Results for “mood affiliation”
135 found

From the comments (Walpurgis Nacht)

Tyler Cowen November 17, 2011 at 4:39 pm

Piggy wants mood affiliation!

G.L. Piggy November 17, 2011 at 4:44 pm 

Yes, I do. Just once!

Reply

Peter Schaeffer November 17, 2011 at 4:51 pm 

I don’t care about mood affiliation. However, Felix’s first chart is simply wrong. CP is “Corporate Profits After Tax”. FCTAX is “Tax Receipts on Corporate Income”. Felix thinks his chart shows “corporate income tax as a percentage of total corporate profits”.

It doesn’t.

Reply

G.L. Piggy November 17, 2011 at 4:58 pm 

But just to be a little pedantic here, the frustrating thing – the part which spurred my need for mood affiliation – is that your position on corporate tax rates was brought up out of nowhere and then quickly qualified.

Laserlight November 17, 2011 at 4:45 pm

“Can we ever get a straight critique out of you”

Ah, you’re looking for Tyler the Ethnic Foods Critic. He’s down the hall to the left.

About what am I optimistic and pessimistic?

Rahul asks:

Reading Tyler’s views on the great stagnation, American deficit, American politics, the Euro, Greece, Medicare, Social Security, climate issues etc. I hardly see a sliver of optimism anywhere.

What things is Tyler really optimistic about?

Beware the fallacy of mood affiliation!  (Choosing a view to correspond to an overall desired or appropriate mood.)  And don’t overrate the importance of the public sector.  A few points:

1. I am a utility optimist and a revenue pessimist; better that than the other way around.

2. Many readers of TGS neglect the last section of the book which notes that a) the great stagnation is going to end, and b) we’ve already made the critical breakthrough, namely internet/computers/smart machines, we just haven’t seen most of the gains yet and they may take longer than most people expect.  I’ll be writing more on this.

3. I am a pessimist about the euro but not Europe.  The continent will do fine once it gets past this mess, albeit with some suffering along the way.

4. I am optimistic about most social issues, such as the increasing felicity of marriage.

5. I am optimistic about how well immigration will go.

6. I am optimistic about human cognition and the Flynn effect.

7. I am optimistic about the future progress of medical care, albeit with some lags.

8. I am increasingly optimistic about the WMD terrorism issue, though I am not sure if I am in absolute terms an optimist on this issue.  The terror groups don’t seem very robust or well-organized, and that may be for reasons which are intrinsic to their operations and ideology.

9. I am optimistic about most developing countries and this is a significant issue.

10. I am a pessimist about climate change and biodiversity, though most other environmental issues seem fine or at least manageable and possibly improving.

11. I am a pessimist about how we treat animals.

12. I am an optimist about restaurants in northern Virginia.

How are nominal wages sticky for the *unemployed*?

There are good arguments that wages are sticky for (many of) the employed.  Observed wage changes cluster in funny ways, indicating an unwillingness of the boss to change the nominal wage at all, and employers testify to morale problems from wage cuts (see Alan Blinder’s work).  In terms of the financial crisis, Keynesian theory explains the initial lay-offs fairly well, but it — at least the sticky nominal wage version — has a tougher time explaining unemployment persistence at such a high level.

Why don’t the unemployed lower their wages to find a job?  The more tragic you think unemployment is, the greater the puzzle here, and yet the people who stress the tragedy are often least likely to admit the positive puzzle (and vice versa).

There’s pretty clear evidence that, during the crisis, when the elderly wanted to work more, the elderly were able to work more.

I hear various arguments in response:

1. Falling wages can lead to a downward deflationary spiral, but a) these wage cuts would be for only a few percent of the workforce, b) let’s not confuse the wage rate with the total wage bill, and c) our Fed, however weak, is committed to stopping a downward deflationary spiral.

2. Maybe firms don’t have enough money to take on more workers, especially since the wages of the employed are fairly sticky.  Yet businesses are sitting on record-high levels of cash.  So while #2 may make sense in theory, it takes a lot more work to apply it to 2011.  I don’t see people even trying.

