SuperFreakonomics: A Rogue Economist Summarizes

I finally snagged a copy of SuperFreakonomics from the library a number of days ago and recently completed it. I posted earlier on its cute little gibes at macroeconomists, which remind me a lot of how sociologists tease economists in general. My overall impression is that like its predecessor, it's a really fun read.

Fun often includes several other emotions too, of course. Riding a roller coaster, you're likely to feel fear, g-forces, nausea, elation, and disappointment when the ride ends. The book lost me early on with its rather snarky writing style, which I felt like it either lost or I became more accustomed to as I read further. I think Levitt and Dubner are providing a public service in revealing the "hidden side of everything," but too often they overplay the amorality and smarty-pants cards. I would agree that those are more appropriate in a popular book than in academic discourse, however.

The back-and-forth over the global warming chapter to me is just humorous. The geo-engineering efforts of the I.V. to me feel recycled from a New Yorker article on the same topic from 2008. I have no problem with their reemphasizing those ideas to a wider(?) audience. Meanwhile, Brad DeLong and Paul Krugman seem to, or perhaps they're misinterpreting the direction of the chapter as hostile denial.

To me, the best aspect of SuperFreakonomics is that it provides a well-written and accessible summary of a lot of economic research that to ordinary people is likely to sound like it matters. And it's not about unemployment, stock prices, or interest rates. I wholeheartedly recommend this book to anyone interested in a round-up of clever ways to think about the world.

Obesity trends flat?

Today's Times reports a plateau in U.S. obesity rates, based on new studies of NHANES data published in JAMA. The main paper by Flegal et al. reveals differential trends among adults primarily by sex, and another paper by Ogden et al. shows essentially no trends in obesity among children since 1999--2000.

But when I look at the data, I'm much less sanguine about the supposed plateau in adult obesity rates. Based on NHANES data analyzed in a 2006 paper by Ogden et al. and in a 2002 paper by Flegal et al., I see a fairly uninterrupted upward trend in obesity prevalence (BMI >= 30) of about 0.5 percentage point per year. That's including the most recent data point.

The issue, and I agree that it could be important, is that the confidence intervals around the point estimates are apparently overlapping this decade. So one cannot reject with statistical tests the hypothesis that there has been no change in obesity rates. But failure to reject is not the same as finding no increase.

I would agree that there seem to be interesting differences by sex, with women displaying more stability in their distribution of BMI and men showing a clear rightward march. The Times article quotes folks as wondering whether this is indicative of good things to come, since women are typically the food preparers in families. They probably are, but are they also the fast food purchasers?

Calorie postings, self control, and the holidays

Today's Times covers a paper on caloric consumption after a new signage law. Researchers at Stanford obtained high-frequency transactions data from Starbucks around the imposition of the NYC law requiring calories be posted at large chain restaurants. The data revealed that NYC customers reduced their caloric intake when they knew how much they were consuming. Except during the holidays, when presumably good cheer or something else overcame the effects of new knowledge!

More on the soul of macroeconomics

Ironically, the primary foci of an article on macroeconomics in the 1/11/2010 New Yorker are Stephen Posner, a law guy, Eugene Fama, a finance guy, and Gary Becker, a microeconomist extraordinaire. John Cochrane makes what can be considered a cameo appearance, and Robert Lucas has a one line quote, "I don't want to do this."

Far be it from me to suggest there ought to be stark lines between macroeconomists and others, being someone who straddles that fence along with several others, but it's ironic that often those who have the most to say about the future and direction of macroeconomics would not identify themselves as such. That sort of thing also shows up, albeit more briefly, in the new SuperFreakonomics book, which remarks that it is not a book about the financial meltdown of 2008, and "[a]fter recent events, one might wonder if the macroeconomy is the domain of any economist" (page 16).

Posner, Becker, Fama, and others like Richard Thaler, Raghuram Rajan, and James Heckman certainly all have useful things to say. But I can't shake the feeling that many of these "macroeconomics-gets-a-thorough-reexamination" articles fail to pose useful questions with debate and suggested answers. What isn't particularly useful is debating whether the Chicago school approach, with its focus on rational behavior in response to prices and incentives, is right. Of course it is and it isn't. It's one simplified view of a very complex beast, not the alpha and omega and also not dead-wrong.

What's more useful are specific questions about policies before future economic crises and after. And there, the basic issues are (1) where on the scale of interventionist to laissez-faire do you end up, which is probably based on your perception of (2) how much relative market prices reflect relative social marginal utilities, i.e. what they ought to reflect if incentives are "right."

Gaining weight and other domestic blisses

The Times reported on a study of weight gain that finds women gain weight on average over time, but they gain more if they have a partner, and even more if they have a child in addition to a partner. Is happiness blimpss? Or is this all about stress and increased abdominal weight!

Unemployment over the business cycle in the U.S. and Europe

Time will tell whether October's 10.1% unemployment rate in the U.S. was the high water mark or not, but it appears that the unemployment rate in Europe may only be beginning its ascent. While today's measure of December unemployment in the U.S. remained at 10.0%, the Euro-area unemployment rate hit 10.0%, the highest in the decade.

The differences are presumably due to labor market regulations and practices. A Times article reports economists' pointing to French and German plans to restrict worker hours in order to avoid layoffs.

Is it better to spread the pain of recessions more broadly, even if it means delaying (or at worst, prolonging) recovery in the labor market?

Dueling cost forecasts

A new cost forecast by Richard Foster, Chief Actuary of CMS is in the news, this one regarding the health insurance reform bill. This forecast, like his sobering projection of the costs of the prescription drug benefit expansion of Medicare, is less optimistic than its counterpart out of CBO.

One thing that's been puzzling me is how a one-time increase in the tax rate applied to employer-paid health insurance premia could create a reduction in the rate of growth of health spending rather than just a level effect. But given some of the literature I've seen from the union I belong to, which argues that the tax on "Cadillac plans" will slowly grow to cover more individuals, maybe the secret is indeed that the effective tax rate will be rising over time. If that's true, it doesn't suggest cost savings can be long-lived.

Maybe I'm missing the point entirely: rates of growth don't change, but levels of tax revenues and thus fiscal sustainability do.