Wednesday, October 31, 2012

Will Sean Penn finally settle the War of the Pacific?

Word is out that, among other things, Evo Morales has asked Sean Penn to reverse the outcome of the War of the Pacific and get Chile to give Bolivia back its coastline!

Is Evo is just enjoying the chance to humiliate Penn?

Is Evo so naive as to think Penn can get national boundaries changed?

Is Penn so arrogant that he led Evo to believe that Penn can get national boundaries changed?

By the way, did you know that the War of the Pacific was fought over poop? It's true!

Zombie Apocalypse

As Angry Alex points out, "Best. Military. Exercise. Ever."

Zombie Apocalypse.

A VIP and his personal detail are trapped in a village, surrounded by zombies when a bomb explodes. The VIP is wounded and his team must move through the town while dodging bullets and shooting back at the invading zombies. At one point, some members of the team are bit by zombies and must be taken to a field medical facility for decontamination and treatment.

"No one knows what the zombies will do in our scenario, but quite frankly no one knows what a terrorist will do," Barker said. "If a law enforcement officer sees a zombie and says, `Freeze, get your hands in the air!' What's the zombie going to do? He's going to moan at you. If someone on PCP or some other psychotic drug is told that, the truth is he's not going to react to you."

The keynote speaker beforehand will be a retired top spook-- former CIA Director Michael Hayden.

"No doubt when a zombie apocalypse occurs, it's going to be a federal incident, so we're making it happen," Barker said. Since word got out about the exercise, they've had calls from "every whack job in the world" about whether the U.S. government is really preparing for a zombie event.

Called "Zombie Apocalypse," the exercise follows the federal Centers for Disease Control and Prevention's campaign launched last year that urged Americans to get ready for a zombie apocalypse, as part of a catchy, public health message about the importance of emergency preparedness.

If you want to stock up on your own...

Happy All Hallows Eve!

Tuesday, October 30, 2012

Grand Game: Broken Window / Hurricane Edition

I actually put off blogging this.  'Cause I could not believe the author--an "economist," and a "widely published" one at that, was serious.  Had to be hoax.  But then I thought about two words, and realized that it may be absurd, but it is not a hoax.  The words, of course, were "Paul. Krugman."
(And, speaking of cheap copies, check this out.  Amazing.)

So, Grand Game it up, folks.  This is a target rich environment.  If the author were correct, of course, then North Korea and Cuba would be the wealthiest nations on earth.

The article  An excerpt (it was hard to pick just one):

When government authorities facilitate rebuilding quickly and effectively, the process of economic renewal, in many tangible ways, can leave communities better off than before.

Factoring in the multiplier effect of $15-$20 billion spent rebuilding yields an economic benefit from reconstruction of about $27-$36 billion.

Monday, October 29, 2012

Ugly Baby? Perhaps Wife Had Plastic Surgery!

A man from northern China who divorced and sued his wife earlier this year for being ugly has recently won the lawsuit, according to a report from

Jian Feng said his issues with his wife’s looks only began after the couple’s daughter was born.  Feng was appalled by the child’s appearance, calling her “incredibly ugly” and saying she resembled neither one of her parents.

With that being the case, Feng initially accused his wife of cheating.  It was at that point that his wife, who has not been named, came forward saying she had spent $100,000 on intense plastic surgeries to drastically change her appearance before she met Feng.  She never told Feng about those surgeries.

When Feng found out about the procedures, he filed the lawsuit. He said the woman convinced him to marry her under false pretenses.

A judge agreed, awarding Feng $120,000.

With thanks to the LMM.  And of course all our babies were beautiful.

Monday's Child is full of LINKS!

Caption Contest!

A KPC caption contest.  Saw this at UNC-Charlotte, where I was visiting DoL Co-blogger Craig Depken.

The box has dirt in it.  And a bunch of text about how great plants are, and how this "Green Screen" will help save the environment.  I had to take a picture.  It captures pretty much everything I know about the "green" movement... Solyndra in a flower box!

click for an even more unwatered and pointless image

Her First Obama Ad... A "Girl" Never Forgets

With a nod to Angry Alex

I'll have what he's having

People, did you know that pandas LOVE cinnamon?

Me neither.

But it's true and I've got the proof:

Context here.

Education: News From the Front

"As consumers wise up about education spending, for-profit colleges are getting schooled. Institutions such as Apollo Group Inc.'s University of Phoenix, DeVry Inc. and Washington Post Co.'s Kaplan — who only a few years ago reported double-digit student gains on a regular basis and posted hundreds of millions in profits — now are hemorrhaging students." [WSJ]


"'Our classes are basically completely filled, they're 100% full. And it's maddening for us because we pride ourselves on access,' says [Santa Monica College] president Chui Tsang. Desperate to widen access, last spring he came up with a programme he called Advance Your Dreams. Tsang's plan would enable students to pay up to 400% more for a guaranteed seat in a class, and the money generated would have allowed extra classes to be arranged." [BBC]


"What is more surprising — because no one else has looked at this question lately anywhere in the country — is that the laid-off people around Janesville who went to Blackhawk [Technical College] are faring worse than their laid-off neighbors who did not. We discovered this striking fact by comparing the dislocated workers who retrained with a larger group of about 28,000 residents, from the two counties where most Blackhawk students live, who had collected unemployment benefits recently and not gone to the college. For one thing, the people who didn’t retrain are working more. About half of them had wages every season of the year, compared with about one in three who went to Blackhawk. An even bigger gap exists in how much those who have jobs are earning. Before the recession, we found, the two groups – the dislocated workers who went to school and the ones who didn’t – were, on average, getting paid about the same. Afterwards, the ones who didn’t retrain are earning more. Their pay has fallen by just 8 percent – about one-fourth the size of the pay drop among the people who went to school." [Amy Goldstein, ProPublica]

How to interpret?  Sounds like the market is working its magic, and fraudulent for-profit schools are getting what they deserve.  It just makes sense to charge more for new access, and people who doubt that care more about fairness than they care about people.  And the only thing that Obama and Romney agree on, is wrong.  Happy Monday!

