Malaise Precis

Stolen phones

2012-01-30T06:33:00.000-08:00

With the increase in crime and along with it - stolen phones, I am puzzled that even with built-in GPS, the police can’t track the phones - like, er, well, on the TV shows, where the perp is tracked down by cell phone pings. Apparently this only works on TV for the most part and even Snopes themselves are confused over what can and cannot be done with built in GPS. The phone companies seem to hold the key and they are unwilling to make cell phone thefts unprofitable by making the phones traceable or simply locking out the device.

Just one day after an 11-year old was robbed of her smart phone right outside Alice Deal Middle School in Northwest DC, it has happened again.

On Wednesday, another young student had her phone taken while she walked through Fort Reno, right by her school. In both cases, police say a young man ran past the victims, snatched the smart phone and took off running. Investigators say the two incidents could be related. Police say this is part of a larger trend where crooks of all ages are stealing smart phones and selling them on the black market.

DC Police Chief Cathy Lanier said smart phone thefts are up across the District, and she isn't getting any help from the phone companies in battling the problem.

Lanier spoke to a group of citizens this week where she said, "I spoke to the head of security at Apple and said, can't you disable these phones permanently when they are stolen to take the profit out of the market for the bad guy? They said, well we can but we're about customer service, and we like to give customer service when they call."

Along with this, what I would like Siri to be able to do - or what I would like to be able to say to her if my iPhone were stolen (if I had an iPhone, that is): “Active self destruct sequence.”

Intermediate outcomes

2012-01-26T10:52:00.000-08:00

Andrew Gelman’s post on the “fight” between Martin Lindquist and Michael Sobel on one side and Judea Pearl and Clark Glymour on the other is strictly for those who are familiar with directed graphical models (DGMs) which also include certain types of structural equation models (SEMs). But this is the second post he has made of late on intermediate outcomes. (Here’s his other post.)

I have nothing to add really except that the phrase intermediate outcomes reminded me of the book Because A Little Bug Went Ka-choo which is full of intermediate outcomes.

Teaching and STEM

2012-01-26T06:33:00.000-08:00

One of MR’s top post touts the payoff from majoring in STEM fields (science, technology, engineering, mathematics). Yet as this NYT article states, majoring in STEM is just too damn hard. Moreover, Catherine Rampell notes it is less work to just to pick a non-STEM major - by about 4 hours a week. (From someone who has spent about that much time a week in Organic Chem lab for one semester, I can attest to that. Not only that, I came out smelling of chemicals which hot showers didn’t always seem to be able clean out. Needless to say, OChem wasn’t for me.)

The highlight of the NYT article however was the following (emphasis mine):

“We’re losing an alarming proportion of our nation’s science talent once the students get to college,” says Mitchell J. Chang, an education professor at U.C.L.A. who has studied the matter. “It’s not just a K-12 preparation issue.”
…
Professor Chang says that rather than losing mainly students from disadvantaged backgrounds or with lackluster records, the attrition rate can be higher at the most selective schools, where he believes the competition overwhelms even well-qualified students.

“You’d like to think that since these institutions are getting the best students, the students who go there would have the best chances to succeed,” he says. “But if you take two students who have the same high school grade-point average and SAT scores, and you put one in a highly selective school like Berkeley and the other in a school with lower average scores like Cal State, that Berkeley student is at least 13 percent less likely than the one at Cal State to finish a STEM degree.”

Several thoughts come to mind:
1. If majors are a way to signal ability and I think that this is partially true, do we want to turn major choice into policy? My knee-jerk reaction is no because if it is a signal of ability and we subsidize entry into STEM then the average quality of STEM majors would fall.
2. Peer effects of being in a selective school seems to indicate that the two people with the same GPA and SAT score are not really the same people. One is higher ability than the other if the one in the selective school succeeds. I use ability in a very general sense to encompass resilience, persistence, grit, motivation or whatever quality that allows them to succeed.
3. The article also notes that it is possible that the problem lies in the way selective schools teach STEM (among other reasons). I’d say yes, and not just in terms of STEM but college teaching in general.

This last point is made by Larry Summers (HT:MR) though he does not address STEM specifically. The value of group rather than individual effort could perhaps stem (pun not intended) the outflow from STEM.

… collaboration is a much greater part of what workers do, what businesses do and what governments do. Yet the great preponderance of work a student does is done alone at every level in the educational system. Indeed, excessive collaboration with others goes by the name of cheating.

One approach that has not been getting much press of late is the concept of peer teaching. Ironically, as the article notes, the leading pioneers of this method of teaching are STEM professors. But the hardest thing to change is:

... getting ... other professors to stop lecturing will be a hard sell. Change is slow in the academy, and professors tend to be rewarded for focusing on their research, often at the expense of their teaching.

Social disorder

2012-01-25T17:30:00.000-08:00

The recent crime wave in the usually staid and wealthy upper NW neighborhoods of DC (see one of several stories in WaPo here) has a feeling that the stakes have just been upped. What started as a series of thefts from vehicles and breaking and entering have entered into a phase of armed robberies and home invasions. The police say that the criminals who commit these crimes are very different in the sense that someone who does a smash and grab is different from someone who would commit a home invasion. In the parlance of economists criminals specialize based on their comparative advantage.
While there may be an element of truth, it seems that one crime is just a hop, skip and a jump to another - it is easy for breaking and entering to become home invasion, armed robbery and murder. After all it is straightforward to acquire the tools and skills. It is whether they have the nerve or the guts to grab a gun and start pointing it at people and perhaps even using the weapon. It is whether they have the audacity to simply invade people’s homes by getting together a group to just smash windows and barge in shooting and for lack of a better word, pillaging the homes.

After all, social order is very much voluntary. We all pay our taxes - voluntarily. If we suddenly woke up and decided not to do so there is very little that the IRS can do. They simply do not have the manpower to to enforce tax laws on everyone. Sure as they say, you may get a few of us but you won’t get us all.

In a similar vein if a proportion of the population decided to start committing crimes, there is very little that the police can do. Sure, they may get a few of them but in the end as there are more of those who decide that it is profitable to commit crimes enter the market so to speak, they can overwhelm a civil society. In a sense there is point at which everyone starts to rebel and there is little that can be done. Think of how riots can erupt, for instance.

Yet like riots, the madness for lack of a better word dies down - somehow. So hopefully, this crime wave is what it is - just a wave.

Reinventing yourself

2012-01-24T11:21:00.000-08:00

Over the course of three weeks in July, the Manchester International Festival presented newly commissioned works by 28 artists known more for challenging audiences than for pleasing them... The whole program was intended to be, according to festival director Alex Poots, a celebration of “risk-taking, the pioneering spirit, and valiant attempts.”

Dickson Despommier ’64PH, a Columbia scientist best known as the progenitor of a concept he calls “vertical farming,” fit right in. He had been invited to announce that the nonprofit organization that runs the biennial festival will soon create a towering multilevel greenhouse inspired by his vision: Alpha Farm, to be located in an abandoned eight-story office building in Manchester, will hold several floors of broccoli, lettuce, tomatoes, onions, carrots, and strawberries, all cultivated beneath huge banks of lights.
…
A microbiologist by training, Dickson Despommier spent the first 30 years of his career holed up in a Columbia laboratory studying a tiny parasitic worm called Trichinella spiralis. His major contribution was to describe how this worm, which thousands of people ingest every year by eating undercooked meat but which rarely causes serious illness, can survive in our bodies for long periods by burrowing into muscle tissue.

In 1999, the National Institutes of Health decided that his research had run its course. “I lost my grant support,” Despommier says. “At age 60, I was faced with reinventing myself.”

But at least he still had a job from which he could reinvent himself. Most would have just gone through the motions of tenure - teach as little as possible and hold out until retirement.

He then began studying how infectious diseases take advantage of certain environmental conditions. ... He also created a new graduate course at Columbia’s Mailman School of Public Health exploring how the use of chemical pesticides and other ecologically disruptive farming practices affects human health in subtle ways, such as by altering the relationships between parasites and their hosts at various levels of the food chain.

Halfway through the semester, the students rebelled against what they considered their teacher’s relentless negativity. “They said, ‘Okay, we get it. Farming is bad for the environment. So why don’t we figure out how to improve it?’” Despommier recalls. “Their idea was to grow crops right in Manhattan, on rooftops.”

Despommier indulged his students, assigning them a group research project in which they were to calculate how much food could be grown if every available rooftop in Manhattan were made into a garden. “It was a purely theoretical hypothesis, really, to imagine that every property owner could be enticed to plant crops on his or her roof,” says Despommier. “But it would test the limits of their idea.”

The students, after poring over maps at the New York Public Library, became discouraged. Even if every square foot of flat, undeveloped rooftop space in Manhattan were devoted to growing rice — an unusually nutritious and calorie-dense grain — the resulting harvest, they estimated, could feed only a tiny portion of the borough’s residents. “This told us that rooftop gardening, for all its benefits in absorbing carbon dioxide and stormwater,” Despommier says, “wasn’t going to be much of a solution.”

The idea of urbanites growing their own food had captivated Despommier’s imagination, ...

From Columbia Magazine.

My tooth WAS handled!

2012-01-24T10:57:00.001-08:00

An amusing post title (“You can’t handle the tooth!”) from MR kindled some memories. The post points to how some tasks can be handled by dental assistants much in the same way that physician assistants (PAs) now take over some care giving from doctors and how this is possibility is being opposed by the American Dental Association (in the same way the AMA fought against PAs.

When I was growing up all my dental needs (and there were many, but more on this below) were taken care of by women (usually from villages) who had come to study to become - well I don’t know what they were studying to become but they were being trained to clean, fill cavities and all other dental care (except extraction) and they were supervised not by dentists but by other graduates of the program. (And yes, they were all women who lived in dormitories near the college. I hesitate to call it a dental college but for all practical purposes that was what it was. I don’t know if this is still the case though but the college still exists.)

Not only later when I was in the United States did I learn that only medically trained dentists were allowed to fill cavities. My two opposing thoughts were and still are:
1. They need doctors to do this!?
2. Was I getting substandard care while growing up?

I had more than my share of cavities I feel and up till today I can’t be sure if it was my bad dental hygiene or the possible screw ups that happened while I went to the college for dental care. (Yes, it was free but at the cost of being a guinea pig.)

Belief falsification

2012-01-20T09:23:00.000-08:00

I’ve been skimming Timur Kuran’s “Sparks and Prairie Fires: A Theory of Unanticipated political revolution” and I probably should take more time to digest it. The element of the model that didn’t really appeal to me was the seemingly exogenous shift in the threshold function that was needed to explain revolutions or to set the stage for a revolution. In many ways the model needs to be extended to include feedback effects as more agents reveal their true preferences which in theory should shift the threshold function. In any case, I say seemingly only because I haven’t taken the time to digest the model and was too busy drawing parallels with financial crises.

Here’s the abstract from Kuran’s article:
A feature shared by certain major revolutions is that they were not anticipated. Here is an explanation, which hinges on the observation that people who come to dislike their government are apt to hide their desire for change as long as the opposition seems weak. Because of this preference falsification, a government that appears unshakable might see its support crumble following a slight surge in the opposition's apparent size, caused by events insignificant in and of themselves. Unlikely though the revolution may have appeared in foresight, it will in hindsight appear inevitable because its occurrence exposes a panoply of previously hidden conflicts.

Here’s my thought on its relevance to financial crises and hence the title of the post:
A feature shared by major financial crises is that they were not anticipated. Here is an explanation, which hinges on the observation that people who believe that the economy is experiencing a bubble hide their beliefs either because of reputational or incentive effects or fear of retribution by their employers. Because of this belief falsification, an increase in stock prices that appears to be based on fundamentals might see its foundations crumble following a slight shift in sentiment, caused by events insignificant in and of themselves. Unlikely though the crash may have appeared in foresight, it will in hindsight appear inevitable because its occurrence exposes a panoply of previously hidden conflicts.

Remember Henry Blodgett who privately called a stock a ‘dog’ while rating it a buy publicly?

Are sociologists more ethical than economists?

