Saturday, December 29, 2012

Garbage in, garbage out

DonorChoose, a non-profit that match teachers who need supplies to those willing to donate, has hired a data scientist. I don't know what the fuck a data scientist is--I think these people specialize in data-mining, not hypothesis testing--but that is probably a good idea. Non-profits should self-evaluate.

The problem is that DonorsChoose evidently wants to draw policy conclusions from its terrible data. For instance, they might want to know if donors who get supplies add more "value" (read: points to test scores) than donors who do not get supplies.

I have no idea how they did this but my guess is that they compared teachers who went on DonorsChoose to request supplies to those who did not. Or they compared teachers who got funding to those who did not. In either case the selection problem jumps off the page. Teachers who select to request supplies are probably harder-working and better than teachers who don't. Similarly, donors probably select projects that tend to have more merit than those that don't. And, to make matters worse, teachers probably are better able to articulate what they need and why its valuable and, as a result, get funded more often.

So what will any of these comparisons show? That either DonorsChoose funds better teachers or its funding help. But that isn't what we read in the news.

Wednesday, December 26, 2012

What is social security?

I have no idea what social security is supposed to be. My dad thinks it is money that is going to be there when he retired because he put money into the fund when he was working. But he also tell a similar story about Medicare even though he knows Medicare is going to pay out many times what he paid in.

There was a good article at Bloomberg discusses the two main narratives about Social Security and how neither one is internally consistent. I'm too lazy to find the link.

Matt Yglesias at Slate discusses why Important People, which I think is code word for people who studied econ 101 but not econ 201, hate social security.

Matt's point is mostly right but it would help to distinguish the two parts of social security: the retirement component (what my dad think it does) from the welfare component (the part where money is redistributed to the poor). Important People probably only dislike the welfare component because the retirement savings component has very little efficiency cost.

Why does retirement savings not do the damage the welfare part does? The shortest answer is that it is a mandated benefit: if you work, you get some money but it can only be used to save for retirement. If the payroll tax costs $1 and workers value that $1 of extra social security benefits at 75 cents then the "real" tax is only the missing 25 cents. The easier way to see it is that the payroll tax does create an incentive not to work if you don't get social security benefits if you don't work.

The welfare part, though, is like any other tax. It's part of a tax system we setup that changes people's decisions from things like "should I work part-time at McDonalds for $7/hour?" to "should I work for $2/hour?" Sometimes people don't work because they're too dumb, but in a lot of cases people are too smart to work for next to nothing.

Monday, December 24, 2012

The Tebows of Harvard

Tim Tebow was a great college quarterback. He put up great numbers running the ball and pretty good numbers passing. But no one thought he would be any good in the NFL. The NFL plays by different rules. The option doesn't work in the NFL--defenses are too fast. And without the threat of the run to complement his mediocre ability to throw, Tebow was a well below average in the pros.

I wonder why something so obvious in sports--that "college football" and "NFL football" are not the same--is so hard to understand for Asian-Americans.

Asians do well on standardized tests. They make up an disproportionately percentage of the students admitted to top high schools when admissions are based on test scores alone. But they make up a smaller percentage of the student body at top colleges and an even smaller share of the elite in most professions (finance, academia, consulting) that they tend to enter.

A lot of people assume the obvious explanation is that Asians are discriminated against. Admissions offices set higher standards for Asians--they need higher SAT scores or they have to show more skill with their violin (or piano). Corporations impose a "bamboo ceiling" and refuse to promote them above middle management.

But isn't it obvious that, to some extent, the explanation is that Asians are the Tebows of academics? They have a great skill, studying hard to master things like the law of sines and the quadratic formula because their parents told them to, and it serves them well in dominating standardized tests and the classical music world. But there is no tight link between dominating the SAT and being a good CEO, pioneering researcher, or even being the kind of student Princeton should want to admit.

Working hard to do the things you parents tell you to makes you good at tasks where directed practice is easy: track (you just run . . . a lot), classical music (you practice each song), and the SAT (you do a lot of problems, internalize patterns) esp. the math part (memorize the algorithms). When its less obvious what to practice to master a subject (what do you do to become a good CEO? what do you do to become a creative song writer?), the skill Asians have in abundance, like Tebow's, becomes less of an advantage.

It isn't obvious that racism is the reason that Asians make up 41.3%* of the students scoring 700+ on the SAT math but just 15-20% of the students at top colleges. Maybe it's that there is more to being a good candidate than being good at standardized tests.

The Fiscal Cliff

The fiscal cliff gets its name from the fact that tax increases and spending cuts will reduce aggregate demand and harm the economy--IF YOU THINK AGGREGATE DEMAND IS NOT FIXED.

Didn't Republicans go on and on about how the Obama tax cuts and spending hikes didn't help the economy? Why do they care about the fiscal cliff?

Maybe it's because tax cuts don't help but tax hikes hurt and similarly for spiking hikes, but I'm guessing many of them went on record saying they would repeal the stimulus so that would be ruled out.

I can't figure it out. Maybe its because they only think tax rates on the rich matter because they have an enormous elasticity of labor supply.

Sunday, December 23, 2012

Misleading news of the day

When you made a deal with the government where it would buy a lot of your product at an inflated price most people call that "corporate welfare" or a "handout."

But CNN describes it like this:

It works like this: In order to keep dairy farmers in businesses, the government agrees to buy milk and other products if the price gets too low. . . . [But] if a new bill isn't passed or the current one extended, the formula for calculating the price the government pays for dairy products reverts back to a 1949 statute. Under that formula, the government would be forced to buy milk at twice today's price [. . .]
When did CNN become the arbiter of prices being "too low?" Is CNN going to start refer to taxes on the rich as "too high" and wages for teachers as "too low" too?

I bet everyone politician in America wants this guy to cover the legislation they sponsor. A hospital didn't oppose a new hospital opening in town to keep out the competition--it was, "in order to avoid duplication of services."

Saturday, December 22, 2012

Kill all the Lawyers

Criminal lawyers are expected to be experts in everything--biology (DNA), economics (motives for many crimes), psychology (for everything), probability ("beyond a reasonable doubt"), etc.

That is asking a lot, so I'm not going to say who wrote the following nonsense in his book on the "economic analysis of law." (The highlights are from Google books because I stumbled on it while search for those words.)

Correction: The guy who wrote this is an economist. Go figure.

Thursday, December 20, 2012

Bobby Jindal on why you shouldn't vote Republican

Bobby Jindal points out all the reasons why people want to vote for Republicans but don't. These are the two most important of his recommendations:

Stop being the stupid party. It's time for a new Republican party that talks like adults. It's time for us to articulate our plans and visions for America in real terms. . . . 
Quit "big." We are not the party of big business, big banks, big Wall Street bailouts, big corporate loopholes, or big anything. We must not be the party that simply protects the well off so they can keep their toys. 
Republicans are right on a lot of technical issues from health care to education to non-military spending. Health care sucks because there's no competition, education sucks because of unions and college's suck because of the subsidies, and no one really wants to pay your TV or radio bills (i.e. for PBS or NPR).

But because the Republican party is the party of the stupid and the corrupt, even if you agree with them on the economy and health care you probably don't want to vote for the whole package of Republican policies.


I've studied this legal paradox more than most lawyers, that is, I've spent a couple of hours thinking about it.

Here's the paradox: Lawyers say they judges are not supposed to "legislate from the bench" on a regular basis. People from all sorts of legal traditions say this on a regular basis. So that's strong evidence that most lawyers agree that the law is set down by the makers of the law (the legislature) and then the courts apply those laws.

