Resume normal programming

I’m now done with my week guest blogging.  The week has flown by.

My final observations are about econo-blogging:

  1. It has been fun. Thanks for listening.
  2. The intertubes can be an interesting and challenging place for discussing ideas and economics.  This might be obvious to you, but for many of us in the ivory tower, the seminar room and the printed page remain our primary fora.  Not coincidentally, they are also where the strongest career incentives lie.
  3. I’ve loved being welcomed and challenged by the Pareto Optimists here at MR.
  4. I’ve been amazed by how much work blogging can be.  More than anything else, this past week has simply increased my admiration for the work that Alex and Tyler put into this site and our community.

I’m still thinking about how my experiences this week will shape my own future views about the who/what/when/where/why of both doing economics and communicating findings.  I’ll be sure to report back if I figure out how one should deal with the (many) alternatives.

So, let me end on a personal note, albeit quoting:

I’m walkin’ down that long, lonesome road, babe
Where I’m bound, I can’t tell
But goodbye’s too good a word, gal
So I’ll just say fare thee well

The Divorce Myth: What is Really Happening?

I began my week guest blogging by noting a widely under-appreciated point: that divorce is falling (here, continued here).  Those posts led a bunch of folks, in the comments and elsewhere, to ask about recent trends, to question the possible confounding influence of changes in marriage rates, and for requests to actually show, rather than summarize the data.

Good news: Despite blogging all week, Betsey Stevenson and I have managed to put together a shortish paper describing the trends in marital stability over recent decades, drawing on most available data sources.  Read away here.  The paper is largely pictures and tables, so should provide useful grist for discussion.  And of course, we are open to any useful suggestions.

Dylan movie. Sort of.

The new Dylan biopic,  starring Christian Bale, Cate Blanchett, Marcus Carl Franklin, Richard Gere, Heath Ledger and Ben Whishaw – all as Bob Dylan – is starting to get some coverage.  As a lifelong Dylan fan, I’m excited to see the movie.  The film is currently doing the rounds of the film festivals, and is going into wider release slowly from September through March (depending on your country).

Early reports only whet my appetite:

  1. A slew of trailers (both official and unofficial) on YouTube [HT: Cass Sunstein]
  2. This is Not a Bob Dylan Movie: a beautifully-written essay in today’s NY Times magazine
  3. A wrap-up of other reviews, from filmmaker Todd Haynes
  4. Some extremely high variance early reviews.

An aside: From many hallway conversations, I can report that Dylan is a surprisingly popular artist among the econ gliterati.

The end of angst?















































% “Extremely important”









Being successful in my line of work









Having a good marriage and family life









Having lots of money









Having plenty of time for recreation and hobbies









Having strong friendships









Being able to find steady work









Making a contribution to society









Being a leader in my community









Being able to give my children better opportunities than I’ve had









Living close to parents and relatives









Getting away from this area of the country









Working to correct social and economic inequalities









Discovering new ways to experience things









Finding purpose and meaning in my life








Oomph v. Statistical Significance

For those after the full debate, see:

  1. McCloskey and Ziliak, "The Standard Error of Regressions," Journal of Economic Literature 1996.
  2. Ziliak and McCloskey, "Size Matters: The Standard Error of Regressions in the American Economic Review," Journal of Socio-Economics 2004.
  3. Hoover and Siegler, "Sound and Fury: McCloskey and Significance Testing in Economics," Journal of Economic Methodology, 2008.
  4. McCloskey and Ziliak, "Signifying Nothing: Reply to Hoover and Siegler."

McCloskey has been making this point for some time, and a longer list of papers is available here, including several shorter (yet unsurprisingly persuasive) pieces.

Can computer failure cause a bank run?

Over the past few days, something strange happened to me: My debit card simply stopped working. This caused a sticky situation when I was traveling, and I was lucky that my cabbie took $27 plus a 20 euro note for a $37 cab fare.

My problem turned out to be a widespread problem with my bank’s computer system.  This is a bank with a large internet presence and no physical branches in my state, so many customers really were stuck with a cash-free few days (which is less fun than being cash-flush, I assure you.)

So what will I do when the computer problems are solved?  I plan on withdrawing $500 so that I’m not caught short if these problems recur next week.  More generally, if account-holders fear that computer glitches tend to repeat themselves (computer failure is autocorrelated), then we will all be lining up (electronically) to make withdrawals.  Some may even be so dismayed by recent events as to close their accounts.

Why haven’t I named the Bank?  Because if enough people are aware of this situation, then these correlated withdrawals become a Bank Run.  The possibility of online withdrawals certainly sped up the the recent run on the UK-based Northern Rock bank, and website problems raised anxiety.  But my (new) fear is entirely a computer-glitch precipitated bank run.

