Below you will find a feed of the economics-related web sites that I find particularly interesting, insightful, entertaining, etc. (In other words, you are getting pretty much an edited view of my Google Reader.) My purpose in doing this is to provide readers with a portal for a wider range of information than I can provide myself. I will add new sources here as I come across them, and feel free to email me with suggestions for sites that you think should be included. It’s not practical to have too many sites incorporated here, so I will keep a list below both of included sites and sites that are not included but worth checking out individually. (Some of these are sites that are great but are not updated frequently enough for them to make sense in the feed.)
I am still working on the formatting, so please bear with me. For now, the page displays the last 50 posts in round robin fashion from the following sites:
- Marginal Revolution
- Greg Mankiw’s Blog
- Freakonomics Blog
- NYT Economix Blog
- Slate’s Moneybox
- Nudge
- Megan McArdle
- Environmental Economics
- The Becker-Posner Blog
- NPR’s Planet Money
- EconomistMom.com
- EcoComics
- xkcd
- Indexed
- Dilbert
The following sites are not currently included in the feed below, but are interesting nonetheless:
- The Consumerist
- Think Like An Economist
- Slate’s Undercover Economist
- Above The Crowd
- The Daily Show Economics Forum
- Economic Policy Review
- Economic Deficit Disorder
- Piled Higher And Deeper
- The Sports Economist
- The PULSE Review
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Marginal Revolution
Small steps toward a much better world.
Five books on information technology
by Tyler Cowen
31 Jul 2010 at 12:11pm
This interview with me is from the often-interesting FiveBooks web site; I was asked to recommend five books on information technology, other than my own. Here is part of my take on Hayek’s Individualism and Economic Order: And is it…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
University Website
29 Jul 2010 at 9:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
The Risk of a Fiscal Crisis
by noreply at blogger.com (Greg Mankiw)
31 Jul 2010 at 7:25am
CBO offers a useful issues brief.
Freakonomics
New York Times Blog
Know Your Scarcity
by By STEPHEN J. DUBNER
30 Jul 2010 at 10:51am
Fred Brooks, the computer scientist who 35 years ago wrote the still-relevant The Mythical-Man Month, has written a new book, The Design of Design, and Kevin Kelly interviews him in Wired.
Economix
Explaining the Science of Everyday Life
The Problem With (Bad) Tests
by By DAVID LEONHARDT
31 Jul 2010 at 6:00am
Does a new study on kindergarten suggest that standardized tests are irretrievably flawed?
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Cheaters & Thieves.
by Jessica Hagy
30 Jul 2010 at 8:57am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
We?ve moved to www.nudges.org. Come with us.
by nudgeblog
27 Feb 2010 at 12:08pm
Nudges.wordpress.com has been a great home for the Nudge blog over the past year and a half, but it’s time to move on. Where to? www.nudges.org. That’s right, we’re taking over our first home and revamping it for the future. We’ve added new social media capabilities that let you share our posts on facebook and [...]
Megan McArdle :: The Atlantic
Atlantic content from Megan McArdle
Phytoplankton Panic
by Megan McArdle
30 Jul 2010 at 5:54am
Phytoplankton, the tiny little ocean creatures that generate a massive amount of the world’s oxygen, form the base of the ocean food chain, and otherwise deserve to be nominated Hero of the World Economy, First Class, are apparently dying off. The theory is that global warming is probably doing them in. Michael O’Hare brings the doom. Kevin Drum brings the gloom:
So, anyway, as temperatures rise the plankton die. As plankton die, they suck up less carbon dioxide, thus warming the earth further. Which causes more plankton to die. Rinse and repeat. Oh, and along the way, all the fish die too.
Or maybe not. But this sure seems like a risk that we should all be taking a whole lot more seriously than we are. Unfortunately, conservatives are busy pretending that misbehavior at East Anglia means that global warming is a hoax, the Chinese are too busy catching up with the Americans to take any of this seriously, and you and I are convinced that we can’t possibly afford a C-note increase in our electric bills as the price of taking action. As a result, maybe the oceans will die. Sorry about that, kids, but fixing it would have cost 2% of GDP and we decided you’d rather have that than have an ocean. You can thank us later.
I actually think that Kevin misses the point a little: if this is true, 2% of GDP isn’t going to cut it. We’d better get back to an emissions level around 1940, or earlier, and stay there. Being that we now have about 2.5 times as many people in the country, and the world, as we did then, that’s going to be tricky. If higher emissions means the trend will continue, we’re pretty much doomed, at least until the Chinese economy collapses into food riots. There’s no point in waxing sarcastic about the American public; it’s a nasty, nasty collective action problem that I can’t see how we’d solve short of invading China.
Of course, this might make it easier to get consensus, since this is no longer a situation where low-lying or tropical poor countries suffer for our industrialization. A lack of oxygen in the air is going to cause problems for everyone; ditto a lack of fish. Frankly, I don’t see how working women are going to survive the loss of Bumblebee Tuna.
