Month: June 2013

The value of the pause?

…research suggests that taking breaks between episodes can increase your enjoyment.  Perhaps most amazingly, commercials can improve the experience of watching television.  Even entertaining shows start to drag after five to seven minutes, decreasing our enjoyment.  Commercials disrupt that adaptation process, so when the show comes back on, we can fall in love with Jim and Pam all over again.

The quotation is from Elizabeth Dunn and Michael Norton, Happy Money: The Science of Smarter Spending, and the underlying research is here.  I believe this hypothesis does not apply to me, nonetheless I am glad to season two of Borgen does not arrive until later in June.  I am never tempted by binge viewing, and in general I do not like to watch two episodes in a row.

Our government will end up thwarting tech innovation and balkanizing the web

…Google Glass + NSA PRISM essentially amounts to a vision in which a foreign country is suddenly going to be flooded with American spy cameras. It seems easy to imagine any number of foreign governments having a problem with that idea. More broadly, Google is already facing a variety of anti-trust issues in Europe where basic economic nationalism is mixing with competition policy concerns. Basically various European mapping and comparison and shopping firms don’t want to be crushed by Google, and European officials are naturally sympathetic to the idea of not letting local firms be crushed by California-based ones. Legitimate concern that US tech companies are essentially a giant periscope for American intelligence agencies seem like they’d be a very powerful new weapon in the hands of European companies that want to persuade EU authorities to shackle American firms. Imagine if it had come out in the 1980s that Japanese intelligence agencies were tracking the location of ever Toyota and Honda vehicle, and then the big response from the Japanese government was to reassure people that Japanese citizens weren’t being spied upon this way. There would have been—legitimately—massive political pressure to get Japanese cars out of foreign markets.

The intelligence community obviously views America’s dominance in the high-tech sector as a strategic asset that should be exploited in its own quest for universal knowledge. But American dominance in the high-tech sector is first and foremost a source of national economic advantage, one that could be undone by excessive security involvement.

That is from Matt Yglesias.

Import Competition and the Great US Employment Sag of the 2000s

That is the new paper (pdf) by Acemoglu, Autor, Dorn, and Hanson, and here is the abstract:

Even before the Great Recession, U.S. employment growth was unimpressive. Between 2000 and 2007, the economy gave back the considerable jump in employment rates it had achieved during the 1990s, with major contractions in manufacturing employment being a prime contributor to the slump. The U.S. employment “sag” of the 2000s is widely recognized but poorly understood. In this paper, we explore an under-appreciated force contributing to sluggish U.S. employment growth: the swift rise of import competition from China. We find that the increase in U.S. imports from China, which accelerated after 2000, was a major force behind recent reductions in U.S. manufacturing employment and that through input-output linkages with the rest of the economy this negative trade shock has helped suppress overall U.S. job growth.

If you ask me what knowledge academic economics generated in the past year, one answer is a better sense of how much the rise of China has had an impact on labor markets in other countries.

Elsewhere in labor economics, the econ blogosphere very much underrates and indeed sometimes even scorns “matching theory.”  But this new paper by Larry Katz (pdf) suggests a calibrated matching model can explain almost all of the rise in observed long-term unemployment.  You will note that this is appended to other, more macro theories of unemployment to “fill in the boxes” and should not be considered a substitute for them.

The Washington Post is on a roll

Here is one excerpt from their latest investigation:

It is possible that the conflict between the PRISM slides and the company spokesmen is the result of imprecision on the part of the NSA author. In another classified report obtained by The Post, the arrangement is described as allowing “collection managers [to send] content tasking instructions directly to equipment installed at company-controlled locations,” rather than directly to company servers.

Government officials and the document itself made clear that the NSA regarded the identities of its private partners as PRISM’s most sensitive secret, fearing that the companies would withdraw from the program if exposed. “98 percent of PRISM production is based on Yahoo, Google and Microsoft; we need to make sure we don’t harm these sources,” the briefing’s author wrote in his speaker’s notes.

An internal presentation of 41 briefing slides on PRISM, dated April 2013 and intended for senior analysts in the NSA’s Signals Intelligence Directorate, described the new tool as the most prolific contributor to the President’s Daily Brief, which cited PRISM data in 1,477 items last year. According to the slides and other supporting materials obtained by The Post, “NSA reporting increasingly relies on PRISM” as its leading source of raw material, accounting for nearly 1 in 7 intelligence reports.

James M. Buchanan: A Celebration of Scholarship

I am pleased to announce that a conference and memorial program will be held to celebrate the work of Jim Buchanan. The conference will be on Saturday Sept. 28 and the memorial program to which all of Jim’s students, colleagues and friends are invited will be on Sunday Sept. 29. More information and rsvp here.