I must admit, I’m not aware of any bank runs – to date – caused by computer problems.  But here’s a forecast: IT problems will cause a bank run within a decade.  Fortunately these sorts of runs are unlikely to cause widespread financial instability.  My advice? If you work in IT at a bank: Demand a raise – your bank’s future depends on you.

Visiting Dartmouth

I’m spending a couple of days at Dartmouth right now, visiting friends and colleagues at the economics department.  I’ll be trying to sneak in posts between meetings.  But one thing I can’t help but notice: this department is a persistent overperformer.  Click on just about anyone’s homepage, and you’ll find creative folks doing first-rate (usually empirical) research on important questions.  And worse: They are all so damn friendly.

Dartmouth have also just hired one of my favorite economists and coauthors, Eric Zitzewitz.  Look for creativity and colleagiality to continue.

Tyranny of the Majority, Tyler Cowen Edition

Two different Tylers talk about the Tyranny of the Majority.

Earlier today:

I like Joel’s book but I think he is far too pessimistic about the prospects for diversity in the modern world.

But when discussing the different flavors of economics:

The very existence of heterodox economics brings benefits.  A
personal anecdote will suffice.  My first two publications were both in
heterodox journals: the Journal of Post Keynesian Economics and the (institutionalist) Review of Social Economy.
These articles lifted me into a top graduate school and financial aid
(can you imagine how confused the admissions committees were to see a
GMU undergrad with an apparently leftie publication record?).  I would
not have had comparable success at Econometrica.

This tale relates to the value of diversity more generally.  We will
miss much of the value of diversity by simply listing a bunch of
diverse elements and evaluating them one-by-one.  Diversity brings
broader benefits by allowing people to use niches as ladders to further
steps, frequently into the mainstream, or in my case into another
niche.  Diversity is also a form of insurance, and of course it doesn’t
always pay off.  Finally many excellent mainstream or sometimes even
right-wing economists started with an intense interest in social
justice, often gleaned from heterodox writings.  Vernon Smith was once
a socialist, and George Stigler was early on a trust-basher.

Yes the profession is getting better but we also are losing too much
diversity in terms of schools of thought.  The diminution of the
Austrian School, as an organized and intellectually alive phenomenon
seems to me a shame, even though I don’t believe in a unique Austrian
method.  Heterodoxies encourage the mainstream to be more philosophical
and more self-reflective.

Sometimes intellectual inefficiency is efficient, and my remarks about heterodox economics should be taken in this light.

The emphasis is mine.  As is the question: Isn’t the second Tyler describing the Tyranny of the Majority?  If so, what are the Waldfogel-ian fixed costs that are preventing all the different flavors of economics from flourishing?

Optimal insults

A long story leading to an interesting question: I like to keep half an eye on heterodox economics.  A lot of this work raises interesting questions about the methodology that is my bread-and-butter.  I think of this as useful intellectual discipline: those who don’t school themselves in the limitations or ethical constraints of our frameworks, are likely to mis-use them.  And that got me thinking about a particular sub-group: The Post-Autistic Economics Movement.  Reading some (but not all) of the output of these heterodox economists can be quite illuminating.

But Post-Autistic?  Really?  What kind of insult is that? 

Two answers:

  1. A pretty darn good insult.  Some of the agents in our models would in fact rightly be called autistic.  Those two words are pretty clever, and occasionally telling.
  2. A terrible insult.  Post-Autistic" is designed to shock.  It is a statement more about the insulter than the insultee.  And as the subject of the insult changes, surely it loses its force.  Based on titles alone, which critical journal would you rather read: Feminist Economics, or the Post-Autistic Economics Review?  (Aside: Feminist Economics is, in my view, an excellent and underrated journal.)

But still, it got me thinking. What does an insult communicate?  At what point does an insult switch from being an insult to a statement about the insulter?  There must be a signaling story here, but I haven’t quite figured it out.  And if signaling yields a theory of insults, what would the characteristics of the optimal insult be?

So with some trepidation, let me say, comments are open.

Thinking about Sports and Economics

I spent last Saturday at a very interesting conference on Sports Statistics, run by the Sports Stats section of the American Statistical Association.  It was a fun day, involving academics, sports journalists, and those Moneyball-inspired quants working for various sports teams.

But at some point I asked myself: Why do economists work on sports?

  1. Sports provide unique opportunities to test economic theories.  Cribbing from a New York Times article, this is the Thaler defense:

    “‘My justification for doing this is that it’s the one really
    high-stakes activity where you get to watch all of the decisions,”
    Thaler said. ”If Bill Gates invited me to watch all of his decisions,
    I’d talk more about that.”

