Education

Modern Principles, 3rd ed!

by on December 16, 2014 at 7:31 am in Books, Economics, Education | Permalink

Modern Principles 3rd
The third edition of the best written, most interesting principles of economics textbook, Modern Principles (economics, microeconomics and macroeconomics), hits the shelves any day now. The 3rd edition features a brand new chapter on asymmetric information, more material on economic growth including geography and growth, a new section on nominal GDP targeting and updated data and graphs throughout. Plus we have a very exciting and brand new feature used throughout the book…but I am going to hold off discussing that for a few more weeks. More to come soon!

Those are the topics of a new paper by Güell, Mora, and Telmer, which is interesting on multiple levels.  The abstract is here:

We propose a new methodology for measuring intergenerational mobility in economic well-being. Our method is based on the joint distribution of surnames and economic outcomes. It circumvents the need for intergenerational panel data, a long-standing stumbling block for understanding mobility. It does so by using cross-sectional data alongside a calibrated structural model in order to recover the traditional intergenerational elasticity measures. Our main idea is simple. If ‘inheritance’ is important for economic outcomes, then rare surnames should predict economic outcomes in the cross-section. This is because rare surnames are indicative of familial linkages. If the number of rare surnames is small this approach will not work. However, rare surnames are abundant in the highly-skewed nature of surname distributions from most Western societies. We develop a model that articulates this idea and shows that the more important is inheritance, the more informative will be surnames. This result is robust to a variety of different assumptions about fertility and mating. We apply our method using the 2001 census from Catalonia, a large region of Spain. We use educational attainment as a proxy for overall economic well-being. A calibration exercise results in an estimate of the intergenerational correlation of educational attainment of 0.60. We also find evidence suggesting that mobility has decreased among the different generations of the 20th century. A complementary analysis based on sibling correlations confirms our results and provides a robustness check on our method. Our model and our data allow us to examine one possible explanation for the observed decrease in mobility. We find that the degree of assortative mating has increased over time. Overall, we argue that our method has promise because it can tap the vast mines of census data that are available in a heretofore unexploited manner.

There are ungated versions here.  For the pointer I thank the excellent Kevin Lewis.

Investing Aphorisms

by on December 13, 2014 at 7:24 am in Economics, Education | Permalink

Morgan Housel of the Motley Fool has a list of 122 Things Everyone Should Know About Investing And The Economy. Many are variations on a theme but here are a few I liked:

  • Investors want to believe in someone. Forecasters want to earn a living. One of those groups is going to be disappointed. I think you know which.
  • There were 272 automobile companies in 1909. Through consolidation and failure, three emerged on top, two of which went bankrupt. Spotting a promising trend and a winning investment are two different things.
  • I once asked Daniel Kahneman about a key to making better decisions. “You should talk to people who disagree with you and you should talk to people who are not in the same emotional situation you are,” he said. Try this before making your next investment decision.
  • For many, a house is a large liability masquerading as a safe asset.
  • “Success is a lousy teacher,” Bill Gates once said. “It seduces smart people into thinking they can’t lose.”

You can file this one under “Questions that are rarely asked.”  The authors are Bauman, Gale, and Milton and the subtitle is Cross sectional study of political affiliation and physical activity.  It seems, in fact, that the armchair socialists are up out of their chairs:

Objective To examine the validity of the concept of left wing “armchair socialists” and whether they sit more and move less than their right wing and centrist counterparts.

Design Secondary analysis of Eurobarometer data from 32 European countries.

Setting The study emanated from the authors’ sit-stand desks (rather than from their armchairs).

Participants Total of 29 193 European adults, of whom 1985 were left wing, 1902 right wing, 17 657 political centrists, and 7649 politically uncommitted.

Main outcome measures Self-reported political affiliation, physical activity, and total daily sitting time.

Methods Linear models were used to examine the relation between physical activity, sitting time, and reported political affiliation.

Results The findings refute the existence of an “armchair socialist”; people at the extremes of both ends of the political spectrum were more physically active, with the right wing reporting 62.2 more weekly minutes of physical activity (95% confidence interval 23.9 to 100.5), and the left wing 57.8 more minutes (20.6 to 95.1) than those in the political centre. People with right wing political affiliations reported 12.8 minutes less time sitting a day (3.8 to 21.9) than the centrists. It is those sitting in the middle (politically) that are moving less, and possibly sitting more, both on the fence and elsewhere, making them a defined at-risk group.

Conclusions There is little evidence to support the notion of armchair socialists, as they are more active than the mainstream in the political centre. Encouraging centrists to adopt stronger political views may be an innovative approach to increasing their physical activity, potentially benefiting population health.

