Sunday, December 25, 2011

Childhood Obesity Falls?

According to this piece in the Atlantic childhood obesity has fallen in NYC. They attribute the results to several interventions designed to solve the problem. But I wonder to what degree this is one of the happy side effects of a prolonged recession? Parents have less money to satiate the sugary demands of their children.
As I explained to Bloomberg News, if this trend continues, it will represent the first truly positive development in years.

It also suggests that the health department's unusually aggressive efforts to address obesity may be paying off. If so, they should inspire other communities to do the same kinds of things. If nothing else, they raise awareness of the problem and help create an environment more conducive to healthy eating.

On the national level, Michelle Obama's Let's Move campaign also has raised awareness. Could it be that we are getting to a tipping point?

It's pretty clear by now what works. A Cochane meta-analysis of 55 studies finds strong evidence to support beneficial effects of child obesity prevention programs on BMI, particularly for kids age six to 12.

The interventions showing the most promise are just like those in New York City:
  • School curriculum that includes healthy eating, physical activity, and body image.
  •           School sessions for physical activity throughout the school week.
  • Improvements in nutritional quality of the food supply in schools.
  • Environments and cultural practices that support children eating healthier foods and being active throughout each day.
  • Support for teachers and other staff to implement health promotion strategies and activities (e.g. professional development, capacity building activities).
  • Parent support and home activities that encourage children to be more active, eat more nutritious foods, and spend less time in screen-based activities.

Thursday, November 17, 2011

Profanity in Presentations

I use it too much in class, but almost not at all in public lectures. Here is an excellent discussion on the use in public speaking.

Sunday, November 06, 2011

Wednesday, November 02, 2011


Behavioral Econ gets a department in the UK government. A report on the group and the concept of nudge from BBC4.

Thursday, October 20, 2011

More on Dogs and Cats

Animals aren't cheap, but that is because we are rich and willing to spend on their health.
Dogs can cost between $310 and $7,100 to maintain every year and between $4,070 and $101,070 to maintain over a lifetime, says Kiplinger’s Personal Finance. That’s more than kibbles and bits.

Cats are cheaper on average: between $490 and $940 per year and between $7,760 and $15,260 per lifetime. The annual costs take into account many factors, including food, toys, monthly veterinarian visits, and other essential supplies

The first year of owning a cat or dog costs substantially more than the average annual cost. For dogs, the cost of ownership for year one averages between $710 and $8,730; for cats, the cost is between $930 and $2,060. The reason why this cost varies from the average annual cost is due to the purchase price of the pet itself. While both cats and dogs can be found for around $50, some breeds of dogs are sold for $1,000 while select breeds of cats are sold for $750. In addition to the purchase cost, there is also spaying and neutering ($190-$220 for dogs, $145 for cats) as well as an initial medical exam ($70 for dogs, $130 for cats) to account for.

Wednesday, October 19, 2011

Pets in LA

My colleague Russ Kashian's sister to a comedic riff on pets in LA. Yet another example of why our healthcare "crisis" is a disease of the rich. We will spend money on our own health, adn our pets health, becuase we are rich. That is the reason for growing expenditures, not insurance companies, not obesity, not medical malpractice, and not big pharma.

Friday, October 14, 2011

Race in America

Mississippi. Segregated Prom Dances. The year 2007. The fact that racial attitudes like those discussed in the movie still persist in this country today amazes me. If you are looking for an interesting web movie, here you go.

Tuesday, October 04, 2011


The ever intriguing Seth Roberts, describes why he thinks Psychiatry is doomed and anti-depressants barely work.
That is the situation of psychiatrists. I’m sure depression is due to the wrong environment. My work suggests we need to see faces in the morning for our mood-controlling system to work properly. Jon Cousins’ work suggests we need to believe others care about us. Those are two possibilities. Psychiatrists cannot fix the environment. The pieces of the environment we need to be healthy must have been abundant during the Stone Age. This means they must be cheap. Psychiatrists cannot supply things that are cheap and abundant. If that’s what they did, they couldn’t make a living. This means they can only supply something that is not what is missing. Like a repairman who cannot replace a broken part, they are stuck with second-rate solutions. This is the fundamental reason that all mainstream treatments for depression, whether talk or drug, have roughly the same effectiveness — and none of them work very well.
Hmm. Looks like I need to change my environment.

Saturday, October 01, 2011

Learning Styles

In a recent Higher Ed piece Robert J. Sternberg claimed that Learning Styles exist.
When I received my first test score – a 3 out of 10 -- in college introductory psychology, I realized that I had some hard slogging ahead, especially after the professor told me that "there is a famous Sternberg in psychology and it is obvious there won’t be another one." I eventually pulled a C in the course, which the professor referred to as a "gift." That professor was probably as surprised as I was when I earned an A in his upper-level course, and I certainly was grateful to him when, as chair of the search committee, he hired me back to my alma mater (Yale University) as an assistant professor, where I would remain as a professor for 30 years. My instructor probably wondered, as did I, how I could have done so poorly in the introductory course and so much better in the upper-level course.

There may have been multiple contributing causes to the difference in performance, but one was almost certainly a difference in the styles of learning and thinking that were rewarded in the two courses. The lower-level course was pretty much a straight, memorize-the-book kind of course, whereas the upper-level course was one that encouraged students to formulate their own research studies and to analyze the research studies of others.

Psychologists and educators differ as to whether they believe in the existence of different styles of learning and thinking. Harold Pashler and his colleagues have claimed that the evidence for their existence is weak, but a number of scholars, whose work is summarized in a 2006 book I wrote with Li-fang Zhang entitled The Nature of Intellectual Styles, and in a forthcoming edited Handbook of Intellectual Styles, have provided what we believe to be compelling evidence for the existence and importance of diverse styles of learning and thinking. I have often felt that anyone who has raised two or more children will be aware, at an experiential level, that children learn and think in different ways.
I think he is confused about learning styles versus skills. Or at least he isn’t articulating it as clearly as I would like. I still like Willingham's short video on this. 

Let me offer an analogy.

No one says we have metabolic styles. Some people have higher metabolisms, and others lower. Should one want to lose weight, it may be easier for some then others, as some may have better self-control over food intake, and other may have better ability to commit to an exercise regime. But we wouldn’t say they have different metabolic styles. The metabolic process is the same.

Learning styles confuse the issues. Yes people have different skills, some have better ability to write, others do math, and others have better memories. I never forget a face, but have lots of trouble remembering names. That’s a skill, but that doesn’t mean I’m a visual learner. The cognitive process is the same in everybody, even if it works better, or faster in some than others, and even if its performance varies by task. The process is the same.

Assessing their “learning” involves requiring them to use their skills and their cognitive process. But we often assess the skill more than the cognitive process that goes on. Much like the metabolic explanation, it would be akin to asking them to run for 30 minutes as a demonstration of the metabolic improvement. Some students are better runners than others, even though there is a correlation between running and metabolism - as in increasing running, should increase metabolism – their metabolic improvement would be poorly measured by the distance they run in 30 minutes.

