That is a new NBER Working Paper by Angrist, Autor, Hudson, and Pallais.  Here is the sentence of interest for the recent community college initiative:

Awards offered to prospective community college students had little effect on college enrollment or the type of college attended.

Do note that some other kinds of awards appeared to be more effective, so this is not an anti-subsidy result per se.  And here is a new Bulman and Hoxby paper on federal tax credits and the demand for higher education (not just community colleges):

We assess several explanations why the credits appear to have negligible causal effects.

Making these programs work is not so easy.  Reihan Salam offers good points, so does Arnold Kling.

Here is a 2010 research paper (pdf) by Schenk and Matsuyama, and here is one sentence from the abstract:

Our results show returns are six percent for those completing a community college degree.

Other work shows that fewer than forty percent of those who start will finish with a degree-based reward and that number may be lower yet for the marginals who are not currently enrolled.  Of course those who do not complete will waste some time and money along the way, although the learning may raise their productivity somewhat.

The overall return on additional subsidies to community college participation is therefore…?

The initial pointer is from @herdingbats.

Our newest MRUniversity online course in economics is now starting, Principles of Microeconomics! Tyler and I have created what we think is our most engaging course yet — featuring high production quality videos filled with great examples to illustrate key concepts.

We’ll cover all of the important topics in microeconomics, such as competition, monopoly, price discrimination, externalities, public goods and more. There are practice questions along the way to test your knowledge, and don’t hesitate to post your questions on each video page.

Check out our video introducing the course and economics more generally. We begin with a great story about incentives!

Here is some testimony from 2011 (pdf), by Mason M. Bishop:

…the myriad of job training programs funded by multiple federal agencies needs to be curtailed.  Currently, the U.S. Department of Energy, the U.S. Department of Health and Human Services and the National Science Foundation are all funding community college education and training grants.  The proliferation of funding for post-secondary education and training programs from Federal agencies with no experience in education and training issues, only serves to foster “mission creep,” duplication of effort and a waste of valuable resources.

Here are my earlier remarks on the new community college subsidies proposal.  Here is Mason Bishop on Twitter, with further remarks.

David Leonhardt writes:

The plan — which would require congressional approval — would apply to students attending a two-year college, including part time, so long as the college offered credits that could transfer to a four-year college or provided training that led to jobs.

David’s article is excellent and has much useful information:

As Reihan Salam of National Review notes, community college tuition is already low. In fact, it’s zero, on average, for lower-income families, after taking financial aid into account. Vox’s Libby Nelson wrote, “Community college tuition for poorer students is often entirely covered by the need-based Pell Grant.”

One potential implication is that by making community college universally free, the government is mostly reducing the cost for higher-income families.

Calculating the completion rate at community colleges is difficult, this estimate does some work to get it up to 38 percent.  What would the completion rate be for the marginal students encouraged under the Obama plan?  We don’t know, but I’ll guess at 20-30%, no more.  That’s the real problem.

Furthermore some of the value of education is signaling to the labor market that you are able to finish college.  I do think the learning component of education is generally more important, but for “marginally not attending community college individuals” — who are often regarded with suspicion by employers — I would not be surprised if the signaling component were one third or more of the value of a degree.  To that extent, pushing more marginals into the degree funnel lowers the value of the degree for the others who were getting it already by lowering the average productivity of the pool of finishers.  That would lower the efficiency gains from the program and also partially offset some of the intended distributional consequences.

Mike Konczal likes the idea, and believes it may lower higher education prices more generally.  Libby Nelson at Vox considers it to be a middle class benefit.  Neil McCluskey at Cato is negative.  Carrie Sheffield is critical.  Here is a look at potential winners and losers in the higher education sector.  The plan could lead to federal money replacing state money, rather than leveraging it.

Citing the growing economy and improving labor market, Andrew Flowers noted:

college enrollment is declining for recent high school graduates (those 16 to 24 years old). And it’s falling fastest for community colleges.

Overall my take is that the significant gains are to be had at the family level and at the primary education level, and that the price of community college is not a major bottleneck under the status quo.

The tables have turned on zoo-goers in China — where people are paying to be locked in cages while hungry lions and tigers stalk their every move.