Nod to Kevin Lewis

Sunday, October 28, 2012

Robert knows best

Robert Frank's latest NY Times piece is amazing in its incredibly low ratio of facts to opinion.

When do low tax rates hurt the rich? When Bob Frank says so, buddy.

Let's break down some of the questionable and unsubstantiated claims.

First is the axiom that money buys national political outcomes. That rich donors have bought low tax rates and deregulation. Frank cannot conceive of the idea that low tax rates and deregulation might actually be popular policies with a wide swath of the population! Nor does he present any evidence that money buys outcomes. Perhaps that's because there is little to no evidence that it does.

Next is the bizarre idea that budget deficits reduce the "quantity and quality of public services". Actually, given a level of revenue, budget deficits INCREASE the quantity of public services above what could be purchased without the deficit.  Budget deficits are the buffer that keep government purchases from falling one to one with declines in revenue.

Now consider Frank's notion that taxes on the wealthy are currently so low that we cannot have paved roads and safe bridges. In FY 2012, we spent $287 billion on transportation (Federal State and Local combined). Total government spending is running over $5.6 trillion dollars in 2012.  There is plenty of money for basic public services and infrastructure. At current tax levels, the rich can have their Bentleys and paved roads to drive them on. It's hard to believe that the rich are both so powerful they can dictate their tax rates but so un-powerful that they can't influence where the money is spent.

There's much more, but I'll leave that for you people.

What the fudge?

Mrs. Angus took a picture of me last night after I heard about the Harden trade:

I have since calmed down a bit, and am actually OK with the deal.

Durant, Westbrook, Perkins & Ibaka all left money on the table to sign contract extensions with the Thunder. OKC was offering James $54 million over 4 years and asking him to take about a $4.5 million discount over the life of the contract.

He wouldn't.

The Thunder got a lot in return. A high lottery pick either this year or next, another first round pick, a proven scorer to come off the bench in Kevin Martin, and a potentially solid rookie in Jeremy Lamb.

I would like to think that if I was going to be making $13 million a year, I would give up an extra $1.2 million per year to stay on a championship caliber team instead of being tossed into a bare cupboard and getting "coached" by Kevin McHale.

But James Harden wouldn't and who knows, maybe I wouldn't either.

I know the team could have kept Harden this year and seen what developed, but that is apparently just not the Thunder way (see Jeff Green), and it is not clear how Harden would have reacted to being in limbo for the season.

The funniest reaction I've seen to the trade is this bit of genius from Matt Yglesias. Russell Westbrook  was second team all NBA for the second year in a row, and is just getting better and better overall and at playing the point. James Harden is a shooting guard, the easiest thing to find in the NBA.

Guide to Candy Trading

For you young economists out there (and for the Dub MOE, who takes candy from children)... The Guide to Candy Trading

Thanks to Eddie M.


I'm in Montreal, for an ILS conference.  Pretty cold, but darned pretty.

Some links:

1.  KPC pal Zach Weiner sends this, thinking I might like it.  Zach is, in this as in all things, correct.  Me gusta.  Extrapolation rulz, kids.  For all you people who are guessing when China will overtake the US.... required reading.

2.  If this is the standard, all government economists should just quit, like these folks did.  Thanks to the LMM.

3.  Camille Paglia is great.  Sneering and genius need to be explored.

4.  The sex lives of conjoined twins.  Thanks to Angry Alex.

5.  Ouch.  Even worse than "too shallow" for a pool.  Thanks to Tommy the Tenured Brit.

Saturday, October 27, 2012

I guess he's just a "glass half full" kind of guy

David Leonhardt is frequently cogent, but his new piece "Who Gets Credit for the Recovery?" is risible.

I agree with his implicit premise: The economy is gonna do what the economy is gonna do and political involvement will mostly be credit-claiming or blame-avoidance, but after that we part company.

The biggest problem I see is the notion that anyone is giving out "credit" for the pathetic mess that is our "recovery". Yes, housing seems to turning a corner, but let's get real.

Fewer people have jobs now than did before the crash, even though 4 years have passed and the population has grown.

Housing starts remain well below pre-crash levels.

Real GDP growth so far is lower in 2012 than it was in 2011, and the 2011 figure is lower than the 2010 figure. And, given that we were emerging from a deep recession, the 2010 figure (2.4%) stunk!

Things are so bad that Democratic loyalists are celebrating a 2% growth rate in the 3rd quarter.

Things are so bad that it took a 9.6% increase in Federal government spending to get that dizzying 2% figure.

Behold: the world according to DL:

Friday, October 26, 2012

Help me pick my house design

People, we have issues at Chez Angus.  We have two different designs for the front of our potential house in Santa Fe.

Here's option 1 (which loyal readers have already seen):

and here's option 2:

Give me your thoughts in the comments.

Who are the riff-makers. Who are they really?

Fascinating post by Chris Dillow on the idea of distinguishing between the "deserving" and "undeserving" poor.

Here's his thesis:

I can see why libertarians might be opposed to all welfare spending on Randian or Nozickian grounds, but I find it hard to see why they think a welfare state should try to discriminate between deserving and undeserving.

Read the piece. He makes a very good case.

And, as always, Mark E. Smith is relevant here:

They take from the medium poor
 to give to the needy poor 
Via the government poor 
Give it to the poor poor 
They're knocking on my door 

John O: Take This Candidate Seriously!

Was just at ol' Davidson last night, for a talk.  Got to walk past the ol' frat house.

By happy circumstance, got an email from an ol' frat brother, John O.  He writes:

With the national elections looming, I know that some friends don't like to get political emails. I also think it is important to share information if we arrive at informed conclusions, so that our friends may benefit. After all the debates, platform analysis, and political punditry I have made my choice as to the best candidate in the field. Rather than vote according to just one issue, or an ideology, or a party ticket, I am voting for the principles and character of "The Man" who tells it like it is, no holds barred. Here is his campaign video. Take a minute to listen to his timely message.

