Heroes are not Replicable
You know the plot. Young, idealistic teacher goes to inner-city high school. Said idealistic teacher is shocked by students who don’t know the basics and who are too preoccupied with the burdens of violence, poverty and indifference to want to learn. But the hero perseveres and at great personal sacrifice wins over the students using innovative teaching methods and heart. The kids go on to win the state spelling/chess/mathematics championship. c.f. Stand and Deliver, Freedom Writers, Dangerous Minds etc.
We are supposed to be uplifted by these stories but they depress me. If it takes a hero to save an inner city school then there is no hope. Heroes are not replicable.
What we need to save inner-city schools, and poor schools everywhere, is a method that works when the teachers aren’t heroes. Even better if the method works when teachers are ordinary people, poorly paid and ill-motivated – i.e. the system we have today.
In Super Crunchers, Ian Ayres argues that just such a method exists. Overall, Super Crunchers is a light but entertaining account of how large amounts of data and cheap computing power are improving forecasting and decision making in social science, government and business. I enjoyed the book. Chapter 7, however, was a real highlight.
Ayres argues that large experimental studies have shown that the teaching method which works best is Direct Instruction (here and here are two non-academic discussions which summarizes much of the same academic evidence discussed in Ayres). In Direct Instruction the teacher follows a script, a carefully designed and evaluated script. As Ayres notes this is key:
DI is scalable. Its success isn’t contingent on the personality of some uber-teacher….You don’t need to be a genius to be an effective DI teacher. DI can be implemented in dozens upon dozens of classrooms with just ordinary teachers. You just need to be able to follow the script.
Contrary to what you might think, the data also show that DI does not impede creativity or self-esteem. The education establishment, however, hates DI because it is a threat to the power and prestige of teaching, they prefer the model of teacher as hero. As Ayres says "The education establishment is wedded to its pet theories regardless of what the evidence says." As a result they have fought it tooth and nail so that "Direct Instruction, the oldest and most validated program, has captured only a little more than 1 percent of the grade-school market."
Does the Coase theorem hold even for Saddam Hussein?
Less than a month before the U.S. invasion of Iraq, Saddam Hussein signaled that he was willing to go into exile as long as he could take
with him $1 billion and information on weapons of mass destruction,
according to a report of a Feb. 22, 2003, meeting between President Bushand his Spanish counterpart published by a Spanish newspaper yesterday.
Here is the story; admittedly it is hard to judge the truthfulness of this report but in probabilistic terms it does not raise my estimate of whether the Coase theorem applies to President Bush.
A simple public choice theory of Russia
This one is crude, but it cannot be dismissed:
Putin doesn’t run a country, he runs a corporation. He is the ugliest mixture of Karl Marx and Adam Smith. He is not interested in restoring the Russian influence, he’s just interested in Gazprom’s and Rosneft’s influence. Actually, Putin is destroying the Russian state. If we look at the functions of the state, they are gradually transferred to the state companies: now the Duma voted that Gazprom and Rosneft can have its own armies. These so-called state companies are run by Putin and his KGB-buddies – him being a sort of "capo di tutti capi". And for those doing business with KGB Inc., I remind them that the KGB shareholders are very active shareholders.
That’s Garry Kasparov, here is one commentator summarizing:
In Kasparov’s view, the main goal of Russian foreign policy is to raise the oil price, no matter what – that’s why the tensions in the Middle East are so important to Putin…
We live in a nice world, no? Megan McArdle ponders life or death incentives in the former Soviet Union. Here is the excellent New Yorker article on Kasparov.
Don Boudreaux reviews Inner Economist
Cowen shows that bygones should not be treated as bygones in all areas of life. When our self-image is at stake, past choices — costs that are irrevocable — often remain relevant for guiding our decisions today.
Here is the full review. Here is Alex on sunk costs. Here is Tyler on sunk costs, both posts date from the early days of MR.
Books that are so good I don’t know what to say about them
How to Read The Bible, by James Kugel.
I’m not even going to give you a pithy excerpt or try to find the right adjectives. It is simply so, so, so good. If you wish to learn more, here is a NYT review.
As long as we are on the topic of very good books, there is a new and very nice hardcover edition of Adam Smith’s The Wealth of Nations.
Happiness advice from my wife
My wife, a PhD microbiologist, told me once that when she was at work she felt guilty about not being at home with the kids and when she was at home with the kids she felt guilty about not being at work.
This problem may explain a surprising finding from Betsey Stevenson and one of your leading candidates for "most wanted economist blogger," Justin Wolfers. Stevenson and Wolfers have a new paper showing that happiness is up for men but down for women. They write:
By most objective measures the lives of women in the United States have improved over the
past 35 years, yet we show that measures of subjective well-being indicate that women’s happiness
has declined both absolutely and relative to male happiness. The paradox of women’s declining
relative well-being is found examining multiple countries, datasets, and measures of subjective wellbeing,
and is pervasive across demographic groups. Relative declines in female happiness have eroded
a gender gap in happiness in which women in the 1970s typically reported higher subjective wellbeing
than did men. These declines have continued and a new gender gap is emerging–one with
higher subjective well-being for men.
