Saturday, May 12, 2012

Can data sooth the "savage" meme?

Veronique & Tyler took a beating for displaying a graph of government spending in selected Eurozone countries and questioning the severity of European austerity.

They were criticized for confusing austerity with spending cuts, not adjusting for inflation, not expressing the data as a percentage of GDP.

Despite its flaws, I think the graph has an important message, as just yesterday the AP ran a story that was picked up everywhere which had the following lede:

The European Union estimates that the economy of the 17 countries that use the euro is in recession in the wake of a debt crisis that has prompted savage spending cuts and a jump in unemployment to record highs.

The dreaded MSM is in love with the "savage cuts" meme.  The graph shows that such cuts don't generally exist.  And that is a valuable service (though the message is not yet getting through).

As to whether or not there's "austerity" in Europe, that determination would require a precise, agreed on definition of the term, which we currently lack. Perhaps the NBER could devise a method to identify austerity periods like they currently do for recessions.

As an awkward aside, I'd also like to point out that expressing government spending as a percentage of GDP when the economy is in a recession would tend to hide rather than reveal spending cuts, so I think giving the raw numbers is the right approach (though an inflation adjustment would be helpful).

Friday, May 11, 2012

We have met the enemy....

As a diagnosed Celiac sufferer, I am often asked to explain why I am not eating bread. When I do so, people often tell me something to the effect that they "couldn't live" without bread or some other wheat-based product. To which I often reply to the effect that if they had my symptoms, they'd never want to eat their beloved wheat-based food.

However, I think I may be very wrong about this.

 Check out the 8 minute prologue to this episode of "This American Life", where people eat nuts knowing they'll be headed to the emergency room, or bring an epi-pen with them when they go out for a shellfish meal.


An ER doctor is quoted as saying "the ER is a virtual laboratory of dysfunctional behaviors and bad choices".

And that puts it into perspective for me at least. If some people spend a lifetime smoking or abusing alcohol or not dealing with their diabetes, of course there are going to be those who won't worry too much about poisoning themselves for a comforting meal.

The Thin Black Comb

There's a fun WSJ op-ed this morning on dialing down occupational licensure requirements for professions like barber, auctioneer, interior designer, and others.

Here's how the "director of a barbering school in Michigan" responded to a proposal to eliminate licensing for barbers:

"I'm not saying we are as important as doctors, but we are the closest you can get. We are turning this into the Wild, Wild West."


I was not aware that licensed barbers are the thin line between life as we know it and the zombie apocalypse.

I guess there are few things more scary than the prospect of a haircut not sanctioned by your government.

Thursday, May 10, 2012

Baffle them with bulls**t

Oh my.  Jeff Sachs has a piece in The Lancet, extolling the accomplishments of his Millenium Village Project, that is, shall we say, weak.

Let's concentrate on child mortality, described in the Lancet piece as the "primary study outcome".

Sachs et. al. claim that, "Mortality rates in children younger than 5 years of age decreased by 22% in Millennium Village sites relative to baseline (absolute decrease 25 deaths per 1000 livebirths, p=0·015) and 32% relative to matched comparison sites (30 deaths per 1000 livebirths, p=0·033)."

They present this evidence in a table (page 7 of the article, the last row of the results there) comparing the change from year zero to year 3 in the MVs and in the comparison villages.

So far, so good, right? Well, what if I told you that, in the words of Sachs et. al., "Local comparison village sites were introduced in the third study year to enhance the plausibility that recorded changes were the result of intervention exposure."

In other words, the comparison villages were added ex-post! So how then can they report the change in child mortality in the comparison villages over a time period that started before they started to study those villages?

"Year-0 value is based on recall items in the year 3 survey (eg, women’s reproductive histories)."


So in year three, they asked women how many children they had under 5 that died in year zero and compared that to the actual numbers they measured in year 3, while the MV change was computed from measurements (not surveys) in both years.

Why does this matter? Well according to the table in the Sachs et. al. article, child mortality is RISING in the comparison villages. This "result" is driving the whole claim quoted above. In the MV case, child mortality falls from 113 to 88.7 over the time period, while in the comparison villages the rate rises from 90 to 96!