Friday, September 30, 2011

Fat Tax

They have been discussed, but thus far seldom implemented. I'm talking about Fat Taxes. Although there are many proposed forms, from taxing high caloric foods to high fat foods, Denmark looks to be the first to tax foods with saturated fat. Denmark taxes fatty products - Telegraph
Starting from this Saturday, Danes will pay an extra 30p on each pack of butter, 8p on a pack of crisps, and an extra 13p on a pound of mince, as a result of the tax. The tax is expected to raise about 2.2bn Danish Krone (£140m), and cut consumption of saturated fat by close to 10pc, and butter consumption by 15pc. "It's the first ever fat-tax," said Mike Rayner, Director of Oxford University's Health Promotion Research Group, who has long campaigned for taxes on unhealthy foods. "It's very interesting. We haven't had any practical examples before. Now we will be able to see the effects for real." The tax will be levied at 2.5 per Kg of saturated fat and will be levied at the point of sale from wholesalers to retailers.
Apparently Hungary already has a version of the fat tax where they tax "unhealthy" levels of certain things.
Hungary at the start of this month imposed a tax is on all packaged foods containing unhealthy levels of sugar, salt, and carbohydrates, as well as products containing more than 20 milligrams of caffeine per 100 milliliters of the product.

Thursday, September 29, 2011

Seminar: Jeff Williamson

The economics department will sponsor its first seminar speaker of the 2011-12 season on Friday, October 7th. Jeff Williamson, Laird Bell Professor emeritus, Harvard University, and Professor of Economics, University of Wisconsin - Madison, will be here to discuss his latest book, "Trade and Poverty: When the Third World Fell Behind." We will meet in room 122 Wimberly Hall at 3:30 pm.

Wednesday, September 28, 2011


I have - on many occasions - commented on how philanthropy, or altruism can have negative consequences for the recipient. I'm not quite Ayn Randian on this, but I do think its important to understand that often the philanthropy is about making the philanthropist feel good, instead of making the recipients life better off. Here is a great example in a short TED talk on condoms in the Congo. Note the difference in marketing strategy between the for profit condom sellers and the NGOs. You know it can't be good for the Congolese when the NGOs are using the condoms to advertise to donors, rather than potential condom users.

Placebo Effect Video

Tuesday, September 27, 2011

Me Write Pretty One Day

Want to write better, or rather be a better writer? Just do it. A Lot. So says Seth.

Taxi Cartel

Here is a nice piece on the Milwaukee Taxi Cartel. Who is helped and who is hurt by the fact that no new taxi permits have been issued since 1992?
The city of Milwaukee capped the number of taxi permits at 321 way back in 1992, and consequently the price of a permit on the secondary market has risen to $150,000. That’s excellent news for people who made well-timed investments in Milwaukee taxis, but obviously it’s bad news for would-be taxi entrepreneurs who’d like to get into the market. Fewer permits means fewer jobs for cab drivers, and it means less access to taxis in the city. Dynamics of who uses taxis, what they cost, and where they’re available differ a lot from city to city and I’m not familiar with Milwaukee so I can’t say who in particular is disadvantaged by taxi scarcity but it’s not the sort of thing that helps a city’s quality of life or economy. Apparently the Institute of Justice, a libertarian law firm, thinks they have a chance of winning a legal argument that this is unconstitutional which I actually would find pretty surprising, but there’s no doubt that it’s bad policy. As I’ve noted before, when it comes to taxi cartels the proponents normally don’t even bother to make a public interest argument:

Monday, September 26, 2011


We don't need no stinking code of ethics! We are ethical. Well, maybe we aren't any more or less ethical than anyone else, but you know that a priori, and a "code" of ethics merely leads to the moral hazard problem. Here is an excellent break down.

Monday, September 19, 2011

Deficit and Stimulus

Here is a very useful graphic on the budget deficit and its history. And here is a useful collection of papers on the effectiveness of the previous stimulus.

Tuesday, September 06, 2011

How to Study

Welcome to the Fall 2011 semester. Want to know how to do a better job of studying this semester? Check out this quick series of videos from a cognitive psychologist.

Thursday, September 01, 2011

Reasoning in Economics

Here is a discussion about behavioral econ, psych, and inductive versus deductive reasoning. It is wonderful throughout.

Wednesday, August 31, 2011

Thursday, July 28, 2011

Lesson in Tax Incidence

Apparently FAA taxes are temporarily suspended since congress has failed to act on renewing them. And it appears airlines are charging rates as if they were still collecting the tax. Any student of economics will recognize this as an issue of tax incidence. The fact that the price to the consumer remains unchanged, suggests that the incidence of the tax fell entirely on the airlines (suppliers). Rather than being angry this is something to be happy about. It means that consumers weren't harmed by the FAA taxes in the first place, and it also means demand for flying is highly elastic. The quote at the end of the block below suggests this might be true:
Several aviation taxes expired after midnight Friday when Congress failed to reauthorize the Federal Aviation Administration, which collects the revenue. The suspended taxes could save passengers 10% to 15% on their ticket prices, but most U.S. carriers have boosted fares to the levels ticket prices would have been with the taxes still in place, allowing the airlines to take in roughly an extra $25 million a day, says Rick Seaney of

As of Tuesday, only Spirit and Alaska seemed to be bucking the trend, Seaney says.

Frequent fliers have noticed.

"While I respect any business' right to set prices as they see fit, this is another example of the airline 'gotcha game,'" says Steven Gordon, a sales manager who lives in Virginia Beach. "It is getting to the point that I feel better about buying a used car than an airline ticket."

Wednesday, July 20, 2011

Changing Memory

The internet is changing us:
A more telling experiment provided a stream of facts to participants, with half told to file them away in a number of "folders" on a computer, and half told that the facts would be erased.

When asked to remember the facts, those who knew the information would not be available later performed significantly better than those who filed the information away.

But those who expected the information would be available were remarkably good at remembering in which folder they had stored the information.

"This suggests that for the things we can find online, we tend keep it online as far as memory is concerned - we keep it externally stored," Dr Sparrow said.
So what? I think in the end it makes us better. Rather than remembering things, we merely have to remember where we put them, thus freeing up our minds to remember more. As the article points out:
I don't think Google is making us stupid - we're just changing the way that we're remembering things... If you can find stuff online even while you're walking down the street these days, then the skill to have, the thing to remember, is where to go to find the information. It's just like it would be with people - the skill to have is to remember who to go see about [particular topics]."
Now I just need to figure out how to remember those things I forgot, but don't remember that I forgot them. There are things we know, things we don't know, and things we don't know that we don't know.

Monday, July 18, 2011

Another DataViz Site


Conan O'Brien delivers an excellent graduation lecture at Dartmouth. The first 16 minutes are wonderful humor and fluff. At minute 16, he continues to be funny, but deeply introspective. 

HT to Presentation Zen, who list three must see graduation presentations. And don't forget Conan's other tasteful piece. The "People of Earth" letter to NBC.


Oh the narcissism. Maybe not everyone should make the baseball team?

Friday, July 15, 2011

Sex and Violence

Our relationship and defense of the first amendment is often peculiar. An excellent piece in the NYT discusses this quoting Justice Breyer.

But what sense does it make to forbid selling to a 13-year-old boy a magazine with an image of a nude woman, while protecting a sale to that 13-year-old of an interactive video game in which he actively but virtually binds and gags the woman, then tortures and kills her?
Maybe this is one of the reasons we have the one of the highest teen pregnancy rates in the developed world, along with one of the highest rates of violent crime.


Order matters. Whether it is the order on a ballot. The order of choices in a survey, or the order of options on a menu.
“Very small but cumulated decreases in food intake may be sufficient to have significant effects, even erasing obesity over a period of years” (Rozin et al., 2011). In two studies, one a lab study and the other a real-world study, we examine the effect of manipulating the position of different foods on a restaurant menu. Items placed at the beginning or the end of the list of their category options were up to twice as popular as when they were placed in the center of the list. Given this effect, placing healthier menu items at the top or bottom of item lists and less healthy ones in their center (e.g., sugared drinks vs. calorie-free drinks) should result in some increase in favor of healthier food choices. [Judgment and Decision Making, Vol. 6, No. 4, June 2011, pp. 333–342]
In the case of voting:

And so it is with voting. Candidates listed first on the ballot get about two percentage points more votes on average than they would have if they had been listed later (flipping a 49 to 51 defeat into a 51 to 49 victory). In fact, in about half the races I have studied, the advantage of first place is even bigger — certainly big enough to win some elections these days.

