Wednesday, December 31, 2014

Living at home versus commuting

The title of this piece from the Atlantic CityLab is a bit misleading. Really, this is a short meditation by someone who has taught in a charter school serving a disadvantaged population on the question of whether or not to encourage his students to bust their budgets to live on campus when they go to college.

The treatment effect of living on campus versus commuting is something we do not have very good evidence on, and which, perhaps as a result, is often neglected in discussions of the effect of college quality (or its interaction with ability, college mismatch) has on academic and labor market outcomes. The probability of living on campus (or away from home, a separate but related treatment) surely increases with college quality. If it represents an important component of the effect of college quality, this would call for quite different policy changes than if it does not matter, and college quality is all about class size or faculty salaries.

I suspect that living on campus actually has quite heterogeneous effects on students, with the distribution of impacts including negative as well as positive values. Being able to predict which students would benefit and which would not would of course be the holy grail here, but it is a long way off indeed.

Tuesday, December 30, 2014


I would have bet good money against this a week ago. Amazing.

Now both of my teams have dream coaches. Let the winning begin (along with the Oregon and Ohio State losing).

Why I love the Economist

From an Economist piece on countries splitting into their component parts:
... in Canada some fear that Quebec's secession would lead to other provinces following suit, much as the departure of an amusing guest can lead to the break-up of a boring party.

Sunday, December 28, 2014

A short primer on libel law

This piece by Eugene Volokh, set in the context of the Rolling Stone story on sexual assault at the University of Virginia, provides a really interesting introduction to the nuances of libel law.

Saturday, December 27, 2014

What are the odds, mate?

Moral panic around gambling in Australia.

Left out of these discussions, whether of gambling, tobacco, alcohol, drugs, or prostitution, is always the benefit side of the cost-benefit calculation. Doing so is fairly straightforward within the framework of traditional consumer theory, but becomes very complicated indeed if you wander down the tangled pathways of behavioral economics.

Plus, I actually thought that gambling was more like five percent of Australian GDP rather than just 1.2 percent.

Thursday, December 25, 2014

A special day

Timely thoughts from wise reader ASAK:

"Every year it's a bonus present to demographers that the Christmas gospel starts with a census."

Happy holidays to all.

Wednesday, December 24, 2014

Assorted links

1. Venezuela on the policy frontier.

2. When no one reads the page proofs.

3. In case you had forgotten Speed Racer.

4. Celebrity professors.

5. Sweden is not as progressive as you thought (just have Google translate the page).

Hat tip on #1 to Scott Wood and on #5 to Lars Skipper.

Wednesday, December 10, 2014

Gilles Saint-Paul on government art

I stumbled across this piece about government art while looking (unsuccessfully, as it turned out) for one of Gilles' papers on active labor market programs. We've only interacted at one conference but even based on that limited evidence I can confidently say that he is a very interesting character with, as this post of his makes clear, quite broad interests.

Tuesday, December 9, 2014

Thursday, November 27, 2014


I can do no better than to quote my colleague Jim Hines from his public finance seminar announcement this week:
This Thursday is Thanksgiving, the annual holiday that commemorates the 1817 publication of David Ricardo's On the Principles of Political Economy and Taxation, which started the field of public finance.  The holiday expresses our gratitude for the opportunity to study taxation.  It is customary to feast on that day, in celebration of the absence of excise and sales taxes on food prepared at home.
To whatever readers remain after my sad posting performance this semester: Enjoy the day!

Saturday, November 15, 2014

Friday, November 7, 2014

Academic geek bucket list

Diamond elite on Delta. Check!

Friday, October 31, 2014

Thursday, October 30, 2014

Epistemological irritation of the day

The text for today's (very short) sermon is:

"A direct test of the hypothesis is looking for significance in the relationship between [one variable] and {another variable]."

No, no, no, no, no. Theory makes predictions about signs of coefficients, not about significance levels, which also depend on minor details such as the sample size and the amount of variation in the independent variable of interest present in the data.


Addendum: academic readers will know from the season that the text is taken from someone's job market paper.

Saturday, October 18, 2014

A delightfully nasty political commercial

I'm a big fan of negative political advertising. This is an especially good one.


Hat tip to reason.

Friday, October 17, 2014

Evan Starr on non-competes

Recent UM doctorate Evan Starr, now at the University of Illinois at Urbana-Champaign, makes it on to the local news in Champaign for a story about Jimmy John's having its workers sign non-compete agreements, which (more broadly) were the subject of his dissertation research.

Best parts (local news always delivers ...):

1. CSI-like closeup of Evan writing on a pad of paper with his mechanical pencil
2. The importance shown to interviews with random uninformed people at a strip mall

Wednesday, September 3, 2014

Book: Ready Player One by Ernest Cline

Cline, Ernest. 2011. Ready Player One. Broadway Books.

Saying anything very negative about this book would be a bit like kicking a puppy. This is a very sweet science fiction book about a geeky young fellow who saves the (virtual) world via his knowledge of 80s pop culture and video game history. That's really all you need to know.

Recommended if you are into such things.

Tuesday, August 26, 2014

Learning about what observed variables you need for selection on observed variables to be a reasonable assumption

I like this paper a lot, both in the narrow sense that it presents interesting and useful results that I have already been citing, but also more generally because it follows the path that I think the literature should follow but rarely does. That path takes claims about the important of selection on unobserved variables in particular contexts and puts them to an empirical test.

Marco Caliendo, Robert Mahlstedt, Oscar A. Mitnik:

Unobservable, but Unimportant? The Influence of Personality Traits (and Other Usually Unobserved Variables) for the Evaluation of Labor Market Policies

Many commonly used treatment effects estimators rely on the unconfoundedness assumption ("selection on observables") which is fundamentally non-testable. When evaluating the effects of labor market policies, researchers need to observe variables that affect both treatment participation and labor market outcomes. Even though in many countries it is possible to access (very) informative administrative data, concerns about the validity of the unconfoundedness assumption remain. The main concern is that the observed characteristics of the individuals may not be enough to properly address potential selection bias. This is especially relevant in light of the research on the influence of personality traits and attitudes on economic outcomes. We exploit a unique dataset that contains a rich set of administrative information on individuals entering unemployment in Germany, as well as several usually unobserved characteristics like personality traits, attitudes, expectations, and job search behavior. This allows us to empirically assess how estimators based on the unconfoundedness assumption perform when alternatively including or not these usually unobserved variables. Our findings indicate that these variables play a significant role for selection into treatment and labor market outcomes, but do not make for the most part a significant difference in the estimation of treatment effects, compared to specifications that include detailed labor market histories. This suggests that rich administrative data may be good enough to draw policy conclusions on the effectiveness of active labor market policies.

Monday, August 25, 2014

The neighborhood lawsuit

The lawsuit described in this astounding Ann Arbor Observer article took place over access to a path in my neighborhood.