So how much should we worry about this right now? I mean, assuming that worrying would actually do us some good, rather than just raise our bad cholesterol and drive us to drink?
The die-off of most of the phytoplankton would be a huge catastrophe. However, here are some reasons that we shouldn’t succumb to outright panic quite yet:
1. It’s one paper. I am not casting aspersions on the authors or their methodology, but the whole idea of science is that even the smartest people can be wrong. As with other attempts to reconstruct past climate, they’re using a series of proxies for past events that have much weaker accuracy than the direct measurements we’re now using. That doesn’t mean they’re wrong, but it does leave them more open to interpretation.
2. All the carbon we’re burning used to be in the atmosphere. Yet the planet supported life. Indeed, the oil we’re burning comes from the compressed, decayed bodies of . . . phytoplankton. This suggests that some number of phytoplankton should be able to survive high concentrations of the stuff.
3. There are positive feedback effects, but also negative ones. One of the things that drives me batty about environmentalists and journalists writing about climate change is the insistence that every single side effect will be negative. This is not really very likely, unless you think that every place on earth just happens to be at the very awesomest climate equilibrium possible as of 9:17 am this morning, or that global warming is some sort of malevolent god capable only of destruction.
Mind you, this is not an argument for letting it happen; I’m not a fan of tampering with large, complex systems that I don’t really understand, which is why I tend not to support much direct government intervention in the economy–and why I do, nonetheless, support a hefty carbon tax.
But there’s a certain tendency to ignore mitigating offsets, such as the fact that higher carbon concentrations make terrestrial plants grow more lushly, sucking up some of that extra carbon dioxide in the atmosphere. At least, as long as we don’t turn them into biofuels, that is. There’s also a tendency to ignore mitigation rather than reduction, on the grounds that emissions reduction is “easier”. Well, I suppose it is easier if you assume away the political problems. But no matter how hard I assume, I keep waking up in a world where we’ve made no meaningful progress on emissions reductions. At this point, I’ve got more faith in America’s engineering talent than in her ability to conquer fierce political resistance to reductions at home and abroad.
Climate change - Global warming - China - Environment - Carbon dioxide
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for July 31, 2010
31 Jul 2010 at 12:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis And Other Stuff
Deja vu all over again
by John Whitehead
29 Jul 2010 at 5:54am
Michigan’s governor yesterday sharply criticized attempts to contain a large oil spill making its way down the Kalamazoo River after the company responsible for the spill said it had redoubled its efforts to clean up the mess.
Gov. Jennifer Granholm asked the federal government for more help, saying that resources being marshaled by the federal Environmental Protection Agency and Enbridge Inc. are “wholly inadequate.”
Enbridge said it has been working to clean up the spill since its pipeline in southern Michigan broke Monday and leaked more than 800,000 gallons of oil into Talmadge Creek, which runs into the Kalamazoo River.
NPR Blogs: Planet Money
Planet Money
The Friday Podcast: Tallying Up The Pelican Bill
30 Jul 2010 at 4:00pm
Today on the podcast, we come up with 5 different ways to put a pricetag on a pelican.
Ecocomics
Where Graphic Art Meets Dismal Science
The American Way
by ShadowBanker
28 Jul 2010 at 8:17am
The Amazing Spider-Man #638 by Joe Quesada, Paolo Rivera
Amazing Spider-Man Annual #21 by Jim Shooter, David Michelinie, and Paul Ryan
Marvel Comics, (2010)
Spectacle for profit. The American way.
The Becker-Posner Blog
Welcome to the new Becker-Posner Blog, maintained by the University of Chicago Law School.
correction
by Gary Becker
27 Jul 2010 at 6:10pm
I apologize for two typos in my last post on extending unemployment insurance.
Toward the end it should read “4.5 million persons were hired in May 2010″
At the end of my post I inadvertently included some statistics on the voting on this bill, and provide a reference for these data.
Gary S. Becker
EconomistMom.com
…where analytical rigor meets a mother’s intuition
A Washington Post Not-So-Much-Lovefest on the Bush Tax Cuts
by economistmom
31 Jul 2010 at 3:37pm
(Graphic above from Washington Post online: Should Congress extend the Bush tax cuts?) It’s a big “rag on the Bush tax cuts” week in the Washington Post–I think because this is one of the biggest looming issues Congress and the Administration will be coming back to after August “recess.” It began with Ruth Marcus’ column on Wednesday, [...]
Marginal Revolution
Small steps toward a much better world.
Negative complementarities in the labor market
by Tyler Cowen
31 Jul 2010 at 8:40am
The Miami Heat easily sold out its season tickets after LeBron James announced he was joining the team. That turned out to be bad news for the ticket-sales staff, which the Heat fired Friday. “Now that the supply for [season...
xkcd.com
xkcd.com: A webcomic of romance and math humor.