Order bias in surveys can stem from the order of the questions in the survey or the order of the answer choice within a question. For example early questions can prejudice the answers to later questions through a priming effect. In the context of categorical answers provided, if they are inherently unordered, their order might affect respondents choice over them.

Modern software allows you to randomize both if you anticipate a large problem.

There is also an order bias when it comes to evaluating people, be it for a job or a contest. I imagine this will be tested with American Idol data at some point. But it is better to be first or last, not in the middle.

Tuesday, July 12, 2011

The Incidence of Mandates

The general public has a sense of tax incidence. They know that sometimes they bear the cost of sales tax, or at other times you hear them say: "corporations just pass that on to consumers", when referring to the corporate tax. We know payroll taxes are generally born by the employee, not the employer. But many people do not understand the difference between legal and economic incidence. Lawmakers for example, seem to have issues with that.  Anyhow, here is a recent study that has an interesting conclusion:

A key issue surrounding employer benefit mandates is the incidence on workers through wages and employment. In this paper, we address this question using a pay-or-play policy implemented in San Francisco in 2008 that requires employers to either provide health benefits or contribute to a public option health plan. We estimate the impact on employment and earnings for the private sector overall, as well as for high impact sectors: retail and accommodation and food services. We develop a novel approach for individual case studies by combining both spatial discontinuity in policies and permutation-type inference using other MSAs. We find that, compared to control counties, employment and earnings patterns in San Francisco did not change appreciably following the policy. This was true for industries most affected by the mandate, as well as for overall private sector employment. The results are generally robust to inclusion of different control groups, county-specific time trends, and varying pre-periods. In contrast to the small effects on the labor market, we do find that about 25% of surveyed restaurants imposed customer surcharges, with the median surcharge being 4% of the bill. These results indicate that while little of the burden of the mandate fell on San Francisco workers, approximately half of the incidence of the mandate fell on consumers.


This is how they get started. I am now "the TJ".

Tuesday, June 28, 2011


On my recent drive back from Madison I was listening to a show entitled "Healthy Minds" as part of the "On Being" program from NPR. At that moment I really missed my co-pilot. I once knew a girl who would have loved to listen to that episode, and I would have loved to hear her opinion. The focus of the hour was on Richard Davidson, and in part his work teaching kindergarteners in Madison how to meditate. I know, sounds wacky. But if you think about it, much of our modern education concerns stuff we want students to know. Yet very little time - if any - is spent on how we might make it easier for students to know and learn the stuff we want them too. For example, I was recently sent this paper: Social-Psychological Interventions in Education:They’re Not Magic
Recent randomized experiments have found that seemingly “small” socialpsychological interventions in education—that is, brief exercises that target students’ thoughts, feelings, and beliefs in and about school—can lead to large gains in student achievement and sharply reduce achievement gaps even months and years later. These interventions do not teach students academic content but instead target students’ psychology, such as their beliefs that they have the potential to improve their intelligence or that they belong and are valued in school. When social-psychological interventions have lasting effects, it can seem surprising and even “magical,” leading people either to think of them as quick fixes to complicated problems or to consider them unworthy of serious consideration. The present article discourages both responses. It reviews the theoretical basis of several prominent social-psychological interventions and emphasizes that they have lasting effects because they target students’ subjective experiences in school, because they use persuasive yet stealthy methods for conveying psychological ideas, and because they tap into recursive processes present in educational environments. By understanding psychological interventions as powerful but context-dependent tools, educational researchers will be better equipped to take them to scale. This review concludes by discussing challenges to scaling psychological interventions and how these challenges may be overcome.
Some examples include having students who demonstrate test anxiety, write the fears on paper, before taking the exam. It has the effect of helping them reduce their anxiety - let it go - and improves their test scores dramatically. Richard Davidson also talked about how people can make themselves happy. The brain as it turns out has a great deal of plasticity. And it is within our capacity to alter it.

Thursday, June 16, 2011

Dan Ariely and Qualtrics

An interesting interview with Dan Ariely in part about his use of surveys. Particularly interesting for students in Behavioral Econ and BUS 230. From the interview:


What people do is not what they say. In general, most of our findings suggest that we should not think very highly of focus groups.

I suspect that many market research companies use focus groups because they want a statement to put in a PowerPoint presentation for a client. But the problem is that what people say doesn’t always reflect what they think or, even more important, the reasons for their actions.


You can ask people what they have done, or what they think they will do in the future. They can answer those questions. But, the moment you get into reasons, into why, interpreting their answers as correct becomes much more tricky.

It is also important to ask about categories that are ones which people can accurately quantify. The more concrete your response scale is, the more likely people are to answer your questions in an informative way.


Take the question, “How often have you done X?”

If you create a scale from “very rarely” to “very frequently”, that’s not as useful as offering, “2 times last week” or “3 times last week”.

The more concrete you get, the more people feel inclined to answer accurately and honestly.


Often people use a 5-point response scale, but we find most people have an aversion to the extremes. This means that when we use a 5-point scale, effectively we are using a 3-point scale. That makes our sensitivity of our measurement less useful.

I would encourage researchers to think whether people will have that extreme aversion, and if that is the case, to have more levels. A continuous scale with just 2 anchors in the extremes in such cases is ideal.

Wednesday, May 18, 2011

Embracing Change

Sometimes you make a conscious choice to change, but at other times it is another's choice that forces you to make change. Still other times, it is the state of nature that deals you a blow requiring change. The past couple of years have involved all the above types of changes. I think it is time for me to embrace the changes, and make a few of my own.

The first change is I will no longer be mowing my own lawn. Small steps towards a better life.

Thursday, April 14, 2011


I'm not married, but I probably should be if I am to suppress the anti-social behavior we academics seem to susceptible to. According to this twin study:

Conclusions: Results indicate an initial selection effect, whereby men with lower levels of antisocial behavior are more likely to marry. However, this tendency to refrain from antisocial behavior appears to be accentuated by the state of marriage.
I'm probably not married because I'm anti-social, I should get married to keep it from getting worse.

Tuesday, April 12, 2011


Here are three good links on the change in income inequality in the US.

1. Tyler Cowen

The broader change in income distribution, the one occurring beneath the very top earners, can be deconstructed in a manner that makes nearly all of it look harmless. For instance, there is usually greater inequality of income among both older people and the more highly educated, if only because there is more time and more room for fortunes to vary. Since America is becoming both older and more highly educated, our measured income inequality will increase pretty much by demographic fiat. Economist Thomas Lemieux at the University of British Columbia estimates that these demographic effects explain three-quarters of the observed rise in income inequality for men, and even more for women.2

Attacking the problem from a different angle, other economists are challenging whether there is much growth in inequality at all below the super-rich. For instance, real incomes are measured using a common price index, yet poorer people are more likely to shop at discount outlets like Wal-Mart, which have seen big price drops over the past twenty years.3 Once we take this behavior into account, it is unclear whether the real income gaps between the poor and middle class have been widening much at all. Robert J. Gordon, an economist from Northwestern University who is hardly known as a right-wing apologist, wrote in a recent paper that “there was no increase of inequality after 1993 in the bottom 99 percent of the population”, and that whatever overall change there was “can be entirely explained by the behavior of income in the top 1 percent.”