Wow. All those lawyer fees could have made for some block party. Or maybe some big notation to a more deserving group?

Full disclosure: we don't know any of the parties to the suit very well, but know the folks who shut down the trail better.

Friday, August 22, 2014

Michigan to play Washington in college football

This will be fun! Stories from a Michigan blog and from the Seattle Times.

The Michigan blogger neglects to note that Washington would have won the last match in the big house had Slick Rick not blown the clock management.

Hat tip: Jeremy Fox

Monday, August 18, 2014

Humans need not apply

An over-the-top but still interesting and entertaining video about capital-labor substitution.

The video does overstate the case: in recent decades the labor market managed to absorb all the folks who used to farm as well as large numbers of assembly-line workers, keypunch operators and the like. I think the takeaway is more about the value of general skills (e.g. how not to be a jerk, how to show up on time, how to manage) than about a future with no work.

Hat tip: Dan Black

Saturday, August 16, 2014

Killewald and Gough

Two sociology students from Michigan foolish and/or bold enough to have me on their committees (and now on to careers in academia) have won a best paper award of the American Sociological Association section on the family.


Friday, August 15, 2014

Ann Arbor history: streetcars

The Ann Arbor News on Ann Arbor's history of streetcars. I was surprised by the extensiveness of the streetcar network.

Thursday, August 14, 2014

An old mystery solved: My Sharona

I probably should have sorted this out a long time ago, but it turns out there actually is a person called Sharona behind the Knack hit song "My Sharona". Perhaps not overly surprisingly, she now sells real estate in Los Angeles. You can see the (SFW) single cover featuring Sharona here.

I saw the Knack in concert back when I was in high school. People thought (and wrote - I wish I still had the Seattle Times concert review) they were going to be the next Beatles. To encourage such thinking, they performed "Hard Days Night" as their encore. As it turned out, they fizzled after their second album.

Wednesday, August 13, 2014

In preparation for the upcoming academic year ...

... advice on how to look smart in meetings.

Some of these work in seminars too.

And, of course, as noted on instapundit, where I found the link, "to [actually] be smart, avoid meetings as much as possible. . . ."

Tuesday, August 12, 2014

Assorted links

1. Mocking the "50 Shades" movie trailer.

2. Sava's restaurant in Ann Arbor written up in the Toronto Star.

3. An update on Second Life.

4. The 400th anniversary of the logarithm.

5. Always wear your seat belt.

Hat tip on #2 to Christine Gribowski and on #5 to Charlie Brown.

Monday, August 11, 2014

NYT on treating addiction

I liked this NYT piece on alternatives to conventional abstinence-based programs for dealing with addition.

I've tried a few times to convince the students in my undergraduate program evaluation course that it would be interesting to read some papers from the related evaluation literature but they have not shown much interest.

My sense of the literature is that placebo effects and heterogeneous treatment effects both likely loom large in a way that makes forward progress on the scientific front difficult. It also seems to me that a treatment that requires you to, say, never have another drink has not really fully solved the problem.

Sunday, August 10, 2014

Another plagiarizing politician

Blue team candidate Frank Walsh drops out of the Montana senate race. The original NYT take-down is here.

Improving referee response times

What Policies Increase Prosocial Behavior? An Experiment with Referees at the Journal of Public Economics
Raj Chetty, Emmanuel Saez, László Sándor
NBER Working Paper No. 20290
Issued in July 2014

We evaluate policies to increase prosocial behavior using a field experiment with 1,500 referees at the Journal of Public Economics. We randomly assign referees to four groups: a control group with a six week deadline to submit a referee report, a group with a four week deadline, a cash incentive group rewarded with $100 for meeting the four week deadline, and a social incentive group in which referees were told that their turnaround times would be publicly posted. We obtain four sets of results. First, shorter deadlines reduce the time referees take to submit reports substantially. Second, cash incentives significantly improve speed, especially in the week before the deadline. Cash payments do not crowd out intrinsic motivation: after the cash treatment ends, referees who received cash incentives are no slower than those in the four-week deadline group. Third, social incentives have smaller but significant effects on review times and are especially effective among tenured professors, who are less sensitive to deadlines and cash incentives. Fourth, all the treatments have little or no effect on agreement rates, quality of reports, or review times at other journals. We conclude that small changes in journals’ policies could substantially expedite peer review at little cost. More generally, price incentives, nudges, and social pressure are effective and complementary methods of increasing prosocial behavior.


So I took part in this experiment as a subject. I was in the group that received the offer of a cash incentive to complete their report within four weeks. A couple of days before the four-week deadline, I took the paper out of the "to review" stack and did my report out of order relative to my usual first-in, first-out rule. Apparently, given the summary of results in the abstract, there are not enough people like me for this equilibrium effect to show up in a statistical sense in the data.

Saturday, August 9, 2014

Movie: Lucy

What to say about Lucy? Scarlett's performance in the lead role is, to quote the NYT reviewer, "improbable but somehow perfect" and very much the strength of the movie. Beyond Scarlett, I am less enthused than the NYT. There is way too much explanation - the movie's approach is much too reminiscent of the "Dukes of Hazard" TV show with its omnipresent narrator for dullards. A less obvious approach would have made for a better movie. The dreamy graphics reminded me too much of the intro to ABC's movie of the week back in the 70s (or maybe an over-achieving PBS series) for something produced in 2014. Overall, this could have been a much, much better movie.

I was entertained that the bad guys were from Taiwan rather than mainland China, presumably to increase ticket sales in mainland China. Indeed, this is sort of the perfect movie (rather like the Bourne and Bond franchises) to maximize worldwide sales by including characters from North America, Europe and Asia.

Recommended, but just for Scarlett.

Friday, August 8, 2014

Thursday, August 7, 2014

Pre-season amazement

The "dry season" (my name for the part of the year without American football) came to an end last Sunday, and, more to the point, the first pre-season college football polls have been released.

Astoundingly, Washington makes the top 25 but Michigan does not.

Book: Half of a Yellow Sun

Chimamanda, Ngozi Adichie. 2006. Half of a Yellow Sun. Anchor Books

The title refers to the flag of the short-lived republic in Biafra in what is presently south-eastern Nigeria. The Biafrians fought a tribally-based civil war with the remainder of Nigeria starting in the late 1960s - I can vaguely remember mentions of it on the news when I was little. This novel covers the years leading up to the civil war, the war itself, and a brief period afterwards. As best I can tell, it gets the history right.

This is literary historical fiction, and the plot and characters are well done, but what I found most interesting was, first, the portrayal of social and intellectual life at an African university shortly after independence and, second, the serial displacement and gradual decline in living standard and mental state of the main characters as they are repeatedly displaced as Biafra slowly (spoiler, but you sort of know this already because there is no currently existing country called Biafra) loses the civil war.

Bottom line: recommended.

Bonus BBC article on Biafrans who still dream of independence.

