Tuesday, December 16, 2008

The Peak

NBER calls the peak. Again, they peg the peak of the cycle to the peak of the employment series.

Some reports are suggesting all of 2009 will be slow. If that is the case, this will be the longest recession since the depression. it remains to be seen if it is the deepest. I guess the business cycle is alive and well. Here is the employment series for the region.

Wednesday, December 03, 2008

Visualizing Immigration

The Assignment: Visualize Immigration.

My first entry shows the distribution of immigrants to the US from continent of origin. The problem with this visulaization is that it does not give you a sense of the changes in the total number of immigrants per yer.

Despite using color brewer, I went with a diverging data color scheme even though this is not diverging data. I felt the qualitative data color schemes suggested did not provide a stark enough contrast. Below I just made up some color combos. The second entry, uses data on US population to put the immigrant flows into perspective. Now we have a stacked area chart which represents the percentage of the US population that are new immigrants and their continent of origin.

Africa and Oceania get totally lost when visualizing the data using a stacked area chart. But short of including more info, I'm not sure how else to represent the data. After all some of that is justified by the small amount of immigration from Africa and Oceania, but it is not zero and you should be able to discern it. It is clear from the above that before WWII there was massive immigration, almost entirely from Europe, and after immigration has been rising from everywhere but Europe.

Tuesday, December 02, 2008

Technology's Side Effects


The study suggests that self-diagnosis by search engine frequently leads Web searchers to conclude the worst about what ails them.

The researchers said they had undertaken the study as part of an effort to add features to Microsoft’s search service that could make it more of an adviser and less of a blind information retrieval tool.

Although the term “cyberchondria” emerged in 2000 to refer to the practice of leaping to dire conclusions while researching health matters online, the Microsoft study is the first systematic look at the anxieties of people doing searches related to health care, Eric Horvitz said.

Mr. Horvitz, an artificial intelligence researcher at Microsoft Research, said many people treated search engines as if they could answer questions like a human expert.

Tuesday, November 18, 2008

Wednesday, November 12, 2008

Wealth Effects

I seldom agree with Dean Baker, but here he has a good point.
This is truly incredible. Homeowners have lost more than $5 trillion in housing wealth. There is a very well established wealth effect whereby $1 of housing wealth is estimated as leading to 5 to 6 cents of annual consumption. This implies that the loss of wealth to date would cause consumption to fall by $250 billion to $300 billion annually (1.7 percent to 2.0 percent of GDP). If you add in the loss of around $6 trillion in stock wealth, with an estimated wealth effect of 3-4 cents on the dollar, then you get an additional decline of $180 billion to $240 billion in annual consumption (1.2 percent to 1.6 percent of GDP).

These are huge falls in consumption that would lead to a very serious recession, like the one we are seeing. This would be predicted even if all our banks were fully solvent and in top flight financial shape. Even the soundest bank does not make loans to borrowers who it does not think can pay the loans back (except during times of irrational exuberance).

Google Flu Trends

Technology can help public health officials more quickly identify outbreaks of disease. Yesterday the NYtimes carried a story about Google tracking the geographic dispersion of the flu by tracking the origin of searches. It turns out the first thing people do before calling the doctor, is Google for "flu symptoms".
In early February, for example, the C.D.C. reported that the flu cases had recently spiked in the mid-Atlantic states. But Google says its search data show a spike in queries about flu symptoms two weeks before that report was released. Its new service at google.org/flutrends analyzes those searches as they come in, creating graphs and maps of the country that, ideally, will show where the flu is spreading.

The C.D.C. reports are slower because they rely on data collected and compiled from thousands of health care providers, labs and other sources. Some public health experts say the Google data could help accelerate the response of doctors, hospitals and public health officials to a nasty flu season, reducing the spread of the disease and, potentially, saving lives.

“The earlier the warning, the earlier prevention and control measures can be put in place, and this could prevent cases of influenza,” said Dr. Lyn Finelli, lead for surveillance at the influenza division of the C.D.C. From 5 to 20 percent of the nation’s population contracts the flu each year, she said, leading to roughly 36,000 deaths on average.

The NYTimes graphic is here and more importantly the data are here . The data would make an excellent weekly instrumental variable for certain activity.

Monday, November 10, 2008

Visualizing the Election

CNN and other news outlets would have you believe this is still a divided country with red states and blue states.

But a better visualization would shade the areas based not upon who won the state, but by the degree to which they won the state. And the states themselves shouldn't be represented as a function of their geographic size, but rather the size of their population. Here we have just such a picture, and its clear, we are all purple now. More can be found here.

Saturday, November 08, 2008


Apparently Botox makes it harder to make angry facial expressions, and since emotions are transmitted through facial expressions, it appears that you will be happier talking to botoxed people. So maybe we should subsidize botox treaments, since they are clearly a positive externaility? Marignal Revolution has the links and the lowdown.

Technology and Matching

With all of the new technology out there to aid the marriage/mate/sexual partner matching process. I wonder if it is leading to better matches or more matches, or both? Or maybe it is only lowering transaction costs and another constraint is still binding on the quantity of partners. Another mashup is provided to make hooking up a little easier.It combines the craigslist personal with google maps. Genius. Hookups.

Thursday, November 06, 2008


I find it ironic that African Americans celebrated the election of Obama as a symbolic victory for the civil rights movement, while they voted in droves to rescind civil rights for California's gay population. How soon the oppressed become the oppressors.

I have not voted Republican in the last three presidential elections, and I think Greg Mankiw captures the reasons quite succinctly. And heck, I didn't go to Harvard. I just hope the Republicans find their way out of the social conservative woods, back to their fiscal conservative roots. Or maybe they spend the time studying a map of the world with Gov. Palin?

Wednesday, November 05, 2008

Voter Turnout

Voter Turnout, via Andrew Gelman.

Ray Fair's equation did pretty well. Underpredicting Obama's share by 1.1%.

Andrew has some more comments here, with plenty of data analysis.

Sunday, October 26, 2008


A key to successful health care interventions is following the doctor's orders. Monitoring can help.
Assistive technologies are old hat, but a team of researchers at the University of Texas at Arlington (among other institutions) is working to provide a more robust, all-inclusive option for elderly individuals who'd prefer to age gracefully within their own domiciles. In theory, sensors could be embedded throughout seniors' homes in order to "detect when the residents have sleepless nights or forget to take their medication." From there, caregivers would be alerted and could react remotely via a web-based communications portal. The UTA lab that's perfecting the idea currently utilizes a single room equipped with cameras, motion detectors and robots, and professors / students keep a close eye on any movement that gets recorded and transferring to computers for processing. If all goes well, a collaboratively built "home of the future" will actually be on display at CES 2009, likely showcasing some of these very advancements.

Privatizing Education

Steve Yamarik helps to make the case for privatizing education. Schooling offers no positive externalities .
Estimating Returns to Schooling from State-Level Data: A Macro-Mincerian Approach

In this paper, we use information from U.S. states to determine the social return to schooling. We estimate a macro-Mincerian model where aggregate earnings (or income) depend upon physical capital, labor, average years of schooling and average labor force experience. We find that the social return to U.S. schooling is 9 to 16 percent, which matches estimates of the private return found in the labor literature. Our results therefore provide evidence that U.S. schooling is indeed productive, but generates no positive externalities.

Monday, October 20, 2008

Assorted Health Econ Links

1. A great graphic showing diseases and their genetic links.

2. The placebo effect. Taking it seriously.

3. Myth or science?

4. Peter Orszag on health care taking lessons the same lessons from psychology as behavioral economics.

5. Even small gains over placebos are important.

6. Is the placebo effect just regression to the mean? We seldom run studies where we compare treatment to placebo AND no treatment.  So it is often hard to identify the placebo effect separately from the natural improvements that can occur over time. Here they look at pain and placebos by eliminating the confounding effects of time.

