Rethinking Bi(g)o 101

Big lectures are the traditional format, but the NY Times profiles some new directions taken with intro courses. Science classes may be a convenient punching bag, but you'd imagine this applies across the spectrum.

Long-term trends in marriage and income

Andrew Cherlin argues marriage inequality and income inequality are related, in the NY Times earlier this month. He's written a cleverly titled book on the topic too.

Phrasing what we see as joint inequalities is accurate and certainly attention grabbing. But underneath could simply be a linear relationship between (expected) earnings and marriage, without a special story about how inequality per se or variance affects outcomes. Maybe Cherlin argues exactly that, and one could imagine how such an argument might proceed: if inequality reflects uncertainty and men or women are risk averse in their marriage choices, then more inequality could reduce marriage, even holding average earnings fixed.

CBO on uncertainty

Here's a nice overview of how CBO addresses uncertainty in its fiscal forecasts, from the director. One of the big challenges with the traditional "high, medium, and low" scenario ranges that appear in CBO and other forecasts is that implicit assumptions about the covariance structure of processes like mortality, fertility, and productivity are extreme and unrealistic.

Men Not At Work

The NYT reports on men who aren't working, and one angle they left out is what prospective wives or partners perceive about the gains to marriage. Much is written about the opportunity costs of working, namely the foregone disability benefits and child care, and the article notes how relatively few men who aren't employed have young kids. AEI scholars have claimed that men's retreat from marriage and fatherhood can explain more than a third of the decline in employment since 1979. An accounting exercise like that is helpful, but it raises the question of why choices have trended the way they have, and I suspect women's choices are important.

Queens College: Affordable for Students and Hollywood

Queens College Campus Event Services announced via email that the upcoming film "Still Alice" was partially filmed at QC.  It's unclear whether these scenes made the final cut, but it's a fun reminder that Queens College is affordable. For students, mostly, but apparently also for Hollywood!

Take that, Columbia University!  Queens College is the Vancouver to your Los Angeles!

From the Office of Campus Event Services:

Campus Event Services markets and coordinates space rentals at Queens College. In April 2014, the college was selected as a location for the film Still Alice (rated PG-13), starring Julianne Moore. The film was also shot at a home in Long Beach and other locations in the New York City area. The movie is based on Lisa Genova's novel by the same name about a Columbia linguistics professor who learns she has early-onset Alzheimer's disease. 

The following campus sites were used in the film:

Campbell Dome

Kiely Hall 258

Fifth-floor Rotunda window, Rosenthal Library

President's Conference Room 1, Rosenthal Library

Dean Craig Michael's office, Powdermaker Hall 100

Hallway in the Remsen Building

Should you choose to see the film, we hope you enjoy seeing the familiar QC locations! 

Matching models

Marriage (50s-style), med school, or NYC high school, the game theorists have a method for the madness, per the NY Times.

Budgetball

Oakland A's baseball has been popularized as "Moneyball" in the eponymous book and movie, but I'd  prefer to call it "Budgetball" for one important but often overlooked reason. Not only is A's baseball profitable in a relatively small MLB market, it is also consistently affordable and exciting for fans.

As is obvious from my Twitter page, I'm an Oakland A's fan and have been since around 1997 or 1998, when I was an economics Ph.D. student at UC Berkeley about 10 miles north of the Oakland Coliseum. The A's recently departed assistant GM Farhan Zaidi is an alumnus of the same program. I wasn't following the team when the front office traded Rickey Henderson in the 1980s or Jose Canseco in the 1990s, the latter infamously from the on-deck circle. But I was in the stands before the Mark McGwire trade in 1997, which didn't seem to catch the fans in the left field bleachers too much off guard. "He isn't even trying," one had complained after a routine out. I was in the third deck watching "The Flip" by Derek Jeter in game 3 of the 2001 ALDS, but that's a story for another day.

The simple point I want to make with "Budgetball"* is that price and quality of the product are important factors motivating fans' demand for baseball, and the A's have been delivering on both fronts for years. This is an ode to a high-quality, affordable product: a seat at the Oakland Coliseum, site of spectacular highs and lows, and the occasional discharge of raw sewage. There are plenty of other intangible things that motivate fans, as essayist Steve Almond and many others have written about, but affordability matters. When I was a student, "Dollar Wednesdays" at the Coliseum actually cost a dollar to attend. The round-trip cost of the BART train ride was probably 5 or 6 times that and still made going to the ballgame eminently affordable. The team in 1997 won just 65 games, the worst in a full season since 1977. But the team brought Rickey back in 1998, and the product throughout was plenty worth it.