3. In a few unionized sectors, hiring lower-wage add-on workers may antagonize the incumbent workers.  Yet a) these sectors are not creating many jobs anyway, and b) in most modern sectors the real morale problem comes when you hire the newbies at higher wages, not lower wages.

4. Another claim is that it is hard for workers to signal that they are willing to work for twenty percent less, or whatever it takes.  How about applying for a job at a Washington non-profit?  Every time you do so you are signaling an ability to work for considerably less than what you are worth elsewhere.  Yet this labor market seems to hire as many people as its revenue stream can support and employers do not throw out all applications.  More generally, in down times the unemployed worker doesn’t need to signal much of anything.  The worker applies for a job.  The employer knows there are a number of workers competing for the job.  The employer makes a low-ball wage offer.  The worker accepts the offer.  End of story.

5. Often I get arguments which either refer back to nominal wage stickiness for the employed, or it is observed that lots of people are out of work so the nominal wage story must be true somehow.  Those responses are signs of a weak paradigm.  Another set of responses point to and then attack some excessively strong version of the nominal flexibility view, such as mocking the view that the Great Depression was a big voluntary holiday.  Another sign of a weak paradigm, don’t fall for it.

One simple view is that Keynesian economics holds true in the short run — it explains a lot of layoffs — but it doesn’t explain longer-run unemployment, precisely because wages are sticky only for a while.  That’s what most neo-Keynesian models imply and for the most part those are good (but not perfect) models.  What we’re seeing is a previously rejected form of Keynesianism, applied across increasingly long and increasingly implausible time frames — suddenly pretending to be the mainstream view.  It’s not and has not been for a long time.

In other words, Keynesianism is morphing into a theory of the long run.

Often when this topic comes up I feel I am playing a game of whack-a-mole.  Most of all, I am struck by how little attention people pay to their own sticky nominal wage hypotheses.  If that were the problem, and if unemployment were today’s biggest issue (a totally plausible claim), you might expect people to blog the microfoundations of nominal wage stickiness very, very often.  You might expect ethnography.  Micro-level data.  Lots of juicy anecdotes and journalistic features, not just on the unemployed but on the stickiness itself.  Perhaps some micro-level advice.  Dozens, no hundreds of blog posts on the all-important microfoundations of the #1 social problem of our time.

But no, there’s not much of those to be seen.  At some level it is understood, if only implicitly, that the sticky nominal wage theory is an embarrassment — when it comes to the unemployed across the longer run (but not the employed).  It doesn’t get too close a look.

What else?  Few people want to come out and utter the possibility: “They’re just too stupid and too stubborn to lower their wage demands.”  Mood affiliation reigns, and the prevailing mood is to express sympathy with the unemployed.  In fact that sentence is not my view, but it actually makes somewhat more sense than most of what is listed above.  A lot of people don’t like hypotheses which suggest the unemployed are not victims of the system, so it doesn’t get much of a hearing.

I think, by the way, that excess capacity theories are one of the most plausible attempts to explain continuing unemployment (you’ve already heart about PSST and ZMP, among others).  I’ll blog excess capacity more soon, but in the meantime note the hypothesis doesn’t rely on nominal wage stickiness.  The firm doesn’t want to produce any more output, so the worker’s wage demands don’t matter so much.  This will have real import for the analysis of monetary and fiscal policy, so the microfoundations really matter here.

In the meantime, beware of claims about sticky nominal wages among the unemployed.

Addendum: Arnold Kling comments.  And Brad DeLong responds but a) he cannot bring himself to tell us what makes wages sticky for the unemployed, and b) he simply misrepresents my point of view, plus he ignores #1.  Scott Sumner responds, but no need to fire the old workers to hire more and don’t reify NGDP!  Here is Matt Yglesias, the question is why the labor market adjustment isn’t quicker, unless you are assuming excess capacity.  As time passes, the gap should narrow, even for a given level of spending.  Kevin Drum seems to embrace excess capacity explanations.  Here is Karl Smith, and Ryan Avent, and Robert from Angry Bear.

