The popular press has begun to mention Martin Feldstein as a possible successor to Alan Greenspan. The other listed candidates, Stanley Fischer and Larry Summers, probably do not have sufficient “right-wing credentials” to get the job. Feldstein offers some recent thoughts on monetary policy. He also endorsed the Bush tax cuts, arguably a sign that he is angling for the job. Feldstein tends to favor targeted fiscal incentives in lieu of traditional Keynesian remedies. Overall he commands the respect of his peers and has had significant administrative experience in building up the National Bureau of Economic Research. But it is hard to tell what kind of monetary policy he would pursue, and how strong an independent stance he could define, if he held the office.

Here is the ever-insightful Brad DeLong on why the current productivity and employment data are so hard to understand. Read Brad here and here (a longer, more technical post) for more context. The key point is this: many companies are prospering, and increasing absolute output, even as they are laying off workers. The implied numbers for productivity increases, per remaining worker, are simply astounding.

This essay by the deceased Robert Nozick has a few years on it, but I never knew there was an on-line version. It is the best piece I know on why so many intellectuals oppose capitalism. See my earlier blog post on the inability of some researchers to find a single registered Republican within some departments of MIT and other universities (of course Republicans commonly fail capitalism but I suspect that is not the objection of the MIT faculty). With thanks to Cato, Newmarksdoor, and BrianMicklethwait.com.

Here is one excellent sentence of many:

“The intellectual wants the whole society to be a school writ large.”

Nobel Laureate Daniel Kahneman is engaged in some fascinating work, read this summary:

“…the duration of an experience plays essentially no role when evaluating how well it becomes etched in our memories.

Kahneman believes the most direct way to evaluate experienced utility is to ask people how they feel at a certain moment, a notion he calls “moment utility.”…But because researchers are more interested in extended outcomes, more often the question they ask is memory-based: “How was it?” Kahneman said this is a different question that reflects the individual’s global evaluation of an entire episode in the past and it may not be a direct assessment of the individual’s real-time state. This “remembered utility,” said Kahneman, is not a very good guide when predicting outcomes. The “total utility” of a state is derived from the moment-based approach of measuring the real time pleasure or pain experienced by the individual.”

In other words, one of our selves does the living, another keeps the memories.

“”When people make decisions, the remembering self is in control, Kahneman explained. “We make our decisions in terms of our memories and basically, we maximize remembered utility, not the actual total utility,” he said. “The only thing we can learn to maximize through personal experience is remembered utility.””

And don’t you forget that.

Also read our earlier blog posts on whether people understand their own happiness, here, and here.

Steve Levitt, recenty profiled in the NYT Magazine has written another amazing and sure to be controversial paper. Levitt and co-author Roland Fryer begin The Causes and Consequences of Black Names with some startling statistics on the racial divide in names. For example, “more than forty percent of Black girls born in California in recent years received a name that not one of the roughly 100,000 white girls born in California in that year was given.” Blacks are more segregated by name than are other races – the majority of Asians, for example, choose from the same name-pool as do whites. Segregation by naming has also increased over time. Prior to the late 1960s, for example, blacks and whites chose from the same name-pool to much greater degree than they do today.

Other studies have shown that when sent resumes identical but for name, employers more frequently ask for follow-up interviews with applicants who have stereotypical white names. Levitt and Fryer respond to these studies in two ways. The first response I find unconvincing. They argue that it is unlikely that a black name could have a big impact on earnings because “Once an employer has met a candidate in person, race is directly observable. A person’s manner of speaking, dress, interview responses and on-the-job performance no doubt provide far better signals of productivity than a name.” No doubt – but this is a rather facile interpretation of the audit studies. The point of these studies was not the literal one that employers discriminate on the basis of a person’s name! The point is that if employers use names to discriminate on race at the resume stage then they probably discriminate on race at every other stage in ways that are harder to identify.

Levitt and Fry have a more convincing but sure to be controversial response to this larger issue. They find that black names signal a variety of other characteristics that could plausibly be connected with lower labor productivity. Here is a key quote:

a woman with a BNI equal to one (implying a name that no Whites have) is 10 percentage points more likely to have been born to a teenage mother and 9 percentage points more likely to have been born out-of-wedlock than a Black woman living in the same zip code with the same age and education, but carrying a name that is equally common among White and Blacks. The woman with a Black name is also more likely to have been born in a Black neighborhood and to herself be unmarried.

In other words, names carry information even after the typical information available on a resume has been taken into account and the information that especially black names carry plausibly suggests lower productivity. It’s papers like this that explain why professors need tenure.

No, says Andrew Rose, economist at UC Berkeley. His recent paper finds that countries don’t move towards more open trade policies after joining WTO. He views the WTO as “small and impotent…by design”, click here for a summary of the research.