Yet at the same time, the courts develop all sorts of policies. The most dramatic example is that, in an effort to keep police from stepping on civil rights the Supreme Court decided that throwing out evidence obtained from civil rights violations is "inadmissible." If the country, or a state, has a problem with cops over-stepping their bounds you would think that the legislature would handle it. The legislature can develop all sorts of incentives--from firing cops to suspensions to jail time--to punish cops of that violate protocol. But the court decided not to leave it up to the legislature how to punish these acts, because it was going to handle it.

Of course that is not an isolated incident. The courts develop all sorts of protocols on how laws are to be enforced and understood that regularly violate the intent of the legislature, with the justification that it is part of the function of the judiciary.

This strikes me as the central paradox of law. The law is meant to be written by the legislature because they make the laws, but at the same time because they can't be clear about everything judges are supposed to reinterpret the laws (often clearly in ways at odds with the intent) so as to improve them.

It closely parallels to the two central tenants of the microeconomics: (1) people are rational actors that make optimal decisions, and lots of economic papers rationalize all sorts of behavior in that framework and (2) economists know better than people because they have better data, so we can explain all sorts of irrational behavior people make and how to improve on it.

In both cases the obvious question is, how do you tell case 1 from case 2? How do I know when I'm supposed to insist the legislature (or people) were doing what is best and how do I know if they made a mistake and only I the lawyer (economist) with my superior reasoning ability can correct them? I know the answer in economics is "we don't have a fucking clue, this is a paradox" but you get the sense lawyers are supposed to have (very simple) rules for separating the two cases since they have (very simple) rules for everything else.

Sunday, December 2, 2012


I like unions but I when people ask about any particular union, I basically dislike them all. I don't like the AMA (doctor's union) becuase I can't see a doctor in a timely manner because of those bastards. I don't like the MBTA's union because the transit system sucks and they pay the bus drivers $25/hour. I don't like either of the two major teacher's unions because, politically, they are major roadblocks to improving education. I don't like firefighter unions because they're overpaid in almost every state.

So how can I like unions?

The thing is that too much of a good thing can be a bad thing. Unions are good because they help workers. Unions are bad because higher wages, shorter work days, better benefits, and lets not forget racketeering, defending racial discrimination, and stuff ballot boxes, have a cost to society. When unions are too weak in an industry, they can help workers a lot (SEIU might qualify here). When unions are too powerful consumers get it stuffed up their asses  (students, MBTA riders, etc.) in addition to the usual downsides of concentrated power (corruption, aforementioned labor rackets, etc.).

Naturally the best known unions are the big ones. And the big ones are the bad ones. So it's not surprising that I hate most of the unions you have ever heard of. But that doesn't mean I don't like unions.

Wednesday, October 31, 2012


In 1996 my dad took me with him to the polls. He told me to punch out the chad for Bill Clinton, but I told him I wanted to vote for Bob Dole. Wasn't my dad supposed to vote for him because they had the same first name?

Thursday, October 25, 2012

The Total Package

I like how people ask "are you voting for Romney or Obama?"

There are three branches to the federal government: legislative, executive, and judicial. You get three votes to influence the legislative, two for senators and one for a congressperson. Your other vote, for president, represents your opinion on the entire two branches of government.

When you vote for president you're voting for who you think should be on the Supreme Court, which judges should set on other federal courts, who should be the Attorney General and which cases should he file, who should be the ambassador to the PRC, who should be the treasury secretary and the chairman of the federal reserve, which advisors should be on the Council of Economic Advisors, . . . oh and who should gave the state of the union address and sign legislation from congress.

I prefer to think about the election in partisan terms because most of what you need to know about all these nominees is which party they will come from. Imagine if Charlie Crist, the moderate former governor of FL, run for president as a Republican. Who would he nominate to the court? Who would run his state department? Who would be on his Council of Economic Advisors? Now imagine if he changed parties (he probably will) and ran as a Democrat. Would they change? I think so. So the man who runs probably isn't as important as his party and that is why I'm a party line voter for president.

Monday, October 22, 2012

Debate Thoughts

I watched some of the presidential debate tonight, mostly not by choice. Some thoughts:

1. My wife thinks the moderate "looks like a goldfish."
2. The moderate thinks "everyone likes teachers" but, of course, not everyone likes the American Federation of Teachers which is why we should hear about in a debate!
3. No one should have more gel in their hair than Mr. Schuster--that means you, Gov. Romney.
4. Get the fuck off my TV! I wanted to watch How I Met Your Mother on CBS tonight, but evidently new episodes of the Prime Time lineup were pushed back to next week so they could broadcast the debate. I don't want the president making speaks in the Magic Kingdom, blocking the main entrance during my vacation. Get the fuck out of my life.
5. Chuck Todd mentioned the "Acela corridor" on NBC. Did Amtrak pay him to say that?

Confidence Intervals

When you do a study on how something is causing something else you generally report two findings, whether your evidence is precise enough to detect if an effect exists and whether the effect is important (this part of subjective).

The second one is the important one but because it is subjective people prefer to put the emphasis on the "objective" test for statistical significance. Objective is a relative term here because, in true, personal biases can have an enormous impact on the result of the test and, more importantly, its interpretation.

Consider "The Effect of File Sharing on Record Sales An Empirical Analysis" a really terrible written paper by a professor at Harvard Business School and a professor at the University of North Carolina. The question they are interested in is whether (and how much) file sharing of music reduces CD sales for music.

Basic economic theory says that being able to get music "for free" should reduce sales of music that costs money. The baseline model would ignore transportation costs and whether consumers care think about the ethics of piracy and just focus on costs. In 2004 songs on CD costs on average $1.5 per song while storage for a 3 MB .mp3 file cost about $0.002 and the time to search for the MP3 (say 20 seconds) is worth about 5 cents . In other words downloaded songs cost about 1/20 as much as music purchased on CD.

If we estimate the elasticity of demand for music and the number of CDs the average person buys we can extrapolate how many songs the average downloader would download. Lets just use 1 for the elasticity and 2 for the number of CDs per year so that the average college student downloads 400 songs per year.

Since it is assumed downloaders do not per for any music the lost sales are about 20 songs and the lost sales per download is 20/400 = 0.05

In the paper the authors find have very imprecise estimates so they find sales increased by up to about .5 units per download or decreased by up to about .5 songs per download. Since one extreme would imply that sales jumped by a factor of over 100x and the other implies negative music sales, all else equal, it is safe to rule both out. Whether the impact is -0.05 as theory predict, -0.027 as they estimate, or 0 as they assume for no apparent reason, not much can be said. Nevertheless they told plenty of newspapers that the effect was 0.

Friday, October 19, 2012

Kristof and the Rule of Two

Nick Kristof presents a case study for the Rule of Two.
Let me offer two counterarguments. 
First, a civilized society compensates for the human propensity to screw up. That’s why we have single-payer firefighters and police officers. . . . Compassion isn’t a sign of weakness, but of civilization. 
My second argument is that if you object to Obamacare because you don’t want to pay Scott’s medical bills, you’re a sucker. You’re already paying those bills. Because Scott wasn’t insured and didn’t get basic preventive care, he accumulated $550,000 in bills [he didn't pay] . .  . We’re all paying for that.
By the rule of two, one of these arguments has to be bullshit. Obviously here it is the second one. Taxpayers and the insured currently pay for a substantial amount of free riding. Kristof would have you believe that under Obamacare, despite substantial expansions of Medicaid and large subsidies for others, we would pay less for other people's healthcare because so much expensive treatment would be avoided when diseases are detected and treated early on. That is mostly bullshit, or at least wishful thinking. There is a substantial costs to screening everyone to detect disease early. In most cases it costs as much or more as waiting and treating the few cases that develop. The CBO estimates for the cost of the Medicare expansion and subsidies is positive to the tune of hundreds of billions over 10 years. If the savings from preventative care were so substantial they should be negative.

Kristof knows this, but at least he is transparent enough to include the real reason he favors increasing health care subsidies and even to put it first.