One reason is suggested by Stevenson in a NYTimes article on her research with Wolfers and similar independent research from Alan Krueger.
Ms. Stevenson was recently having drinks with a business school
graduate who came up with a nice way of summarizing the problem. Her
mother’s goals in life, the student said, were to have a beautiful
garden, a well-kept house and well-adjusted children who did well in
school. “I sort of want all those things, too,” the student said, as
Ms. Stevenson recalled, “but I also want to have a great career and
have an impact on the broader world.”
Opportunity brings opportunity cost.
In the NYTimes article David Leonhardt correctly notes that "Although women have flooded into the work force, American society hasn’t fully come to grips with the change." Alas, all he has to offer as solution is the usual platitudes about subsidized daycare and how men should do more of the housework – peculiar solutions to women’s unhappiness with increased opportunities. Leonhardt should instead have talked to my wife.
As I wrote this post, I asked my wife about her feeling guilty at home and at work but she told me she no longer feels this way. "Really?" I asked, "Why not?"
"I decided to act more like a man and get over it," she responded.
My favorite things London
No, I am not there, but this was a request from a loyal MR reader. Here goes:
1. Mystery writer: Eric Ambler, most of all A Coffin for Dimitrios; the villain is pathetic, not fearful, and this is most of all a study in collective mythmaking.
2. Philosopher: Francis Bacon. I’m not a Straussian but he really does have hidden and deep meanings. Read Perez Zagorin on Bacon for a guide to the complexity of it all.
Honorary mention goes to Jeremy Bentham, whose proposal for interest-bearing currency, ideas on animal welfare, and Auto-Icon (most of all the text, not just the body) still stand ahead of their time. He was a subtle thinker, not a one-dimensional simpleton.
3. Favorite song off London Calling: "Jimmy Jazz" remains dearest to my heart.
4. Favorite Alfred Hitchcock movie: Vertigo may be the most complete masterwork, but the best segments of The Birds, Psycho, and Marnie (all inconsistent movies) stick most deeply in my mind.
5. Favorite Henry Purcell recording: The Complete Odes and Welcome Songs, and no, eight discs of this music is not overkill.
6. 17th century economics pamphlet: Nicholas Barbon’s Apology for the Builder. Barbon to Dudley North is a wonderful period in the history of political economy, spend a few weeks reading that stuff sometime. This short pamphlet has increasing returns, aggregate demand management, urban economics, and the invisible hand, all well before Adam Smith.
7. Favorite neighborhood to stay in: Kensington, it is leafy green and away from both the monarchy and the hideous theatre district.
8. Favorite painting in: The National Gallery offers stiff competition, but how about this Gauguin, in the Courtauld? As for carpets, here is the Ardebil, in the Victoria and Albert Museum.
9. Pianist: The elegant Clifford Curzon remains underrated. He produced a lyrical account of Liszt’s B Minor Sonata plus try his Schubert B flat sonata and his Mozart.
Other stuff: Do I really have anything to add about Chaucer, Blake, Defoe, Forster, Keats, Milton, Samuel Johnson, Dickens, Orwell, Turner, Turing, Mick Jagger, Tim Harford, Stephen Jen, and The Economist? Maybe, but not today.
YouTube of Tyler Cowen speaking at Google, about Google
I was supposed to speak on Discover Your Inner Economist, but this was the morning after Google announced its backing of the lunar landing prize. They asked me about that, and here is what they got for an answer.
Thanks to Hakan A for the pointer.
China photo of the day
The world in only seven pictures, via Jason Kottke. The first three are the best, after that they could have called it quits.
Irrational beliefs I hold about carbon emissions
I have two sets of beliefs about global warming. The first set I infer from the observed "scientific consensus," but applying my "sociology of science" adjustments to the filters of mainstream media, intelligent blogs, reports of peer-reviewed journals, popular science books, and so on. That means somewhat more skepticism than the postulated consensus, but mostly I buy into the consensus account as our best available estimate. Procedurally speaking, I am not sure how I could make these beliefs more rational.
The second segment of my beliefs is less rationally grounded. I believe, for instance, that ocean acidification will, in the long run, be the most dangerous consequence of carbon emissions. (And by saying that I don’t mean to downgrade the other worries.)
I am aware that this belief isn’t necessarily justified. It is shared by some scientists as a speculation, and it could turn out to be true, but it is hardly well-grounded as our major worry even though it does seem to be a real worry.
Still, for whatever reason, I cannot help but believe it, or at least believe it with some excess degree of credence. Is this because I visited the ocean as a child, and received some mysterious emotional sense of its powers, a sense which I can no longer eradicate from my subconscious? Or am I more generally attracted to explanations which postulate some deeper but slightly hidden or indirect problem with status quo policies? (I could look for signs that I hold similar delusions elsewhere.)
I try to keep these beliefs from affecting my policy conclusions, but I am not altogether able to stop holding them. And even if my belief turns out to be true (which I expect someone to suggest in the comments), I am quite sure my procedural reason for holding it is an irrational one.
Why are there strikes?
The UAW at General Motors has gone on strike. But why are there strikes at all? John Kennan wrote (full text gated here):
There is no commonly accepted economic theory of strikes.
