Hi future, competency-based learning

by on October 21, 2014 at 9:40 am in Education, Medicine | Permalink

From Inside Higher Ed:

The University of Michigan’s regional accreditor has signed off on a new competency-based degree that does not rely on the credit-hour standard, the university said last week. The Higher Learning Commission of the North Central Association of Colleges and Schools gave a green light to the proposed master’s of health professions education, which the university’s medical school will offer. In its application to the regional accreditor, the university said the program “targets full-time practicing health professionals in the health professions of medicine, nursing, dentistry, pharmacy and social work.”

The link is here, via Phil Hill.

Kevin Vallier, a philosopher, considers on Facebook the optimal journal submission strategy:

I was implicitly assuming the best strategy was to start with the best journals, receive rejections, and then work my way down, lest my piece get accepted by a sub-par journal first. But now I’m thinking it may make more sense to start from “the bottom” or at least mid-tier journals and work my way “up” if I can assume that my pieces will generally be rejected several times, even by the mid-tier journals. I think I was overestimating the risk of publishing my work in mid-tier journals and underestimating how much rejections can improve the quality of the paper. In light of this, I want to construct a “journal ladder” that political philosophers and political theorists can “climb” towards the best journals. 

Let’s put some numbers on this to see what makes sense. The expected utility from submitting to a high quality journal first is:

HighFirst = Ph* HV + (1 – Ph)*(Pl*mult)* 1

The first term, Ph*HV is the probability of acceptance at a high quality journal times the value of acceptance at a high quality journal. If the paper is rejected, which happens with probability (1-Ph), then you go to a low-quality journal where the paper is accepted with probability Pl times the multiplier which you get because of suggestions and comments from the referees at the high quality journal. The value of the low-quality journal is set to 1 so HV>=1.

Now what about low first:

LowFirst = Pl*1 + (1 – Pl) (Ph*mult)*HV

if you submit to the low quality journal and are accepted you get Pl*1, if the low quality journal rejects which will happen with probability (1-Pl) you submit to the high quality journal which accepts with probability Ph*mult and if accepted you get HV.

Now let’s put some numbers on this. The probability of acceptance at a high quality journal is 5-10%. The rate at the AER in recent years, for example, has been about 7.5%. Let’s say 10% and for a low-quality journal 20%. These rates are conditional on being the type of paper that is submitted to the AER not any random paper. (These rates are also reasonable for philosophy journals.). What’s the value of HV, the high quality journal relative to the low quality journal? Let’s say between 1 (equally valuable) and 10. And the multiplier? 1.5 would be very generous. 1.1 might be reasonable on average, 1.2 if you are lucky. Given these numbers let’s consider LowFirst-HighFirst so positive numbers mean that the LowFirst strategy is better, negative numbers that the HighFirst strategy is better. Here’s what we get:

OptimalStrat

The way to read this is that if the multiplier is a hefty 1.5 then LowFirst is superior to HighFirst if a high quality journal has a value of at least 3.5 (relative to the low quality journal at 1). If the multiplier is 1.3, however, then LowFirst is optimal only if the high quality journal is more than 8 times as valuable as the low-quality journal. And for a multiplier of 1.2 LowFirst is never optimal.

Thus the LowFirst strategy is better the higher the relative value of a high-quality journal, the bigger the multiplier and also the lower the acceptance rate at the low quality journal . The lower the acceptance rate at the low-quality journal the lower the cost of submitting it there in order to earn the multiplier.

I conclude that the high-value first strategy is usually optimal. All the more so since there are good substitutes for submitting to a low quality journal. Namely, submit the paper to a conference, circulate the paper to friends, enemies (especially) and others to get comments. The multiplier with this approach will be at least as large as with the submission approach and the opportunity cost will be lower.

