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.

Assorted links

1. Now you can major in cognitive science at Michigan.

2. Big data versus minor details at MIT.

3. Taking pictures on the bus in Buenos Aires. I think the Atlantic misuses the word voyeur here as the subjects are all in public spaces.

4. Obama is the face of Viagra in Pakistan.

5. Korean BBQ within walking distance of Lorch Hall. Happy, happy.

Monday, February 17, 2014

President's Day

Odd to have a holiday to celebrate such a motley crew of pompous blowhards and miscreants.

Hat tip on the "quote" to Lones Smith (no relation, other than that we were in the same class at Chicago and used to be colleagues at Michigan)

Ozy interviews Austan Goolsbee

In general I agree with what Austan has to say, other than his near-embrace of the "thermostat" model of regulation in which what matters is the amount rather than the content. Fortunately he backs off a bit but not as much as he should.

And doesn't Ozy have editors or fact-checkers? Goolsbee is not on the faculty of the economics department at Chicago but rather that of the Booth School. Ooops. And it is so hard to check, given that the department has adopted the tricky procedure of listing the faculty in alphabetical order by the first letter of their last name.

Thursday, February 13, 2014

Bill Maher on government and old people

Bill is right on target. NB: slightly off-color at times.

This may be the first time I've ever linked to the Daily Kos.

What Greens think of neo-liberals in Austria

Freedom = fangs?

Photo: Scott Wood

Jane Bussman

Overall, I have found "ozy" to be less overwhelming than it imagines itself to be, but it did offer this short piece on journalist and performer and development aid critic Jane Bussman.

You can find a video of her here, which I watched and enjoyed.

Monday, February 10, 2014

Community High

Ann Arbor has a hip alternative high school, access to which is allocated by lottery, as described in this piece in the (renamed back to the old name) Ann Arbor News.

Seems to me that the school district might raise some funds (they are forever whining about not having enough even though they are in the far upper reaches of the per-pupil spending distribution in Michigan) by setting the price at the market clearing level, at least for high income parents, instead of handing out the scarce (and apparently highly desirable) good for free.

Advice to junior faculty (and gradual students)

Hat tip: Charlie Brown

Thursday, February 6, 2014

Movie: The Invisible Woman

The Invisible Woman tells the story of Nelly Ternan, mistress to Charles Dickens. It succeeds on several levels: as a moving romance, as the sort of lovingly constructed period piece that the BBC does so well, and as a social history of gender relations in the not-so-distant past. I enjoyed it on all levels.

The NYT review is both less positive and not very insightful.

Highly recommended.

Book: Three and Out

Bacon, John U. 2011. Three and Out: Rich Rodriguez and the Michigan Wolverines. FSG.

Three and Out (a fine pun indeed) tells the story of the Rich Rodriguez era as coach of the University of Michigan football team. It is interesting for two reasons. First, it presents an account that is much more favorable to Rich than the one I picked up from the local media at the time. Second, completely independent of Rich Rod, it presents an insider account of how a major college football program works, both at the level of what the players and coaches experience and at the level of how the program interacts with the central administration. I found the latter of great interest. Rich Rod deserves a lot of credit for letting the author have the access he had, which is quite extraordinary.

Recommended if you are into such things.

Local commercials

Another very fine local commercial.

Hat tip: Ophira Vishkin

Tuesday, February 4, 2014

Assorted links

1. International problem solving guide (humor).

2. Homeless in Ann Arbor.

3. Leftover explosives from WW2 (and WW1 ... )

4. Over-reaction at Pioneer High School

5. A nice post on inequality from Greg Mankiw.

Hat tip on #1 to Jianlin Wang and on #2 to Cong Zhang.

Richard Epstein on the differences among libertarians

This is a useful piece in highlighting the difference between classical liberals and libertarians who adhere strictly to the non-aggression principle.

In my own intellectual development, I have found using the strict case as a starting point for thinking to be very valuable. For example why isn't taxation just theft by proxy? Or, perhaps a better formulation, when isn't taxation just theft by proxy.

I should note too that Richard Epstein's book Takings had a big effect on my thinking on several dimensions. Takings is particularly valuable for economists in implicitly illustrating the difference between how a classical liberal economist thinks about things relative to how a classical liberal law professor thinks about things. I am looking forward to reading his new book, which I bought a couple of weeks ago.

The best Super Bowl ad you didn't see (unless you live in Savannah)

You've got to like the flaming sledgehammer.

Hat tip: Candice Stephens