Month: November 2015
How do students feel about older faculty members?
With the elimination of mandatory retirement, the average age of college and university faculty members has increased. While this has raised some concerns, relatively little research has tried to measure the impact of this aging on productivity inside the classroom. Using data from the RateMyProfessors.com website for a large sample of instructors in a broad cross-section of colleges and universities, we find that age does affect teaching effectiveness, at least as perceived by students. Age has a negative impact on student ratings of faculty members that is robust across genders, groups of academic disciplines and types of institutions. However, the effect does not begin until faculty members reach their mid-forties and does not seem to increase even when they reach the former retirement ages of 65 or 70. Moreover, the quantitative impact of age on student ratings is small and can be offset by other factors, especially the physical appearance of professors and how easy students consider them to be. When we restrict our sample to those professors deemed hot by student raters, the effect of age disappears completely. We conclude that ending mandatory retirement has had little impact on student perceptions of faculty quality.
That is from a new paper by Rovbert J. Stonebreaker and Gary S. Stone, via Kevin Lewis.
Further wounds for Obamacare
UnitedHealth may exit the provision of ACA plans:
The nation’s largest health insurance provider, UnitedHealth Group, dealt a blow to the Affordable Care Act on Thursday when it warned it may stop offering coverage to individuals through public exchanges after taking a big hit to the bottom line from disappointing enrollment and the law’s unexpected effects.
The insurer’s withdrawal from the Obamacare exchanges would force some 540,000 Americans to find coverage from another provider.
UnitedHealth (UNH) downgraded its earnings forecast, bemoaning low growth projections for Obamacare enrollment and blaming the federal health care law for giving individuals too much flexibility to change plans.
People who purchase insurance through the public exchanges are typically heavy users of their plans, draining insurers’ profits, analysts say.
In a sharp reversal of its previously optimistic projections, UnitedHealth suspended marketing of its Obamacare exchange plans for 2016 — which the company has already committed to offer — to limit its exposure to additional losses.
“We see no data pointing to improvement” in the financial performance of public-exchange plans, UnitedHealth CEO Stephen Hemsley said on a conference call, though he added that “we remain hopeful” the market will recover.
The move comes amid indications that insurers are absorbing steeper costs than they expected from plans offered to individuals through the public exchanges, which are purchased online.
The average premium for medium-benefit plans offered to 40-year-old non-smokers is set to rise 10.1% in 2016, according to the Kaiser Family Foundation.
…Even though UnitedHealth wasn’t a major player yet on the ACA exchanges, the fact that it priced plans conservatively and entered cautiously made its statements more significant, said Katherine Hempstead, who heads the insurance coverage team at the Robert Wood Johnson Foundation.
“If they can’t make money on the exchanges, it seems it would be hard for anyone,” Hempstead said.
But that is not all the news. There is also:
In many Obamacare markets, renewal is not an option
Shopping for health insurance is the new seasonal stress for many
Health care law forces business to consider growth’s costs
Many say their high deductibles make their health insurance all but useless
and my own Obamacare not as egalitarian as it appears
All five are from the NYT, the first three being from the last two or three days, the other two from last week. They are not articles from The Weekly Standard…
To put it bluntly, I don’t think the mandate part of the bill is working. These are mostly problems which decay and get worse, not problems which self-correct.
On UnitedHealth, here is commentary from Megan McArdle. Here is Bob Laszewski. Here is Vox.
Can this be true?
Between 1989 and 2010, U.S. attorneys seized an estimated $12.6 billion in asset forfeiture cases. The growth rate during that time averaged +19.4% annually. In 2010 alone, the value of assets seized grew by +52.8% from 2009 and was six times greater than the total for 1989. Then by 2014, that number had ballooned to roughly $4.5 billion for the year, making this 35% of the entire number of assets collected from 1989 to 2010 in a single year. According to the FBI, the total amount of goods stolen by criminals in 2014 burglary offenses suffered an estimated $3.9 billion in property losses. This means that the police are now taking more assets than the criminals [emphasis added].
That is from Martin Armstrong, via Noah Smith and Michael Hendrix. While private sector robberies are underreported by a considerable amount, this is nonetheless a startling contrast.
