Just don't bother.
Some macroeconomists use calibration, some use econometrics, and some use both. There’s no real methodological debate left in the field on this issue.
What is true is that most people outside of macro do not like calibration. I don’t know why. I spent seven years of my life thinking about whether econometrics was better than calibration … and pretty much decided that the answer is: “it depends”.
That's N. Kocherlakota, from his essay on the state of modern macro. He's absolutely right, and keep in mind that I am an econometrician.
Part of the reason is that macroeconometrics is, well, dodgy - and that's 'at best'. A lot of macroeconometrics is outright bonkers.
Another issue is that econometrics is generally misunderstood; most of the 'data' on any issue usually resides on the researcher's head, meaning that in most cases the informational contribution of hard-coded data is much less important that that of theory ('soft-coded data'?). There's no such thing as 'letting the data speak for itself', but the notion sounds appealing so people keep pretending there is.
And if you take issue with the previous sentence, good luck discovering the next Phillips curve, deciding whether GDP has a unit root, and estimating any elasticity with a non-laughable degree of precision.
Chris Dillow has the details.
p(General Moral Outrage At Your Being Arrested When Having Committed A Serious Crime)=
f( artistic contribution, funny international politics, time from incident, age)
By these standards, Bono is free to commit armed robbery, Jasper Johns has a license to kill, and Shakespeare could have gotten away with a small genocide if he felt like one.
I seem to be in the minority (at least judging from the MSM) in finding it a tad bit improper that the French and Polish political elites have condemned the arrest of a fugitive self-confessed paedophile, that the Swiss have had to more or less say 'sorry', and that so many show-biz people feel morally outraged about the incident. I'm not saying the guy should be hanged and quartered, but is it really so bad to expect the law to apply to everyone regardless of their achievements and artistic contribution?
Kieran Healy rounds up some of the comments out there, and adds interesting insight.
Over at Andrew Gelman's, a reader emails:
I read the abstract for your paper What is the probability your vote will make a difference? [...] I'd note that the abstract prima facie contains an error. Your sentence in the abstract, "On average, a voter in America had a 1 in 60 million chance of being decisive in the presidential election." can not be correct. If we assume that this sentence is correct that means that given the actual turnout of 132,618,580 people the sum total probability of voters being decisive is larger than one. This of course [sic] is impossible. The total amount of decisiveness must be at most one.
What is going on here? Can the probabilities sum to more than one? Take a minute to think it through, and then read the rest of the entry to find out the answer...
More, including construction details, here.
In his book Bagombo Snuff Box: Uncollected Short Fiction, Vonnegut listed eight rules for writing a short story:
1. Use the time of a total stranger in such a way that he or she will not feel the time was wasted.
2. Give the reader at least one character he or she can root for.
3. Every character should want something, even if it is only a glass of water.
4. Every sentence must do one of two things—reveal character or advance the action.
5. Start as close to the end as possible.
6. Be a Sadist. No matter how sweet and innocent your leading characters, make awful things happen to them—in order that the reader may see what they are made of.
7. Write to please just one person. If you open a window and make love to the world, so to speak, your story will get pneumonia.
8. Give your readers as much information as possible as soon as possible. To hell with suspense. Readers should have such complete understanding of what is going on, where and why, that they could finish the story themselves, should cockroaches eat the last few pages.
From his wikipedia page. And here's an audio recording of Vonnegut reading from Breakfast of Champions for the first time, three years prior to publication.
Here. Tested it and works great, takes about 30 seconds to set up.
Ryden's web-page has more images and goodies. Ryden is also responsible for 9: The Last Resort, a 1996 adventure computer game produced by Robert De Niro and Jane Rosenthal, and featuring voice performances by Cher, James Belushi, Christopher Reeve, and Aerosmith amongst others.
If you think that charities could do with better economic analysis and programme evaluation and would like to help, Pro Bono Economics might be what you are looking for.
Pro Bono Economics is a new charity whose aim is to broker economists into the charitable sector to help on short and medium-term assignments, typically addressing questions around measurement, results and impact.
* To improve the effectiveness of the charitable sector, in particular when evaluating the wider impact of its activities and when presenting these results effectively to an external audience; and
* To provide a mechanism by which the economics profession can contribute to a well-functioning charitable sector of society, both as an end in itself and as part of professional development for economists.
Thanks to Al for the pointer.
