Month: January 2012

From my inbox

I feel like the young economist bloggers of the world need some advice, but I don’t have the stature, experience, or age to give it.

Working for a consulting company I’m fairly detached from the academic world, but we are staffed with PhD economists and we do hire grad students. When I read stuff that, for instance, REDACTED writes, in the tone that he writes it, I know that at my company if he were a potential hire we would a) Google him, and b) this would hurt his chances. This isn’t about political leanings either. My liberal colleagues would look at his writings with the same distaste and worry that my conservative colleagues would.

Is this the same way it is in academia? Should young economist (and other academic) bloggers be more careful than many seem to be? Are they hurting their job market chances? Because that is my impression.

That is another reason for polite discourse, namely that it improves the career prospects and quality of one’s readers and followers.  The best reason, however, is still that it improves one’s own thought processes and that is a point of substance not just style or manners.  I’ve seen that point ignored a lot in the commentary of the last few weeks but not once seriously disputed.

How well can you communicate over email? (or blog posts? how about in person?)

Justin Krueger, Nicholas Epley, Jason Parker, and Zhi-Wen Ng write (pdf):

Without the benefit of paralinguistic cues such as gesture, emphasis, and intonation, it can be difficult to convey emotion and tone over electronic mail (e-mail). Five experiments suggest that this limitation is often underappreciated, such that people tend to believe that they can communicate over e-mail more effectively than they actually can. Studies 4 and 5 further suggest that this overconfidence is born of egocentrism, the inherent difficulty of detaching oneself from one’s own perspective when evaluating the perspective of someone else. Because e-mail communicators “hear” a statement differently depending on whether they  intend to be, say, sarcastic or funny, it can be difficult to appreciate that their electronic audience may not.

The pointer is from Sendhil Mullainathan on Twitter.

Simulations and the Fermi paradox

If we are living in a simulation, does that resolve the Fermi paradox?  I would think so.  The “aliens” would be here, we just would not “see” them as such.  But in fact we would be looking at nothing but the alien products, namely the creators of the simulation.

Should we expect to find alien civilizations in a simulation?  The priors are not so clear: do the simulation creators want full Bayesian realism?  Is the universe run by an alien version of Daniel Kahneman?  The simulation has not excluded animals, but it has (so far) excluded self-replicating von Neumann probes or the use of supernovae as alien corporate advertisements.  The simulation still might have alien civilizations turn up in ways which do not make Bayesian sense, but which add to the drama.  For the time being, we are still in a “no aliens” do loop.

I thank Jim Olds for a conversation related to this topic.  In any case, the Fermi paradox raises the likelihood that we are living in a simulation.

Addendum: Robin Hanson comments, as does Jim Olds.

Does fortune favor dragons?

John Nye and Noel Johnson report:

Why do seemingly irrational superstitions persist?  This paper analyzes the widely held belief among Asians that children born in the Year of the Dragon are superior.  It uses pooled cross section data from the U.S. Current Population Survey to show that Asian immigrants to the United States born in the 1976 year of the Dragon are more educated than comparable immigrants from non-Dragon years.  In contrast, no such educational effect is noticeable for Dragon-year children in the general U.S. population.  This paper also provides evidence that Asian mothers of Dragon year babies are more educated, richer, and slightly older than Asian mothers of non-Dragon year children.  This suggests that belief in the greater superiority of Dragon-year children is self-fulfilling since the demographic characteristics associated with parents who are more able to adjust their birthing strategies to have Dragon children are also correlated with greater investment in their human capital.

An alternative link to the paper is here.  What else does this imply for how to raise your kids?

The new fiscal treaty?

It seems the Irish are spilling the beans on the phoniness of the promised “austerity” provisions:

However, a new draft leaves it open to the Government to enshrine a “golden rule” on debt and deficits in secondary legislation.

As I’ve stated numerous times, the real summit action was the ECB three-year loan program to the banks, not the cheap talk about binding austerity.

Steve Murdock is not looking for a handout

Steve is doing some jobs, but it could not be said that he has a job in the traditional sense:

During the previous month, he had taken to picking up cans and scrap metal along the road. It made him feel like a bum, he said, but he had managed to fill seven bags with aluminum cans and other recyclables. Now he loaded them into a friend’s pickup truck and drove a few miles south, toward Myrtle Beach. They pulled up to a warehouse where the owner purchased scrap metal. Murdock grabbed his bags and set them onto an industrial scale, stale beer spilling onto his hands and his jeans.

“Twenty-seven pounds at 35 cents per pound,” an employee said. He punched the numbers into a calculator, rounded up and handed Murdock $9.50.

It is difficult for me to see how Murdock’s predicament — is it a typical one? — is well-described by the theory of nominal wage rigidity. I don’t mean to bait Scott Sumner, but I will again mention the difference between “nominal aggregate demand” and “real aggregate demand.”  If society were much more prosperous and people had higher real wealth-backed demands to buy a lot more products, Murdock probably could get a traditional job of the kind he is seeking.  In this sense you can attribute Murdock’s joblessness to a shortfall in aggregate demand.  That said, it is not clear why juicing up nominal variables should do very much for him.  His wage and workplace condition demands are already quite flexible, as he is willing to settle for what he can get.  Is money illusion his problem?  It seems there is no need to trick him, using monetary policy, into a lower real wage.

The article is here.

Addendum: Scott Sumner responds.  In my view if it is a job worth creating, the private sector will expand V, or credit, endogenously, so while I believe we are on an excessively low NGDP path I do not blame that for the fate of Steve Murdock.