Interesting.  I had never noticed how much like "I want to be sedated," by the Ramones, this chorus is.  But if I get one more Robo-call from some Romney shill, I may need to be sedated.  Or restrained.

Selling Carbon Offsets by Growing Plankton?

"A California businessman chartered a fishing boat in July, loaded it with 100 tons of iron dust and cruised through Pacific waters off western Canada, spewing his cargo into the sea in an ecological experiment that has outraged scientists and government officials...The entrepreneur, Russ George, calling it a 'state-of-the-art study,' said his team scattered iron dust several hundred miles west of the islands of Haida Gwaii, in northern British Columbia, in exchange for $2.5 million from a native Canadian group. The iron spawned the growth of enormous amounts of plankton, which Mr. George, a former fisheries and forestry worker, said might allow the project to meet one of its goals: aiding the recovery of the local salmon fishery for the native Haida. Plankton absorbs carbon dioxide, the predominant greenhouse gas, and settles deep in the ocean when it dies, sequestering carbon. The Haida had hoped that by burying carbon, they could also sell so-called carbon offset credits to companies and make money." [NYT]

Nod to Kevin Lewis

Thursday, October 25, 2012

Are Some People Just Too Ignorant?

I do often hear my climate catastrophe worshipping colleagues say that some people are just too darned stupid to understand how smart my colleagues are.  Meaning that this whole "democracy" thing is a problem. Voters should shut up and do what experts tell them to do.

An interesting study, along these lines:

The polarizing impact of science literacy and numeracy on perceived climate change risks

Dan Kahan et al.
Nature Climate Change, October 2012, Pages 732–735

Abstract: Seeming public apathy over climate change is often attributed to a deficit in comprehension. The public knows too little science, it is claimed, to understand the evidence or avoid being misled. Widespread limits on technical reasoning aggravate the problem by forcing citizens to use unreliable cognitive heuristics to assess risk. We conducted a study to test this account and found no support for it. Members of the public with the highest degrees of science literacy and technical reasoning capacity were not the most concerned about climate change. Rather, they were the ones among whom cultural polarization was greatest. This result suggests that public divisions over climate change stem not from the public’s incomprehension of science but from a distinctive conflict of interest: between the personal interest individuals have in forming beliefs in line with those held by others with whom they share close ties and the collective one they all share in making use of the best available science to promote common welfare.

A nod to Kevin Lewis.

More after the jump....

On notes from one's mother

Link for October 25, 2012

This "Zits" amused the LMM.  Because it is entirely accurate.

"Dude!  It has a bibliography!"

And that is just some of her texts!

Democracy is a bad idea

At least in the USA.

Tyler and I have a piece up at Slate which highlights the findings that irrelevant local events (like football games) affect peoples' voting behavior.

Beyond the pieces we cite, there is also research by Justin Wolfers showing that voters don't process economic information rationally, and a fun paper by Achen & Bartels showing how shark attacks in New Jersey hurt Woodrow Wilson at the polls.

People, the legitimacy of representative democracy rests in large part on the idea of democratic accountability, and there is a growing literature showing that such accountability is a mirage.

We open our piece with a great Churchill quote: "The best argument against democracy is a 5 minute conversation with the average voter".

It's no wonder our political outcomes are often so illogical, frustrating and counter-productive.

We have met the enemy and he is us (apologies to Walt Kelly).

Wednesday, October 24, 2012

Income and Democracy

Income and democracy: Revisiting the evidence

Enrique Moral-Benito & Cristian Bartolucci
Economics Letters, December 2012, Pages 844–847

Abstract: In an influential paper, Acemoglu et al. (2008) find that the positive correlation between income per capita and the level of democracy across countries vanishes once country-specific effects are accounted for. In this paper, we find evidence of a non-linear effect from income to democracy even after controlling for country-specific effects. In particular, our findings point to the existence of a positive effect only in low-income countries.

Nod to Kevin Lewis

Helping the private sector in Argentina

Argentina has now passed a decree allowing the government to direct both the amount and the type of investment behavior of private insurance companies. Here's the scoop from the AP (via Fox News so you KNOW it's true):

she (President Christina Kirchner)  decreed that insurance companies must invest up to 30 percent of their holdings in "productive activities" to improve Argentina's infrastructure. "This decree links the insurance industry with the development of the actual economy," said the decree published Tuesday. 

With her government redirecting resources toward "projects that have a clear productive and social purpose," insurers will "encounter new possibilities of investment that that will feed a virtuous cycle of development with social inclusion," it said. The decree, effective Wednesday, puts Deputy Economy Minister Axel Kiciloff and Commerce Secretary Guillermo Moreno in charge of a committee that will decide where the insurers can invest their holdings. 

The list begins with projects already sponsored by the nationalized pension system and other government-run funds, but also can include whatever the committee decides is "productive, according to the objectives of the political economy." 

Economy Minister Hernan Lorenzino said Argentina's insurers are sitting on $13 billion but put only $18.5 million in what the government considers productive projects. The government hopes to raise that to $1.5 billion by mid-2013. This "will be good for the national economy and for the insurance sector as well, since these investments have proven to be the best in terms of profits and security in recent years," Lorenzino said in a radio interview. 

That's right, private money decreed to go to either "infrastructure" or projects with a "clear social purpose".

Gee this sounds like a great idea. Win-Win-Win. I wonder what  other Argentine investors think?

Argentina's Merval stock market index dropped more than 3.5 percent Tuesday after Fernandez made the surprise announcements Monday night.

Uh, oh, more people making bad decisions with their money.  Sounds like La Penguina has some more work to do!

Hat Tip to NC

The Internet

Why was the internet invented?  So you can read about a Vietnamese fish with its penis on its chin.

Now you know.


The First Law of Petropolitics

Romain Wacziarg, Economica, October 2012, Pages 641–657

Abstract: We examine empirically the relationship between crude oil prices and the ebb and flow of democratic institutions, in order to test the hypothesis that high oil prices undermine democracy and sustain autocracy. We use a variety of time series and panel data methods over a wide range of country subsamples and time periods, finding strictly no evidence in favour of this so-called ‘First Law of Petropolitics’ (Thomas Friedman 2006).