Can this be true?
Thursday assorted links
1. Glenn Loury on the recent troubles at Brown. And should Princeton still use the Woodrow Wilson name?
2. Henry Rowen, economist and former head of Rand, has passed away.
3. A deaf couple discuss their marriage.
4. There is no great ketchup stagnation.
5. Intergenerational mobility in the Great Depression (pdf).
Syrian Refugees, Jelly Beans, and Murderers
A meme going around compares Syrian refugees to jelly beans:
If i gave you a bag of 50000 jellybeans and told you 100 are poisonous, you wouldnt accept them right? Then why would we accept 50000 refugees if some of them are bad?
I like jelly beans and numbers so I did a back of the envelope calculation. In the US there are about 15,000 murders per year. Most murderers kill only one person. Even serial killers kill only 2.8 people on average. Thus, 15,000 is also approximately the number of murderers in a year.
Let’s say that people live on average for 50 years–that’s a bit low but our figure for the number of murderers was a bit high–this means that in the current population there will be approximately 15000*50=750,000 murderers.
750,000 killers among us struck me as an awful lot when I first calculated the number but there are approximately 166,700 people in prison for murder right now and of the 750,000 some of them are not yet murderers and some of them won’t be caught. Thus, on reflection, 750,000 seems like a scary, yet reasonable estimate.
The current US population is 322 million so there are .0023 murderers per capita or 2.33 murderers per 1000 or 116 murderers per 50,000 people in the United States. Put differently, about 116 American babies out of every 50,000 will grow up to murder someone. (Perhaps the NYMag should rerun its poll?). In contrast, only 100 of the 50000 jelly beans were poisonous.
Thus, if anything, Syrian jelly beans look pretty good compared to American jelly beans.
Addendum: See Alex Nowrasteh for calculations going beyond jelly beans.
Leadership sentences to ponder
This sounds like a combination of a David Brooks column and a Robin Hanson blog post, and what could be better than that?:
Surprisingly, the most effective leaders did not have the highest level of self-awareness. Indeed, the more they underrated themselves, the more highly they were perceived as leaders. We assume this is caused by a combination of humility, high personal standards, and a continual striving to be better.
That is from Jack Zenger and Joseph Folkman, via the excellent Samir Varma.
How important was the Sykes-Picot agreement anyway?
From the ubiquity of media reference to them, one might suppose that Sir Mark Sykes and Georges Picot were the only actors of consequence on the Ottoman theater in the First World War, and Britain and France the only relevant parties to the disposition of Ottoman territory, reaching agreement on the subject in (so Google or Wikipedia informs us) anno domini 1916…
It is a seductive story, simple,compact, elegant, and easy to understand. But the Claude Rains summary of Sykes-Picot bears little resemblance to the history on which it is ostensibly based. The partition of the Ottoman Empire was not settled bilaterally by two British and French diplomats in 1916, but rather at a multinational peace conference in Lausanne, Switzerland, in 1923, following a conflict that had lasted nearly twelve years going back to the Italian invasion of Ottoman Tripoli (Libya) in 1911 and the two Balkan Wars of 1912-13. Neither Sykes nor Picot played any role worth mentioning at Lausanne, at which the dominant figure looming over the proceedings was Mustafa Kemal, the Turkish nationalist…Even in 1916, the year ostensibly defined for the ages by their secret partition agreement, Sykes and Picot played second and third fiddle, respectively, to a Russian foreign minister, Sergei Sazonov, who was the real driving force behind the carve-up of the Ottoman Empire, a Russian project par excellence, and recognized as such by the British and French when they were first asked to sign off on Russian partition plans as early as March-April 1915.
That is from the new and interesting The Ottoman Endgame: War, Revolution, and the Making of the Modern Middle East, 1908-1923, by Sean McMeekin.
Wednesday assorted links
2. Bill Simmons interviews Obama.
4. Caplan reviews Garett Jones The Hive Mind, and more here.
My conversation with Cliff Asness
Here is the full transcript, video, and podcast of the chat. Cliff was great from beginning to end. The first thirty minutes or so were an overview of “momentum” and “value” trading strategies, and to what extent they violate an efficient markets hypothesis. Much of the rest covered:
…disagreeing with Eugene Fama, Marvel vs. DC, the inscrutability of risk, high frequency trading, the economics of Ayn Rand, bubble logic, and why never to share a gym with Cirque du Soleil.