2. Terry Fitzgerald

The claim that the standard of living of middle Americans has stagnated over the past generation is common. An accompanying assertion is that virtually all income growth over the past three decades bypassed middle America and accrued almost entirely to the rich.

The findings reported here—and summarized in Chart 8—refute those claims. Careful analysis shows that the incomes of most types of middle American households have increased substantially over the past three decades. These results are consistent with recent research showing that the largest income increases occurred at the top end of the income distribution. But the outsized gains of the rich do not mean that middle America stagnated.

3. Joe Stiglitz. For a different perspective.

Monday, April 11, 2011

Staying Young

Looking younger helps:

Environmental cues that signal aging may directly and indirectly prime diminished capacity. Similarly, the absence of these cues may prime improved health. The authors investigated the effects of age cues on health and longevity in five very different settings. The findings include the following: First, women who think they look younger after having their hair colored/cut show a decrease in blood pressure and appear younger in photographs (in which their hair is cropped out) to independent raters. Second, clothing is an age-related cue. Uniforms eliminate these age-related cues: Those who wear work uniforms have lower morbidity than do those who earn the same amount of money and do not wear work uniforms. Third, baldness cues old age. Men who bald prematurely see an older self and therefore age faster: Prematurely bald men have an excess risk of getting prostate cancer and coronary heart disease than do men who do not prematurely bald. Fourth, women who bear children later in life are surrounded by younger age-related cues: Older mothers have a longer life expectancy than do women who bear children earlier in life. Last, large spousal age differences result in age-incongruent cues: Younger spouses live shorter lives and older spouses live longer lives than do controls.

From my favorite blogger/tweeter.


Faculty salaries increased on average throughout the country. Time to look for a new state to work in. According to the NYT:
This year’s results are just slightly higher than last year’s increase of 1.2 percent, which was the smallest rise reported in the survey’s 50 years.

On average, full professors at doctoral universities earned $127,296 for the current academic year, and assistant professors $72,893.

But the report found a widening pay gap between public universities, where full professors averaged $118,054 and assistant professors $69,777, and private institutions, where full professors’ average salary was $157,282 and assistant professors’ $86,189.
My favorite part is the difference between "Public" sector and "Private" sector salaries.

Tuesday, March 22, 2011

Stimulus and Medicaid

States rush to settle Medicaid bills
The federal stimulus law and a later extension provided states an extra $80 billion in 2009 and 2010 for Medicaid, the nation's health care program for the poor. This was done by reducing the state's share of the program from a national average of 40% to 28%.

This bargain rate declines slightly April 1 and expires completely July 1. That means the average state responsibility on a $1,000 Medicaid bill will rise from $280 today to $400 July 1 — a 43% increase.

The bonus federal matching rate depends on when the bill is paid, not when the service is provided or the bill is received. Because states run the $400 billion a year program — while the federal government reimburses them — states can time payments to maximize the federal share.

Thursday, March 17, 2011


Looks like I need to find an asian woman to date. Anthropometry of Love: Height and Gender Asymmetries in Interethnic Marriages.
Both in the UK and in the US, we observe puzzling gender asymmetries in the propensity to outmarry: Black men are substantially more likely to have white spouses than Black women, but the opposite is true for Chinese: Chinese men are half less likely to be married to a White person than Chinese women. We argue that differences in height distributions, combined with a simple preference for a taller husband, can explain a large proportion of these ethnic-spefi…c gender asymmetries. Blacks are taller than Asians, and we argue that this signifi…cantly affects their marriage prospects with whites. We provide empirical support for this hypothesis using data from the Health Survey for England and the Millenium Cohort Study, which contains valuable and unique information on heights of married couples.

Elder Porn

The Japanese are well known for their unusual taste in porn. The latest is apparently referred to as 'elder porn'. Shigeo Tokuda is apparently a star of the genre.

Some Health Links.

1. One Third of Staten Island Is On Pain Pills.

2. Health Care Tidbits from Arnold Kling.

3. Half of German doctors prescribe placebos.

4. Better mortality estimates from Gary King.


$180 for something I previously got for free? I think I'll probably be reading a lot less New York Times.

Tuesday, March 08, 2011

Public vs. Private Sector Pay

I thought I would wrap up a bunch of the blog posts on public sector versus private sector pay, and union versus non-union. First, in this debate I've come to realize people's prior beliefs are strong, even if uniformed. Showing them data merely results in what has been called the confirmatory bias. They pick out the parts that validate their position and discount the data which does not. There have been many posts and op-eds but let me point you to a few. Adam Ozimek had a useful post which point to the related empirical work:
He linked to three reports (here, here, and here) that show that public sector wages are no higher than, and often lower than private sector wages.

A final point I’d like to make is that a wage premium is not equal to public sector union power. A powerful union may use all of it’s bargaining power to negotiate for absolute job security, which could then select for a different set of workers with lower unobservable skills. In this case you would observe wages equal to or even below private sector wages despite a clearly powerful union. Some would argue this is exactly what teachers unions do.
Part of the discussion of public versus private is also a union versus non-union argument. I think Adam does a good job of discussing it. I would suggest that he should include an interaction term as well (ie union*public) as well.  That said I think the evidence is that there is a wage premium for lower educated union public workers. There is a negative premium for higher educated non union public workers (ie university professors).

On the issues of the relationship between public sectors unionization and spending, taxing and state deficits, John Sides of the monkey cage has produced a bunch of nice bivariate correlations. (here, and a lot more here, and a final roundup here). He notes here, that a single comparison of two points is misleading, but multiple comparison of all combinations of two points is just a regression! Of course, like any regression it is still subjected to an omitted variables bias.

The current state budget shortfalls probably have far more to do with the housing market, than public sector unions. As this graph suggests.

Here is the macroeconomic case against unions.

Useful Comments from Richard Freeman on Labor Unions with this jewel here:
If you had the ear of Wisconsin Governor Scott Walker, who is pushing a bill to strip public sector unions of their bargaining power through the state legislature, what would you say?

I would say: consider what happened to John Howard, former Prime Minister of Australia. When he gained control of both houses of parliament, he did what the governor of Wisconsin seems to want to do: he forced through the legislature (in which his party had a small majority) a policy to radically restrict union activity, with the goal of basically de-legitimising that institution in society. John Howard was thrown out of office in the next election; he even lost his own seat. If you push to undo an institution that is part of the fabric of society, one that many people believe should be available to workers who want it (whether or not they themselves want to be part of it), you might find yourself pushed aside.

Removing collective bargaining from the public sector and lodging all power with employers will not solve the economic problems of U.S. states and cities. It will just remove one mechanism for bringing workers and management in the public sector together to deal with the fiscal problem that neither of them caused.

Here is a good comment from inside higher ed.

Here are my earlier comments. (here and here).

Monday, March 07, 2011

Innovation in Recessions

Starbucks claims to have had several.
Q: Was the decline due to the recession, or was it Starbucks failing to gauge consumers?

A: There was a dramatic change in consumer behavior. On a parallel track, Starbucks has to assume responsibility for decisions that were made. There were self-induced mistakes. But the last quarter (first fiscal quarter of 2011) was the best quarter in our 40-year history. When our back was against the wall, we were able to do our best work.

Q: In the depths of the recession, was there a moment you thought the Starbucks empire could implode?

A: I don't want to seem arrogant, but I always believed that Starbucks would be able to weather the storm. We certainly had challenging moments. But there was not one single moment when I thought we couldn't overcome the challenges. I have a book coming out at the end of March about the last two years of our transformation, Onward: How Starbucks Fought for Its Life without Losing Its Soul.