And it has remained worth it. According to Team Marketing Report, the 2014 A's ranked 19th in the majors in their Fan Cost Index, and 23rd if you looked at ticket prices alone. By contrast, the 2014 World Series champion and cross-bay rivals San Francisco Giants ranked either 5th or 8th most expensive. The graph below plots wins (y-axis) against TMR's average ticket price (x-axis) for all 30 teams in 2014. The Oakland A's are on the upper left side of the cloud, suggesting they offer good results for the money.

Why am I writing about this now? Baseball fans recall how the A's controversially traded their cleanup hitter in the middle of their 2014 pennant chase, and now the team has done it again, trading away MVP candidate and fan favorite Josh Donaldson last week. Many fans aren't happy, and I was struck by Ken Arneson's lengthy piece on the topic. It hurts to lose a familiar face, a player who consistently makes the highlight reel with his bat or glove or both. And player continuity is part of the quality of the product; following a team or sport is more fun when it consists of distinguishable personalities rather than just numbers. More fun translates into profitability, just ask Amazon and Twitch why a gamer named "Nadeshot" is so popular.

But I think what has made Oakland A's baseball so great is a bifurcated approach to winning under budget constraints, one that preserves a little continuity while aggressively seeking to maintain or improve the winning record. In the aughts, they signed their last Gold-Glove 3B Eric Chavez to a long-term contract and stuck with the Big Three for a while. This decade, they inked deals with CF Coco Crisp and RP Sean Doolittle while ruthlessly letting go Grant Balfour and trading their right-handed power hitters. The 2012 season was magical, and I was there in person at all the critical games, watching the team clinch the wild card and then the division on the last game of the season.

The A's strategy produces "Budgetball." I can afford to go in person to a game or ten, and it's a great product, even when the team comes up a little short. I could have gone to three more A's games if I hadn't gone to that one Giant's game this year, that's the kind of price difference we're talking about if it's not nosebleed seats.

It's still a fun team to watch, departures and all, and I can afford it. Sign me up, and keep dealing, Billy Beane. I won't pretend it doesn't hurt, but if it keeps the product's quality high and price low, my feet have voted long ago.


(*Apologies to the Peter G. Petersen Foundation for appropriating their term "Budgetball," which they coined in 2009 for a team game of cognitive and physical skill about federal fiscal policy.)

Less divorce for younger cohorts

The Times discusses lower divorce rates among cohorts married in the 1990s and 2000s, according to the SIPP. It's a nice update to work last decade by Stevenson and Wolfers.

Update: Another nice piece by Wolfers discusses changes in the economic role of marriage and connections to the rising acceptance of gay marriage.

Update 2: A tweet by Wolfers led me to this recent study on marriage and specialization exploiting a 1988 change in Swedish pension laws.

Update 3: Josh Goldstein pointed me in the direction of this 2014 piece in Demography by Kennedy and Ruggles calling into question some of the patterns in SIPP data, reviewed here last spring.

Economists' "Survey-Says" moment on Piketty

Not news, but here's a roundup of some of the thinking in North American economics departments about Thomas Piketty's Capital in the Twenty-First Century.

A broad collection of perspectives is available via the IGM Economic Experts Panel, although I think the way IGM phrased the question may have doomed it. Rather than asking about longer historical periods, Europe, or the future, it asked about the U.S. since the 1970s, and economists broadly agree to disagree with the relevance of Piketty's most parsimonious point about r > g, at least for that period.

Related to that are essays by Acemoglu and Johnson, who perhaps expectedly would rather talk about institutions than "laws" of capitalism, and slides by Justin Wolfers that draw from several other sources, including the ingeniously titled "Nit-Piketty" by Debraj Ray.  Also available is the April book review in the New Republic by Robert Solow, a springtime review by Larry Summers, and a recent review in J Econ History by Alex Field.

I think two of the main points about the relevance of Piketty's work to understanding modern inequality are that (1) a lot of U.S. inequality seems to be driven by labor income and/or technology, and not plausibly by excess growth of wealth over income as suggested by the r > g argument; and (2) how big r is relative to g may ultimately be an empirical question, but the empirical estimates vary depending on the time period and the definition of capital, and the theoretical reasons are also important (i.e., Eric Maskin's point that r and g are both determined by other stuff). I'm sure I've missed other important points!

Healthy Immigrants and NYC life expectancy

Preston and Elo attributed a big share of NYC improvements to immigrants in a Popul Devel Rev piece published earlier this year. They wrote a little about health care, but more prominent in the tale were public health campaigns against HIV, homicides, and smoking. What, no calories or soda?