Frogger
27 Jul 2010 at 9:00pm
Greg Mankiw's Blog
Random Observations for Students of Economics
Stocks Look Cheap
by noreply at blogger.com (Greg Mankiw)
31 Jul 2010 at 7:17am
Freakonomics
New York Times Blog
Charitable Giving in a Recession
by By FREAKONOMICS
30 Jul 2010 at 8:01am
A new report, based on the Center on Wealth and Philanthropy's Individual Giving Model (IGM), estimates that individual charitable giving was down 4.9% percent in 2009.
Economix
Explaining the Science of Everyday Life
The Rich Drink More
by By CATHERINE RAMPELL
30 Jul 2010 at 4:00pm
Upper-income Americans are more likely to report that they consume alcohol, according to a Gallup survey.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Getting warmer.
by Jessica Hagy
29 Jul 2010 at 8:57am
Nudge blog
From Richard Thaler and Cass Sunstein's "Nudge: Improving Decisions about Health, Wealth, and Happiness"
Auto-suggest suggests how far behavioral economics has come, and how far it s...
by nudgeblog
24 Feb 2010 at 7:30pm
In terms of recognition and respect, behavioral economics has certainly come a long way in the last 25 years. But it is still a Hibernian outpost in the great Roman Economics empire. One of the newest metrics for evaluating its impact is the auto-suggest feature in many search engines that has become quite popular since [...]
Megan McArdle :: The Atlantic
Atlantic content from Megan McArdle
Quote of the Day, Wikileaks Edition
by Megan McArdle
30 Jul 2010 at 5:38am
Clive Crook: “The question is, who do I trust to decide what should be secret, the Pentagon or Julian Assange? The answer is neither.”
Wikileaks - Julian Assange - United States - Pentagon - Government
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for July 30, 2010
30 Jul 2010 at 12:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis And Other Stuff
#12 all-time most hated sports teams
by John Whitehead
28 Jul 2010 at 12:48pm
1991-92 Duke Basketball:
You loathed the second of coach Mike Krzyzewski’s title-winning teams for the same reasons you hate boy bands: their nauseating omnipresence, thanks to a Blue Devils-centric, Dick Vitale-fueled TV schedule; an ensemble of well-coiffed prepsters who looked better suited for the cast of School Ties; and an aggravating, undeniable level of talent that justified their cocksure attitudes. Star forward Christian Laettner epitomized that rock-star mentality. He was the ultratalented leader (witness his perfection in the Regional final against Kentucky) and the bad boy (who could forget the stomp he delivered to Aminu Timberlake’s chest?) of the group. This Duke team was not built to be loved. It was built to win, quashing the storybook runs of Kentucky’s “Unforgettables” and Michigan’s “Fab Five” in the process. This was when Duke basketball emerged as a polarizing brand — a bastion of annual excellence that, simultaneously, became the target of effortless disdain. – Chris Mahr
NPR Blogs: Planet Money
Planet Money
Crackberry Addicts Score New Way to Get Fix
30 Jul 2010 at 2:53pm
Now you can have your Blackberry and a Tablet, Too
Ecocomics
Where Graphic Art Meets Dismal Science
Iron Man is Impressed With Barter Economies
by ShadowBanker
27 Jul 2010 at 6:00am
Invincible Iron Man #28 by Matt Fraction and Salvador Larroca, Marvel Comics (2010)
Stark Resilient is officially underway as Tony Stark tries to piece together his life, build a new Iron Man suit, and kickstart his new company, with the goal of creating the first ever electric car powered in full by repulsor technology. First step? The interview process.
Here, Stark interviews a Mr. Macken. He ran an electronics repair shop in Detroit, fixing televisions and such primarily for senior citizens. However, the community he worked in was poverty-stricken and faced as astonishing 88% unemployment rate. This meant that most of his customer base were out of work and could not actually afford to pay for their repairs. So, Mr. Macken decides to fix the televisions anyway in exchange for direct goods and services, such as a nice home-cooked meal and some plumbing in his home. This apparently “created a kind of running barter system in lieu of cash. An underground economy.” And it impressed Tony Stark.
First, which community is this that is running an 88% unemployment rate? And how small is this community? I did a quick search and couldn’t find anything. Maybe the community is a few blocks populated mostly by senior citizens, who likely would have been retired anyway. Though, that wouldn’t even count in the unemployment statistics since unemployment refers to those actively looking for work. The people who Mr. Macken tends to serve seem to be just good, old-fashioned poor.
Second, how big could this barter economy have possibly been? Tony makes it seem like Mr. Macken launched an entire system where everyone in this community just swapped chickens for checkups. That might be, but my guess is that it was really more along the lines of a barter system relegated to television repair. I doubt this would have made a major impact worthy enough to gain Tony Stark’s attention.
Plus, I doubt this economy’s sustainability. As we all know, there are several problems with barter economies, the least of which is not having a standard by which you measure value. For instance, someone with a particular skill or trait could exhaust it after one use. Take, for instance, the case of the repair man offering to fix Mr. Macken’s plumbing in exchange for TV repair. Suppose the gentlemen later needs his radio fixed. He’s already fixed the plumbing, so what else does he have to offer?