Their new paper is here, ungated here (pdf), here is the key passage:

We have shown that in the model with capital, the presence of productive assets carrying a positive marginal product does not eliminate the possibility of a secular stagnation. The key assumption is that capital has a strictly positive rate of depreciation. In the absence of depreciation, capital can serve as a perfect storage technology which places a zero bound on the real interest rate. It is straightforward to introduce other type of assets, such as land used for production, and maintain a secular stagnation equilibrium. For these extensions, however, it is important to ensure that the asset cannot operate as a perfect storage technology as this may put a zero bound on the real interest rate.

Let me recapitulate the basic problem.  Secular stagnation models are supposed to exhibit persistent negative real rates of return, but how is this compatible with economic growth and positive investment?  Just hold onto stuff if need be and of course the goverment can help you do this with safe assets, if need be.  The earlier models had no capital, which ruled out this possibility.  The new model assumes storage costs for capital are fairly high, or alternatively the depreciation rate for capital is high.  Since you can’t sit on your wealth, you might as well invest it at negative real rates of return.

But at the margin, storage costs for goods (and some capital) are not that high.  My cupboard is full of beans and cumin seed, but I eat the stuff only slowly.  In the meantime it is hardly a burden, nor is it risky since I know it will be tasty once I make the right brew.  Art has negative storage costs (for the marginal buyer it is fun to look at), although its risk admittedly makes this a more complicated example.  Advances in logistics, and the success of Amazon, show that storage costs are getting lower all the time.

Secular stagnation might be a good model for Liberia and Venezuela and Mad Max, but not for the United States today or other growing economies with forward momentum.  But a credible stagnation model for America needs to recognize that rates of return will be lower than usual but not negative in real terms.  And there won’t be a long-run shortfall of demand because eventually market prices will adjust so that demand meets the supply we have.  That is a supply-side stagnation model of the sort promoted by myself, Robert Gordon, Peter Thiel, Michael Mandel, and others.  In the secular stagnation model as it is now being discussed by Keynesian macroeconomists, you end up twisting yourself in knots to force that real rate of return into permanently negative territory.  Of course if you allow the real rate of return to be positive albeit low, the economy is not stuck in a perpetual liquidity trap as people move out of cash into investment assets.  The demand-side stagnation mechanisms fade away into irrelevance once prices have some time to adjust.

Izabella Kaminska comments here.  Josh Hendrickson has a very good blog post on the model here.  I’ve already cited Stephen Williamson here, he notes the model is really about a credit friction and would be remedied with a greater supply of safe assets for savings, an easy enough problem to solve, for instance try the Bush tax cuts.  Here is Ryan Decker on the model, and here is Ryan arguing that investment is aggregate demand also and many of us seem to have forgotten that, a very good post.

This is an important and interesting paper, but only because it shows the model doesn’t really hold and requires such contortions.  The discussion of policy results is premature and way off the mark.  The authors should have included sentences like “storage costs aren’t very high, and the economy as a whole does not exhibit negative real rates of return, so these policy conclusions are not actual recommendations.”

Explorationsineconomics.com.

Here you can watch a video about Alan Krueger not being able to get a mortgage on a second home.

Maybe that welfare cost is not very high at all.   After all, if Amazon does not carry a book you can sign up at the Barnes & Noble website and that takes a few minutes at most.

There is a tension in most criticisms of Amazon.  On one hand, the critic wishes to argue that a “not carry” decision by Amazon has a big impact on how a book does.  On the other hand, the critic wishes to argue that the loss of access to particular titles is a big deal.  You cannot easily have it both ways.  If readers won’t switch to B&N.com, they must not care very much about particular titles, in which case the Amazon refusal to carry (or delay in shipping) is small even relative to the size of the (small) trade in books.

Krugman’s column today, which covers Amazon vs. Hachette, appears terrible at first glance, but in fact he presents a new and original argument.  Get past the mood affiliation and you come to this:

…what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

If I may fill in some blanks, one possible version of the hypothesis — to pull an idea from Gary Becker and Steve Erfle — is that readers consume both “books” and “buzz around books” as complements.  The marginal gains from books can be low but the marginal gains from the bundled package may be much higher and those higher gains will not be measured by the (high) price elasticity of book purchases.

