Page of paper topics

I just found this page of short papers laying out research agendas in economics. I took a look at the ones by Imbens and by Varian (writing about clinical trials!) and both were useful. Imbens emphasizes the econometrics of studying data on networks as well as variable selection problems that arise when the number of candidate conditioning variables rivals the number of data points.

My favorite bit from Imbens' piece:

Research related [networks] has been conducted in multiple disciplines and is a fertile area for interdisciplinary research. Sociologists have a long tradition of studying communities and social interactions, and have contributed many substantive questions to this area. They have also collected interesting data sets, as well as some statistical methodology.

Nice of the sociologists to collect some questions and data for us ...

Imbens is actually very good about paying attention to other disciplines, but I could not resist the tease.

On educational performance measures

I have a new paper:

IZA DP No. 5897

Alastair Muriel, Jeffrey A. Smith:

On Educational Performance Measures

(published in: Fiscal Studies, 2011, 32(2), 187-206)

Abstract:

Quantitative school performance measures (QPMs) are playing an ever larger role in education systems on both sides of the Atlantic. In this paper we outline the rationale for the use of such measures in education, review the literature relating to several important problems associated with their use, and argue that they nonetheless have a positive role to play in improving the educational quality. We delineate several institutional reforms which would help schools to respond "positively" to QPMs, emphasizing the importance of agents' flexibility to change the way they work, and the importance of a sound knowledge base regarding "what works" in raising attainment. We suggest that the present institutional setups in both England and the US too often hold schools accountable for outcomes over which they have little control – but that such problems are far from insurmountable.

The working paper version (not gated) is here, and the published version (gated) is here. They are the same other than minor changes at the proof stage.

The paper tries to steer a middle course on the question of quantitative educational performance measures, arguing that they have some value, and so should not be simply abolished, but that they should not be the whole, or even the majority, of the institutional system that seeks to improve and maintain school quality. Moreover, there is much to complain about in regard to the current design of such systems, particularly the system put in place by the No Child Left Behind (NCLB) Act in the US. The performance measures in the US job training system have problems at well, as I (again with co-authors) have written about elsewhere.

This paper is based on a presentation I gave at a conference-within-a-conference at Oxford in the summer of 2010. It is unusual for me in that the nice folks at the Institute for Fiscal Studies provided me with a co-author to help transform the talk into the paper. My co-author Alistair Muriel, whom I first met at the conference, turned out to be the perfect partner, which is to say that he writes well, works hard, and put up with the oddities of my work style. The paper is also notable for the speed of publication; due to a few days lag by me in submitting the final version to IZA, and some backlog at IZA in announcing their new discussion papers, the "working" paper actually came out after the published journal version in Fiscal Studies.

I went with IZA rather than NBER (the NBER prohibits circulation in multiple working paper series, though that rule is widely ignored by people other than me) because of the European content to the paper.

Bryan Caplan on happiness and books about happiness

A generally quite good review essay from the Wall Street Journal.

Musgrave Prize

UM graduate student David Agrawal won the Musgrave prize for the best paper by an economist under 40 presented at the International Institute for Public Finance (IIPF) conference held in Ann Arbor last week.

Given that nearly everyone at the conference was under 40, and that there was stiff competition not only from faculty but also from some of our other graduate students, I would say that this is quite an honor.

So, congratulations David!

Oh, and David is on the job market this year. Hint, hint.

Addendum: not sure why the web page lists David's affiliation as the University of Copenhagen. He's not even Danish.

Addendum 2: the winning paper can be found on David's web page. It is the one about the tax gradient.

Our modern government ...

... helping to not only slow but actually reverse technological progress.

From the American Economic Association email to members today:

Job Openings for Economists has been published only electronically for the past decade. Starting with the August 2011 issue, the Association resumes publishing JOE in print format, in order to ensure compliance with Department of Labor regulations for obtaining work visas for non-citizen economists. Print issues will be distributed via the U.S. Postal System two to three weeks after they are published electronically. Annual subscriptions will run from August through the following June of each year, and are $50 each. To subscribe go to http://www.aeaweb.org/joe/subscribe/. Single issues are available for $45 each.

My AEA dues at waste. Thanks DOL. And it's not very green either.

Addendum: Alex at Marginal Revolution had the same reaction, about 20 minutes later.

More on Mark Thoma

Larry Summers has an excellent response with which I largely agree.

I would only quibble with the failure to focus on variation across subfields in economics. This is important not for blame assignment, but because the existing equilibria differ across fields as do the possibilities for credible empirical work. There can be no "credibility revolution" in the study of business cycles, for example, because we will never have plausible exogenous variation in them. That does not mean that we should give up, but it does mean that macro is necessarily different from, say, labor economics or the micro part of development economics (which, at present, is essentially all of development economics, though that was not the case in the past).