I don’t know about you, but I don’t trust this “Mr. Macken” and his crazy get-rich-quick schemes. Not the kind of employee I envision for Stark Resilient.
The Becker-Posner Blog
Welcome to the new Becker-Posner Blog, maintained by the University of Chicago Law School.
Should Unemployment Compensation be Extended? Becker
by Gary Becker
25 Jul 2010 at 5:23pm
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President Obama during this past week signed into law extending unemployment benefits to a maximum of 99 weeks, or almost two years, for persons who have been unemployed for over half a year and have exhausted their state benefits. The degree of extension varies among states depending on a state?s unemployment rate, with higher unemployment states getting longer durations of coverage. The bill that became law is highly partisan, passing with almost all Democrats, 31 House Republicans, and only 2 Republican senators. I believe the law extends unemployment benefits for too long, although the economics of optimal unemployment insurance gives a less than certain answer.
Unemployment insurance tries to balance two conflicting goals. One is to protect at least some of the earnings of workers laid off from their jobs through no fault of their own, while the conflicting goal is not to make unemployment status so comfortable that workers try to get laid off, and do not look seriously for jobs when they are unemployed. The first aim is a typical goal of insurance against bad outcomes, while the second goal is to reduce the degree of ?moral hazard?; that is, to reduce the incentive of persons to reduce their efforts to remain employed and look seriously for work when unemployed because they have insurance against the cost of being unemployed.
One typical way insurance tries to reach a compromise between these conflicting goals is to have a deductible that is paid by insured persons, such as the $500 deductible many car owners have on their automobile insurance. The trouble with practically all the state-run unemployment insurance plans is that they typically have no or a minimal deductible because they provide coverage essentially from the first week of unemployment. In addition, they usually limit coverage to a fixed number of weeks, such as 26 weeks. This is an inefficient and costly approach since practically all the unemployed can readily cover their first several weeks of unemployment from savings, spouses? earnings, or borrowing on credit cards and in other ways. Unemployed workers usually run into financial trouble only when they have been unemployed for an extended time. An optimal unemployment insurance plan would make unemployed workers responsible for their first month or two of unemployment, and mainly spend unemployment insurance resources on the longer-term unemployed.
A second insurance approach to the moral hazard problem is to require significant co-payments, so that the insured have to pay a portion of any additional losses they experience after they exhaust the deductible. American unemployment insurance plans usually do pretty well on this by only paying about half or so of the earnings the unemployed had received when they were employed. Many European plans had usually replaced most or all of the earnings of the unemployed, and covered unemployed for many years. After they learned the hard way the prediction of economic theory that this encouraged significant increases in unemployment, several countries greatly cut back both the duration and payment (i.e., replacement) rates for the unemployed. Interestingly, In Germany this was done under a center-left Social Democratic government.
This analysis of insurance provides background for evaluating the new extension of unemployment benefits for the longer-term unemployed. The approximately $30 billion committed to this extension has been partly justified as a stimulus to what may be a slowing US economy. However, since any ?stimulus? from $30 billion would be paltry even to the most optimistic stimulus calculations, such a stimulus can hardly be a serious justification for this extension of benefits. This is especially the case when federal budget deficits have been so large during the past couple of years, and there is no serious evidence that the $800 billion stimulus package passed over a year ago has had much stimulating effect on unemployment or GDP. Much of the evidence usually cited about number of jobs created by the stimulus package is based on terrible analysis. Any new hires under stimulus money is assumed to be net jobs created by the stimulus rather than a transfer of employment from non-stimulus activities to stimulus-supported activities.
So the case for the new law rests on its insurance provisions rather than on its stimulus capabilities. I argued earlier that covering the longer-term unemployed is the more optimal way to approach unemployment insurance since the long-term unemployed face the largest economic hardship. From that viewpoint, extending the duration of coverage beyond 6 months makes sense in an environment where the unemployment rate remains excessively high at 9.5%, especially if the extension is accompanied by the elimination of unemployment coverage for the first 6-8 weeks of unemployment.
However, the actual large extension poses a major risk of creating an unemployment culture where men and women remain ? unemployed? for years. Once the period of unemployment becomes long enough, people begin to get the habits from being unemployed for a long time: they sleep late, develop various leisure interests, and at the same time their work skills depreciate from not using them for an extended period. Studies have shown that skill depreciation is a serious effect of being unemployed for a long time.
Some might retort that this argument is persuasive during periods of normal unemployment rates, perhaps 7% and under, but not when jobs are scarce, the unemployment rate is over 9%, and it is coming down slowly. There is merit to this response, but on the other hand, the JOLTS data show that even with the current high unemployment rates, about 4.5 4 million persons were hired in May 2010 (and about the same number are either being laid off or quitting their jobs). So for the most part, even the long term unemployed can find jobs if they are willing to take a cut in their earnings, and/or move to other industries and occupations.