Bringing it home

The Times reports speculation on changing city climates over the next 40 years, a deft way of literally bringing the effects of climate change home for Americans. Could cities like Detroit benefit from being less hard hit?

Reforestation and climate change

An assistant prof at Yale makes the case for caution, citing several counterintuitive patterns in the data.

IOM weighs in on end-of-life

A new IOM report calls for change, per the Times. It's easy to see how fee-for-service reimbursement structures might produce too much hospital care and not necessarily enough sustenance of quality of remaining life.

Actuarial estimates of NFL brain injuries

The Times reported some startling statistics from the NFL concussion settlement.  Described as conservative by the NFL team, numbers like these are still pretty scary:

"The N.F.L.’s actuaries assumed that 28 percent of all players would be found to have one of the compensable diseases and that the league would pay out $900 million to them. Their calculations showed that players younger than 50 had an 0.8 percent chance of developing Alzheimer’s or dementia, compared with less than 0.1 percent for the general population. For players ages 50 to 54, the rate was 1.4 percent, compared with less than 0.1 percent for the general population. The gap between the players and the general population grows wider with increasing age."

Krugman on Scotland

He advises against Scottish independence in its current proposed form, seeing little wisdom in a currency union without a fiscal union based on the Euro Zone's recent experience.

State of birth by state of residence

The NY Times provides us nifty graphical snapshots of state-of-birth in all 50 states in Census data since 1900. One of the mild surprises? Residents of New York are more than 60% New-York born. More than half live upstate, but given the large percent foreign born in the state, this still seemed surprising to me.

PTSD in the Civil War

An enterprising SUNY grad student examines PTSD among Civil War veterans using several sources including Ancestry.com and hospital records. She paints a sobering picture.

Cost-benefit analysis when there's addiction

The Times reports on a kerfuffle over FDA cost-benefit analysis regarding smoking, in which a number of prominent economists have weighed in. A big bottom line for them: "Particularly when ... addiction occurs prior to the age of majority ... we find it inappropriate to measure the area under a demand curve to define welfare."

 

Too much of a good thing?

The WSJ reports on research about high blood pressure and blood sugar control. Especially among the elderly, the benefits of managing biomarkers in a tight range are weighed against costs.

Cost-benefit analysis of counterterrorism spending

John Mueller and Mark Stewart provide a nice overview in the Summer 2014 J Econ Perspect. The short view: overall spending seems too high compared to the probability weighted risks. But FBI counterterrorism efforts seem more reasonable.

Mapped NYC traffic injuries

The Times reports on traffic injuries and fatalities, with a map of hotspots, and the Swedish experience.

Super Nordhaus Bros

The Times profiles Bill Nordhaus and his older brother Bob, both of whom have thought about climate change and the economics of pollution.

More opinions on Piketty

Yesterday Paul Krugman and David Brooks opined about Thomas Piketty's new book, with Brooks emphasizing human capital (and some Marxian class conflict theories of his own!). Krugman wrote about this issue in his formal review but doesn't mention it here. Ironically, this seems like a focal point at least for U.S. inequality: much is driven by high returns to managers at the top. It's not obvious whether better educating the bottom, as Brooks suggests, could help much, but perhaps he's positing that anyone with enough education could break into those ranks of the hyper-successful.

Update: Greg Mankiw weighs in as well, and mentions an AEA session upcoming in Jan 2015.

Krugman on Piketty

In the 5/8/14 issue of the NY Review, Paul Krugman reviews Thomas Piketty's new book on historical wealth, returns, and growth. I bet somebody smarter than I has already remarked about this, but if the return to capital or wealth is "too high" and needs to be taxed, another view is that if the supply is elastic, taxing it will reduce it and presumably raise its marginal product and return. I'm not an expert, but perhaps the estate tax would be safest in this regard, presumably being less disincentivizing.

Zero lower bound in macro models

Frederic Mishkin offers a tutorial about incorporating the zero lower bound into intermediate macro, and it looks like his approach mirrors the one presented by Buttet and Roy in J Econ Educ. I like their creativity, and maybe the very point is that an upward sloping aggregate demand curve is so very unintuitive. But I'm not sure it's the best approach in the classroom, where nifty changes to supply or demand curves beyond tinkering with the slopes seem to really snow students. I don't have any alternatives yet!

Solow reviews Piketty

Robert Solow reviews Thomas Piketty's new book on wealth inequality, through the lens of the Solow model effectively. He emphasizes the central finding that the return on capital has historically exceeded the growth rate of the economy, or what I recall being termed the "dynamic efficiency" condition, r > n + g.

