Brooks on health care and institutions

There are at least two things to appreciate about David Brooks's column today. One is that it discusses the efficiency/equity tradeoff implicit in social safety nets. Nothing's for free, but that's not to say that costly things have no value.

The second point is that he argues that "over the years, Americans decided they wanted a little more safety and security. This is what happens as nations grow wealthier; they use money to buy civilization."

Political scientists and economists see this connection between economic growth and institutions in completely opposite ways. Economists think institutions precede and create growth; political scientists believe the reverse. As Gary King once said, what you think is exogenous curiously tends to depend on your discipline. In fact it should depend on inherent statistical properties!

Gail Collins on the details

For an academic perspective on the changing roles of women in U.S. Society, check out Claudia Goldin's work. As reviewed in the Times, the new book from Gail Collins, When Everything Changed: The Amazing Journey of American Women From 1960 to the Present, presents many of the details to the story that scholarly works are sure to leave out. Collins "aims to tell social history 'by combining the public drama of the era with the memories of regular women who lived through it all.'” (How's that for a quotation of a quotation!)

Acemoglu on institutions in Esquire

Daron Acemoglu outlines the case for institutions in determined economic well-being. To me, the biggest revelation is his call for U.S. foreign policy to punish kleptocracies and repressive dictatorships in order to foster growth.

New work on fiscal adjustments

Alberto Alesina and Silvia Ardagna offer a new look at fiscal adjustment --- namely, raising taxes or cutting spending in order to achieve it --- and GDP effects among OECD countries. This is related to the question about the size of fiscal multipliers, but the samples are likely to be quite different. You'd never in your right mind conduct fiscal adjustment to lower a deficit during a contraction ... or would you?

In the paper, which is forthcoming in Tax Policy and the Economy, Alesina and Ardagna find that cutting spending is less harmful than raising taxes, and reflexively, tax cuts are better for GDP than spending increases. I don't think they are able to measure the (perceived) degree of permanence of these policies, which presumably would matter for life-cycle consumers.

Top college professor

A few days ago the Journal reported on the Cherry Teaching Award, which has nothing to do with fruit and everything to do with teaching. The article discusses the tension between teaching and research or other service at the collegiate level.

It also profiles 3 candidates for the Cherry award this year. Elliott West is 64, Edward Burger is 45, and Roger Rosenblatt is 69. See a pattern?

Way to go!

CBO Director Doug Elmendorf is profiled in the Times. "A good CBO director is respected but not loved by Congress."

Sahm et al. on the 2008 tax rebate

Claudia Sahm, Matthew Shapiro, and Joel Slemrod argue that micro-level survey results suggest people spent a third of their tax rebate checks. Their bottom line: "Absent the rebate, the sharp decline in spending that is evident in aggregate data beginning in the third quarter of 2008 would have started in the second quarter, prior to the financial crisis of the fall."

This stands in stark contrast to the perspective offered a year ago by John Taylor, who pointed out the complete lack of evidence in aggregate data of any consumption effect.

This reminds me of the back-and-forth over the Administration's "jobs created or saved" measure derived from surveys, criticized recently by Ed Lazear. If something doesn't show up in macroeconomic data, maybe it isn't there and maybe it is. What's the counterfactual? If it's a survey of intentions or actual outcomes, are the data good?