Saturday, December 20, 2003

On Teaching and Learning

Another long hiatus, but I wanted to post this as soon as possible. From J.S. Mill's Autobigraphy, avaliable from the gutenberg project

In my eighth year I commenced learning Latin, in conjunction with a
younger sister, to whom I taught it as I went on, and who afterwards
repeated the lessons to my father; from this time, other sisters and
brothers being successively added as pupils, a considerable part of my
day's work consisted of this preparatory teaching. It was a part which
I greatly disliked; the more so, as I was held responsible for the
lessons of my pupils, in almost as full a sense as for my own: I,
however, derived from this discipline the great advantage, of learning
more thoroughly and retaining more lastingly the things which I was
set to teach: perhaps, too, the practice it afforded in explaining
difficulties to others, may even at that age have been useful. In
other respects, the experience of my boyhood is not favourable to the
plan of teaching children by means of one another. The teaching, I
am sure, is very inefficient as teaching, and I well know that the
relation between teacher and taught is not a good moral discipline
to either. I went in this manner through the Latin grammar, and a
considerable part of Cornelius Nepos and Caesar's Commentaries, but
afterwards added to the superintendence of these lessons, much longer
ones of my own.

Keywords: Learning, Teaching

Saturday, November 15, 2003 was sold to CNET (read it here) and all of the music content will be destroyed. I think this leaves a big hole for someone to fill. Its not clear that the existing services (itunes, music match, etc) have any interest in including artists that are not signed with a label. The internet will be a boon to unsigned talent, as soon as someone picks up on this market failure. I'm waiting...


Wal-Mart that often maligned behemoth of a retailer, is in a unique position to give us insight into consumption. Since their sales represent such a large portion of the retail sales numbers, they can provide unique insight. Here are some fact about walmart from The Marginal Revolution:

Wal-Mart is the largest company in the world, measured by sales, $245 billion last year.

McKinsey estimates that one-eighth of the productivity gains of the late 1990s came from Wal-Mart.

Its $12 billion of imports from China account for a tenth of total U.S. imports from China.

It is estimated that Wal-Mart saved U.S. customers $20 billion last year.

82% percent of American households made a purchase at a Wal-Mart last year.

On the darker side, it pays lower wages and "censors" music and magazines.

And do you worry about monopoly or monopsony power? In this context I don't, frankly, except for the cultural/censoring issue, but still it is worth noting that Wal-Mart's U.S. market share of consumer staples could hit 50% by the end of the decade.

From Business Week , which has a long cover article, "Is Wal-Mart Too Powerful?"

Here are two more facts:

1. It is the biggest employer in 21 states, with more people in uniform than the U.S. Army

2. Every year the company loses $2 billion in theft, this "enterprise" alone would rank #694 on the Fortune 1000.


And here is an interesting article pointed to by Brad Delong

Customers continue to buy the cheapest items in any given category -- a sign that household budgets remain tight, Lee Scott, Wal-Mart chief executive officer, said on a recorded message.

Buyers are "timing their expenditures around the receipt of their paychecks, indicating liquidity issues," Scott said.

An estimated 100 million people shop at its U.S. stores every week. The company takes in 6 to 8 cents of every U.S. dollar spent on retailing, excluding autos.

Sunday, October 26, 2003

Money Monopoly

I had planned a longer post about Friedman's views on the government maintaining a monopoly on the production of money, but for now let me just point to the Dallas fed conference in his honor. Here is Virgina Postrel's blog and reference to her NYT article. And here is an article by Bernanke.

Keywords: ECO301, Money

Thursday, October 16, 2003


Marginal Revolution has a post on corn as the root cause of our current epidemic. The NYT article gives a pretty good background. David M. Cutler, Edward L. Glaeser and Jesse M. Shapiro have looked at this issue and found that most of the recent increase in waist lines can be attributed to an increase in the number of meals eaten, largely due to improvements in technology. It only takes 150 additional calories a day for a 155 lb male to add 10 lbs to his steady state weight. That's not a lot. Awhile back Hal Varian cited other research by Darius Lakdawalla and Tomas Philipson who found most (60%) of the increase can be attributed to our more sedentary lifestyle with the remaining being explained by the increased supply of food. Slightly different conclusions, but very interesting. They motivated me to cut out soda for a bit to see if I could lose weight. The trouble is if you don't count your calories, you tend to replace soda with something else, resulting in the same amount as when I was drinking soda. That's a bad diet. Not only am I not losing weight, I'm not even maximizing my own utility, because I'm consuming my second choice not my first. The solution is to count calories, and do so religiously. If you're interested here is a website that helps calculate BMI, and list suggestion for different calories diets. They even note that underreporting of caloric intake is generally estimated to be between 400 and 900 calories a day, so you should account for that as well. Time to go have some Ben and Jerry's.