This analysis leads me to the following conclusions. During bad times, 6 months of unemployment compensation may not be long enough, but the 2 years in the new law is too long. About 9 months of unemployment compensation would be the right length. Anyone unemployed longer than that would lose these benefits. If they want to work they should be forced to adjust, at least temporarily, to the bad economic environment, and accept jobs that they would turn down during good economic times.
[K1]?The vote in the House was 272 to 152, with 31 Republicans joining 241 Democrats in supporting the measure. Voting against were 142 Republicans and 10 Democrats.?
Fewer senators crossed partisan lines (2 Republicans and 1 Democrat) on this issue.
EconomistMom.com
…where analytical rigor meets a mother’s intuition
Peter Orszag on the False Debate
by economistmom
29 Jul 2010 at 10:55am
Peter Orszag, President Obama’s budget director, gave a “farewell speech” of sorts yesterday at the Brookings Institution (his former professional “home”). Although an incident with a protester stole most of the media attention, Peter’s point about the “false debate” between those concerned about the deficit and those concerned about jobs–shown in the video clip [...]
Marginal Revolution
Small steps toward a much better world.
*The Fever*
by Tyler Cowen
31 Jul 2010 at 5:27am
The author is Sonia Shah and the subtitle is How Malaria has Ruled Humankind for 500,000 Years. Excerpt: The mosquito’s immune system instinctively attacks the parasite, encapsulating the intruder in scabs and bombarding it with toxic chemicals. To survive, the…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
Period Speech
25 Jul 2010 at 9:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
Do Kindergarten Teachers Matter More than Parents?
by noreply at blogger.com (Greg Mankiw)
28 Jul 2010 at 8:36am
New research on the value of kindergarten teachers is remarkable.
In fact, it seems a bit hard to believe. If kindergarten teachers matter as much as this new research suggests, then you would think that parents would have a large influence on their kids’ adult outcomes. After all, you spend a lot more time with your parents than in your kindergarten class. But much research in behavioral genetics finds very little evidence for significant parental effects. (See Judith Harris’s The Nurture Assumption.) So I am puzzled.
Update: Judith Harris emails me:
I guess it’s been a while since you read my book. In Chapter 11 of The Nurture Assumption I described the case of a gifted first-grade teacher, “Miss A,” who had a long-lasting beneficial effect on her students, and I proposed an explanation of how and why this happened.Yes, it has been a while, and since I am now at the Jersey shore, I don’t have a copy handy. I much appreciate the correction.
Update 2: From Raj Chetty, one of the authors of the study:
I’m writing in reference to your interesting comment about our Kindergarten paper. I think our results are actually consistent with your perfectly sensible intuition that parents should matter more than teachers, for two reasons:
(1) the Kindergarten class effects are large in aggregate but explain a small share of the variance in earnings (less than 5%) overall. A better class leads to higher average earnings (3% higher earnings for a 1 SD improvement in teacher quality), but there is a lot of variation around the mean.
(2) The best evidence I’ve seen on the long term impacts of parents is this quasi-experimental paper by Bruce Sacerdote published in the QJE. It shows that parental characteristics explain about three times more of the variation in adult outcomes than KG classes, consistent with your intuition.Thanks!
Freakonomics
New York Times Blog
Memories of Madrid
by By STEPHEN J. DUBNER
30 Jul 2010 at 6:33am
A recent trip to Madrid included a lecture at the Universidad Europea de Madrid (which features, among other things, a dentistry school, at right). The best part was a short film that had been made before my arrival: a spoof in which an economics class at the university is taught freakonomics instead of economics (sorry, no translation available).
Economix
Explaining the Science of Everyday Life
The ‘Great Recession’ Earns Its Title
by By CATHERINE RAMPELL
30 Jul 2010 at 1:48pm
A look at how the most recent downturn compares to those that came before it.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Somebody?s always in charge.
by Jessica Hagy
28 Jul 2010 at 9:01am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
Millionaire athletes hate handing over $20 cash for being late
by nudgeblog
23 Feb 2010 at 7:39pm
UCLA economist Matthew Kahn picks up on a neat little story about Los Angeles Lakers coach Phil Jackson’s use of psychology in his NBA locker rooms. Ever the behavioralist, Jackson fined his players tiny amounts – $10 and $20 – for being late to games by a few minutes. Jackson has found that players are [...]
Megan McArdle :: The Atlantic
Atlantic content from Megan McArdle
Why Do Employers Use FICO Scores?
by Megan McArdle
29 Jul 2010 at 5:14am
A few days ago, I wrote about employers using FICO scores to screen potential employees. One thing that neither I nor Kevin Drum really answered is: why are employers using them? They’re at best a weak proxy. Of course, corporations do stupid things all the time, because they’re not infallible. Still, it’s a question that bears asking.