In the early stages of this war, Amazon boycotts have often increased the buzz for a book, such as with Beth Macy’s Factory Man.  But if these practices continue, they will cease to be news stories and an Amazon refusal to carry or promote plausibly will damage how books will do, without much potential for upside.

How much of the value in a book/buzz package is due to the buzz?  65 percent?  That would explain the concentration of reading interest among bestsellers and books your peers are reading.  But if Amazon won’t carry or promote a book, does the total supply of buzz fall?  Or does the buzz simply transfer to other titles?  In the latter case we are again back to small welfare costs from an Amazon refusal to carry.  Krugman’s idea is fun, but I am still inclined to think the welfare cost of Amazon supply restrictions on individual books likely is small, again even relative to the size of the book sector, much less relative to gdp.

It is fine to argue that Amazon is being unfair to some authors and to object on ethical grounds.  The economist also should add that readers don’t seem to mind very much.  Most of the objections I am seeing are coming from authors and publishers, who of course in this sector are much less diversified in their interests than are readers.

Assorted links

by on October 20, 2014 at 12:59 pm in Uncategorized | Permalink

1. The tallest cow in the world?

2. Scott Sumner on exports.

3. New learning on the speed and breadth of the Industrial Revolution (pdf).

4. China upgrade markets in everything.  And interview with Marc AndreessenShould China make its big cities bigger yet?

5. Do travel restrictions limit pandemics?

6. Contrary to a behavioral econ claim about threshold earnings, taxi drivers in fact have positive elasticity of supply.

7. Elisa New (wife of Larry Summers) has a poetry MOOC from Harvard, Larry will appear to discuss economics and poetry with her.

There is a new NBER paper by Campbell R. Harvey, Yan Liu, and Heqing Zhu, and it is a startler though perhaps not a surprise:

Hundreds of papers and hundreds of factors attempt to explain the cross-section of expected returns. Given this extensive data mining, it does not make any economic or statistical sense to use the usual significance criteria for a newly discovered factor, e.g., a t-ratio greater than 2.0. However, what hurdle should be used for current research? Our paper introduces a multiple testing framework and provides a time series of historical significance cutoffs from the first empirical tests in 1967 to today. Our new method allows for correlation among the tests as well as missing data. We also project forward 20 years assuming the rate of factor production remains similar to the experience of the last few years. The estimation of our model suggests that a newly discovered factor needs to clear a much higher hurdle, with a t-ratio greater than 3.0. Echoing a recent disturbing conclusion in the medical literature, we argue that most claimed research findings in financial economics are likely false.

The emphasis is added by me.  There are ungated versions of the paper here.

For the pointer I thank John Eckstein.

The Germans lecture the periphery to engage in structural reform and increase their exports.  A variety of IS-LM Keynesians strike back and note that not all nations can increase their net exports, therefore it is a kind of zero-sum game which won’t boost aggregate demand overall.  This is sometimes followed by blaming the Germans for soaking up aggregate demand from other parts of the world.

But that Keynesian counter is a mistake, perhaps brought on by the IS-LM model and its impoverished treatment of banking and credit.

Let’s say all nations could indeed increase their gross exports, although of course the sum of net exports could not go up.  The first effect is that small- and medium-sized enterprises would be more profitable in the currently troubled economies.  They would receive more credit and the broader monetary aggregates would go up in those countries, reflating their economies.  (Price level integration is not so tight in these cases, furthermore much of the reflation could operate through q’s rather than p’s.)  It sometimes feels like the IS-LM users have a mercantilist gold standard model, where the commodity base money can only be shuffled around in zero-sum fashion and not much more can happen in a positive direction.

Second, the higher (gross) exports and higher quantity of trade overall would produce positive wealth effects.  This too would reflate economies through a variety of well-known mechanisms, including but not restricted to the easing of collateral constraints.