2012-01-19T10:41:00.000-08:00

I was surprised to read in the recent debate about the economics code of ethics at the AEA meetings that the code of ethics would be modeled along the lines of (gasp!) the American Sociological Association. (See excerpt at the NYT.) Does this mean that sociologists are more ethical than us?

Like others I am skeptical that a code of ethics would do much. It’s sort of like, well, having MBA students and investment bankers take a course in ethics and then expecting them to behave, err, ethically. Unlike Lant Pritchett however, I believe that disclosure is important. (See coverage at Slate.) Pritchett believes that any argument should be able to stand on its own weight regardless of the affiliation of the person who is making them. So if Frederic Mishkin believes that the economy of Iceland is sound because of its fundamentals even if Iceland has paid him a consulting fee we should be able to evaluate Mishkin’s arguments fairly without any knowledge of this side payment.
Unfortunately in economics there are very few facts but lots of opinions and arguments and what actually constitutes facts is always debated. There is nothing more factual than a clinical trial - it is all about collecting data and running experiments. Yet would we be swayed if we knew the results of a trial was funded by the company trying to get a drug approval rather than the NIH?

Do we eat corn flakes because it is good for us or because Michael Phelps says its good for us? If eating corn flakes is good for us then we should be able to eat it without any regard for who is telling us to eat it. Likewise, an economist making an argument is just that - an economist making an argument. But if an economist is paid to make an argument or if the economist has ties to a company that may benefit from the arguments that the economist is making then the economist is doing more than making an argument. The economist is making an endorsement.

So we arrive at the question - are sociologists more ethical than economists? While both the American Economic Review and the American Sociological Review requires data sharing only the former seems to be more transparent in making the data accompanying published articles more easily available for download.

Vado a bordo, cazzo

2012-01-19T09:25:00.000-08:00

Vado a bordo, cazzo: I could not resist typing this into Google Translate: “I go on board, fucking”. The alternatives (click on the words and Google will pop up some alternatives) may be a little better, e.g. “I go on board, dick”, etc. but none seem to be able to drop the pronoun.

Can social media become a weapon of mass hysteria?

2012-01-18T17:52:00.001-08:00

With the increase in crime in our neighborhood there was an inevitable increase in chatter on the listserv as to what the community could do. There was talk about setting up a Twitter account so that we could tweet about suspicious people or cars in the neighborhood. Never mind that people were already posting to the listserv on a somewhat of a real time basis. For example, someone walking home posted about police activity at a nearby intersection. There was also an increase in postings about what someone may have heard while talking to someone else, etc.

But … perhaps with a lack of events or incidents, the talk died down and we didn’t become massively hysterical. Which leads me to believe that perhaps social media cannot become weapons of mass hysteria. It would be interesting to see an analytical model of information with behavioral feedback applied to social media and its role in creating social action such as protests and revolutions.

How much stuff do we have

2012-01-11T05:43:00.000-08:00

In a previous post on the stagnation of median incomes I had suggested that another alternative measure would be “how much more stuff” the median household or median person have had over time. The data source that might contain this data is the Consumer Expenditure Survey. Unfortunately, this data is not publicly available for free download but is available for sale. My knee jerk reaction is: Isn’t there something wrong about selling data that has been collected using public funds? The only other data is from the NBER but this only goes up to 2003.

Assuming we had the data, the measure might be whether the proportion of after tax income that is spent on food, housing, expenditure and health has decreased over time by the median person or household.

There goes the neighborhood

2012-01-10T05:26:00.000-08:00

A couple of days before Thanksgiving a woman was mugged a block north of us. She was knocked unconscious. The day after Christmas a couple was robbed about half a block down from us and in the past 2 weeks there have been 3 robberies within a couple of blocks from us. Some of these have been armed robberies. These have usually happened after dark and in EST that means after 6 pm. Meanwhile, the listserv is burning up (well, not quite but there has been some discussion) over the benefits of motion detector lights versus having lights that are always on as a neighborly service to those might have to walk in dark areas of the road.

To DST detractors, I say it’s time to scrap EST and go to DST permanently. It is tempting to also make a link between the recession and crime but this article in the fedgazette suggests that it is not so clear cut. And I am not surprised. Highly aggregated numbers tend to hide (if any) underlying patterns there might be. Meanwhile, highly disaggregated reports such as those that might be provided by Crime Reports may also obscure spatial patterns that may exist.

The neighbors are accusing ‘boys from SE’ (presumably DC) and I am sympathetic to the idea that while there may not have been an increase in the overall crime rate (property or otherwise) there has been a definite shift in the geography. Whether these are coming from SE DC or not remains to be seen. Whereas crime may have occurred in and where the criminals lived in the past, the recession has caused them to migrate beyond their usual territory since the pickings have become slimmer in their neighborhoods. But because only a small portion of them would move to commit crimes elsewhere there may not be any noticeable drop in say one section of the metro area and a noticeable increase in another. (I use noticeable as in ‘eyeball comparison’ rather than in a statistical sense.)

Moreover, with the increased use of credit cards and the falling prices of electronics, more robberies have to be committed just for the criminals to maintain their previous standard of living. So in the past whereas one criminal might survive on a robbery or burglary a day, he now has to commit multiple crimes.

I am also skeptical that a short term recession would increase the proportion of people who become criminals but a longer recession (of which this might be considered one) could have an impact on the crime rate. So aggregate measures of crime rate over NBER recession dates would not yield much correlation if the recessions are short. This is suggested in the following paper which finds that the ‘lost decade’ of Japan has increased crime as a result of the effects of the recession on the low skilled. The data used in my mind is less than perfect and is suggestive rather than conclusive.

The new culture?

2011-12-16T07:51:00.000-08:00

What can I possibly think about this?

Meet Sophia Pinto: the 21st century's standard-issue, all-American perfect 10.

The 5-foot-5 Minnesota native -- a sly, funny, 22-year-old natural blonde who spends every summer bikini-clad on the shores of Lake Minnetonka -- works out five days a week. Her slim waist and megawatt smile hearken back to the polyvinyl glamour of the original Barbie doll.

In fact, if Mattel were to redesign Barbie based on the new millennium's ideal woman, she would likely resemble Pinto. Healthy, athletic, alluring, and smart (Pinto will graduate early this month from Northwestern University), she's both a role model and a sex symbol.

And if you were to undress Pinto, you'd find she embodies yet another trademark characteristic of the plastic glamour girl-turned-careerwoman: Like Barbie, Pinto has no pubic hair.

We used to date but now it’s hookups.

Herbenick [Indiana University researcher] recalls one encounter in which a popular, well-liked college student in a class she taught openly professed that he had never hooked up with a girl who had pubic hair, and would frankly be disgusted to undress a woman and discover a veil of genital fur.

We used to go steady but now its …

"I personally find myself a little more attractive when I don't have it," Pinto explains. "But one time I had a consistent hookup and he told me, 'Either way, you're attractive. You're a naked girl, and you're in my bed. Doesn't matter.'"

Consistent hookup?

Fracking (Frakking) Republicans

2011-12-15T09:41:00.000-08:00

This NYT article was probably written to demonstrate that it is a myth that Republicans are pro-busines:

As energy companies move to drill in densely populated areas from Pennsylvania to Texas, battles are breaking out over who will have the final say in managing the shale gas boom.
…
The battle is playing out in Pennsylvania as the Republican-controlled legislature considers bills that would in their current form sharply limit a community’s right to control where gas companies can operate on private property. Critics say the final bill could vastly weaken local zoning powers and give industry the upper hand in exchange for a new tax, which municipalities badly need.
The legislation has struck a nerve in a state where land control has long been considered quintessentially local.

“I’m a conservative Republican, and this goes against all my principles,” said Brian Coppola, the chairman of the Board of Supervisors of Robinson Township, in Washington County west of Pittsburgh. The pending legislation, he said, “is an enormous land grab on the part of the industry. He added, “Our property rights are being trampled.”

The brouhaha is over the following:

Local governments argue that drilling is an industrial activity, just like that of a gas station or a cement factory, that should be subject to zoning. Dozens of towns, cities and counties across the country have enacted rules on drilling noise, lighting and the distance from homes and, in some cases, outright bans. In New York State alone, there have been at least 70 such actions.
…
The flurry of local rules comes as the federal government inches forward on a national study of hydraulic fracturing, also known as fracking, the process used to extract previously inaccessible natural gas from shale deep underground.

Frak, I was familiar with from BSG. But it’s a little funny to see how a simple character difference has carried the word into the mainstream media.

Unity is killing me

2011-12-14T09:13:00.000-08:00

Not quite literally, but I am a little disappointed with it. My initial reaction to converting to Ubuntu had been quite positive but that desktop didn’t have the hardware to run Unity. Naturally, I was curious and a couple of days ago spent some time cleaning up a laptop to get it ready for a XP/Linux dual-boot system.

The installation was painless - I wish I had taken the chance to click on advanced configuration when the installation came to the point of partitioning the hard disk - but other than that I walked away with a dual boot laptop. Overall, it was about 2 hours of elapsed time. The first time I tried booting into Windows it ran a disk diagnostic and I got into the system fine although Windows doesn’t ‘see’ the Linux partition (though Linux is able to to do so). The only other thing that I have yet to figure out is when I’m in Windows and it goes into power save mode, reactivating the computer gives me the Ubuntu login screen.

Back to Unity - oh, I want that application menu item back. I liked the way Ubuntu 10.10 organized all the applications into sub-folders e.g. Internet, Office, etc. I don’t want to have to scroll through all the installed applications just to see what I have! For instance, I want to see what Games came installed rather than typing in “solitaire” in the Unity tab. And what is up with locking the Unity dashboard to the left of the screen. There doesn’t seem to be anyway to move it to the bottom of the screen (or the top or the right). Have read that it supports gestures but haven’t tried it out yet.

Popcorn (non) innovation

2011-12-14T08:17:00.001-08:00

Microwave: Popcorn setting
Bag of popcorn with instructions: Do not use popcorn setting on microwave.

More middling ruminations

2011-12-13T10:36:00.000-08:00

The Financial Times had some interesting assertions which I would really like to see some data on but unfortunately the article lacks links to any of them:

In short, the middle-skilled jobs that once formed the ballast of the world’s wealthiest middle class are disappearing. They are being supplanted by relatively low-skilled (and low-paid) jobs that cannot be replaced either by new technology or by offshoring – such as home nursing and landscape gardening. Jobs are also being created for the highly skilled, notably in science, engineering and management.

By supplanted, I assume the author means that there is a literal hollowing out of the middle so if I were to plot a histogram of all occupations-wage combinations I would literally see twin peaks, which I have yet to see.

… According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 per cent. Some have moved from claiming unemployment benefits to disability benefits, and have thus permanently dropped out of the labour force.

Now here is something that I have often wondered about - does the unemployment rate fall over the course of the recovery because people are leaving the job market at a higher rate rather than the fact that there is greater job creation or an increase in the job finding rate?

Creativity, leadership and assholes

2011-12-13T07:51:00.000-08:00

There were more assholes here than I have ever encountered in any single article.

Steve Jobs was a visionary, a brilliant innovator who reshaped entire industries by the force of his will, a genius at giving consumers not only what they wanted, but what they didn't yet know they wanted.

He was also a world-class asshole.

… middle managers and wannabe masters of the universe who are currently devouring the Steve Jobs biography and thinking to themselves: "See! Steve Jobs was an asshole and he was one of the most successful businessmen on the planet. Maybe if I become an even bigger asshole I'll be successful like Steve."

Running along similar lines MR summarizes some parallel research into teachers and assholes -- I mean teachers and creative students.

One of the most consistent findings in educational studies of creativity has been that teachers dislike personality traits associated with creativity. Research has indicated that teachers prefer traits that seem to run counter to creativity, such as conformity and unquestioning acceptance of authority (e.g., Bachtold, 1974; Cropley, 1992; Dettmer, 1981; Getzels & Jackson, 1962; Torrance, 1963). The reason for teachers’ preferences is quite clear creative people tend to have traits that some have referred to as obnoxious (Torrance, 1963). Torrance (1963) described creative people as not having the time to be courteous, as refusing to take no for an answer, and as being negativistic and critical of others. Other characteristics, although not deserving the label obnoxious, nonetheless may not be those most highly valued in the classroom.

