Results for “alan krueger” 54 found
The sorry state of economic literacy
…there is a great deal of confusion about basic facts relevant to policy. Almost half the public, and a quarter of those over age 55, thought Medicare already provided drug benefits for outpatients before legislation providing such coverage was enacted. More than half could not hazard a guess about the size of the budget deficit. The average person thinks 37 percent of Americans lack health insurance, more than twice the actual percentage.
From where do Americans learn about the economy? By far the most common source is television. Those who rely on television the most, however, tend to be among the least informed.
The second most common source is local newspapers, which were cited much more frequently than national or big-city papers.
Friends and relatives came in third, followed by political leaders, radio and economists. The Internet was next, although a sizable contingent listed it as their most important source.
Those who consulted more sources, and consulted them more often, were a bit better informed – but not much. That’s a sobering fact for the media.
People who said they voted in the last presidential election were better informed than nonvoters.
Liberals, moderates and conservatives all did about equally well on the test of economic facts. But those who said they hadn’t thought much about their ideological leanings – one in three people – were appreciably less knowledgeable.
That’s all from Alan Krueger, writing in The New York Times. His bottom line is that ideology, not self-interest, predicts public opinions about economics.
On the same topic, here is one of my favorite essays by Bryan Caplan. Here is one good bit:
In stark contrast to income, education exerts a powerful influence over a wide range of economic beliefs… The typical cab driver with a Ph.D. in philosophy shares the economic outlook of other Ph.D.’s, not other cab drivers. Given the strong correlation between income and education, though, widespread misconceptions about the “beliefs of the rich” are quite understandable.
Further below Craig Newmark offers remarks on related topics.
What is in a voter’s self-interest?
Alan Krueger reports on survey research that shows that people do not vote according to their self-interest. In particular, he bemoans the fact that a majority of the poor want to get rid of the estate tax. This and other odd results are due to “ignorance and uncertainty” says Larry Bartels, a Princeton political scientist. If only the poor were better informed they would vote against tax cuts for the rich. Moreover, a better informed electorate would be a good thing. I take issue with both of these positions.
Take the normative position first. Assuming that voters voted self-interestedly, would a more informed electorate be a good thing? Doubtful. If everyone voted their “interest,” as Krueger and Bartels conceive it, every bureaucrat, welfare recipient and old person living on social security would vote for more government. Naturally, I think this would be a disaster but even those who think this would be a good thing ought to give pause when they consider how much more polarized our society would become were it not for the fact that ideology cuts across class lines.
Moreover, isn’t it interesting that when the poor vote against their “self-interest” they are labeled “uninformed” – Bartels compares them to Homer Simpson. But when Hollywood liberals like Barbara Streisand or rich philanthropists like Bill Gates Sr. vote against their “self-interest” they are called enlightened. What Krueger and Bartels refer to as self-interest is actually masking an ideology.
Is it true that informed voters would vote differently? (Krueger cites some evidence suggesting that in fact this is not the case – at least not as much as one would expect – but he doesn’t offer an explanation.) To understand this one should first realize that voters are uninformed because it doesn’t pay to be informed. The probability that one vote sways the election is infinitesimal so voters are rationally ignorant. Does this imply that voting is random? Not at all. Voters who care about ideas even a little are free to vote their ideology at low cost. Thus, in my view, the fact that votes don’t matter gives us hope. It’s only because votes don’t matter that libertarianism has a chance of success. Of course, I recognize that the same facts gives socialism a chance at the polls but I hope good ideas will win out.
Addendum: I’ve been influenced on these issues by our colleague, Bryan Caplan – although I give the ideas a more positive spin than he does. I recommend his paper Libertarianism Against Economism: How Economists Misunderstand Voters, and Why Libertarians Should Care from The Independent Review and his other papers on rational irrationality which you can find on his web page.
Tuesday assorted links
1. Taxing the rich.
2. “Exposure to import competition is bad for centrists.” (NYT)
3. Lifting the oil export ban is working.
4. The best all-purpose tweet, ever.
5. John Cochrane podcast with David Beckworth.
6. The debut of Chinese RoboCop.
7. Interview with Card and Krueger. Very good, goes well beyond previous coverage of their work and ideas.
Temporary and on-call employment is up after all
There has been some back and forth on this topic over the last few years, but it now seems to be settled. Neil Irwin reports:
…new research…indicates the proportion of American workers who don’t have traditional jobs — who instead work as independent contractors, through temporary services or on-call — has soared in the last decade. They account for vastly more American workers than the likes of Uber alone.