Hat tip on the book: Jessica Goldberg

Wednesday, August 6, 2014

Best-selling books in China

Ozy provides a look at the on-line bestseller list in China.

I have been struck on all three of my visits to China at how few books (and bookstores) one sees. When I ask about it I get puzzled looks or the claim that people in China read relatively more ebooks than Americans.

Tuesday, August 5, 2014

Unemployment policy design: Australia creates some useful variation

Australia, it turns out, requires a giant (by US standards) number of applications each week by those on unemployment insurance, as well as making them perform community service!

What does that lead to? Fake applications of course, as discussed in this Guardian article. And fake applications waste the time and money of the firms that receive them.

The problem with using command and control, rather than prices, to influence behavior is that it is almost always impossible to control all the margins, which means you get strategic responses. Sometimes these are small enough to matter and sometimes they are not. I'd be curious to see a thoughtful and thorough cost-benefit analysis of the Australian application requirement.

Monday, August 4, 2014

Paul, behave!

Larry Kotlikoff tells Paul Krugman to stop calling people names. I would add that Paul's behavior is a public bad for the economics profession; even he would surely call for it to be taxed. Perhaps he should be required to pay large fines to the American Economic Association. Basically the idea is the same as the fines that pro athletes pay their leagues when they act off.

Via Greg Mankiw


The sad tale of man fired from a school (!) for promoting the understanding of homophones in Utah.

Hat tip: Adam Cole

Sunday, August 3, 2014

Saturday, August 2, 2014

Movie: Secretary

Secretary is a sort of lite SM story of love, acceptance and self-discovery. The acting by James Spader and (especially) Maggie Gyllenhaal is exceptional, and the movie does a surprisingly good job of combining dark comedy and sexual tension with heartfelt self-realization.

Said the New York Times reviewer back in 2002 when the movie was released:
I prefer to see ''Secretary'' as a wacky new-wave romantic comedy in which two lonely people locked inside their private fantasies discover a miraculous erotic harmony. In today's post-Freudian, do-your-own-thing era of free sexual expression, the movie stands to be a wholesome self-help fable about the unlocking of shame and its magical transformation into pleasure and personal liberation. So what if its vision is finally too good to be true? 
Yeah, that's about right.

Highly recommended. It's well worth the time on Netflix.

Thursday, July 31, 2014

More on the $400K tree

The Ann Arbor News reports progress on moving the giant old oak tree from the middle of the Ross School to the front of the Ross School.

I wonder if the tree-movers have a performance contract in which they get a bonus if the tree survives?

Why not just leave it where it is and make the building a little bit taller?

Bonus: still more on the tree from the University Record.

4th Avenue in Ann Arbor

The Ann Arbor News is very excited about all the new businesses on 4th Avenue in downtown Ann Arbor.

4th Avenue is notable, at least to the News, because it was once Ann Arbor's "red light" district as a result of being home to one (1) adult bookstore and (1) of the wink-wink nudge-nudge sort of massage parlors. As is usual in Ann Arbor News discussions of that era, the reader is left to wonder how these businesses persisted so long when apparently everyone in town wanted them closed. This set of cool old pictures also reveals just how discreet and non-threatening the red light district was (and shows the old Montgomery Ward store too).

I also find it entertaining to read about 4th Avenue being "undiscovered". Ann Arbor's downtown is, even with a pretty generous definition, about 40 city blocks. Is it really possible for a bunch of them to go missing and require rediscovery?

Wednesday, July 30, 2014

TV: Jetsons, Season 1

As I've mentioned on here before, I watch old television shows during my morning exercise. Most recently, I have been watching the first season of the Jetsons, the futuristic analogues of the Flintstones. Their first season started right around when I was born in the fall of 1962.

What did I learn? (1) The music is still great, as is the animation, which is quirky, creative and fun. (2) TV audiences were much less sophisticated in the early 1960s; watching, say, a Simpson's episode right after a Jetson's episode is instructive in this regard. (3) Gender roles and gender stereotypes have changed a lot. One whole Jetson's episode, for example, considered the horrifying prospect of Mrs. Jetson learning to drive. (4) The writers and producers did not put any serious effort into technological continuity across episodes. For example, sometimes dinner is flavored pills, other times it is a regular meal. Sometimes "tapes" are delivered by regular mail, other times there is a picture phone, and so on. (5) The future of the Jetsons is much more mechanical and much less electronic than the actual future turned out to be.

Good stuff, all, but probably I will not take the time to watch the second season.

Monday, July 28, 2014

Still More P.J.

A short interview of P.J. O'Rourke from the Financial Times, with an excellent picture.

Book: What Do Women Want? by Daniel Bergner

Bergner, Daniel. 2013 What Do Women Want? Adventures in the Science of Female Desire. Ecco / Haper Collins.

What Do Women Want? is a popular science book that reviews recent studies from a number of fields that challenge the view that women are less interested in sexual variety than men because they need a stable partner's support to raise children, while men just want to spread their genes around to the greatest extent possible. The research summarized in the book is interesting and clearly described, as are the back stories of the researchers and how they ended up doing research on sex-related topics. My favorite bits of research covered in the book concern how the number of sexual partners reported by women changes when you ask them the question when they are hooked up to a fake lie detector and how the number of women who request a second meeting in speed dating varies with whether the women get up and move around to different men or the men get up and move around to the different women.

Recommended if you are in the mood for such things.

Tuesday, July 22, 2014

Assorted links

1. P.J. O'Rourke on the pursuit of happiness.

2. What internet censorship looks like.

3. How to make a clarinet with a carrot.

4. I'm not convinced this Elizabeth Warren video isn't a parody.

5. Interview with Christina Hoff Sommers

Hat tip on #3 to Jackie Smith

Econometrics and statistics

I agree with a lot of what this writer has to say, though I think he understates the extent to which the differences result from trying to accomplish different things. Much of what statisticians try to do is not locate causal relationships but rather just fit the data or find patterns and so on. In contrast, endogeneity is not just a topic in microeconometrics, it is the overarching theme of microeconometrics.

He is surely correct that both tribes have much to learn from the other. In some ways it is resembles the commonplace that one of the best ways to really understand English is to learn a foreign language.

Monday, July 21, 2014

Doonesbury on college application essays

Once in a while the reader is reminded of Doonesbury's glory days.

Hat tip: Charlie Brown

In the Chronicle again

The Chronicle ponders various papers in the literature on college mismatch (may be gated).

Includes comments from yours truly, as well as my co-author Nora Dillon, along with a preview of the still-in-progress findings from our next paper.

I was positively impressed by my interactions with the Chronicle reporter, who did a good job of capturing the main points of our discussion.

Sunday, July 20, 2014

Remembering Mary Jo Kopechne after 45 years (and two days)

Mary Jo's Wikipedia page. Ad parody from National Lampoon. Via instapundit. 

