"I know the two of you are convinced that the Fischer Price Ocean Wonders Turtle Nightlight thing is some kind of proverbial night watchman, but I assure you if an owl tried to collect my eyes at 10PM, that $50 construction would prevent nothing."
A fair amount of the Fed's post-crisis "unconventional policies" have been aimed at the housing market. QEIII in particular. Often, these policies are evaluated on a very short term basis. Before and after the announcement like a pseudo event study is one popular method. Looking at what happens to rates after the policy ends is another. We've all seen charts of the last five years with vertical lines indicating the beginnings and ends of various Fed policies, with credit or blame assessed as desired.
But the basic fact about mortgage rates in this country is that they've been secularly falling. Here's a graph of the average 30 year fixed rate. Data are from Fred.
(clic the pic for an even more ski-slope image)
Rates are less than half what they were in 1976 when this data series begins. Rates have been steadily falling since 1982.
In other words, we've seen a steadily falling trend in mortgage rates over the last 30 years with a fair amount of short run noise around the trend.
Given that context, I think we are putting way too much emphasis on very short run movements in mortgage rates as an indicator of the effectiveness of particular Fed policies or announcements.
I also think, given mortgage rates are already at a 35 year low, that driving them down even more is not going to be a big boon to the housing market. I don't see how it helps re-financers all that much either. If you refinanced at 3.75 are you going to do it again at 3.49?
PS: Do I think the modern Fed deserves credit overall for this falling trend? Sure, just as much as they deserve blame for the ultra-high rates in the late 70s and early 80s.
Sociological Methods Research, May 2012, Pages 251-293
Abstract: This article develops a method to estimate the impact of change in a particular social setting, the residential neighborhood, that is designed to address nonrandom selection into a neighborhood and nonrandom selection out of a neighborhood. Utilizing matching to confront selection into neighborhood environments and instrumental variables to confront selection
out of changing neighborhoods, the method is applied to assess the effect of a decline in neighborhood concentrated disadvantage on the economic fortunes of African American children living within changing neighborhoods. Substantive findings indicate that a decline in neighborhood concentrated disadvantage during childhood leads to increases in adult earnings and income, but has no effects on educational attainment or other social outcomes.
Jens Ludwig et al.
Science, 21 September 2012, Pages 1505-1510
Abstract: Nearly 9 million Americans live in extreme-poverty neighborhoods, places that also tend to be racially segregated and dangerous. Yet, the effects on the well-being of residents of moving out of such communities into less distressed areas remain uncertain. Using data from Moving to Opportunity, a unique randomized housing mobility experiment, we found that moving from a high-poverty to lower-poverty neighborhood leads to long-term (10- to 15-year) improvements in adult physical and mental health and subjective well-being, despite not affecting economic self-sufficiency. A 1–standard deviation decline in neighborhood poverty (13 percentage points) increases subjective well-being by an amount equal to the gap in subjective well-being between people whose annual incomes differ by $13,000 — a large amount given that the average control group income is $20,000. Subjective well-being is more strongly affected by changes in neighborhood economic disadvantage than racial segregation, which is important because racial segregation has been declining since 1970, but income segregation has been increasing.
Not too long ago, people were upset about an elderly lady who allegedly botched a Jesus Fresco restoration in Italy.
I took the minority view and claimed that the "towel-armed manimal" she created was actually an improvement. Look, we have tons and tons of old Jesus paintings. Baby Jesus, Happy Jesus, Sad Jesus, you name it, but as far as I know, that is the only manimal fresco in any church anywhere!
Dr. Alan van Norman wrote "The multiple wounds present suggest to me that an owl and Ms. Peterson somehow became entangled. Perhaps the owl got tangled in her hair or perhaps she grabbed the owl's foot." Dr. Patrick T. Redig, a professor of veterinary medicine at the University of Minnesota wrote
"In my professional opinion, the hypothesized attack to the face and back of the head resulting in the various punctures and lacerations visible in the autopsy photographs is entirely within the behavioral repertoire of large owls". Kate P. Davis, executive director of Raptors of the Rockies, located in western Montana, wrote
"The lacerations on Mrs. Peterson's scalp look very much like those made by a raptor's talons, especially if she had forcibly torn the bird from the back of her head," she wrote. "That would explain the feathers found in her hand and the many hairs pulled out by the root ball, broken or cut. The size and configuration of the lacerations could certainly indicate the feet of a Barred Owl." She noted that owls can kill species much larger than themselves and that it is not uncommon for them to attack people.