Real vs. nominal dollars for discretionary spending

Matt Yglesias tweets:

Did every libertarian in America suffer mass amnesia about the difference between real and nominal dollars yesterday?

Others complain as well.  Keep in mind a few things:

1. The spending forecast itself is made in terms of nominal dollars and that is what I, and others, reported.  Bloggers report nominal dollar magnitudes all the time, without pretending to be tricking anybody.  Reporting real dollars would mix in the base information with someone’s forecast of future expected inflation and in general that is not considered to be more enlightening, all the more during a period where people disagree radically about inflation forecasts.  Graph viewers can make their own real vs. nominal adjustments ex post, as indeed they are used to doing.

2. For the Keynesian argument, it is often nominal dollars which matter most.  And also, in Keynesian terms, it is the reaction of the Fed which will be of paramount importance.  Even a not very potent version of QEIII could easily undo whatever mild contractionary effects this spending change might have.

3. Inflationary pressures are not very strong and arguably there are deflationary pressures.  That’s bad, but it means the nominal is not going to be so far off from the real.

4. On top of all that, it is far, far from obvious that those specified spending changes are actually going to take place.  The tendency is for promised spending slowdowns to be ignored or reversed.

Some MR commentators raise the issue of per capita measures of discretionary spending and whether they will decline.  It might be nice to have growing public sector per capita quality with growing population and growing wealth.  But if the good in question is a public good (and is it not supposed to be?), adding extra people to the mix, ceteris paribus with no spending boost, is compatible with those additional people getting more or less the same services as the previous consumers.  Falling per capita expenditures on public goods, if it is not too big a fall, still means a greater real quantity of public goods enjoyed, given non-rivalry of consumption.

The correct response to all this information about future projected spending is still “I guess that’s not much of a spending cut, is it?”

By the way, entitlement reform is MIA.

Instead what I see is a lot of people adding up the entire fiscal gap — ignoring that the stimulus is ending anyway and was going to end anyway — and proclaiming that Tea Party extortion is causing the economic heavens to fall.  Ross Douthat nails it.

Here’s a big “ouch” for some of you:

Sixty five percent approve of deal’s spending cuts. But it gets worse. Of the 30 percent who disapprove, 13 percent think the cuts haven’t gotten far enough, and only 15 percent think the cuts go too far. One sixth of Americans agree with the liberal argument about the deal.

The final effects of the deal are hardly a Ron Paul world and so we are seeing massive exaggeration, driven by the fallacies of mood affiliation, excess sensitivity to social information (“who won the showdown?”) and us vs. them thinking.  What we have is a weak, vacillating postponement of all the hard decisions.  In hindsight, the decision to allow no revenue increases will be seen as a huge blunder, by conservatives most of all.

Assorted links

1. Many WWII bombs in Germany remain unexploded, and live, and they are (still) tracked with WWII reconnaissance photos.

2. Krugman can’t bring himself to present the figures on government spending.  Herbert Hoover raised spending and raised taxes too, in a slightly expansionary combination.  It is incorrect to take, say, a state governor who is pursuing a contractionary fiscal policy and liken that person to Hoover.  Krugman would do better to simply cede this historical point, which need not infringe upon his more general critique of contractionary policy.

3. What is a high mortgage default rate?, from Arnold Kling.  And Rortybomb, with links to Min, responds on GSEs, a useful post.

4. Are all non-Africans part Neanderthal?

5. A sign that “the Left” is falling apart too; how many hackneyed or false memes or misguided examples of us. vs. them thinking or mistakes of mood affiliation are in this blog post?  It is a veritable feast of fallacy and it should be studied by future historians.  (If you are looking for balance, try David Brooks on the contemporary right.)

Crime is falling, still

The number of violent crimes in the United States dropped significantly last year, to what appeared to be the lowest rate in nearly 40 years, a development that was considered puzzling partly because it ran counter to the prevailing expectation that crime would increase during a recession.