Edward Luce is what I call “prescient plus”

A few days ago he wrote this subtitle in the FT:

Self-interest guides the Big Data companies, and the same is often true of the White House

And this:

Big data’s agenda is not confined to immigration reform. Among other areas, it has a deep interest in shaping what Washington does on privacy, online education, the school system, the internet, corporate tax reform, cyber security and even cyber warfare. Big data is also likely to be influential in the US-European trade partnership talks, which start this month. Whether the sector becomes a thorn in the side of the process remains to be seen. Either way, Americans should be relieved someone is making the case for privacy.

He closes with this:

A century ago, Theodore Roosevelt pushed back against the power of the rail barons and oil titans – the great technological disrupters of his day. Mr Obama should pay closer heed to history. And he should become wary of geeks bearing gifts.

Don’t forget this line:

One of the geekocracy’s main characteristics is a serene faith in its own good motives.

The general problem is the unholy government and tech alliance, based on a mix of plutocracy, information-sharing, and a joint understanding of the importance of information for future elections.  Which current politician wouldn’t want to court the support of tech, and which major tech company can today stand above politics?

I will add this: if you were surprised by today’s revelations, shame on you!

The economics of declining teacher quality

I hear this topic discussed quite often, yet rarely does this 2006 paper by Darius Lakdawalla, “The Economics of Teacher Quality,” come up in the popular conversation.  Here is the abstract:

Concern is often voiced about the quality of American schoolteachers. This paper suggests that, while the relative quality of teachers is declining, this decline may be the result of technological changes that have raised the price of skilled workers outside teaching without affecting the productivity of skilled teachers. Growth in the price of skilled workers can cause schools to lower the relative quality of teachers and raise teacher quantity instead. Evidence from the National Longitudinal Survey of Youth demonstrates that wage and schooling are good measures of teacher quality. Analysis of U.S. census microdata then reveals that the relative schooling and experience-adjusted relative wages of U.S. schoolteachers have fallen significantly from 1940 to 1990. Moreover, class sizes have also fallen substantially. The declines in class size and in relative quality seem correlated over time and space with growth in the relative price of skilled workers.

The jstor link is here, this version is (I think) ungated for you.  Here is an ungated, earlier version with some related results.  Here is a good sentence from the middle of the paper:

Both schooling and experience-adjusted wages entered a period of relative decline for teachers beginning with the cohorts entering the labor force during the 1950s.

On pp.318-318 Lakdawalla discusses the importance of superior labor market opportunities for women for the argument.  Here is Lakdalla’s earlier argument that Medicare benefits the poor to a disproportionate degree.

I was reminded of the education paper by a tweet from Austan Goolsbee.

Assorted links

1. Daron Acemoglu on Turkey, and Norman Stone on Turkey.

2. One (not the only) behavioral analysis of Obamacare.  From a man of the cloth (but not the Vicar of Aldeburgh).

3. Is there everything?

4. How do you cheat with computer aid in rapid (chess) games when there are plenty of observers?  Note this is not mainly a question about chess.

5. Food markets in everything: gravy candy.

6. The ECB is not at the zero bound.

7. Did Proposition 13 starve the beast?

How to kill bedbugs, 1777

“Spread Gun-powder, beaten small, about the crevices of your bedstead; fire it with a match, and keep the smoak in; do this for an  hour or more; and keep the room close several hours.”

The Complete Vermin-Killer: A Valuable and Useful Companion for Families, in Town and Country, 4th ed. (London, 1777)4.

The link is here.  That is from a new-to-me blog,  Here is “How to Make Pink Pancakes, 1786,” and you will find numerous other excellent items.  Try “How to Sober Up, 1628” or “How to Grow a Beard, 1539.”

For the pointer I thank the excellent Hollis Robbins.

The decline of interest in female film stars

Glamour featured film stars on half of its covers in 2012. But the May 2012 issue featuring Lauren Conrad, the former star of the reality show “The Hills,” was the year’s best-selling issue, at 500,072 copies. The magazine now expects to make film stars the minority presence in 2013.

At Cosmopolitan, the best-selling cover this year featured Kim Kardashian in April, with 1.2 million copies sold, followed by the singer Miley Cyrus in March with 1.1 million copies. In 2012, three out of five of Cosmopolitan’s top covers featured the celebrities Demi Lovato with 1.379 million copies sold, Khloé Kardashian at 1.354 million copies and Selena Gomez at 1.334 million copies.

Vogue’s best-selling cover in the first four months of 2013 featured Beyoncé with 340,000 copies sold. In 2012, Lady Gaga commanded the cover of Vogue’s September issue and sold nearly double the number of copies of the January 2012 issue, featuring Meryl Streep.

It’s not just younger women’s magazines that are moving away from film stars. When Redbook landed an interview with Gwyneth Paltrow for its January issue, the magazine featured her with her trainer Tracy Anderson and not in what the magazine’s editor in chief, Jill Herzig, called the “traditional A-lister in a ball gown kind of way.”

