Education

IT IS not quite Keynes-Hayek, but Lin-Zhang is a marvel in its own right. Perhaps the most famous debate in the history of economics was that between John Maynard Keynes and Friedrich Hayek—a clash over the benefits and perils of government intervention that exploded in the 1930s and still reverberates today. It has echoed around Chinese lecture halls in recent months. Justin Lin, a former chief economist of the World Bank, who leans to Keynesian faith in public spending, has squared off against Zhang Weiying, a self-professed Hayekian who doubts bureaucrats can ever beat the free market.

Like their predecessors, Mr Lin and Mr Zhang have been sparring over two decades. And whereas Keynes and Hayek were down the road from each other (respectively, in Cambridge and London), the Chinese professors are now only a few paces apart, both at the prestigious Peking University. Their latest debate has been one of their fiercest, becoming a talking point for the domestic press, other academics and even officials.

Here is the full story from The Economist.  Now I am waiting for the Russ Roberts Chinese opera video…

Greg Adamo, a loyal MR reader, writes me with a query:

I have two related questions sparked by your review of American Honey.

First, do you have any tips on judging movies? I make a lot of mistakes. I dismiss a number of very good movies after seeing them the first time. If I happen to watch them a second time – or even a third – I come to see a lot of virtues that I missed originally. I thought Pulp Fiction and the Big Lebowski were quite overrated the first time I saw them. 20 years later, having seen them both several times, my view has changed greatly.  These are only two examples – there are dozens more. How can I avoid this problem?

Second, what is the correct time period for appreciating a movie? We have an annual award system (the Oscars). Like me, it also makes a lot of mistakes. Misfires like Crash or Shakespeare in Love – the don’t hold up to other winners. How Green Was My Valley beat Citizen Kane. Hitchcock never won an Oscar. It’s not just me that goofs up – it’s everyone.

I can’t help but think time is a factor. Suppose the Oscars were like the Baseball hall-of-fame and had a five-year waiting period.  Would that improve the selection? Is there a market-failure in the movie-critic journalism business that pushes reviews out so near to the release date?

This is an area in which overconfidence and bias abound. I wonder if I’m better off disregarding individual movie reviews in favor of aggregated data – i.e. rotten tomatoes.

Those are some very good questions, I will offer some general observations in response:

1. If the movie was shot for the big screen, you must see it on the big screen.  Otherwise your response is not to be trusted.

2. Try not to discriminate by genre or topic, for instance “I don’t like war movies,” “I don’t like romantic comedies,” and so on.  You’ll miss out on the very best of that genre or topic this way, and those are very likely very good indeed.  (NB: In your spare time, you can debate whether there is a horror movies exception to the principle.)

3. In my view, the bad Oscar picks were evident right away.  A five year wait will only elevate some other set of mediocre movies instead.  Movie awards are designed to generate publicity for the industry, not to reward merit.  Ignore them.

4. I use movie criticism in the following way: I read just enough to decide if I want to see the movie, and then no more.  I also try to forget what I have read.  But before a second viewing of a film, I try to read as much as possible about it.

5. On net, I find the best reviews are in Variety magazine, as they are written for movie professionals.  And the market for reviews is largely efficient.  That is, if you read six smart critics on a movie — usually just two or three in fact — you will have a good idea of the quality of the movie.  But you must put aside movies that are politically correct or culturally iconic, as they tend to be overrated.  Brokeback Mountain and The Graduate will make plenty of “best of” lists, and they are both interesting and extremely important for both cinematic and cultural reasons.  Still, I would not say either is a great movie, though they have some wonderful scenes and themes.

6. Hardly anyone watches enough foreign movies, that means you too.  Or you might not watch enough outside your favored cinematic area, such as French, Bollywood, etc.  There is a switching cost due to different cinematic “languages,” but most of your additional rewards at the margin probably lie in this direction.  Furthermore, the very best foreign movies are so excellent it is easy to find out which they are.

