Friday, May 23, 2008

More anecdotes on gas prices and transit behavior

Another day, another story about high gas prices inducing changes in economic behavior, whether it's spending less overall on gas or the likely concomitant changes in commuting and other transit behavior.

The unfortunate thing is that by and large it is individuals with relative low income who are reported to have changed their behavior because of the rising relative price of oil. A higher gas tax back when the price was lower would have had the same asymmetric impact, but with a tax the U.S. government could have at least used the tax revenue to compensate the hardest hit.

Were the oil shocks of the 1970s coincident with changes in transit behavior? If yes, were the effects permanent or transitory?

Thursday, May 22, 2008

Is education recession insurance?

The CUNY Chancellor states that college experience is "recession insurance" because folks with some college experience are less likely to be unemployed than those without.

I think this observation is based on cross-sectional data: You survey everyone at a point in time, and it turns out that those with more education are less likely to be unemployed.

But that's not really the answer to the relevant question here, which is if you have more education, does that provide protection from becoming unemployed at some future date? Does education lower the probability of becoming rather than being unemployed?

What's the difference between these concepts? Economists categorize unemployment by three types of cause: cyclical, structural, and frictional. The first is what we mean when we talk about a recession. The second and third refer to underlying disincentives or other impediments to working, which are relatively low in the U.S., and the normal churn in a job market where millions of jobs are created and destroyed each year.

It is easy to imagine how education might insulate you against any combination of these three causes, and how it may not insulate against any particular one. Recent research in macroeconomics has identified the difficulty of finding a job as the key motive force behind rising cyclical unemployment during recessions, and not increased layoffs or quits. One would expect that more education should improve the chances of being newly hired, but I'm not sure that's true.

Tuesday, May 20, 2008

Some cities in population decline

The NY Times reported last week on deaths exceeding births in some U.S. cities, notably Pittsburgh.

Two local friends of mine used to live in Pittsburgh, before emigrating to New York --- where they had a child!

The causes of population decline can frequently be economic in nature, and they probably are in this case. Pittsburgh is not a place where more people die than anywhere else, or where something in the water prevents conception.

Some cities and counties, for example in Florida, deaths exceed births more because of in-migration of the elderly rather than the out-migration of the young.

Monday, May 12, 2008

Fuel costs, mass transit, and obesity

A link on Paul Krugman's blog led me to this NY Times article on increased transit use during a time of rapidly rising gasoline prices.

Some of my recent research has examined public transit usage, walking, obesity, and health care expenditures. To the extent that transit use increases walking and reduces obesity, users save additional money just by being healthier.