The Rule of Two

I have this rule that when I hear someone make an argument and they give me two or more reasons they are right, I always assume they are wrong. Some examples:

We went to Iraq to prevent WMD terror . . . and to spread Democracy.

Cash for clunkers will stimulate the economy . . . and lower carbon emissions.

Affirmative action is helps level the playing field . . . and diversity is good for every college student's education.

We should make Medicare a voucher system to increase competition . . . and to reduct the deficit.

Whenever you hear more than one reason to support a policy, odds are someone is just trying to find something that sticks. Why would people do that, why not just offer the one compelling reason that convinced them? Probably because they know you disagree with them on that point, so they hope they can sway you with other reasons -- reasons that they don't even find convincing.

And that is the generous interpretation. Sometimes people give you a lot of (bad) reasons because they want to hide the real reason they favor a policy. M.D.s will tell you that "brain drain" of medical professionals causes shortages overseas, hurting the poorest, and lowers quality standards in the U.S. . . . but not that it increase supply putting downward pressure on wages. The foreign aid lobby will tell you that the U.S. spends lots of money screening immigrants for TB each year and that dangerous strains of TB from overseas will eventually kill Americans . . . but only when they can't sell spending on overseas TB treatment for humanitarian reasons.

So whenever I hear two reasons to support a policy I assume that one of them is bullshit and that the other is so weak not even the person saying it believes it.

Thought Police

There is this stereotype that some liberals are so liberal that they will attack you for even asking certain questions. Do blacks have lower SAT scores, in part, because they study less and not just because of bias in the test? Don't ask, racist.

But in most cases there is a reasonable response: no one is attacking someone for asking the question, just for intentionally get the answer wrong, probably due to prejudice. At least some of the time that is plausible.

But today Time just published this headline from Toure:

Will Blacks Vote for Obama “Because He’s Black”?The question itself is offensive and racist. Here's why

A lot of the time journalists don't write their own headlines. I don't know if he wrote the subtitle, but he does say it in almost the same words in his article "the idea that blacks support Obama just because he’s black is itself racist."

The strange thing is that Toure brings up these statistics "Obama leading Romney among blacks 94% to 0%" while "Al Gore won 90% of the black vote in 2000 and John Kerry won 88% in 2004" and then concedes "[yes], Obama’s blackness is part of why many blacks support him."

The strange thing is that Toure goes on to write about why blacks should vote, in part, based on race because race is "a deep shaper of your life, a significant part of your soul, such that [Obama's victory] is critical to your life and worthy of support."

I wonder what people will think of this argument in 50 years. When my mom was a kid every Irish person she knew in New York was a Democrat. They all liked the Kennedys, in part I guess becasue John's "victory helped Irish-Catholics feel fully American." But my generation, or maybe it's just me, look back on the era of machine politics with shame, not pride.

Friday, October 12, 2012


Evidently no one has ever heard of mularkey. I guess that is why they can't identify the horseshit leaking out of the politicians' mouths for what it is.

If I were an idiot I'd be voting for Paul Ryan. The guy promises that you can have your cake and eat it too on entitlements. Medicare will be cut because there is a low-cost low-benefit option but if you can't want the low-beneift option you can keep the old one and . . . somehow that still saves money?

I'll be back after I eat 10 McRyans. You see they introduced a low-calorie soup for dieters, but if you don't want to eat if you can have the McRyan burger and still lose weight.

Friday, October 5, 2012

TV is "America's Biggest Classroom?"

When did cutting subsidies for children's TV become an attack on education?

The old liberal line used to be that we needed universal pre-K and subsidized daycare so that parents would not "use the TV as a babysitter." Somehow that become "TV is out best educational device" so we need to encourage kids to watch more?

This is almost as bad as eating fried chicken to "protect First Amendment rights."

Sunday, September 16, 2012

Political Economy 101

In a fleeting moment  of coherence David Brooks wrote about the contrast between the private sector and the public sector in our economy. (The public sector here includes all industries with heavy government involvement that substantially distorts incentives and generates rent-seeking behavior.)

One commenter responded:
In the US, [the public sector] has to purchase from [the private sector]: books, standardized tests, . . . , etc. and in too many cases, there is little or no competition. Consequently, [the private sector] is turning a considerable profit and part of that profit goes into campaign contributions . . .

I spent 25 years in commercial printing before becoming a teacher about 13 years ago - so I've seen both sides of the issue. . . . Meanwhile, I have seem more waste than you can imagine in public schools - all involving products of some large company that maintains a strong presence on K street. 
The conclusion is that we need strong leaders to say no to no-bid contracts and to kick all the textbook publisher and computer manufacturer lobbyists out of D.C., state capitals, and the like.

I think this misses some core lessons from Political Economy 101, big government encourages big rent seeking. If you don't want textbook companies and computer companies convincing schools to piss tons of money away on their products then give the people who make purchases decisions an incentive to make them wisely. Private schools have those incentives in many cases, but public schools often do not. If you don't want tons of Medicaid fraud then get companies incentives not to commit fraud: severe punishments. Big its a fact of life that the government is often bad at putting these incentives in place whereas they often emerge naturally in the marketplace (schools that spend too much go into the red and close shop).

Sunday, September 9, 2012

"I voted to send men and women to war"

In 2002 voting against going to war in Iraq was expected to be a massive political liability.

In 2008 Barack Obama won the Democratic nomination in part because of his continuous opposition to the war. (He did vote against withdrawal in 2006 but I don't think that changes the perception that he was "against the war.")

Now in 2012 Paul Ryan went on TV and supported his claim that he has foreign policy experience by saying "I voted to send men and women to war [in Iraq]."

You get whiplash from how fast public opinion about Iraq changes.

Monday, August 13, 2012

Breaking: Romney Errs in VP Pick

Today campaign insiders admitted to reporters that Mitt Romney, the presumptive Republican president candidate, meant to ask Ron Paul to be his running mate but accidentally dialed Paul Ryan.

The 65-year old presidential candidate released a statement saying "I used to have contacts sorted 'Last, Name' on my Rolodex but on this iPhone thing it's 'First, Last.'" Inquiries about whether the candidate planned to dump Paul Ryan from the campaign and nominate Ron Paul were met with stonewalling.

Political analysts say it doesn't really matter who gets the nomination as the Ron Paul Revolution crowd will vote for anyone who throws them a few libertarian bones about lowers or a nugget of a conspiracy theory. Insiders have even suggest Paul Ryan may have more appeal to the Birthers, 9/11 truthers, and other conspiracy theorists because of his ties to a government conspiracy to defraud investors.

Friday, August 10, 2012

Scott Brown is more of a dick than I thought

I didn't know much about Scott Brown until his reelection campaign heated up.

Evidently he is demanding that Elizabeth Warren pay to mail voter registration forms to people getting government assistance. They were supposed to have been given the forms when they applied for the benefits, just like how you get them when move and get a new license, but Brown thinks this is a conspiracy to get votes for Warren.

What a dick.

More details here.

Thursday, August 9, 2012

Clinical psych is hard: Kids edition

A clinicial pyshologist writes in the New York Times that she has found that,
[t]he happiest, most successful children have parents who do not do for them what they are capable of doing, or almost capable of doing . . .
The central task of growing up is to develop a sense of self that is autonomous, confident and generally in accord with reality.
The research I've seen says that having a better sense of reality is correlated with depression. Having a small reality distortion field that allows you spin things in a positive light is a key part of being satisfied with your life.

Likewise I don't understand how the author sees no trade-off between being happy and successful. There could, of course, be a positive correlation, and the research on flow suggests that people who succeed doing things they like are happy and likewise it makes sense that people who enjoy what they do will be more motivated. So maybe happiness and success should be correlated.