7. I still think Pulp Fiction and The Big Lebowski, while good, are overrated.  Don’t always assume your second reaction is the correct one.  In addition, a lot of movies are made to be seen only once, so don’t hold that against them.  For instance, I am not sure I need to see the opening sequence of Private Ryan again, but I am very glad I saw it once.  It made seeing the whole movie worthwhile, but since most of the rest is ordinary, albeit serviceable, seeing it again would be excruciating.

8. It is a mistake to smugly assume that television has surpassed movies.  The best movies (mostly foreign) are better than the best TV, even today.

What tips can you all offer?

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In 1946 the University of Chicago economics department considered the following individuals for job offers: John Hicks, Paul Samuelson, Friedrich A. Hayek, Milton Friedman, Lionel Robbins, A. G. Hart, and George Stigler.

The names making the final vote were Hicks, Hart, Stigler, Friedman, and Samuelson.  The Borda point count method was used, and Hicks turned out to be the clear number one choice.  Neither Friedman nor Samuelson were the number one choices of any departmental voter, while Stigler won three first-choice votes (see Table one in the paper).

The voters themselves were quite prestigious, including Hazel Kyrk, Lloyd Mints, Jacob Marschak, Henry Simons, Tjalling Koopmans, H. Gregg Lewis, Frank Knight, and T.W. Schultz.  If you are wondering, Knight’s first choice was Stigler.  Friedman and Samuelson came in fourth and fifth, respectively, with Samuelson as a distant last place pick.  Schultz however put Friedman dead last.

The winner Hicks was not interested, and that year, Chicago ended up with Friedman and Roy Blough.  Here is the NYT obituary for Roy Blough:

Roy Blough, an economist who served in the Roosevelt and Truman administrations, died on Friday at a retirement home in Mitchellville, Md. He was 98.

From 1938 to 1946, Mr. Blough was director of tax research at the Treasury Department and assistant to the treasury secretary. From 1950 to 1952, he was a member of the president’s Council of Economic Advisers.

Later in the 1950’s, he was principal director of the economic affairs department at the United Nations. He also taught at several universities, including the University of Chicago, from 1946 to 1952, and Columbia University, from 1955 to 1970, when he retired.

He wrote several books, including ”The Federal Taxing Process” and ”International Business: Environment and Adaptation.”

That is all catalogued in this fascinating David Mitch piece, in the latest JPE.  Here are ungated copies and some related information.

Addendum, via Doug Irwin:

Arnold Harberger on Roy Blough: “he came to Chicago and he was a very boring professor. He didn’t inspire anybody to do anything, and he didn’t do very much himself. And he was a little pompous, but nice, a decent analyst, not very deep analytically, didn’t really command the theory of the subject. Then he was named a member of the Council of Economic Advisors and he left Chicago. And all the colleagues sighed a sigh of relief and said, “Gee, we found a way to get rid of him.”

http://www.cmmayo.com/interview-ARNOLD-C-HARBERGER.html

To replace Blough, they hired Arnold Harberger, I am told.

It is entrepreneurship that will create the jobs of the future:

We use a unique horse-­assisted leadership experience to help your group create a profound sense of trust, safety, honest communication, authentic connection, and purpose-driven action.

The Circle Up Experience brings together teams [of people] and horses because these majestic animals [presumably the latter] exemplify balanced and shared leadership. This style of leadership creates stability, trust, and the freedom to communicate while valuing the strengths of each individual member and their unique leadership roles within a dynamic and flexible herd[human]-like environment.