Krugman and CUNY

Here's a nice piece in Business Week about CUNY, Paul Krugman, inequality and access.

Brooks on institutions & poverty

Yesterday's column by David Brooks discussed the rule of law, or lack thereof, in developing countries, much like Acemoglu and Johnson's Why Nations Fail. It's hard to see how foreign aid or intervention could easily establish the rule of law where it doesn't exist, short of invasion and occupation, which does not exactly appeal. These topics seem like a critical beachhead for research on development.

Medieval Europe family economics

The BBC reports on apprenticeships in the middle ages, with references to the Black Death, the price of labor, and teenagers. Fun reading!

Reinhardt on Obamacare

Uwe Reinhardt restates his idea from an earlier post to replace the individual mandate of Obamacare with a stark choice to either go-it-alone, with no social support, or to join a community-rated system of heath insurance. I like how his descriptions sharpen the issues, but it's hard to see how a system like that would really be sustainable.

Parents and children in data

Here's a fabulous NPR article about intergenerational occupation and income mobility based on the National Longitudinal Survey of Youth 1979. Thanks to Justin Wolfers for the tweet!

Growth in Poland and Ukraine

The Times reports on Poland as a "blueprint for Ukraine," and here's the picture that emerges from the Penn World Table v.8. Income per person in Poland today is on par with Russian levels and has been growing steadily, while Russia and Ukraine both experienced protracted swoons after 1991.

An "A" for aspirations

Catherine Rampell reports on Claudia Goldin's work on college grades and chosen majors.  Women seem to react more strongly than men to receiving lower grades in terms of their ultimate choices of majors.  Thanks to Greg Mankiw's blog for posting this.

Krugman on inequality and growth

Paul Krugman's column points to new IMF research that reveals no clear growth penalty for greater redistribution and reduced inequality. Since we redistribute through the tax code, and taxes bring distortions and deadweight costs, this is a surprising development.

Demographic transition in Africa

The Economist reports on the stalled demographic transition in Africa, where fertility has been a little higher than UN estimates among half the continent's population.

Paternal age and child outcomes redux

Another article about father's age and child outcomes was profiled in the Guardian by science writer Ian Sample with quotes from the lead author and from me and Jenn Roff at Queens College.  We think this research is interesting, but we're unsure whether the statistical strategy, which examines siblings rather than similar kids in different families, can plausibly separate the effects of paternal age from birth order.  Are junior's test scores lower because his dad was older when he was born, or because his older sibling absorbed more parental time?  Or did the parents get divorced?

Ukraine's ousted President and growth

All I could think of when reading about the "golden toilet" moment in the palace of the former Ukrainian president was of the abject corruption in many failed states discussed in Why Nations Fail by Acemoglu and Johnson.

Krugman joins CUNY

Nobel Laureate Paul Krugman is joining the Graduate Center at the City University of New York and the Luxembourg Income Study group. In his blog post, he highlights the lifestyle changes associated with living and working in New York City, along with a solidified focus on income inequality and employment with a public university.

Echo of the grandmother hypothesis

An article on BBC.co.uk discusses research into the evolutionary genetics of homosexuality, with an interesting reference to increased nurturing behavior by e.g. uncles. Kind of like the grandmother hypothesis about post-reproductive longevity.

This Sunday, Northwestern psychology professor Eli Finkel opined in the Times about trends in marriage and divorce rates. Here's a nice summary quote: 

"The problem is that the same trends that have exacerbated inequality since 1980 — unemployment, juggling multiple jobs and so on — have also made it increasingly difficult for less wealthy Americans to invest the time and other resources needed to sustain a strong marital bond."

NYC immigrants in the news

On Sunday, the Times reported that 8% of NYC cabbies are native born, down from 62% in 1980. Separately, during the State of the City address on Monday, Mayor Bill de Blasio formally proposed identification cards for all city residents regardless of citizenship status.

Looking ahead to the January employment situation

A journalism student asked me some questions about the upcoming January employment situation release expected this Friday morning, and I thought I'd reproduce the Q&A's here:

In the reported figures last month the unemployment rate dropped from 7% to 6.7% and the Yahoo finance figures suggest the prediction is that it will drop by another 0.2 percentage in the report on Friday. Does this sound about right to you? Are we part of a drop in unemployment and do you think this trend will continue?

I suspect we will see another reduction in the unemployment rate with the January data, but whether it will be large or small is less clear.  A reduction of 0.2 percentage point seems reasonable but might be conservative.