Saturday, July 19, 2014

How deep is your love?

Paris Review on the history and influence of the BeeGees, with some bonus pop psychology.

The radio station I listened to in high school, KISW in Seattle ("if it's too loud, you're too old"), had a nightly feature called "Disco Destruction" in which they would play a disco song at varying speeds and overlaid with the sounds of chain saws and wolves howling. After a minute or so, the DJ would drag the needle across the remainder of the record and immediately transit into some head-banging hard rock song. Good times.

Note to younger readers: the needle refers to the bit of the record player that came into contact with the vinyl record.

Friday, July 18, 2014

520 off-ramp to nowhere

Seems that after 50 or so years, Seattle is finally planning to tear down the off-ramp to nowhere on highway 520, which runs just south of the University of Washington campus and includes a floating bridge on its way to the east side of Lake Washington.

Wednesday, July 16, 2014

Weird Al meets Schoolhouse Rock

 Does this mean that Weird Al has jumped the shark?

Either way, I am sympathetic to the message, but wonder whether insulting people will really work as a motivator for them to improve their writing.

For the young(er) people, "jumped the shark" is defined here and the Schoolhouse Rock reference is explained here.

Via instapundit

Marrying a stranger?

I think my main issue with this is that the sample size is not large enough, and they should have a randomized control group of people who were willing to marry a stranger but not given the opportunity to do so.

And how about those Danes, for coming up with the idea?

And how about the NY Post, which doesn't know what a spiritualist is (hint: they communicate with dead people), nor that it is "party-hearty" and not "party hardy"?

Hat tip: Marit Rehavi

Monday, July 14, 2014

David Warsh on new growth theory

Writing at Economic Principals, Warsh defends the importance of new growth theory against criticism from Paul Krugman, among others, and illuminates some of the machinery behind the economics Nobel prize.

Sunday, July 13, 2014

The Atlantic on the Ukraine

I quite enjoyed this piece in the Atlantic on the current state of the Ukraine.

My favorite bit of text:
Viatrovych commanded one of the battalions on the Maidan, and has since returned to his job at the National Institute for Memory, where he works to create a Ukrainian identity.
More broadly, implicit in the piece is the deep problem of creating a nationalism because you have to because of competing nationalisms even though you know that, at a deep level, nationalism is a nasty, primitive business.

Saturday, July 12, 2014

UM grad student wins award

Congratulations to UM grad student Olga Malkova, winner of the Heinz Koenig award from the ZEW (= zentrum fuer Europaische Wirtshaftsforschung) one of the leading German research institutes.

Wednesday, July 2, 2014

Movie: Edge of Tomorrow

Edge of Tomorrow is sort of a science fiction version of Groundhog Day, with Tom Cruise reliving the same day over and over again until he gets the bad guys (or rather, the bad alien critters).

The NYT gave it a surprisingly strong review - I think perhaps the reviewer has a thing for Tom - but to me, though it was enjoyable enough as Hollywood fluff, it seemed like a missed opportunity to create a really interesting movie.

Sort-of recommended, if you are in the mood for some low-brow time travel musings and Emily Blunt.

Economics moment of zen #11

"Utility is nothing more than a way of encoding choice"

- Larry Blume

Tuesday, July 1, 2014

Canadian educators gone wild

Who knew that the Washington Monument could be interpreted that way?

Hat tip: Charlie Brown

Friday, June 27, 2014

Saturday, June 21, 2014

Thursday, June 19, 2014

Matt Welch on Bowe Bergdahl

This piece by Reason editor Matt Welch does a nice job of covering some of the key issues. I agree with him that it really matters here that this is a volunteer army.

More generally, the bit that still astounds me is just how badly the Obama administration got the public relations aspects of the case wrong. I think this is a strong signal of politically and intellectually monochromatic backgrounds and perspectives within the administration.

Wednesday, June 18, 2014

Performance Network update

More on the financial travails of Performance Network from the Ann Arbor News.

Tuesday, June 17, 2014

Summarizing communism via sculpture

The statue is in Poland. Daily Mail story here.

Hat tip: Charlie Brown

Monday, June 16, 2014

Movie: Chef

Chef is a food truck full of sugar.

The NYT critic correctly describes it as a "shallow, but enjoyable all-American morality play".

Recommended if you are into a bit of very light fun with a 40-minute long happy ending, lots of yummy food, and even some Scarlett.

UM construction boom

Two pieces from the Ann Arbor News on the construction boom on the Michigan campus: first one, second one.

There has been construction around Lorch Hall, home of the economics department, every year since I arrived nine years ago, including the policy school's new building, the law school's new building (and re-model of their old building) and the business school's first (they are about to get another) new building. Most recently, "our" lawn has been filled with temporary office (and classroom?) space for the business school during the next round of construction there.

Oh, and be sure to note the bit about spending 300K to move a tree. It is Ann Arbor after all.

Saturday, June 14, 2014

Assorted links

1. Positive spillovers from the coup in Thailand.

2. Launch of Heckman's new center at the University of Chicago.

3. Good thing I shaved off my mustache.

4. Tracking residential decay in Detroit with Google street view.

Hat tip on #1 to Charlie Brown.

Thursday, June 12, 2014

Wise words for the red team ...

... from the folks at the Economist.

Columns interview with Washington football coach Chris Petersen

There are some worthwhile bits in this (relatively short) interview from Columns magazine, published by Washington's alumni association.

Soccer versus football: some revisionist history

My kinesiology colleague Stefan Symanski (co-author of soccernomics) offers a bit of quantitative linguistics regarding the debate about what to call soccer.

Tuesday, June 10, 2014


The economist has virtually reprinted their lead article from the week of D-Day, just 70 years ago. It makes for interesting reading on several dimensions.

The line that struck me the most was: "the first advances have been secured with surprisingly little loss of life". According to wikipedia, allied dead on just the first day of the Normandy landings exceeded 4,400. That one-day total is just a bit less than the number of American soldiers killed in the entirety of the Iraq war.

Monday, June 9, 2014

Non-compete agreements

The NYT discovers agreements not to compete, about which the Massachusetts legislature is presently debating.

The article is not too bad as these things go, but is very short on evidence. Also, the notion that, whether good or bad, the effect of non-competes could be determined by comparing state level unemployment rates is ludicrous. They are just not that important relative to the other factors that push around unemployment rates. I was also entertained by the fellow who stayed on UI for a year rather than endure a long commute.

The most glaring omission from the article is of course the fine recent work by Michigan's newly minted Ph.D. Evan Starr, shortly departing for the exotic wilds of Urbana-Champaign. His (very fine) dissertation deals entirely with non-competes.

Hat tip: Charlie Brown, who chaired Evan's committee.

Life in the modern classroom

Hat tip: Charlie Brown

Tempest in the privilege pot

Columnist Dan Savage and his adventures at the University of Chicago, where, apparently, not only fun goes to die, but perspective as well.