Teen Sex

It appears to have declined slightly. The full report has lots of interesting details on sexual behavior by gender and age group. And this article discusses in part why these facts are counter to popular belief.

Sunday, March 06, 2011

Dating the Recession

I was asked by the local newspaper to comment on the recession. Has the recovery begun locally? The article is here, and my thoughts are here.

Friday, March 04, 2011

Sex Toys and Class

To think I once had a colleague who objected to my study of pornography. She was concerned a student would walk into my office and see porn. This despite the fact that all of my research is based on a dataset, and does not involve actually looking at porn. The comical thing about her objection was that at the time, some faculty on campus would show ACTUAL porn in class.

Now we have this from Northwestern:
Northwestern Uni defends sex-toy demonstration.

EVANSTON, Ill. (AP) — A Northwestern University professor concluded a discussion of bondage and other sexual fetishes in his human sexuality class by having a woman take off all her clothes, climb on stage and graphically demonstrate the use of a sex toy, the school has acknowledged.

The demonstration took place Feb. 21 at the conclusion of psychology professor John Michael Bailey's class on human sexuality. According to guest lecturer Ken Melvoin-Berg, after the students were told that a couple would take part in a demonstration involving a sex toy, the students were warned about a half dozen times that "what was about to happen would be graphic."

With that, Jim Marcus and his fiancee Faith Kroll climbed on the stage in front of about 100 students and demonstrated the use of the motorized device with a phallic object attached to it, as students heard about issues such as safety and consent, Melvin-Berg said.

However this has to be my favorite quote:
"It is probably something I will remember the rest of my life," said senior Justin Smith, 21, one of the students who stuck around voluntarily after class when students were told about what they were about to see.

"I can't say that about my Econ 202 class and the material that I learned there," Smith told The Chicago Tribune.

Thursday, March 03, 2011

Gold Bugs

A gold standard. Thats what Ron Paul wants. And thats why he is a nutter. A writer tries to explain the depths of Ron Paul's question to Bernanke.
Bernanke says: My definition of the dollar is what it can buy. Consumers don't want to buy gold; they want to buy food, and gasoline, and clothes and all the other things that are in the consumer basket. It is the buying power of the dollar in terms of those goods and services that is what is important, and that's what I call price stability.

The writer says: Compare that to a gold standard. Let's say at the beginning of the year, the price of gold is $1,000 per ounce. That's the same as saying that a dollar is worth one one-thousandth (1/1000) of an ounce of gold. At year's end, you can still buy the same amount of gold with your dollar, unless the definition has been changed by policymakers. It is possible, however, that you may be able to buy additional or fewer goods and services with that dollar, depending on how other factors in the economy have changed.

So Bernanke's definition of a dollar is constantly moving, while Paul's would be static. Which framework is better is a far more complicated and controversial question. We'll leave that for another time, but both methodologies have pros and cons.

That dude is either intentionally misleading people or is an idiot. Just because the state says 1 dollar is worth 1/1000 an oz does not make it true, nor does it make it fixed (other than in some nominal meaningless way). For proof look at every fixed exchange rate ever...just because the govt declared their currency to equal something, doesn't mean the market agrees. A gold standard is no different. Its just a fixed exchange rate, that may equal the market rate (ie the relative supplies) or it may not.

The fundamental difference between a gold standard and a fiat standard is who controls the supply of money. In a fiat world, the Fed does. In a gold standard, miners do. Who do think is better suited to run our economic lives?

Tuesday, March 01, 2011

Premarital Sex

It looks like a couple of sociologists are imitating economists with their book Premarital Sex in America: How Young Americans Meet, Mate, and Think about Marrying. The New Republic reviewer has the traditional complaints seen from non-economists.
Mark Regnerus and Jeremy Uecker, sociologists both, rely heavily on this theory to explain the sex lives of young adults today. The rise of “the hookup culture” at colleges, they argue, can be attributed in part to the increasing scarcity of men on campus—an oversupply of sellers works to a buyer’s advantage. Sexual economics also suggests that many women look unkindly on promiscuous members of the same sex out of the same impulse that makes retailers angry when Wal-Mart comes to town: they are being undersold, and now they have to give discounts or lose customers.

Regnerus and Uecker are either indifferent or tin-eared about how distasteful this idea is:
Sex might cost little or nothing—a few drinks or some attention and compliments, or simply a promise to be discreet about the liaison. Typically it’s more expensive than that, such as a perceived commitment to being in an exclusive relationship for a while. The highest price a man can pay is a lifetime promise to share all his wealth, income, and affections with a woman exclusively.
Equating an intimate act to a business transaction is not only crass and reductive; it is also analytically misleading. The analogy to commerce implies an adversarial situation wherein the buyer always wants to pay the minimum and the seller wants to get the maximum. But men often find themselves bestowing attention, falling in love, and getting married after they have already been sleeping with the woman in question. Sexual economics has trouble accounting for that. Men willingly overspend, which describes approximately no one who buys a car. Similarly, the pay-for-play hypothesis fails to capture the fact that most women do not want to extract caring and love from a person disinclined to offer it, and they do not see sex as something they wish they could avoid until marriage.
The author fails to understand supply and demand in this context as a matching model. He also has apparently never heard of signaling

Monday, February 28, 2011


In what is sure to be supreme irony. My op-ed on changing the nature of the debate was cut from about 750 to around 500 words. Given that one of my main points was that we do not take time to make the complicated arguments, I think I've proved my point. As for how we change the nature of the debate? I'm at a loss. I guess we as consumers of information have to change our demands. Here is the full op-ed with links.
Changing the Nature of the Debate. 2/21/11 Taggert J. Brooks, PhD

I have to admit the last week has been quite an emotional roller coaster for me. As a state employee who will be receiving a large pay cut, my morale is low. As someone who is teaching health economics I can hardly think of a more salient example of the struggles we face with rising health care expenditures. But as an economist I’ve been infuriated by the level of debate. I’ve spent too much of my time trying to raise the level of discussion on both sides in the comments section of this newspaper, or the Facebook walls of my friends and former students.

We need to change the nature of the debate.

In December Congress moved to extend unemployment insurance benefits to another group of recipients to an unprecedented 99 months . Republicans claimed that this would only delay recipient’s job search and inflate an already high unemployment rate . Republicans were right. Unemployment Insurance (UI) artificially reduces the incentives to find work by increasing the cost of taking up employment. Larry Katz finds a one week extension typically increases unemployment duration by 0.2 weeks. This is supported by ample economic research. But Democrats cried foul. They argued that failure to extend benefits would throw thousands off UI resulting in painful decreases in their family’s income, and it would cause the ensuing macroeconomic consequences associated with falling consumption . Democrats were right too, and there is plenty of research to back their argument. Why the seemingly contradictory conclusions? The reason is unemployment insurance is a blunt policy tool.

But the debate shouldn’t be about extending or not extending UI. The debate should be about how we sharpen the blunt tool, about how we get the good things out of UI without creating the bad things? Sadly we seem far from that type of discussion. Maybe because it would never fit on a bumper sticker.

Wisconsin’s current troubles provide us with other examples of how we need to change the nature of the debate. Unions are complicated entities – and much like UI - they do both good things and bad things. Looking specifically at the K-12 teachers union, since they appear to be Governor Walker’s primary target, we hear about their resistance to change and their protection of bad teachers. Unions are blunt instruments. They are designed to protect worker’s rights, but in so doing they often protect bad behavior and bad workers. The debate should be about how we reduce the bad things that they do, and improve the good things they do. How do we sharpen the tool? The Governor’s actions have circumvented that conversation.