In all regions, the country appears to be safer. The odds of being murdered or robbed are now less than half of what they were in the early 1990s, when violent crime peaked in the United States. Small towns, especially, are seeing far fewer murders: In cities with populations under 10,000, the number plunged by more than 25 percent last year.

This development reminds me of a fallacy committed by (some) intellectuals.  Occasionally you will read it insinuated that if inequality continues, or continues to rise, “the public will take matters into its own hands,” or something like that.  Apart from being potentially factually false, such an outcome is neither endorsed nor condemned by the intellectual.  The writer is hinting that the losers from such a rebellion would deserve what is coming to them, without having to say so.  Least of all is the writer willing to throw his or her efforts behind dissuading or criticizing such a public response (is it so hard to write “don’t bring out the guillotine”?).  The ostensibly “positive” description of what the public will do is used as a veiled threat, to be enacted if the warnings of the supposedly smarter intellectual are not heeded, yet without the intellectual having to make the threat himself.

A similar issue comes up in some discussions of free trade.  It is sometimes hinted that if more is not done to help victims of free trade, the public will turn against free trade and force through extreme populist anti-trade measures.  Again, the writer is playing on mood affiliation rather than analyzing such an outcome dispassionately and then evaluating the behavior of the public and trying to prevent it by framing the issue in a different manner.

The reality is that the public does not respond to most events, or most changes in the income distribution, as the intelligentsia likes to think it should, or will.

Maybe I will call this “the public as billy club” fallacy.  I have a low opinion of sentences in which this fallacy is committed.

Religious conversion as an anti-poverty strategy

Adam writes to me:

Hypothetical for you: would a massive conversion of low-income people to Mormonism reduce poverty? Utah looks to have some good demographics, which must be somewhat due to to the fact that 60% belong to the LDS church: http://www.adherents.com/largecom/lds_dem.html

They have the lowest child poverty rate in the country, the highest birth rate but the lowest out-of-wedlock birthrate.

Is Mormon conversion a viable development policy?

A viable *policy*, no, but a viable solution *yes*.  Many of the costs of poverty are sociological rather than narrowly economic per se.  In other words, many of the poor do not have what could be called Mormon lifestyles.  This point holds all the more strongly in Latin America, where alcoholism is arguably a larger economic problem than in the United States.  It is not uncommon for a rural village to have a male alcoholism rate of up to fifty percent.

A political conservative is more likely to make this point than to simply focus on the lack of money earned by the poor.  A political liberal is more likely to assume that the rate of strict religiosity can rise only so high, and take that as a background constraint.  Furthermore, under the exogenous thought experiment of many more poor people converting to Mormonism, positive selection bias diminishes and perhaps the religion as a whole becomes less strict.

The truth of the Mormonism insight doesn’t necessarily have strong implications for cash-based social aid policies in the meantime.  Mormonism, as a variable, is difficult for political agents to manipulate, although they (possibly) can squash it.  Raising this point, however, makes the poor look less like victims and more like a group partially complicit in their own fate.  That framing does have “marketing” implications for the politics of how many resources the poor will receive.  For this reason, liberals sometimes underrate the conservative point, because they do not like its political implications, and this leads liberals to misunderstand poverty.  The conservatives end up misunderstanding poverty policy.  Almost everyone ends up a little screwy and off-base on this issue, victims of the fallacy of mood affiliation.

Here is an article about the poorest community in the United States, in terms of measured income, it is mostly Hasidic Jews (1/20).  It doesn’t have most of the problems which we usually associate with poor communities.

Meta-ethics, realism, and intuitionism

Dan S. asks:

What are your meta-ethical views? I’ve heard you mention the importance of subjective value as well as “virtue,” so I imagine you are inclined toward a more “morality is subjective” view. What is your opinion of Bryan Caplan’s moral realism and intuitionism? Do you think it faces insurmountable metaphysical obstacles?

I am a moral realist and intuitionist, as is Bryan, but my view on applications is very different.

On torturing babies, I a) think it is objectively wrong, but b) I don’t think that a philosophical unpacking of “wrong” here gets one very far.  It’s wrong, and if you don’t understand why you won’t understand the philosophic explanation either.  There is nothing in the philosophical explanation that is more evident than the initial wrongness.  So far I’m on board with Caplan.