Saturday, June 7, 2014

Justin Wolfers puff piece from Oz

This is not bad as puff pieces go. I didn't know the bits about gambling.

Via Justin's facebook feed.

Wednesday, June 4, 2014

Campus sex trials

Megan McArdle has an excellent piece on why sex cases should not be investigated and tried by university administrations.

Reason columnist Cathy Young details an example from Northwestern.

And here is an example from Michigan

The penalties here are serious, as are the underlying behaviors. In my view, they deserve much better treatment than they currently seem to get from university administrations.

The Foundation for Individual Rights in Education does good work on this and other issues.

Sunday, June 1, 2014

A Few Goodmans

A humorous take on co-authors who share a last name.

Hat tip: The person I think of as "the other Erzo Luttmer", meaning the one I did not overlap with in graduate school at Chicago.

Assorted links

1. The truth about glasses.

2. Piketty and marmots.

3. Digitizing Timbuktu

4. Outsourcing homework in India.

5. Taste-testing at the Raven's Club in A2. I've been going there more often lately.

Hat tip on #2 to Stephen Hamilton and on #4 to Charlie Brown.

Friday, May 30, 2014

Movie: Maleficent

Disney redoes (and rewrites) the sleeping beauty story with a focus on Anglea Jolie as the witch who casts the curse.

The NYT review is a bit overwrought, but captures the spirit well. I liked this line:
The exquisite attention to detail in both the makeup and costume is routine in major productions like this one, of course, but the mixture of Old Hollywood glamour and contemporary fetishwear doesn’t just turn Maleficent into a pleasurable spectacle, it also serves a character who embodies both the past and the future.
Recommended if you have kids. There are some scary bits, but nothing our six-year-old couldn't handle; she pronounced the movie among her favorites when it was done.

More on Performance Network

From the Ann Arbor news, details on a meeting of former Performance Network staff and performers.

Thursday, May 29, 2014

The State News on the minimum wage

My 15 minutes of fame in East Lansing were used up by this article in the MSU student newspaper.

The student reporter did a pretty good job of capturing my thoughts. The one exception is that I tried to emphasize that what leads businesses to substitute customer effort and/or capital for labor is changes in relative prices more broadly. The minimum wage is just one source of those. Part of the reason for recent changes, such as replacing counter people at fast-food restaurants with screens and self-checkout at drug stores, is presumably more about reductions in the cost of the capital involved rather than movements in wages levels.

I was impressed with the thoughtfulness of the business owners interviewed for the article as well. I wonder how many she sampled to get these responses.

Tuesday, May 27, 2014

Luhrmann on cultural differences in sleep

This NYT op-ed (?) is a bit of a teaser for Luhrmann's research.

Her book When God Talks Back, which is an ethnography (sorta) by a linguistic anthropologist of a Christian sect (the Vineyard church) that places a strong emphasis on communicating with God, is one of the most fascinating books I have ever read. That book, which I highly recommend, considers in more detail some of the same themes raised in the op-ed, such as how people perceive things that should not happen, such as hearing the voices of beings not physically present.

Luhrmann is high on my list of people it would be really fun to have a long lunch with.

Hat tip on the op-ed and the book: Jessica Lowen.

Monday, May 26, 2014

An IZA manifesto on open European labor markets

They did not ask me to sign (after all, I am not a European) but I agree with much of what they have to say.

I also agree with the implicit concern over the political revitalization of nativism in Europe. Time to hit the history books for many it seems.

The Hook-Up Truck

Who says innovation is dead?

I especially liked this line:
The intention was a participatory performance art project with an intrinsic statement regarding the commodification of, attitudes toward, and media representation of SEX
If only we had jargon like that in economics.

Via instapundit.

Who cares for sick children?

This struck me as a pretty clever idea (and demonstrates once again what you can learn with really excellent administrative data, which the Swedes have and we Americans do not):

Can you stay at home today? The relationship between economic dependence, parents’ occupation and care leave for sick children

This is one of only a few studies on the division of care leave for sick children between parents in Sweden and the first to attempt to examine the importance of differences in parents’ work characteristics. The study uses register data for parents with children born in 1999-2002 to analyse two aspects of working life that may influence how parents divide care leave between them: The parents’ relative wages and differences in their occupations. First, the results show that a father’s share of care leave increases as the mother’s economic dependence decreases. This suggests that decisions about care leave are influenced by bargaining power gained through relative economic resources. Second, the resources of couples where both partners work in the same occupation are more equal than the resources of other couples. Their wages are more similar, and they also divide care leave more equally than couples where the partners work in different occupations. However, the fact that couples who work in the same occupation tend to share more equally does not seem to be explained by similarities in the partners’ work characteristics or by relatively low economic dependence of women, but instead may be explained by unmeasured, stable characteristics. Gender egalitarianism and greater possibilities for women in terms of career and wages are put forward as possible characteristics for couples working in the same occupation that may influence the way they divide care leave.

Full working paper here.

Saturday, May 24, 2014

Friday, May 23, 2014

Blog request: explaining north / south difference in the US to someone not from here

So one of my undergrads from mainland China is off to do a master's degree at Virginia next year. I was trying to come up with a suggestion of something that he could read that would make sense to him of how and why the south is different from the north but found myself without much in the way of ideas.

Suggestions from readers, either via the comments or by email (which I will then summarize and post) are very welcome.

Assorted links

1. The world according to Americans.

2. A truly excellent paper title.

3. An update on the life of Tom Lehrer. Best line: "What's wrong with graduate school as a career?"

4. A 1950s Tokyo bathhouse (surprisingly SFW)

5. A snarky commencement address on the theme of closed-mindedness.

Hat tip on #1 to Lisa Gribowski and on #2 to ASAK. #3 via MR and #4 and #5 via instapundit.

Odd goings-on at Performance Network

Performance Network theater in Ann Arbor has suspended operations.

How can it possibly be optimal to do this in the middle of a run when all the fixed costs for the current show (which we were planning to see next week) have already been paid?

Hope they find a way to restart - we really enjoy their productions and they are generally well-attended and a couple a year have very successful extended runs.

Addendum: more on PN from the Ann Arbor News.

Tuesday, May 20, 2014

Academics for athletes at UNC

Now the scandal has reached the Daily Mail.

It is hard to make the case that the NCAA is not exploiting these young men, a case that it wants to make to stave off unionization / payment / insurance claims, when things like this go on. In that sense, UNC is generating a huge negative externality for other universities that take the scholar side of scholar-athlete more seriously, even for the football and basketball players.

More broadly, this is pretty sad stuff for all involved. Mary Willingham, the administrator who blew the whistle, deserves a lot of praise.