Wednesday, October 15, 2008

Hospital Data

A recent speaker in my health economics class pointed us to quality data for hospitals in Wisconsin (wicheckpoint.org), produced by the Wisconsin Hospitals Association. They also produce inpatient and outpatient billing data from those same hospitals (wipricepoint.org).

Age of Consent

The Onion Op-eds tackle the issue of age of consent laws in the funny - but serious - way only they can. Our laws are very different from the rest of the developed world.

Monday, October 13, 2008

Comparing Health Plans

Radio Times interviews a political scientist who compared the candidate's plans for health care.
Radio Times with Marty Moss-Coane

Programs for 10/13/2008 to 10/17/2008
Monday 10/13/2008
Hour One
In the last presidential debate, John McCain referred to health care as a responsibility while Barack Obama called it a right. These statements are at the core of how the candidates have shaped their health care proposals. We turn to political science professor JONATHAN OBERLANDER whose comparison of the two plans was recently published in the New England Journal of Medicine. Listen to this show via Real Audio | mp3 

Links to their plans can be found here.


Krugman wins Nobel. By himself. This is kind of shocking for many reasons. More when I have time.

Sunday, October 12, 2008

Presidential Health Care

The candidates on health care.

McCain  v. Obama

Wednesday, October 08, 2008

Insurance Exchange

Pro and Con. Well sort of.

Healthcare: Right or Responsibility?

The candidates were asked "Is health care a privilege, right or responsibility? I'm not sure that question really means anything. After all, what is a RIGHT in a world with scarcity? It can not mean access to an infinite amount of care at a zero price. So then what does it mean? The definitions are below, along with the candidates answers via youtube.

privilege: a right or immunity granted as a peculiar benefit, advantage, or favor ; especially : such a right or immunity attached specifically to a position or an office

right: something to which one has a just claim: as a: the power or privilege to which one is justly entitled

responsibility: the quality or state of being responsible: as a: moral, legal, or mental accountability

Problem Definition

I stumbled upon this quote from Bertrand Russell:

The greatest challenge to any thinker is stating the problem in a way that will allow a solution.

Bertrand Russell
British author, mathematician, & philosopher (1872 - 1970)
It's why we spend so much time on Problem Definition in BUS 230.

Tuesday, October 07, 2008

Productivity Pr0n

Merlin Mann has my number. He knows that for me, productivity Pr0n is my procrastination.  I love the irony in that, but really I should just try to get some things done, instead of oogling the latest desktop tweaks on lifehacker.
R.I.P., Productivity Pr0n

Friends, I’m done with “productivity” as a personal fetish or hobby. There are countless sites that are all too happy to vend stroke material for your joyless addiction to puns about procrastination and systems for generating more taxonomically satisfying meta-work. But, presently, you won’t find so much of that here.

Except inasmuch as it can help move aside barriers to finishing the projects that you claim matter to you, “productivity” is often a sprawling ghetto of well-marketed nonsense for people who really just need a ritalin and a hug. So, for myself, random tips and lists that aren’t anchored to solving a real-world problem for a smart but flawed adult with a mind are dead to me. Pour a forty on ‘em.

From now on, I’m going to talk about how people make stuff. Books, art, code, buildings, ballets, companies, furniture, whimsical hats, songs, or what have you. But understand: this isn’t just for fancy people and fine arts majors.

Sunday, October 05, 2008

Covering The Uninsured

I've just read large chunks of Gruber's piece in the JEL (here is a previous draft).  He points out the interesting dynamics of the uninsured population.
In addition, there are important dynamics within the uninsured population that are missed by this point-in-time estimate. A problem with the CPS estimate is that it is a strange hybrid of a point-in-time estimate and a backwards look at the previous year. Other surveys that are less widely cited provide different perspectives on the uninsured, as reviewed in Congressional Budget Office (2007). The Congressional Budget Office finds that other surveys that ask about uninsurance at particular point in the year provide estimates very similar to the CPS. But they also find that estimates of uninsurance over an entire calendar year are only about one-half to two-thirds as large as point-intime estimates; correspondingly, estimates of the number of individuals uninsured at any point in the last year are on the order of 40–50 percent higher than point-in-time estimates. These findings highlight the dynamic nature of uninsurance.
And the heart of the matter can be found at the end of the piece.
Measures that are being discussed today under the guise of cost control are very modest. Initiatives such as medical electronic records, increased preventive and maintenance care, and reduced medical errors will at best reduce health care costs by only a few percentage points, and are just as likely to raise costs (with increasing quality). With health care costs rising at 7–10 percent per year, this is not enough. To fundamentally control health care costs we need to actually be willing to deny care that does little for health—but which consumers now want. This would be accomplished either through government technology policy, medical standards, or global provider budgets.

There remains considerable controversy, however, over the appropriate level of such government interventions—or whether they are necessary at all. Some argue that past health care spending advances are well justified by improvements in population health (Cutler 2004). Others argue that there are huge variations in health care practices across the United States with no tangible benefits (e.g., Jonathan S. Skinner, Douglas O. Staiger, and Elliott S. Fisher 2006). These two views are not mutually inconsistent: the first speaks to the average value of medical care over time, the second to the marginal value of additional health care at a point in time. But until we can resolve these discrepancies and understand more fully which health care spending is justified and which is not, we are not prepared to take on the American public on cost control. The fundamental insight of this round of reform is therefore to not hold the attainable goal (universal coverage) hostage to the (currently) unattainable goal, fundamental health care cost control.
This makes me very pessimistic about the prospects in the US, as we would not settle for government limitations on what we can spend privately. It seems difficult in the UK as well.
Patients “cannot, in one episode of treatment, be treated on the NHS and then allowed, as part of the same episode and the same treatment, to pay money for more drugs,” the health secretary, Alan Johnson, told Parliament, according to the Times. “That way lies the end of the founding principles of the NHS,” which is supposed to guarantee equal care to all, regardless of ability to pay.
Returning to the aforementioned Gruber piece Arnold Kling and a commenter make some useful observations:
He fails to mention the fact that the Massachusetts plan has been a disappointment. Nor does he mention his own deep involvement in the plan, which might affect his objectivity in the matter.
And the comments from Bob Goldberg point out:
Good pick on the Gruber piece.. Gruber also fails to mention that such programs simple replace private coverage and personal responsibility for payment with public assumption of the costs and risks. By about 50 percent. Talk about inefficiency. He should know since both he and David Cutler (one of the most thoughtful health care economists around and most substantial) wrote about a decade ago. (See, David M. Cutler and Jonathan Gruber, “Does Public Insurance Crowd Out Private Insurance?” The Quarterly Journal of Economics, Vol. 111, No. 2 (May 1996), pp. 391–430. And also, Jonathan Gruber and Kosali Simon, “Crowd-Out Ten Years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance?” NBER Working Paper No. w12858, January 2007, and Noelia Duchovny and Lyle Nelson, “The State Children’s Health Insurance Program,” Congressional Budget Office, May 2007. In turn, the underwriting models that would normally apply in insurance are tossed out the window. When you make the purchase of a good or service nearly risk free -- as with housing or home ownership -- guess what happens? Markets can't sustain the subsequent behavior without continued government expansion of subsidies, support and regulation and then costs at some point become prohibitive and lead to rationing.

Friday, October 03, 2008

Health Mashups

Here is a mashup between google maps and some quality assurance data for hospitals.