But mostly you would expect a tradeoff. The way people become exceptional--remember we are talking about "most successful"--is by doing a ton of directed practice. And directed practice is hard work, exhausting, and it sucks. Working 80+ hours a week sucks, even when you generally like your work, when it inevitably cannibalizes your social or family life.

I know from experience that most of the most successful kids, a few years down the road when they are at MIT and Harvard, are not particularly happy.

Wednesday, August 8, 2012

Statistics is hard: Type 1 error edition

Matt Yglesias notes that data dredging is a major potential downside to "Big Data:"

Given a nice big dataset and a good computer, you can come up with any number of correlations that hold up at a 95 percent confidence interval, about 1 in 20 of which will be completely spurious.
But that isn't really right at all. The number of spurious correlations is probably far higher.

Let's start with where the 5% spurious figure comes from. If we test a true hypothesis that there is no linear correlation between two variables at the 5% level, then we will find a significant correlation between the two uncorrelated variables about 5% of the time. If we test a bunch of true null hypotheses that pairs of variables are uncorrelated about 5% of those pairs will show up in our list of significant correlated pairs.

But what percentage of the correlations on the list are spurious?

100% by assumption!

The key parameter for estimating how many of the correlations are spurious is the percentage of pairs that are uncorrelated, call it p. The other parameters that matters which is how often true correlations are detected, the power function of the test, and a distribution of correlation coefficients for the variables are are correlated.

Let's assume for simplicity that all false null hypotheses are rejected 100% of the time. Then we can use Bayes rule to figure out the percentage of spurious correlations:

P(spurious | null rejected) = P(null rejected | spurious)P(spurious)/P(null rejected)
From earlier P(spurious) = p and P(null reject | spurious) = 0.05
P(null rejected) = correct rejections on the 1-p false nulls and 0.05p incorrect rejections = 1-p+0.05p

P(spurious | null rejected) = 0.05p/(1-p+0.05p)

If p > 20/39 then more than 1 in 20 of the correlations we find is going to be spurious. p being close to 1 seems most plausible since we can imagine testing all sorts of bizarre correlations like the relation of the number of vowels in your last name to cheddar consumption on a given day--for each day of the year. That gives us 365 hypotheses to test. We could add 365 more for each type of cheese and that is just the tip of the iceberg. How many of those hypotheses have a genuine relationship?

Obama: "I didn't pass that"

Today President Obama has reversed his position on "you didn't build that" explaining that the conventional wisdom was right and he "was wrong." He went on to say that he bears no responsibility for Obamacare because "I didn't pass that, the congress did." When asked if the political pressure he exerted on party members and the input his administration had on crafting the bill counted for anything he said "about as much [credit] as the police should get for preventing theft thus protecting profits--absolutely zero percent."

Democratic House Majority Leader Nancy Pelosi  said she did not agree with the president because "most Americans are too dumb to understand proof by contradiction or his point here." She reiterated that "most Americans are so fucking stupid they think small business owners invented the Internet." 2000 election popular vote winner Al Gore declined to comment on the origins of the Internet was asked.

The president was not the only candidate backtracking today. When informed of the president's comments, Republic nominee Mitt Romney exclaimed "that's right . . . I passed a pretty much identical bill in Massachusetts! Give credit where credit is due, Mr. President" to roaring applause but quickly backtracking and asking an advisor, "how do I twist this so I am not responsible for Romneycare but he is responsible for Obamacare?"

Recent polls show that 65% of Americans believe small business owners built America's roads. When asked if a business that started paying taxes after a road was built could take credit for building that particularly road, a plurality responded "whatever choice will make Obama sound bad."

Monday, August 6, 2012

Economics is dangerous: CCP "Justice" Edition

China has a long standing tradition of accepting body doubles to stand in and take the punishment of crimes committed by the rich. The response of CCP officials is a textbook example of how learning a little bit of economics can be dangerous:
Some imperial Chinese officials who admitted to the use of substitute criminals justified its effectiveness. After all, the real criminal was punished by paying out the market value of his crime, while the stand-in’s punishment intimidated other criminals, keeping the overall crime rate low. In other words, a “cap-and-trade” policy for crime.
That, of course, is nonsense. You could get the result in a simple model where every agent is identical. When everyone is identical it is easy to talk about the right tax level to internalize the externalities of your crime because everyone faces identical constraints with identical preferences. But one of the obviously important facts is that a stand in and the criminal perceive the cost of the punishment differently (or the benefit or the money exchange) hence the "trading" of places.

How much do you think Li Gang's son  would have to had to pay for the college girl to accept being murdered? That is the real "market price" of his crime, not the amount the lowest bidder is willing to pay to be executed.

And hasn't the CCP ever heard of public goods? Do you think Li Gang's son has enough money to compensate the hundreds of millions calling for his head, each of whom would gladly pay a few yuan to watch him die? I think in CCP logic he should be executed to ensure the "Pareto efficient" outcome.*

* - Yes, that is sarcastic. Pareto efficient means all parties are better off or at least as well worse after the trade. Surely Li Gang's son would not agree to die even for that enormous "market price" any more than the woman he killed would have agreed to die for the CCP dubbed "market price" of her life.

Saturday, August 4, 2012

Math is good: Jared Diamond edition

Diamond, who is an excellent scholar, writes this nonsense in a discussion of health and economic growth:

 Tropical diseases cause a skilled worker, who completes professional training by age thirty, to look forward to, on the average, just ten years of economic productivity in Zambia before dying at an average life span of around forty, but to be economically productive for thirty-five years until retiring at age sixty-five in the US, Europe, and Japan (average life span around eighty).
This isn't right because there is a difference between average life expectancy and conditional life expectancy. It is easy, maybe even natural, to assume that if life expectancy is 40 and you are 30 you can expect to live 10 more years. But that isn't right, if you are 45 do you expect to live -5 years?

It turns out that this isn't an innocuous mistake. The low life expectancy in Zambia is driven by high child/infant mortality and a high AIDS prevalence. If you survived your childhood and don't have AIDS, then you will live into your 70s, on average, and probably die from cancer or heart disease like most Americans. A priest in Sierra Leone told me that they having a saying to that effect (paraphrased): "If you live to 18, you will live to 80."

Friday, July 27, 2012

Anaheim's Race Problem

“The mayor said he wanted relations between ethnic groups to be kinder,” says Moreno. “I raised my hand and asked him if he knew the Spanish word for that. He didn’t, nor did another city council woman.
You know what they say: you shouldn't communicate in a language you both know when you could fail to communicate in languages you don't.

The issue appears to be that the police spend too much time policing the areas near Disneyland and also do too much policing of gang-infested areas, including killing armed and dangerous gang members who openly fire weapons in public. I guess the solution is to . . . police the Latino parts of the community more without doing anything about the gangs?

Without knowing anything about the situation I assumed they had valid complaints, but now that I have some details it sounds like it's a garden-variety riot.

Thursday, July 26, 2012


My girlfriend, who grew up in China, asked me why gun laws might be endogenous in a regression of murder rates on gun laws (i.e. concealed carry permitted). She said she understands that attitudes towards gun use and ownership are omitted variables but how would they influence the laws?

"We'll, culture influences how people vote."
"Oh, you people vote!"

And that is all I have to say about that.

Saturday, July 21, 2012

Menino brings best, and worst, of mob politics to Boston

Mayor Menino is threatening to block Chick-fil-A from opening in downtown Boston with the time-honored tactic of strangling the chain with bullshit regulation. This the method is popular in China as a way to Communist Party (CCP) thugs to crush competition to their and their friends' businesses.

The Mayor's stated goal, which we have little reason to question, is to stick it to Chil-fil-A for donating millions to anti-gay hate groups. The founder reportedly said he was "guilty as charged" in supporting the traditional family when asked if he funded anti-gay groups. I haven't read the details on Chick-fil-A's hate group donations but it is the conventional wisdom that is happened and it doesn't seem like the company is doing much to dispute the claims.