Assorted links

1. Abandoned military bases.

2. Facebook as censor. Could this sort of clueless bumbling be related to it not being cool anymore?

3. In case you need a planeload of cute in your life today.

4. FT lunch with Tim Geithner

5. Government is just another name for the things we do together.

#1 via instapundit. I think #2 is via MR. #3 from Jackie Smith.

Monday, May 19, 2014

Boku Buckeye

Why does the president of Ohio State make so much?

Hat tip: Dan Black

Saturday, May 17, 2014

Movie: Dom Hemingway

Dom Hemingway is a great bit of British gangster fluff. It is sort of in the same genre as the Wolf of Wall Street but it is a lot more honest about its fun.

The NYT review is cleverly written but a bit more negative than I would have been.


Wednesday, May 14, 2014

Performance management and higher education

There are attempts afoot inside the beltway to bring the glories of performance management to the higher education world. Sarah Turner's short but very thoughtful piece should give advocates of such efforts many reasons to slow down and maybe (perish the thought) even read the literature on what has gone wrong with performance management in other contexts such as job training.

Sunday, May 4, 2014

Gary Becker, RIP

Gary Becker passed away yesterday. has written a better post than I could

I started a dissertation under Becker before switching to Heckman when he returned to Chicago after two years at Yale in 1991. When I asked Becker for "permission" to switch he commented that he thought Heckman would be good for me (he was right) but added that he thought the topic I was working on with him was more interesting.

A very large loss for our intellectual world.

Addendum: the obituary from the University of Chicago, including remarks from Heckman and Kevin Murphy.

Hat tips: Bob Willis and Dan Black

Saturday, May 3, 2014

Sir Richard

I do not know how this missed my attention earlier in the year, but UCL economist Richard Blundell, who has made important contributions in labor, public finance and econometrics, became Sir Richard Blundell earlier this year.

Glad to know the Queen is keeping up with the journals.

Electile dysfunction

A sad story regarding what happens to a republican with a sense of humor.

I thought the ad was pretty funny in a 15-year-old-boy sort of way.

Hat tip: Charles Brown

Wednesday, April 30, 2014

On vocational training

If only we could train deans to sit and do nothing ...

Hat tip: Charlie Brown

Tuesday, April 29, 2014

Unlikely academics

The USC policy school hires a new faculty member who is ideally suited to dealing with student complaints about grades.

Hat tips: Mel Stephens and Charlie Brown

Monday, April 28, 2014

Rice economics on the move

They've hired Antonio Merlo and, I am told, others as well.

Hat tip: Mel Stephens

Sunday, April 27, 2014

FP on Putin

I thought the last paragraph was too kind to both Putin and the Obama administration, but overall the FP does a nice job of charting Putin's journey from pragmatist to nationalist church lady.

The building at 611.5 William Street

I have always wondered about the building on William between (what used to be) White Market and New York Pizza. Michigan Today provides the history, which involves Gerald Ford and black robes.

Thursday, April 24, 2014

Assorted links

1. New Springfield subway map from the Simpson's. It's sweet that the innocent Atlantic Cities writer can't figure out what "Jerk Circle" might be about.

2. A cool video about an eccentric photographer in NYC.

3. A fine Expose from the Atlantic about how the NFL exploits the taxpayer.

4. Movie trailer for Chicago potholes. The sequel could feature Ann Arbor potholes.

5. The Economist on work, leisure and social class. I am surprised they did not reference this fine paper.

Hat tip on #4 to Dan Black.

Monday, April 21, 2014

Sunday, April 20, 2014

Best of Ann Arbor 2014

From the Michigan Daily.

I like it that the winner and runner-up for best new business are World of Beer and Literati, respectively.

Perhaps next year someone clever will open a bookstore with a bar ...

Addendum: According to Ozy, I am not the only one who thinks combining books and beer is a good idea.

Friday, April 11, 2014

Government is just a word for the things we choose to do together

I really like the way the Honest Courtesan links to various government abuses by using that ridiculous phrase, so I have decided to do the same:

1. Traffic tickets in Florida for those speeding to the hospital.

2. Doubling down on out-of-control joggers in Austin.

As to the phrase itself, "choose" seems like an odd word for an institution is fundamental feature is a monopoly on the legal use of violence.

On consultants

From the New Yorker.

Tuesday, April 8, 2014

Jobs that sound like fun

This fellow called Jesse Schell is an "Assistant Professor of Entertainment Technology" at CMU. Why didn't anyone mention this career path when I was playing SimCity back in grad school?

Hat tip: Ophira Vishkin

Tree Campus USA

The University of Michigan's Ann Arbor campus has been recognized by whomever does the recognizing of such things as a "Tree Campus USA" for the sixth year in a row.

In other news, yesterday the university sawed down several perfectly healthy trees outside of Lorch Hall, home of the economics department. Rumor has it that the trees were removed so that the ugly construction trailers that have been present outside our building for almost my entire career at Michigan, but which disappeared a few weeks ago, can be replaced by more spacious ugly construction trailers so as to facilitate the next round of construction at the busyness school next door.

Hat tip: Joel Slemrod.

Sunday, April 6, 2014

Movie: The Grand Budapest Hotel

We saw Grand Budapest on Friday night at the State Theater. It is a complete delight: crazy, original, funny, at times sad, visually rich, and overall just an excellent way to spend a couple of hours. I completely concur with the glowing review by A.O. Scott in the NYT.

Saturday, April 5, 2014

On cheating

The Atlantic reports on the reaction of some college teachers to a student who advertised on Craig's List for someone to help them cheat on a placement exam and possibly also an on-line course.

People do cheat, even at Michigan. Of the three places I have been, I liked Maryland's process for dealing with cheaters best. It involved (in part) students judging other students, and the students were typically much tougher on cheaters than administrators. Michigan's process works reasonably well too, but is a bit more lenient than I would like.

Western Ontario, at least when I was there, was neither as organized as Maryland and Michigan in how it handled cheaters nor as tough. I had a student at Western who plagiarized on their honors thesis (!). I wanted to toss him out of the program but in the end was only able to give him a low grade. He had the temerity to come back a few days later and ask for more points. That day was the closest I ever came to physically harming a student.

Assorted links

1. Jerusalem Gardens moving into Seva space. Yum.

2. Mocking Rob Ford at the Atlantic.

3. Urban ruins: Rochester subway (and be sure to click through to the old promotional video). They should make lemonade from lemons and do something like the Underground Tour in Seattle.

4. Remodeling Morgan and York. More yum.

5. Hanna Rosin on affairs.

Thursday, April 3, 2014

Obama comes to Ann Arbor

Whatever you think about raising the minimum wage, it is hard to see how it is a good use of tax dollars for the president to travel to Ann Arbor, disrupt traffic, and draw students away from their classes (including one from mine) just so he can have a Reuben at Zingerman's and give a speech that could equally well been given on the white house lawn (or not at all, given that it has already been given several times before).