The Lehe Ledu Wildlife Zoo in Chongqing city is giving people the hair-raising chance to learn what it’s like to come face to face with an apex predator, Central European News reports.

Visitors are forking over their cash to be caged inside the back of a truck as it makes its way through the animal park. Just to make sure they get the attention of the beasts, huge chunks of raw meat are tied to the bars to lure them as close as possible.

“We wanted to give our visitors the thrill of being stalked and attacked by the big cats but with, of course, none of the risks,” said zoo spokeswoman Chan Liang. “The guests are warned to keep their fingers and hands inside the cage at all times because a hungry tiger wouldn’t know the difference between them and breakfast.”

The chilling, once-in-a-lifetime experience has been a hit with visitors — the trips have been sold out for the next three months, according to CEN.

The link is here, via NinjaEconomics.  Elsewhere, in New York they are banning the tiger selfie, with or without huge chunks of raw meat.  Yet also in New York, Tough Mudder has added tear gas to some of its obstacle routines, via Hugo Lindgren.

The third edition of Modern Principles of Economics is now available! Modern Principles is the best written and most interesting economics textbook and it has a wonderful new feature which puts it far ahead of its competition.

The third edition features over 30 beautifully produced videos each carefully chosen to integrate perfectly with Modern Principles of Economics. A majority of the videos are newly written and designed by Tyler and myself and all are linked in the text with URLs and QR codes. The videos will also be available in Macmillan-Worth’s learning management system, LaunchPad, along with the e-text, grading system and assessment tools.

The videos integrate perfectly with Modern Principles but they also work great with any textbook, Most importantly, we will be making all of the videos available to anyone in the world completely free of obligation or charge (more on that next week!).

A new chapter in Modern Principles covers asymmetric information so here is our video on adverse selection featuring Groucho Marx and George Akerlof!

If you read a book, how many other related or similar books does it make you order?  (Of wish to order, if you are budget constrained.)  If the number is at least three or four, the book you read is almost certainly very interesting and worthwhile, if not always accurate.

Andrew Roberts’s biography of Napoleon made me want to read an additional biography of Napoleon, because it made his life to me more interesting.  It made Napoleon’s period more interesting too.  I might read a book on cavalry tactics as well, a topic I have never read on before.

Some books pretend to be the final word on a topic, but it is unlikely they succeed.  If you don’t end your read with some additional book orders, maybe you need to ask yourself what exactly went wrong.

At times it is not a book order which is the appropriate follow-up.  Say you read a book on Sri Lanka and you respond by going to Sri Lanka, well that counts too.  Or a biography of Beethoven may lead you to more of his music, rather than to another book on his life.

If I apply the Amazon order test, the best book for me this last year was Michael Hoffman’s Where Have You Been?: Selected Essays.

Hofmann’s book wins additional points for chain effects, namely the books I ordered, as a result of reading Hofmann, in turn made me want to order further books.  But chain effects are tricky.  Following my read of Andrew Roberts, and then a follow-up Napoleon biography, will I read yet another life of Napoleon?  That may depend on how good the follow-up is, and Roberts should not be held liable for that.  Or should he?  What should you think of a book which leads you to so-so follow-ups rather than to excellent follow-ups?  A blog post which does the same?

What percentage of the value of a book is derived from the quality of the follow-ups it induces?  Under plausible rates of discounting, for serial readers this could easily by eighty or ninety percent or more.  (Could it be that actual book reviews are not consequentialist? Horrors.)  How about a book review outlet which refuses to consider the books under consideration, but rather considers and evaluates what they will induce you to read next?

I would subscribe.

That is the new paper by Lalley and Weyl.  Here is the abstract:

While the one-person-one-vote rule often leads to the tyranny of the majority, alternatives proposed by economists have been complex and fragile. By contrast, we argue that a simple mechanism, Quadratic Voting (QV), is robustly very efficient. Voters making a binary decision purchase votes from a clearinghouse paying the square of the number of votes purchased. If individuals take the chance of a marginal vote being pivotal as given, like a market price, QV is the unique pricing rule that is always efficient. In an independent private values environment, any type-symmetric Bayes-Nash equilibrium converges towards this efficient limiting outcome as the population grows large, with inefficiency decaying as 1/N. We use approximate calculations, which match our theorems in this case, to illustrate the robustness of QV, in contrast to existing mechanisms. We discuss applications in both (near-term) commercial and (long-term) social contexts.