I also liked the response by Ashwin Parameswaran.

My original response is here, which includes a link to the Thoma piece on professors and practitioners.

Happy 99th Milton

A fine birthday tribute, with video, for Milton Friedman, courtesy of reason.

I particularly like the emphasis on the process - of following arguments wherever they lead and of speaking truth to power and taking on conventional "wisdom" - that Friedman did such a fine job of demonstrating.

Professors and practitioners

Mark Thoma argues that academic economists need to pay more attention to practitioners as a way of making themselves more useful to society.

I have several responses to this; I'll start with criticisms:

First, the article is really only about macroeconomists. They are important, and a big chunk of the profession, but hardly all of it. Talking about economists as a vague whole misleads the reader. There is no problem along these lines in development economics, for example, or in the economics of education. Indeed, if anything, those fields would be better balanced if they had a bit more detached theory.

Second, even within macroeconomics, Thoma surely overstates the problem. At least one of my macro colleagues shuttles back and forth to DC all the time to provide aid and counsel on policy choices. A look at any macro journal will reveal a mix of theory and empirical work, with much of the empirical work devoted to estimating policy relevant parameters.

Third, I think a bit more recognition that there is a tension between specialization and division of labor on the one hand and lots of interaction between academics and practitioners would have improved the piece. I suspect that the optimal setup includes some academics who specialize theory and some who delve more into the real world of application. What's that you say ... that is what we have now? Well, perhaps.

Fourth, I think Thoma overstates the value of forecasting. Academic economists disdain forecasters not because they use old models, but because they are mostly selling snake oil, which is to say that most forecasts are not very good. Indeed, as John Cochrane has pointed out many times, in some sense the model says that forecasts should never be very good because current prices already reflect all the available information. In this sense, improving the knowledge base - they "how it works" knowledge that Thoma criticizes in his piece - may be the best way to improve the forecasts that matter most, which are the ones implicit in current prices.

Fourth, I am not convinced that science = "theory and math".

At the same time, I do think there is something to what Thoma has to say. Part of why I do some consulting is precisely to have the interactions with practitioners that Thoma describes. I have learned a huge amount from these interactions about how the econometric methods that I study and use in my academic work get understood and applied in real world applications. Some of those lessons have improved my later academic work and/or guided my choice of things to work on.

I have also seen academic economists who feigned knowledge of particular applied areas but in fact had no clue about them. In my experience this is most common in industrial organization. That field has experienced a methodological revolution in the past 10-15 years. One result has been a strong emphasis on tools, particularly among students on the job market. Improving tools is a very good thing, but for the moment one of the old virtues of the field, which was strong subject area knowledge, has fallen a bit to the wayside. When I was at UWO we hired an applied theorist who claimed their job market paper showed that Microsoft should be broken up by the anti-trust authorities. In fact, the model in the paper had nothing really to do with the Microsoft situation; rather, some misbehaving member of the student's dissertation committee had pushed them to claim that it did so that they would appear more "applied" and topical on the job market.

So, yes, there is a point here, but at the same time we don't really need to have evolutionary biologists hanging out in operating theaters, to borrow Thoma's medical analogy.

Understanding structural retirement models

Hat tip (and title): Charlie Brown

Arrow Prize

The BE Press 2010 Arrow for Junior Economists goes to:

Vincenzo Caponi, Ryerson University

Burc Kayahan, Acadia University

Miana Plesca, University of Guelph

for their paper entitled "The Impact of Aggregate and Sectoral Fluctuations on Training Decisions".

Miana is my student from Western Ontario and I am very happy for her!

Congratulations to all three authors!

Amateur economist spam

I, along with all of my UM economics colleagues, received the following email:

--------------------------------------------------------------------------------

Hi University of Michigan Department of Economics,

My name is Chris and I have written a short story (attached) that has challenging ideas for our economy. The basic principle of story is that equality is the truth, and if equality is disrupted somehow, that the way back to equality is by sharing. So this is also a truth: love is to share. Therefore there is no need for systems, like a wage system, monetary system, school system, or any system. We can share all the world; our basic necessities of life, but brighter than just basic; our luxuries and commodities; our inventions and creations; our art and other hobbies. The story is a modern day twist on the writings of Plato.

This is not communism or socialism (these things are systems). There is no running government, the people will share all the world together.

There is more to the story. Please take a read or two. You can post or use this story anywhere. I am sending this information out to other schools around the world. Contact me.

Thanks!

[name]

www.thetruthofequality.org

Download my free ROCK album:

https://www.yousendit.com/download/UnlBeFlYTmE1bmhjR0E9PQ

[phone number]
[email address]

--------------------------------------------------------------------------------

You can find the story that was attached on the webpage.

