Month: October 2014

More women are among the top earners

Claudia Sahm has given us the link (pdf) for Guvenen, Kaplan, and Song, David Wessel the summary.  The paper abstract is this:

We analyze changes in the gender structure at the top of the earnings distribution in the United States over the last 30 years using a 10% sample of individual earnings histories from the Social Security Administration. Despite making large inroads, females still constitute a small proportion of the top percentiles: the glass ceiling, albeit a thinner one, remains. We measure the contribution of changes in labor force participation, changes in the persistence of top earnings, and changes in industry and age composition to the change in the gender composition of top earners. A large proportion of the increased share of females among top earners is accounted for by the mending of, what we refer to as, the paper floor — the phenomenon whereby female top earners were much more likely than male top earners to drop out of the top percentiles. We also provide new evidence at the top of the earnings distribution for both genders: the rising share of top earnings accruing to workers in the Finance and Insurance industry, the relative transitory status of top earners, the emergence of top earnings gender gaps over the life cycle, and gender di erences among lifetime top.

David pulls this out:

A trio of economists, wielding big data from Social Security’s records, says that in 1981-85, women constituted just 1.9% of the top 0.1% of earners (based on average earnings for those years) and 5.2% of the top 1%.

But a quarter-century later, in 2008-12, women were 10.5% of the top 0.1% and 27.5% of the top 1%.

Who will win the next Nobel Prize in economics?

Jon Hilsenrath says Bernanke deserves one, I agree.  I would gladly see a Bernanke-Woodford-Svensson prize, perhaps working in Mark Gertler too.

But for this year’s pick, due October 13, I am predicting William J. Baumol, possibly with William G. Bowen, for work on the cost-disease.  As you probably know, this hypothesis suggested that the costs of education and health care would continue to rise in relative terms, thereby creating significant economic problems.  Not a bad prediction for 1966, and of course it has become a truly important issue.

One problem is that the initial Baumol and Bowen hypothesis focused on the performing arts, rather than health care and education.  A lot of live performance is pretty robust, although not always European high culture, and furthermore the internet has proven a much closer substitute in the minds of consumers than many people had expected.  So the cost-disease argument, in the area where it was originally formulated, hasn’t panned out but rather has evolved into a kind of merit good demand — “I wish more people were paying for Mozart rather than for sports and live music in bars.”

A second problem is whether it should be Baumol or Baumol and Bowen.  Bowen was co-author on the major and initial work, but Baumol has numerous other contributions, including contestability, operations research and economics, entrepreneurship, externalities and Pigouvian taxes, portfolio theory, and even in the older literatures on money demand and also sales maximization for business firms.  One can well imagine Baumol paired with one or two other people, perhaps from industrial organization, and the cost-disease as one but not the only reason for the prize.  Or if they give it to him and Bowen, it looks more like an “economics of education” prize, with a mention of health care tacked on.

So yes, that’s my pick.  Keep in mind people, in the past I have never, ever gotten the timing of the pick right.  Not once.  But Baumol is now ninety-two, so I think this will be his year.  Of course the Bayesian will note that last year he was ninety-one.

Will the Catalonian independence referendum take place?

This is perhaps today’s underreported news story:

Catalonia’s regional government said Tuesday it was suspending its promotion of an independence referendum, a day after a decision by Spain’s Constitutional Court blocking the nonbinding vote.

Catalonia’s leaders still hoped to hold the vote on Nov. 9, said spokesman Francesc Homs, but meanwhile they are halting the campaign for the referendum to avoid subjecting public servants to possible legal liability for defying the court.

There is more here.  Here is an El Pais in English story about how they hope to fight back and continue anyway, but it sounds like a losing cause.  Here is a story on a protest march to defend the referendum idea.  Developing…

What is the relevant bias when Westerners try to predict what Chinese leaders will do?

I see a whole bunch of candidates here, each backed by a broadly plausible psychological story:

1. They are more ruthless than we realize.

2. They are more like us than we realize.

2b. #1 and #2.

3. They have longer time horizons than we imagine.

4. Due to extreme political constraints, they have far shorter time horizons than we think.

5. They are more inured to the risk of economic depression and hardship than we grasp.

6. They are more obsessed with parallels to earlier Chinese history than a typical Westerner would find natural.

7. They are less rational than social science rational choice models would predict, having one or two major blind spots on matters of critical importance.

8. The Chinese see themselves as weaker and less stable than we see them.

9. All of the above.

10. Good luck.

The CIA Starbucks (intelligence markets in everything)

Emily Wax-Thibodeaux reports:

The new supervisor thought his idea was innocent enough. He wanted the baristas to write the names of customers on their cups to speed up lines and ease confusion, just like other Starbucks do around the world.

But these aren’t just any customers. They are regulars at the CIA Starbucks.

“They could use the alias ‘Polly-O string cheese’ for all I care,” said a food services supervisor at the Central Intelligence Agency, asking that his identity remain unpublished for security reasons. “But giving any name at all was making people — you know, the undercover agents — feel very uncomfortable. It just didn’t work for this location.”

This purveyor of skinny lattes and double cappuccinos is deep inside the agency’s forested Langley, Va., compound.

…The baristas go through rigorous interviews and background checks and need to be escorted by agency “minders” to leave their work area. There are no frequent-customer award cards, because officials fear the data stored on the cards could be mined by marketers and fall into the wrong hands, outing secret agents.

And this:

The chief of the team that helped find Osama Bin Laden, for instance, recruited a key deputy for the effort at the Starbucks, said another officer who could not be named.

Employees at the branch also are not allowed to bring smart phones inside.  The piece is interesting throughout.