Via R., here is the full site.  Let’s get that equine labor force participation rate back up again…

Maybe voters aren’t quite as irrational as we had thought, or at least not in some of the ways we had thought:

We reassess Achen and Bartels’ (2002, 2016) prominent claim that shark attacks influence presidential elections, and we find that the evidence is, at best, inconclusive. First, we assemble data on every fatal shark attack in U.S. history and county-level returns from every presidential election between 1872 and 2012, and we find little systematic evidence that shark attacks hurt incumbent presidents or their party. Second, we show that Achen and Bartels’ finding of fatal shark attacks hurting Woodrow Wilson’s vote share in the beach counties of New Jersey in 1916 becomes substantively smaller and statistically weaker under alternative specifications. Third, we find that their town-level result for beach townships in Ocean County significantly shrinks when we correct errors associated with changes in town borders and does not hold for the other beach counties in New Jersey. Lastly, implementing placebo tests in state-elections where there were no shark attacks, we demonstrate that Achen and Bartels’ result was likely to arise even if shark attacks do not influence elections. Overall, there is little compelling evidence that shark attacks influence presidential elections, and any such effect—if one exists—appears to be substantively negligible.

That is from a new paper by Anthony Fowler and Andrew B. Hall (pdf).  Here is commentary from Andrew Gelman.  Here is related work by Fowler and Montagnes on football games, here is a response.

Just don’t conclude that voters are so extremely rational, in my view focal, vote-moving irrationalities typically will be tied conflicts in social status across different groups.

Though online technology has generated excitement about its potential to increase access to education, most research has focused on comparing student performance across online and in-person formats. We provide the first evidence that online education affects the number of people pursuing formal education. We study the Georgia Institute of Technology’s Online M.S. in Computer Science, the earliest model to combine the inexpensive nature of online education with a highly-ranked degree program. Regression discontinuity estimates exploiting an admissions threshold unknown to applicants show that access to this online option substantially increases overall enrollment in formal education, expanding the pool of students rather than substituting for existing educational options. Demand for the online option is driven by mid-career Americans. By satisfying large, previously unmet demand for mid-career training, this single program will boost annual production of American computer science master’s degrees by about seven percent. More generally, these results suggest that low-cost, high-quality online options may open opportunities for populations who would not otherwise pursue education.

That is from a new NBER paper by Joshua Goodman, Julia Melkers, and Amanda Pallais.  And here is a new NBER paper by Deming, Lovenheim, and Patterson: “Our results suggest that by increasing competitive pressure on local schools, online education can be an important driver of innovation and productivity in U.S. higher education.”

Even though William Baumol didn’t win the Nobel prize this year it got me to thinking about the cost disease, as did the death last week of William Bowen, the co-author of Performing Arts – The Economic Dilemma which brought the cost disease to public attention. The cost disease says that if two sectors have unequal levels of productivity growth then the sector with lower growth will increase in relative price. If in 1900, for example, it took 1 day of labor to produce one A good and 1 day of labor to produce one B good then the goods will trade 1:1. Now suppose that by 2000 1 unit of labor can produce 10 units of A but still only one unit of B. Now the goods trade 10:1. In other words, in 1900 the price or opportunity cost of one B was one A but in 2000 to get one B you must give up 10 A. B goods have become much more expensive.

The cost disease says only that the relative price of the low productivity good increases, it doesn’t say that the low productivity good becomes absolutely more expensive. The economy in 2000 is much wealthier than in 1900 so relative to income B has become cheaper. Anyone who could consume x units of B in 1900 can still consume x units of B in 2000, the only difference is that in 2000 they will be giving up more A than in 1900 so the tradeoff has become steeper even though still affordable.

Stated generically the cost disease is indisputable. But it becomes more contentious when we try to identify the A and B good. Baumol and Baumol and Bowen initially pointed to labor intensive goods, the service sector, as the low-productivity B sector. The performing arts were the key example–it took four quartet players 40 minutes to perform a Mozart composition in 1900 (or 1800) and it took four quartet players 40 minutes to perform a Mozart composition in 2000, hence no productivity improvements in Mozart performances, hence a rising cost over time since those four players could produce many more goods in say the manufacturing sector in 2000 than 1900. Health care and education are other stock examples.

