yes, Edward Tufte, you were right). So, in a nutshell, the Air is worse than a Macbook in every single way except for its weight. It's not like the Macbook weighs 10 pounds, anyway, so who would want this thing?
Republicans for Obama
Okay, I get it. Obama is a uniter, not a divider, and not even REPUBLICANS can disagree. But seriously, I know that site is supposedly Republicans for Obama, but I can't find any information about the Republicans who are a member, who started it, or anything. And why is Obama so close to them? I don't have a firm grasp of what exactly the differences are between him and anyone, since I'm a rational person who totally ignores elections (my vote won't count so why bother learning a damn anything!), but this smells fishy to me.
Will Ferrell Bud Light Commercial
Funny, but at the same time, this is identical to his George W. Bush commercial in a way.
Will Ferrell Bud Light Commercial - Watch more free videos
Will Ferrell Bud Light Commercial - Watch more free videos
Birth Control and Crime
John Donahue and Steven Levitt, in 2001, created one of the biggest academic controversies to hit economics when they provided evidence that legalized abortion during the early and mid-1970s was responsible for the decline in crime rates observed in the United States in the early 1990s. While the original findings have not held up to deeper scrutiny, and the results cannot always be replicated using alternative methods of identification, several papers have found evidence that suggests those abortions performed eliminated future criminals. A new working paper by Juan Pantano, graduate student at UCLA on the job market this year, extends the original Donahue and Levitt paper by focusing on a different set of exogenous shocks - legalized access to the birth control pill. The paper is here.
I heard Juan present this paper at the Population Association of America a year ago, and was impressed. I've not read the paper close enough to speak about its strengths, either, so I'll just explain what he does in this paper. Goldin and Katz noted in an earlier set of papers that the Vietnam War created a natural experiment relevant to contraception access, which they exploited to identify the effect of birth control access on fertility outcomes as well as female employment outcomes. Ordinarily, females were unable to get access to the Pill (legally) until they were 21. The Vietnam War put pressure on several states to lower the "age of elibility" for voting, completely unrelated to the age of eligibility for getting the Pill. The argument was that if you're old enough to fight in the war (age 18), you're old enough to vote for or against it (then 21), so several states lowered their age of eligibility from 21 to 18. These legislative changes coincidentally allowed 18-20 year old women to get access to the Pill, slightly ahead of other cohorts and other states. Goldin and Katz use this quasi-experiment to find the effect of birth control access on cohort outcomes. This kind of empirical approach is essentially an instrumental variables strategy, and during the 1990s, was quite the rave. And still is, to some degree, but not like then, where original and creative experiments like these were almost enough to get you published in the best journal.
Pantano's reasoning goes like this - if abortion lowered crime, then wouldn't any contraceptive technology do the same, namely access to the Pill? He then uses Goldin and Katz's coding of the states with early repeal of their state age of eligibility laws in a standard OLS framework, and finds indeed that access to the pill is negatively associated with crime rates later in time.
Because of the controversy of the original Donahue and Levitt (2001) study - only some of which has to do with moral protests about the normative implications of their study (which frankly are outside the scope of the study and irrelevant to their findings, which is purely scientific) - you have to take Pantano's findings with a grain of salt initially. One should read the forthcoming Quarterly Journal of Economics (2008) paper by Foote and Goetz, for instance, that documents the programming errors in Donahue and Levitt's original piece, as well as their specification of the models which may in and of itself create negative correlations where there are none (because they used numbers of effective abortions rather than rates is, I think, the main problem noted), as well as the forthcoming, Review of Economics & Statistics (2008) by Ted Joyce that replicates their study using simpler tests and finds no effect of abortions on crime, and you should read them closely and check whether Juan successfully persuades you he has dealt with those many problems. I am encouraged to see he does include state-year fixed effects, for instance, which was the source of the programming error. But then I'm actually astonished the results hold up. Someone should replicate this study themselves and figure out how robust this is. If it is robust, then I am personally closer to believing the abortion hypothesis. But having written a similar paper myself looking at the effect of abortion legalization on other outcomes correlated with crime but not crime itself, I've actually become a skeptic. At least for the things I was examining, the declines observed were coincidental to the abortion effect, and not causal, because when you compare outcomes of the emerging cohort to the older cohorts in those states who had not been in utero during Roe v. Wade or early repeal of abortion laws in the early repeal states, you find the declines are generic within the state across all age groups. Which suggests that what people may be picking up is actually an unobserved, generic state effect, and not a cohort effect - some kind of event or events in those states in those years which for reasons known or unknown is correlated with the decision of states to legalize abortion early.