I don't have a big problem with sticking it to Chick-fil-A for being bigots.

But I'm not sure Menino should have that power. According to the Boston Herald the past he has used it to block Wal-Mart from coming to Roxbury and offering lower prices to a neighborhood where the median household income is about half the city median. I guess he likes sticking it to people on a budget as much as to bigots.

Friday, July 20, 2012

Market predicts Dark Knight audiences unafraid

An insane gunman at a Dark Knight Rises midnight showing killed 12 people. Networks are taking down TV spots for the movie, at least for now. Will fear and decreased advertising cause a slump in ticket sales, or will the increased publicity draw in interest?

The Hollywood Stock Exchange says it's mostly a wash as a derivative that pays based on total box office revenue went nowhere today (up 1.28% or an expected increase of $6.24 million).

There are a few caveats in order. When a good movie is released the stock usually jumps up just prior to release and again over the release weekend. (See the pattern for The Avengers here.) The increase prior to release reflects information from reviewers saying the movie is good, which suggests more repeat viewers and good word of mouth down the road. The increase at release reflects resolution of uncertainty over whether the general public agrees with the critics (usually it does) and new information like new box office tracking data. In the case of The Avengers critics gave the movie a big thumbs up but when CinemaScore revealed the average viewer gave the movie an A+ the stock jumped substantially (on 5/5) as it became clear repeat viewings and word of mouth would be particularly strong. Data on sales at midnight release and Friday and Saturday estimates may have contributed to the increase as well.

In light of that pattern we might have expected the TDKR stock to jump a few percentage points today on resolution of uncertainty (in its favor) and good word of mouth. I'll plug my positive review here: it's as good as the other two. Reports do indicate that TDKR broke midnight box office records by a nice margin ($25-30 million vs The Avengers $18) but I think that was widely expected based on tracking data as this report from yesterday indicates. So I think taking the slight upward movement at face value is reasonable.

That's good news. It'd be ironic, and sad, if fear kept the masses from seeing a film largely about overcoming fear.

"Why do we fall Bruce? So we can learn to pick ourselves up." - Thomas Wayne

Update: Today, July 21st, TDRK is down $11 million and the opening at $77.2 million was somewhat weaker than some projections in the $80-90 range. It looks like some people are being deterred by fear but only something like 2% of people interested in the film. I'm think it's a good showing for American courage.

Wednesday, July 18, 2012

Can the Supreme Court define marriage too?

The Supreme Court ruled that the mandate is a tax and many conservatives insist that the court is the final word on how we refer to the mandate.

When the court one day rules that marriage is not defined as "a union of one man and one woman" and that "gay marriages" are marriages, will conservatives be quick to insist that is now how we must talk about marriage?

Monday, July 16, 2012

David Stern's negative endorsement

from ESPN
Obama's campaign held a fundraiser last February at the Orlando-area home of Vince Carter of the Dallas Mavericks. Attendees included Paul, who plays point guard for the Los Angeles Clippers, NBA commissioner David Stern and former NBA stars Magic Johnson and Alonzo Mourning.
I might have to sit this election out. That's a pretty strong negative endorsement.

Sunday, July 8, 2012

Scott Brown beats English language to pulp

Scott Brown went to war on the English language last night with the incoherent statement that
Foreign aid is important for humanitarian reasons, and to help give us leverage in negotiations involving our own national security. But, while it is a relatively small portion of our budget, we ought not spend a penny more than is necessary to accomplish these vital goals.
in the middle of a discussion of cutting spending. Since tens of thousands of children are dying from preventable diseases like malaria on a daily basis because we don't spend more, I'm going to assume helping them doesn't count as "humanitarian." I think humanitarian here means rebuilding countries after we went to war with them and maybe some disaster relief.

I don't think Brown ever had a chance of getting my vote even though I'm presumably the kind of Democrat he is targeting (white, male, blue-collar background). But he slammed the door shut and I'll probably go ahead and volunteer for Warren since a friend has been prodding me to do.

Friday, July 6, 2012

The Broccoli mandate market

A new market taking bets on the passage of a "broccoli mandate" opened early Friday in response to discussion of whether congress could, constitutionally, mandate broccoli purchases. An anonymous Republican analyst, clearly reading talking points off a notecard, said, "the court's decision implies that congress could mandate purchases of broccoli under their taxing authority."

In early trading the price for a $10 payoff if such a bill is passed hovered around 1 cent, indicating a 1 in 1,000 chance of such a bill passing in the next 50 years. Market research published by Morgan Stanley suggested that the most likely scenario for the bill being pass is a demand by the Chinese government in an effort to prop up sales of Szechuan style Beef and Brocolli.

After lunch, however, the price went negative implying that traders were paying people to take their money in the event the bill was passed. Anonymous sources report that the trades are a massive gamble on behalf of JPMorgan CEO Jamie Dimon who believes the possibility of 60 Republican and Democratic Senators agreeing on anything is so remote it would indicate the second coming and, as stated in James 5:3, riches will "testify against you and eat your flesh like fire" at that time.

The Pope could not be reached for comment as he was enjoying broccoli soup, but Former president George H. W. Bush released a short statement saying "23 years later I'm still not going to eat broccoli."

How did Federer get back to #1?

Federer will regain the number one ranking is he wins Wimbledon on Sunday, a possibility that seemed pretty remove after the Australian Open in January.

So how did it happen? There are two main factors. The first is that Federer cleaned up at ATP 500 events, securing 1500 points with three victories at such events while Djokovic has only contended two such events with poor showings. The second is that Djokovic chose not to defend his title at the Serbia Open after his grandfather died. The easy 250 points from winning that event would have kept Federer stuck at number two even if he wins Wimbledon.

But the biggest factor was the Madrid Masters. The switch to heavily salted blue clay help big servers and hitter and harmed players who move well. Federer won the event while Djokovic crashed out in the QFs.

What would have happened if the Madrid Masters was played on red clay?

We can take a pretty good guess. In all of the other 2012 major clay court tournaments Djokovic met Nadal in the final and lost. At the 2011 edition of the Madrid Masters, Djokovic defeated Nadal at the final. Looking at it this way it seems like a good bet Djokovic would have met Nadal and won with between 0% and 25% chance. I call this the counterfactual case.

Another way to look at it is to consider the past three champions at Madrid prior to 2012: Djokovic, Nadal and Federer. Since each won the event once in the past three years it'd be fair to say they all had equal chances of winning. If there were the case just throwing out the Madrid 2012 results would give an unbiased guess at what the rankings would have looked like.

The table below shows how the rankings would have looked in either case, conditional on Federer winning on Sunday:

A lot of things had to go right for Federer to regain number one. He had to play well at lower tier events. Djokovic's grandfather had to die. But the most important thing was the Blue Clay debacle.

Thursday, July 5, 2012

Please learn to speak English

The Learn English Act passed the house today with bipartisan support. The bill mandates that all candidates for congress pass a test of basic English before being placed on the ballot and, in a concession to Democrats, allocates billions of dollars of funding for ESOL (English as a Second Language) instruction as long as most of the money is spent on no-bid contracts given to the language-learning software companies that donate the most money to campaigns.

In a surprise twist, however, the entire congressional delegation from Mississippi and roughly half the delegations of Georgia, Alabama, and northern Florida have been ruled unfit for reelection. The candidates failed a test of 10th grade English vocabulary and were deemed completely unintelligible by 54% of the listeners who grade verbal skills.

Rosetta Stone, winner of the first no-bid contract, said it will offer it's English (American) software to the candidates free of charge.

This post was inspired by Rep. Bill Young.