One of Governor Walker’s examples for wanting to eliminate collective bargaining comes from the Milwaukee Teachers' Education Association (MTEA). He decries the union’s attempt to reinstate Viagra coverage with their health insurance . The implication is that the union is defending a bunch recreational drug users. I’m quite sure there is some of that, but I’m also sure there are prostate cancer survivors in that same mix. I think we can all agree their desire to have intimate relations with their spouses is a legitimate health issue. But we can’t blame the union entirely for the bluntness of their defense, we should also blame the insurance company. Why can’t they cover the medicine for the cases we all think are legitimate, and not cover it for the cases some of us might find frivolous? We need to sharpen our tools, the debate should be about how we do that, not about avoiding the conversation. We should not abandon our teachers nor our prostate cancer survivors.

Our current health care system guarantees this will continue to be a problem. But we need to end the winner take all mentality. There is a third way. Honest discussion, debate and a willingness to wrestle with complicated ideas, that can’t be reduced to sound bites. It will take leadership on both sides. But more than that, politicians will have to become educators, because the problem really is us. We want our cake and want to eat it too. Edmund Burke had it right. Politicians should not be mere puppets for the majority of their constituents; they should be advocates for the public trust. Otherwise we are doomed to painfully oscillate between extreme world views.

Sunday, February 27, 2011

Teacher Compensation

Teacher compensation data is here. Here are two plots of total average compensation (salary plus fringe) for the top 40 school districts and the bottom 40, of the 425 districts. Its important to remember that this is not starting salary, but includes all teachers, even those with 30 years of experience.

Thursday, February 24, 2011

Race and Voting

Here is a discussion of a fascinating and uncomfortable conversation we might have.
Section 5 of the Voting Rights Act is, indisputably, an unusual piece of legislation. It does not apply, as the rest of the law does, to the whole country. Rather, it requires nine southern states and parts of another (40 of North Carolina’s 100 counties) to submit any change in voting procedure, from redistricting an entire state to moving a single polling place from one location to another, for “preclearance” by the Department of Justice or a three-judge federal court in Washington.

But is it constitutional? Maybe not.

Wednesday, February 23, 2011


The Problem with Twin Studies.

And here is Richard A.:

The Body-Mass Index of Twins Who Have Been Reared Apart

We conclude that genetic influences on body-mass index are substantial, whereas the childhood environment has little or no influence. These findings corroborate and extend the results of earlier studies of twins and adoptees. (N Engl J Med 1990; 322:1483–7.)

IOWs, the reason why white kids of today are much fatter than white kids of the 50s and 60s is due to genetic influences and environment has little or no influence

This shows that the twin studies are flawed.

Because genetic changes are far less than can explain the changes in weight.

But remember that the changes in weight are a result of small changes in behavior 10 lbs of steady state weight comes from just 150 calories extra per day. Thats 10 minutes walking. 3 oreos, one coke? Seems small too, and maybe a small drift on a single gene can achieve that end?

For the average american male every 1 point of BMI is about 3.2 kg, or about 7 pounds. Since 1970 we have probably added about 3 points to our average BMI, but maybe less for the median. So we are trying to explain 21 lbs.

Changing Behavior

I think I've mentioned that recessions as deep and long as the one we experienced can have lasting effects on behavior. These changes might very well be temporary, but some might be more permanent for this age cohort. From the NYT on Walmart:

Company executives and analysts said consumers seemed to have changed their ways during the recession, and that has persisted into the sluggish recovery. New shopping habits, like using less credit, relying more on month-to-month cash and buying in smaller packages, have hampered Wal-Mart’s ability to climb out of the sales slump.
In the fourth quarter of 2010, the problems stemmed from several areas. Toy sales were down in American stores, though Wal-Mart had aggressively promoted prices and added back toys to its aisles. Apparel continued to be a problem.

And in consumables — basics like toilet paper and soap — Wal-Mart said its prices and sizes were a problem for shoppers who continued to be on tight budgets.
“It’s not a case that we’re not correctly priced,” Mr. Holley said. For example, he said Wal-Mart’s price-per-ounce for laundry detergent was usually lower than competitors’, but competitors like dollar stores often sold smaller bottles or boxes that were cheaper.

“Some of our customers at the end of the month may have only a fixed amount left,” he said, “and even if it’s more per ounce, if the price point is more attractive at a competitor, at the end of the month that’s all they can spend.”
It seems to be a liquidity/financing problem for their customers.

Tuesday, February 22, 2011

The Enemy

The enemy is US.

Those Darn Polls

Rasmussen Reports released a new poll the other day, which found:
A new Rasmussen Reports national telephone survey finds that 48% of Likely U.S. Voters agree more with the Republican governor in his dispute with union workers. Thirty-eight percent (38%) agree more with the unionized public employees, while 14% are undecided.
The wording can be found here.

1* How closely have you followed news reports about the Wisconsin governor’s effort to limit collective bargaining rights for most state employees?

2* Does the average public employee in your state earn more than the average private sector worker in your state, less than the average private sector worker in your state or do they earn about the same amount?

3* Should teachers, firemen and policemen be allowed to go on strike?

4* In the dispute between the governor and the union workers, do you agree more with the governor or the union for teachers and other state employees?

5* Would you favor or oppose reducing your state government payroll 1% a year for 10 years, either by reducing the number of state employees or by cutting the pay of state workers?
As Nate Silver points out that it probably suffers from and order bias due to the question framing in prior questions.
The issue is clearest with the third question, which asked respondents whether “teachers, firemen and policemen” should be allowed to go on strike. By invoking the prospect of such strikes, which are illegal in many places (especially for the uniformed services) and which many people quite naturally object to, the poll could potentially engender a less sympathetic reaction toward the protesters in Wisconsin. It is widely recognized in the scholarship on the subject, and I have noted before, that earlier questions in a survey can bias the response to later ones by framing an issue in a particular way and by casting one side of the argument in a less favorable light.

The Rasmussen example is more blatant than most. While many teachers have been among the protesters at the State Capitol in Madison, obliging the city to close its schools for days, there have been no reports of reductions in police or fire services, and in fact, uniformed services are specifically exempted from the proposals that the teachers and other public-sector employees are protesting. So bringing in the uniformed services essentially makes No. 3 a talking point posed as a question.

As an analogy, imagine a survey that asked respondents whether they believed the Democrats’ health care overhaul included “death panels” before asking them whether they approved or disapproved of the bill over all.

Randomizing the order of questions can address this issue, or working harder to ask questions which use language free from this type of bias.The AFL-CIO had their own poll here.

Free Market Health

Please, please, can't we have sensible policy when it comes to compensating donors? People are dying.

MPS Teachers Have Tons of Sex

I'm sure you've heard this bandied about by the Walker camp:
Example #2 Viagra for Teachers
The Milwaukee Teachers' Education Association (MTEA) tried to use a policy established by collective bargaining to obtain health insurance coverage that specifically paid for Viagra. Cost to taxpayers is $786,000 a year.
Its astonishing. I didn't realize sex was a "lifestyle". Only Republicans would view that as an inessential part of life. Anyhow. Lets leave aside the argument about whether sexual health is a health issue or a lifestyle.

The health insurer claims it will save $786,000 dollars per year if its approximately 1,000 enrollees can no longer get Viagra. By my estimate, thats approximately 786 dollars in viagra a year, or about 7 bottles of 6 100mg pills. Now I'm not sure - but I've heard - you can break those into 50mg pills and do quite well.