….Research has suggested that traits associated with creativity may not only be neglected, but actively punished (Myers & Torrance, 1961; Stone, 1980). Stone (1980) found that second graders who scored highest on tests of creativity were also those identified by their peers as engaging in the most misbehavior (e.g., “getting in trouble the most”). Given that research and theory (e.g., Harrington, Block, & Block, 1987) suggest that a supportive environment is important to the fostering of creativity, it is quite possible that teachers are (perhaps unwittingly) extinguishing creative behaviors.

Substitute creative with assholes and voila!

All creative people may be assholes but not all assholes are creative. Just because some assholes are creative doesn’t mean we should allow assholes to become bigger assholes or to foster a culture of assholism.

Comcast/Xfinity and Verizon

2011-12-12T10:41:00.001-08:00

The other day a Comcast rep knocked and asked whether we’d be interested. They’re offering some specials which definitely beats the Verizon package we have. Given my past experience with Comcast I asked whether their “new” fiber optic lines would allow them to get a line into our house. Of course, he didn’t know. I really didn’t expect him to since he wasn’t the technician who had to do the job. The last time a tech came up he couldn’t find a cable tap.

It is unfortunate that I have to reconsider my attachment to Verizon. Certainly in the early stages of FIOS we have been extremely satisfied. Of late, we have been losing our Internet connection (though not our phone connection). The support on the phone has been great (with and without accents) and the only horrible thing about calling Verizon is the fact that I have to go through this inane robot who tries to diagnose the connection problem and comes up blank (every time!) and the only solution has been for them to reboot the system.

I once asked why it was such a recurring problem and I didn’t get a very clear answer - something about a maintenance software that runs on the weekends that didn’t finish its job. Well, that ain’t much of a maintenance program is it?

I’m tempted to have both carriers for redundancy - is that even possible? I tried Googling having two ISPs but drew a blank.

Technology and my discontents (again)

2011-12-06T10:37:00.001-08:00

I had voiced them previously, but I can’t help voicing them again (a different set of compalints this time) because I succumbed to the lure of electronics again.

Got a 10-inch Samsung Galaxy tablet despite my not so positive experience with Android based devices. My conclusion has not changed. Those who claim that their tablet can replace their laptop for work tasks aren’t doing real work. Unfortunately, it was an expensive lesson for me and egads (!) I’m thinking that I should have gotten a multi-touch Kyros instead. (These weren’t out at the time.) On top of the $400 tablet, I blew another $100 on a bluetooth keyboard, a stylus, a folio case, HDMI connector, and a USB connector. The last 4 items were all included in the earlier version of the Kyros I got - all at $170. The one thing that the Samsung has going for it that the Kyros didn’t is the battery life and the camera. That Kyros version I had was also a resistive touch which was almost unbearable and no access to the Android market. It also ran Android 2.1 and the sound while it was pretty good is definitely not as good as on the Samsung.

So off I go to the app market. One app I wanted to try out was the Economist magazine’s Android app. With the latest Android on the tablet, I figured I could not go wrong. Wrong. The Economist app only works with …. drum roll, please, Android 2.1 (or 2.2 or 2.3). What’s going on here? No backward compatibility? Well, I can see the guys at Google think this is a great idea. Not. Or perhaps app production is so straightforward that the guys at the Economist should have just recompiled a new version under the new Android SDK. Whichever it may be this state of affairs is a step backward! App guys who can keep up with Android apps shouldn’t be in the business of producing apps. Platform guys who can’t ensure backward compatibility shouldn’t be producing platforms. Oh, wait I forgot - the guys at Google don’t get platforms.

On to my next new toy, a Dell Latitude laptop with Pentium i-5 chip which is not really my toy but rather one that is on temporary loan to me. What is up with the slow start up? Otherwise I was fairly impressed with the feel of the laptop. Our old Dell Desktop circa Pentium 4 looked and felt so cheap I had decided to ditch Dell. This laptop hasn’t quite induced me to go back to Dell.

But wait, it’s the new (almost 1 year old) HP that looks and feel so cheap that I’ve decided to ditch HP. The DVD player crapped out last weekend - refusing to read DVD+R disks but will read some CDs. I’m afraid to put a movie into it. I’m not sure if the problem is Windows or HP or the player. I tried un-installed and reinstalled the drivers but no dice.

Criticism of Jane Jacobs or big city approach of Jane Jacobs?

2011-11-30T06:33:00.000-08:00

From an interview with Catherine Thumber:

You’re quite critical of some of the urban theorists and economists who’ve conceived of ways of revitalizing cities after the 1960s. Why?

They’ve made the metropolis the ideal urban form, when that had not always been the case. I lay much of the blame for that on Jane Jacobs—as much as I admire her—who framed the intellectual response to widespread urban decline, ignoring what she called “little cities and dull factory towns,” and arguing that urbanism thrives only in large and growing cities. She influenced the next two generations of urban theorists—people like Richard Florida and Ed Glaeser—who, while they don’t ignore smaller cities, advise them to do things like develop a creative class of artists, try to attract knowledge industries, and develop a tourist trade. These are not necessarily economic strategies that will work in smaller cities. As much as Scranton is a nice small city, it’s probably never going to have a substantial tourist trade. In the 1960s, there had been a debate between Jacobs and the social critic Lewis Mumford about different visions of urbanism. In the 1920s and 30s, Mumford argued against concentrating all of our wealth and cultural riches in large cities, and for valuing smaller cities as well, including the farmland and the ecological region in which they’re set. Jacobs basically won the debate, which is why we don’t really hear about Mumford’s vision.

A summary of her arguments are here.

There are no shovel ready jobs

2011-11-29T02:15:00.000-08:00

Not even in the government. In a recession when it seems that data gathering is more important than usual to gauge the extent and depth of the crisis, even the government statistical agencies are unable to take on these tasks that could add jobs in the way that a census year usually adds temporary jobs to the census workforce:

From Remapping Debate (emphasis mine):
In the last several months, the U.S. economy has added several hundred thousand jobs, sparking optimism among some observers that the labor market has finally started to recover in earnest. There is substantial debate, however, over whether the jobs being added are “good jobs” — those that pay a high-wage and offer job security and benefits to workers — or “bad jobs,” which don’t. There is some, mostly anecdotal, data suggesting that the jobs being created in certain industries pay less than the pre-recession jobs, but, oddly, the federal government simply does not collect sufficiently robust information to determine how the wages and benefits of new hires differ from the wages of existing employees in the same occupation.

That basic lack of data has perplexed some labor economists and policy advocates, who see such information as a crucial part of understanding the current labor market. It is true that the information would not be definitive: the existence of a newly hired employee does not necessarily mean that a new job has been created, because “new hires” would show up regardless of whether the position was actually new (if an employer fires one employee and hires another for the same job — a process known as “churn” — the new employee is a new hire, but the job is not new). Nevertheless, being able to track the wages of new hires relative to existing workers would be a valuable contribution to an understanding of the pressures facing workers and the state of the labor market as a whole, several labor economists said.
…
If the data on the wages of new hires existed and were easily accessible, many labor economists said that there were a wide variety of useful applications for it, which could end up influencing policy decisions for the better.

John Schmitt, a senior economist at the Center for Economic and Policy Research, a beltway think tank, agreed. “In the best of all possible worlds our policy decisions would be informed by the data,” he said. “When we don’t have the data, we’re forced to make decisions on incomplete information, which often encourages decisions to be made based on political connections and in backroom deals.”
…
There are some practical obstacles to obtaining data on the wages of new hires at the occupational level, but economists agree that the BLS could collect that information in several different ways. The most practical vehicle, according to Kosanovich, would likely be the Current Population Survey (CPS), which is a monthly survey of households on a range of topics.

The CPS currently asks about job tenure in a biennial supplemental survey usually conducted in January. And though some industry-wide information on the wages of new hires can be gleaned from these data, Kosanovich explained that the survey size is too small to provide accurate information at the level of detailed occupations. To address that problem, questions about job tenure would need to be asked more often, or asked of more households, or both.

And according to George Long, a BLS economist with the National Compensation Survey, the obstacles to collecting the data are “more institutional than practical.”

“If we don’t provide certain information,” Long said, “it is because Congress has decided that it does not need that information on a regular basis.” Moreover, Long explained, every change that the BLS makes to its surveys must first be cleared with the Office of Management and Budget (OMB) as part of a 1980 law called the Paperwork Reduction Act. “The OMB is particularly concerned with ‘respondent burden,’” Long said. “They really don’t want us to ask more questions than we are required to by law.”

Technology stagnation or not

2011-11-28T08:12:00.000-08:00

1. Broke down and bought a 10-inch Samsung Galaxy Tab. Compared to the Coby Kyros that I used to have which had a resistive screen I thought that the experience was much better. But wait a minute - the Kyros had HDMI output and microSD slot - both of which are not available on the higher price tablet?

Was never impressed with Android as an operating system and this current experience hasn't changed my opinion. There is too much sand boxing of apps and relying on the app to find a folder. Copying files from a flash drive is tedious. I never know where to put the books or music.

2. Converted an old desktop running Pentium 4 into a Linux. Compared to my previous experience loading Linux about 10 years ago this was an incredible experience. Gone are the days where I had to type in the screen resolution and type of graphics card. Phew!

3. Computer with TV tuner. Set up next to TV. Both receive over the air signal via rabbit ears antenna. TV receives more channels than computer. Swapped antenna. Same thing. What's the deal?

Are college classes a normal good

2011-11-27T06:00:00.000-08:00

I remember the days when I was in college when a professor (usually of economics) would remark that classes is a good that students enjoy most when there’s less of it (or something in a similar vein). Would they enjoy it more if they were go get none of it? From the WaPo:

George Washington University students who received “A” grades in two courses that were never taught will be refunded their money and allowed to keep their class credits, according to a university statement released Wednesday afternoon.

In October, the GWU School of Medicine and Health Sciences Office of the Provost received three letters from students who said they were enrolled in physician assistant classes in 2010 but never received instruction. The students still received “A” grades from Venetia Orcutt, department chair of the physician assistant program, according to the statement.

Orcutt had been assigned to teach a sequence of evidence-based medicine courses over three semesters in 2010 — one in-person class and two online ones. Each course was worth one credit. Orcutt taught the in-person course, but not the two online ones.

Some crisis and economics readings

2011-11-26T13:12:00.001-08:00

Crisis Economics by Nouriel Roubini and Stephen Mihm. The NYT review is here and here and another one is here. I was hoping for a radical new economic approach to thinking about crisis but this is not what the book is about. It gives a nice summary of the events and ideas that led to the crisis although it did not shed any new light. I was hoping for something radical on the part about reforms. Unfortunately this was not the place for any radical departure from the current debate.

The only proposal that sounded radical was to break up the big banks but this has already been put forth by different parties, among them Mark Thoma. All in all, I was disappointed by the book but some may find it a good place to start.

The Origins of Financial Crises by George Cooper was where I found the “radical proposal” that I was looking for which I had hoped that Roubini would be brave and daring enough to espouse. This proposal is that central banks should actively seek to pop bubbles, i.e. take the punch bowl away from the party when the fun is just beginning. Some reviews are here, here and here. The argument that the origins of all financial crises is excess liquidity (or his preferred measure is credit creation or some broad definition of money supply) is nothing new. However, he manages to craft his arguments very simply in terms of the Minsky’s financial instability hypothesis.

These were the best parts of the book but like many economists, Cooper suffers from the same physics envy that brought the financial profession into the brink of self destruction not unlike the current crisis, dot-com valuation, and LTCM. His proposal that central banks can work to pop bubbles and in fact to manage the economy by creating smaller waves of small booms and busts rather than allowing a bubble to expand to such an extent as to create a systemic risk is very well argued. In fact it is too simply argued using as an analogy (I think) James Clerk Maxwell’s paper “On Governors” which is included as an appendix. Not surprisingly, Maxwell’s paper which is a predecessor to control theory and systems and deals with controlling the steam engine is filled with differential equations again not unlike much of finance theory and macroeconomics.