The main obstacle is that if one has a theory which predicts when a
strike will occur and what the outcome will be, the parties can agree
to this outcome in advance, and so avoid the costs of a strike..strikes are apparently not Pareto optimal, since a strike means that the pie
shrinks as the employer and the workers argue over how it should be
divided. If the parties are rational, it is difficult to see why they
would fail to negotiate a Pareto optimal outcome.Hicks suggested two possible explanations for strikes:
either the union is trying to maintain a "reputation for toughness", or
there is private information on at least one side of the bargaining
table…
The NYT claims that the union had to "draw a line in the sand." More generally, David Card wonders whether striking workers are forcing employers to reveal how profitable they are. The firm, if indeed it is profitable, will come back with a higher wage offer, but only if it’s hand is forced. Otherwise the union does not know how much surplus can be grabbed because the firm will not have to reveal it. Or can workers, using institutions and morale, somehow precommit to a resistance curve? Such a precommitment is optimal ex ante (it reaps a greater share of the surplus by conferring a bargaining advantage) but not always best ex post because gains from trade can break down. That is my guess in this case.
Perhaps Dave Ribar has the wisest comment:
The only "good" news (if you can call it that) is that GM’s
manufacturing workforce has shrunk so much that many fewer workers are
involved than in the earlier UAW strikes.
About 73,000 workers have gone on strike. Here is the decline of General Motors.
Brad DeLong’s lectures
1. The lectures are stuffed into here, with more to come I believe
2. Daniel Hamermesh, economic thought of the day
3. I couldn’t keep on reading that novel, here is why — one of the best book reviews I have ever encountered
Housekeeping
The MR Google Search bar is very useful but it was hard to find so I have made it more prominent near the top left corner.
Also, if you are going to buy anything at Amazon, whether it’s a book Tyler recommended or a diamond engagement ring, then please click to Amazon through the link on the left. It costs you nothing but it will help to cover Tyler’s prodigious book budget. Our wives wish that blogging would cover a diamond budget but alas no.
Ed Leamer says “Housing IS the Business Cycle”
Leamer writes:
Of the components of GDP, residential investment offers by far the best early warning sign of an oncoming recession. Since World War II we have had eight recessions preceded by substantial problems in housing and consumer durables. Housing did not give an early warning of the Department of Defense Downturn after the Korean Armistice in 1953 or the Internet Comeuppance in 2001, nor should it have. By virtue of its prominence in our recessions, it makes sense for housing to play a prominent role in the conduct of monetary policy. A modified Taylor Rule would depend on a long-term measure of inflation having little to do with the phase in the cycle, and, in place of Taylor’s output gap, housing starts and the change in housing starts, which together form the best forward-looking indicator of the cycle of which I am aware. This would create pre-emptive anti-inflation policy in the middle of the expansions when housing is not so sensitive to interest rates, making it less likely that anti-inflation policies would be needed near the ends of expansions when housing is very interest rate sensitive, thus making our recessions less frequent and/or less severe.
Here is the paper, try this link too.
This kind of talk makes me nervous. The Fed "matters" for at least two reasons. First, short-term interest rates affect the real economy. Second, Fed policy is a focal point in a noise trader game and also in a macro "should we expand or should we contract output?" multiple equilibria game. Given the second factor I am reluctant to strangle so many booms in the cradle. Furthermore, identified macroeconomic relationships become less stable the very moment a policymaker tries to act on them ("Goodhart’s Law," which is related to the Lucas critique).
We can’t reject unit root models (many of which suggest a gain in the growth rate is on average permanent, noting that "do not reject" is not the same as "accept"), so I say let her rip and don’t take the punch bowl away. Who knows what tomorrow will bring?
The bottom line: I didn’t feel comfortable in Leamer’s world. I would sooner say "Comovement IS the Business Cycle."
Bargain in your pajamas, or blog in suit and tie
Johan Almenberg, a loyal MR reader, asks about:
A world in which the difference between office clothing and athletic clothing has been eroded because people work better when they are comfortable.
Under one hypothesis, signaling would break down an all-pajamas equilibrium [TC: oddly I don’t find athletic clothing all that comfortable]. Jamie Cutthroat could look just a little better than his workplace competitor by putting on his tie.
But if wasteful signaling is the operative force, employers can internalize those externalities in many cases. A workplace with few outside visitors or external appointments should seek to minimize signaling costs by imposing a maximum dress code (e.g, no ties), not a minimum dress code. I have heard that Google enforces casual wear on everyone, but maximum dress codes are rare in the corporate world. Furthermore even minimum dress codes should be subject to "cheating": OK, you can’t wear a tie but the market will provide super nice (and uncomfortable) T-shirts and the signal-constrained employees will wear them to send a new and hitherto unregulated signal. How much does this happen?
Alternatively, dressing up actually might make people more productive, but then would not at least a few of us blog in suit and tie?
In short, I don’t have a theory of corporate dress that fits the major data points. My best guess is that signaling by dress is often an efficient means of sorting — Jamie Cutthroat really does want the promotion more than I do — and thus the employer does not want to ban it.