Statistical releases post-shutdown

I was wondering about when we'd see the September unemployment report, and the answer is next Tuesday. Blinders ... being removed!

"Generational Theft"

Well, that's a strong way of putting it, but maybe sometimes it pays to be flashy. Today in the NYT, Tom Friedman discusses his friend Stanley Druckenmiller and his recent rather strongly entitled presentation at NYU about U.S. entitlement spending and intergenerational transfers. It's good to see a blunt discussion of this, especially with the added focus on poverty among the young compared to that among the elderly, although that focus is not new. Sam Preston pointed it out in the early 1980s.

Child behavior, bedtimes, and study design

The NY Times reports on a Pediatrics article on regular bedtimes and child behavior. As you might expect, parents' self-reports of regular bedtimes is associated with better children's behavioral scores, but who knows whether it's having a regular bedtime that causes better scores, or better behavior causing the scores and the regular bedtime. Not revealed in the Times article is that the study looks at differences-in-differences or changes in these variables over time in the panel, which will remove any unchanging sources of variation. But without a clearer source of identifying variation, it's hard to accept such results reveal a causal lever.

Now there's a return on an asset

Today the Nobel Committee awarded the 2013 prize in economics to Eugene Fama, Lars Peter Hansen, and Robert Shiller, for theories of asset pricing and the generalized method of moments (GMM) estimator, which has become a standard element of the econometrics toolkit. I remember when I arrived at UC Berkeley in the late 1990s, Roger Craine, now emeritus, was interested in the finance side of macroeconomics and introduced some of these topics to our Ph.D. cohort.  Some of it made its way into my dissertation.

More recent memories are of the New Yorker's John Cassidy interviewing Eugene Fama for a piece entitled "After the Blowup" that appeared in early 2010.

Update: Over at the WSJ, Michael Casey quotes from Cassidy's piece on the topic of credit bubbles and feels Shiller's "Animal Spirits" approach seems to better capture at least recent events. In the interview, Fama explains what he means about bubbles, that in a way the term only applies in hindsight.

Here's a fun graph of Major League Baseball team victories (vertical axis) plotted as a function of opening day payrolls (horizontal). I was surprised to find an upward sloping relationship with as much statistical significance as there is, although here not enough to pass the standard test of a 95% confidence bound. There are plenty of reasons to quibble with this graph, not least of which being that opening day payrolls change a lot as the season play out, but I thought it was fun. No wonder the Yankees would like to get under the luxury tax threshold!

Janet Yellen to be nominated for Fed chair

Here's a fun timeline of Janet Yellen's life and career in the New York Times today. The high school yearbook photo is fun! I was fortunate enough to work at the CEA in 1998 and 1999 when she headed it, which is about a third of the way down the page. But I think by the time I got there, President Clinton had white hair!

Wilentz on the 14th Amendment

The eminent Sean Wilentz of Princeton wrote an op-ed in defense of presidential power to pay U.S. debts under the 14th Amendment. It's hard to quibble with his interpretation of historical events and the intent of Section 4 about the "validity" of the public debt. But his description of the 1860s controversy over paying debts in "depreciated paper money, or 'greenbacks'" was striking in light of the history of financial crises and defaults recently popularized by Reinhart and Rogoff. I think they would say that the U.S. has indeed "defaulted" on debts by repaying in inflation-debased currency, probably most notably by going off the gold standard during the Great Depression. One would have to agree that simply not paying debts is a lot more like unconstitutionally "questioning" them than inflating them away, but it seems there is some leeway in interpretation.