In other words, it can help reflate all or most of the economies if they increase their gross exports, even though net exports are a zero-sum magnitude.

This interpretation of the meaning of zero-sum net exports is one of the most common economic mistakes you will hear from serious economists in the blogosphere, and yet it is often presented dogmatically or dismissively in a single sentence, without much consideration of more complex or more realistic scenarios.

This is from Larry Summers and Lant Pritchett:

…knowing the current growth rate only modestly improves the prediction of future growth rates over just guessing it will be the (future realized) world average.  The R-squared of decade-ahead predictions of decade growth varies from 0.056 (for the most recent decade) to 0.13.  Past growth is just not that informative about future growth and its predictive ability is generally lower over longer horizons.

The main point of this paper is to argue that Chinese growth rates will become much lower, perhaps in the near future, here is a summary of that point from Quartz:

Summer and Pritchett’s calculations, using global historical trends, suggest China will grow an average of only 3.9% a year for the next two decades. And though it’s certainly possible China will defy historical trends, they argue that looming changes to its  authoritarian system increase the likelihood of an even sharper slowdown.

The piece, “Asiaphoria Meets Regression Toward the Mean,” is one of the best and most important economics papers I have seen all year.  There is an ungated version here (pdf).  I liked this sentence from the piece:

Table 5 shows that whether or not China and India will maintain their current growth or be subject to regression to the global mean growth rate is a $42 trillion dollar question.

And don’t forget this:

…nearly every country that experienced a large democratic transition after a period of above-average growth…experienced a sharp deceleration in growth in the 10 years following the democratizing transition.

As Arnold Kling would say, have a nice day.

Germany fact of the day

by on October 19, 2014 at 3:09 pm in History, Political Science | Permalink

A shocking example is the decrepit state of German military hardware. Of the Luftwaffe’s 254 fighter planes, 150 cannot fly.

That is from Wolfgang Münchau at the FT.

Sunday assorted links

by on October 19, 2014 at 12:31 pm in Uncategorized | Permalink

1. Good essay on risk communication during pandemics (though it focuses on flu, not Ebola).

2. Charles A. Beard and the Columbia School of Political Economy.

3. What Saddam Hussein said in public vs. what he said in private (hat tip www.bookforum.com for the last two links).

4. What are academic conferences good for?

5. Have we lost confidence in public health?

Charles Murray on Ayn Rand

by on October 19, 2014 at 7:30 am in Books, Philosophy | Permalink

Charles Murray has a good piece on Ayn Rand, critical in parts but especially insightful about why Rand’s books continue to be so inspirational and influential:

Ayn RandRand expressed the glory of human achievement. She tapped into the delight a human being ought to feel at watching another member of our species doing things superbly well. The scenes in “The Fountainhead” in which the hero, Howard Roark, realizes his visions of architectural truth are brilliant evocations of human creativity at work. But I also loved scenes like the one in “Atlas Shrugged” when protagonist Dagny Taggart is in the cab of the locomotive on the first run on the John Galt line, going at record speed, and glances at the engineer:

He sat slumped forward a little, relaxed, one hand resting lightly on the throttle as if by chance; but his eyes were fixed on the track ahead. He had the ease of an expert, so confident that it seemed casual, but it was the ease of a tremendous concentration, the concentration on one’s task that has the ruthlessness of an absolute.

That’s a heroic vision of a blue-collar worker doing his job. There are many others. Critics often accuse Rand of portraying a few geniuses as the only people worth valuing. That’s not what I took away from her. I saw her celebrating people who did their work well and condemning people who settled for less, in great endeavors or small; celebrating those who took responsibility for their lives, and condemning those who did not. That sounded right to me in 1960 and still sounds right in 2010.