Did you know that 2009 is one second shorter than 2008? And you thought leap years are cool.
On related news, I find it astonishing that I have to manually set the time on my mac and iphone - and to top it all up, I have a nagging suspicion that both clocks are actually slow.
The seven deadly sins.
vox - Research-based policy analysis and commentary from leading economists
It’s said variously that 250 million people have been saved from death by his life’s work or that 1 billion people have been saved from starvation.
By Mr. Toenniessen’s calculation, about half the world’s population goes to bed every night after consuming grain descended from one of the high-yield varieties developed by Dr. Borlaug and his colleagues of the Green Revolution.
The New York Times obituary is here. HT Tim Worstall.
What happens when the insurer market becomes less competitive?
We test whether insurers that experience larger enrollment increases due to Part D negotiate lower drug prices with pharmacies. Overall, we find that 100,000 additional insureds lead to 2.5-percent lower pharmacy prices negotiated by the insurer, and 5-percent reductions in pharmacy profits earned on prescriptions filled by enrollees of that insurer.The results seem genuine:
Estimated enrollment effects are much larger for drugs with therapeutic substitutes, and virtually zero for branded drugs without therapeutic substitutes.And there's also this interesting bit:
We also present evidence that most insurer savings are, on the margin, passed on as lower premiums.The authors also put the results in perspective:
Naturally, the optimal degree of competitiveness faced by manufacturers dependsIt's interesting how discussions on healthcare reform have focussed almost exclusively on the financial costs of health-care, the bulk of which represent transfers from consumers to health providers and big pharma, with very little discussion of deadweight losses beyond overheads, or any serious attempt at quantifying them.
both on efficient drug pricing, and the provision of sufficient incentives to innovate. Therefore, it is not clear whether policies to increase competition among manufacturers would harm future welfare by more than they enhance current welfare.
We spend more time discussing how much we spend on health-care than how much we waste. For economic thinkers, this is very out of character.
And another random observation: I may be wrong here, but I feel like the (non-articulated) current concensus in policy discussions is more-or-less that dynamic effects are not important, and that spending has little to do with innovation and improved health outcomes in the future. Going further out on a limb, I think I can trace this change to Robin Hanson's campaign and his popularisation of the RAND study, but of course this is just a gut feeling.
Between 1950 and 2000, the price of […] long-distance passenger air transport fell by 2.6 percent annually, and of trans-Atlantic phone calls by an astounding 8 percent annually.From the Concice Encyclopedia of Economics, at the Library of Economics and Liberty.
[...] women (physicians) spend 20% to 25% less time in practice than men.These are dangerous statistics to quote without having checked the methodology, but the numbers make sense. You can find some earlier blogging I did on statistical discrimination here.
Via Kids Prefer Cheese:
Can you imagine having no traffic lights or signs or any other way of keeping cars and people apart? The results would be dangerous chaos, right?
Well, they have a lot a faith in human nature in the small Dutch town of Drachten. Its main intersection is a busy place, where cars and trucks compete with people on bicycles, and others on foot.
The normal civic response - here and elsewhere - has been to put in more traffic lights, divide the roadway into lanes - control things. But the response in Drachten has been the opposite - they took the controls away.
A funny thing happened. The accident rate around the intersection went down - way down, from more than eight a year to fewer than two. [...]
There have been a few small collisions, but these are almost to be encouraged, Mr Monderman explained. "We want small accidents, in order to prevent serious ones in which people get hurt," he said yesterday.
"It works well because it is dangerous, which is exactly what we want."
The statistics are weak, but the theory has merit. Nonetheless, I would expect some restrictions to be beneficial. When you drive you take into account the risk to yourself, but you only partially consider the risk to others; hence you are not careful enough and some additional incentives are needed (e.g. fines).
Even if these numbers can be replicated, they may mostly reflect a short-term response until people adjust back to their optimal speed/risk ratio. In other words, right after the change risk-averse drivers will be over-cautious until they learn how to drive in the new conditions; the price of speed is high. As time passes and they manage to squeeze more speed out of a set amount of risk, they will probably converge back to their old speed/risk ratio.
And of course the prevalence of accidents is not the relevant metric: a lot of traffic signals serve to co-ordinate drivers rather than make them go safely, and it's a safe bet that stop signals help people go faster on average. The objective is to balance speed with safety, not to minimise the accident rate.
Count me as intrigued but not convinced.