Most remarkably, the number of Americans using these alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater than the rise in overall employment, meaning there was a small net decline in the number of workers with conventional jobs.
…The labor economists Lawrence F. Katz of Harvard and Alan B. Krueger of Princeton found that the percentage of workers in “alternative work arrangements” — including working for temporary help agencies, as independent contractors, for contract firms or on-call — was 15.8 percent in the fall of 2015, up from 10.1 percent a decade earlier. (Only 0.5 percent of all workers did so through “online intermediaries,” and most of those appear to have been Uber drivers.)
And the shift away from conventional jobs and into these more distant employer-employee relationships accelerated in the last decade. By contrast, from 1995 to 2005, the proportion had edged up only slightly, to 10.1 percent from 9.3 percent. (The data are based on a person’s main job, so someone with a full-time position who does freelance work on the side would count as a conventional employee.)
Here is the full NYT coverage.
Uber Increases Productivity
Uber drivers carry more passengers per mile driven or hour worked than do taxi drivers. In other words, the Uber system is more productive than the taxi system. That’s the big finding from a new paper by Judd Cramer and Alan B. Krueger.
On average, the capacity utilization rate is 30 percent higher for UberX drivers than taxi drivers when measured by time, and 50 percent higher when measured by miles, although taxi data are not available to calculate both measures for the same set of cities.
Four factors likely contribute to the higher utilization rate of UberX drivers: 1) Uber’s more efficient driver-passenger matching technology; 2) Uber’s larger scale, which supports faster matches; 3) inefficient taxi regulations; and 4) Uber’s flexible labor supply model and surge pricing, which more closely match supply with demand throughout the day.
Krueger co-authored an earlier paper on Uber drivers commissioned by Uber but this paper was not commissioned.
Why are so many people still out of work?: the roots of structural unemployment
Here is my latest New York Times column, on structural unemployment. I think of this piece as considering how aggregate demand, sectoral shift, and structural theories may all be interacting to produce ongoing employment problems. “Automation” can be throwing some people out of work, even in a world where the theory of comparative advantage holds (more or less), but still this account will be partially parasitic on other accounts of labor market dysfunction. For reasons related to education, skills, credentialism, and the law, it is harder for some categories of displaced workers to be reabsorbed by labor markets today.
Here are the two paragraphs which interest me the most:
Many of these labor market problems were brought on by the financial crisis and the collapse of market demand. But it would be a mistake to place all the blame on the business cycle. Before the crisis, for example, business executives and owners didn’t always know who their worst workers were, or didn’t want to engage in the disruptive act of rooting out and firing them. So long as sales were brisk, it was easier to let matters lie. But when money ran out, many businesses had to make the tough decisions — and the axes fell. The financial crisis thus accelerated what would have been a much slower process.
Subsequently, some would-be employers seem to have discriminated against workers who were laid off in the crash. These judgments weren’t always fair, but that stigma isn’t easily overcome, because a lot of employers in fact had reason to identify and fire their less productive workers.
Under one alternative view, the inability of the long-term unemployed to find new jobs is still a matter of sticky nominal wages. With nominal gdp well above its pre-crash peak, I find that implausible for circa 2014. Besides, these people are unemployed, they don’t have wages to be “sticky” in the first place.
Under a second view, the process of being unemployed has made these individuals less productive. Under a third view (“ZMP”), these individuals were not very productive to begin with, and the liquidity crisis of the crash led to this information being revealed and then communicated more broadly to labor markets. I see a combination of the second and third forces as now being in play. Here is another paragraph from the piece:
A new paper by Alan B. Krueger, Judd Cramer and David Cho of Princeton has documented that the nation now appears to have a permanent class of long-term unemployed, who probably can’t be helped much by monetary and fiscal policy. It’s not right to describe these people as “thrown out of work by machines,” because the causes involve complex interactions of technology, education and market demand. Still, many people are finding this new world of work harder to navigate.
Tim Harford suggests the long-term unemployed may be no different from anybody else. Krugman claims the same. (Also in this piece he considers weak versions of the theories he is criticizing, does not consider AD-structural interaction, and ignores the evidence presented in pieces such as Krueger’s.) I think attributing all of this labor market misfortune to luck is unlikely, and it violates standard economic theories of discrimination or for that matter profit maximization. I do not see many (any?) employers rushing to seek out these workers and build coalitions with them.
There were two classes of workers fired in the great liquidity shortage of 2008-2010. The first were those revealed to be not very productive or bad for firm morale. They skew male rather than female, and young rather than old. The second affected class were workers who simply happened to be doing the wrong thing for shrinking firms: “sorry Joe, we’re not going to be starting a new advertising campaign this year. We’re letting you go.”