Nod to Kevin Lewis

Tuesday, October 23, 2012

Wow. Seems Impossible....

This would be a really interesting, beautiful photograph.

Except that it is NOT a photograph.  It is drawn with a ....pencil.  Click for an even more absurdly realistic view.

I bought it off the Baptists

These renderings may or may not end up being what we eventually build in Santa Fe, but they are where we are at now in the process (clic the pics for even more speculative images). 

Of course, Mark E. Smith is always relevant:

Free Falling

Cute prank.  Interesting that it worked; the monitors must in fact be pretty good.

Nod to Angry Alex

Monday, October 22, 2012


Models with a persistent, time-varying error variance (i.e. GARCH) models, are mainly used in Macro to investigate whether uncertainty affects the conditional mean (i.e. GARCH-M).

However, even if we are not modeling GARCH in Mean effects, ignoring conditional heteroskedasticity, or "correcting" our coefficient standard errors for it by a White-type of correction can be problematic.

For one thing, a maximum likelihood approach can have almost infinite relative efficiency gains over OLS. Thus in a VAR context, ignoring the conditional variance-covariance process, can lead to poorly estimated coefficients and thus poorly estimated impulse responses.

For another, White (or Newey-West) standard errors are not generally appropriate in the case of a GARCH variance process.

Jim Hamilton has a great piece about these phenomena, with a couple interesting examples of how dealing with the conditional variance can change inferences about the conditional mean.

This is a situation I've seen in my own work. Here is an older piece with Mark Perry in the Journal of Finance about liquidity effects, and here is a joint piece with Haichun Ye in Economic Inquiry about the twin deficit phenomenon. In both cases modeling the conditional variance process changed inferences about the conditional mean.

Here is a recent piece by rising macro star Olivier Coibon in the AEJ: Macro which also demonstrates the importance of modeling the conditional variance process.

GARCH (or Stochastic Volatility if you prefer) in macro is still way under appreciated and under used.

Sunday, October 21, 2012

YYM in Portugal

So, I get this phone call at 7 am Saturday from the YYM:  "I got pickpocketed in the Lisbon train station."

He still has his passport, and he is with his girlfriend so he has access to cash.  But it is worrisome.  Apparently the two of them had "met" this aggressive woman who stood very close to them and asked for directions.  Presumably confederate behind him reached and took the wallet.

From his front jeans pocket?  Because that is where I always tell him to keep his wallet in train stations and public place:  keep your wallet in your FRONT jeans pocket.  Make them "kiss the dog."

No, it was in his outside jacket pocket, the big open one where you put your hands.  *&$^#$&^@!

Later in the day, he sent this picture, after they had rented a car and driven over to the coast.  Things must not be TOO bad...

Click for an even more happy image.

V meets Jubilee meets Disturbing Nutjobs

A call to the armed forces of England to commit the grossest and most destructive kind of treason. 


A target rich environment

People you know I'm talking about the Sunday NY Times!

Let's start with yet another defense of the stimulus by Christina Romer.

The piece starts with a remarkable display of selective amnesia. Romer says,

After listening to Representative Paul Ryan in the vice-presidential debate, you might think that careful evaluation isn’t needed. In his view, we spent $800 billion on the stimulus, yet unemployment still rose to 10 percent — so obviously it wasn’t helpful.

She then goes on to (correctly) point out that to evaluate a policy, we actually need the counter-factual, what would have happened without the policy in question.

But she ignores the counterfactual elephant in the room:

Which of course arrived to us in a document authored by... Christina Romer (and Jared Bernstein)!

Even more amazingly, she says the stimulus would have worked better if people would have believed in it more! In most circles, this is known as blaming the victim, not economic analysis.

And yet, who could fault people for not believing in the stimulus when by the second quarter of 2009 it was obvious that it would not accomplish anything nearly close to what the government had claimed it would accomplish?

Case #2 is after the jump!

Thursday, October 18, 2012

"God will truncate their hustle"

People, I cannot recommend this post, "How to give foreign aid" highly enough

Here is just a taste to get you motivated:

Some wicked people will say blasphemous things like we do not need to have highly paid foreigners living posh lives in our country in the name of development. The evil people will even imply that by pumping in so much money into projects that the government should be doing and has the money to do, you are making the government lazy and inadvertently encouraging corruption. They lie! And God will judge them harshly. Their real aim is to spoil your hustle, yours and those of all the good Africa-helping people of the world under the able leadership of Bono (and Madonna who has been kind enough to adopt dark Malawian babies who would otherwise have died of poverty or some dreadful disease). God bless Bono and Madonna.

How to prepare for next time

Let's face up to the fact that our government is not going to try and stop "running" the economy any time soon and think about ways to limit the damage they do.

When it comes to macro policy, there are two no-brainer reforms that would really help.

First, I agree with Ryan Avent (really). Raise the inflation target to say, 3.5%, but INDEX all tax brackets so that the higher inflation can be more neutral.

There clearly is a "discontinuity" in the Fed's reaction function when nominal rates hit zero, and a higher inflation target can help avoid this situation.

Second,  I agree with JM Keynes (really). Counter-cyclical fiscal policy is a good idea. Surplus in the booms, deficits in the downturns. Chile has figured this out for Pete's sake, why can't we? Balance the budget over the business cycle.

People, I don't think the Fed can control real GDP. I think the Fed has done a decent job controlling inflation over the last 30 years, and they did a great job throwing the kitchen sink at the financial system and preventing a full meltdown / depression. I don't think there is a magic monetary policy the Fed could have been following that would have either avoided the downturn or given us a quick and robust recovery. I do think that zero bound problems were not sufficiently appreciated and a modestly higher inflation target could help us from smacking into them.