Trabandt and Uhlig have a well-crafted new NBER working paper:
For benchmark parameters, we find that the US can increase tax revenues by 30% by raising labor taxes and 6% by raising capital income taxes. For the EU-14 we obtain 8% and 1%. Denmark and Sweden are on the wrong side of the Laffer curve for capital income taxation.
With predictable implications:
[...] lowering the capital income tax as well as raising the labor income tax results in higher tax revenue in both the US and the EU-14 (DC: EU-15 sans Lux), i.e. in terms of a “Laffer hill”, both the US and the EU-14 are on the wrong side of the peak with respect to their capital tax rates.
These results match my priors almost exactly, and I would think those of the mainstream economist too. This makes their model a good model. But I'm afraid they perfectly match the authors' priors too; this makes it a not so informative model.
I will now believe these numbers with ever-so-slightly increased certainty.
TypeRacer is a free online game where you compete against a group of friends or strangers in real-time, with the person who can type the fastest winning the race - I can see this being a massive hit in the blogosphere! The excellent choice of quotes adds a nice touch.
I loved this game, and I finally figured out how many words per minute I can churn out.
Then: The Gospel of Matthew
Now: 40 Days and a Mule: How One Man Quit His Job and Became the Boss
Then: Crime and Punishment
Now: Confessions of a Axe Murderer: How Killing An Old Woman Showed Me the Truth About Life, Love, and Morality
Then: The Lion, The Witch, & The Wardrobe
Now: Harry Potter and the whatever the fuck
They are even more funny collectively than in isolation.
That's a real quality of Michael Jordan, and something we can all use in our regular daily lives.
He saw just about everything as an excuse to work harder. He didn't make his varsity team ... so he worked harder. He didn't make the playoffs, so he worked harder. He couldn't beat the Pistons, so more work.
Public service announcement: You can work all you like, but you will never be Michael Jordan.
The World Economic Forum's latest ranking of competitive countries sees the US fall to second place behind Switzerland, while Singapore moves up to third.
The World Economic Forum (WEF) released The Global Competitiveness Report 2009-2010 in which it ranks countries across the world on how competitive they are, with Switzerland, the US and Singapore taking the top three spots. The report was released ahead of an annual WEF meeting being held in Dalian.
Top Ten Rankings 09/10
Full rankings (PDF)
Full rankings (Excel)
The GCN's flagship publication is The Global Competitiveness Report (GCR). It is the most comprehensive and authoritative assessment of the comparative strengths and weaknesses of national economies, used by governments, academics and business leaders. The GCR was first published in 1979 and its coverage has expanded each year since, now extending to 134 major and emerging economies. Further expansion of coverage is planned.
Deworming is the most cost-effective way to improve school attendance and performance in developing countries:
The simplest and least costly of these programs is deworming. Nearly 2 billion people around the world are affected by parasitic worm infections, with children disproportionately affected.
Harvard economist Michael Kremer has studied the impact of mass deworming in Kenya and India. Delivering deworming medication costs 50 cents per child per year in Kenya but yielded a 25 percent increase in school attendance; a similar program in India cost $4 per student per year and yielded a 20 percent attendance gain. "This is a simple, cost-effective and yet tragically not-done program. It's a scandal that [deworming] hasn't been addressed," Kremer says. There are spillover effects as well. "The most surprising thing about the study in Kenya was the widespread impact," Kremer says. The program drove down infection rates for several kilometers around the schools, he says, and there were significant improvements in attendance for untreated students, in the treatment schools as well as in nearby schools not in the program.
It’s not generally appreciated that health care expenditures for people in the lowest 15% of income are 50% to 100% greater than for people of average income. There’s also a difference at the high end. The wealthiest 15% also consume more, but only about 20% more. So there’s greater utilization at both ends of the income spectrum, but for different reasons and with different outcomes.
More spending at the high end improves outcomes, not simply for a specific condition but across the board, because the care consists of a broader spectrum of beneficial services. More yields more. But among the low-income patients, outcomes are poor despite the added spending. In fact, the added spending is because of poor outcomes – more readmissions, more care for disease that’s out of control.
That's Richard Cooper, and the numbers sound plausible. The interview is interesting throughout.
Bluematter is being revamped, so funny things will be happening to the layout over the coming days. Regular blogging service of the type not seen around around here for months will also be starting in a couple of weeks, so check back soon.