US Hospital Finder.

Wednesday, October 01, 2008


Thanks to a fellow student, here is a link which allows you to watch SiCKO for free:

Watch "Sicko" Movie

Reading Research

The New York Times has a great Health related section this week.  In particular they have this graphic, which details how to read (skeptically) medical research.  Its good advice for reading all kinds of research.

Sunday, September 28, 2008

Health Links

Just answering a few questions from class.

An interesting story on lifetime benefits caps and uncompensated care. Notice the hospital will claim they lost $791 by not being compensated for the stockings.

Preexisting conditions clauses are only possible in some circumstances and often limited in duration.
If you are under a federally-regulated health plan, twelve months is the longest period of time that your plan can exclude coverage for your preexisting condition. (Ask your employer if you are not sure whether your plan is subject to the federal law.)
We also discussed the fact that Federal regulations prevent the denial of emergency medical services due to the lack of health insurance. However, as this NYTimes piece notes, you can't be compelled to provide emergency services that aren't offered.  Many specialties avoid ER call because ER call makes them more likely to be sued for malpractice.

Immigration and Health Insurance

According to EPI immigrants make up a portion of the uninsured, but don't explain the recent rise in uninsured.

Tuesday, September 23, 2008

Concierge Medicine

CNN has an article on the coming trend towards concierge medicine, or boutique medicine. The example given is for a $1,500 fee (annually?) for the doctor to reduce his practice from 2,500 patients to 600. With that the promise is for increased access. That's $900,000!! Those sneaky doctors may have just monetized the opportunity cost of sitting in a waiting room.

Monday, September 22, 2008

Obesity Tax?

From CNN:
With obesity levels higher than in any other state except Mississippi, Alabama's insurance board chief William Ashmore and his staff of workplace wellness advocates decided it was time for a change.

"Over 10 percent of the people we screen are at risk for one of the factors we're screening for, and the vast majority had no earthly idea they were at risk," Ashmore said.

But the plan, which encourages state workers to have health screenings and to see a doctor if a problem is found, is angering some employees.

"It's penalizing people for being genetically who they are," says E-K. Daufin, a college professor at Alabama State University. "I have a lovely sexy body mass index of 44 right now," a number that would put Daufin in the group that would have to pay. That is, unless she decided to see a doctor about the issue.
I love the fact that E-K invokes the genetics defense. It brings up an important question: Are we liable for our genes? Are our parents responsible? Don't forget that genes are not exactly deterministic, environmental factors can turn them on and off.

Wednesday, September 17, 2008


Another great chart from the NYTimes on per capita spending across countries.
How people spend their discretionary income – the cash that goes to clothing, electronics, recreation, household goods, alcohol – depends a lot on where they live. People in Greece spend almost 13 times more money on clothing as they do on electronics. People living in Japan spend more on recreation than they do on clothing, electronics and household goods combined. Americans spend a lot of money on everything.

Tuesday, September 16, 2008

Tax Math

Higher taxes are most likely in our future, regardless of who we elect:
Douglas Holtz-Eakin, a former Director of the Congressional Budget Office and current chief McCain economic advisor, is an honest man--which means he's something of a liability on the Straight Talk Express. A few months ago, he admitted to my colleague, Michael Scherer, that Barack Obama's economic plan would reduce taxes for most people. And now, in a forthcoming book by Fortune columnist Matt Miller, he makes it clear that the next President is going to have to raise taxes.

"If you do nothing on the spending side, you're going to have to raise taxes whether you're a Republican, a Democrat or a Martian," he tells Miller...and then he immediately makes it clear that the "spending side" part of the argument is nothing more than a political fig-leaf.
And the futures market is also betting on rising taxes according to Mankiw.
The top income tax rate is now 35 percent. According to the betting at Intrade, the probability that the top income tax rate in 2011 will exceed 38 percent is 0.87. Call this P(tax hike).

Barack Obama has made such a tax hike part of his campaign promises, and there is no reason to think the Congress won't deliver for him. So let's assume Obama is certain to get the tax hike if he wins. That is, P(tax hike / Obama) = 1.0. (If this assumption is wrong, and this conditional probability is less than one, then my conclusion below would be even stronger.)

According to Intrade, the probability of Obama being the next president is 0.53. Call this P(Obama). And P(McCain) = 0.47.

Now we can calculate the probability of a tax hike conditional on McCain winning. It comes from the formula

P(tax hike)
= P(tax hike/Obama) P(Obama) + P(tax hike/McCain) P(McCain),

and plugging in the above numbers. It tells us that

P(tax hike / McCain) = 0.74.

Sunday, September 14, 2008

Freakonomics Quorum

I was asked to participated in a Freakonomics Quorum on Sex, and since I don't know when to say no, I agreed.  For editorial reasons they cut most of my links, in particular links to the supporting data.  I've reproduced it below with the links in tack.

How differently do Americans perceive sex now than they did 30 years ago? (For brevity's sake, it's best to discuss one or two ways.)

The best data on American’s perceptions of sex come from the General Social Survey. Assuming Americans don’t suffer from extraordinary cognitive dissonance we would also expect their perceptions of sex to change with their behavior. Sexual behavior since the introduction and legalization of the female contraceptive pill in the 1960s, has changed dramatically from what was once an act that risked pregnancy to an act which could be accomplished with a risk of pregnancy approaching zero. Importantly it was a technology controlled by woman, rather than by men as was the case of previously available condoms. The primary result of this technological change was the sexual revolution, which started a very slow cultural shift towards a general acceptance of premarital sex.
For the most part I think a majority of Americans have come to embrace sex as an intimate act primarily for the pleasure of the participants, instead of an act with the primary or even secondary purpose of creating a child.  This has led to several other changes in society.  No longer is premarital sex as shunned as it once was – unless your mother is the Republican VP nominee who has promoted abstinence education - because no longer is it as likely to result in pregnancy. And if sex isn’t about creating life, but solely about creating pleasure and intimacy between consenting adults, then homosexual sex - for some people – can achieve that desired end.  It is one reason why homosexual relations are gradually becoming socially accepted by many Americans.   
There are of course pockets of Americans - generally religious - who still view the primary function of sex as procreation, a view the Catholic Church surprisingly continues to promote forty years after the encyclical “Humanae Vitae.” Contrary to the views of many practicing Catholics sex according to the church should “be open to the creation of life”, which I interpret to mean there should be a positive risk of pregnancy unaltered by mechanical or chemical means.  Actually the Church’s preferences are asymmetric in that they are only concerned with preventing the lowering of the probability of pregnancy because if they were concerned about raising it the encyclical would have also banned the consumption of alcohol, a chemical known to increase the risk of pregnancy.   
How do you predict perceptions will change 30 years from now?

The one caveat to previous question might be the general decline in birth rates around the globe.  Falling fertility rates have put strains on social insurance and retirement systems that rely upon the pyramid scheme of population growth.  Italy has talked about subsidizing sex for procreation purposes.  Who knows one day we may view sex as an act of patriotism as we may be asked to literally do IT for our country.
As in the case of the pill, new technologies are probably most likely to facilitate future shifting social perceptions of sex.  I think many Americans perceive a dramatic drop off in sexual activity among the elderly, but I think innovations like Viagra will force us to rethink that stereotype.  In fact there is already evidence that the little blue pill has led to a dramatic rise in STDS among older Americans. Senior living situations are likely the next battle ground against STDs. I’m not implying senior living environments have become bastions of sex, akin to college coed dorms, but none the less the technology has allowed for increase in sexual activity, and with it the transmission of disease.
I also think other social biases will change with time. The internet has been a boon for people with sexual fetishes, allowing them to connect with others who share their interests.  In turn it has lead people who were previously unaware of the fetishes to learn more about them.  And as with most cultural changes in perceptions, slowly over time and with more exposure to them the repulsion many people feel will diminish.