Neither do I think that fiscal policy has big multiplier effects (though I admit to being intrigued by the idea that at the zero bound, the effects are perhaps greater than 1), but you know that in troubled times it will be used. Let's just stop shooting ourselves in the foot by running big deficits in the good times as well.

We are not going to get rid of policy actions in downturns. But if our policymakers were operating from better baseline positions (further from the zero bound, further from an explosive level of debt), these policy actions would be much more effective and carry lower long term consequences.


Wednesday, October 17, 2012

Deer Crossing Performance Art

I refuse to believe that this is serious.  It is the most brilliant performance art hoax in human history.

Step 1:  Woman suggests that "Deer Crossing" sign be moved somewhere with less traffic.  She thought that the sign was to tell the deer where to cross.  I mean, that's what she SAID.  "We can use the signs to direct the deer elsewhere."  Please, please listen to this....

Step 2:  Woman "admits" that she was confused.  The "Deer Crossing" sign is actually information for HUMANs, not for DEER.  She totally stays in character.

She says she grew up in a rural area.  Because apparently people in rural areas think that deer can read.  They aren't like those smart city folks, who know a lot about deer.

A Joy

Why was the internet invented?  So a fat guy could lecture us on how to use a katana against burglars.

The description, from YouTube:

Bike Helmet Follies

"One common denominator of successful bike programs around the world — from Paris to Barcelona to Guangzhou — is that almost no one wears a helmet, and there is no pressure to do so. In the United States the notion that bike helmets promote health and safety by preventing head injuries is taken as pretty near God’s truth. Un-helmeted cyclists are regarded as irresponsible, like people who smoke. Cities are aggressive in helmet promotion...'Pushing helmets really kills cycling and bike-sharing in particular because it promotes a sense of danger that just isn’t justified — in fact, cycling has many health benefits,' says Piet de Jong, a professor in the department of applied finance and actuarial studies at Macquarie University in Sydney. He studied the issue with mathematical modeling, and concludes that the benefits may outweigh the risks by 20 to 1. He adds: 'Statistically, if we wear helmets for cycling, maybe we should wear helmets when we climb ladders or get into a bath, because there are lots more injuries during those activities.'" [Elisabeth Rosenthal, NYT op-ed]

I like the comments part of the article.  The idiot parade is in full swing.  The claim is not that (1) wearing a helmet is a bad idea, or that (2) wearing a helmet should be illegal.  The claim is that the statistical risks are in line with wearing a helmet when you brush your teeth.  People slip and fall in the bathroom, sometimes, and hit their heads.  Not very often.  And the survivable accidents on bikes where a helmet matters are statistically rare.

Now I fully expect some goofball to comment and say, "A helmet saved the life of my cousin's stepdaughter!"  Yes.  And your dad should have worn a condom.

(Nod to Kevin Lewis, who likely wears a helmet when he brushes his teeth)

Hell, Meet Handbasket

Why are things so bad in the U.S.?  This is a theory I had NOT heard before.

The decline of the US is that people go to Wal-Mart wearing saggy-butt PJs!

With thanks to Jeff...

Tuesday, October 16, 2012

The Amazing video Paul Samuelson doesn't want you to see

Pinback are back!

Argo, the Movie

The LMM and I went to see Argo.  Like it.  A lot, in fact.  But even I recognized that there were some pretty improvements in the story.

My good friend Dan Drezner notes that the films succeeds when it tells the truth.  And it also succeeds when it fibs.  As he puts it, "If you didn't detect at least one of the Really Big Whoppers in the second half of the film, well, then you should probably find a career other  becoming a foreign policy wonk.  Because there is some serious fictionalizing going on.  If you're buying it as fact, then you either lack the instincts or the strategic sense necessary to operate in the world of statecraft."

Dan points to two sources for getting actual historical background:  the Wired story by Joshuah Bearman that partially inspired the movie and theSlate explainer by David Haglund

Interestingly, Angus has suggested a related test for having the instincts for doing political economy.  And that's reading Mark Thoma.  If you don't immediately spot several credulous whoppers, you may not be a political economist.

Subversive? Deconstructing Gangnam Style

Interesting attempt at analysis of the "Gangnam Style" song/video.  Excerpt:

This skewering of the Gangnam life can be easy to miss for non-Korean. Psy boasts that he's a real man who drinks a whole cup of coffee in one gulp, for example, insisting he wants a women who drinks coffee. "I think some of you may be wondering why he's making such a big deal out of coffee, but it's not your ordinary coffee," U.S.-based Korean blogger Jea Kim wrote at her site, My Dear Korea. (Her English-subtitled translation of the video is at right.) "In Korea, there's a joke poking fun at women who eat 2,000-won (about $2) ramen for lunch and then spend 6,000 won on Starbucks coffee." They're called Doenjangnyeo, or "soybean paste women" for their propensity to crimp on essentials so they can over-spend on conspicuous luxuries, of which coffee is, believe it or not, one of the most common. "The number of coffee shops has gone up tremendously, particularly in Gangnam," Hong said. "Coffee shops have become the place where people go to be seen and spend ridiculous amounts of money."

Um...actually, that IS our ordinary coffee.  At least for a lot of people.  But I guess we have "Doenjangnyeo" here, too.

Disclaimer:  We have had the tag line "Blogging Gangnam Style!" for about a month.  And we certainly intended it subversively.  Or at least sarcastically.

Monday, October 15, 2012

A Peculiar Prevalence of P values Just Below .05

A peculiar prevalence of p values just below .05

E.J. Masicampo & Daniel Lalande
Quarterly Journal of Experimental Psychology, forthcoming

Abstract: In null hypothesis significance testing (NHST), p values are judged relative to an arbitrary threshold for significance (.05). The present work examined whether that standard influences the distribution of p values reported in the psychology literature. We examined a large subset of papers from three highly regarded journals. Distributions of p were found to be similar across the different journals. Moreover, p values were much more common immediately below .05 than would be expected based on the number of p values occurring in other ranges. This prevalence of p values just below the arbitrary criterion for significance was observed in all three journals. We discuss potential sources of this pattern, including publication bias and researcher degrees of freedom.

