Month: April 2014
That is the new paper by Christiano, Eichenbaum, and Trabandt, and it is the most thorough study of the topic I know. They arrive at this conclusion, the last sentence being of particular interest to me (emphasis added):
We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions interacting with the zero lower bound. We reach this conclusion looking through the lens of a New Keynesian model in which firms face moderate degrees of price rigidities and no nominal rigidities in the wage setting process. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small size of the drop in inflation that occurred during the Great Recession.
For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income. But that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay.
The strain is not limited to the usual high-cost cities like New York and San Francisco. An analysis for The New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income.
In Chicago, rent as a percentage of income has risen to 31 percent, from a historical average of 21 percent. In New Orleans, it has more than doubled, to 35 percent from 14 percent. Zillow calculated the historical average using data from 1985 to 2000.
Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000.
A house listed for just under $600,000 in East Vancouver sold for $643,000 after its first weekend on the market.
According to the Huffington Post B.C., Vancouver’s cheapest listed single family home attracted large numbers to open houses, with two written offers pushing the final purchase price seven per cent over asking.
The price of the 100-year-old, 1,951-square-foot, three-bedroom, detached house at 2622 Clark Dr. was set low initially due to its smaller size and half lot site.
“It’s very rare, and that’s why all the excitement,” said RE/MAX realtor Mary Cleaver.
3. The (homoerotic) culture that is Finland. Note that the link is itself…homoerotic. And the Indian Supreme Court recognizes transgender as a third gender.
4. Excellent Jesse Shapiro slides on how to give an applied micro talk (pdf). It starts with: “Your audience does not care about your topic. You have one or two slides to change their minds.” And the short list for the Clark medal, Jesse is on it.
Let us start with “Teheran markets in everything”:
I think this happens only in Tehran. Some people get paid to walk behind your car, so the traffic cameras can not capture your plate number when you enter the restricted traffic areas!
The photo alas does not reproduce, and that is from a fascinating Quora discussion on “what is a job that exists only in your country?”
The Vietnamese water bag carriers are impressive (you get into a plastic bag and they pull you across a river). Here is some Indian arbitrage:
Disabled people get 50-75% concession on train ticket from Indian Railways. Additionally, they can take one person as escort who will be entitled to the same amount of concession.
Some disabled people earn their living with this scheme. Their only job is travelling between different cities and taking Strangers (who actually want to go to some city) as escorts. These strangers pay 75% of the fare to the disabled people. Thus Stranger saves money, Disabled person earns profit.
This also was new to me:
In China, when there are big traffic jams, you can pay a fee to have two people on a motorcycle drive to your vehicle, where one takes your place at the steering wheel, and the other will take you wherever you need to go on his motorcycle.
Nor had I known about the “pet food taster” (Simon and Marks) or the costumes of those Australian Meter Maids. India is prominent on the list but Mexico makes an appearance as well:
In Mexico we have men who make a living by discharging electricity into the bodies of consenting drunk people (who gladly pay a couple of dollars for the experience). These men usually hang around bars and areas where nightlife abounds and yell “toques toques!”(“discharges, discharges!”) while banging the two metallic handles of their contraption together. The device is a battery-operated metal box with a voltage regulator that can increase the intensity of the electrical current depending on how much the customer can take. It is generally accepted by Mexicans that a bit of electricity will increase your buzz…
It costs about $2-$4 per jolt. Maybe the real winner should be this one:
United States of America: Man who walks on the moon (currently on hiatus).
I believe I owe thanks to somebody on Twitter, alas I can no longer recall to whom.
I enjoyed this piece by Sarah Turcotte:
Tour caddies are well-compensated. The winning looper this week will pocket a nice $144,000. But they earn that 10 percent. A long-running joke among caddies is that there are only three rules: Show up, keep up and shut up. Truth is, their jobs might be tougher than the players’. Well maybe not quite, but it’s close. Caddies are part pack mule, part meteorologist, part psychologist (BIG part), part mathematician, part scapegoat, part psychic and sometimes even part bartender. When I played in the LPGA’s Michelob Ultra Open a few years back, a veteran caddie suggested to the man on my bag a little Drambuie and Sprite to calm my nerves. (Full disclosure: He did have a water bottle filled with Chardonnay available at all times. We never used it, but it was a comfort knowing it was there.)
Caddies do not appear to do very much, yet most people could not hold a job as an effective caddy for a good golf professional. This, in a nutshell, is why the transition toward the new service sector jobs will not run smoothly for everybody.
And even if you really do make the grade, “…job security for caddies is non-existent.”
A four-year slowdown in health spending growth could be coming to an end.
Americans used more medical care in 2013 as the economy recovered, new reports show. Federal data suggests that health care spending is now growing just as quickly as it was prior to the recession.
“We’re at the highest level of growth since the slowdown began,” Paul Hughes-Cromwick, a senior health economist at the Altarum Institute, which tracks health spending. “You have to go back seven years to see growth like this.”
Here is what I had to say:
Tyler Cowen, a professor of economics at George Mason University, argues that the very definitions of labor and capital are arbitrary. Instead, he looks around the world to find the relatively scarce factors of production and finds two: natural resources, which are dwindling, and good ideas, which can reach larger markets than ever before.
If you possess one of those, then you will reap most of the rewards of growth. If you don’t, you will not.
3. Modern Russian cancer ward? The general topic of pain relief is one of the most neglected in public policy and it requires more deregulation in the United States as well.
7. James K. Galbraith writes a Cambridge critique of Piketty. A good and interesting piece, one of the best reviews.
The Census Bureau, the authoritative source of health insurance data for more than three decades, is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama’s health care law in the next report, due this fall, census officials said.