Wednesday, July 4, 2012

Mankiw works less, Liberal students cheer

Greg Mankiw, a professor economics at Harvard University, announced today he would stop working to update his textbooks in response to tax increases contained in the Obamacare legislation, the ACA. Previously Mankiw had continued to work on the books, despite the higher taxes being on the books, because "[he] expected the taxes to be struck down by the courts before [he] had to pay them."

A representative from Occupy Wall Street cheered the decision as "probably the best by-product of the legislation" but qualified the statement by noting they had no idea what a labor supply curve was because they walked out of Mankiw's principles of economics class. Off the record he stated he was "a social studies concentrator" which the official Harvard dictionary says translates to "a pompous way to say majoring in philosophy and political science."

An anonymous professor of social studies stated that in the "concentration" it is standard practice to teach students the names of concepts without expecting them to understand the concept. The professor said the department prefers "reading old books in translation" to using textbooks and other modern teaching tools.

Obviously this entire post like many others with ridiculous premises is satire.

Tuesday, July 3, 2012


The Supreme Court today issued a ruling on the severability of the Affordable Care Act (ACA), the president's signature domestic legislative accomplishment. In late March the Court heard three days of arguments over "Obamacare." The first concerned whether the mandate was a tax and therefore the Anti-injunction Act precluded the court from hearing the case. The second concern the issue of whether the mandate was constitutional and the third was held on which parts of the legislation, if any part is struck down, could be severed from the rest.

Last week the court ruled on the first two of these issues starting that because the mandate is not a tax the Anti-injunction Act does not apply but because the mandate is a tax it is authorized by the constitution. Today the court ruled to sever the words "tax" and "penalty" as used in many pre-trial articles on the ACA ruling that the mandate is "a tax and not a penalty" and inappropriate use of the phrase "tax penalty" was unconstitutional under the commerce clause.

Justice Scalia was heard at a dinner party stating "God damn-it! If those liberals think they can use the commerce clause to mandate insurance purchases than I can use it to infringe on their rights to free speech." Scalia is best known for his theory that growing pot at home for home consumption is interstate commerce.

Rick Scott suggests Medicaid direct deposit

Rick Scott is refusing to accept federal money to expand Medicaid in Florida. The former HCA CEO says that he knows from experience that the vast majority of the money will be used to pay hospitals defrauding the government.

Earlier on Monday Scott suggested "cutting out the middleman" and setting up "direct deposit" accounts so the major hospitals and other health care providers could get their cut without mountains of paperwork. The governor backed off these comments when state house Democrats insisted eliminating the paper-pushing jobs in Tallahassee that entail rubber-stamping the fraud would damage the economy.

One Republican analyst noted that Gov. Scott may reverse his position if increased demand for bureaucrats to administer the expansion  could help him achieve his goal of creating 2 million new jobs for the 1 million non-retired citizens in the state of 19 million.

Sunday, July 1, 2012

Roberts changes name

Chief Justice John Roberts intends to legally change his name to John Webster, potentially as early as Monday. In the wake of his opinion labeling the health care mandate "a tax, not a penalty" Roberts feels the name captures his new role as "the most influential arbiter of the English language since Noah Webster" of Webster's dictionary.

Thousands intend to gather before the Supreme Court on Monday demanding Chief Justice Roberts issue a ruling on whether "fag" can refer to something uncool in everyday use or must refer to a homosexual. In this highly political issue no one can tell which side is the Republican side so constitutional scholars are unsure which way the justice leans.

Two supreme court justices stated, on the condition of anonymity, that what they called a "publicity stunt" is distasteful but Roberts has informed us that, officially, his actions do not constitute a publicity stunt.

Friday, June 29, 2012

Romney at All Children's Hospital

Here is Mitt Romney at the hospital where I spent the first ten days of my life.

It's featured in an article about how Mitt Romney used to love the mandate, in his own words. Barack Obama flip-flopped on the mandate too.

Is it just me or is it a bad sign that the headline says "buy health care" meaning "buy health care insurance" and it is accepted that they are the same thing. If a headline used "buy car repairs" in place of "car insurance" or "buy a new home" in place of "fire insurance" wouldn't that be misleading?

Thursday, June 28, 2012

"That's it, I'm moving to Canada"

People are going to move to Canada in protest of Obamacare.

Canada does encourage Americans to move there but I have a feeling many of these geniuses will not "qualify under the skilled worked program."

Wednesday, June 27, 2012

Scalia hates illegal immigrants?

Scalia said
"Arizona bears the brunt of the country’s illegal immigration problem . . . Its citizens feel themselves under siege by large numbers of illegal immigrants who invade their property, strain their social services, and even place their lives in jeopardy."
I have a feeling that if you showed Scalia evidence that illegal immigrants rarely invade property, strain social services, and kill people . . . he wouldn't change his mind about the case.

I wonder why people bring up issues in the cost-benefit calculus when, if it turned out not to be true, they wouldn't change their mind. If Scalia doesn't care then why should I care?

Saturday, June 23, 2012

"You CAN'T have it all"

This article in The Atlantic about work-life balance for women is getting a lot of attention.

Despite the article running 6+ pages, I think the only part you need to read is this:
I am writing for my demographic—highly educated, well-off women who are privileged enough to have choices in the first place. We may not have choices about whether to do paid work, as dual incomes have become indispensable. But we have choices about the type and tempo of the work we do. 
Her husband is "an academic" at Princeton so I'm guessing he makes six figures.

I think my wife is going to have a good life. But she won't always be a 00P and stunningly beautiful. She will get old and wrinkly. Our child who won't be born for probably a decade may not be that smart or pretty. My wife may never make >$100,000 (adjusted for inflation). We'll both probably take time off to be with our daughter when she is young. Not everyone is going to like us or be impressed with our lifestyle.

I thought all those things were part of life and if you learned to accept them and focus on the positive you'd be happy. But evidently you need more to have it all and have a "comfortable life."

And to think I spent nearly 23 years thinking I had a good life and many good years ahead.

Friday, June 22, 2012

63% of Republicans believe Saddam had WMDs

Evidently 63% of Republicans believe Saddam had WMDs in 2003.

The blogger I linked to supported the war and is a self-described conservative so I think his comments are a little over the top.

American politics has always been filled with a ton of misinformation. America has always had idiots. It probably has less misinformation and fewer idiots today than ever before.  But it might have more  misinformed people who believe strongly that they are not. And that is bad.

Wednesday, June 20, 2012

Regulating soft drink size

Cambridge is considering banning the sale of soft drinks bigger than 16 oz in restaurants, movie theaters, etc.

I'm not really in favor of this, but not because it "restricts liberty." Sometimes, for my own good, the government should step in and try to "facilitate" better choices. That might include not drinking so much soda.

But before the mayor help me out I'd like to see some studies showing lots of people want to quit drinking so much soda but can't help it or that drinking less soda is associated with being happier. It's a good idea to start with the prior that the mayor doesn't know best and then consider the evidence to the contrary.

Also, when I go to the AMC theater in Harvard Sq. I get the large size soda to share with my girlfriend. It's probably 32 oz so it'd be banned even though at 16 oz/person it's not the intended target. I'd probably just always go to the AMC theater in Boston so it's not a big deal.

My final objection would be that I drank a 64 oz Double Gulp at 7-Eleven in college, so did my girlfriend, and I think most people should as a coming-of-age right. But they downsized the cup to 50z so it's not the same.

Sunday, June 17, 2012

Children of gay people

I found this sentence in a CNN article:
With same-sex couples, more often than with heterosexual couples, a child may be biologically related to one parent but not the other...
I'm not sure if that is a mistake or if it's actually possible to mash together two eggs and have two moms.

Thursday, June 14, 2012

Quote of the year

Jon Chait on bipartisanship, Washington culture, etc.