This looks more like an indulgence of presidential vanity than a serious use of either public funds or the president's time to me (and I would note, of course, that such trips are a bipartisan affront to the taxpayer as all recent presidents have done this sort of thing).

Tuesday, April 1, 2014

Great moments with Mr. Gelman

Funny, and sometimes pointed, quotes from Andrew Gelman.

I had a student write down a list of all of the crazy stuff I said in one semester of undergraduate econometrics and email it to me at the end of the semester. Pretty scary.

Hat tip: DVM

Monday, March 31, 2014

Alternative economist minimum wage petition

Signers include three Nobelists, Greg Mankiw and Tyler Cowen, among others.

Given all the possible welfare-enhancing policies out there that would obtain nearly universal approbation from the economics community, it is a real shame to see so much political capital being spent on something that does not. Of course, there is information in that fact regarding the objective function being maximized.

Assorted links

1. Nick Gillespie defends millenials.

2. Tunnels at UM.

3. More pressure on Steve Sarkisian at USC or Chris Peterson at Washington? I would say clearly Steve Sarkisian.

4. Art and politics don't mix.

5. Interesting Atlantic piece on where (chain) restaurant menus come from.

Hat tip on #4 (including the joke) to Charlie Brown.

Paper: Is Twitter actually useful for something?

Using Social Media to Measure Labor Market Flows
Dolan Antenucci, Michael Cafarella, Margaret C. Levenstein, Christopher Ré, Matthew D. Shapiro
NBER Working Paper No. 20010

Social media enable promising new approaches to measuring economic activity and analyzing economic behavior at high frequency and in real time using information independent from standard survey and administrative sources. This paper uses data from Twitter to create indexes of job loss, job search, and job posting. Signals are derived by counting job-related phrases in Tweets such as “lost my job.” The social media indexes are constructed from the principal components of these signals. The University of Michigan Social Media Job Loss Index tracks initial claims for unemployment insurance at medium and high frequencies and predicts 15 to 20 percent of the variance of the prediction error of the consensus forecast for initial claims. The social media indexes provide real-time indicators of events such as Hurricane Sandy and the 2013 government shutdown. Comparing the job loss index with the search and posting indexes indicates that the Beveridge Curve has been shifting inward since 2011.


I saw Maggie Levenstein (who runs Michigan's Census Research Data Center) present the paper a couple of weeks ago. It's a clever idea and likely an exemplar of much that lies in our future.

Play: Venus in Fur

Venus in Fur at Performance Network is great fun as well as a thoughtful meditation on gender and power. The writing is excellent and the acting is strong as well, particularly Maggie Meyer in the female lead.

Recommended (and recently extended for an additional weekend).

Friday, March 28, 2014

Job market papers

Bonnie Kavoussi, a student in our Masters in Applied Economics (MAE) program, draws some good lessons from one of the funnier bits of this year's skit night.

Monday, March 24, 2014

Institute for Human Studies Summer Seminars

It's that time of year again: time to advertise the fine summer seminars on classical liberal / libertarian themes run by the Institute for Humane Studies. I did a couple of these back in the day, had a great time, and learned a great deal about the non-economics parts of the classical liberal intellectual tradition.

I recommend them even if you are not a classical liberal. It is always good to understand your intellectual opponents.

Full disclosure: The IHS gave me a fellowship in grad school. Now I give them donations.

Sunday, March 23, 2014

Tax fun

I've been asked to advertise the upcoming Let's Get Fiscal (public finance economists are big on puns) symposium in Washington DC on May 15-16.

Looks like fun to me. Flyer / program here.

Hat tip: Adam Cole

Movie: Divergent

Teen romance plus post-apocalypse ruin porn plus science fiction plus pretty people plus cool soundtrack. What's not to like? Well, all the things complained about in the NYT review, which is pretty much on target on the weaknesses.

One more dimension: The theme of both movie and book is individualism. That nets bonus points from me but probably means points off at the NYT.

Recommended if the you give enough bonus points for ruin porn and individualism.

Bonus aside: a key problem facing the director is how to make the "El" (short for "elevated railway") in Chicago look more post-apocalyptic than it already does. This is accomplished by removing most of the seats and adopting a darker color scheme.

Blattman on Crimea

The original post is here and comments plus responses to comments are here.

Good for Chris for speaking up. My own thoughts largely parallel his. A better procedure would have been nice, but the outcome would have been the same. I also agree that spillover effects are likely pretty small.

Big data for undergraduate economics majors

Washington is offering a course that combines "big data" and undergraduate econometrics.

Maybe we should offer something like that here? It would be fun to teach.

Wednesday, March 19, 2014

Wednesday, March 12, 2014

Let it snow, let it snow, let it snow

Today 2013-2014 became the snowiest winter in recorded Ann Arbor history. Whee!

Assorted links

1. Robocop review (humor)

2. How long can the police detain you after a traffic stop? No one seems to quite know. Seems to me it should not be very long at all.

3. Things cars used to have but no longer do. My 1964 Valiant (inherited from my grandmother) had many of these.

4. Guns on campus - a humorous take with which I do not entirely agree.

5. Lose weight by eating only at McDonald's. Take that, Morgan Spurlock!

Hat tip on #1 to Glenn Simon and on #4 to Charlie Brown.

Virginia Postrel on Barbie

Is Lammily really better than Barbie?

Tuesday, March 4, 2014

Assorted links

1. Worries about "transient academics" in Evanston.

2. Stereotype confirmation: radio station ratings in Ann Arbor.

3. In praise of Steven Wright.

4. There is no great stagnation - naughty bits cosmetics edition.

5. Niagara falls frozen.

Hat tip on #4 to an anonymous friend and on #5 to Jackie Smith

Monday, March 3, 2014

Joe Namath

After the Seahawk's dominating victory, the highlight of the Superbowl was surely former NY Jets quarterback Joe Namath in fur.

And what better time to recall the commercial that made Joe famous in the first place:

I know it makes me sound old to say this, but it is an endless source of pleasure and fascination to me that essentially any bit of culture or history I remember from earlier in my life is just a few clicks away.

Life lessons

I rather liked this piece on what you learn in your 40s.

In particular, three bits struck me as particularly useful. First,
There are no grown-ups. We suspect this when we are younger, but can confirm it only once we are the ones writing books and attending parent-teacher conferences. Everyone is winging it, some just do it more confidently.
I think you actually learn this at whatever age you have children. One day there is that flash of insight that your own parents must have felt just a clueless raising you as you feel raising your own children. At that moment, much becomes clear that was previously unclear.

You will miss out on some near soul mates. This goes for friendships, too. There will be unforgettable people with whom you have shared an excellent evening or a few days. Now they live in Hong Kong, and you will never see them again. That’s just how life is.
This is, I think, one of the saddest bits of life. Being able to travel a lot helps, but does not really solve the problem.

And third,
Forgive your exes, even the awful ones. They were just winging it, too.