Here is one excerpt:
COWEN: I think of you as doing a kind of metaphysics of human nature. On one side, there’s behavioral economics. They put people in the lab, one-off situations, untrained people. But here it’s repeated data, it’s over long periods of time, it’s out of sample. There’s real money on the line, and this still seems to work.
When you back out, what’s the actual vision of human nature? What’s the underlying human imperfection that allows it to be the case, that trading on momentum across say a 3 to 12 month time window, sorry, investing on momentum, will work? What’s with us as people? What’s the core human imperfection?
ASNESS: This is going to be embarrassing because we don’t have a problem of no explanation. We have a problem with too many explanations. Of course, we can observe the data. The explanations you have to fight over and argue over. I will give you the two most prominent explanations for the efficacy of momentum.
The first is called underreaction. Simple idea that comes from behavioral psychology, the phenomenon there called anchoring and adjustment. News comes out. Price moves but not all the way. People update their priors but not fully efficiently. Therefore, just observing the price move is not going to move the same amount again but there’s some statistical tendency to continue.
Take a wild guess what our second best, in my opinion, explanation for momentum’s efficacy is? It’s called overreaction. When your two best explanations are over- and underreaction, you have somewhat of an issue, I admit. Overreaction is much more of a positive feedback. It works over time because people in fact do chase prices. So if you do it somewhat systematically and before them you make some money.
One of the hard things you find out in many fields but I found out in empirical finance is those might be the right explanations but they’re not mutually exclusive.
And here is from the overrated/underrated part of the chat:
COWEN: …In science fiction, the author Robert Heinlein.
ASNESS: Early stuff, underrated. Later stuff, overrated.
COWEN: What’s your favorite?
ASNESS: That is a really — Methuselah’s Children.
COWEN: Ah, good pick.
ASNESS: I could have gone with the obvious. I’m a bit of a libertarian. I could have gone with, The Moon Is A Harsh Mistress. It’s his most famously libertarian book.
COWEN: But it doesn’t age so well.
ASNESS: No, no. I like Methuselah’s Children.
This was the funniest segment:
ASNESS: I live in Greenwich, Connecticut. In some parts of the world, if you said, “my daddy runs a hedge fund,” I’d say, “what’s a hedge fund?” In Greenwich, Connecticut, the kids say, “what kind of hedge fund is your daddy running? Is he event arbitrage? Trend following? What does dad do?”
Interesting throughout, as they are known to say…
The global reach of the Fed, and why it is time to discard Mundell-Fleming
Miranda-Agrippino and Rey have an important new paper out on global transmission of money shocks. I find the abstract poorly presented, but here are the key sentences from the body of the paper:
…US monetary policy has a significant effect on the leverage of US and European investors (particularly continental European and UK banks who have large capital market operations and are classified as systemically important banks), on cross-border credit flows and on credit growth worldwide…Our results are not driven by the crisis period…
I am not sure if I should feel better or worse about all that, in the meantime beware of purely domestic monetary policy arguments for a particular policy.
Note also that the Mundell-Fleming model is looking rather weak these days. Not long ago Olivier Blanchard and co-authors told us that capital inflows are expansionary, now there is more work from Cambridge telling us that floating exchange rates do not insulate a country from the monetary policy of its neighbors.
Isn’t it time to conclude that the Mundell-Fleming is mostly wrong? You know wrong, as in…not correct. Incorrect, in fact.
How much is unified control of a state government worth?
That is the subject of a new paper by Devin Caughey, Christopher Warshaw, and Yiqing Xu (pdf). It turns out that before the 1980s it hardly mattered at all which party controlled a state government. These days it matters much more, but how much?
Even today, for example, electing a Democratic rather than Republican governor should be expected to increase monthly welfare payments by only $1-2 per recipient, and to increase by just half a percentage point the proportion of policies on which a state has the liberal policy option. These eff ects are small relative to policy diff erences across states. They are also small relative to the partisan divergence in legislative voting records. These results thus partially assuage the normative concern that partisan polarization has led to extreme policy swings, degrading the congruence between policy outcomes and citizens’ preferences.