Over at CoyoteBlog, an employer offers one possible answer: because we’ve made other forms of information gathering illegal. IQ tests are out, as are any other tests that have disparate impact on minority groups. And references have become useless:
That being said, as someone who has 500 service employees working for me, I understand the insatiable desire for information on employee reliability and conscientiousness. A large number of our employees we hire who interview well tend to get released within 60 days of their hire. I can’t tell you how many people who seem totally normal and friendly turn out to be raving maniacs in stressful customer contact situations.
The elephant in the room that neither McArdle or folks like Kevin Drum mention is that businesses are starved for reliability information on potential employees. It used to be the best source was to check job references. Nowadays, though, very few employers will give a honest job reference, or will provide any information at all. I know I am guilty of that — my company does not allow any manager to give out performance data on past employees. I only needed to be sued once over somehow interfering with someone’s living by giving honest information about that employee’s reliability to change my behavior.
I understand that this is exactly what the Left is shooting for - an environment where the competent have no advantage over the incompetent. If employers are resorting to FICO scores, it just demonstrates how all the other reasonable avenues of obtaining information have been closed to them.
That’s uncharitable, but I think there’s a grain of truth in it. And to be sure, everyone has an interest in ensuring that people who’ve done something stupid in the past can get a fresh start.
But no matter how valuable privacy is, it cannot be true that you have a right to control the dissemination of information about all of your public interactions. Other people have an interest in knowing if you are a rageaholic who will cost them customers, destroy the apartment you’re renting, or stiff them for goods bought on credit.
I’m not sure why credit reports should fall into the category of sacred information that no one else has a right to see. The amount of money someone has is private–but not paying your bills is a very public action with large repercussions for others. Why do you have an absolute right to keep others from knowing that you’ve stiffed a third party?
We seem to be in a situation where we are systematically depriving employers of any potential information about employees. This is both bad for businesss, which end up with unnecessary turnover, and bad for employees, because it results in the use of less accurate proxies that aren’t banned. As Alex Tabarrok pointed out, banning inquiries about criminal history is likely to result in (illegal, but harder to detect) racial discrimination. Imposing liability for truthful bad references results in the use of things like FICO scores. And banning FICO scores–well, it may not be a good proxy, but what are bosses likely to use instead?
Kevin Drum - FICO - Employment - Credit history - Business
Dilbert Daily Strip
The Official Dilbert Daily Comic Strip RSS Feed
Comic for July 29, 2010
29 Jul 2010 at 12:00am
Environmental Economics
Economists on Environmental and Natural Resources News, Opinion, Analysis And Other Stuff
The value of a statistical life in developing countries
by John Whitehead
28 Jul 2010 at 11:18am
Edward Carr addresses the Summers Memo and its implications for banning risky stuff in developing countries:
If someone is going to suggest that people elsewhere should ?be allowed? to use materials that we have banned here for reasons of public health, then they should also have to address the implicit valuation of human life that makes such a political statement appear ?logical? and apolitical.
Now to see if the folks at Environmental Economics let me have it over this . . . they are, after all, real economists.
The only concern I have with this post is the implication that we are “real” economists. That is an outrage!
Seriously though, the trouble the value of statistical life (VSL) calculations is they are based on willingness (and ability) to pay. Since environmental quality (and health and safety) is a normal good — people want more if it when their incomes increase — environmental quality (and health and safety) will be valued lower in places that have lower incomes. This naturally leads to lower VSL calculations and the policy implications are clear. The net benefits of many policies will be positive in rich countries and negative in less rich countries. But, this is not because lives are worth less in less rich countries but because less rich countries can’t afford as much environmental quality (and health and safety) as rich countries. Sad, but true.
NPR Blogs: Planet Money
Planet Money
Are Poor People More Generous?
30 Jul 2010 at 1:03pm
A new study shows a selfish streak among the rich
Ecocomics
Where Graphic Art Meets Dismal Science
Beast Gets Statistical Significance Wrong
by ShadowBanker
26 Jul 2010 at 6:00am
Uncanny X-Men: The Heroic Age by Matt Fraction, Whilce Portacio,
Steve Sanders, and Jamie McKelvie, Marvel Comics (2010)
In the wake of the major “Second Coming” event, the return of Hope, thought to be the mutant messiah, has resulted in the appearance of at least five new individuals with the X-gene across the globe. Or at least that’s the theory. After all, correlation is not causation.
Why is this important? Well, there hasn’t been a single mutant birth since the “M-Day” event, and for the past several years mutantkind has been living in fear at the prospect of its own extinction. As Molly mentions above, the return of Hope (the first mutant technically born after M-Day) and the appearance of these five new mutants could signal a potential resurgence of the species.
In response to this, Beast tells Molly that, as a scientist, he is skeptical. After all, there were only five mutants. Compared to the mutant birth rate before M-Day, a mere five mutants is inconsequential. He refers to this as being “statistically insignificant.”
I’m surprised to see such a renowned scientist fumble the concept of statistical significance. When economists, statisticians, scientists, etc. say that something is “statistically significant,” they mean that the results they observe are extremely unlikely to have occurred by mere chance. Even if the results are small, they can still be statistically significant.