Tyler offers one response to the cost disease namely that it’s true if you define the good narrowly (listening to a live performance of a 40 minute Mozart composition) but why should we define the good narrowly? If instead we define the good as “listen to music for 40 minutes” then it’s clear that costs have fallen dramatically. Not only has the cost of listening fallen, variety has increased. Costs have fallen even further since Tyler wrote. In a similar way, Tyler and I have argued that online education greater lowers costs and increases quality.

robot-playerHere, however, I offer a different and more fundamental response. Baumol pointed to labor and the service sector as the low productivity, low growth, sector. But robots and artificial intelligence mean that there is no longer a pure “labor” sector. Robots are labor made of capital. Whether we are talking about robot vacuum cleaners, AI answering machines or Dr. Watson there is much more capital in the service sector than ever before. K has become L. And when K becomes L, the productivity of L increases with the productivity of K. If manufacturing productivity improves and we are manufacturing robots then any sector that uses robots increases in productivity. If software productivity improves–if AI becomes more intelligent, for example–then any sector that uses AI increases in productivity. Any service that uses information technology inherits all the productivity growth of information technology.

At any moment there will always be some sectors that are increasing in productivity at a faster rate than other sectors–that is the nature of progress, uneven and episodic–but the time when one could distinguish a manufacturing sector and a service sector and argue that as a general rule the latter increases in productivity at a slower rate than the former is rapidly coming to a close. K has become L.

Addendum: Timothy Lee also has a piece today on the cost-disease.

The coach who never punts

by on October 14, 2016 at 2:51 am in Education, Sports | Permalink

In Little Rock, Arkansas, the Pulaski Academy Bruins play the game of football differently than you’ve ever seen before.

They don’t punt.

They onside kick every time.

And they always go for two.

Kevin Kelley, the architect of the system, studied years and years worth of data and implemented the system with absolute success. He’s won five state titles and has one of the best offenses in the entire country.

There is, sadly, a noisy video at the link, though it is easy to turn off.  Whether you agree with this strategy or not, one of my core views is that we do not have enough experimentation of this kind.  And I’m not just talking about football.

For the pointer I thank Peter Bach-y-Rita.

That is my latest Bloomberg column, here is the introductory section:

The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.

These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.

The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.

Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.

And:

For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.

There is much more at the link.

And these days, that means today is a Messy day:

Messy: The Power of Disorder to Transform Our Lives celebrates the benefits that messiness has in our lives: why it’s important, why we resist it, and why we should embrace it instead. Using research from neuroscience, psychology, social science, as well as tales of inspiring people doing extraordinary things, I explain that the human qualities we value – creativity, responsiveness, resilience – are integral to the disorder, confusion, and disarray that produce them.

As I wrote the book, I grappled with the way Martin Luther King’s speechmaking style evolved from careful preparation to impromptu genius. I tried to tease out the connections between the brilliant panzer commander Erwin Rommel, Amazon boss Jeff Bezos, and the primary campaign of Donald Trump. I interviewed Stewart Brand about the world’s most creative messy building – and Brian Eno about the way David Bowie would reject perfection in favour of something flawed and interesting every time.

I loved writing this book.

As I’ve already written, it is Tim’s best and deepest book.  Here is the book’s home page.  You can order the book here, it is out today a messy day it must be.

Jeppe Trolle Linnet, an anthropologist at the University of Southern Denmark, argues that hygge is not the great social leveller it appears. Danes dislike acknowledging class differences, but his research finds that the habits of hygge vary by income and social status. For some, hygge is a bottle of burgundy with soft jazz on the hi-fi; for others it is a can of beer while watching football on telly. Worse, different groups are uncomfortable with others’ interpretations of hygge. Mr Linnet calls it a “vehicle of social control”, involving “a negative stereotyping of social groups who are perceived as unable to create hygge”.

…A recent report on the quality of life for expatriates in 67 countries, compiled by an organisation called InterNations, bears this out. Denmark’s own natives may rank it top for happiness, but the immigrants in the survey ranked it 60th in terms of friendliness, 64th for being made to feel welcome, and 67th for the ease of finding friends. Finishing just ahead of Denmark on the finding-friends measure was Norway, the country from which the Danes imported the word hygge. If cultures are obsessed with the joys of relaxing with old friends, perhaps it is because they find it stressful to make new ones.