It is music and TV which are in the ascendancy.  I blame the globalization of the movie market in part, which skews Hollywood movies more toward Asian male audiences, in turn limiting their appeal to American females.  In general international audiences lower the return to good dialog and raise the return on action and explosions, which on average hurts prominent female roles.  Note that men’s magazines are now having more film stars on their covers.  And there is this:

A recently published study by the University of Southern California’s Annenberg School for Communication and Journalism showed that the percentage of female characters with a speaking part in the nation’s top movies each year reached its lowest point in the past five years in 2012, at 28 percent. Ms. Coles said it had become so difficult to find female film stars to feature from this summer’s blockbusters that her magazine was publishing an article about the problem.

The full article is here.

A simple parable on cutting government spending vs. raising taxes

Referring to Europe, here is an email (slightly edited for clarity) I sent last night to a libertarian friend:

…let’s say the private sector is so screwed up that at the margin it won’t grow, no matter what, though some going concerns hold govt.-protected monopoly power.

If govt. cuts spending by $100, that is $100 less of output and employment (admittedly may be wasteful), but still the numbers come out that way.  None of those workers are reemployed.

If govt. raises taxes by $100, some of the firms with monopoly power, while their profits are now lower, still will produce roughly the same output.  Neither output nor employment falls so much.

That gives you a composition difference, pretty much fully blameable on government intervention, and without requiring any belief in Keynesian economics.  Govt. spending cuts are *worse* for short-run gdp than are tax increases.

I am not saying that is always the true story, but I don’t see anything in the 1990s Alesina results to convince me to believe otherwise.  Europe (or rather parts thereof) is less dynamic these days.  And I don’t see why libertarians are in such a hurry to dismiss that particular story.

I am not claiming that Keynesian effects have to be zero, but rather using that as a hypothetical starting point.  And this is a thought experiment to raise some points about observational equivalence, not a series of empirical claims about the real world.

You also may notice that in this “model” contractionary fiscal policy lowers gdp.  And while expansionary policy raises measured gdp, it doesn’t necessarily do the economy a lot of good.  It’s like a hidden transfer payment with possible hysteresis benefits through the illusion of make-work, but it is hardly on its own a source of much turnaround.

It is “loose paywall” time at The Washington Post

Ezra explains, Matt offers some analysis.  I am very happy to pay full price, noting that I live around here, but in any case I plan to do so until the very end, for either them or me.  I do however see this as a further sign that the golden age of free links is over, forever.  Bloggers take note.  From what I understand of the paywall, Twitter connections will be free and this, along with other developments, will raise the relative import of Twitter.  Perhaps at some point Twitter will become so important that this is no longer price discrimination and Twitter cannot be allowed as a free way in.  But we remain far from that point, it seems to me.

Should states jump on the Medicaid expansion bandwagon?

Carter C. Price and Christine Eibner have a new study in Health Affairs suggesting a definite “yes,” and I have seen this piece endorsed numerous times in the blogosphere and on Twitter.  I do understand that part of their argument is a normative one, given the desire to expand insurance coverage for the currently uninsured.  But they and their endorsers also seem to be making a state-level financial prudence argument, as if there were no possible reason for a state not to expand participation behind sheer ideological stubbornness.  On that matter I don’t think they have pondered the problem deeply enough and they fail an intellectual Turing test.

Let’s start with a simple observation, namely that a Republican may win the next Presidential election.  There is also quite a good chance that such a victory would be accompanied by a Republican Senate (and House), given the distribution of vulnerable seats.  That means a very real chance that the federal government will scale back its commitment to Medicaid expansion, for better or worse.  States don’t want to be left holding the bag, and governors know it is hard to take back benefits once granted.

I often interpret the Republicans as operating in a “they don’t really mean what they say” mode, but on Medicaid I think they basically do mean it and we already can see some of the demonstrated preference evidence.  Furthermore a new Republican President would face very real pressure to “repeal Obamacare,” yet we all know that the “three-legged stool” centered around the mandate is hard to undo selectively.  That ups the chance Medicaid will be the target and much of the rest will be relabeled (“repealed,” in the press release) but in some manner kept in place in its essentials.

Another possibility is that a Republican administration would somehow restructure the deal to, in some way, favor the holdout red states, relative to the deal already on the table.  (Why not reward your supporters?)  That increases the prospective return to being a holdout red state.

On top of all this, there is option value.  The chance to jump on the Medicaid expansion bandwagon won’t go away tomorrow.  Even if the cost-benefit ratio > 1, you still might want to play wait and see.  There is even a chance that in the meantime you are somehow offered a better deal yet.

Now if someone wants to argue that, given these considerations, Medicaid expansion still makes financial sense for a state, fine, I would be keen to read such an analysis.  But that is not what I am seeing.  The Price and Eibner piece doesn’t analyze these considerations or even bring up most of them.  Governors are not stupid, or their chiefs of staff are not stupid, and many governors are far less ideological than they let on.  They are politicians.  And they are politicians who understand that the federal government is not to be trusted and yes if you wish you really can blame that on the Republicans, or indeed on any prospective switch of power.  That is why we are not seeing more states do the Medicaid expansion.  In the meantime, the debate needs to catch up to the reality.