Overall, the economy looks like it is continuing to recover, albeit not very rapidly.  So we would expect the unemployment rate to drift downward, back toward a long-run equilibrium level around 5 or 6 percent.  In normal times, the unemployment rate is a nonzero number because of the usual pace of job creation and destruction.  Exactly where it ends up in the long run is a function of workers' skills relative to employers' demands.

The January number might well be even lower than the current forecast of 6.5% because of the December 31 expiration of extended unemployment benefits.  Because people have to declare themselves as unemployed --- out of work but actively looking for work --- in order to receive benefits, the end of the extension program is likely to reduce the incentive to declare as unemployed.  It may have prodded people to take jobs they would otherwise not have, or it may cause them to effectively withdraw from the labor force by not actively looking for work.  Either way, the number of unemployed seems likely to fall.  The labor force may also shrink if the long-term unemployed stop looking for work, but in percentage terms any such decline in the labor force must be smaller than the decline in the number of unemployed through this channel.  Thus the unemployment rate would fall, because the numerator would be falling faster than the denominator.

Do you have any sense of where the jobs are dropping or increasing in terms of region or sector?

No, not much of a good sense.  The broader story since the Great Recession has been increases in services and in the health sector and decreases in construction.  Monthly data tend to be noisy, and there's a lot of data and no clear story.  But the December 2013 employment situation news release presents average monthly increases in 2013 by sector, which I would be more inclined to reference.

You can calculate these yourself if you look at Table B-6 in the release and compare Dec 2012 versus 2013 levels of employment by industry and divide by 12.

Do you think the drop in unemployment is more due to people finding jobs or people dropping out of the workforce?

That's a good question, and I think it probably depends from when you start measuring, so whether you're talking about short-run flows into and out of unemployment versus longer-run trends.  The Great Recession reduced the employment-to-population ratio by about 4 percentage points, and that effect has been basically permanent so far.  So in a way, one could argue that none of the changes in the unemployment rate over the last 6 years reflect more people having jobs.  But it is also true that changes in the population age structure due to population aging should have been pushing the employment-to-population ratio downward during this time anyway, so this may not be the ideal way to look at it.

Do you think the expiration of the federally funded unemployment benefits is likely to be playing a role in people dropping out of the work force?

I think there certainly is potential for this channel, but I don't know.  On July 1, 2013, North Carolina acted alone in ending long-term unemployment benefits.  My reading of the state of knowledge is that economists have struggled to find much clear evidence of any effects stemming from this change, but they have some speculative perspectives.  Part of the problem is that there is no clear control group aside from neighboring states; another is that state-level data from surveys tend to oscillate more than national data in part because of reduced sample sizes.

Are there any seasonal fluctuations that I should me aware of that might be affecting the unemployment figures at the moment?

The statistics that we look at are seasonally adjusted, which means that statistical techniques have been applied to remove the quotidian impacts of seasonality. Even so, sharp and irregular snaps in weather can still affect seasonally adjusted data.  But I am unaware of anything in particular that is expect to impact the unemployment statistics.  We will find out on Friday, when the release typically includes enough armchair quarterbacking and 20/20 hindsight to placate us all!

Income inequality and health

On his blog, Greg Mankiw debunks a claim by Paul Krugman about income inequality reducing health, courtesy of a summary by Angus Deaton of his own research and other work that revisits the Wilkinson hypothesis.

Apps for personal finance

The Times reviews money management apps. My favorite quote is toward the end:

"Jim Bruene, founder of the NetBanker blog ... , can appreciate old-school methods for a period of time. 'Diligently hand-entering every expense for a month or two can be eye-opening, at least for the more short-term scenario where you are trying to get a handle on what’s happening with all your cash.'

"But that'll require some willpower."

Medicaid increases ER vists

The Times reports on a Science article finding strong increases in ER usage following the randomized Oregon Medicaid expansion, based on administrative data. Toward the bottom of the first page of the Science article, the authors conveniently summarize their other findings to date:

• Medicaid improved self-reported general health and reduced depression
• No statistically significant effects on measured physical health, specifically blood pressure, cholesterol, or glycated hemoglobin levels
• Medicaid decreased financial strain, but did not have statistically significant effects on employment or earnings
• Medicaid increased health care use; increased self-reported access to and use of primary care, as well as self-reported use of prescription drugs and preventive care
• No statistically significant effect of Medicaid on self-reported use of the hospital or the emergency department; however, Medicaid increased hospital use as measured in hospital administrative data

The authors discuss some reasons why patterns in self-reports, which didn't suggest many effects of the expansion, differ from those in administrative data. The latter are of higher precision and represent different universes. Administrative data pick up the behavior of people who don't respond to survey requests or who don't complete interviews.