How should we as a society be looking at/treating sex? (your opinion)

I think we should view it as the loving, intimate, fun, and pleasurable connection between consenting adults. As such it should not be regulated by the state.  Failing that utopian dream, the government should at least let women (and men) in Alabama buy and enjoy their sex toys.

Monday, September 08, 2008

Google Advice To Students

Google gives great advice to students and  sounds like they are describing BUS 230.
Our Googley advice to students: Major in learning
7/15/2008 05:48:00 PM
Management guru Peter Drucker noted that companies attracting the best knowledge workers will "secure the single biggest factor for competitive advantage." We and other forward-looking companies put a lot of effort into hiring such people. What are we looking for?

At the highest level, we are looking for non-routine problem-solving skills. We expect applicants to be able to solve routine problems as a matter of course. After all, that's what most education is concerned with. But the non-routine problems offer the opportunity to create competitive advantage, and solving those problems requires creative thought and tenacity.

Here's a real-life example, a challenge a team of our engineers once faced: designing a spell-checker for the Google search engine. The routine solution would be to run queries through a dictionary. The non-routine, creative solution is to use the query corrections and refinements that other users have made in the past to offer spelling suggestions for new queries. This approach enables us to correct all the words that aren't in the dictionary, helping many more users in the process.

How do we find these non-routine savants? There are many factors, of course, but we primarily look for ...

... analytical reasoning. Google is a data-driven, analytic company. When an issue arises or a decision needs to be made, we start with data. That means we can talk about what we know, instead of what we think we know.

... communication skills. Marshalling and understanding the available evidence isn't useful unless you can effectively communicate your conclusions.

... a willingness to experiment. Non-routine problems call for non-routine solutions and there is no formula for success. A well-designed experiment calls for a range of treatments, explicit control groups, and careful post-treatment analysis. Sometimes an experiment kills off a pet theory, so you need a willingness to accept the evidence even if you don't like it.

... team players. Virtually every project at Google is run by a small team. People need to work well together and perform up to the team's expectations.

... passion and leadership. This could be professional or in other life experiences: learning languages or saving forests, for example. The main thing, to paraphrase Mr. Drucker, is to be motivated by a sense of importance about what you do.

These characteristics are not just important in our business, but in every business, as well as in government, philanthropy, and academia. The challenge for the up-and-coming generation is how to acquire them. It's easy to educate for the routine, and hard to educate for the novel. Keep in mind that many required skills will change: developers today code in something called Python, but when I was in school C was all the rage. The need for reasoning, though, remains constant, so we believe in taking the most challenging courses in core disciplines: math, sciences, humanities.

And then keep on challenging yourself, because learning doesn't end with graduation. In fact, in the real world, while the answers to the odd-numbered problems are not in the back of the textbook, the tests are all open book, and your success is inexorably determined by the lessons you glean from the free market. Learning, it turns out, is a lifelong major.

Sunday, September 07, 2008

Healthcare Links

Two good posts and links on coming changes to health care funding. From Greg Mankiw on the strange bedfellows of partisan presidential policy. And Arnold Kling on the future of medicaid and health care funding.

Saturday, September 06, 2008


You have to love Shiller's genius even if you don't share his point of view.

Friday, September 05, 2008


There is nothing I love more than the naked exposure of hypocrisy. Jon Stewart exposes quite a heavy dose.

Saturday, August 30, 2008

Foreclosure Filing Rate and The Unemployment Rate

The graph below shows the county's unemployment rate, and the foreclosure filing rate, with the size of the bubbles proportional to the population of the county. A larger version can be found here.

Saturday, August 23, 2008

Property Taxes

We recently finished the semi-annual consumer sentiment survey for the 7 Rivers Region. The upcoming September meeting concerns the Wisconsin Way initiative. In preparation we asked our participants some of the questions that have been asked around the state. In particular we asked:

When you think about the property taxes you or your landlord pay on the home in which you live and the services you receive for those taxes would you say property taxes in Wisconsin (or your state of residence) are much too high, somewhat too high, about right, somewhat too low or much too low?

I've joined the following answers and created a word cloud.
a. Much too high
b. Somewhat too high
c. About right
d. Somewhat too low
e. Much too low
f. Other

The fact that you can not find Much Too Low or Somewhat Too Low in the graphic is not a mistake.

Friday, August 08, 2008

I Read It For The Articles

Well, at least some people can make a good case that they do read Playboy, just for the articles. The Library of Congress produces a copy in braille for the blind.

Ditch Diggers

I've always felt the role of a third rate economist like myself was to be a ditch digger for the profession.  You know, someone to carry out the grunt work.  If an econometrician develops a new technique to estimate trade elasticities for industrialized countries, someone needs to do the same thing for the other 180+ countries.  That would be my calling.  But we are also in a good position to be a bridge between the superstars and the laity.  As Tim Harford says, we can be the translators.  I also think we need to be better educators of the public, so we can better inform policy debates. A recent article talks about the opaqueness of much academic research.
Some of these issues also came to the fore in the debate on "Why Economics Matters", which was held at the London School of Economics in May to mark the launch of The New Palgrave Dictionary of Economics. This immense eight-volume book, edited by Steven N. Durlauf and Lawrence E. Blume (and just published by Palgrave Macmillan at £1,600), brings together the contributions of more than 1,500 economists as well as a few outsiders such as the Swedish zoologist who contributed an entry on "game theory and biology". Although full of diagrams and mathematics, it also bears ample witness to the way that economics has loosed its moorings and now takes in pretty much all of human life. Entries range from "addiction" and "altruism", "bribery" and "bubbles", "convict labour" and "co-operation", all the way through to "tulipmania", "user fees" and "value of life". It is precisely because economic perspectives can be applied to parenting and speed dating that there is a popular market for the subject. Yet there have also been criticisms that economics has colonised and taken over much of the other social sciences, to the detriment of both sides.

The two panellists at the LSE debate who had contributed to the dictionary took very different lines. For Franceso Caselli, professor of economics at the LSE, books about sumo wrestlers and United Nations diplomats not paying their parking fines were all very well, but it was often the most nerdy, technical and even mind-numbing areas of economics that provide the crucial insights to improve lives. His "unsung and unlikely heroes", he said, were Alan Heston and Robert Summers, economists "who spent most of their professional lives developing - and implementing - methods to make national accounts comparable across countries, particularly, but not exclusively, by putting them on a purchasing-power-parity basis. The result of this lifetime effort was the publication of the Penn World Tables, in 1991."

While their work might sound dull and offputting - it certainly required one "to set up and solve a rather opaque set of many equations in many unknowns" that took "several hours to explain even to advanced PhD students" - it provided a set of vital practical tools. "Economists (and policymakers) used to think poor countries were poor because they invest too little, whether in physical capital or in their people, and as a result at any point in time they have too little capital," Caselli pointed out. "What the Penn World Tables allowed Chad Jones and others to do is to check these assumptions against the data - and to find that they were completely wrong ... the problem of poor countries is not that they have too little resources to produce, but that they use these resources very badly. What they need is not more investment or more schooling: they need to become more efficient." All this will make a big difference to the lives of the poor "in the same way that in medicine getting the right diagnosis for a sick patient improves his life relative to having the wrong diagnosis. Different diagnosis implies different therapy."