That is from The Economist.

Hat tip: Nicholas Tabarrok

In this issue (.pdf):

Instrument found flat: Stan Liebowitz criticizes an influential Journal of Political Economy article about music piracy’s impact on the sound recording industry.

You get what you measure: Daniel Schwekendiek explainshow South Korea followed a proven template of incentivizing exports to boost Web of Science publications and raise the rankings of its academic institutions.

Now entering a Republican-free zone: Mitchell Langbert, Anthony J. Quain, and Daniel Klein report on the voter registration of faculty at 40 leading U.S. universities in Economics, History, Journalism, Law, and Psychology.

Whither science in gender sociology? Charlotta Stern investigates whether gender sociologists blinker themselves from scientific findings about sex differences.

Carl Menger on classical political economy in relation to the politics of his day: A first-ever English translation of Menger’s 1891 article calling for a recovery of the Smithian tradition, with an introduction by the translators Erwin Dekker and Stefan Kolev.

How to Do Well by Doing Good! In this 1984 essay,Gordon Tullock counsels young economists that doing well and doing good go together. Some elements of the essay, if accurate once, are dated now, but others are timeless.

EJW Audio

Erwin Dekker on Carl Menger on Adam Smith

Frank Machovec on Perfect Competition

Call for papers

EJW fosters open exchange. We welcome proposals and submissions of diverse viewpoints, and also submissions ‘beyond Econ,’ from contiguous social sciences.

Download entire September 2016 issue (.pdf)

Taking a test on a hot and polluted day can result in a measurably lower score which, if the test is for something like a university entrance exam, can have permanent consequences. I find both of these results hard to believe which doesn’t necessarily mean that they shouldn’t be believed.

Heat Stress and Human Capital Production by Jisung Park

How does temperature affect the human capital production process? Evidence from 4.6 million New York City high school exit exams suggests that heat stress on exam days reduces test scores and educational attainment by economically significant magnitudes, and that cumulative heat exposure during the school-year prior may affect the rate of learning. Taking an exam on a 90°F day relative to a 72°F day leads to a 0.19 standard deviation reduction in exam performance, equivalent to a quarter of the Black-White achievement gap, and a 12.3% higher likelihood of failing an exam. Teachers clearly try to offset the impacts of exam day heat stress by selectively boosting grades just below passing thresholds, while existing air conditioning seems to have a limited protective effect.  These findings may have implications for estimating the social cost of carbon, for designing education policy, and for understanding of climate in explaining income gaps across individuals and nations.

The Long-Run Economic Consequences of High-Stakes Examinations: Evidence from Transitory Variation in Pollution by Avraham Ebenstein, Victor Lavy and Sefi Roth.

Cognitive performance during high-stakes exams can be affected by random disturbances that, even if transitory, may have permanent consequences. We evaluate this hypothesis among Israeli students who took a series of matriculation exams between 2000 and 2002. Exploiting variation across the same student taking multiple exams, we find that transitory PM2.5 exposure is associated with a significant decline in student performance. We then examine these students in 2010 and find that PM2.5 exposure during exams is negatively associated with postsecondary educational attainment and earnings. The results highlight how reliance on noisy signals of student quality can lead to allocative inefficiency.

Equally, in a world where academics are obliged to offer up each piece of work to be evaluated as internationally significant, world leading etc., they will seek to signal such a rating discursively. A study by Vinkers et al. in the British Medical Journal uncovered a new tendency towards hyperbole in scientific reports. They found the absolute frequency of positive words increased from 2.0% (1974-80) to 17.5% (2014), which amounts to a relative increase of 880% over four decades. 25 individual positive words contributed to the increase, particularly the words “robust,” “novel,” “innovative,” and “unprecedented,” which increased in relative frequency up to 15 000%”). The authors comment upon an apparent evolution in scientific writing to ‘look on the bright side of life’.

That is by Liz Morrish, via Mark Carrigan.