The weakest link in his argument I think is that Cooper seems to believe that the macroeconomy can respond to various central bank levers such as interest rate within some reasonable uncertainty bounds and is hence “controllable” but in reality monetary policy responds with long and variable lags. However, I am not convinced that his argument can simply be dismissed just because of this. The idea of Keynesian activism however is to smooth out the booms and busts of the economy, not to create booms and busts because of unsustainable booms. Perhaps it is time to revise the ideas of what Keynesian activism should be.

The Road from Ruin by Matthew Bishop and Michael Green was more enjoyable than I had expected. A review is available here. It is a very useful account of various things that have happened in financial history and why we need to learn (or relearn some of the lessons). Unlike Cooper, the lesson they take from history is the bubbles are a result of financial innovations rather than credit creation. For instance, if securitization is to be blamed then it should be banned or more highly regulated. The authors argue however that it was this higher degree of regulation that prolonged the great recession (p. 43). In may ways the authors cheer for free markets and the benefits that they have brought and tend to tread more lightly on the costs.

Plight of the Fortune Tellers by Riccardo Rebonato starts out with the premise that the current state of financial risk management is not working. It is too heavily dependent on measurement when measurement cannot be precise enough and when it can be precisely measured what can be measured is not relevant. A review is available here. This was what grabbed me but unfortunately, the book was not able to hold me. It goes through a discussion of Bayesian statistics and value-at-risk but what he actually wants to say essentially comes down to the fact that risk management is all judgment. We have a lot of tools that can help us make a decision but when it comes down to making some kind of decision it is all judgment and nothing else. We should not pretend that statistics, theory, data and computers are going to be able to quantify the risks and uncertainties precisely because they won’t.

And the Money Kept Rolling In (and out) by Paul Blustein was in some ways belated and in someways timely in light of the current Euro crisis. It is again a reminder of how tenuous the recovery was in Argentina and still is even today. Though the book is not as good as The Chastening it has the same characteristics of access to the cast of characters and internal IMF documents. (The phrase “abc was and still is a confidential internal IMF document” pretty much fills the end notes of the book.)

Bangkok floods update

2011-11-16T10:26:00.001-08:00

Update 1: Check out #4, 11, 19, 23, 28, 41.
Update 2: Check out #11, 19, 27

Land of smiles? Or is the situation just so hopeless that we should just resign ourselves to it?

Thanks to the Atlantic magazine for compiling the pictures.

The (non) future of book retailing

2011-11-16T09:25:00.001-08:00

In a previous post, I lamented the demise of bookstores in general and whether its future lay in positioning and locating itself in popular vacation spots and refocusing itself solely as a seasonal business as a tourism driven business model. I dismissed it as somewhat unlikely without much introspection and am returning to this as a result of the following news item:

After a beloved local bookstore closed here last December and another store was lost to the Borders bankruptcy, this city once known as the Athens of the South, rich in cultural tradition and home to Vanderbilt University, became nearly barren of bookstores.

A collective panic set in among Nashville’s reading faithful. But they have found a savior in Ann Patchett, the best-selling novelist who grew up here. On Wednesday, Ms. Patchett, the acclaimed author of “Bel Canto” and “Truth and Beauty,” will open Parnassus Books, an independent bookstore that is the product of six months of breakneck planning and a healthy infusion of cash from its owner.

“I have no interest in retail; I have no interest in opening a bookstore,” Ms. Patchett said, serenely sipping tea during a recent interview at her spacious pink brick house here. “But I also have no interest in living in a city without a bookstore.”

While I share the sentiments about living in a city without a bookstore what I’ve read of the article does not allow make me very confident about the survival of her bookstore (and the survival of book stores in general). When I think back to the times when I have actually enjoyed a book store visit I find that it is not when I was looking for a particular title. When I want to do this I go online. I know what I want and I want to get in and get out without having to wait in line.

It is not when I am with the kids or in a bookstore with kids running around. The children’s section needs to be located far away from the rest of me. The Barnes and Noble near us has its children section in the basement and to its credit it is a large section so that the kids can be contained within. The Borders that was near us had a children’s section as well but it was a corner of the bookstore which was not secluded enough. When I am with the kids in a book store the last thing I want to do is to try to contain them within a small space (especially when there are lots of other kids around). Fortunately, we are past that stage now.

The times when I enjoyed being in a bookstore was the indulgence of serendipity - when a knowledgeable bookseller talks to me and makes a recommendation that would never have occurred to me. Or when talking to strangers who introduce me to a new genre. Sadly, this no longer happens as much perhaps due to our hectic schedules or changes in our lifestyles. Or perhaps the failure of bookstores is evidence of a decline in our sense of community. It would have been a place where like minded come and share ideas and recommendations and enjoy a sense of belonging.

Equilibrium

2011-11-16T05:33:00.001-08:00

What I did not know about equilibrium:

1. From SciAm (gated):

From the preamble:
… a sad fact of life quantified by the famous second law of thermodynamics … if the world is steadily becoming more disordered, how do you explain the self-organization that often occurs in nature? At root, the trouble is that classical thermodynamics assumes systems are in equilibrium, a placid condition seldom truly achieved in the real world.

The Achilles' heel of thermodynamics is that, strictly speaking, it applies only when the system under study is in a quiescent state called equilibrium. In this state the system's parameters, such as mass, energy and shape, have ceased to change. Putting two objects together at different temperatures makes heat flow from the hotter object to the colder. This process stops when both reach the same temperature — that is, when the two are in thermal equilibrium. From that point on, nothing changes.

… Thermodynamics therefore deals only with situations of stillness. Time plays no role in it. … In introductory physics classes, students apply thermodynamics to dynamic systems such as car engines to calculate quantities such as efficiency. But these applications make an implicit assumption: that we can approximate a dynamic process as an idealized succession of equilibrium states. That is, we imagine that the system is always in equilibrium, even if the equilibrium shifts from moment to moment.
Describes the current state of macroeconomic dynamics very well.

2. Beer in equilibrium. From Fat Tire (on its label rather than website):

Fat Tire Amber Ale’s appeal is in its feat of balance: toasty, biscuit-like malt flavors coasting in equilibrium with hoppy freshness.

I expected the brewer to be an economist (after all who would use equilibrium to describe beer?) but he turned out to be an engineer.

Counting people

2011-11-04T07:09:00.000-07:00

We’re trying to count people but we’re not coming up with numbers that make much sense - or differences that are troubling. Let’s back up. We’re trying to count people by educational attainment. The following is for those 25 years and over:

Based on the 2010 American Community Survey:

	Estimate	Margin of Error
Some college, less than 1 year	12,846,799	+/-80,342
Some college, 1 or more years, no degree	30,622,369	+/-89,558
Associate's degree	15,553,106	+/-65,380
Bachelor's degree	36,244,474	+/-119,630

From the 2010 Digest of Education Statistics (based on the Current Population Survey):

	Estimate	Margin of Error
Some college	33,662,000	+/-186,900
Associate's degree	18,259,000	+/-142,700
Bachelor's degree	38,784,000	+/-198,100

These differences cannot be accounted for by sampling error - the margin of error is smaller than the differences between the two surveys in most cases.

Presumably, the larger margin of error in the CPS March supplement data is due to its smaller sample size. Also the March Supplement is a monthly sample (actually collected over 3 months) versus the ACS which is collected over the course of the year. The ACS website states:

The strength of the ACS is in estimating characteristic distributions. We recommend users compare derived measures such as percents, means, medians, and rates rather than estimates of population totals.

The ACS seems to be a more complete sample in terms of its coverage (both in geography and time frame) yet defers to the CPS when totals are being reported (based on above statement). Moreover, the CPS continues to be the official source for poverty estimates. A guidance and fact sheet are available as well as some differences between CPS and ACS.

As far as I can tell Census has not made any attempt to reconcile the differences and I don’t really know if they can. I would assume the ACS numbers to be superior in terms of educational attainment and anywhere where I would think of numbers on an annualized basis. The deference to the CPS in terms of poverty seems from the outside to be a bureaucratic wrangle between two divisions and/or a desire to preserve continuity in time series.

Median incomes revisited

2011-10-26T10:10:00.001-07:00

In a previous post, I was not able to find any evidence that median incomes had stagnated since 1973. Courtesy of the Atlantic, the graphic indicates that median earnings for men have indeed stagnated since the early 70s.

Secretariat

2011-10-16T12:40:00.001-07:00

Watched Secretariat. Unexpected economics titbit: The owner of Secretariat - Penny Tweedy/Chenery’s brother is Hollis Chenery.

Is Google becoming more evil?

2011-10-15T13:41:00.000-07:00

K1 was surprised (and upset) to find out that she had been locked out of her Gmail account. Inexplicably, Google appears to have decided that it was time to enforce its terms of service - those under the age of 13 are not allowed to have Gmail accounts. (I found this out by googling Google and Gmail. Besides, who really reads these TOSs and EULAs anyway. I can hardly count the number of times I’ve clicked “I have read and agree to Terms and Conditions” every time Adobe Flash updates.) This decision is strange since it deliberately chose to allow these accounts when she was signing up. I suspect it has something to do with Google+ and the default privacy settings that Google has set up for all users. Sounds sneaky and well, perhaps even evil for Google.

The least they could have done was to give a warning and a grace period of several days or a week to clean out her account and download any documents that she needed. Now in order to reactivate we'd essentially have to send Google a credit card number and be charged $0.30 thereby establishing that since she has a credit card she can enter into a contract with the evil empire. But by doing so, we could be accessory to fraud by letting her pretend to be older than she is. This sounds so badly handled that only some nincompoop in the legal or marketing department could have thought this up.

Floods in Thailand and resilience

2011-10-14T15:39:00.001-07:00

Worst flooding in Thailand, courtesy of The Atlantic with some pictures of what it means to be tolerant or resilient - see #1,8,11,32.

Burglary revisited

2011-10-14T15:38:00.001-07:00

Strange things taken and not taken:
Battery charger
PS2 keyboard but not the USB version!
Earbuds - cleaned us out of all of them
iPod shuffle cable (fortunately K1 had her iPod with her but this leaves us without an ability to charge or sync)
All the Wii games except Wii Sports, including a Hello Kitty game! But not the Wii Fit board

The pluses:
Thompson Creek replaced our window - FOC
Now I can blame everything on the theft as in, “Did you eat all the chips?” “Who me? The burglar must have taken them!”

Have median incomes really stagnated?

2011-10-13T10:53:00.001-07:00

Tyler Cowen claims that median incomes has stagnated since 1973 and Russ Roberts asks a good question: What does it mean for median incomes to stagnate? Does this mean the the standard of living of the median household in 2010 is the same as it was in 1973? Like Russ Roberts, I find this hard to believe.

First, some data issues. Googling “personal median income” turned out very few hits so I would imagine that Tyler is referring to household income. There were some rather unwieldy tables on the Census website but DaveManuel has reproduced most of it in an easy to read form here from 1975 to 2010. Except for the huge dive that it took in 2009 (for real close up view, see Felix Salmon’s post), it is difficult for me to say that household income has actually stagnated. In real dollars, based on DaveManuel, the 1975 household median was $43,000 and in 2010 was $49,000. (We can quibble about statistical significance but let’s not.) In the intervening years, median household income rose and fell with a peak of $53,000 in 1999.

I would say that Tyler is over exaggerating the extent of stagnation but if he were to say that median incomes have stagnated in the past 10 years there would be no argument from me. In order to address the question of whether the standard of living of the median households have actually stagnated I would compare median households in 2000 with the current median household (or if Tyler believes that 1973 is in fact when median incomes stagnated, I would also throw the 1973 median household in the mix).

Compared to the median households of the past, do the median households of today have more “stuff” and I think of stuff in a very narcissistic (economist type) way. What is the percent of median households today with broadband access? Or cable TV? Owned their own homes? Or the average size of the home? Or number of electronic gadgets?

Assuming that the median households of today have more stuff than those of the past then the obvious question is that if incomes have stagnated, how did they own all this stuff? Is it a result of previous periods of “unstagnated” incomes? Did they go into more debt to get more stuff? And if more debt is the answer, then is this good or bad in the sense that are households more vulnerable to economic shocks? Vulnerable could be taken to mean greater fluctuation in consumption or higher propensity to file for bankruptcy.