The full paper is here, and for the pointer I thank Michelle Dawson.

There is a new 538 article on this, by , and , here is one excerpt:

We first found that an economist’s research area is correlated with his or her political leanings. For example, macroeconomists and financial economists are more right-leaning on average while labor economists tend to be left-leaning. Economists at business schools, no matter their specialty, lean conservative. Apparently, there is “political sorting” in the academic labor market.

A word analysis indicates the most left-leaning phrase is “post Keynesian,” followed by “credit union.”  The most right-leaning phrase is “free banking,” and then “bank note” and “hedge fund.”  Here is some good news:

There’s no evidence that publication decisions are determined by editor ideology.

And yet:

…a left-leaning economist is more likely to report numerical results aligned with liberal ideology (and the same is true for right-leaning economists and conservative ideology)

This won’t be a popular paragraph with everyone:

Policymakers may need to “re-center” economists’ findings by adjusting for ideology. Take the area of tax rates for high earners. The average optimal tax rate reported by economists in our data is 41 percent. Using our model, we can also estimate that these economists as a group are slightly left of center. We can then figure out what optimal top tax rate a hypothetical centrist economist would report: 33 percent.

Here is the authors’ lengthy research paper on all of this (pdf).

For the pointer I thank Bruce Bartlett.

I reviewed this very good and very useful book by Eric and Joel Best in the 28 November issue of the Times Literary Supplement, not on-line.  Here is one excerpt from my review:

The second problem is that American higher education is much more indebted than it appears at first glance.  Most non-profit colleges and universities have only small amounts of explicit debt on their books, but there are many forms of implicit debt.  Many of those institutions made salary commitments to tenured faculty members, or promised donors they would continue various programmes, or they initiated or expanded sports teams and facilities, hoping to fund those plans with future tuition increases.  A slow economic recovery, sluggish entry-level wages in labour markets, recalcitrant state legislatures, and, yes, the student debt crisis will make those tuition increases very difficult to pull off.  This liquidity crunch is already under way and it has come first to the profit-making institutions and to stand-alone business and law schools, which will be closing and consolidating in great numbers.

I call it “probably the best and clearest book on the United States’ complex student debt problem.”  You can buy the book here.  Also buy the TLS issue, it is their best of the year, as it contains an especially fine “Best Books of the Year” list, you can stop worrying about TNR now.

Skype Translator is on the way

by on December 4, 2014 at 1:38 pm in Education, Science, Web/Tech | Permalink

In May, Satya Nadella and Skype Corporate Vice President Gurdeep Singh Pall unveiled Skype Translator, Microsoft’s breakthrough in real-time speech translation at Re/code’s inaugural Code Conference. Since then, the engineering team has been hard at work to get the technology behind Skype Translator ready for a preview release. Starting today, we are rolling out a Skype Translator preview program sign-up page.

There is more here, the pointer is from Lotta Moberg.

Chilean inequality has been going down lately, pre-transfer that is, but this is not in every way reassuring news:

“In this case, the fall of inequality would be bad news over the long term,” Mr. de la Torre told me. “We would be specializing in sectors that require less knowledge.”

That is from a very good column on Chile by Eduardo Porter.  In my view, although Chile of course has done very well, it is one of the most overrated countries in the world today, economically speaking that is.  They have not overcome their educational problems or their class problems, the glorious run of copper is over, they will have a hard time continuing to move up the quality ladder, and their policies are moving in a more redistributive but not growth-enhancing direction.

Way back when, Alex and I used to select the most underrated and most overrated countries, in the sense of which country-specific mutual funds you might short or buy.  My pick this year for the most overrated country is, I am afraid to say, a country I love dearly and that is Chile.

What is your pick?

Lotta Moberg, who does international, development, and macro, with a current focus on Special Economic Zones, and

Alexander Schibuola, who does macro, money, and capital theory.

I recommend them both very highly.  Of course I have more to say about them than that, so if you are interested either email me or request their letters of recommendation through normal channels.

Cato is holding a conference this Thursday (Dec. 4) on The Future of US Economic Growth. Speakers include Nobelist Edmund Phelps, Ed Glaeser, Dale Jorgenson, John Haltiwanger and Erik Brynjolfsson. I will speak in the afternoon on the topic of entrepreneurship and whether economic dynamism is in decline. I will have some surprising things to say about dynamism and regulation. More information at the link.