Wednesday, October 08, 2003

Unemployment Insurance and Duration

Another intersting article in the recent AER:

Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System
Dan A. Black, Jeffrey A. Smith, Mark C. Berger, and Brett J. Noel

We examine the effect of the Worker Profiling and Reemployment Services system. This program “profiles” Unemployment Insurance (UI) claimants to determine their probability of benefit exhaustion and then provides mandatory employment and training services to claimants with high predicted probabilities. Using a unique experimental design, we estimate that the program reduces mean weeks of UI benefit receipt by about 2.2 weeks, reduces mean UI benefits received by about $143, and increases subsequent earnings by over $1,050. Most of the effect results from a sharp increase in early UI exits in the treatment group relative to the control group. (JEL J650)

There are a few interesting items here: In their profiling model they were not allowed to use age, sex, race, ethnicity or veteran status. This may help to explain why they found the impact of treatment varies nonlinearly over different profiled sub groups. They may just have a lot of misclassified people and therfore they can't extract the signal from the noise. The research also suggests that UI prolongs the job search, by lowering the costs of unemployment, and even something as simple as sitting through classes is enough to drive some to get a job.

Monday, October 06, 2003

The Plaza Accord

Recent research has led me to read the Plaza Accord of 1985, where the G-7 finance ministers agreed to some general principles.

Here is the US commitment:

The United States Government is firmly committed to policies designed to: ensure steady non inflationary growth; maximize the role of markets and private sector participation in the economy; reduce the size and role of the government sector; and maintain open markets.

In order to achieve these objectives, the United States Government will:

1. Continue efforts to reduce government expenditures as a share of GNP in order to reduce the fiscal deficit and to free up resources for the private sector.

2. Implement fully the deficit reduction package for fiscal year 1986. This package passed by Congress and approved by the President will not only reduce by over 1 percent of GNP the budget for FY 1986, but lay the basis for further significant reductions in the deficit in subsequent years.

3. Implement revenue-neutral tax reform which will encourage savings, create new work incentives, and increase the efficiency of the economy, thereby fostering non inflationary growth.

4. Conduct monetary policy to provide a financial environment conducive to sustainable growth and continued progress toward price stability.

5. Resist protectionist measures.

To think that people call both the current government and the government of the Plaza Accord conservative. I don't think there is any principle above, that Bush hasn't broken. It's time to start the recall.

I quickly reread the list and realized Bush has little to do with #4, besides making the appointments, so I probably can't claim he's violated that one, or even that it has been violated. Although, he was certainly impatient with the rate cuts in 2001.

Inequality and Growth

From the latest issue of the AER:

Inequality and Growth: Why Differential Fertility Matters
David de la Croix and Matthias Doepke

We develop a new theoretical link between inequality and growth. In our model, fertility and education decisions are interdependent. Poor parents decide to have many children and invest little in education. A mean-preserving spread in the income distribution increases the fertility differential between the rich and the poor, which implies that more weight gets placed on families who provide little education. Consequently, an increase in inequality lowers average education and, therefore, growth. We find that this fertility-differential effect accounts for most of the empirical relationship between inequality and growth. (JEL J13, O40)

This leads to interesting policy proposals, like sterilizing poor people. Only kidding, clearly the source of growth comes from human capital accumulation, so public policy that minimizes the inequality in acquiring human capital would prevent slower growth. This leads to a few interesting ideas, in societies where human capital is very important, regardless of socioeconomic status, like Korea, you would expect income inequality to have a smaller impact on changes in growth rates.

Tuesday, August 26, 2003

Policy Rules and Uncertainty

In a recent speech by Bill Poole made several comments on the usefulness of policy announcements.

Key Words: ECO301

Monday, August 25, 2003

Intellectual Property

Imagine how fast standards of living could rise if more people did things like the BBC, or MIT instead of like the MPAA, the RIAA, or Microsoft. The difference is between those who understand their intellectual property and those that don't, or rather those who have very little intellectual property and fear they'll never be able to create anymore.

Key Words: ECO120, ECO305

Wednesday, August 20, 2003


This is just a quick link to a paragraph by Quiggin on what he wants his blog to accomplish. I too had hoped this might serve as a database of ideas, interesting articles, etc. I think I'll need to switch to moveable type to accomplish everything I want to, but this is a start.


This has been quite a long time off, the semester is about to start and I need to commit some time to blogging. Look for class info and other musings in the near future.