Although he is also a contributor to The New Palgrave Dictionary, Klaus Nielsen, professor of institutional economics at Birkbeck, University of London, was far more worried about the highly mathematised state of economics today. For a start, he suggested, technical economic arguments were often a smoke screen used to disguise quite different reasons for making decisions (as when Britain stayed out of the eurozone or aggressively bid to host the Olympic Games).

But he also worried that the subject had become "autistic". "Mainstream economics", he has written elsewhere, "has developed too much in the direction of an excessively specialised and formalised state of de facto withdrawal from the study of the economy in favour of exercises in applied mathematics". While its language "makes dialogue with other disciplines impossible ... the self-image of the discipline makes it unnecessary".

Part of the problem, Nielsen continued, is that economics is now "based on an expansive research programme with a strong core and a flexible protection belt". All the claims of the "belt" were up for discussion, provided the core remained intact. But it was the core, unfortunately, that incorporated a lot of basic assumptions about human nature and behaviour that disciplines such as anthropology, psychology and sociology had long called into question.

When economic research is impenetrable to those outside the subject (or even outside the subdiscipline), there will always be disputes about whether its difficulty is unavoidable, given the fiendish complexities of the real world, or whether it just amounts to an arid exercise in applied mathematics. And, because every example is different, there is probably no general answer to this question. But what about cases where economists do have important insights but dress them up in jargon and formulas that only their fellow specialists can understand?

Harford of the Financial Times, who was another panellist at the LSE debate, had something to say about that. Long may academic economics remain impenetrably opaque, he declared. It left a very lucrative gap in the market for people like him to step in as "translators", taking the best ideas of the ivory tower into the airport bookshop.

Saturday, July 19, 2008

Condom PPP

Here are the average prices of a 12 pack of Durex Elite Condoms.  You can use these prices to derive a PPP index, much like the Big Mac index.


This Boston Globe article points to the chilling effect that Massachusetts case law has on marriage.  Of course the impact of making divorce more expensive may not only be to reduce the number of marriages it could also prevent divorce as well.  And thus the law will likely lead to more extra-marital sex.
FORGET KAFKA. Welcome to Massachusetts. In the 1980s, it was known as Taxachusetts. These days, it's known as the state whose divorce laws are so out of date that many people decide against marrying here - or marrying anyone anywhere whose alimony obligations originate here. I'm one of them. Two divorce lawyers tell me that the state's laws are so extreme they have "a chilling effect on marriage." Prenups offer no guarantees. Judges routinely ignore them.
more stories like this

Cathy Ortiz, a secretary in Fairhaven whose husband is out of work, was ordered in 2007 to make alimony payments from her own paycheck to his ex-wife - who has a full-time job with benefits. The husband, Ernest Ortiz, is suing the state, arguing that these laws are unconstitutional. Oral arguments were heard yesterday in Appeals Court.

Alimony law is largely case law, not statute. Many legislators are shocked to hear the feudal details, unique to Massachusetts. But not shocked enough to reform the law.

The laws are gender neutral, but the facts are not: 96 percent of alimony payers are men, who often must give 30 to 40 percent of gross earnings to educated and sometimes employed women. Alimony does not automatically end or decline at retirement, even after an ex-wife has gotten an equitable share of marital assets. This applies in no-fault divorces, to the middle-class, and to millionaires.

Alimony is usually ordered until the recipient dies or remarries, even for couples in their 30s and 40s. Judges who set time limits may be overruled on appeal. When children are involved, the court usually awards only child support, about 30 percent of a father's income, which ends when children turn 23. Then mothers frequently receive alimony at the same or higher levels, for life.

Prostitution and Price

Here we have an example of price differences by nationality of prostitute. There are many things that could explain the lower prices received by Malay girls. Anything from preferences of Johns, to supply of prostitutes.  Malay prostitutes might be more likely to have a STD so the lower price reflects a discount due to risk of disease for the John.

Porn's Financial Woes

Variety bends over to kick the porn industry while its down.
Economists are citing some dire portents of a recession these days, but they've missed one indicator I find especially disturbing: The porn business has suddenly gone flaccid.

The drop in porn rentals and sales is worrisome on several fronts: Till now, porn has been a recession-proof business. Further, with the country already in a dispirited mood, the fact that porn has gone limp may indicate a true plunge in consumer confidence.

DVD porn is down between 10% and 30%, depending on which nook and cranny of the business you scrutinize. Joy King, executive vice president of Wicked Pictures, and a smart analyst of the business, says the smallest dropoff is in "couples-friendly porn" -- films that embrace something of a storyline. Women account for roughly half of this audience, making their purchases in lingerie boutiques and toy stores (no, not kiddie toys).

By contrast, that sector called the "gonzo" side of the business is in serious need of fiscal Viagra. Guys with an appetite for "gonzo" are going unrequited, which may help account for the closing of many DVD emporiums like the Movie Galleries in the Midwest.

One beneficiary of these trends is online porn -- a business that's lofty in traffic but shriveled in terms of revenue. With sales declining across the landscape, employees at big corporations have a lot more time to check out the three-minute porn clips flashing across their computers. To the serious porn players, some of these clips are beyond hardcore -- they're, well, mega-gonzo.
Of course there are some claims that the economic stimulus has stemmed the tide of losses, though I'm never one to put too much stock into unverified press releases.
NEW YORK, July 2 /PRNewswire-USNewswire/ -- An unforeseen and surprising beneficiary of the Economic Stimulus Plan, a plan that George Bush contends will "boost our economy and encourage job creation," has surfaced this week. An independent market-research firm, AIMRCo (Adult Internet Market Research Company), has discovered that many websites focused on adult or erotic material have experienced an upswing in sales in the recent weeks since checks have appeared in millions of Americans' mailboxes across the country.

According to Kirk Mishkin, Head Research Consultant for AIMRCo, "Many of the sites we surveyed have reported 20-30% growth in membership rates since mid-May when the checks were first sent out, and typically the summer is a slow period for this market."

Jillian Fox, spokeswoman for LSGmodels.com, one of the sites reporting figures to AIMRCo, added, "In a June 15, 2008 survey to our members, thirty two percent of respondents referenced the recent stimulus package as part of their decision to either become a new member, or renew an existing membership."

Where I've Been

Mostly riding my bike, and reading. Posting to resume soon.

Monday, June 23, 2008

Hollywood Subsidies

La Crosse was initially in the running to become one of the locations for the new Johnny Depp "Public Enemies" movie. Wisconsin was chosen for several reasons, one of which was probably the newly passed tax considerations. Maybe we should look at the evidence and research done by other states. This headline says it all:
Rich stars pocket subsidies, state says
The analysis by the Department of Revenue this week estimated that at least half the film-industry payroll spending will go to out-of-town residents, mainly actors, directors, and producers commanding salaries of more than $1 million each. The Revenue Department assumes they will spend only a fraction of their paychecks in Massachusetts, limiting the benefits to the local economy.

The Revenue Department noted its analysis is consistent with a 2005 report on Louisiana's film tax subsidies, which estimated 60 percent of spending eligible for tax credits would go out-of-state. And when The Providence Journal reviewed records for a Wesley Snipes film subsidized by Rhode Island, it found just $1.9 million of the $11 million in production expenses went to local residents and vendors - less than the $2.65 million in tax credits issued to support the 2006 movie, "Hard Luck."

But in this week's report, the Revenue Department found the subsidies probably wouldn't generate enough money in income taxes and other revenue to offset the cost of the incentives, forcing the state to cut other government spending. Assuming $100 million a year in incentive spending, the state said it would only be able to recoup $18 million to $23 million in other tax revenue.