So if that comparison is no good what can we use? Well, the total percentage decline in child mortality in the MVs was around 22% which is pretty much right in line with the overall figures the World Bank is reporting for many Sub-Saharan African countries!

I am by far not the first one to point this out. Here's an article from Nature, quoting Michael Clemens than makes many of the same points.. Here's the Roving Bandit pointing out other statistical silliness in the Lancet paper. Here's more from Aid Thoughts about the overall decline of child mortality in Africa.

I really don't understand why a well published PhD economist would bend good practice to this extent, no matter how noble his ultimate goals.

Wednesday, May 09, 2012

never say never

Hugo Chavez has called home from Cuba to affirm that he's alive and running the government. As for the future, he had this to say:

"The opposition are never going to win any elections in Venezuela, ever again,"

Wow, those are some doctors, those Cuban doctors. Apparently they are not only curing Hugo but making him immortal?

 Or maybe he says that because he feels like there won't BE any elections in Venezuela ever again?

Hat tip to Greg Weeks

Fooled by randomness?

Wikipedia tells me  Philip Tetlock is a distinguished chaired professor at Penn, who is best known for being highly skeptical of the value of "expert" forecasts.

Yet today here is a guest post up at Marginal Revolution from him this morning that I find extremely confusing. Tetlock is describing a multi-year forecasting experiment and doing things that I find quite surprising/shocking.

First consider the claim is that the forecasters did well because an ex-post weighted average of the "most insightful and engaged forecasters" crushed a control group.


In fact, they did so well that the Tetlock's group is breaking their planned experimental study after one year and is creating a group of "super-forecasters" based on their first year track record.

Double Yikes!

People, in a small sample stochastic environment, there will always be individuals that do better than others. This could purely be by chance. If you ex-post weight them higher, you can get a very impressive short term performance.

Generally speaking though, godding them up and following their forecasts into the future is a fools game, because their success was just short term randomness, or in plainer terms, luck.

Or as Mrs. Angus succinctly put it: "mean reversion, y'all".

 If you do decided to enter the contest, you may find this information helpful.

Tuesday, May 08, 2012

Are Corporations People?

Ron Artest sets the record straight

The artist formerly known as World Peace went on Conan last night to give his side of the James Harden concussion saga.

It turns out that Harden frequently "runs into people's elbows".

I love this spin. People should use it more frequently.

Lincoln runs into people's bullets ~ John Wilkes Booth

Rodney King runs into people's nightsticks ~ LAPD

Give me some better examples in the comments.

Monday, May 07, 2012

What do the European elections mean for the Euro?

People, it's another beard vs. beard situation as Lebron takes the pessimistic view while PK says the results may be good news for the Euro.

The bottom line is that electorates in the PIGS (so far Ireland is resolute in taking its medicine) are unwilling to tolerate the Troika policies. Their only unilateral alternative is to exit the Euro, and they all seem unwilling to take this step.

So, I guess the "optimistic"view is that these results scare Germany enough to get them to pay more for their southern neighbors and to throw their weight behind the ECB significantly raising the Eurozone inflation rate.

Sunday, May 06, 2012

Job wars

Nothing takes worse of a beating in presidential elections than do facts and figures.  We know that (a) our employment levels have not recovered to their pre-recession levels and (b) job losses in this recession are far worse than in any post-war recession.

But yet someone manages to produce this (clic the pic for an even more misleading image):

So this "recovery" is "normal", even though we know it isn't.

The trick is accomplished in three steps. The first is by using the total number of jobs and not taking into account that the labor force is much larger now than it was in 1990 or 2001. The second is to date the chart from the bottom of the recession. The third is to ignore all the other post-war recessions.

The invaluable Calculated Risk blog provides a more accurate view about the strength of our current recovery (clic the pic for an even more enlightening image):

Yes people, that is actually where we are and what we are still up against. The first graph is roughly comparing the upward sloping part of the red line against the upward sloping part of the brown line (the 2001 recession and recovery) on a total number of job basis instead on of a percentage of jobs basis, and trying to get you to think that we are better off in this recovery than we were in the 2001 recovery, which of course is utter nonsense.

On a more positive note, I am fairly certain that Bin Laden is actually dead.

The more we prosecute drug crimes, the less successful we can be in prosecuting other crimes. Judge Jim Gray:

Nod to Angry Alex