Friday, March 21, 2003

Sample Selection Bias

Another poll used inappropriately via the Volokh Conspiracy.

[Eugene Volokh, 5:26 PM]
REPEAT AFTER ME: "I will not believe scientifically invalid polls." "I will not believe scientifically invalid polls." "I will not believe scientifically invalid polls, even if I like their results."

Look, I'd like to think that most MTV viewers support the war; in fact, they might well support the war. But unless I misunderstand the way the poll described here (see also the InstaPundit link) was conducted, that poll doesn't tell us that. It doesn't tell us much of anything, because it counts only those people who choose to vote in it (key phrase: "Among people voting in's polls . . .," and see also this sample of an poll), and we have no reason to believe that they're a representative sample of MTV viewers, or of any other group.

UPDATE: Drat, The Corner falls for this, too.

Remember, if you want to make accurate inference about a population, your sample selection methods need to be free from systematic biases...this example clearly fails that test. Although I doubt they were trying to make accurate inference...

Keywords: Polls, BUS230

Wednesday, March 12, 2003

Strong Dollar Advocates

Another topic to add to the list of things to write about:

Strong Dollar policy...What does this mean? Is it a good policy? The reality is it’s an intellectually vacant idea, except that talking about it seems to temporarily influence the occasional ignorant FX trader.

Wednesday, March 05, 2003

Lies, Damn Lies, and Polls

By way of the Volokh Conspiracy. An important point on survey data. The question matters, and the alternatives offered matter even more.

[Eugene Volokh, 7:38 PM]
MORE INCONCLUSIVE POLLS ON IRAQ: Edward Boyd (Zonitics) cites the following poll:
ABC News/Washington Post Poll. Feb. 26-March 2, 2003. N=1,022 adults nationwide. MoE ± 3 (total sample). Fieldwork by TNS Intersearch.

"The Bush Administration says it will move soon to disarm Iraq and remove Saddam Hussein from power, by war if necessary, working with countries that are willing to assist, even without the support of the United Nations. Overall, do you support or oppose this policy?"

[Support] 59%
[Oppose] 37%
[No Opinion] 4%
Cool, I like that. But if you read further on the same page (at the site, a great resource), you also see:
CNN/USA Today/Gallup Poll. Latest: Feb. 24-26, 2003. N=1,003 adults nationwide. MoE ± 3. . . .

"As you may know, the U.S., Great Britain, and Spain plan to submit a resolution to the United Nations that says that Iraq is in serious violation of prior UN resolutions that required Iraq to disarm. Do you think the United States should invade Iraq with ground troops only if the UN approves this new resolution, even if the UN does not approve this new resolution, or do you think the United States should not send ground troops to Iraq at all?" Options were rotated

[Only With UN Approval] 40%
[Even Without UN Approval] 38%
[Not At All] 19%
[No Opinion] 3%
So one poll (2/26-3/2) says 59%-37% in favor of war even without U.N. approval; another (2/24-2/26) says 59%-38% against war without U.N. approval.

So what does this mean? Well, obviously people's reactions are sensitive to the wording of the question, but I think that sort of sensitivity itself shows that people's views on the subject just aren't very firm. A bit over a third of the public supports war without the U.N., a bit over a third of the public opposes it (either altogether or unless the U.N. says yes), and a bit under a third is uncertain.

Thus, we don't have a settled public opinion even now -- and this means that it's utterly futile to predict how the public would view the war after it takes place. It would be pretty pointless, it seems to me, for Democrats, Republicans, or anyone else to focus much on these polls.

I’m not sure I’d come to the same conclusion as he does, but it clearly points out an inconsistency. So what explains it? Random sampling error? Each survey lists the margin of error at +/- 3%, which is not necessarily the margin of sampling error for this question, but the largest possible sampling error for a bivariate categorical question in this survey. As a short aside, the inaccurate reporting of margins of error for surveys has become a bit of a pet peeve. Rather then report the actual sampling error for each question, which would vary based on the variation in responses to that question, they report a sampling error for the survey. The problem is there is no such thing as a sampling error for a survey. The sampling error is for a particular question, trying to measure a particular phenomenon. Now in their defense they always assume the largest possible variation in a dichotomous response question, therefore biasing the margin of error upward.

There are of course many other types of errors besides sampling error that can be responsible for the different results. Things such as sample selection problems, order bias, administrative errors, etc. Eugene thinks that people have not made up there minds yet. Notice that the actual question in the first poll asks if you support or oppose the policy outlined in the question. The first answer offered is “support” and if Eugene is right and people don’t have strong opinions, then they usually take the first alternative offered (order bias). The pollsters should have rotated the alternatives support and oppose, like they rotated responses in the second poll to avoid this problem. I don’t think that is the case, besides both surveys allowed people to freeely respond with no opinion, and those percentages are quite low suggesting that people have thought about it, even if they haven’t thought very deeply. My guess is that the wording is the root cause of the different results. What exaclty do people think they are supporting in the first poll?