At the end of the day, the stagnation of median incomes is interesting but not that interesting.

Embrace the cloud?

2011-10-12T10:01:00.000-07:00

After our break-in and the loss of our digital photos on our laptop, I thought of moving everything to the cloud. We had backed up most of everything onto a portable hard drive but unfortunately that was taken too. The SD cards that had some pictures were on a camera but the camera was also taken. But as James Fallows describes, the cloud isn’t all that safe either.

It strengthens my resolve to discard as many items as I possibly can. After all, the key to traveling light is to not need very much.

Fragmentation

2011-10-11T05:41:00.000-07:00

When one hears of fragmentation, one usually thinks of market fragmentation. But which market? A cursory search of IDEAS indicates that economists have focused more on production fragmentation as it relates to outsourcing in the production of goods.

The other markets are of course labor markets or consumer goods market. The latter is probably closely related to product differentiation. It is unclear to me why the research on fragmentation seems to have become really a strand of outsourcing and its effects because there seem to be other more interesting questions in the labor markets.

For instance, the fragmentation of entertainment into the Internet, cable, and regular broadcast TV has provided possibly new labor markets.

From the BBC:
.. online video has become a career for thousands of video creators, with some making hundreds of thousands of dollars each year.

And in an uncertain job market, many are finding ways to cash in on the opportunities afforded by web video.
...
In 2010, the number of YouTube partners making over $1,000 (£600) per month from advertising revenue went up 300%, the company said.
The company declined to release specific figures, but Mr Sly said "hundreds" of video creators make more than $100,000 a year and "thousands" make more than $10,000 a year.
...
Mike Michaud, who started online production company Channel Awesome after being losing a job at an electronics retailer, says the revenue he earns from host Blip.tv has enabled him to hire six full-time and two part-time staff members.
"I don't have the daily grind that a nine-to-five usually entails," Mr Michaud said.
"I wouldn't say I'm living comfortably just yet, but I am living much better than before."
…
"I see this becoming the new television, but a place where the average person has a much better chance of getting noticed and making money than if they were to go the traditional route via Hollywood," Mr Michaud said.

Alan Lastufka, author of YouTube: An Insider's Guide to Climbing the Charts, said: "The money may not always be headline-worthy, but it's enough to quit your day job, stay in the basement on your computer and spend your time connecting with fans."

Likewise, the fragmentation of cable TV into multiple specialized channels has created new markets for actors that may have been unemployed or underemployed in the days when broadcast TV or cinema were the only options for many of these aspiring actors.YouTube has also allowed some to venture into Internet only broadcast - perhaps hoping to one day be noticed and become popular as in Justin Bieber. Make no mistake that the argument here is not that these new fragments have supplanted the traditional entertainment markets like TV or cinema but have become an avenue to the traditional markets much like minor leagues are a way into major league baseball.

One possible research avenue that I would be curious about is the effects of fragmentation on wages in the these markets. Has the creation of the Internet entertainment channel or the increase in specialized cable channels compressed the wage distribution of actors’ salaries? Has it provided more employment - perhaps the unemployment rate is lower, but has this also drawn more people into the labor pool so perhaps unemployment has not changed as much?

What would I want the message to be? New markets creates new jobs, yes - but are these good jobs as in higher wage jobs? Do these new entertainment markets have any “creative class” effect in the places where they live and work?

Middling ruminations

2011-10-10T07:30:00.000-07:00

David Autor has been pushing the fact that there is a class of jobs called “middle jobs” which I take to mean jobs that lead to a middle class life, has been disappearing thereby leading to a polarization of jobs in America. (See here.) I view this through the same lens on the debate of whether world incomes have become bimodal (i.e. twin peaks).

If I understand the report correctly, it takes a class of jobs at the beginning of the period, e.g. 1980 and finds the jobs that are in the “middle”. The report then documents that these jobs have decreased over the next two or three decades. I was expecting a twin peaks type argument but instead I was mostly puzzled over why this was an interesting outcome.

To make my puzzlement (or some might consider thick headed) obvious, consider an artificial economy whose “middle” jobs were mostly in buggy production. This includes production, clerical and other support jobs as well as the various sub-industries that support buggy production such as buggy whips and wheels. Moreover, buggies are in high demand and this supports the profits and middle class salaries in the industry. This economy is hit by an influx of cheap buggies from another country and over the next two decades face fierce competitive pressure which results in a decline in this industry as its inability to compete becomes obvious.

Is it that surprising then that we find middle jobs have disappeared? But does this mean that no other middle jobs have arisen to take its place? This second argument was something I was looking for in the report and perhaps I am misreading it but I don’t see this argument in there. I was also hoping to find a twin peaks distribution of jobs but did not find it. I was also looking for a distribution (either of hourly or total earnings) that showed the “hollowing” out of the middle between 1980 and 2010 but didn’t.

Linden, et. al (2009) find that even in the case of the iPod which is heavily outsourced, there are still “middle-income jobs” in the iPod production. Though these may be few, I suspect that they are scattered across the industry landscape and the job for economists is to identify these jobs for the rest of us.

Linden, et. al. find:
The offshore jobs are mostly in low wage manufacturing, while the jobs in the U.S. are more evenly divided between high wage engineers and managers and lower wage retail and non-professional workers.

Pulau Tikus

2011-10-10T03:30:00.000-07:00

The following NGS article on the trade on exotic animals did not reflect very well on Malaysia and Penang in particular.

On September 14, 1998, a thin, bespectacled Malaysian named Wong Keng Liang walked off Japan Airlines Flight 12 at Mexico City International Airport. He was dressed in faded blue jeans, a light-blue jacket, and a T-shirt emblazoned with a white iguana head. George Morrison, lead agent for Special Operations, the elite, five-person undercover unit of the U.S. Fish and Wildlife Service, was there to greet him. Within seconds of his arrest, Anson (the name by which Wong is known to wildlife traffickers and wildlife law enforcement officers around the world) was whisked downstairs in handcuffs by Mexican federales, to be held in the country's largest prison, the infamous Reclusorio Norte.
…
For nearly two years Anson fought extradition to the U.S., but eventually he signed plea agreements, admitting to crimes carrying a maximum penalty of 250 years in prison and a $12.5-million fine. On June 7, 2001, U.S. District Judge Martin J. Jenkins sentenced him to 71 months in U.S. federal prison (with credit for 34 months served), fined him $60,000, and banned him from selling animals to anyone in the U.S. for three years after his prison release.

If the judge thought a ban on Anson Wong would work, he was mistaken. Shortly after his arrest, Anson's wife and business partner, Cheah Bing Shee, established a new company, CBS Wildlife, which exported wildlife to the U.S. while Anson was in prison. His main company, Sungai Rusa Wildlife, continued to ship despite the ban. Now that he's free, Anson has launched a new wildlife venture, a zoo that promises to be his most audacious enterprise yet.
…
Situated in the trendy Pulau Tikus ("rat island") section of Penang, Sungai Rusa Wildlife might easily be mistaken for a hair salon. No wider than a family garage and unidentified, it's one of dozens of units along a quiet strip of retail shops offering tummy reduction, skin care, and spa treatments.
…
One day in late December 2007, Anson's black Mercedes-Benz pulled into Penang International Airport and picked up two of Malaysia's top wildlife enforcement officials, Perhilitan's law enforcement division director, Sivananthan Elagupillay, and his boss, Deputy Director General Misliah Mohamad Basir. The officers had flown in from Kuala Lumpur for a press conference launching Flora and Fauna Village, now a joint venture between Penang's forestry department and Anson Wong and Michael Ooi's enterprise.
…
Anson had long boasted his government influence. Now he had the open support of both the Penang government and Malaysia's wildlife department. Misliah's presence was ironic. During Operation Chameleon Misliah had been the wildlife official in charge on Penang. She signed his CITES permits. Within four years of Anson's arrest, she was promoted to director of Perhilitan's law enforcement division, and by 2007 she'd been given the department's number two job.

I wondered what Misliah thought of the man who had smuggled so much endangered wildlife right under her nose.

"He is my good friend," Misliah giggled, sitting behind her desk in her spacious office at Perhilitan headquarters. She was a plump little woman, hardly more than a round head wrapped in a Muslim's white tudung scarf. She was swaddled in a sky blue shawl over a baju kurung, a long blouse and sarong, and wore petite brown sandals. Her voice was honestly the sweetest I'd ever heard.
…
Malaysia's second highest wildlife law enforcement officer speaks of her country's most notorious illegal trafficker like a doting aunt.

"People say, 'How can you give him his license?' " A smile wreathed Misliah's face. "He was a very bad boy, but if we don't give him a license, he would just do it anyway." This way, she said, they could keep their eye on him.

To this day Misliah vouches for Anson. "Anson Wong has carried out his business legally and complying [sic] the needs and requirements under the domestic law. He and his business in peninsular Malaysia have been monitored closely by this department," her office asserted in a written statement to the press in 2008.

She was also in favor of legalized tiger and bear-bile farming. "Why not?" she asked me.
Misliah Mohamad Basir, so inconspicuous, seemingly so benign, is one of the most powerful wildlife decision-makers on the planet. On her watch Malaysia has become a global trafficking hub.
…
Last August Misliah responded to allegations of a corrupt relationship between her department and Anson Wong: "As far as Malaysia is concerned, he abides by local laws and has the necessary licenses," she said. "What he does outside the country is not our concern."

After that article was published, a follow-up in Foreign Policy:

Things didn't begin to change until January 2010, when National Geographic published a profile I wrote of Wong, detailing his government connection and his new plans to exploit tigers. The outcry by both the public and journalists in the Malaysian press was immediate. (Malaysian newspapers and television are state controlled, which makes it difficult for journalists to criticize the government directly -- but they are free to disclose foreign reporting about Malaysia, such as my story.) In the course of the past year, the Ministry of Natural Resources and Environment announced a revamp of its wildlife department, promising to rotate senior officers every three years. It stripped the department of key powers and is in the process of transferring Misliah, who is now also under investigation by the Malaysian Anti-Corruption Commission. While international wildlife NGOs were cautious about causing trouble in Malaysia, they have provided invaluable advice to the country's government, including the parliament, which passed the first overhaul of its wildlife law in nearly four decades this summer.

As a result, when Wong was caught with a suitcase of boa constrictors, he didn't get away with it. The Malaysian government revoked his business licenses, shut down his zoo, and seized his entire collection of animals, including his Bengal tigers. In November, a judge sentenced him to five years in prison, an unprecedented term for a wildlife trafficker in Malaysia, and a stern sentence for animal smuggling compared to current standards anywhere else in the world.

Interestingly, Pulau Tikus was translated as ‘Rat Island’ I suppose to make the imagery complete although the Malay language doesn’t really distinguish between rat and mouse. I used to think of it as mouse. Some pictures of Pulau Tikus at above link. There’s a great Hokkien Mee place there - my mother and her friends refer to this place as the ‘soup miser’.

Natural experiment?

2011-10-09T09:01:00.000-07:00

As abhorrent as this is, some economist is going to think that it’s a wonderful “natural experiment”:

The vanishing began Wednesday night, the most frightened families packing up their cars as soon as they heard the news.

They left behind mobile homes, sold fully furnished for a thousand dollars or even less. Or they just closed up and, in a gesture of optimism, left the keys with a neighbor. Dogs were fed one last time; if no home could be found, they were simply unleashed.

Two, 5, 10 years of living here, and then gone in a matter of days, to Tennessee, Illinois, Oregon, Florida, Arkansas, Mexico — who knows? Anywhere but Alabama.
The exodus of Hispanic immigrants began just hours after a federal judge in Birmingham upheld most provisions of the state’s far-reaching immigration enforcement law.
…

Grocery stores and restaurants were noticeably less busy, which in some cases may be just as well, because some employees stopped showing up. In certain neighborhoods the streets are uncommonly quiet, like the aftermath of some sort of rapture.

Drawn by work in the numerous poultry processing plants, Hispanic immigrants have been coming to Albertville for years, long enough ago that some of the older ones gained amnesty under the immigration law of 1986. But the influx picked up over the last decade, and the signs on Main Street are now mostly bilingual, when they include English at all.

