More from Barro on fiscal multipliers

Robert Barro weighs in again on the multiplier, this time in an assessment of the fiscal stimulus package. He thinks it's $600 billion in public spending associated with a $900 billion reduction in the rest of GDP. Hm.

Social change and cohesion

David Brooks discusses distrust of elites, by which he means corporations, government, media ... just about everyone, it would appear. He lists five elements he sees contributing to this feeling despite the more meritocratic bent of the nation: (1) the lack of circumspection in addition to knowledge, since the two are sometimes orthogonal; (2) new social chasms deriving from geographic and matrimonial concentration; (3) backbiting among leaders; (4) shorter time horizons due to the weakening of dynasties; and (5) greater transparency.

What I find particularly interesting is point #2. Is it really the case that we're more geographically concentrated today than we were? Brooks means bankers living outside the communities they're serving. And are marriage patterns really more rigidly defined as a coming together of social equals today?

Krugman on health insurance and individuals' opting out

Citing the WellPoint story in California, today Paul Krugman explains why it might be a problem in insurance markets if people are free to choose whether or not to insure. Anybody who believes his or her probability of an adverse event is temporarily low would find it profitable to drop coverage, leaving the covered pool comprising relatively more people who expect to file claims. In the recession, some Californians have chosen to drop health insurance, so WellPoint has responded by raising premia on those remaining, because they are sicker.

Econometrics in Hollywood

Not many details are divulged, but a Vanity Fair piece on a Hollywood executive reveals one of his secrets to be a statistical model of box-office returns. I'm not sure a book titled "Moneymovie" would sell as much as "Moneyball," but you never know.

Brooks on cost of recessions

David Brooks's piece today discusses the wrenching effects of joblessness and provides an overview of the current situation with relatively more men out of work. As he points out, "men are concentrated in industries where employment is declining (manufacturing) or highly cyclical (construction)."

Supply and demand and ... induced demand?

Yesterday an article in the Times profiled new medical schools around the country. Dr. David Goodman at Dartmouth is quoted as pointing out that “When you add more physicians to an area, they just add more services, and their salaries don’t go down anywhere near in proportion to the increased supply.”

It would be interesting to know what that proportion actually is, and I'm no expert in this subfield. Shifting out the supply of doctors along the demand curve should in principal lower doctors' wages, unless the demand curve shifts too, but it clearly depends on the slope/elasticity of demand.

Krugman on the euro crisis

Today Paul Krugman provides a very nice overview of the issues surrounding the current crisis in the euro area. His description of the problem with Spain illustrates the difficulties inherent in relinquishing control over monetary policy when joining a single currency.

2010 Economic Report of the President

Today the CEA released its 2010 Economic Report of the President. The first three chapters provide a nice overview of recent macroeconomic events, here and abroad. The next chapters cover (4) saving and investment, (5) long-term fiscal imbalances, (6) financial market reform, (7) health care reform, (8) the labor market and education, (9) energy and climate change, and (10) productivity.

Congratulations, CEA fact-checkers of 2010! Your 80-hour weeks are now complete!

Sex ratio on college campuses

The Times Sunday Magazine includes an article about a shortage of eligible men on college campuses that's a fun read. Probably the most controversial issue it raises is whether a relative shortage of men that empowers them in the dating market leads to an equilibrium of relationships that are on terms more favorable to men. Some of the academics quoted in the article seem to want to blame the sex ratio for changing the nature of college dating, toward more commitment, since it might seem reasonable for men rather than women to prefer that.

That's a tempting explanation, but I'm not so sure I'm sold. Enrolling in college is certainly costly, but if the college dating market were so much more favorable to men, why wouldn't more men jump in to take advantage of it and correct the sex imbalance? To me, it's also a little telling that one of the anecdotes in the article is about a male in college who laments the "hook-up" culture and has apparently eschewed it.

Brooks on aging

Although it's like hiking a switchback, with several abrupt turns in new directions, I enjoyed David Brooks's piece on aging today. He writes about new research suggesting more happiness, more altruism, better life satisfaction, and much productivity past retirement. Then he links it to the looming fiscal issues we confront. Maybe Brooks thought of all this because Eugene Steuerle pointed out that "in 2009, for the first time in American history, every single penny of federal tax revenue went to pay for mandatory spending programs [i.e., mostly transfers to the elderly]."

Volcker and Krugman on banking reform

Yesterday and today, Paul Volcker and then Paul Krugman took turns presenting views on banking reform. Volcker's list of issues to address is a little longer, including some walling off of commercial banking from other, more risky and less publicly insured (i.e., subsidized) activities, and a resolution corporation that could step in and unwind failing institutions, perhaps via a "living will" agreed upon in advance. Krugman's is shorter; he argues that a comparison with Canadian banks suggests to him that the one overt difference, more robust consumer protection, should be the focus of U.S. reforms.