I'll confess, the whole thing rather leaves me at a loss for words, but I suppose it is at least better than emails from Nigerian bankers, relatives of former dictators and the other bits that make it through UM's email filter, if only because it provides some variety.

Addendum: Name, phone number and email deleted by request of the original sender.

Theorists tackle the financial crisis

David Warsh provides a readable and interesting summary of the goings-on at the 22nd Jerusalem Summer School in Economic Theory.

Reading this piece it struck me how much deeper Warsh's grasp of economics is than certain NYT economics columnists who come in for relatively frequent criticism on this blog. And, unlike certain other NYT economics columnists, Warsh seems to be able to make his points effectively without personal attacks. Seems like a misallocation of resources to me. Someone call the central planner.

Momism

The Atlantic advertises David Leonhardt's brief talk at the Aspen Institute about the perils of "momism". I look forward to Leonhardt's future remarks on the parallel plight of men and women who spend a lot of time with their boats. Boats, like children. sports cars and flower gardens, are a durable consumption good that often proves so engaging that it consumes a great deal of time that might otherwise be spent on career development. I also look forward to Leonhardt's call for universal boat care and company marinas.

More seriously, I do understand that children are different than boats in important ways, but at the same time I think the comparison is illustrative and useful to provoke some actual thinking in a policy domain where sentiment tends to reigns supreme. There are serious equity issues here not just between men and women, but between people who choose to have children and people who do not. There are also substantive environmental issues associated with subsidizing domestic population growth (the explicit aim of universal daycare policies in other countries but left implicit in discussions that focus on parental gender) as well as links to policy choices related to immigration. Thinking like an economist about these issues can aid in sorting out both the policy and the ethics by identifying the inherent tradeoffs.

Ban the job-killing ATMs

A funny video from the Media Research Center.

The only downside is that neither the MRC nor the people they ask for signatures seem to realize that the "M" in "ATM" stands for "machine", so that saying "ATM machine" over and over makes one look silly.

NBER disclosure policy

The National Bureau of Economic Research (NBER) released their new disclosure policy in an email to their affiliates. It seems sensible enough, and the FAQ on the web page is surprisingly balanced in noting that one can sell one's research soul to both private firms and to the government.

Urban farming

Ed Glaeser throws cold water (or is it cold carbon) on urban farming, whose carbon cost, in terms of reduced density, likely well exceeds any gain due to reduced transport costs.

Says Ed:

Good environmentalism is smart environmentalism that thinks through the total systemic impacts of any change.

One is tempted to say that once the "thinks through" part has started, we have crossed the heavily guarded border between environmentalism and economics, but that would be a bit snarky so I won't say that.

Aside: I went to gradual school with Ed too. When you take 9 years to get a job and 11 years to finish (don't do this at home, trained professionals only) you overlap with a lot of people.

Via, amazingly, portside.org.

Rebecca Blank

An interview with Rebecca Blank, former dean of the Ford School at UM, and apparently under consideration to replace Goolsbee at CEA.

Via Brad DeLong, who thinks Becky is not Keynesian enough or is but is toeing the administration line. A third, more prosaic, explanation is that she is famously careful with other people's money, which is why she was the perfect dean during the construction of the Ford School's new building.

Interviews with Heckman graduate students

On pages 10-11 of the Spring-Summer 2011 issue of Dialogo, the magazine (on line but for one print issue per year) that the Division of the Social Sciences at Chicago produces for its alumni, you can find interviews with three Heckman students.

I don't know how the particular students interviewed for the piece were selected but they do a good job of giving a sense of the intensity of the enterprise.

Hat tip to Nina Herbst at Chicago for putting this on line so that I could blog about it.

Economists in WW2

Some interesting history of the role that economists played in the US war effort in WW2 from Economic Principals.

And, distantly related, some well justified bashing of Richard Shelby and the rest of the red team for promoting ignorance and incompetence by keeping Peter Diamond off of the Federal Reserve Board of Governors.

Freakonomics radio on parenting

A group of economists, some of whom I know, get together with Dubner to talk about both research on raising children and about their own choices on Freakonomics radio.

The research suggests that parents matter only modestly to educational and earnings outcomes, and that much of the guilt-induced investment of time and money by striving middle and upper-middle class parents is likely a waste unless it also yields a current utility payoff. What, it seems, that parents can do is affect their children's socialization, which is to say, how well they play with others in the broad sense.

At the same time, many of the economists on the show don't follow the research and still over-invest. What can you do?

The transcript is here; I could not find the audio but maybe you can.

Aside: I'm still trying to picture Bruce Sacerdote as a hedge fund manager.

Hat tip: Tanya Byker, parent and economist-in-training