Aging and tenure

The Times features a Room-For-Debate about hiring on the tenure-track at colleges and universities prompted by a Chronicle of Higher Ed piece that focused more broadly on the macroeconomy's impact on hires and leaves in academia.

I felt like almost all the contributors to the Times piece said the real issue was adjunct or part-time labor being increasingly substituted for tenure-track or full-time labor. Those who didn't took on the issue of whether the tenure system was a good idea or how it could be improved. Few had anything to say about the inflows and outflows per se.

CUNY is experiencing a wave of early retirements this fall, induced by financial incentives. But the majority of them seem to be among staff rather than faculty. What motivates faculty to become emeritus or not?

Mulligan points out that summer still happens

Casey Mulligan's economix blog post asserts that labor supply is an important part of the labor market. That's hard to argue with, but it's also hard to swallow the evidence he offers as a particularly clear-cut reason why the "stimulus law is partly responsible for today’s low employment, precisely because so many of its components have eroded work incentives."

Mulligan show that seasonally unadjusted employment for 16-19 year olds has continued to jump each summer. His graph also shows that while the seasonal summer spike is still there, it too has fallen lower each year along with the rest of the monthly trajectory as the recession has taken its toll. (Or as anti-recessionary policy has created disincentives, if you like.)

I'm not surprised that the recession hasn't halted summers! Or put differently, summer activities. Something tells me that some moms and dads still ship their kids off to summer camp, where some of the workers are ... 16-19 years old. But there are probably fewer parents doing that than normal, because some are now unemployed and can spare the time themselves, or they're cutting camp costs out of their tightened budgets. Camp employment is surely not all of the spike among 16-19 year olds, but I'm not convinced that it's a pure labor supply effect, with idled teens facing a lower price of time (during the school year, the opportunity cost of working is skipping school!). It seems to me that there is probably a seasonal labor demand effect too, tied in to seasonality in preferences.

Greg Mankiw's take is that Mulligan offers a reason to eschew extreme Keynesianism (demand-driven everything) in favor of more of a synthesis view. It's hard to argue with that one, too!

I was surprised

The Modern Love column in the Times featured an article about the "two body problem" in academia, where both partners are searching for tenure-track jobs simultaneously. I thought for certain that the author and her husband were going to split up in the end, but instead the story took an unexpected turn. I don't want to spoil it.

Academics are just obsessed with themselves, aren't we? But part of me wonders how common it may now be for dual-career spouses outside of academia to choose a two-city arrangement, at least temporarily. Or maybe it's just we academics who are completely out of our minds.

NEC, CEA, OMB: The Alphabet Soup of economic policy

The OMB and CEA chairs are leaving, while the NEC chair is staying ... so what in blazes does that all mean?! For the nostalgia factor alone, Keith Hennessey's post on economic policy inside the Executive branch is a fun read, and it's also helpful for thinking about who does what and with how much of a consulting vs. advising role.

Thanks as usual to Greg Mankiw's blog for that cite, and to Ezra Klein's informal poll about the Laffer Curve. That's interesting on several levels, and definitely because it illuminates the different objectives one might have in mind when discussing an "optimal" tax rate. Does that mean, "revenue maximizing," as is typical in discussions of the "Laffer Curve," or does it mean "growth maximizing," which could easily be different?

Money & banking on the brain

I've been prepping Econ 215, Money & Banking, for the fall, and I've got money on the brain even more than usual. The Fed Bank of Atlanta has a nifty "macroblog" with a recent posts about quantity theory, perceived uncertainty in inflation forecasts, and the Fed's policy since the fall of 2008 of paying interest on bank reserves.

Demographic change and grocery stores in Queens

The WSJ reports on grocery stores around Flushing, Queens, where closures have apparently reduced the availability of one type of ethnic cuisine: Caucasian! The article reports that data from the 2008 ACS show nearly equal numbers of Asian Americans and whites in Queens community district 7, north of Queens College. But at least in some parts of Flushing, it's apparently become difficult to find cold cuts and bread on the store shelves.

Romer stands up, neatly pushes in CEA chair

The news out of Washington today is that Christy Romer will step down as CEA chair and return to U.C. Berkeley. She joins Peter Orszag, the outgoing OMB director, as the second economist to leave the cabinet and (presumably, in Orszag's case) return to academia. I bet students and faculty at Berkeley will be very happy to have her and her husband, David Romer, back again. I know from personal experience as a student during the mid to late 1990s that service during Democratic administrations tends to hollow out Evans Hall at U.C. Berkeley!

What an incredible ride it must have been for Christy Romer! Have any other CEA chairs presided over a more volatile period, both in terms of underlying macroeconomic turbulence and in the vicissitudes of the policy response? The same would certainly also be true for Fed Chairman Ben Bernanke if he were to have not been confirmed or had resigned.

Geithner cites Blinder and Zandi

Today Tim Geithner opines in the Times about the great recession, the policy response, and the recovery. He cites a recent study by Mark Zandi and Alan Blinder that uses a macromodel of the U.S. economy maintained by Moody's Analytics to divvy up the effects of the fiscal stimulus and the various monetary/financial policies (TARP, quantitative easing).

Their counterfactuals are entirely model-derived and thus subject to the usual criticisms. What's interesting is that they separately parcel out the effects of the fiscal stimulus and the effects of the financial policies, and they find that (1) the sum total effect of both is greater than their parts, and (2) the partial effects of the financial policies were larger than the partial effects of the fiscal policies.

Blinder and Zandi argue that the reinforcing effects of the two policies produce a sum greater than its parts; for example, they offer, housing credits in the fiscal stimulus helped raise housing demand and thus prices, which may have improved the efficacy of financial policies.

If economics-of-scale in policy interventions are indeed operative, then a cost-benefit comparison of fiscal and financial policies is a little messier. Just comparing their individual partial effects to their costs seems to strongly suggest that one was more cost effective. Blinder and Zandi don't seem to highlight this, but I think their results show that financial policies (mostly the TARP) may have raised 2010 GDP by 2.65% (Table 6) at a cost of about $101 billion (Table 9), while fiscal stimulus may have raised 2010 GDP by 1.9% (Table 8) at a cost of about $1 trillion (Table 10).

Mankiw in National Affairs

Greg Mankiw contributes a nice article in National Affairs entitled "Crisis Economics" in which he discusses the challenges facing policy advisors. He provides a nice JEP-like overview of the state of the literature on fiscal multipliers.

Optimistic Expectations

Atul Gawande writes about end-of-life medical decision-making, and the view is disturbing at times. And not because the end of life is such a fraught component of the life course.

One of the most shocking issues the article reveals is how doctors tend to overestimate survival probabilities of their terminally ill patients, a result reported by Christakis and Lamont in BMJ. For medicine to be efficiently employed, decision-makers should be well informed. It would be regrettable but perhaps not unsurprising that patients might have little knowledge of the underlying probabilities of outcomes. But if doctors do not have rational expectations either, it seems unlikely that choices can be optimal.

A colleague remarked that maybe patients demand optimism. Another one thought it might be hard for doctors to face their jobs without optimism. But another finding by Christakis and Lamont, that the overoptimism rises with increased knowledge of the patient, does not fit particularly well with either story and suggests instead that doctors may find it (increasingly) costly to be objective with terminally ill patients. Gawande's piece seems consistent with that.