But this paper does make a contribution. Even though skeptics may accuse Juan of simply being a part of this cottage industry of papers devoted to the abortion-crime hypothesis that Levitt started, I think given the controversial nature of that original study and the controversial nature of abortion in general, we need to know whether that theory holds any water. And science progresses through this kind of iteration. I see that Juan has many interviews on the job market this year at excellent schools, so it sounds like his paper is getting attention. Good for him. He's a very cordial person, and exceptional as an economist as far as I can see.
Update That is not Juan's job market paper. This is his job market paper: "On Scarlet Letters and Clean Slates".
I heard Juan present this paper at the Population Association of America a year ago, and was impressed. I've not read the paper close enough to speak about its strengths, either, so I'll just explain what he does in this paper. Goldin and Katz noted in an earlier set of papers that the Vietnam War created a natural experiment relevant to contraception access, which they exploited to identify the effect of birth control access on fertility outcomes as well as female employment outcomes. Ordinarily, females were unable to get access to the Pill (legally) until they were 21. The Vietnam War put pressure on several states to lower the "age of elibility" for voting, completely unrelated to the age of eligibility for getting the Pill. The argument was that if you're old enough to fight in the war (age 18), you're old enough to vote for or against it (then 21), so several states lowered their age of eligibility from 21 to 18. These legislative changes coincidentally allowed 18-20 year old women to get access to the Pill, slightly ahead of other cohorts and other states. Goldin and Katz use this quasi-experiment to find the effect of birth control access on cohort outcomes. This kind of empirical approach is essentially an instrumental variables strategy, and during the 1990s, was quite the rave. And still is, to some degree, but not like then, where original and creative experiments like these were almost enough to get you published in the best journal.
Pantano's reasoning goes like this - if abortion lowered crime, then wouldn't any contraceptive technology do the same, namely access to the Pill? He then uses Goldin and Katz's coding of the states with early repeal of their state age of eligibility laws in a standard OLS framework, and finds indeed that access to the pill is negatively associated with crime rates later in time.
Because of the controversy of the original Donahue and Levitt (2001) study - only some of which has to do with moral protests about the normative implications of their study (which frankly are outside the scope of the study and irrelevant to their findings, which is purely scientific) - you have to take Pantano's findings with a grain of salt initially. One should read the forthcoming Quarterly Journal of Economics (2008) paper by Foote and Goetz, for instance, that documents the programming errors in Donahue and Levitt's original piece, as well as their specification of the models which may in and of itself create negative correlations where there are none (because they used numbers of effective abortions rather than rates is, I think, the main problem noted), as well as the forthcoming, Review of Economics & Statistics (2008) by Ted Joyce that replicates their study using simpler tests and finds no effect of abortions on crime, and you should read them closely and check whether Juan successfully persuades you he has dealt with those many problems. I am encouraged to see he does include state-year fixed effects, for instance, which was the source of the programming error. But then I'm actually astonished the results hold up. Someone should replicate this study themselves and figure out how robust this is. If it is robust, then I am personally closer to believing the abortion hypothesis. But having written a similar paper myself looking at the effect of abortion legalization on other outcomes correlated with crime but not crime itself, I've actually become a skeptic. At least for the things I was examining, the declines observed were coincidental to the abortion effect, and not causal, because when you compare outcomes of the emerging cohort to the older cohorts in those states who had not been in utero during Roe v. Wade or early repeal of abortion laws in the early repeal states, you find the declines are generic within the state across all age groups. Which suggests that what people may be picking up is actually an unobserved, generic state effect, and not a cohort effect - some kind of event or events in those states in those years which for reasons known or unknown is correlated with the decision of states to legalize abortion early.
But this paper does make a contribution. Even though skeptics may accuse Juan of simply being a part of this cottage industry of papers devoted to the abortion-crime hypothesis that Levitt started, I think given the controversial nature of that original study and the controversial nature of abortion in general, we need to know whether that theory holds any water. And science progresses through this kind of iteration. I see that Juan has many interviews on the job market this year at excellent schools, so it sounds like his paper is getting attention. Good for him. He's a very cordial person, and exceptional as an economist as far as I can see.
Update That is not Juan's job market paper. This is his job market paper: "On Scarlet Letters and Clean Slates".
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