Sunday, March 2, 2014

On being an adult film actor at Duke

This piece from the Duke student paper on a female student's failed attempt to keep her part time career in adult films a secret is all over the internet.

I enjoyed Lauren's spirited defense of her own choices.

Thought question 1: How is an adult film star more or less a commodity than an economics professor? I would say "not at all".

Thought question 2: Will this affect the number of male applicants to Duke? What about female applicants?

Hat tip: a dean at another university

Job market advice

It's a bit late for most of our students, but Chris Blattman offers some excellent advice on dealing with job offers.

Addendum: fixed the attribution - thanks to the commenter

Partying with English teachers

The five-minute university with Father Guido Sarducci

Friday, February 28, 2014

Movie: The Past

The Past is a story of dysfunctional relationships, as well as a deftly unfolding mystery and a cautionary tale about passwords. I think I liked it better than the NYT reviewer, who complains of too much plot. I thought the intricate plot was the best part.


Higher education bubble battles

The above is a parody of higher education commercials that I found at instapundit.

The thing that bugs me about the video is that it exemplifies the fact that the red team is on a crusade against higher education these days for bad reasons, just like the blue team is on a crusade in favor of higher education for bad reasons.

The red team has two concerns: First, universities are chock full of people from the blue team who want to convert their little darlings. Second, they overgeneralize from anecdotes about students with high debt and no jobs to the idea that college no longer has a net financial payoff on average to those who undertake it due to the rise in tuition in recent years and the move, in the public sector, to make students bear more of the costs directly (something you might have thought red team folks would like). This latter view is simply inconsistent with the available evidence, which continues to find a substantially positive average treatment effect on the treated of going to university, particularly for completers.

The blue team also has two concerns. First, they view university as a factory for creating blue team members; thus, more is better. This is the flip side of the first concern of the red team. Second, the blue team confuses the average treatment effect on the treated with the average treatment effect, and so, quite incorrectly in my view, expects that the financial benefits of university for those not currently undertaking it would equal those of students who currently do. This might be true for a relatively small number of high-ability credit-constrained or ill-informed students, it is unlikely to be true in general.

The sad bit is that a more nuanced view would actually be, you know, helpful. First, there are some students who should go to college who do not, or who would likely benefit from going to much different colleges than they choose to go to. Focusing on finding and aiding such students is a topic of much current research and is very valuable. Second, the positive average treatment effect on the treated of university surely hides much in the way of heterogeneous treatment effects. Much of that heterogeneity in treatment effects results from choices that students and parents make in terms of effort level (and thus degree completion probability), choice of major, and so on. Most of the sad anecdotes one reads concern students and parents who made poor choices on these dimensions, choices they might have made differently if the policy focus shifted away from trying to move students into or out of the university sector and focused instead on helping them to make better choices regarding how to manage their university experience.

Sunday, February 23, 2014

Swipe and sign

The Wall Street Journal explains why the regime of ubiquitous debit cards with chips, already present in Canada and many other places, has been slow to arrive in the US, but apparently is on its way.

Because I still have a Canadian bank account, complete with debit card with chip, from my Western Ontario days, I have experienced the new regime on my travels to Canada. It is definitely much nicer than swipe and sign.

Used to be a Pizza Hut

A fine blog chronicles the afterlife of former Pizza Hut restaurants.

Via MR as I recall.

Saturday, February 22, 2014

CEA post on CBO minimum wage report

I was somewhat disappointed in the response from the Council of Economic Advisers (CEA) to the Congressional Budget Office (CBO) report on the minimum wage that has been making the rounds the past few days.

I have three main concerns:

1. The CEA post does nothing to distinguish between the short-run and long-run effects of the minimum wage (or of low-skill wage levels more generally, a topic oddly absent from most minimum wage discussions). The famous Card and Krueger paper estimates a very short-run effect. It is not at all surprising, if you think that firms are forward-looking and that most of the action revolves around the substitution of capital for labor, that the short-run effect would be zero or very small. Substantively minor short run effects are quite consistent with substantively large long-run effects. Both the short and the long run matter for policy; one might think the long run should matter more. The failure of the CEA post to mention the distinction is disappointing. I fear that the post has run afoul of one of the most important (and most popular) false folk theorems of empirical economics: "Quantities that are hard to credibly estimate must equal zero".

2. Near the end of the post we find this bit:
Overall the logic for the finding that raising the minimum wage does not result in large adverse impacts on employment is that paying workers a better wage can improve productivity and thereby reduce unit labor costs. These adjustments, along with others that firms can make, help explain why the increase in the minimum wage need not lead to a reduction in employment. Higher wages lead to lower turnover, reducing the amount employers must spend recruiting and training new employees. Paying workers more can also improve motivation, morale, focus, and health, all of which can make workers more productive. In addition, by reducing absenteeism, higher wages can increase the productivity of coworkers who depend on each other or work in teams. 
Perhaps I misunderstand, but I read this as saying that firms throughout the economy are leaving huge amounts of money on the table by not setting their wages correctly. Really?

3. In my view, the post puts too much weight on the Booth School survey of economists about the minimum wage. I have two concerns here. First, the questions in the Booth survey are not worded as well as they could be, especially the first one. In particular, in addition to a sort of general vagueness (e.g. what does "noticeably" mean), they do not distinguish between the short-run and the long-run effects of the policy. For this reason alone the responses should be discounted. Second, though the respondents are all indeed "experts" at something as described in the CEA post, they are not all experts on the minimum wage or even on labor economics. Many of them are experts in quite different bits of economics. As I read it, the CEA post gives the impression that the poll reflects mainly those familiar with the economics and evidence of the minimum wage, when in fact many poll respondents are theorists, macro-economists and so on and so are quite unlikely to be familiar with the relevant literature in any detail.

In closing, as always, I promise to meditate on the substantive unimportance of low-skill wages (and labor costs more generally) to the organization of production (and thus to the quantity of low-skill labor demanded) next time I fill up my own soft drink in a restaurant, or fill my own gas tank at a gas station (yes, I am old enough to remember when they had workers who did this for you), or check myself out at the drug store, or wander the long aisles of a discount retailer trying to find an employee, or tap my order into a screen at a restaurant, or scan my own receipts for reimbursement, etc.

Full disclosure / small world of economics: Betsey Stevenson of the CEA is my Ford School colleague at Michigan. Based on the positive impression I have of her as an economist via repeated interactions in academic contexts I assign responsibility for the defects of the CEA post to some combination of her co-poster and her political minders in the administration.

Friday, February 21, 2014

An amazing commercial

They should have gotten a slot during the Super Bowl. They would have topped every list of the best commercial.

Hat tip: Elizabeth Smith

Addendum: local news interview - by a presenter who thinks she has a "European accent" - with the star of the Poopourri commercial.

Thursday, February 20, 2014

Science fair

Hat tip: a Facebook friend.