Eric Posner has a good summary.  I would put it this way.  Simple vote trading won’t work, because buying a single vote is too cheap and thus a liquid buyer could accumulate too much political power.  No single vote seller internalizes the threshold effect which arises when a vote buyer approaches the purchase of an operative majority.  Paying the square of the number of votes purchased internalizes this externality by an externally imposed pricing rule, as is demonstrated by the authors.  This is a new idea, which is rare in economic theory, so it should be saluted as such, especially since it is accompanied by outstanding execution.

The authors give gay marriage as an example where a minority group with more intense preferences — to allow it — could buy up the votes to make it happen, paying quadratic prices along the way.

My reservation about this and other voting schemes (such as demand revelation mechanisms) is that our notions of formal efficiency are too narrow to make good judgments about political processes through social choice theory.  The actual goal is not to take current preferences and translate them into the the right outcomes in some Coasean or Arrovian sense.  Rather the goal is to encourage better and more reasonable preferences and also to shape a durable consensus for future belief in the polity.

(It is interesting to read the authors’ criticisms of Vickrey-Clarke-Grove mechanisms on p.30, which are real but I do not think represent the most significant problems of those mechanisms, namely that they perform poorly on generating enough social consensus for broadly democratic outcomes to proceed and to become accepted by most citizens.  One neat but also repugnant feature of democratic elections is how they can serve as forums for deciding, through the readily grasped medium of one vs. another personae, which social values will be elevated and which lowered.  “Who won?” and “why did he win?” have to be fairly simple for this to be accomplished.)

I would gladly have gay marriage legal throughout the United States.  But overall, like David Hume, I am more fearful of the intense preferences of minorities than not.  I do not wish to encourage such preferences, all things considered.  If minority groups know they have the possibility of buying up votes as a path to power, paying the quadratic price along the way, we are sending intense preference groups a message that they have a new way forward.  In the longer run I fear that will fray democracy by strengthening the hand of such groups, and boosting their recruiting and fundraising.  Was there any chance the authors would use the anti-abortion movement as their opening example?

If we look at the highly successful democracies of the Nordic countries, I see subtle social mechanisms which discourage extremism and encourage conformity.  The United States has more extremism, and more intense minority preferences, and arguably that makes us more innovative more generally and may even make us more innovative politically in a good way.  (Consider say environmentalism or the earlier and more correct versions of supply-side economics, both innovations with small starts.)  But extremism makes us more innovative in bad ways too, and I would not wish to inject more American nutty extremism into Nordic politics.  Perhaps the resulting innovativeness is worthwhile only in a small number of fairly large countries which can introduce new ideas using increasing returns to scale?

By elevating persuasion over trading in politics (at some margins, at least), we encourage centrist and majoritarian groups.  We encourage groups which think they can persuade others to accept their points of view.  This may not work well in every society but it does seem to work well in many.  It may require some sense of persuadibility, rather than all voting being based on ethnic politics, as it would have been in say a democratic Singapore in the early years of that country.

In any case the relevant question is what kinds of preference formation, and which kinds of groups, we should allow voting mechanisms to encourage.  Think of it as “politics as education.”  When it comes to that question, I don’t yet know if quadratic voting is a good idea, but I don’t see any particular reason why it should be.

Addendum: On Twitter Glenn Weyl cites this paper, with Posner, which discusses some of these issues more.

…”the internet is now a major driver of the growth of cognitive inequality.” Or in simpler terms, “the internet makes dumb people dumber and smart people smarter.”

The post is here, Kevin’s earlier post on that theme is here.

Everyone is up in arms over the list supplied by The Economist.  I won’t go through those debates.  Let me just note that for all the talk of wonk this, data that, and Generalized Method of Moments this that and the other, every now and then the best algorithm is simply Asking Tyler Cowen.  So here are, in no particular order, the most influential economists circa 2014:

1. Thomas Piketty

2. Paul Krugman

3. Joseph Stiglitz

4. Jeffrey Sachs

5. Amartya Sen

Basta.  Of course Yellen and Draghi are extremely influential as central bankers, but in the way Paul Volcker was, so that is a different list, albeit a more important one.