Yet I don’t wish to walk down this plank very far.  Bryan wants to “coin” a large number of (non-trivial) moral truths this way, such as his claim that taxation is morally wrong for violating the precepts of common sense morality (“don’t take things from other people”).  Last I looked, a lot of common sense people support taxation and the interpretation of common sense maxims depends very much on context.  Reasoning by analogy is far, far weaker than Bryan wishes to believe.

I’m agnostic on a lot of ethical issues, but not a relativist or a subjectivist per se.  I simply think that we don’t have very good facilities for detecting objective ethical truth, just as most of us are not very good at factoring large numbers in our heads.  Indeed, ethical philosophy hasn’t made a lot of progress in the last two thousand years.

I find that my combination of views is fairly rare.  People who believe that ethics is objective and intuitive are often quite keen to make a lot of detailed pronouncements about the content of those ethics.  The agnostics tend to be relativists or subjectivists.  It seems to me that people are first choosing a mood or attitude, and then finding the disparate views which match to that mood and, to themselves, justifying those views by the mood.  I call this the “fallacy of mood affiliation,” and it is one of the most underreported fallacies in human reasoning.  (In the context of economic growth debates, the underlying mood is often “optimism” or “pessimism” per se and then a bunch of ought-to-be-independent views fall out from the chosen mood.)

Here is an earlier post on ethical intuitionism.  Here is my conclusion:

…ethical intuitionism settles many fewer issues than most of its proponents like to think.  That said, there is often nowhere else to go.  We somehow need to come to terms with two propositions at the same time:

1. We need to think more rather than less ethically.

2. The content of ethical philosophy tells us less, in reliable terms, than most people would like to believe.

From Bret Stephens

In October, Brian Riedl of the Manhattan Institute tallied the costs of Mr. Sanders’s policy goals. By his calculations, the federal government would double in size. Half the American work force would be employed by the government, Mr. Riedl writes. Government spending as a percent of G.D.P. would rise to 70 percent (in Sweden, it’s less than 50 percent). The 15.3 percent payroll tax would hit 27.2 percent to help pay for Medicare for All. Total additional outlays would reach $97.5 trillion on top of the nearly $90 trillion the federal, state and local governments are projected to spend over the next decade.

Here is the full NYT column.  #TheGreatForgetting, #moodaffiliation.

Saturday assorted links

1. Mood, I am still looking for the affiliation.  Wait…I found it.

2. Are cult movies on the way out?

3. Markets in everything: Facebook buys black market passwords to keep you safe.

4. Forty old shipwrecks discovered in the Black Sea (NYT).

5. Options for health care coverage reform, redux, most of my 2013 post has held up quite well for today.  And update on Trump on Dodd-Frank.

6. Italy has a hedgehog hospital, and other good photos.

Assorted links

1. Chemists find a way to unboil eggs.  And the Obama administration targets occupational licensing.

2. Jodi Beggs example database for Principles of Economics course.

3. When writing about China, it is much easier to acknowledge the importance of the top one percent.  A very good post, #moodaffiliation.

4. Afghan carpet weavers are putting drones on their rugs.

5. Will new technology lead to ultraropes, much longer elevator shafts, and much taller cities?

6. Why the left wing sometimes finds it hard to succeed, follow-up post here, I’m not saying you should read those through.  And do more expensive placebos work better?  Original paper here.  And here is Ross Douthat on same.

7. People identified through credit card use alone, often as few as four transactions.

8. Interview with Charles Plosser.

Assorted links

1. You only mimic the robot when it is present.  And robot soccer, with automated referees.

2. Academic average is over.

3. How to make selfie toast (there is no great stagnation).

4. Roko’s Basilisk.

5. Wolfgang Streeck on how capitalism will end.  And how many copies has Knausgaard sold?

6. The era of mood affililiation.

7. The pageant king of Alabama.

8. The world’s most cerebral marriage? (Parfit-relevant)