What the new immigration law means on a large scale will become clearest in a place like Albertville, whether it will deliver jobs to citizens and protect taxpayers as promised or whether it will spell economic disaster as opponents fear.

Critics of the law, particularly farmers, contractors and home builders, say the measure has already been devastating, leaving rotting crops in fields and critical shortages of labor. They say that even fully documented Hispanic workers are leaving, an assessment that seems to be borne out in interviews here. The legal status of family members is often mixed — children are often American-born citizens — but the decision whether to stay rests on the weakest link.
…
Mr. Orr said there were already signs that the law was working, pointing out that the work-release center in Decatur, about 50 miles to the northwest, was not so long ago unable to find jobs for inmates with poultry processors or home manufacturers. Since the law was enacted in June, he said, the center has been placing more and more inmates in these jobs, now more than 150 a day.

Of course, placing people in work is a lot different from making sure they keep working. Afterall what can we make of this experience?

How can there be a labor shortage when nearly one out of every 11 people in the nation are unemployed?

That’s the question John Harold asked himself last winter when he was trying to figure out how much help he would need to harvest the corn and onions on his 1,000-acre farm here in western Colorado.

The simple-sounding plan that resulted — hire more local people and fewer foreign workers — left Mr. Harold and others who took a similar path adrift in a predicament worthy of Kafka.
The more they tried to do something concrete to address immigration and joblessness, the worse off they found themselves.

Mr. Harold, a 71-year-old Vietnam War veteran who drifted here in the late ’60s, has participated for about a decade in a federal program called H-2A that allows seasonal foreign workers into the country to make up the gap where willing and able American workers are few in number. He typically has brought in about 90 people from Mexico each year from July through October.

This year, though, with tough times lingering and a big jump in the minimum wage under the program, to nearly $10.50 an hour, Mr. Harold brought in only two-thirds of his usual contingent. The other positions, he figured, would be snapped up by jobless local residents wanting some extra summer cash.

“It didn’t take me six hours to realize I’d made a heck of a mistake,” Mr. Harold said, standing in his onion field on a recent afternoon as a crew of workers from Mexico cut the tops off yellow onions and bagged them.

Six hours was enough, between the 6 a.m. start time and noon lunch break, for the first wave of local workers to quit. Some simply never came back and gave no reason. Twenty-five of them said specifically, according to farm records, that the work was too hard.

Pardon me

2011-10-08T06:49:00.000-07:00

But did these guys just offer up a definition of a bubble?

When rapid credit growth or other indicators of financial excess accompany asset price increases, the authorities should employ stress tests to measure the effects of changes in credit conditions on asset prices, economic activity, and financial stability.

Instead of seeking to identify bubbles, the authorities should simply ask whether current financing conditions are raising the likelihood of sharp reversals in asset prices that are disruptive to economic activity.

Serial numbers

2011-10-08T04:34:00.000-07:00

One thing that the cops were asking for after we got broken into was the serial numbers of all the stolen items. This is one thing that I never recorded, after all in monetary terms the things we lost didn’t add up to all that much, especially when the technology became outmoded after several months.

However, there may be an externality argument for keeping these serial numbers in the following sense: If the items are recovered or traced through pawn shops, it helps make a case against the accused, i.e. writing down serial numbers may lead to lower crime rates.

Yeah, not too convincing but then so are the deterrent effects of capital punishment.

Why taxing the multimillionaires makes sense

2011-10-07T06:45:00.000-07:00

Especially these losers:

Just last week, Léo Apotheker was shown the door after a tumultuous 11-month run atop Hewlett-Packard. His reward? $13.2 million in cash and stock severance, in addition to a sign-on package worth about $10 million, according to a corporate filing on Thursday.

At the end of August, Robert P. Kelly was handed severance worth $17.2 million in cash and stock when he was ousted as chief executive of Bank of New York Mellon after clashing with board members and senior managers. A few days later, Carol A. Bartz took home nearly $10 million from Yahoo after being fired from the troubled search giant.

This is what “pay-for-performance” has given us:

“It’s a great irony that spectacular failure is rewarded lavishly,” John J. Donohue, a professor at Stanford law school and the president of the American Law and Economics Association, told me. “It is a terrible mistake to set up a structure where the top person walks away with millions even if the company is laid waste by their poor decision-making, yet this is what’s happening. It’s a shocking departure from capitalist incentives if you lavish riches on the losers.”

Yes, and those advocated pay-for performance would use as an excuse: “But it wasn’t implemented correctly.” Right - the only time it can be correctly implemented is in the rarefied world of theoretical models. Principal agent models should confined to the trash bin or dedicated to a journal called Journal of Pay for Performance and Why It Only Works in Models.

What’s changed

2011-10-07T04:15:00.000-07:00

I don’t want to leave the house.
I dread coming back to the house.
I want to carry everything that is left untaken with us all the time.
I want to hide stuff instead of leaving them out.
I want to double bolt our doors, strengthen our windows.
I can’t bear to look at the window he broke.
The places he’s stepped.
I want to move.

Update on Euro vs US

2011-10-06T09:14:00.000-07:00

Some updates on questions I had for myself in a previous post:
I had wondered if the difference between the Euro and the US as a monetary union was solely because states in the US were somehow different from the Euro countries. VoxEu had an argument that this is the case although I am not entirely convinced:

For an idea about how to solve this dilemma it might be useful to look at the US. The US states have many sovereign powers that give them a great deal of financial discretion. They have the power to establish their own tax systems and spending powers. Many states are legally required to balance their budgets, although this is often meaningless in a dynamic sense if they don’t have to fund future obligations. In addition states cannot file for bankruptcy under the US Bankruptcy Code.

So how do the states guard against default and preserve their access to capital markets? In spite of their well-advertised budgetary problems the US states do have access to capital markets and at generally favourable rates. The reason is institutional. Most states give debt service a constitutional priority over other expenditures.

This means that the “sovereign” debt has to be paid out of revenues before other obligations. There are some minor exceptions. In California and some other states for example education funding has a prior claim on revenues – probably a good thing if it prevents them from undermining their long-term growth prospects. This mechanism does not prevent fiscal problems from arising. The problems of states like California are well known and they are severe. But fiscal problems become sovereign political problems, not threats to the stability of the US. It should be noted that their debt levels are quite small relative to sovereign nations.

This point is brought up again in another VoxEu post:

Tom: Well, what I meant by that is a commitment mechanism. The analogy I drew was with the U.S. states. It's well known that many of the U.S. states, some of the biggest ones, like California, Illinois, have faced significant fiscal problems and significant fiscal imbalances. And yet they still have access to capital markets at quite favorable rates. The question is why. The answer is that for most of these states there is a constitutional commitment to service general obligation bonds before all other claims on the tax revenues of the governments of the states.

This kind of takes the issue of fiscal brinksmanship off the table. U.S. states are not allowed to go bankrupt, to file for bankruptcy. They constitutionally have to honor their debts first before they pay the police and firemen and the other local government workers.

That imposes an automatic austerity regime. If the fiscal situation gets out of balance in a given state, it's a problem - and it is very much a problem in some states like California - but it's a problem that is a local problem. It's not a problem for the union.

My only issue is that even if brinkmanship is taken off the table where in the constitution is it explicitly ruled out that it cannot be put on the table. And isn't a constitution subject to amendments?

Wages and the value of work

2011-10-06T06:06:00.000-07:00

In classical economics, wages are assumed to be equal to the marginal product of labor. This is intuitive in production economies where workers actually make something. Where I think this approach fails is when we move to service economies where wages are then assumed to be the marginal product of some incremental stream of service (either measured in per unit time or some measure of per-service e.g. gutter cleaning).

I suspect that many economists would also assume that how much we value our “stuff” is the same as the willingness to pay for the “stuff” and if we value it more than the market price then this is consumer surplus. These same economists would also consider it an efficient outcome if consumer surplus were zero, that is, there is perfect price discrimination and everyone paid out their willingness to pay.

Now, I’m not quite sure where I am going with this except to say that while this is all well and good, many consumers who could also be economists (myself included) would think that our goal in shopping is to maximize our bargains, i.e. our consumer surplus. This is also true when we shop for services as was our case in our recent remodel of the house (although I would say that our consumer surplus there was zero).

But what about other services such as those in the “caring” professions. Recently, WaPo published the following:

… the degrees in least demand — and that pay the least — lead to jobs that help other people the most. Counseling, psychology and social work are among these.

Does this mean that we as a society value caring professions less? If we want cheap (or affordable) child or elder care, does this mean that we put a lower value on those whose jobs are to be responsible for those we care about - and by extension does this mean that we care less about those whom we want cared for? What about school bus drivers or just regular bus or train operators who are responsible for the lives of many? Does low wages imply low valuation on the lives they are responsible for?

Classical economists would argue that it is not the annual wages that matter but the stream of lifetime income that these workers make that is the correct measure. Even if this is the case, the lifetime incomes of these workers are probably lower than many other occupations.

FTL travel?

2011-09-24T05:45:00.000-07:00

The discovery that particles may be traveling faster than the speed of light is still preliminary. But it cannot stop the imagination. So, spin up the FTL drives, folks, we hope to go on a magic carpet ride.

Advice on crime prevention

2011-09-24T03:54:00.001-07:00

I have heard of the following:

Leave your lights on - a) this will deter burglars since they will think some one is home, but b) won’t they also be able to see directly that no one is home? or provide the light they need to break into the house?
Don’t plant shrubs near your windows or doors - a) this will provide hiding places for them, but b) won’t this also prevent them from getting too close to the windows and doors?
Get steel doors and have good locks - err but can’t they just bust a window like they did to us?

If I had a choice of what to live in, it would be an earthship, with commercial grade glass - the ones used for office buildings - for doors and windows.

Day 2 of the day after

2011-09-24T03:38:00.000-07:00

Was it a coincidence that I read this the day after?

Burglaries are up nine percent in the 4th Police District, which includes Shepherd Park, this year, according to police statistics. Citywide, they have increased by 14 percent. In 2010, property crime rose in the District while violent crime fell, according to FBI statistics.
…
Residents peppered the officers with questions and concerns. “I’m afraid to be in my own home again,” one woman said, recalling a series of break-ins last year.

I know that feeling.

Jobs versus work

2011-09-23T10:02:00.001-07:00

Is there a difference?
I have a job. I have work.
We go to work, we go to our jobs.
I’ve got to work this weekend. I have a job to do.
I work from home. I have a job from home.
Is one more meaningful than the other?

These thoughts arise mainly out of the work (job?) that was done in our home remodel. In my mind, construction - working with hands - seem so much more rewarding than … what, putting out another study? “A study today finds that ….” In many ways, the word craftsmen describes those who work in the construction industry (among others). The older CPS data used to describe some workers in production jobs/work as “craftsmen and other kindred workers”. Perhaps this is why despite how much I despise painting (and yes, there’s still plenty of it to be done) I can always look back at it with some measure of satisfaction (even though it can be a horrible paint job).

Kevin Murphy probably has the best of both worlds:
Murphy’s house, 36.5 Mapquest miles southwest of the GSB in New Lenox, Illinois, is filled with his handiwork: elegant wooden cabinets, tables, and shelves, each carefully crafted but with one tiny, deliberate flaw. “I think it adds that handmade touch,” he says, “something personal. I also enjoy pointing them out.”

For years he and his family—wife Arlene, son Chris, daughters Erin and Ellen, and two Jack Russell terriers—lived about 16 miles to the east in the suburb of Flossmoor, where he joined the school board, “the most frustrating thing I’ve ever done,” and coached Little League. Earlier this year they moved farther out, to a heavily wooded subdivision outside New Lenox. In late summer, you can’t see another house from his backyard. Power tools and lumber take up three of the slots in his four-car garage, and the fourth is at risk. His next big home project is to furnish a new study, but that has to wait for the logs, remnants of a dead walnut tree out back, to dry before he cuts them into boards.

Despite the lumberjack look, he is a card-carrying, certified academic. In 1997 he won the John Bates Clark Medal, given every two years to an outstanding economist under 40. Last fall he was named one of 25 recipients of the MacArthur award—a $500,000, unsolicited, no-strings-attached prize popularly known as the “genius” grant.