The changes are intended to improve the accuracy of the survey, being conducted this month in interviews with tens of thousands of households around the country. But the new questions are so different that the findings will not be comparable, the officials said.
An internal Census Bureau document said that the new questionnaire included a “total revision to health insurance questions” and, in a test last year, produced lower estimates of the uninsured. Thus, officials said, it will be difficult to say how much of any change is attributable to the Affordable Care Act and how much to the use of a new survey instrument.
“We are expecting much lower numbers just because of the questions and how they are asked,” said Brett J. O’Hara, chief of the health statistics branch at the Census Bureau.
With the new questions, “it is likely that the Census Bureau will decide that there is a break in series for the health insurance estimates,” says another agency document describing the changes. This “break in trend” will complicate efforts to trace the impact of the Affordable Care Act, it said.
Obviously with a big new law you need new questions too, I suppose, plus the old questions ought not to hang around. You can read more here.
As a side note, I have been reading far too many blog posts about “numbers enrolled” as a metric of success for Obamacare. That has never been a good test of the serious criticisms (and defenses) of ACA.
I thank Megan and Garett for the pointers.
Addendum: You should read this update from Vox, though I am not satisfied with the Administration’s response.
No examples have surfaced of anyone actually exploiting the vulnerability.
Of course that is no longer true, as The Royal Canadian Mounted Police are investigating the cases of 900 Canadian identity theft victims. And there are likely undetected further cases. Still, when I hear this crisis described as “On the scale of 1 to 10, this is an 11,” I conclude that economists think about risk differently than do most people, including tech consultants. (To flip this coin on its other side, I am not especially reassured about the web sites judged as “safe” — should we now start trusting such judgments so strongly?)
What can the deadweight loss be of a previously unnoticed crisis? And if that is an 11, what does a 12 look like? How many Canadian victims would be needed to get us up to 13?
Well, at which margin? At current margins, not for all donors and it seems not for “warm glow” donors. Here is a new paper by Dean Karlan and Daniel H. Wood. Every sentence in the abstract is interesting:
We test how donors respond to new information about a charity’s effectiveness. Freedom from Hunger implemented a test of its direct marketing solicitations, varying letters by whether they include a discussion of their program’s impact as measured by scientific research. The base script, used for both treatment and control, included a standard qualitative story about an individual beneficiary. Adding scientific impact information has no effect on whether someone donates, or how much, in the full sample. However, we find that amongst recent prior donors (those we posit more likely to open the mail and thus notice the treatment), large prior donors increase the likelihood of giving in response to information on aid effectiveness, whereas small prior donors decrease their giving. We motivate the analysis and experiment with a theoretical model that highlights two predictions. First, larger gift amounts, holding education and income constant, is a proxy for altruism giving (as it is associated with giving more to fewer charities) versus warm glow giving (giving less to more charities). Second, those motivated by altruism will respond positively to appeals based on evidence, whereas those motivated by warm glow may respond negatively to appeals based on evidence as it turns off the emotional trigger for giving, or highlights uncertainty in aid effectiveness.
How is that for a chilling final sentence?: “…those motivated by altruism will respond positively to appeals based on evidence, whereas those motivated by warm glow may respond negatively to appeals based on evidence as it turns off the emotional trigger for giving, or highlights uncertainty in aid effectiveness.”
The BirdReturns program, financed by the Nature Conservancy, then pays rice farmers in the birds’ flight path to keep their fields flooded with irrigation water from the Sacramento River as migrating flocks arrive. The prices are determined by reverse auction, in which farmers bid for leases and the lowest bidder wins.
Because the program pays for only several weeks of water instead of buying the habitat, the sums are modest; the conservancy does not disclose bids because that might affect future auctions, but it says the figures were both above and below the $45 per acre that the federal government pays for bird-friendly practices.
The project’s first season ended last month, as birds headed north from newly flooded fields. Researchers said all of the birds whose numbers they hoped to improve were seen on “pop up” wetlands — a temporary steppingstone for the birds’ journey north. This happened when the field would have ordinarily been drained, an indication that the approach was working. More analysis will be done this month. The fields will be flooded again in the fall for the birds’ return journey. Eventually, using this and other approaches, the conservationists at BirdReturns hope to increase the number of shorebirds that stop in the Central Valley to 400,000, from current levels of 170,000.
Yes doing things now can have good side effects, but unless something changes in the side-effect processes, doing things later should have exactly the same sort of side effects. And because of positive interest rates, you can do more later, and thus induce more of those good side effects. (Also, almost everyone can trade time for money, and so convert money or time now into more money or time later.)
For example, if you can earn 7% interest you can convert $1 now into $2 a decade from now. Yes, that $1 now might lend respectability now, induce others to copy your act soon, and induce learning by the charity and its observers. But that $2 in a decade should be able to induce twice as much of all those benefits, just delayed by a decade.
In math terms, good side effects are multipliers, which multiply the gains from your good act. But multipliers are just not good reasons to prefer $1 over $2, if both of them will get the same multiplier. If the multiplier is M, you’d just be preferring $1M to $2M.
…I think one should in general be rather suspicious of investing or donating to groups on the basis that they, or you, or now, is special. Better to just do what would be good even if you aren’t special. Because usually, you aren’t.
There is more here.
3. Insights into Vox.com and how it views its competitors. And here is Joshua Gans on Vox.
4. Philippe Legrain, European Spring, a useful and well-written popular look at the European economic mess, $2.99 on Kindle.
6. Chrystia Freeland dialogue with Larry Summers, starts at about 40:00. It is the best Larry video I have viewed. Here is a Sendhil Mullainathan talk on machine learning which I have not viewed.