So that means the average enrollee is getting 84 doses. Assuming they can never have sex without a help from their little blue friend that means they are having sex 84 times a year.

A majority of Americans married, partnered, single, any age have sex less than weekly. So we either have some fishy numbers, some hypersexual teachers (and their covered partners), or they are selling/providing them to friends.

Demanding Viagra is not the problem, having a system that allows you to get more than you could plausibly use is a problem. But the problem isn't directly with the teachers union, it with the incentives of the insurer. It needs to curb demand another way.

Monday, February 21, 2011

Wisconsin 2010-2011 General Fund Appropriations

This is data from Table 10 from Act 28.

This link which takes you to the "Many Eyes" website in order to have a bit more room to play around with it.

Sunday, February 20, 2011

Unions and ACT/SAT Scores

I saw this "fact" posted on FB:
Only 5 states don’t have collective bargaining for educators. Their ACT/SAT rankings: SC-50th/NC-49th/GA-48th/TX-47th/VA-44th.
I wanted to investigate, so I tried to dig into the data (SAT here, ACT here) but noticed instantly that Wisconsin ranks highly for the SAT, but has only 6% participation. That is suspiciously low to infer too much from.

Then I ran into this post. I thought I would share my comment here along with the paper I found.

Its a difficult thing to determine from simple descriptive stats. States with low participation in a particular test are likely to suffer from a selection bias. In Wisconsin you take the SAT if you are planning to go out of state. You go out of state if you are smarter, richer, etc. Which is why our SAT scores are high. You need to combine ACT, and SAT (through some conversion) then adjust the state's data for race, income, education, and percent going to college, along with union penetration. That will give you a better handle on the union’s effect. Unions definitely have very bad aspects too them, but they also have good aspects to them as well. The question is in part about the net effects. I would think their ability to get higher pay for union members, and better benefits relative to the non-union setting results in them attracting better teachers (on average) and results in greater stability. Again, we all know situations where this does not work well, but on average it might make for better teachers. That's not to say you couldn’t create the same environment without unions. Or to say you couldn't work with the unions to minimize their negative effects. When I graduated from Madison I knew people with teaching degrees who went to Texas, because of the lower standards and the ease of getting a teaching job there. The good ones eventually moved back to Wisconsin, and the bad ones left teaching. Wisconsin skims the cream as it were. It lets Texas do the work of separating the good from the bad teachers. Texas students lose, Wisconsin students win.

This paper looks like it might do a better job of identifying these issues:
Title: Do Teacher Unions Hinder Educational Performance? Lessons Learned from State SAT and ACT Scores.
Authors: Steelman, Lala Carr; Powell, Brian; Carini, Robert M.
From a quick read I think it does a reasonable job addressing the issues I highlighted above. Their conclusion, with a very thoughtful discussion of its implications is below:

They find a significant and positive relationship: that is, the presence of teacher unions appears to be linked to stronger state performance on these exams. These findings challenge the position that teacher unions depress student academic performance, and in so doing invite further empirical scholarship on this topic from a range of academic disciplines.

Our finding that teacher unions are positively linked to state average SAT and ACT scores prompts the question of why. Clearly, our study challenges the "rent-seeking" view outlined earlier, which envisions teacher unions at odds with what parents desire from schooling, namely, the educational advancement of their children. The zero-sum orientation that permeates much research on unions and assumes that worker gains inevitably result in production losses appears misguided, at least with respect to teacher unions. Still, our data cannot distinguish among the previously outlined explanations for the positive relationship between unions and state-level SAT and ACT scores. However, in supplementary analyses (available from the authors), we were able to test one possibility: that teacher unions are positively related to lower average class size (i.e., student-teacher ratios), higher per ca¬pita expenditures on education (adjusting for interstate variation in the cost of living), and higher salary (also adjusting for cost of living) . Although these variables are linked to state SAT and ACT scores, their inclusion in our models did not significantly reduce the effect of teacher unionization. Other mechanism (s) (i.e., better working conditions; greater worker autonomy, security, and dignity; improved administration; better training of teachers; greater levels of faculty professionalism) must be at work here. Future scholarship should be directed at unraveling why teacher unions appear to favor¬ably influence academic outcomes.

Finally, this study cannot tell us if there is an overall net benefit of teacher unions, at least with respect to cost effectiveness. Because we examined the link between teacher unions and productivity but not costs, we cannot gauge whether the higher test scores are enough to offset the purportedly higher costs of unionization. Whether there is a net benefit of teacher unions hinges not only on the impact of teacher unions on economic (and non¬economic) costs, but also on the specific costs deemed acceptable (by the public, policymakers, or academe) for a unit increase in educational productivity — an assessment for which consensus may be difficult to reach. Moreover, even if, through some mechanism, unionization raises test scores, teacher unions may be a relatively inefficient vehicle of educational reform: for example, states might raise scores more with an identical investment in school infrastructure, additional teacher training, or special programs.


Ed Glaeser talks about his new book Triumph of the City. He makes a few important points. Actually many, but two i want to focus on. Living in cities now improves life expectancy rather than making it worse. And he also makes a point about how technology such as facebook makes living closer together ever more valuable. It is a paradox I've mentioned before. But its also why we will not see the end of Universities as we know them. All the new technology is still just a complement to face to face learning and sharing, not a substitute for it.

Wisconsin's Budget Problems

This is going to be a long post, but I've been asked by a fair number of former students and friends, from both sides of the political aisle to comment on what is happening in Wisconsin.

First, lets look at the budget problem. The State of Wisconsin has had a structural deficit since days of  Tommy Thompson (current issues here). They are largely the result of large increases to K-12 spending, tougher sentencing laws (map here), and tax cuts in early 2000. To be sure, there are other factors (such as rising healthcare expenditures) contributing to our current problems. But those three changes were the genesis.While they did occur under a Republican Governor, every Governor since has kicked the can down the road. And now the healthcare expenditures are starting to bite as well. Doyle was the most creative in using temporary tricks and one time money to close the gap. Even raiding a fund we will have to pay back. Andrew Reschovsky discusses efficient tax policy and proposes some tax altering policies which might be used to close the gap. If you are interested in understanding why Wisconsin taxes are higher than other states, read this excellent piece by Todd Berry and Dale Knapp. Higher taxes are in part to fund higher spending, and in part due to less efficient taxing. The reasons for the higher spending are clearly outlined, in the piece but include paving roads no one else paves, K-12 benefits packages, and subsidizing higher education tuition. (although this last one has obviously declined substantially recently).

Looking more specifically at the current budget repair bill. It appeared it was only made necessary by the tax expenditures (yes that is spending too) that happened at the end of January. Read Bob Lang's Legislative Fiscal Bureau's (LFB) Jan 31st report.
Our analysis indicates that for the three-year period, aggregate, general fund tax collections will be $202.8 million lower than those reflected in the November/December reports.  More than half of the lower estimate ($117.2 million) is due to the impact of Special Session Senate Bill 2 (health savings accounts), Assembly Bill 3 (tax deductions/credits for relocated businesses), and Assembly Bill 7 (tax exclusion for new employees). 
Tax expenditures are bad public policy and bad tax policy. However, closer inspection reveals that in fact the tax expenditures affect the 11-13 budget only.  Interestingly the tax expenditures add  up to about 140 million, which is 50% of the projected 11-13 savings from higher health and pension contributions from state employees. Money is fungible, but passing tax spending, then three weeks later screaming about rising deficits, strikes me as a little intellectually dishonest, or at least inconsistent. 