I think the difference is due to people’s reluctance to be opposed to military action if it is undertaken. Call it the Vietnam effect, or the rally around the flag effect, or maybe the patriotic effect (no one wants to be so unamerican as to oppose the policy of the president). And no one wants to be seen as being opposed to the troops. Notice in the second poll they are offered policy alternatives that let them choose which policy they prefer, very different from asking if they support or oppose a policy currently being used. I would tend to believe the second poll is a better measure of American’s stance on what they feel is the best policy choice for the US to follow.

Keywords: Polls, BUS230

Thursday, February 27, 2003

Critical thinking

I don’t do it enough, or well enough, or deep enough. Let me give you an example. Take my last post, where I first lay out the research question the guy tried to answer. I can see deeply enough into the problem to point out one potential issue, the fact that using actual data may not be a perfect test of revealed preference, because the retailer may have already reduced the choice set facing the consumer and therefore the data may not represent what people are truly willing to pay for recycled paper towel.

So, this might be fairly obvious to better minds, but it is a big insight for me. Yet, I still can’t get my mind around how the reduced choices, could actually bias the data. That is too say I believe it is probably true, I can say it, but I can’t articulate it in a clear concise argument. And I might never, unless I spend more time on it. People with better, more well honed critical thinking skills could do this, and do it quicker, and do it deeper. By deeper I mean they can see several issues down the road, that may be more interesting, or they see a bigger problem.

I think chess might be a good analogy. I can see one or two moves ahead. The people with better critical thinking skills can see more then that, maybe three, four or more moves ahead. And more importantly, they’ll also have perspective, the ability to step back from the problem, and understand the situation, so they don’t waste time looking at moves in the wrong areas, but rather they recognize the situation, and seem to search for moves in areas that will pay off. How is it that they always know which areas will payoff? Is this learned? Is it merely experience? How do you get it? I’m not sure what that is, but the people who have it routinely demonstrate it.

Take Paul Krugman as an example. He seems to offer clear insight into problems he discusses, and what’s nice is he takes you on the intellectual journey his mind went through to get to the point where he is. The problem is I’m always left amazed. I’ll think to myself, I understand that connection, another interesting connection, and then wammo. He hits you with the ultimate conclusion that you didn’t see coming. He tied his argument into an important insight, and one I’m sure I might never have come up with, but one he can clearly convey, and I can thoroughly understand. I understand part of this is his writing technique, but as they say writing is thinking.

So how do you teach this? How do you learn this? I think I’m finally a mature enough learner to be able to identify this, but how I improve it is a bit more daunting a task. Am I confined by nature? Or is this truly a skill like swinging a hammer that can be learned?

I do think that it can be learned to some degree. I do think that deep thinkers employee techniques that they’ve developed, and those techniques have been learned. I’m not sure these techniques are entirely transferable; I think they may be unique to the owner. So other then getting students to think deeply about problems I’m not sure I can teach them.

Keywords: Critical Thinking, Learning

Wednesday, February 26, 2003

Buy Recycled, Buy American

Just a quick note. A grad school buddy just told me about a job talk he sat in on. It concerned the extra amount people were willing to pay for recycled paper towels. He said survey results put the number in the narrow range of 6-30 % (I didn’t get the details on this). Interestingly the presenter also looked at actual data, from Peapod, and found as a matter of revealed preference that people were only willing to spend 5% extra for recycled paper towel. I mentioned that I’ve heard, from a Wal-Mart buyer, that they are only willing to pay a 10% premium for recycled or made in America goods. My buddy said there may be a problem with the revealed preference data, since the retailer may be making some of the decision for the customer. Interesting...and if Wal-Mart is willing to pay 10%, but people are only willing to pay 5% are they subsidizing it? Narrower margins? Are they really environmentally friendly patriots? Doubt it. No matter they are still scary stores to patronize at 2am.

Future topics

My first experience with losing a post. Let this be a lesson to me. Anyhow, here is a list of topics I’d like to write on sometime in the near future.

State Budgets
The catch-22 problem. The progressivity of taxes, means tying state revenues to those (rich people) with highly variable incomes. The variability in revenues, in states with balanced budget amendments, results in a painful boom bust cycle for spending. The problem is seeking out sources of revenue, less variable often means decreasing the progressivity.