Busted

2011-09-22T06:12:00.000-07:00

Someone broke into our home yesterday. A couple of laptops/electronics around $2000. Except for the digital pictures that were on the computer the rest were pretty much replaceable. It took MoCo 20 minutes to arrive after the 911 call and we waited outside but the cruiser drove right past us! We had to flag it down!

What I vastly underestimated were the psychological costs. K1 and K2 seemed okay at the time when the police were around but by bed time they were feeling insecure and that is not a pleasant feeling. The feeling that we were unsafe even though the chances of the thief returning are virtually nil. Even more so, the feeling that our house is no longer our home.

Ah, the joys of living in Washington. Perhaps it’s a sign. Or that I need to develop higher tolerance. But small town living ain’t all it’s cracked up to be either:

In the small towns nestled throughout the Ozarks, people like to say that everybody knows everybody’s business — and if they do not, they feel free to offer an educated guess.

But of late, more people in this hardscrabble town of 5,000 have shifted from sharing the latest news and rumors over eggs and coffee to the Mountain Grove Forum on a social media Web site called Topix, where they write and read startlingly negative posts, all cloaked in anonymity, about one another.

And in Dee’s Place, people are not happy. A waitress, Pheobe Best, said that the site had provoked fights and caused divorces. The diner’s owner, Jim Deverell, called Topix a “cesspool of character assassination.” And hearing the conversation, Shane James, the cook, wandered out of the kitchen tense with anger.

His wife, Jennifer, had been the target in a post titled “freak,” he said, which described the mother of two as, among other things, “a methed-out, doped-out whore with AIDS.” Not a word was true, Mr. and Ms. James said, but the consequences were real enough.

Natural beauty

2011-09-21T09:11:00.000-07:00

Waterfalls. These seem to be obvious and universal. No matter where or no matter how high or puny these are, all can agree by looking at it that it is a natural beauty. This was what I was thinking when I was at Artist Point.

Dark matter theory: RIP?

2011-09-21T08:13:00.000-07:00

BBC reports:
Scientists' predictions about the mysterious dark matter purported to make up most of the mass of the Universe may have to be revised.

Research on dwarf galaxies suggests they cannot form in the way they do if dark matter exists in the form that the most common model requires it to.

That may mean that the Large Hadron Collider will not be able to spot it.
…
Scientists' best ideas for the formation and structure of the Universe form what is called the "cosmological standard model", or lambda-CDM - which predicts elementary particles in the form of cold dark matter (CDM).
Prof Carlos Frenk at Durham University, working with … the Virgo Consortium has created computer simulations to visualise how the dwarf galaxies formed, using their assumptions about CDM.
The team found that the final results of these simulations did not at all match what we observe....
Prof Frenk said that after working for 35 years with the predictions of the standard model, he is "losing sleep" over the results of the simulations.
But he believes he has found a solution to the CDM problem. He proposes that instead of "cold" dark matter that formed within the first one millionth of a second after the Big Bang, the Universe may instead be filled with warm dark matter (WDM).

Meanwhile at the other “science”:

One of the biggest issues confronting international macroeconomists is whether or not the large and persistent U.S. current account deficits are sustainable.

[One possible reconciliation is the]... the “dark matter” view of Hausmann and Sturzenegger (2007), henceforth HS. HS propose an alternative method to computing net international positions and current accounts.

… from a relative reliability perspective the dark matter view can be quickly dispensed with. HS suggest that the external position for all asset types should be estimated by capitalizing income at a common discount rate. They then compute the net position from these capitalized values, and form the current account as the year-to-year change in their constructed net position. This explicitly assumes that investment income, a subcomponent of the current account, is the most reliable portion of the entire set of international accounts, and that it is appropriate to construct positions in this manner. Given that approximately two-thirds of published investment income data are not measured, but are formed by applying estimates (of yields) to estimates (of positions), from a relative reliability perspective dark matter fails. Moreover, while we have sympathy for some parts of the hypothesis, we find the methodology of capitalizing income streams to be questionable. Even if the investment income numbers are entirely reliable, we doubt this method of constructing the current account or position is an improvement over the published estimates.

What can license plates say?

2011-09-20T11:30:00.000-07:00

While we were at Yellowstone, we saw quite a few cars with Virginia license plates and one with DC tags but none from Maryland indicating that they drove out west.

Can I conclude that Marylanders are less adventurous than Virginians?

Is growth accounting really useless?

2011-09-20T11:09:00.001-07:00

I came across this Mankiw’s comment on Oliner, Sichel and Stiroh (2007):

To be honest, in my own life as a practical macroeconomist, I do not spend a lot of time thinking about growth accounting. In fact, I can estimate with a fair degree of precision that I spend ﬁfteen minutes a year on the activity. Those are the ﬁfteen minutes that I teach growth accounting to undergraduate students in my macroeconomics course.
…
While reading this paper I found myself reﬂecting on my almost complete lack of attention to the growth accounting literature, to which this paper very ably contributes.
…
One reason is that this literature seems mired in a host of issues that quickly make a reader’s eyes glaze over. Some of these issues are technical, such as distinctions between gross output and value added and the index number theory that bridges that gap. Others involve data availability, such as the potentially important role of unmeasured intangible capital. Out of necessity, many of these issues get resolved by imposing assumptions on the production process which, although not outlandish, are neither compelling nor verifiable. This paper, for example, at times makes an assumption about the complementarity between information technology and intangible capital that seems to be just pulled out of a hat. But I think there is a more fundamental reason why the growth accounting literature fails to have a larger impact. Even if one grits one’s teeth to make it through all the technical issues, and even if one has enough credulity to buy into all the necessary assumptions, the exercise does not deliver what we really want. Ultimately, God put macroeconomists on earth for two reasons: forecasting and policy analysis. We want to know how the world is likely to look in the future, and we want to know how alternative policies would change the future course of history. Unfortunately, growth accounting contributes relatively little to either forecasting or policy analysis. Instead it is a deeply data-intensive exercise that often gets so deeply enmeshed in its own internal logic that it never returns to the big questions of macroeconomics.

Long ago, some economist—I believe it was Moses Abramovitz—called multifactor productivity “a measure of our ignorance.” That is, we account for changes in capital, labor, labor quality, and the many other determinants of output we can measure, and the changes in output left unexplained are called “multifactor productivity.” But that is really just giving a fancy name to something about which we are pretty clueless. When reading this paper I started playing a game where every time I read the authors say something about “multifactor productivity,” I imagined putting some version of “a measure of our ignorance” in its place.

Let me give an example. At one point the authors write, “MFP growth strengthened in the rest of nonfarm business, adding roughly 3/4 percent-age point to annual labor productivity growth during 2000–06 from its 1995–2000 average.” I rewrote the sentence as follows: “our ignorance strengthened in the rest of nonfarm business, adding roughly 3 ⁄4 percentage point to annual labor productivity growth during 2000–06 from its 1995–2000 average.” Framed in this alternative way, the statement carries an almost comical hollowness. It also makes it clear why statements about multifactor productivity are of limited use for either forecasting or policy analysis. Measured ignorance is probably better than unmeasured ignorance, but it would be a mistake to confuse it for real knowledge.

Ouch.

Self referencing

2011-09-20T10:00:00.000-07:00

The NYT had an interesting article about failure being a better teacher than success. The underlying research that it picks up on is the idea of what makes children resilient. Having read the books (which have some good parts as far as practical advice on how to impart resilience), I found the literature to be sometimes self referencing/circular:

For instance (I’m paraphrasing from what I’ve read):
Q. What is resilience?
A. Resilience is a characteristic where someone who fails picks themselves up and tries again and eventually succeeds. This person does not let failures overcome them.
Q. What makes these people succeed in life compared to other people?
A. They are more resilient.
Q. Why are they resilient?
A. Because they do not allow failures to overwhelm them.

Eventually, we escape this circle:
Q. Can we teach resilience?
A. Yes. Here’s how....

A similar problem lies in economics and education when defining effective teachers.
Q. Who are effective teachers?
A. An effective teacher is one who raises the achievement score of its class by one standard deviation or more.
Q. How can teachers be more effective?
A. By raising the achievement score of its classroom by one one standard deviation or more.

Again, there is an escape hatch which is the question that matters most:
Q. Can we teach teachers to be more effective?
A. Perhaps.

City slickers

2011-09-19T17:34:00.000-07:00

While we were at Yellowstone, I overheard this:

“Oh my god! A bird!”
“Look, a chipmunk!”

Later we found out that it wasn’t a chipmunk but a ground squirrel.

More jobs lost

2011-09-19T17:24:00.000-07:00

Due to technology change:
Motorists’ bane, magnet for thieves, and memorialized in the Beatles’ “Lovely Rita,” the diminutive parking meter has led an outsize life. But its days in New York City are about to expire.

The city will remove its last decommissioned single-space parking meter in Manhattan on Monday, transportation officials said, the start of a yearlong process that will eventually eliminate all the steel-and-sludge-hued meters in the city.
...
But at the Transportation Department’s repair shop in Maspeth, Queens, where meter surgery is still performed with butter knives and nail files, mechanics are bracing for an era’s end. Stephen Kerney, the shop supervisor, wondered about his team’s fate as he surveyed shelves and tables filled with hundreds of discarded meter innards.
“At one time,” he said, “we were the largest shop in the world.”
Some of the meter shop mechanics will be retrained or reassigned, city officials said.

Greek American thoughts

2011-09-18T17:18:00.001-07:00

This Economist article seems to imply that the “proper” diagnosis to Greece’s problem is not solely in its profligacy but also the absence of a “proper” political union. The implication is that if there is stronger political will in backing Greece then the uncertainty surrounding the crisis would not be as extensive as it has been and its contagion effects would have been smaller.

The United States is a political and monetary union. States can be profligate but is there really an implicit guarantee from the federal government that states are “too big to fail”? This does not seem to be the case as NYC itself has been on the brink of bankruptcy and no bailout was forthcoming from the federal government. This is also the case with California which has flirted with near bankruptcy for a while. Political union itself therefore does not appear to be a necessary condition for the political will to bail out the profligacy of states. In fact it can be argued that most of the country was ignorant or had more issues on their own plate to pay any attention to the problems of other states.

What’s different about Greece as a nation-state in the European Union and California as a state in the United States? Unfortunately, as they say - don’t know much about history - nor politics of U.S. states but it seems to be that the major difference is that states are not allowed to borrow on the open market. (Is this right?) Certainly, there are no California bonds except perhaps education savings bonds but is not the same as borrowing for general use.

Rambling thoughts on job creation

2011-09-15T07:30:00.000-07:00

In this earlier post, I had wondered how fiscal stimulus would translate into jobs when industries are undergoing structural change from one with a manufacturing base to a service based economy. If we think of structural change as one where the economy is dominated by changes in employment in the same direction before and after a recession (i.e. Groshen and Potter, 2003) we would find that the manufacturing industries have been declining before and after each recession while service based industries have been increasing their share of employment before and after recessions. But why would industries/firms create jobs in the first place, and are manufacturing and service industries different in terms of why they create jobs?

Haltiwanger, Jarmin and Miranda (2010) find that small and young firms are mostly responsible for job creation. They don’t address the question of why jobs are being created and some introspection indicates that they would probably be hiring in order to grow by either product development or revenue enhancement. It is possible that they are experiencing losses when they are doing this and the “up-and-out” hypothesis that Haltiwanger et. al advocates is consistent with the idea that after a certain period, some these firms are overextended and crash and burn.

In a recession or at least in uncertain economic times, these firms are unlikely to overextend or at least be more cautious. This certainly contributes to jobless recoveries. But how is their behavior any different when fiscal stimulus appear to have worked in the past? As previously mentioned, a fiscal stimulus (or a tax cut) that increases AD in manufactured goods shifts the demand for goods and increases the MP of workers therefore increases demand for workers by firms. But with this sector in decline any AD based policy cannot create that many jobs, especially when the bulk of goods are imported from overseas.