In this case, what we’re testing is whether the appearance of these five new mutants was just pure coincidence, or whether it was actually caused by some event (i.e. the return of Hope). There is really no way to get a firm answer on this. As readers, we pretty much know that Hope was responsible. But it’s a bit harder to prove empirically that it wasn’t coincidence.
Nevertheless, this is not what Beast was referring to. He was referring to the number of mutants, which is not what statistical significance actually is.
In actuality, Beast made a common mistake, which is to mix up statistical significance with practical importance. Beast was implying that whether or not Hope actually caused the birth of these five new mutants, it didn’t have any real implication yet, since five mutants is a relatively small number compared to the current mutant population and the previous birth rate.
The funny thing is that it’s even too soon to tell whether it has any practical significance as well. It’s been a matter of days since “Second Coming” ended. It is highly likely that given some more time, the X-Men would find some more mutants on the radar. I know scientists are supposed to be skeptics, but I’m truly shocked to see Beast be so dismissive about this. And I’m stunned to see him blame his empirically-trained mind for the phenomenon.
Maybe Hand McCoy should enroll as a continuing ed. student in the local college and re-take statistics.
The Becker-Posner Blog
Welcome to the new Becker-Posner Blog, maintained by the University of Chicago Law School.
Against Extending Unemployment Benefits?Posner
by Richard Posner
25 Jul 2010 at 4:20pm
I do not favor extending unemployment benefits. The bill signed into law by the President last Wednesday would extend unemployment benefits by up to 13 weeks (depending on a state?s unemployment rate) for persons, estimated to number some 2.3 million, who have been unemployed for six months or longer, up to a maximum of 99 weeks (almost two years), at a total cost to the government estimated at $34 billion.
I would not object to the government?s giving the states some fraction of $34 billion to enable them to make additional welfare payments to persons experiencing serious economic hardship. But extending unemployment benefits beyond the standard six-month limit is a bad idea.
As Becker points out, the total amount of the additional benefits is too small to have a significant positive effect on employment?and for the further reason that a transfer payment cannot be assumed to have a positive effect on consumption or investment. The effect will depend on what the recipient of the transfer does with it. If he saves it, at least in an inert form such as cash or a federally insured demand deposit that the bank in which the money is deposited uses to buy a Treasury security, then it will not stimulate production and hence employment. Even if he uses it to buy something, it may turn out that the seller is selling from inventory and doesn?t plan to restock, in which event the effect on production will depend on what the seller does with the money he receives for the sale?maybe he will save it in some inert form!
Far from being effective as stimulus, the extension of unemployment benefits will have two negative effects on employment. First, it will increase the opportunity cost of the recipient?s rejoining the labor force. Unemployment benefits are set lower than earnings to reduce the moral hazard that Becker discusses, but the gap between benefits and earnings is narrowed by the costs of work (such as commuting, and any disutility associated with work, such as fatigue and boredom) and by the benefits of household production and of leisure?and those benefits, unlike earnings, are not taxed. The gap is so small for many unemployed people that studies show that they do not begin a serious job hunt until their unemployment benefits are about to expire.
So extending or otherwise enhancing unemployment benefits, far from stimulating employment, is likely to reduce employment and so slow the pace of economic recovery.
Second, extending unemployment benefits has a negative long-term effect on employment. The longer a person is unemployed, the less likely he is ever to return to the labor force, at least in a job comparable to the one he held before becoming unemployed. Apart from erosion of skills and of the habit of working, persons unemployed for a long time are unattractive hires because employers are suspicious of these persons? attachment to or aptitude for work.
Thus the net effect of the just-enacted extension of unemployment benefits is likely to be to reduce employment and output. And while the amount of the benefits involved in the extension is not large, the negative effect on the economy may be if a substantial number of the 2.3 million persons who will be receiving the benefits are unemployed for a longer time, as a result, than they would otherwise be.
So the extension has to be defended if at all as a welfare measure. It is a bad measure because it is not means-tested. To be counted as unemployed you have to be looking for a job, so one can assume that the unemployed are involuntarily unemployed and so would prefer to work. But that doesn?t mean that they necessarily face economic hardship as a result of being unemployed. They may be unemployed because their attachment to the labor force is actually quite week; they do not try very hard to meet their employer?s expectations and so are quick to be laid off in bad times, or their search for employment is lackluster. They may have large savings or a high-income spouse. No doubt the bulk of the long-term unemployed are hardship cases, but it is only hardship cases that make a strong claim on a welfare program.
The fact that not all persons who have been unemployed for a substantial period of time are hardship cases reinforces my concern that extending unemployment benefits will cause disemployment. The persons who can afford, as it were, to be unemployed are likely to pocket any additional unemployment benefits that they receive and slow their search for a job.