Second, Ayn Rand portrayed a world I wanted to live in, not because I would be rich or powerful in it, but because it consisted of people I wanted to be around. As conditions deteriorate in “Atlas Shrugged,” the first person to quit in disgust at Hank Rearden’s steel mill is Tom Colby, head of the company union:

For ten years, he had heard himself denounced throughout the country, because his was a ‘company union’ and because he had never engaged in a violent conflict with the management. This was true; no conflict had ever been necessary; Rearden paid a higher wage scale than any union scale in the country, for which he demanded—and got—the best labor force to be found anywhere.

That’s not a world of selfishness or greed. It’s a world of cooperation and mutual benefit through the pursuit of self-interest, enabling satisfying lives not only for the Hank Reardens of the world but for factory workers. I still want to live there.

…In scene after scene, Rand shows what such a community would be like, and it does not consist of isolated individualists holding one another at arm’s length. Individualists, yes, but ones who have fun in one another’s company, care about one another, and care for one another—not out of obligation, but out of mutual respect and spontaneous affection.

Ayn Rand never dwelt on her Russian childhood, preferring to think of herself as wholly American. Rightly so. The huge truths she apprehended and expressed were as American as apple pie. I suppose hardcore Objectivists will consider what I’m about to say heresy, but hardcore Objectivists are not competent to judge. The novels are what make Ayn Rand important. Better than any other American novelist, she captured the magic of what life in America is supposed to be. The utopia of her novels is not a utopia of greed. It is not a utopia of Nietzschean supermen. It is a utopia of human beings living together in Jeffersonian freedom.

Also worth reading is this superb piece by Robert Tracinsiki, All an Ayn Rand Hero Really Wants is Love.

The Ebola risk premium

by on October 19, 2014 at 1:48 am in Current Affairs, Economics, Law, Medicine | Permalink

Underpaid or overpaid?:

They’re looking for the few, the proud — and the really desperate.

For a measly $19 an hour, a government contractor is offering applicants the opportunity to get up close and personal with potential Ebola patients at JFK Airport — including taking their temperatures.

Angel Staffing Inc. is hiring brave souls with basic EMT or paramedic training to assist Customs and Border Protection officers and the Centers for Disease Control and Prevention in identifying possible victims at Terminal 4, where amped-up Ebola screening started on Saturday.

EMTs will earn just $19 an hour, while paramedics will pocket $29. Everyone must be registered with the National Registry of Emergency Medical Technicians.

The medical staffing agency is also selecting screeners to work at Washington Dulles, Newark Liberty, Chicago O’Hare and Hartsfield-Jackson Atlanta international airports.

There is more here, via Matthew E. Kahn.  How much does the regular (non-Ebola) staff earn?

Saturday assorted links

by on October 18, 2014 at 3:25 pm in Uncategorized | Permalink

1. Nairobi markets in everything, macaroni and cheese edition.

2. Ken Rogoff reviews Martin Wolf (pdf).

3. How they have been improving scholar.google.com.

4. Somehow the Egyptian economy is improving.

5. One take on the economics of the mafia (speculative?).

Germany fact of the day

by on October 18, 2014 at 3:03 am in Data Source, History, Uncategorized | Permalink

From 1973 to 1985 German inflation was most of the time over two percent a year, sometimes much over two percent.  In 1973 it hit eight percent and in the early eighties it exceeded six percent a year.  Source here (pdf), see p.6.

From 1951-1973, the Germans seemed happy with roughly the same inflation rate as what Americans had.  Source here (pdf), see p.9, and also p.13, passim.  In the early 1970s, the rate averaged almost seven percent a year for a few years (p.15).  It is fine to note the role of oil shocks here, and in the earlier period Bretton Woods, but still Germans tolerated the higher inflation rates.  They expected the alternatives would be worse and probably they were right.

The claim that the current German dislike of inflation dates back to unique memories of Weimar hyperinflation is dubious.  Rightly or wrongly, today’s Germans associate high rates of inflation with wealth transfers away from Germany and toward other nations.  More broadly, Germany is a more flexible country than outsiders often think, not always to the better of course.