The opposite of Max Smart's "missed it by THAT much!"  A blog post.  All too obvious:  you mess with the estimation, specification, and reweighting of the S.E.'s (to "correct" for various imaginary problems) until you that p<0 .05=".05" p="p">
With a nod to Tim Harford, who tweeted on this six weeks ago.  Anod also to K Lewis...

This is Pretty Disgusting

So, this triumphalist video.  It's more than a little disgusting.  Why exactly do we need to do this?

Note the map: These two bases are very close to the border...of the freakin' CZECH REPUBLIC! Those vicious Czech hordes may pour over the border in the soft underbelly of Bavaria any moment.

Close the bases.  Now.  Bring all the troops, and their mighty Strker vehicles, home.  From Germany, Japan, and a dozen other places.

When I was in Bavaria in 2009, I asked quite a few people if they thought it was time the American occupying army left.  They said no.  Because the "benefits" of these military bases were so large.

Let the Germans have their own army to defend against the Czechs.  They can afford to write all those "checks" to EU countries.  WTF is the US doing in Germany?

Thanks to Mr. Fox.

Roth and Shapley Win Nobel in Econ

Alvin Roth and Lloyd Shapley win Nobel in economics for algorithms for matching.

Everything I know about this subfield I learned from my friend Atila A., here at Duke.  Here is a paper he coauthored with Roth, in the AER.  It's an interesting and important problem, though the "solutions" are highly technical.  But this paper is quite accessible.


Sunday, October 14, 2012

It's not Tina's glorious comeback

This morning, I read Mark Thoma's column about Tyler's column before I read Tyler's column and thought to myself, "an anti-government screed? Kill Government? Tyler? Did Tyler outsource his column to me and Mungowitz? Or has visiting North Korea allowed Tyrone to just take over?"

Then I read Tyler's actual column and it was vintage Tyler. We are both makers AND takers. Restrictive zoning favors the rich. There are things we could do over time to improve education but those things are difficult. The mortgage interest deduction is both popular and distortionary.The founding fathers worried about this problem.

But here's Thoma's reaction:

I just don't believe that no government at all will result in a better outcome for the vast majority of Americans. (A good analogy is monopoly power. I think the government should do more to reduce monopoly power, but it doesn't due to the influence of the wealthy and powerful who own these companies. But getting rid of anti-trust law altogether, i.e. getting government out of the way completely, won't improve the outcome -- monopoly problems would simply get worse). I want to improve government, not kill it.

Maybe Romney's glorious comeback has everyone on edge, but Mark is just way way way off base here. There is not a single phrase in Tyler's piece to suggest that Tyler favors "killing" government.

In fact, Tyler's libertarian bona fides are actually quite suspect to many because of his acceptance of relatively big government.

Liberalizing zoning laws is not killing government. Repealing the mortgage interest deduction is not killing government. Reforming teachers' unions is not killing government. Centralizing school spending decisions is not killing government. More school choice is not killing government.

I'd suggest that Mark consider responding to what people actually write, than to the boogieman that appears before his eyes when he sees the byline of someone he suspects might be a libertarian.

I'd also suggest that phrases like this, "the answer is a government that represents all of our interests," suggest that Mark's comparative advantage in blogging may lie outside the field of political economy.

New York Times Dumb Article Contest

1.  Dumb article about "food movement."

2.  Remarkably dumb article comparing 14th Venice to a capitalist society.

3.  Appallingly partisan editorial claiming that the best way to judge a candidate is what s/he says early in the campaign.  Clearly, the best way to judge a candidate is on what that candidate actually DID, in office.  If we went by what Obama SAID, we'd have a balanced budget, be out of Gitmo, and have broad bipartisan consensus.  We have none of those things.  If you want to say that Romney is a bad guy, because he has no values except winning, okay.  But to claim that his speeches in primaries are the ONLY source of "real" info....shame on you, NYT.  How far you have descended into the muck and mire of partisan shilling.

But, then, an interesting and provocative article from my friend Nick Carnes at Duke Sanford School.  Not sure what I think the policy implication is, but an interesting argument.

Saturday, October 13, 2012

Torn from the headlines

People, you wonder why folks in Washington have trouble with getting the math right? Well the town's paper of record, the senescent WAPO, is not helping.

In the print edition this morning, Preston Williams' column on the Yankees - Os series reads in part, "Sabathia hurled a commanding four hit shutout for a 3-1 win at Yankee Stadium....."

This fabulous example of DC math is viewable in the online edition for now (2nd graf of story), but who knows, maybe someone will wake up and fix it.


Friday, October 12, 2012

Reaming Romney

I don't always find the New Yorker to be very good reporting.  I subscribed for years, but the bias and outright fabrications of the new regime were just too insulting to readers with an IQ over 80, so I bailed.  But, occasionally, they get something right.  Like this.  Excerpt:

  Romney now seems to fancy himself a small-government zealot, who promises the end of the culture of entitlement. Yet even as he assails people on Medicaid and Social Security, and those who receive the earned-income tax credit, for being “dependent upon government,” Romney has had strikingly little to say about another prominent group that’s “dependent upon government”: the many American companies whose profits rely, in one form or another, on government assistance.

Here's the hilarious thing:  when you lefty goofballs write stuff like this, the mask slips a little.  You jabber about George Bush being all "libertarian."  Really?  Then why is the above paragraph true?  There is nothing libertarian about crony capitalism.  Quite the opposite, in fact.  So if the above is true, and it is, then stop calling Romney, Bush, and the other corporo-statist extremists libertarians.  It's absurd.  Even a steaming pile of ideology-baiting ordure like the New Yorker can get it right, sometimes.

Thursday, October 11, 2012

Someone thought that this was a good idea...