There seem to be a lot of people who mistake relative price changes for deflation/inflation. I’d like to lay out the import distinctions between the two, so that I don’t have to read anymore articles on good deflation versus bad deflation. I imagine it is an issue Uncle Milt has recently commentated on, I’ll have to search it out.

Wow, the rhetoric on this topic is enormous and at times confusing. I guess that is to be expected when people (Glenn Hubbard) are forced in to taking positions counter to what they've written. To be fair he has walked the line carefully. Anyhow, I want to comment on the position of the Deficit hawks. While I largely agree, they ignore the impacts of the size of the government. They talk about the effects on investment, from larger deficits, but ignore the potential impacts of larger government. For example, if the government budget is balanced and 10% of GDP versus balanced and 40% of GDP, I venture to guess the consequences for investment (and more importantly productivity growth) is different in both. That previous statement is almost a tautology...

I’ve recently read Alfie Kohn’s book entitled Punished by Rewards, and I’d like to make a few comments on it.

That's all for now.

Tuesday, February 25, 2003

Western Wisconsin Labor Force Statistics

As part of my job (Assisstant Professor of Economics at UW - La Crosse), I follow the local economy in Western Wisconsin. The area is now referred to as the 7 Rivers Region. So as data becomes available that may be interesting to residents and business leaders in this area, I'll comment on it, or at least provide a link to it. When I get a chance I'll sneak a peak at some of the profiles....

The County Workforce Profiles for each of the eight counties in Western Wisconsin (Buffalo, Crawford, Jackson, Juneau, La Crosse, Monroe Trempealeau, & Vernon) are complete and for the fifth consecutive year, it is my pleasure to share with you the most recent update of these profiles. The regional labor market economists and analysts in the Department of Workforce Development developed the county profiles which offer a concise picture of labor market developments.

Each profile includes information on the aging of labor force, commuting patterns, industry employment changes, the leading employers, select occupational wages, personal income, and much more on the individual characteristics of a county's work force and population. In these latest profiles, new data from the 2000 Census has been included.

These 2002 County Profiles not available in print format, but are available for downloading and printing from the Internet.

If you have any questions, comments, or suggestions: please contact William Brockmiller, your local regional analyst, either by phone: 608-785-9337, or email:

Feel free to share this email with anybody interested in labor market data for these counties.

Keywords: 7 Rivers

Monday, February 24, 2003

Comparing GDP

Here is an interesting idea from the Osgood Files....

The Osgood File. This is Dave Ross. On the CBS Radio Network.

Are we going to have to fight North Korea again?

Why is North Korea determined to rub its nukes in our face?

Wacky Dictator Kim Jong-il probably figured that with the US distracted by a war in Iraq, this would be the ideal time.

But instead it comes at a time when a war against Iraq gets harder to justify with each uneventful weapons inspection - leaving Washington with a military all suited up and nothing to bomb.

And now we're starting to see stories like this:
"Dateline WASHINGTON - With 1.2 million troops, North Korea has more soldiers, per capita, than any other. Its military is the fourth or fifth largest in the world. etc etc etc."

This only inflating the importance of Kim Jong-il. Who needs inflating because he's 5 3', maybe 5-5 if you count the elevator shoes and that bizarre pompadour.

No - we should measure North Korea the way we measure everything. Money.

The Gross domestic product of North Korea is 22 billion dollars a year.

22 billion dollars a year is about the same as the gross domestic product of. MONTANA.

Take Iraq. Iraq has a gross domestic product of 59 billion.

Same as Nebraska.

Cuba's gross domestic product - the same as Wyoming.

You see? The wonderful thing about America is that we are SO rich, that no matter which rogue country you name, we have a state that beats it.

I don't even know why we want to fight them as a nation. We could just assign each member of the axis of evil to a state in their peer group.

And not just the axis of evil, how about the axis of stubbornness? Look at France - gross domestic product 1.5 trillion dollars. Instead of wasting the time of highly trained national diplomats trying to argue with them, we could assign France to states of similar importance. California and Arizona would do it. Make the French deal exclusively with Grey Davis.

The Osgood File. This is Dave Ross. On the CBS Radio Network.

Wisconsin is the 20th largest state at 177 billion, which would make it the 23rd largest country, behind Austria, but ahead of Poland. The Metropolitan Statistical Area (MSA) of La Crosse at 4.12 Billion dollars is ranked 245th out of 318 metro areas. In the list of countries that would put us 114th, just ahead of Bosnia and just behind Laos. And of course ahead of pretty much every African nation, because they have leaders like Robert Mugabe.

Keywords: ECO120, ECO301, ECO305, GDP

Sunday, February 02, 2003


Just testing blogger's post mailing system.