OK, you can all go home and relax now…and just to be clear, these estimates are adjusting for what is already the ideology of the state.
Some other things to note from this paper:
1. The effect of having a Democratic governor seems to be rising.
2. Whatever Democratic governors accomplish, they accomplish in their first two years in office. Policy effects do not seem to cumulate over time.
3. “The estimated policy effect of a switch in unified party control is one-twentieth the size of the typical difference between states…”
The bottom line? Worry about the culture people, not about the election.
Herb Scarf has passed away
There is one account here, another here. And from Timothy Taylor.
For the pointer I thank John Chilton.
Identifying barriers to Muslim integration in France
From an email from the Harvard Kennedy School:
“Identifying Barriers to Muslim Integration in France”
Adida, Claire L.; Laitin, David D.; Valfort, Marie-Anne. Proceedings of National Academy of Sciences (PNAS), 2010, Vol. 107, No. 52, doi: 10.1073/pnas.1015550107.Abstract: “Is there a Muslim disadvantage in economic integration for second-generation immigrants to Europe? Previous research has failed to isolate the effect that religion may have on an immigrant family’s labor market opportunities because other factors, such as country of origin or race, confound the result. This paper uses a correspondence test in the French labor market to identify and measure this religious effect. The results confirm that in the French labor market, anti-Muslim discrimination exists: a Muslim candidate is 2.5 times less likely to receive a job interview callback than is his or her Christian counterpart. A high-n survey reveals, consistent with expectations from the correspondence test, that second-generation Muslim households in France have lower income compared with matched Christian households. The paper thereby contributes to both substantive debates on the Muslim experience in Europe and methodological debates on how to measure discrimination. Following the National Academy of Sciences’ 2001 recommendations on combining a variety of methodologies and applying them to real-world situations, this research identifies, measures, and infers consequences of discrimination based on religious affiliation, controlling for potentially confounding factors, such as race and country of origin.”
There are other interesting papers at the top link, many of them topical with regard to recent events. This article, by the way, argues that 9-11 decreases the rate of Muslim assimilation in the United States.
Tuesday assorted links
1. How is development economics taught in developing nations?
2. Robin Hanson reviews Garett Jones. And cities as harems?
3. Lego’s anti-Lego slippers (markets in everything there is no great stagnation).
4. Walter Frick: are successful CEOs just lucky?
5. New Yorker profile of Nick Bostrom. And Cass Sunstein to write Star Wars book.
Whistleblowers for Innovation
We reward whistle blowers who help to prosecute people who are defrauding the government by giving them a share of the proceeds. Bradley Birkenfeld, for example, provided evidence to the US government that the Swiss bank UBS was illegally enabling US tax evaders. The case led to a $780 million dollar fine against UBS and Birkenfeld collected a sweet cut, $104 million.
Derek Khanna at the R Street Institute suggests a similar system to reward innovators (pdf).
Imagine a research team developed a cancer drug that could save the federal government $1 billion a year. Under the innovation savings program, a portion of those savings would flow back to the researchers themselves, in exchange for their not patenting the technology. In order to be eligible for a prize payout, the innovation would need to meet a minimum cost-savings threshold established by Congress (e.g., $100 million). Since the researchers would be paid out of funds already authorized by Congress, there would be no additional cost to taxpayers, who instead would expect to see still additional savings.
…This idea is directly inspired by the centuries-old concept of “qui tam” claims. Qui tam statutes allowed a private citizen to bring action on behalf of a government to recover a penalty….
But programs that seek only to stamp out waste, fraud and abuse do little to encourage the kinds of innovations that would reduce costs on the “front end.” That’s the goal of the innovation savings program: to provide a profit mechanism, separate and apart from patents and direct subsidies, to encourage innovations that could revolutionize such fields as medical technology, energy efficiency and payment processing
The benefits of such a system are not only that it avoids some of the costs of patents but that it would also work when patents are not available. It only works when the government is a big player but that’s a huge share of the economy.