The two groups have ended up lumped together and indeed a superficial glance at their resumes may suggest — for reemployment purposes — that they are observationally equivalent. This discriminatory outcome is unfair, and it is also inefficient, because some perfectly good workers cannot find suitable jobs. Still, this form of discrimination gets imposed on the second class of workers only because there really are a large number of workers who fall into the first category.
Here is John Cassidy on the composition of current unemployment. Here is Glenn Hubbard with some policy ideas.
Are the Long-Term Unemployed on the Margins of the Labor Market?
There is new Brookings research by Alan B. Krueger, Judd Cramer, and David Cho:
The short-term unemployment rate is a much stronger predictor of inflation and real wage growth than the overall unemployment rate in the U.S. Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high labor force withdrawal rates, and as a result they exert little pressure on wage growth or inflation.
Consistent with my earlier views, this work is suggesting that many of the long-term unemployed are/have become an economically segmented group. This is noteworthy too, as it implies the problem is not merely initial discrimination:
…even after finding another job, reemployment does not fully reset the clock for the long-term unemployed, who are frequently jobless again soon after they gain reemployment: only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later.
I would consider that evidence for a notion of zero marginal product workers. Furthermore, in my view (I am not speaking for the authors here), right now further inflation is as likely to harm as to help these individuals. To ask whether the Fed “should give up” on the long-term unemployed is a biased framing which is more likely to mislead us than anything else.
There is a good piece up at 538:
Krueger and his coauthors, Princeton economists Judd Cramer and David Cho, find evidence that the long-term unemployed aren’t getting jobs even in parts of the country where the job market is comparatively healthy, suggesting that a stronger economic rebound won’t be enough to put them back to work.
Thomson Reuters predicts the 2013 Nobel Laureate in economics
Joshua D. Angrist, David E. Card, Alan B. Krueger, Sir David F. Hendry, M. Hashem Pesaran, Peter C.B. Phillips, Sam Peltzman, and Richard A. Posner, all very good possible picks in my view.
My personal prediction (which never once has been correct, at least not in the proper year) is for an early “shock” prize to Banerjee, Duflo, and Kremer, in part to show (try to show?) that economics really is an actual science.
In any case the above link offers Reuters picks for the science prizes as well. Here are some other speculations for the science prizes as well.
For the pointer I thank Michelle Dawson.
The Minimum Wage Fantasy
MaxSpeak is pushing a letter from economists, already signed by notables Alan Blinder, Clive Granger, Rebecca Blank and others, to raise the minimum wage. Don’t worry, I won’t bore you with the usual story about unemployment. A small increase in the minimum wage will have only a small unemployment effect, nuff said. Nevertheless, parts of the letter strikes me as absurd. The letter says, for example, that "The minimum wage is also an important tool in fighting poverty." Rubbish. But don’t take my word for it.
The minimum wage is a blunt instrument for reducing overall poverty, however, because many minimum-wage earners are not in poverty and because many of those in poverty are not connected to the labor market. We calculate that the 90-cent increase in the minimum wage between 1989 and 1991 transferred roughly $5.5 billion to low-wage workers…. an amount that is smaller than most other federal antipoverty programs, and that can have only limited effects on the overall income distribution.
The source? Card and Krueger in Myth and Measurement (p.3).
The letter also states that most of the people earning the minimum wage are adults. Most workers are adults so this is hardly surprising. What is more surprising is that 25% of the workers earning the minimum wage are teenagers, even though teenagers are a much smaller percent of the workforce. In addition, over half the workers earning the minimum wage are younger than 25. The letter can spin things how it wants but it would be more informative to say that most of the workers earning the minimum wage are young workers who with a little age and experience would have their wages increased in anycase.
That brings me to a second strange statement, the idea that "the minimum wage helps to equalize the imbalance in bargaining power that
low-wage workers face in the labor market." One wonders how bargaining power is defined. Do these economists really believe that the fat cats are getting rich slurping up surplus from the low-wage workers? If you measure bargaining power as a difference between wages and marginal productivity it is surely high wage workers who lack bargaining power.
The real rebuke, however, to the bargaining power idea is this: a lot of people earning the minimum wage are teenagers but more than 90 percent of working teenagers earn more than the minimum wage. Either most teenagers are very good bargainers or wages depend less on "bargaining power" than on productivity. Either way the letter is confused.
The debate over the minimum wage is more about rhetoric than reality.