EconomistMom.com
…where analytical rigor meets a mother’s intuition
EconomistMom Merchandise! (Without Even Trying)
by economistmom
27 Jul 2010 at 9:24pm
CafePress will make anything in virtually any theme imaginable. So when I did a quick google search on “EconomistMom” to check for articles linking to my blog, the link to the CafePress “Economist Mom” merchandise came up at the top of page 2! Pretty cool. I guess I should at least get [...]
Marginal Revolution
Small steps toward a much better world.
Why don’t issuers choose IPO auctions?
by Tyler Cowen
31 Jul 2010 at 5:02am
Most firms try to sell their initial public offerings at predetermined prices, rather than just holding an auction. After the shares are sold, there appear to be immediate excess returns, which suggests some money may have been left on the…
xkcd.com
xkcd.com: A webcomic of romance and math humor.
All the Girls
22 Jul 2010 at 9:00pm
Greg Mankiw’s Blog
Random Observations for Students of Economics
Readings for the Pigou Club
by noreply at blogger.com (Greg Mankiw)
27 Jul 2010 at 7:43am
Gib Metcalf makes the case. (He suggests that club members email their support for higher Pigovian taxes to the National Commission on Fiscal Responsibility.)USA Today joins the club.
Freakonomics
New York Times Blog
What’s Harder: Science or Rapping?
by By STEPHEN J. DUBNER
29 Jul 2010 at 11:00am
Three interns at Intellectual Ventures have made a rap video.
Economix
Explaining the Science of Everyday Life
What We’re Reading: Billionaires Around the World
by By CATHERINE RAMPELL
30 Jul 2010 at 11:45am
Links from around the Web.
Indexed
PUBLISHED WEEKDAY MORNINGS as the COFFEE BREWS
Ha ha.
by Jessica Hagy
27 Jul 2010 at 9:33am
Nudge blog
From Richard Thaler and Cass Sunstein’s “Nudge: Improving Decisions about Health, Wealth, and Happiness”
Italian RECAP?
by nudgeblog
23 Feb 2010 at 8:13am
Bank of Italy Governor Mario Draghi says “the variety of new (bank) fees makes it difficult for customers to compare the different offers.” He then seems to propose a RECAP-style system of simplification and disclosure. Within days we will submit to the Government a comprehensive regulatory proposal that can lead to clearly stated charges, so [...]
Megan McArdle :: The Atlantic
Atlantic content from Megan McArdle
Does Medicaid Kill?
by Megan McArdle
28 Jul 2010 at 12:27pm
Several people have written to ask what I think of this piece by Avik Roy on Medicaid outcomes, which discusses a study indicating that people on Medicaid do worse than people with no insurance at all. I suspect that many of them were hoping to catch me in a bit of hypocrisy, as I rushed to support the study with the findings that undercut the rationale for national healthcare. And indeed, if you think these are right, you should be horrified by PPACA, which got more than half of its coverage boost by putting people into a program that will kill some of them before their time.
What do I think? This is not actually a surprising new finding; it turns up off and on in the literature on insurance and health care outcomes. I’m glad that Roy blogged the study, but I’m skeptical that this reflects the relative benefits of Medicaid, for the same reasons that I outlined in regard to studies of the uninsured. Unobserved variable bias is incredibly hard to combat in these studies.
The authors controlled for many, many possible variables, including a long list of comorbidities. But consider the pretty convincing evidence that people with lower social status do worse on health outcomes than those higher up the SES ladder; the evidence that blacks do worse on a range of health care measures, particularly premature birth and infant mortality, even when we control everything that we can think of; and now even a study that finds people with fewer social contacts tend to die younger.
Some of these things may reflect actual practical reductions in the quality of your care, because you have fewer people to check up on you, monitor your doctors, or make sure you take your medicine and drive you to PT. Some of it probably reflects that fact that people with poor impulse control don’t take care of themselves either financially or physically, and so are disproportionately likely to end up on Medicaid. But some of it genuinely seems to reflect the effect of primate status-competition on the brain and body. It’s not a crazy stretch to think that people with fewer social contacts and lower social status are more likely to end up in the state-run health care system, dragging down its performance metrics.
Moreover, everyone I talked to when I wrote my piece on mortality and insurance agreed that Medicaid did have measurably positive outcomes in a few cases; prenatal care and hypertension control were the two most often cited. Even if you accept that Medicaid patients are likely to do worse in surgery, they might still be faring better on certain preventative measures.
That said, I take seriously Roy’s warning not to reject the notion that Medicaid might be worse than no insurance simply because it violates our “common sense” intuition. Policy history is full of “common sense” policies that didn’t work, and our intuition that Medicaid must be better than nothing is not obligated to actually be correct.
Everything I know about Medicaid confirms that it is a terrible program on many levels, with a dysfunctional payment system and a byzantine bureaucracy, and procedures that vary wildly from one state to the next. While I assume it is probably better than having no insurance, I wouldn’t be surprised to find out that it’s not much better. And whether or not you think it is actually killing people who would be better off with no insurance at all, there’s no question that it could be massively improved.
Medicaid - Health care - Insurance - United States - Avik Roy