On the question of public sector compensation. Yes, my non-wage benefits and the non-wage benefits of all state employees are very good. And they will still be very good even after the proposed concessions. But when making comparisons you can't merely look at non-wage benefits without considering the wage side as well. Total compensation is the economically relevant concept. As this Heritage document explains, it is about the incidence.
Incidence of labor Taxes. The relatively elastic demand for labor, coupled with the assumption of a highly inelastic supply of labor, means that labor bears most of the initial economic incidence of taxes on labor income. It has become common to assert that all taxes on labor income fall on the worker, including the employer's share of the payroll tax, the employers; share of the payroll tax, the unemployment compensation tax, and the portion of the income tax that falls on wages and salaries.
In other words, labor bears the burden of income taxes, and both sides of the payroll tax, along with any benefits. So we should compare total compensation, and not look merely at pieces of the compensation pie. It is akin to watching someone try to lose weight. What matters is total calories consumed. If you merely look at the breakfast someone has consumed you might be led to the wrong conclusion. They might have a large breakfast, but a far smaller lunch and dinner. There are other reasons simply comparing benefits is problematic, and challenging. The Minneapolis Fed talks about the case of pensions here. And by the way, Wisconsin pensions are not underfunded like Minnesota's.

One of the challenges in the discussion is that talking about public versus private sector includes large swaths of very different people, different jobs, different skills, different education. So saying things like "public sector workers are over paid", are useless statements, just like saying public workers are underpaid is useless. That is true for some and not true for others. Relative to what? This EPI paper does a good job of addressing the case for Wisconsin. It uses a wage equation to adjust our salaries for inputs such as age, education and experience, etc. It also correctly adjusts our salaries for the fact that public employees work fewer hours (on average), but it is missing some things, like the fact that our jobs are generally more secure. Given that public employees generally have increased job security (although that doesn't look to be the case in the next budget) one would expect a lower salary. The conclusion of the paper:
On an annual basis, full-time state and local employees and school employees are under-compensated by 8.2% in Wisconsin, in comparison to otherwise similar private-sector workers. When comparisons are made for differences in annual hours worked, the gap remains, albeit at a smaller percentage of 4.8%.
Furthermore, average annual total compensation for a full-time worker without a high school education is 14% greater in state and local government ($36,935) than in the private sector ($32,415). High school graduates approach earnings and compensation equivalency between the private and public sector.
So, some workers appear to be overpaid, based on the wage equations and some underpaid. On average, we are underpaid. But as I said, we probably should be a little underpaid.

A former student sends me this cato paper which talks about public sector unions and the rising cost of employee compensation. I don't have time to dig in to the national trends on unions and public sector employment now, but I will comment on unions below. I did want to include the reading for future reference.

In terms of the rest of the proposal I have two comments, first on Walker's tactics as the relate to the budget, and second on collective bargaining and unions.

I think Walker's tactics are ill thought out. In the case of high speed rail, not only did he give back 810 million to the feds (which by the way was not remitted to WI tax payers but spent elsewhere, like CA), but that maneuver also cost us money, since we were committed to some expenditures that were covered by the 810 million, that we can not get out of. I am not a fan of highspeed rail. But I'm less of a fan of returning money to the Feds. As they say when you are hungry, you eat what is given to you. He did the same thing with 23 million in broadband money from the Feds, and who can be against improved broadband? And now this budget repair bill is likely to cost us another 47 million in federal money. I understand the argument that we should not take the money. But as I've said before, it is unwise to unilaterally disarm. The federal government is not reducing our taxes by the amount we give back, rather it is being spent in other states. To hand back money is foolish. Wisconsin already receives far less than its share of federal money. We get back 82 cents for every 1.00 we send to Washington. I fully understand that we have a budget issue at the federal level, but unilaterally disarming will not solve the problem. It will only make us relatively poorer. To use another metaphor it is equivalent to showing up to a gun fight, and out of principle putting the gun down. Not a bright idea. We need the politicians in Washington, Republicans and Democrats to solve the Medicare/Medicaid/Healthcare conundrum. We need them to set the priorities of the nation. They are failing. And no, the Tea Party is not offering a solution. Shooting down random spending bills is hardly a method of establishing priorities. Bowels/Simpson proposal was an attempt to start the conversation. Look at how quickly everyone fled the conversation.

On to the issue of collective bargaining. Maybe Scott Walker is a genius. The debate seems to be about collective bargaining rights, and not the 8% pay cut. Everyone has already offered to give up the benefits. Yet, the fight over collective bargaining continues. Which means this isn't entirely about repairing this budget, but the fight over collective bargaining is really the fight about future cuts. As in the future cuts that will occur in the 11-13 budget. Walker needs to break the union in order to cut State Aids by 900 million. Now I'm not a fan of unions. I think there are millions of examples of how they do bad things (faculty example here).

That said, we should understand the role of unions. As I mentioned I am no fan of unions. But remember they are merely a monopolist (for another view see this), meant to - at times - counterbalance a monopsonist. Why do the NFL and MLB have players unions? In part they counteract the State sanctioned monopoly of the owners (at least in the case of the MLB). And in the case of the NFL it is just to counteract the monopsony power of the owners. Since local government's educate 90% of the K-12 kids, they might be viewed as a monopsonist. 

Stripping away the collective bargain rights in this fashion has unfortunately put us on a path of confrontation and contentiousness. I now have no hope that we will be able to collectively address the budget problems going forward. Rather than negotiating a smooth path to a different equilibrium we collectively bargain, we will be stuck in a political seesaw where we bounce from the Republican vision of the future to the Democrat's vision, back and forth. The pain is in the dynamics. This increases the pain, it doesn't reduce it. Make no mistake in 4 years we will have a Democrat in the capital and he will pull the same shenanigans to payoff the public sector employees.

I also think its enormously hypocritical to exempt the police, firefighters, and the troopers. Not only did he exempt them he requires in the budget repair bill that funding for their departments be kept at 2009 levels or above. Therefore Walker further protects them from the cuts coming to state aids.

UW Faculty have not, until recently been able to collectively bargain. Doyle gave us the right to vote on it, and there has been a large push on UW-L's campus. Faculty have decided to go ahead with the vote, which is now guaranteed to pass. (Even many who would have voted against it might vote for it because they really hate having their rights taken away).

I am a bit offended by the tenured faculty that walk around campus claiming we need a union. They complain that we need more rights to negotiate our working conditions. I teach 9 credit hours. Other than being in the classroom for those hours and holding office hours, I have near complete autonomy over how I do my job. I can think about what I want, I can work on what I want. We set our own curriculum, we decide on our own research agendas, we hire and fire our colleagues, and provide input into the hiring or our leaders, who in the end will have very little influence on what we do. We - at least some of us - have tenure. We are the last people that need a union to bargain our work rules. We write them!  We do not work in a coal mine or a steel mill, and complaining as if we do makes us sound like we are divorced from reality, and insults those union workers who do not have it as well as we do.

But my job is very different than most other state workers.

A few parting shots. Politicians in Madison like to control the UW-System, but they currently provide less than 18% of the funds for our operation. How many private sector firms do you know where the 18% share holder calls all the shots?

For those of you that say "get a job in the private sector". I could, far easier than many. After all the unemployment rate for PhDs is quite low. And it would pay more (bls). Or I could just get a higher paying job in another state (AAUP data). Or maybe I'll just figure out a way to make a little money on the side.

For some more background on State and Local Taxes. The Tax Foundation is a wonderful non-partisan source. Here is the history of state and local tax burden in Wisconsin. Here is a wealth of data on all states.

Update: Here is a Chicago Fed symposium on the public v private compensation issue.