ADA to Dental Practioniers: You Can’t Handle the Tooth!

From an article at

…dental care is hard to come by in underserved areas of the country. Try finding a dentist in the remotest rural or deepest urban pockets of the land, and for blatantly economic reasons, they just aren’t there. That’s why states are looking to fix the problem by creating a so-called mid-level dental provider. Much like a nurse practitioner (NP) or physician assistant (PA) is to a doctor, this provider would be educated and licensed to perform basic dental services — routine checkups, cleanings, filling cavities and extracting teeth — under the supervision of a fully trained dentist.

…Yet in much the same way that the American Medical Association fought against the creation of NPs and PAs, the American Dental Association (ADA) and its state chapters are lobbying hard to thwart state legislatures as they work to create this new level of dental care providers, who are common and well liked in other parts of the world.

…“Publicly their main objection is safety issues,” Oswald says. “They tried to discredit the model, saying the therapists were not trained to the same level as dentists. In reality, all the research around the world shows that [mid-level providers] provide as good, if not better, care. Every time they stated safety as a factor, we asked for research, which they didn’t have.”

By the way, states with tougher licensing of dentists do not have better dentistry, but they do have higher prices. Almost thirty percent of the US workforce is now required to hold a license including shampoo specialists.

Hat tip: Carpe Diem

Afghan markets in everything

From their tiny cubbyhole offices, an army of typists can run up everything from marriage certificates to CVs and job application letters. Also available, for several hundred dollars more: Taliban death threats, the special chits also known as “night letters” that can be a passport to a new life in the west.

“We can write whatever you need; it depends,” said one young clerk. “For example, we will mention you work in a government department, your job title and salary. It will say, ‘If you don’t leave your job by this date, we will come and kill you or put a bomb in your house’.

And this:

“Australia gives citizenship if you have a good story,” he said. “I am 100% sure that after spending six months in a [processing centre] in Australia you will get citizenship if you do not lose your temper and have warning documents from the Taliban saying you can’t live in Kabul.”

He also trains his clients to stick to their story: “They will know you are lying, but as long as you say the same thing whatever they ask you, you will be fine.”

The story is here, interesting throughout, and for the pointer I thank Bruce Douglas.

This is bad news for we the people

The origin of multicellular life, one of the most important developments in Earth’s history, could have occurred with surprising speed, US researchers have shown. In the lab, a single-celled yeast (Saccharomyces cerevisiae) took less than 60 days to evolve into many-celled clusters that behaved as individuals. The clusters even developed a primitive division of labour, with some cells dying so that others could grow and reproduce.

It suggests that “the filter” lies ahead of us rather than behind us.  The difficulties of producing multi-cellular organisms have been one of the main responses to the Fermi Paradox (“where are they?”).  If it’s not so hard after all, there must be some other obstacle to lots of self-reproducing von Neumann probes.

The link is here.  Speaking of bad news, here is a bad news argument about Chinese real estate.

I expect your comments on this post will be awful, try to prove me wrong

Karl Smith asks:

I am specifically going to ask Yglesias, Drum, Cowen, Ozimek and Barro (Josh) to chime in on this. Anyone else feel free as well, but I would like to hear from these guys.

I don’t care if Mitt Romney pays negative taxes, cheated on his mistress with her daughter, fired his Grandmother while at Bain, and lied to kids to get the GOP nomination, etc.

What are the significant differences that you think we could actually see come to pass from a Romney Presidency versus an Obama Presidency?

I am generally a better-the-devil-you-know kind of guy, but I am pretty open here. So, let me here it.

Kevin Drum offers a specific answer.  I have not invested much energy in following Romney or the other Republican candidates, so this is a rough, impressionistic response.  Here are a few points:

1. I expect Romney to claim he has repealed ACA, but in fact he will change five aspects of the law and cement the rest of it in place, albeit in a less progressive manner and with lower Medicaid expenditures.   (Outright repeal actually would not be easy, not to mention filibuster issues.)  He knows he doesn’t have any other “right-wing health care plan” in his back pocket, won’t be willing to restore the status quo ex ante, and he will be willing to take the “Tea Party knock on the chin” very early on in his term, hoping to repair the fence later.  Ultimately letting the issue fester doesn’t help him, and he is smart enough to realize that.

2. The Republican Party will split very quickly.  For instance, will AEI support or oppose Romney in an early action like this?  I don’t know, but I see massive carnage.  Democrats may end up happier than they expect.

3. Romney will use conservative judge nominations, corporate tax cuts, Dodd-Frank repeal (does anyone understand it anyway?), and estate tax repeal to try to keep the base in line.  Democrats may end up less happy than they expect.

4. Medicare won’t be touched, not fundamentally.  There is some chance that a “twenty years from now” plan is passed (remember Waxman-Markey?), yet without any secure mechanism for commitment to make the actual cuts.

5. I worry if Obama wins on a platform of envy and anti-rich sentiment; such ideas rarely translate well into policy.  If Obama loses, future Democrats will continue the cash goodies they deliver to constituents but fold on a lot of regulatory issues (don’t want to appear “anti-business”), and they will pay greater lip service to Deficit Commission recommendations and the like, while insisting that the governing Republicans take the heat for an actual budget deal.  It is a much better outcome if Obama is re-elected from a promise to govern as a moderate and a fiscal conservative.  So far I don’t see that as the Democratic strategy, so I am more worried about an Obama re-election than I used to be.

As noted, those are very rough predictions and I don’t have much faith in them, but they are my best guesses.

What else can Karl Smith get me to do?