Bernanke as Health Economist

Ben talks about Healthcare. The conclusion with which I could not agree more:
Let me conclude by restating a point I made at the beginning: As we focus on the problems of our health system, it is easy to forget that much is good about it. Our health system has produced innovations in basic science, in the understanding and diagnosing of disease, and in pharmacology and medical technology. These advances have resulted in more-effective treatments and significant reductions in mortality across a wide spectrum of diseases. In devising policies to reform our health-care system, we must take care to maintain the vitality and spirit of innovation that has been its hallmark.

Descriptors or Treatments

I too have often thought of background variables, such as race, income, and education as descriptors, rather than treatments. However it seems as if most applied econometricians today think of them as treatments. Andrew Gelman posts on this topic:
Income, education, and religion as "background variables" or "treatments"

The discussion here on the climate change attitude mystery reminded me of a funny thing about how we think when we classify people by education, or income, or religion.

The original question was to explain why college-educated Republicans are less likely (compared to non-college-educated Republicans) to believe in human-caused global warming, while, among Democrats, those with college education are more likely to believe in it. To me this was no surprise: college-educated people are more political polarized and are more likely to align their views with their political attitudes.

But many of Tyler Cowen's commenters had a different sort of explanation, along the lines of, Going to college makes Republicans more skeptical of scientific authority but convinces Democrats of these arguments.

Setting aside the specific issue of climate change, one interesting thing here is the way I, in common with most political scientists, think of education (and other variables such as income and religion) as traits, or background variables, or descriptors of people. Thus when we talk about how rich and poor people vote, or more and less educated, or Protestants and Catholics, or whatever, we think of these as different sorts of people. But you can also think of income, or education, or religious attendance, as "treatments" that affect people--for example, if you go to college and share a room with someone of a different ethnic or political group, you might become more tolerant. Or maybe if you are conservative and go to college, you'll be skeptical of what's taught in your physics class (or if you're liberal, maybe you'll be skeptical of what's covered in your econ class).

I don't really have much to add here . . . somehow it seems more reasonable to me to think of these as descriptors than as treatments, but I guess it depends on the person and on what issue is being considered.

Delong is Right

He is absolutely right, get away from or above the nearest road and you will generally have solitude. Although Chicago Basin was a long way from the nearest road, it was a bit more crowded than I would have liked.

The Upside to Higher Oil Prices

Among them is lower obesity rates.

Here are the rest.
1. The mass transit boom

2. Lower obesity rates

What’s happening: Rising gas prices and smaller belt sizes go together, according to Charles Courtemanche of Washington University in St. Louis. His research found that, for every dollar increase in the average real price of gas, overweight and obesity levels in the United States would decline by 16 percent after seven years. His study also attributes the outward expansion of American waistlines between 1979 and 2004 in part to falling prices. Similar research published in the European Journal of Public Health found that European countries with higher gasoline prices tend to have lower rates of obesity.

Why it’s happening: One word: exercise. Bike shops across the United States are reporting record sales, and Britain is even promoting a national “Bike Week” to encourage commuters to ride, not drive, to the office. Not only is two-wheeling a cheaper way to travel, it’s also healthier. Courtemanche’s results show that “the average person walks or bicycles an average of 0.5 times more per week if the price of gas rises by $1.” Another factor he identifies is that cost-conscious Americans are choosing to eat at restaurants less frequently. Indeed, a virtuous cycle could be at work: A study published in The Engineering Economist found that Americans today use nearly a billion additional gallons of gasoline each year, compared with 1960, solely because they weigh more.

3. Fewer accidents

4. Shorter commutes

5. The biofuels craze

Early Intervention

I'm fairly convinced by Heckman's work on early cognition. Here is a great survey piece he wrote. And this via Mankiw.
Cognitive abilities are important determinants of socioeconomic success. So are socioemotional skills, physical and mental health, perseverance, attention, motivation, and self confidence. They contribute to performance in society at large and even help determine scores on the very tests that are commonly used to measure cognitive achievement.

Ability gaps between the advantaged and disadvantaged open up early in the lives of children. Family environments of young children are major predictors of cognitive and socioemotional abilities, as well as a variety of outcomes such as crime and health. Family environments in the U.S. and many other countries around the world have deteriorated over the past 40 years.

Experimental evidence on the positive effects of early interventions on children in disadvantaged families is consistent with a large body of non-experimental evidence showing that the absence of supportive family environments harms child outcomes. If society intervenes early enough, it can improve cognitive and socioemotional abilities and the health of disadvantaged children. Early interventions promote schooling, reduce crime, foster workforce productivity and reduce teenage pregnancy.

These interventions are estimated to have high benefit-cost ratios and rates of return. As programs are currently configured, interventions early in the life cycle of disadvantaged children have much higher economic returns than later interventions such as reduced pupil-teacher ratios, public job training, convict rehabilitation programs, adult literacy programs, tuition subsidies or expenditure on police.

Wednesday, June 18, 2008

Calories In, Calories Out

Not according to this guy. While I believe there is more to our complicated engine, in fact most of the concernes are of second order to calories in calories out. it is one of the few things that can explain the vast difference in obesity between the US, France, Belgium, Germany, etc. Which can hardly be accounted for in terms of carbohydrates, or genetics.

'The natural question is, "What regulates fat accumulation?"' he begins, swivelling gently in his office chair. 'That was actually worked out 50 years ago. We know that the hormone insulin is what puts fat in fat tissue. Raise insulin levels and you accumulate fat; lower insulin levels and you lose fat. And we secrete insulin as a response to carbohydrates in the diet.'We have screwed up the causality of obesity,' he continues. 'Fat people are predisposed to be fat. Genetics determines how we respond to the carbohydrates. Healthy people exercise more than unhealthy people, and we know that lean people exercise more than heavy people - but that doesn't tell us that exercise will make a heavy person lean or an unhealthy person healthy.'

Taubes's defence of a high-fat, low-carb regime sounds suspiciously like the Atkins diet, which proposed that a hefty slab of steak followed by cheese was less fattening than a bagel or a bowl of pasta. The Atkins diet still has many fans, but recently seemed to have been consigned to the reject bin among health warnings and heart-attack alerts (and the news that when Dr Atkins died in 2003 he was a hefty 18½ stone). But in his book Taubes puts forward a compelling case for avoiding a high-carb, low-fat diet. 'I have this problem when I talk to physicians and biologists, ' he says. ' They will say, "OK, I can see that obesity is a disorder of fat accumulation. I acknowledge insulin makes us store fat." Then I say, "Well, that implicates carbohydrates," and they go, "Oh, that's that Atkins crap. It's old news." They shut down and that's the end of the discussion.' In fact, he says there are many respected scientists who do agree with him, but who are reluctant to support him openly.

Gay Gene

I do not believe being gay or straight is as dichotomous as this article suggests, but nonetheless these are interesting results. Does this mean that gay females should trade and perform in lab experiments more like males?

Brain scans have provided the most compelling evidence yet that being gay or straight is a biologically fixed trait.

The scans reveal that in gay people, key structures of the brain governing emotion, mood, anxiety and aggressiveness resemble those in straight people of the opposite sex.

The differences are likely to have been forged in the womb or in early infancy, says Ivanka Savic, who conducted the study at the Karolinska Institute in Stockholm, Sweden.

"This is the most robust measure so far of cerebral differences between homosexual and heterosexual subjects," she says.

Previous studies have also shown differences in brain architecture and activity between gay and straight people, but most relied on people's responses to sexuality driven cues that could have been learned, such as rating the attractiveness of male or female faces.