The surprising thing about French restaurant Ananas' lipsticked mouth-shaped urinals isn't that they have decided to remove them, it's that it took someone three weeks to get pissed off (no pun intended) about them. The "sumptuous" Sydney, Australia, eatery attracted criticism over their choice in pee décor from at least one feminist writer. "This is just an example of misogyny," Ann Summers said. "They're asking men to put their d***s in these mouths as urinals." The urinals, designed by female artist Meike van Schijndel, have been spotted (and complained about) in Europe, including at Germany's Rolling Stones Fan Museum. "We sincerely apologize if they have caused offense," an Ananas spokeswoman said.


Do click for a more wide-open image.


the tree museum*

Walking today in our Nation's capital, I saw the strangest tree. It was on the corner of 31st & R NW if you want to go look at it. It seemed like something from the spiny forest in southern Madagascar than a domestic specimen.

I'd really like to know what kind of tree it is. Here are some pics:

(clic the pics for even more exotic images)

There are little spikes on the actual tree trunk as well.

Any ideas?

*and they charged the people a dollar and a half just to see 'em!

Separated at birth, Nobel Prize Edition

Check it out people:

Newly minted Nobel Literature Laureate Mo Yan:


No wonder the Chinese government is actually happy about this Nobel winning citizen.

Stuck in the middle with you?

Duncan Black's median voter theorem is a classic result in voting theory. Anthony Downs extended the results to electoral competition.

In a nutshell, if there are two candidates competing for election in a one dimensional policy space, and voter preferences over the policy space are single peaked, the candidate that is positioned closest to the position of the median voter will win.

Heuristically, we might think that over the course of a campaign, candidates' positions might move toward that of the median voter.

But look at this amazing chart from Henry Farrell John Sides (clic the pic for an even more counterintuitive image):

What is up? Anthony Downs, you got some 'splainin' to do!


1. Candidates take non median positions to win primary, then are "trapped" at or near that position in the general election.  Perhaps, but these guys appear to be moving AWAY from the mean.

2. Voter preference distribution is not symmetric so average  does not equal median. Maybe, but it's hard to believe the median would be either more conservative than Romney or more liberal than Obama.

3. The policy space is multi-dimensional. This is my cherished view, on which I've written exactly one paper that only got published in a special issue of Public Choice that I edited (though it has been cited a few times at least. I always get bashed over the head with the Poole-Rosenthal work claiming that politics really is one dimensional.


4. Negative ads work. Black & Downs never conceived of the modern world of political attack ads.

Other thoughts? Tell me in the comments.

"What was that idiot thinking?" ~ future me about present me

Great article about problems with end of life directives. Turns out that our present selves are not very good about predicting what our future selves will want.

Money quote:

“Despite the prodigious effort devoted to designing, legislating, and studying of advance directives, the consensus of medical ethicists, researchers in health care services, and palliative care physicians is that the directives have been a resounding failure.”

The article reminded me of the excellent book, "Stumbling On Happiness".

Wednesday, October 10, 2012

Are Workers in Finance "Over"Paid?

Wages and Human Capital in the U.S. Finance Industry: 1909–2006

Thomas Philippon & Ariell Reshef
Quarterly Journal of Economics, forthcoming

Abstract: We study the allocation and compensation of human capital in the U.S. finance industry over the past century. Across time, space, and subsectors, we find that financial deregulation is associated with skill intensity, job complexity, and high wages for finance employees. All three measures are high before 1940 and after 1985, but not in the interim period. Workers in finance earn the same education-adjusted wages as other workers until 1990, but by 2006 the premium is 50% on average. Top executive compensation in finance follows the same pattern and timing, where the premium reaches 250%. Similar results hold for other top earners in finance. Changes in earnings risk can explain about one half of the increase in the average premium; changes in the size distribution of firms can explain about one fifth of the premium for executives.

Nod to Kevin Lewis

Tuesday, October 09, 2012

HIstory got sides?

"we want to go to our graves feeling we were on the right side of history" ~Tyler Cowen

(more here)

Now I hope Tyler lives a long and interesting life, but his language just reminded me of the incredible Mae Shi song "Run to Your Grave". I couldn't get it out of my head so I decided to share it with you people.

Money quote:

"Cause they're coming for your brain but
They will leave with your head
And they've got money and science
And they will leave you for dead"

Great quotes from the comments section of MR as well:

"Whichever way history runs, when you go to your grave you are on the wrong side of it". ~ Andrew'

I doubt that online education is really what you will be thinking about when you “go to [y]our graves” ~ Andreas Moser

Monday, October 08, 2012

What's your super-power?

Bill Clinton's is the ability to inhabit his wife's body at critical junctures:

Shows you what I know

Chavez wins 54% - 45%. Not really all that close. I really should just shut my yap at this point. I broke Munger's law and Gaddie's law and didn't heed Boz's wise voice.

I am a dope.

Sunday, October 07, 2012

The Culture that is Sweden: Lunch Lady Edition

A school chef in a town in Sweden has gotten a cease and desist order because her food is BETTER THAN WHAT IS SERVED IN OTHER SCHOOLS!

I am not making this up.

Apparently she produced a 15 item veggie buffet and fresh baked bread, while staying on budget.

No more.

The horror doesn't end here though,"Her traditional Easter and Christmas smörgåsbords may also be under threat."

Ecce Chavez

Today is election day in Venezuela. The opposition seems united, its candidate, Henrique Capriles, has run an energetic campaign and made a major comeback in the polls. Chavez has survived his health issues (so far), and the vote is expected to be very close.

While it is certainly fair to denounce the dramatic fall in economic freedom, personal freedom, and impersonal rule of law in Venezuela under Chavez, it is also important to remember that pre-Chavez Venezuela was not exactly a democratic paradise.

There is, after all a reason that Chavez was elected and re-elected and re-elected. People think Venezuela is a socialist dictatorship masquerading as a democracy (I don't think this is true), but pre-Chavez Venezuela was an oligarchy masquerading as a democracy.

While it may take 20 years to undo the damage Chavez has done to the economy and the rule of law, in the long run (40 or 50 years), I believe that Chavismo will prove to have been a net plus for Venezuela.