I would add several comments:

a. Piketty does very very well for marginal impact in 2014, but probably would/will do less well over broader time spans, even if you think his work will hold up.

b. Krugman is a clear winner for the United States.

c. Stiglitz, Sachs, and Sen have most of their influence outside of the United States.

d. Larry Summers is influential among economists and the intelligentsia and is one possible choice for number six, with Dani Rodrik as another, or maybe drum up the leading Islamic theorist on sukuk.  But Summers is not so influential with casual observers, which in some ways puts him as the opposite of Stiglitz (in his current incarnation).

e. There is no right-wing or center-right economist on the list.  See the EJW symposium on why there is no Milton Friedman today.  Krugman is probably the most politically conservative figure among the top five.

f. Behavioral economics as a whole is quite influential, but with no single dominant figure of influence.  In actuality Cass Sunstein (not formally an economist) and Richard Thaler might globally be #1 in the behavioral area, followed by Daniel Kahneman.

*What makes this book so great*

by on December 27, 2014 at 1:03 am in Books, Education | Permalink

That is the title of the new Jo Walton book, and the subtitle is Re-Reading the Classics of Science Fiction and Fantasy.  It is an extended paean to the pleasures of re-reading, exhibiting a taste which is interesting , useful, and yet uneven (fifteen separate works by Lois McMaster Bujold are covered, each with its own chapter.  I do like her, but…).  Most of the book offers analyses of individual works, here is one broader bit:

In a science fiction novel, the world is a character, and often the most important character.

In a mainstream novel, the world is implicitly our world, and the characters are the world.

In a mainstream novel trying to be SF, this gets peculiar and can make the reading experience uneven.

…The difference between a mainstream novel and a SF one is that different things are just scenery.

She is trying to tell me that I should attempt Samuel R. Delany’s Dhalgren again.  She recommends re-reading Neal Stephenson’s Anathem, but can’t bring herself to say it is good.  Overall buying this book caused me to make four additional Amazon purchases, a good sign that is was worth my while.

Should you keep your kids in the dark about Santa not being who he says he is?  Who you say he is?  Will Wilkinson says he will:

Well, we’re atheists. I don’t intend to proselytize atheism to my kid, because I’m not interested in getting him to believe anything in particular. What I’m interested in is teaching him how to reason in a way that maximizes his chances of hitting on the truth. Now, one of the most interesting truths about the empirical world is that there are all these powerful systems of myth that are kept afloat by a sort of mass conspiracy, and humans seem disposed to pick one from the ambient culture and take it very seriously. But it can be hard to get your head around the way it all works unless you participate in it. Santa is a perfect and relatively harmless way to introduce your child the socio-psychology of a collective delusion about the supernatural. The disillusionment that comes from the exposure to the truth about Santa breeds a general skepticism about similarly ill-founded popular beliefs in physics-defying creatures.

I say why not leave them guessing, hovering in a state of Bayesian Santa doubt?  My parents never told me Santa “was real,” but they didn’t tell me he “wasn’t real” either, so I slid rather gracefully into my Santa non-belief.  I don’t recall ever feeling disillusioned by a sense of loss and in fact those presents kept on coming.  I even had a clearer sense of the appropriate channel for making gift requests, what’s not to like about that?

Why not teach them some Walter Benjamin early on?:

The 99-cent App “Talking Santa,” in addition to allow children to talk to an animated St.Nick, allows them to run him over with a snowball and, when the “violence” setting is turned on, slap him.

Some sociologists and child-development experts warn the technology puts the magic of Christmas in jeopardy.  If children treat Santa as they would any classmate — constantly texting or calling or tweeting at him — then what makes Santa special?

Remember Smith’s diamond-water paradox, which in fact dates as far back as Galileo?

I recall sitting on Santa’s lap as a tot and being terrified by his rubber fingers (why oh why was he wearing rubber fingers?  Were his real fingers scarred?).  Thank goodness we have left those days behind, I would have preferred a simple text although I barely know how to do that either.

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.