Thursday, June 12, 2008


I know I have too much stuff. But this video (The Story of Stuff), forwarded by a relative, gets me really annoyed. My relative asked for an Economists opinion and here was the first part of my response:
Don’t worry, you’ve come to the right place. That piece laughable, but the real irony is how many consumer goods she probably had to use to put that video together, such as the slick new iBook, along with some fancy movie editing software, a digital camera, etc. In the first couple of minutes she makes the same argument made by Thomas Malthus (circa 1800), that we are growing too fast for our planet, technology is linear, population growth is nonlinear...blah, blah. I almost shut it off, but thought I’d better watch the whole thing. Every generation makes this argument and they are all wrong. Resources are scarce but technology and technological advancement is not, which is something these Malthusian types never seem to get. Like Garret Hardin for example, but at least he wasn't a hypocrite, he took himself out of the lifeboat.

She talks about the fact that incomes have risen but happiness has not, though that phenomenon (known as the Easterlin paradox) appears to be in jeopardy. Besides, it doesn’t even pass the smell test, can you honestly say you’d be happier living in the 50s? I’m pretty sure I wouldn’t be happier, because I would be dead.

She also talks about how we don’t pay the true cost of making things, with her $4.99 radio example. Economists refer to the things she mentions as negative externalities. The simplest example being pollution. The plant that produces the radio might pollute the air, yet they do not have to pay for their pollution, thus the cost of the radio reflects only the direct costs, and not the cost to society of the pollution externality. Eliminating externalities is easy enough, you merely have to tax the activity, thus forcing the firm to account for their pollution. This is in part why we tax gasoline, and Greg Mankiw has proposed a carbon tax to further reduce the externality. An idea embraced by Obama. Many of the things she lists that might appear to be externalities are really her own preferences masquerading as externalities. She romanticizes small communal farming, and assumes any move away from that reflects a negative externality which is not priced into the good. Hardly. It is just a preference she does not share.

She also fails to note the existence of positive externalities which would require government subsidies in order to increase output to the socially optimum level. Take cell phones. If I’m the only one that has a cell phone it is useful to me, but it would be even more useful if everyone else has one, allowing us to communicate with each other no matter where we are. So maybe the private market provides too few cell phones? Should the government then subsidize them?

She mentions Eisenhower’s CEA chair claiming the goal of the economy is to produce consumer goods. I can’t seem to find that quote anywhere, but I’m sure he meant consumer goods in the abstract sense of the term goods. That is to say both physical goods and services. So her plea for education, health care, etc are all things the CEA chair would have agreed with. Those are to an economist, part of consumer purchases. No economist I know of would ever have elevated the role of physical goods above services, or vice versa. We can all agree our life is made better off with the goods and services we consume. If it isn’t then you shouldn’t be buying it. And remember that buying “experiences” such as a family trip to Florida is part of that as well. Americans work a smaller percentage of their life than ever before in history, which means we consume more leisure than ever before. This is only possible with a more productive economy.

Her snippet on computers having only one part that changes from year to year?? WTF….that just makes the rest of the argument so much weaker since it is monumentally ignorant. Like all the goods and services we consume, new technologies are invented and used to make the products and services marginally better. At some point the increased benefits might outweigh the costs of purchasing a new unit. But it is very rare that a “new” product comes out, and is adopted by the whole market, even though there are no technological advantages (look at how bad MS Vista is flopping). You can’t fool all the people.

I feel bad for this woman, because if she took an econ class in college, the professor was horrible. She clearly has an innate interest in the functioning of the economy, yet was never introduced to a rigorous way to think about it. Instead she takes her preferences and arrogantly romanticizes poverty, and comes up with the belief that we should end consumerism? What? Yes, tell the Chinese that the last 20 years haven’t been good for them, they should go back to subsistence farming, thats a lot of fun, particularly when draught hits. Good times that starvation.

So don’t feel too bad for your kids. You are generally leaving them with a better world than you have occupied. In fact I guarantee their standard of living will be higher than yours, though it could be higher still if you sent in more money with your taxes next year to help reduce the deficit. Or just set aside more money in your 403(b).

This is not to say that there aren’t some things we should/can do. I think we can do a better job of trying to identify and correct externalities (although I will admit this is not easy and it makes my libertarians sensibilities bristle). If we do, then prices will be a very efficient allocation mechanism as they will now reflect private and public costs. I do think we could buy (ie consume) less…in fact economic growth would probably be more rapid if we consumers spent less and saved more, thus freeing up capital for corporations to invest in new technology. The beauty of it is it will provide even more stuff for us to buy in the future! So I'm only advocating consuming less now, so that we can consumer even more in the future. Though I’m quite sure that’s not the argument she is making. Remember if its family you enjoy, living longer allows you to spend more time with them, and living longer is only going to happen through better health, health care and medicine…not through buying local tomatoes.

Me, I imagine I’ll get the fill of my family…

Golf and Reliability

A great post on golf and statistical reliability.

Fast Food

Fast food doesn't make you fat, its the quantity of food you eat that makes you fat. And according to this post:
Matsa and Anderson next looked at data on individual eating habits from a survey conducted between 1994 and 1996. When eating out, people reported consuming about 35 percent more calories on average than when they ate at home. But importantly, respondents reduced their caloric intake at home on days they ate out (that's not to say that people were watching their weight, since respondents who reported consuming more at home also tended to eat more when going out). Overall, eating out increased daily caloric intake by only 24 calories. The results for urban and suburban consumers were similar.
Fast food can only be blamed for increasing caloric intake at most 24 calories at day. Since 140 calories extra a day will increase your steady state weight by about 10 lbs, at most this means 1.5 lbs.

Time to look elsewhere for a scapegoat. How about the mirror?

Tuesday, June 10, 2008

No Pole Tax

While I was away the Texas Pole Tax was defeated. From Vice Squad:
Remember Texas's "pole tax," the $5 per customer fee applied to strip clubs in January? Turns out that a state judge has ruled the tax to be a violation of the First Amendment. The Attorney General intends to devote more public funds to appealing the ruling, while other supporters of the tax are investigating reforms to the legislation that would help it pass constitutional muster. (Incidentally, I haven't read the court opinion, but I am surprised that a case decided on free speech grounds also seems to hinge (if the published reports are correct) on the earmarking of the revenues from the tax.)

Euro Churches

Having just come back from Europe I can attest to the grand churches. You would hardly believe they are a more secular society than we are except for the fact that many of the churches are merely tourist attractions now. However they are quite a sight to see, and marginal revolution provides us with an economic argument for their opulence:

Why did they build expensive medieval churches?

Bryan Caplan asks (the rest of the post is interesting on other matters):

Seeing a bunch of French cathedrals makes me even more skeptical of the claim (made by Larry Iannaccone and others) that people weren't more religious in earlier centuries. If people weren't far more religious in the Middle Ages, why did they pour such a high fraction of their surplus wealth into century-long religious architectural projects? You could say "It was primarily rulers, not donors, who allocated the funds," but that just pushes the question back a step. Were rulers vastly more religious than the masses? That's hard to believe. Were rulers trying to impress the masses by building churches? Well, why would churches impress the masses unless they were highly religious?

His answer:

Religious architecture and art were to medieval feudalism what advertising and commercialism are to modern capitalism: A rather effective way to build support for the status quo using aesthetics instead of argument. My claim, in short, is that Notre Dame played the same role during the Middle Ages that fashion magazines play today. Notre Dame was not an argument for feudalism, and Elle is not an argument for capitalism. But both are powerful ways to make regular people buy into the system.