One possibility for the jobless recoveries is that job creation is not only concentrated among young and small firms but most of these firms are in the service sector (unfortunately, Haltiwanger et. al. do not break their study down by sectors). If this is indeed the case, then why and when would these firms engage in job creation? Does demand for services respond as elastically as goods? If not then fiscal stimulus/tax cuts would not increase demand as much and hence would not create many jobs.

In any case, it is unclear to me whether any policy can actually spur job creation given that uncertainty faced by small young firms are as much (or perhaps even more so) a matter of perception as it is of reality. Moreover, in order to create more jobs, the economy needs to also create more firms. But why firms and jobs are created is not a very well understood phenomenon. (the former falls under the study of entrepreneurship, but the dot-com bubble and the growing importance of ICT industries may have biased studies toward high-tech start-ups rather than firm formation in general.)

What I’ve been reading

2011-09-14T07:15:00.001-07:00

Nineteenth Street NW by Rex Ghosh: The characters were somewhat cliched and the plot predictable but Ghosh writes well. In a way the biggest weakness of the book was to focus more on the financial “thriller” aspect rather than character development. There were flashes of character development that were worth exploring and might have worked better if the book had been turned into some kind of a “drama” rather than a thriller.
The Curious Incident of the Dog in the Nighttime by Mark Haddon: Somewhat enjoyable. I am a little divided on this in that while the plot was predictable I felt baited and switched for some inexplicable reason. There was a somewhat unexpected reference to Malaysia when the protagonist talked about “orang utans” which took me by surprise.
Case Histories by Kate Atkinson: I was taken in by all the endorsements, especially Stephen King’s: “Not just the best novel I read this year, but the best mystery of the decade..... I defy any reader not to feel a combination of delight and amazement.” In my case, I felt neither - in fact I felt deceived. This was chick lit disguised as a mystery. If it had been just chick lit I might have enjoyed it but the fact that it was being marketed as a mystery was a huge letdown. What was especially annoying is the device the author uses to keep the reader reading is to withhold key facts to be revealed later. I can take this once or twice in a book but she does this continuously through the use of flash backs and different points of views. Generally I feel that the reader should know what the protagonist knows the same time the character in the book knows it.
The Geography of Bliss by Eric Weiner: This was enjoyable and good for a few chuckles. I read this while we were in Yellowstone and it’s a good vacation book.
China Mountain Zhang by Maureen McHugh: I had to include the links because I am not quite sure to make of it. It was a good read and I agree with the review that says its a lot like reading Kim Stanley Robinson. Nothing much really happens but the setting and description of life in the future with China being the dominant economic force and America under socialist influences were particularly interesting.
The Peace War and Marooned in Realtime by Vernor Vinge: Pretty good reads but not “deep” in the sense of McHugh’s book. Some have described Vinge as “hard SF” but I did not find these to be the case, especially compared to Charles Stross’ Accelerando.

How to use replicate weights with SAS - American Community Survey or Current Population SurveyFor some reason, there are negative replicate weights in the ACS data. (I don’t know if this is the case with the CPS data.) data acs; set a.acs; array temp(*) pwgtp1-pwgtp80; do i = 1 to dim(temp); if temp(i) < 0 then temp(i)=0; end; run; proc surveymeans data = indiana varmethod=jackknife; var agep; weight pwgtp; repweights pwgtp1-pwgtp80 / jkcoefs=0.05; run; The value for jkcoefs (4/80=0.05) comes from the documentation for variance estimation (chapter 12 of the design methodology):

2011-09-14T05:35:00.000-07:00

For some reason, there are negative replicate weights in the ACS data. (I don’t know if this is the case with the CPS data.) See also IPUMS.

data acs;
set a.acs;
array temp(*) pwgtp1-pwgtp80;

do i = 1 to dim(temp);
if temp(i) < 0 then temp(i)=0;
end;
run;

proc surveymeans data = indiana varmethod=jackknife;
var agep;
weight pwgtp;
repweights pwgtp1-pwgtp80 / jkcoefs=0.05;
run;

The value for jkcoefs (4/80=0.05) comes from the documentation for variance estimation (chapter 12 of the design methodology):

Update: I believe the following statements will also work but haven't verified this:

proc surveymeans data = indiana varmethod=brr (fay=0.5);
var agep;
weight pwgtp;
repweights pwgtp1-pwgtp80;
run;

What is tolerance?

2011-09-13T07:02:00.001-07:00

That is the emotion.
Is it ignoring something that bothers us?
Or is it thinking about it and then letting it go, saying “never mind”

Or in theoretical terms, is it something called a decreasing increasing marginal disutility of a bad. We know what a good is - it is something that confers utility albeit with diminishing marginal returns. So a bad is something that increases our disutility. Tolerance is how quickly (or slowly) our marginal disutility increases, i.e. the second derivative is positive. A tolerant person is therefore someone whose second derivative of a bad is actually negative.

Some examples:
I’ve driven eight hours to get to my destination. Two miles from where I am supposed to be I encounter some heavy traffic. Every additional car or traffic light that goes against me increases my disutility. I am therefore intolerant. Alternatively, I say to myself, “I’ve already driven eight hours, what’s another couple of minutes.” Does this mean I am tolerant?

A hurricane just hit and we’ve lost power. After several days we get increasingly impatient and less tolerant. As more and more people get their power back except us (peer effects), each minute increases our disutility. Some greens move into our neighborhood. We don’t like those greens, but as more and more of them start moving in we become used to their presence. We are more tolerant.

But tolerance can also be tempered by constant exposure to hardship. Sometimes this is referred to as resilience. So we start off as being intolerant but exposure to lack of our creature comforts can harden some of us and at the same time make others less able to cope. Is this tolerance?

In economics, bads are the realm of public economics and analysis is usually confined to public bads, e.g. pollution, noise, etc. But the above examples are private bads. Is there any role for taxation/subsidy or regulation to increase the overall level of tolerance of a society? Should there be a role?

Three books on consulting

2011-09-12T11:08:00.000-07:00

The three books are:

Consulting Demons by Lewis Pinault
Dangerous Company by James O’Shea and Charles Madigan
The Witch Doctors by John Micklewait and Adrian Wooldridge

Pinault’s book is a personal look at the consulting industry and was the most enjoyable read. Not surprisingly it is apparently the only one out of the three that are still in print. While the subtitle of the book is “Inside the Unscrupulous World of Global Corporate Consulting”, to me it was no more unscrupulous than say the current subprime crisis. Ah yes, they are only all rationally responding to incentives. There was a surprising reference to Malaysia and Kuala Lumpur in the book while Pinault was in Singapore. He referred to going to a trip as ‘going out-station’. Yes, that was and probably still is the phrase we used when growing up. Surprisingly, management guru CK Prahalad did not come out well in this book. He was caricatured as a “self-help tear-them-down-then-build-them-up’ personality that bordered on messianic and maniacal.

In contrast to the up close and personal look of Pinault, O’Shea and Madigan, whose book is subtitled ‘Management Consultants and the Businesses they Save and Ruin’, take a look at a series of consulting ‘projects’ (if you will) or rather what happened to various companies who retained the the ‘expertise’ of management consultants. Some of the cases such as Bain and Company’s relationship with Guiness and the role they played in the Distiller takeover are recounted. This was interesting for me since it was the first time reading it. Likewise an account of how Figgie International went into bankruptcy as a result of too many consultants trying to do too much was also entertaining. Everything else was rather so-so. The authors tried to cover each large consulting firm through the lens of a company it advised and this approach can be interesting or not and mostly it was not. Many of the cases such as Gemini Consulting’s work with Cigna was at the time, too much in its infancy to draw any strong conclusions.

The last book (by which time I think I already had my fill) was subtitled ‘Making Sense of the Management Gurus’. This was written in a historical context beginning with Frederick Taylor but focusing on and Peter Drucker and Tom Peters. In many ways, it is a journalist’s attempt at synthesizing the fads that seem to come and go in management theory. They do an admirable job - and what they say is for the most part sensible. For instance, they don’t condemn all the reorganization fad that consultants sold and companies fell for. They note when it worked and when it didn’t as well as why it worked at this time but not at another time and so forth. However, they also fall into what I consider a journalistic trap of something that is quirky and unexpected must therefore be good. One example is the a company that sends its managers to Disney to be imagineers for a week (or something similar). They don’t say this good or bad, yet their citing it seems to indicate that they think that this novel approach is something to be celebrated. Their attempt is mainly a synthesis by anecdotes or rather management theory by anecdotes which perhaps is all management consulting is.

Sept 11

2011-09-11T05:00:00.000-07:00

I can’t do September 11 - whatever do is. All these memorials, television specials, magazine special issues... Why do we want to “remember” such an awful day. The anniversary (and the days before it) has brought back a lot of emotion from that day and the days afterwards. The pessimism, the grief, the anxiety... This day will be remembered and remembered and remembered but I’ll try to push it all away.

K1 was only 2 and yet she found enough meaning(?) in Sept 11 to celebrate(!) OBL’s death. I was neither celebrating nor was I disappointed. I just accepted. Perhaps this is what I should do.

Half full or half empty

2011-09-10T14:19:00.001-07:00

The difference between optimism and pessimism from the view of Generation Limbo
Half full:
WHEN Stephanie Kelly, a 2009 graduate of the University of Florida, looked for a job in her chosen field, advertising, she found few prospects and even fewer takers. So now she has two jobs: as a part-time “senior secretary” at the Florida Museum of Natural History in Gainesville and a freelance gig writing for Elfster.com, a “secret Santa” Web site.

But is Ms. Kelly stressed out about the lack of a career path she spent four years preparing for? Not at all. Instead, she has come to appreciate her life. “I can cook and write at my own pace,” she said. “I kind of like that about my life.”

Likewise, Amy Klein, who graduated from Harvard in 2007 with a degree in English literature, couldn’t find a job in publishing. At one point, she had applied for an editorial-assistant job at Gourmet magazine. Less than two weeks later, Condé Nast shut down that 68- year-old magazine. “So much for that job application,” said Ms. Klein, now 26.

One night she bumped into a friend, who asked her to join a punk rock band, Titus Andronicus, as a guitarist. Once, that might have been considered professional suicide. But weighed against a dreary day job, music suddenly held considerable appeal. So last spring, she sublet her room in the Fort Greene section of Brooklyn and toured the country in an old Chevy minivan.

“I’m fulfilling my artistic goals,” Ms. Klein said.

Half empty:
“We did everything we were supposed to,” said Stephanie Morales, 23, who graduated from Dartmouth College in 2009 with hopes of working in the arts. Instead she ended up waiting tables at a Chart House restaurant in Weehawken, N.J., earning $2.17 an hour plus tips, to pay off her student loans. “What was the point of working so hard for 22 years if there was nothing out there?” said Ms. Morales, who is now a paralegal and plans on attending law school.

Some of Ms. Morales’s classmates have found themselves on welfare. “You don’t expect someone who just spent four years in Ivy League schools to be on food stamps,” said Ms. Morales, who estimates that a half-dozen of her friends are on the Supplemental Nutrition Assistance Program. A few are even helping younger graduates figure out how to apply. “We are passing on these traditions on how to work in the adult world as working poor,” Ms. Morales said.

Neither:

Sarah Weinstein, 25, a 2008 graduate of Boston University, manages a bar in Austin because she couldn’t find an advertising job. In her spare time, she volunteers, doing media relations for Austin Pets Alive, an animal rescue shelter.

“It’d be nice to make more money,” Ms. Weinstein said, but “I prefer it this way so that I have the extra time to spend volunteering and pursuing other things.” Volunteering, however, goes only so far. After three years without an advertising job, she is now applying to graduate school to freshen up her résumé.

For Geo Wyeth, 27, who graduated from Yale in 2007, that means adopting a do-it-yourself approach to his career. After college, he worked at an Apple Store in New York as a salesclerk and trainer, while furthering his music career in an experimental rock band. He has observed, he said, a shift among his peers away from the corporate track and toward a more artistic mentality.

“You have to make opportunities happen for yourself, and I think a lot of my classmates weren’t thinking in that way,” he said. “It’s the equivalent of setting up your own lemonade stand.”

Whatever happened to the free-agent nation?