When assessing Quinn’s sense of the [decline of Washington D.C.'s wine-and-dine scene], we should also have a firmer sense of what the culture was actually like. Here is one scene from Quinn’s inculcation into the Washington elite:
Washington writer Sally Quinn told of a 1950s reception where: “My mother and I headed for the buffet table. As we were reaching for the shrimp, both of us jumped and let out a shriek. Senator Strom Thurmond, grinning from ear to ear, had one hand on my behind and the other on my mother’s. As I recall, we were both quite flattered, and thought it terribly funny and wicked of Ol’ Strom.”
Once Washington was a happy place where a girl and her mother could be groped simultaneously in good fun by a white supremacist.
It's only June but I'm comfortable certifying that as the Quote of the Year.

Wednesday, June 13, 2012

More reasons to love America

The UK wants to reduce immigration dramatically so they are raising standards arbitrarily to exclude the spouses of many English people from immigrating. The whole story is here.

The U.S. has a minimum income requirement which I think is terrible, but it is far below the UK level of 25,800 pounds AFAIK. I don't know what the PPP median income is in the U.K. or much about the social safety net but I suspect that number is set far above what is necessary to ensure immigrant spouses don't become wards of the state.

The U.S. also issues probationary green cards like the U.K. proposal includes and I think lengthening the probation period to 5 or even 10 years might be reasonable because if the marriage is in good faith, what do you have to lose. But the policy isn't costless. If the couple has kids then the parent should be allowed to stay even if the marriage dissolves. I don't know if it is like that on the books but most people would agree that is how it should be. A longer probationary period increases the incentive to have kids as insurance against the marriage dissolving the foreign spouse losing his green card. It also creates the preserve incentive where a woman might cheat on her husband, he would normally get a divorce, but he'd lose his green card and this makes the choice more difficult if he is still on probation.

The "test of attachment" is retarded.

I'm pretty "hawkish" on immigration policy. I hate birth tourism, don't believe the 14th amendment covers people visiting or tourist visas or illegal immigrants, favor English as the national language, and believe the citizenship of "dual citizens" should be revoked. But these regulations strike me as pretty bad across the board with the one exception.

Friday, June 8, 2012

Tuesday, June 5, 2012

It isn't common sense: David Brooks edition

David Brooks tells us that
[a] huge reason [previous generations avoided massive public debt] is that [they] were insecure. They lived without modern medicine, without modern technology and without modern welfare states. They lived one illness, one drought and one recession away from catastrophe. They developed a moral abhorrence about things like excessive debt, which would further magnify their vulnerability.
Of course, it's common sense! When people are poorer they are more risk averse.

When you look at the history of sovereign default it's clear that it is a relatively recent phenomenon, tied to, as Brooks mentions, modern medicines, technologies, and welfare programs.

Saturday, June 2, 2012

It's not common sense

(This is a follow-up to my post about Duncan Watt's book. I hope to make it recurring.)

Some doctors wrote an op-ed in the New York Times about how to solve the primary care doctor shortage. In short, they think too many doctors are becoming specialists and too few are working in primary care. They propose to fix this by taking away the (roughly) $200,000 subsidy for learning a specialty.

That sounds like common sense. If you don't want so many specialists then stop paying $200,000 to encourage people to become one. But if you read the article you'll see the authors take hundreds of words to articulate this idea. The authors are doctors so they aren't idiots. The insight took years of research and hundreds of carefully edited words because it's NOT common sense.

Monday, May 28, 2012

College dropouts in low demand

Investor's Business Daily reports
Unemployment for those 25 and up with some college but no degree was 8% in April compared to 6.6% for the age group, measured on a more volatile seasonally unadjusted basis. In the same month, the jobless rate was 7.7% for 25-and-up high school grads with no college and 6.2% for those with a two-year college degree.
That is really surprising. You would think that employers would be looking for people who have demonstrated . . . disinterest in hard work by dropping out of college?

They also report
Out of 9 million unemployed in April, 4.7 million had gone to college or graduated and 4.3 million had not, seasonally adjusted Labor Department data show.
Since (based on numbers in the article) it is implied that there are about twice as many college graduates and drop-outs as people with a HS diploma who never attended college, the implied unemployment rate for college attendees is half of the other group. But that wasn't worth mentioning.

Sunday, May 27, 2012

End the FDA

Opposition to the Food and Drug Administration (FDA) practice of using randomized trials to determine the safety and efficacy of treatments is picking up steam.

On the right, Tea Parties oppose the existence of government regulation in an industry and claim that randomized trials are a con spiracy or something promoted by the liberal elite. In a letter to Sen. Thad Cochran one constitution wrote that "a real man knows when he feels better and when he doesn't" while "the spineless at Harvard use people as guinea pigs" to decide which pills to take.

On the left, those traditionally in favor of heavy handed government regulation that drives up prices for corporate cronies and protects consumers, have shifted to opposing randomized trials. They note that sometimes unsafe pills make it through trials or harm people during the trials. They argue that, as with the death penalty, if one innocent person ever dies as a result of a drug innovation policy then the policy is unjust. Critics have noted that, as with the death penalty, if drug innovation saves more lives than it eliminates then a reasonable analysis would consider the costs and the benefits but liberals have responded by covering their ears and shouting "I'm not listening."

What do journalists do?

Is it just me or is it a little sickening that Fortune pays to run a cheerleader blog for a corporation?

We love to be tribal about sports so there are thousands of cheerleader blogs for every team in the MLB, NFL, etc.  That seems natural. The hagiography coming from blogs dedicated to individual players is a little disturbing but I think its mainly just the benign extension of tribalism about pro sports.

Blogs that write for one "side" of an ideological war are almost surely harming political discourse but politics is ugly so it's probably inevitable. TV stations that cheer on one party, on the other hand, probably should only exist in China.

But blogs that cheer on a corporation? That's a bit much for me to stomach. I don't think I'm going to read anything at Fortune again anytime soon.

Sunday, May 20, 2012

If Mark Zuckerberg can do it ...

CNN reports
Zuckerberg told ABC that Chan inspired him to try to learn Mandarin Chinese in one year. The venture wasn't very successful, he said, but he picked up enough to talk with Chan's elderly grandmother.
If Mark Zuckerberg can achieve basic competence then surely I can. I've never thought Harvard douches and businesspeople have anything on us MIT alums and regular Joes.

Friday, May 18, 2012

Corporate Conspiracy

Today Ron Paul suspended his campaign after his staff divided itself into two warring factions. College dropouts and those kids that read Ayn Rand books in high school are coming to blows across the country over claims that Ron Paul's campaign is a front for a corporate conspiracy.

A CNN iReporter writes that the Ron Paul campaign is funded by a consortium of Fortune 500 companies seeking complete control of the economy. Reportedly Ron Paul does not believe in anything he was campaigning for saying, off the record, that "this gold standard idea is a farce" and "only someone who has studied any economics since 1920" could support it.

Supporters insist that the report is just a rumor and that, even if true, Paul still represents the cause of unfettered liberty. Joe Smith, a longtime supporter from Tampa, FL, said that "we all knew the cause of unfettered liberty would lead to domination by our corporate or military masters, so whether it happens on day 1 or day 100 of his presidency is immaterial." He later added that "while you do not have the right to use force to regain your freedom, our ideal government does not enforce that so you might as well."

Nevertheless, nearly half of Paul's former supporters have become its biggest critics citing "undeniable evidence of a major corporate conspiracy to strike down the Constitution." Ben James IV, a sociologist at Harvard, said this was "not unexpected" as "all the conspiracy theorists loved Paul, every 9/11 truther in America has been to a Paul rally." Many are now accusing Paul of spearheading the 9/11 attacks.

Monday, May 14, 2012

Jagdish Bhagwati Smackdown Alert

This is funny:

CommentsAgain, the worldwide influence of the powerful liberal media in the US should not be underestimated. While The Economist backed Okonjo-Iweala, The New York Timesendorsed Kim. This is an election year in the US: if President Barack Obama had nominated a lamppost, America’s “newspaper of record” would have found it to be possessed of excellent credentials.