I would add that churches were a form of fiscal policy and the associated spending was a way to hand out goodies to political allies. (This is especially important if the finished project takes decades or centuries to materialize.) In a time of political decentralization it wasn't easy to construct or maintain a long distance road. So you had to put a lot of expense in one easy-to-guard place and in a politically correct way. Churches were the obvious choice. Churches may have been an efficient means to store wealth for other reasons as well. If someone is going to plunder you on the run, they can wreck a church but they can't dissemble and carry away its value very easily.

Robin Hanson might argue that beautiful churches also signaled the status of the elites who built them.

Becoming a Super Stripper

While I was in Europe I got behind on some interesting posts. Freakonomics and others pointed me to this one:
Let’s face it. Stripping is hard work. There’s judgment from outside the club. Competition inside the club. And, you’re an independent contractor. There’s having to make nice when you don’t feel like making nice. There’s the pressure to hustle. Pressure not to hustle. There’s the standing in 8″ heels all night. And above all, the ever-present challenge of making bank. That’s where Star Light’s Exotic Dancer, M.B.A. comes in! Spend the day with us, and we’ll share tips on sales (because stripping is sales), organizing your finances, and managing the day-to-day stress of stripping. Find your path to being a SuperStripper. What’s a SuperStripper? She’s an amazing woman who uses stripping as an avenue to create financial freedom and the future she wants! Someone who doesn’t let the job define her.
There is no doubt that more money can be made if dancers use proper techniques. In fact many of them are budding neuroscientists. The link between sex, money and risk is well established. And once the money is made, properly managing it is of the utmost importance since their careers are often very short.

Monday, June 09, 2008

Random Sampling

Here is an excellent post from Marginal Revolution on the perils of random sampling. Even when you think you've done it, you might have missed something.

The Wisdom of Whores

As a teenager Elizabeth Pisani discovered that she liked sneaking into the "girlie bars" of Hong Kong and talking to the hookers and the johns. Ordinarily one wouldn't expect such peculiar hobbies to pay off in a dazzling career. But beginning in the mid 1980s, people who were comfortable talking to hookers, rent boys, trannies, warias and junkies (all Pisani's terms) especially in the hot spots of Asia and Africa became scouts and spies in the war against AIDS. Information provided by these epidemiologists in the streets about where AIDS hid and how it spread has been critical to the war.

The Wisdom of Whores
is Pisani's vivid account of what she has learned and why AIDS is still being fought ineffectively. I'll say more on this in the future. Here, however, is one bit relevant to the title:

We'd just finished our first survey of HIV, syphilis and risky sex among waria in Jakarta...I had the impression from the qualitative research...that waria were turning dozens of tricks a week, but the study showed they averaged only three. And since that figure came from 250 waria selected at random as the manual requires, it was certainly more accurate than the qualitative research...

"Three a week? Your insane!," snorted [sex worker and waria] Ines....Ines left school at fourteen but she is not stupid, so I explained how, through our probability sampling, we are asking a representative sample of Jakarta's waria. Ines dismissed by lecture with a wave of her manicure and a flick of her locks. "So clever, but so stupid." she sighed.

Ok, so what was the wisdom of the whore? (n.b. Pisani's term!) Bonus points if you can also describe a solution. I am going to have to get this into my econometric notes! Answer in the extension.

She explained, as if to an enthusiastic but slightly dim child, that a waria who is hanging around on a street corner to be interviewed by a research team is a waria who is not with a client. 'You are talking to all the dogs, obviously'.

Not something I learned in the lecture halls of London...but Ines is quite right. Our sample is biased towards the 'dogs,' who get picked up less than the cuter girls. So the study results underestimate the true number of clients per seller...

Ines's comments...prodded us into changing the sampling strategy...now we work with the powers-that-be (the mami, the pimps, the brothel owners) to arrange off-hours time for data collection. The principle....is that you are not cutting into people's work time, so there is less chance of talking only to the remnant sex workers who can't get a client.

Sunday, June 01, 2008

Mostly Harmless Econometrics

A new Econometrics book : Mostly Harmless Econometrics.
The core methods in today's econometric toolkit are linear regression for statistical control, instrumental variables methods for the analysis of natural experiments, and differences-in-differences methods that exploit policy changes. In the modern experimentalist paradigm, these techniques answer clear causal questions such as: Do smaller classes increase learning? Do minimum wages reduce employment? Should wife batterers be arrested? How much does education raise earnings? Mostly Harmless Econometrics shows how the basic tools of applied econometrics allow the data to speak.

In addition to econometric essentials, Mostly Harmless Econometrics covers important new extensions--regression-discontinuity designs and quantile regression--as well as how to get standard errors right. Angrist and Pischke explain why fancier techniques are typically unnecessary and even dangerous. The applied econometric methods emphasized in this book are easy to use and relevant for many areas of contemporary social science.

* An irreverent review of econometric essentials
* A focus on tools that applied researchers use most
* Chapters on regression-discontinuity designs, quantile regression and standard errors
* Many empirical examples
* A clear and concise resource with wide applications

Wednesday, May 28, 2008

Prostitution in NZ

Apparently Prostitution was partially decriminalized in New Zealand some time ago. The full report is here. An article summarizes here:

Prostitution reform has little effect
5:00AM Monday May 26, 2008

The number of sex workers in New Zealand does not appear to have increased since legislation decriminalising prostitution became law, according to a new report.

The Prostitution Law Review Committee was set up to report on the Prostitution Reform Act 2003 three to five years after the act came into force.

Its report, just published, was based on work carried out by the Christchurch School of Medicine and Victoria University's Crime and Justice Research Centre.

The committee, chaired by former Police Assistant Commissioner Paul Fitzharris, said an accurate count of the number of sex workers was difficult.

However, a comparison between the number of sex workers in Christchurch in 1999, before decriminalisation, and 2006 - after the act was passed - showed the total had stayed about the same.

A 2007 estimate in five centres - Auckland, Wellington, Christchurch, Hawkes Bay and Nelson - found a total of 2332 sex workers, the committee said.

Numbers of sex workers should continue to be monitored, it said.

Around 93 per cent of sex workers cited money as the reason for getting into and staying in the sex industry.

"The most significant barriers to exiting are loss of income, reluctance to lose the flexible working hours available in the sex industry and the camaraderie and sense of belonging that some sex workers describe."

The committee said a Christchurch School of Medicine survey found that more than 90 per cent felt they had legal rights under the act.

More than 60 per cent felt they were more able to refuse to provide commercial sexual services to a particular client since the enactment of the law.

Before the act, the illicit status of the industry meant workers were open to coercion and exploitation by managers, pimps and clients. Research indicated there had been "some improvement" in employment conditions "but this is by no means universal".

Generally, brothels that had treated their workers fairly before the act continued to do so, while those that did not, continued to have unfair management practices, it said.

"The committee recommends that the sex industry, with the help of the Department of Labour and others, moves towards written, best-practice employment contracts ... becoming standard for sex workers working in brothels."

Other findings included that the majority of sex workers felt the act could do little about violence that occurred, although a significant majority felt there had been an improvement since the passing of the act.

The legislation made it an offence to arrange for or to receive, or facilitate or receive payment for, commercial sexual services from a person under 18.

The committee said the threshold of 18 should remain.

It found 1.3 per cent of sex workers were under age but did not believe the act had resulted in more underage people working in the industry.

Other recommendations included that the Government provide additional funding to the Ministry of Health to enable medical officers of health to carry out regular inspections of brothels.

It also said the Government should provide funding so that non-government organisations could provide services, including assistance with exiting for those who wanted to quit sex work.

Associate Justice Minister Lianne Dalziel said the report showed the act had had a positive effect on the health and safety of sex workers and had not led to an increase in numbers of sex workers as predicted by critics of the law reform.