That is the title of a new paper (pdf) by Marion Fourcade, Etienne Ollion, and Yann Algan, here is the abstract:

In this essay, we investigate the dominant position of economics within the network of the social sciences in the United States.  We begin by documenting the relative insularity of economics, using bibliometric data.  Next we analyze the tight management of the field from the top down, which gives economics its characteristic hierarchical structure.  Economists also distinguish themselves from other social scientists through their much better material situation (many teach in business schools, have external consulting activities), their more individualist worldviews, and in the confidence they have in their discipline’s ability to fix the world’s problems.  Taken together, these traits constitute what we call the superiority of economists, where economists’ objective supremacy is intimately linked with their subjective sense of authority and entitlement.  While this superiority has certainly fueled economists’ practical involvement and their considerable influence over the economy, it has also exposed them to more conflicts of interest, political critique, even derision.

The paper has interesting bits throughout, such as:

…the top five sociology departments now [total] 35.4 percent in the American Journal of Sociology, but 45.4 percent in the Journal of Political Economy, and a sky-high 57.6 percent in the Quarterly Journal of Economics.

The section on the rise of finance starts on p.18, worth a read.  And here Paul Krugman adds extensive and very interesting comments.  My view is that economists are in fact the smartest of the social scientists (on average), but this also has led economics to degenerate somewhat into a game of signaling smarts, to the detriment of breadth and knowledge of facts about the world.

For the pointers I thank Gabriel Zucman and Claudia Sahm, who comments as well.

“Corinthian Colleges, accused of exploiting students, finds a buyer for half its schools.  The unlikely savior?  A student loan debt collection company.”

Note that quotation is in the print edition but I don’t see it on-line.

We are running a contest for MRU, and the goal is to figure out how economists ought to be put on cereal boxes.  Imagine that a famous economist would in fact be represented by a cereal and a cereal box.  For example there would be:

Thomas Piketty, Special K

Another possibility would be tweaking the cereal name slightly, so you would get:

Hyman Minsky, Captain Liquidity Crunch

Or:

John Bates Clark, Marginal Product 19

You could try:

Eugene Fama, Lucky Charms, though perhaps that is too subtle for some.

The winner of the contest gets…his or her suggestion actually realized.  Please enter your suggestions, and vote on the suggestions of others, here.  Or if you don’t want to enter the contest per se, there is always the MR comments section…

…cetacean brain size, relative to body size, increased substantially about thirty-eight mill years ago when the odontocetes evolved from the ancient archaeocetes…

What drove these changes? It does not seem to have been the transition to an aquatic existence itself as that occurred about fifty-five million years ago and brains stayed at roughly the same relatively small size relative to body weigt as the archaeocetes made their gradual entry into the ocean.  A better hypothesis is that the increased brain size of the odontocetes thirty-eight million years ago was driven by the evolution of echolocation.  The early odontocetes had inner ear bones that were good at picking up high frequency sound, which suggests that they had developed a form of sonar.  Lori Marino thinks “that echolocation came on line and then got co-opted for social communicative purposes.”  In this scenario, the odontocete brains increased in relative size to deal with the acoustic information itself, as well as, perhaps, a new perceptual system based on the data from the returning echoes.  But…the change may have been even more profound: “This may indicate that the large brains of early odontocetes were used, at least partly, for processing this entirely new sensory mode [echolocation] that evolved at the same time as these anatomical changes and perhaps for integrating this new mode into an increasingly complex behavioral ecological system.”

That is from the new and notable The Cultural Lives of Whales and Dolphins, by Hal Whitehead and Luke Rendell, previously covered on MR here.  And here is my earlier post on the economics of dolphins.

Human-dolphin fishing cooperatives

by on November 21, 2014 at 2:37 am in Books, Education, Science | Permalink

1. They have been reported to exist in Australia, India, Mauritania, Burma, and the Mediterranean, but the best known are in Brazil.

2. In parts of southern Brazil, human fisherman have been cooperating with dolphins for many generations (of each species).

3. If fishermen clap just the right way, dolphins will herd fish into the desired areas of fishermen, in muddy lagoon areas.

4. The dolphins perform a distinctive kind of dive to signal to the humans it is time to cast the net for the fish.

5. Only some individual dolphins are able (willing?) to do this well, perhaps the others belong to the forty-seven percent.

5b. The dolphins which cooperate with the fisherman are also more social, more socially connected, and more cooperative with other dolphins.

6. The Brazilian fishermen name the star cooperating dolphins after ex-presidents, soccer players, and Hollywood stars.

7. The names aside, it is not clear whether dolphins benefit from offering this assistance; some commentators suggest the dolphins end up with isolated or injured fish from these exercises.

Here is one blog post report on these practices.  Here is one piece of the original research.  I stumbled upon this while reading the new and excellent Hal Whitehead and Luke Rendell The Cultural Lives of Whales and Dolphins, a new book from University of Chicago Press.