The rest is here. I'm not as down on Kim as he is. Michael Clemens has a smarter but less funny take somewhere on thee CGDev blog worth reading.

Jon Haidt

Most of the time when a smart guy like Jon Haidt writes a book, the central objection to his argument is addressed preemptively in the book and/or quickly gets a vigorous discussion in roundtables and book reviews.

I didn't read a lot of praise and discussion about Jon Haidt's new book that argues (1) people based their politics and ethics on intuition, not reason which is, I think, a mainstream belief and (2) we can learn valuable lessons from other's moral intuitions to sharpen our moral intuitions and improve our reasoning as opposed to the mainstream position that the lesson is in how to manipulate people.

The idea that our moral intuitions can help us reason better is runs counter to my intuition. Why would our brains have involved good intuition on whether inflation targeting is a good response to a liquidity trap? But I haven't seen any summaries of Haidt's response and the specifics of what, exactly, I'm supposed to learn from conservatives.

I'm pretty sure that the answer is that Haidt's position is contradictory on a lot of points and if that is the case I don't want to read the book.

Sunday, May 13, 2012

Indictment of high schools

The New York Times printed a pretty terrible article on student debt. It points the finger at a lot of people but never high schools which should come across as the biggest criminal:

Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. . . . 
Ms. Griffith, 23, wouldn’t seem a perfect financial fit for a college that costs nearly $50,000 a year. Her father, a paramedic, and mother, a preschool teacher, have modest incomes, and she has four sisters. . . .
“As an 18-year-old, it sounded like a good fit to me, and the school really sold it,” said Ms. Griffith, a marketing major. “I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month. No one told me that.”

You would think that someone who graduated from high school in America in 2008 would know how to calculate their payments by, for instance, typing "student debt calculator" on Google. The first website,, says she should expect to pay over $1,000 a month.

Wednesday, May 2, 2012

edX, MITx, Harvardx

edX is going to be a major flop, like OCW. You heard it here first.

I have no idea what the goal of the project is, but across a wide range of possible goals it will fail miserably.

Why? MIT isn't particularly good at educating it's own "residential" students!

Update: This has been my most popular post so I should add some less factitious comments. The general sense I get from edX, Coursesa, and other massively online courses is that they do not have much in the way of a mission. I can't tell if edX is a motivational product, a learning tool, or what. You could compare it to a gym. Gyms provide free weights, stationary bikes, treadmills, and the like to help you work out. But for most people these machines provide little advantage over just jogging around the neighborhood. edX provides courses, but if they are anything like most MIT courses, they probably aren't much better than a good textbook or notes. Maybe the value of the courses is that they are a motivational device, or a signaling device, but no one has explained to me what they do for people beyond "educating" them and I'm skeptical about that.

I think universities mostly generate value for students by helping them to network with peers and alumni, motivating them to work through nudges like social pressure to attend class and traditional incentives like grades, and signaling that people are "smart" (this interacts with networking). I don't see how edX could be good at any of that anytime in the near future.

That said I don't think edX is a waste of money. With the future of high education so uncertain there is a lot of option value to having an online education system "ready to go" and, as I noted earlier, MIT's undergraduate education is by and large pretty terrible. If MITx courses draw interest from people who care about teaching then perhaps MIT will see a shift of student out of classrooms where the teachers suck and into classrooms where the teachers are passionate about designing good class.

Tuesday, April 17, 2012

Equal Pay Day

High school dropouts are lobbying for legislative change on April 20th which marks "equal pay day." As Austin Jackson, a sanitation engineer in Owensboro, Kentucky explained, "today marks the day that people like me (high school dropouts) have earned as much since January 1, 2000 as a doctor did in the year 2000."

Critics say dropouts could have continued their education and gotten M.D.s if they wanted to earn more money but the Equal Pay Campaign responded in a press release that "u don't rly believe that shit?" A spokesman explained that tuition at medical schools is approaching an average of $40,000 meaning you have to spend an "asston" of money before you can start earning "a fuckton" in return. Economists call the idea of spending money now to earn more later "investing" and use the technical term "dumbass" to refer to those who don't invest.

In other news, a statistic taken out of context five years ago was successfully put back in context by a team of statisticians at Harvard University.

Friday, April 13, 2012

Red Sox seek to repeal law of supply

The Red Sox announced yesterday that they are funding a ballot initiative to repeal the law of supply in Massachusetts this November. The team hopes the initiative will quell outrage over high ticket prices at Fenway--which have lead the league for the ninth consecutive year--and the lackluster effort shown in the team's 1-5 start after finishing last year on 7-20 run.

The team president explained the economics of the initiative: "The law of supply says if you lower supply it drives prices up. We insist on playing our home games in a 100 year old undersized stadium with about 25% lower capacity than it should have"which leads to "a terrible experience with fans paying more to be packed like sardines" in what "everyone not born within the city limits can see is a complete dump."

Harvard economist Greg Mankiw said he "do[esn't] think you can repeal this kind of law" but cautioned that he "only spent a few years at Harvard Law and did not finish [his] J.D."

Kentucky residents, inspired by the initiative, have filed papers to petition for the repeal of the law of gravity.

Tuesday, April 3, 2012

Piling on lawyers

Jeffrey Toobin with today's most valuable paragraphs (MVP) including this zinger:
No one expects the Justices to be making health-care policy any more than we expect them to be picking Presidents, which, it may be remembered, is not exactly their strength, either.
Maybe I'm not the only person who thinks lawyers should stay out of policy-making.

The News

The Supreme Court handed down a surprise ruling on the health care mandate today. In a 5-4 decision the court ruled to uphold the mandate and instead strike down President Obama himself. Antonin Scalia, writing for the majority, wrote that "the Constitution is clear that the President only counts as 3/5th of a man and this court must obey the Constitution." In a press-conference following the landmark decision Justice Thomas was asked if the ruling imperiled his position on the court, to which he responded "3/5th of a man? ask Anita Hill how much man I am. More like 1 and 3/5ths."

Red Sox manager Bobby Valentine is speaking out against companies that insist on access to employees' Facebook pages. Sources say that Valentine was miffed that the Red Sox demanded access to his account and his home in order to dig up dirt on him. The Red Sox released a statement saying that they "just wanted to be prepared for the inevitable mudslinging when we blame our problems on him and run him out of town." A spokesman said that "not everyone is Manny Ramirez, who made character assassination easy. We don't want a repeat of the Normar diaster" referring to the fan-favorite shortstop and overall good guy who was traded by the team midseason and repeatedly badmouthed thereafter.

Stuart Green defends arguing over semantics

Stuart Green doesn't like to call file-sharing stealing, offering the alternatives of "unauthorized use, trespass, conversion and misappropriation."

If that sounds like semantics unworthy of real estate, he disagrees:
This is not merely a question of nomenclature. The label we apply to criminal acts matters crucially in terms of how we conceive of and stigmatize them. What we choose to call a given type of crime ultimately determines how it’s formulated and classified and, perhaps most important, how it will be punished.
I'm not convinced but I'd like to see more arguments from lawyers defending their profession. I think  lawyers play too large a role in crafting laws. Economists (and other social scientists) specialize in modeling how people respond to incentives and designing systems to maximize social welfare (or whatever). They should control the broad outlines of policy-making. Lawyers, in contrast, specialize in turning these systems into laws and arguing over the inevitable details of interpretation. Those things is important to any legal system but it's unclear that expertise qualifies Green to figure out the optimal punishment for a given crime. Obviously I'm not convinced by his argument for as Shakespeare said, an "incentives by any other name affects the cost-benefit analysis just the same."

Monday, April 2, 2012

Jeff Miron on economics

Jeff Miron with the four best paragraphs you will read today.