He broke the oligarchy. He gave voice and hope to millions of effectively disenfranchised people. I don't Venezuela can ever go back to the old ways again.

If I can get all Marxist up in here for a minute, to me something like Chavismo was almost an historical necessity for Venezuela given the abuses of the old regime.

For the big finish, I am going out on a limb and predicting a Capriles victory.

Saturday, October 06, 2012

"And they began sewing chaos!"

The EYM sends this link, from Chile.  Excerpt:

SANTIAGO — On October 5, 1988, after a 16 years military dictatorship, a national referendum was held to determine whether or not General Augusto Pinochet would extend his rule for another eight-year term in office. The “No” side won with just under 56 percent of the vote, and Pinochet stepped down.  To celebrate the anniversary of the return to democracy, a number of left-wing government ministers organized a memorial rally at Plaza Rosales earlier today.
Unfortunately, the commemoration quickly ended, turning into another violent student action. Students from the Internado Nacional Barros Arana (INBA) infiltrated the rally and began sewing chaos, taking out their aggression on representatives of the Communist Party (PC), the Democracia Cristiana (DC), the PPD, and the Socialist Party (PS).  The students were struggling against politics in general and against a perceived lack of changes since the end of the dictatorship. The representatives immediately left the place, no one was injured.
Despite the incident, left-wing representatives maintained their desire for unity and better democracy for the next municipal and presidential elections.  (my emphasis)

Those who sew chaos will end up wearing ripped shirts!  Or I think that's how it goes. "Struggling against politics in general"? Excellent. Nos miramos, nos gustamos, y nos besamos!

If you want to understand Chilean protest groups, you'll need to (re)watch this from Life of Brian...  (with Spanish subtitles, just in case)  (UPDATE:  As Otto points out in comments, that would PORTUGUESE subtitles to anyone except an idiot....mea culpa!)

The agreement that all will fight authorities for the symbolic, but admittedly non-existent, right of men to have babies captures perfectly the sensibilities of the Chilean student left.  And then the "splitters" thing.  Nice.

Montana: You're not good

Surprising pretty much no one, Montana was told that it cannot make its own separate campaign finance laws.  "First Amendment Incorporation" is a b***h, I suppose.  Almost all US campaign finance law is simply an attempt to shield incumbents, who are ALREADY CORRUPT, from the scolding winds of scrutiny and competition.

As CCP's Brad Smith put it:

“Few serious people really think that Montana’s limit - a total contribution of $160 to a state senator’s campaign committee over his four years in office - is going to corrupt anybody," said CCP founder and Chairman Brad Smith. "It is clear that the purpose of the many contribution limits is not to prevent corruption or its appearance, but to smother speech. We’re pleased to see a district court take the Supreme Court’s admonition in Buckley and Randall seriously. The state’s and the federal government cannot just assert an anti-corruption interest – their limits have to be actually tailored to address a real problem.”

For more....

Friday, October 05, 2012

Survey says.....

People, a very interesting jobs report this morning, no?

Let's start with the Establishment Survey which reports 114,000 net new non-farm jobs in September.

That's a bad number.

But, revisions to July and August have raised job creation in those months by 86,000 ("The change in total nonfarm payroll employment for July was revised from +141,000 to +181,000, and the change for August was revised from +96,000 to +142,000").

Those are decent numbers.

But, as you may have seen, the blockbuster number is that the unemployment rate fell to 7.8%. And, this did not happen because people left the labor force. Labor force participation was "little changed".

You may ask, if it takes more than 150,000 net new jobs to lower unemployment unless people leave the labor force, and we had 114,000 jobs and no decline in labor force participation, how did unemployment fall .3 percentage points?

Well, unemployment is calculated from the Household Survey, which is separate from the Establishment survey and it (Household) reports that, "total employment rose by 873,000 in September", which is what caused the drop in the unemployment rate.

Obviously, 114,000 is pretty different than 873,000, even allowing for the sampling errors in the surveys. Why the big difference?

Is that because there were 760,000 new farm jobs? Technically it could be, but probably not.

The BLS has a report on the differences between the two surveys. Here is a good summary chart:

Since 2002, the two series track each other closely, though the household survey (the blue line) has been getting further and further away from the establishment survey (the red line):

The biggest difference between the dynamics of the two is that the household survey is way more volatile. Here I've graphed the growth rates of the two and you can see the difference (the household survey is the blue line, the establishment survey is the red line).

This month, one of the two jobs numbers is an outlier. If recent patterns hold, either the establishment survey number will get revised up or the household survey number will reverse itself in the next month (or some combination of the two).

While the household number is fantastic news for the economy, we need to realize that it might not last, given the high volatility of the dynamics of that survey.

Does the Fed think QEIII will produce higher inflation?

The short answer is, not really.

The longer answer can be found in these charts which were released on September 13th, the same day that QEIII was announced:

(you can clic for a slightly better image or refer to page two of the linked PDF)

The bottom panel shows that no one on the FOMC is predicting a surge in inflation from QEIII. The highest individual prediction in 2014 is 2.2% and in 2015 it's 2.3%. The "central tendencies" for those years are 1.8% - 2% in 2014 and 1.9% - 2% in 2015. You can read these numbers from the first table in the link provided above.

I just don't see that the Fed views their language in the QEIII statement or the minutes as seriously committing to higher than equilibrium (i.e. 2%) inflation in the future.

The FOMC is bullish on growth in 2014 and 2015 as can be seen from the top panel of the embedded chart, with a "central tendency" of their forecasts reported as 3.2% - 3.8%. Their long run forecast central tendency is 2.2% - 3%.

There is nothing in these forecasts that indicates the Fed expects NGDP to get back on anything resembling its pre-crash trend.

People, believe me when I tell you that I want the economy to recover. I want lots of new jobs created. I want there to be good times in America for all.

But I think people are projecting their own views onto Fed actions. The FOMC  just isn't playing the game that the Woodfordians want them to play.

 It's my view that it is impossible for the Fed to play and win the Woodfordian game, but I'd love to be proven wrong.