  2. Sports shapes broader national debates.  Sports is a microcosm of our broader society and our national narrative on the important issues, from drugs, to race, to cheating, to sexual harrassment often play out on our sports pages.  In honor of a particularly compelling example, let’s
    call this the Jackie Robinson defense.
  3. Professional sports are an important part of the economy.  I call this the Dog defense, not as a dyslexo-religious statement, but simply because dogs raise an important question: aren’t pets a bigger part of the economy than professional athletics?  If so, why are there so many papers on professional sports and so few on the economics of dogs?
  4. Sports participation is an important activity.  It seems important to learn whether sports make us happier, healthier or more productive.  For instance, it is important to learn, say, what the broader effects of Title IX were.  Under this view, research on sports is part of the human capital agenda, leading me to call this the Gary Becker defense.
  5. Sports provides a useful teaching metaphor.  Many of those teaching Sabermetrics-inspired courses argue that sports provides a useful vehicle for teaching something far more important – basic quantitative reasoning.  When I teach my class on behavioral economics, I do so by analyzing anomalies in sports betting markets.
  6. Doing research on sports is fun.  It was no mistake that the conference I attended was on a Saturday.  Many of the academics in attendance were giving up leisure, not more important work. But for some, sports provides a chance to mix work with leisure; of course, if non of the above arguments holds, then it is just a chance to mix leisure with leisure.

Let me now translate this into advice, because I often hear from students wanting to write a thesis on sports.   My first response is always: Don’t.  Too often, we find our sporting heroes more interesting than other people do.  (Yes, I have been guilty of breaking this rule.)

But if you must work on sports, make sure you have a defense to this charge. I find the Thaler and Becker defenses most compelling, because they speak to the broader economic issues or yield policy implications.  The Jackie Robinson defense is also important, but not applicable often enough.  The Dog defense is often raised, but rarely compelling; neither pets, nor professional sports, are really a big part of the economy (estimates to the contrary usually turn out to be more applicable to the Becker defense).

The Tyranny of the Market

A new book by my friend and Wharton colleague, Joel Waldfogel.  I’ve not read it yet, but based on our lunchtime conversations, I’m looking forward to it. (Hint: what does it take to get a free copy?)  Plus you’ve got to admire any book invoking the Rolling Stones in the title.

Joel has summarized the main arguments in his latest column at Slate.  Certainly a subtle and fascinating hypothesis about
how and when markets can fail us.  More commentary (from the Wharton writers) here.

The Australian Labo(u)r Market

An interesting (and emphatic) broadside from Richard Freeman.  And this is no Country Doctor making it up on the fly: Richard has long understood the Australian labour market better than just about any other economist, and certainly better anyone outside Australia.  (Dan Hamermesh is a close runner-up.)

My $0.02: This is what happens when conservative governments confuse decentralization and deregulation.

In the shower with Robert Frank

I tend to listen to NPR while showering, and really enjoyed this morning’s interview with Robert Frank.  The interview draws heavily from his book, The Economic Naturalist – previous blogged about by Tyler, here and here.

Robert Frank’s observations on economics teaching will fundamentally change what I do in the classroom.  What he has to say is important.  Read it.  Here.

Yes, this was previously covered on MR (here and here).  But I am intrigued by Frank’s ambition in arguing that we need to emphasize the "deep" concepts of economics in a way that transforms how our students see the world.  We econ profs probably fail, and it is hard to see how to do better.  But it is worth doing.

Perhaps blogs like Marginal Revolution help one better see the world through an economists lens.  But most econ profs teach in the classroom, not the blogosphere, and so I want to ask: How can we do a better job teaching what is important, true and beautiful in economics? Comments open.  But a request: Please only comment if you have taken the time to read the Frank piece (this one).

How to sound smart around the water cooler

The baseball playoffs begin today. (Go Red Sox!)  But if you haven’t been following the 162-game season, you may risk sounding foolish around the water cooler.

Here’s how to sound like an expert: Research tells us that prediction markets yield accurate forecasts.  Indeed, a prediction market forecast is likely smarter than any expert.  Simply point your browser to your favorite prediction market, and make the following observations confidently around the water cooler:

  1. Note that the American League looks much stronger than the National League.  (HT: Mike Giberson at Midas Oracle.)
  2. Sigh, while you say that "Once again the American League race looks like being the Red Sox or the Yankees."
  3. State emphatically that "the National League is anyone’s race.  Heck, even the come-from-behind Phillies are a chance."  (Say this as though you didn’t already know they were the betting favorites)

That’s it.  You are now an expert.  (How else do you think an Aussie can keep up a conversation about U.S. sports? I’ve been faking it for years… but shhh, don’t tell David Stern.)

  • 1
  • 2