Despite commonsense appeal, the link between self-interest and happiness
remains elusive. One reason why individuals may not feel satisfied with
self-interest is that they feel uneasy about sacrificing the needs of
others for their own gain. We propose that externally imposing
self-interest allows individuals to enjoy self-benefiting outcomes that
are untainted by self-reproach for failing to help others. Study 1
demonstrated that an imposed self-interested option (a reward) leads to
greater happiness than does choosing between a self-interested option
and a prosocial option (a charity donation). Study 2 demonstrated that
this effect is not driven by choice in general; rather, it is the
specific trade-off between benefiting the self and benefiting others
that inhibits happiness gained from self-interest. We theorize that the
agency inherent in choice reduces the hedonic value of self-interest.
Results of Study 3 find support for this mechanism.
This makes a lot of sense. People would feel terrible if they robbed a liquor store and took the money. But if the STATE takes the money at gunpoint, and "gives" it you....cool! Now I'm happy! Because I didn't do the stealing, I just get the benefit of the stealing!
There's a lot of talk about how the relatively weak economy is not hurting President Obama's re-election chances from top pundits like Ezra Klein, Matt Yglesias, & Will Wilkinson. It's either just stated or said that "models show" this to be the case.
But, one thing about statistical models of elections is that they kind of suck. There aren't a lot of observations so people often use data from the distant past to predict the future without testing to see if the data generating process is constant over the time period.
Also people use a lot of strange and potentially endogenous explanatory variables. As a rule of thumb, if you let me pick the dependent variable and also allow me to create my own made up right hand side variables, I'm going to get a pretty good in sample fit for my model.
So lets just look at the relatively recent raw data and see what we can see. This graph is from my 2008 Public Choice paper. It shows that from 1961-2004, there is a pronounced difference in economic performance over the second half of the election cycle between cycles where the incumbent party wins and when it loses.
I used Fred to update the results through 2008, and average growth over the last half of the election cycle when the incumbent party wins is 4.6%. When the incumbent party loses, it's 2.2%. That difference is significant at the 0.001 level.
For the relevant period of the Obama cycle for which Fred lists data (2011 q1 - 2012q2, 6 quarters), the average growth rate is 1.9%
In recent times, the incumbent party will, on average, lose with such a low growth rate in the second half of the cycle.
Why do I care about this? Well, I want to question the idea that the economy is helping (or at least not hurting)Obama. I want to question the assertion that campaigns don't matter because the economy is everything.
BHO is going to win in November DESPITE the economy, largely because Romney is a terrible candidate who is running an undisciplined, juvenile, brain-damaged campaign.
We've been getting woken up once or twice a week by a series of unearthly sounds from the park next door. I initially attributed it to a screech owl, but it turns out that they don't actually screech! Research led us to suspect the barred owl.
Over 21% of global sales happen there and gross sales for 2012 are expected to exceed $850,000,000.
Men wear lipstick and foundation!
What has happened to the rough and tumble Korean male?
Theories abound, but as always in Asia, cherchez the Japanese:
Things began to change in the late 1990s, when the South Korean government relaxed a ban on Japanese cultural goods, exposing South Koreans to different ideas on male beauty, including popular comics featuring pretty, effeminate men.
Not sure that I agree with his overall point that we don't care about producers when evaluating the effects of trade, but I learned a lot about boiled sand and the production of solar panels.
Here's an excerpt (but do read the whole thing):
At which point I should make the metal’s industry critique of the Solyndra business plan. They assumed a continuing high price for silicon and thus their technology concentrated on making that expensive material more productive. If silicon had remained high priced it might even have worked: but as they were ramping up production into a world where the raw silicon ingot had just fallen to 10% of its previous price they were doomed.