Economics

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The Economist Gives Thumbs Up to Economics Blogs

January 4, 2012 in Blogging, Economics - General | No comments

Although mainly discussing the quality of economics blogs focused on Macroeconomic issues, the Economist endorsed the blog-o-sphere as a productive forum for intellectual debate.  To give it some historical context:

“Previous publishing revolutions, such as the advent of printing, prompted similar concerns about trivialisation and extremism. But whatever you think about the impact of blogging on political, scientific or religious debate, it is hard to argue that the internet has cheapened the global conversation about economics. On the contrary, it has improved it.”

Sure, writing an economics blog improves the quality of intellectual debates, but why do bloggers do it?  Blogging takes time and resources away from other pursuits (e.g., publishing, other work, leisure).  For only a few blogs does the ad revenue earned make up for the time spent working on the site.

One reasons blogging is attractive is that it helps the reputation of the blogger.

“Research (by two blogging economists at the World Bank) suggests that academic papers cited by bloggers are far more likely to be downloaded. Blogging economists are regarded more highly than non-bloggers with the same publishing record. Blogs…have also given voice to once-obscure scholars advancing bold solutions to America’s economic funk and Europe’s self-inflicted crisis.”

If blogging can help promote the intellectual debate of a boring topic like macroeconomics, imagine what it is doing for the much more interesting (in my completely unbiased opinion) debates surrounding health economic issues.

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Nobel Prize in Economics

October 10, 2011 in Economics - General | No comments

Two months ago I was standing in Stockholm’s Stadshuset (City Hall).  Soon, Thomas Sargent and Christopher Sims will be there as well.  The pair, however, will be accepting the 2011 Nobel Prize in Economics.

Although I am not a macroeconomist myself, Marginal Revolution has a good description of the pair.

My old professor, Jim Hamilton of UCSD explains macroeconomic impulse response functions which Sims helped develop.

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Prince William, Kate Middleton, and Nuptial Economics

May 2, 2011 in Current Events, Economics - General | No comments

Nearly 23 million Americans watched a British Prince and his fiancee get married last week.  Yet you don’t have to be royalty to enjoy a luxurious wedding.

In the U.S., the average wedding costs about $30,000.  Weddings in India are well known for their extravagance.

“India’s legendary nuptial shindigs risk emptying not just the country’s wallets, but its bellies too. In February the food minister estimated that close to 15% of all grains and vegetables in the country are wasted through ‘extravagant and luxurious social functions’, such as lavish wedding banquets.”

On the other hand, other countries are trying to reign in spending on nuptials.

“…the Afghan authorities have been considering a proposal to limit the boom in weddings, sombre affairs under the Taliban. The suggested limit is 300 guests and a few dollars per head.

…Wedding laws in Tajikistan now maintain that only one course may be served.”

When do wedding festivities excess become excessive.  Like love, the answer is in the eye of the beholder.

 

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The Purple Health Plan

April 12, 2011 in Health Reform, Public Policy | 3 comments

The Purple Health Plan is supposed to be a “moderate” plan for health reform–purple is after all a mix of red and blue.  The plan is endorsed by five Nobel laureates.  So what is the Purple Health Plan?

Key provisions of the plan include the following:

  • All Americans receive a voucher each year to purchase a standard plan from the private-plan provider of their choice.
  • Vouchers are individually risk-adjusted; those with higher expected healthcare costs, based on documented medical conditions, receive larger vouchers.
  • Participating insurance companies providing standard plans cannot deny coverage.Americans choose doctors and hospitals included in the standard plan they choose.
  • Plan providers offer supplemental plans to their participants and cannot deny supplemental insurance coverage to their participants.
  • The government (federal and state) ends the tax exclusion of employer-provided health insurance premiums.
  • Like all other Americans, Medicare, Medicaid, and health exchange participants are covered by the Purple Health Plan subject to appropriate transition provisions.
  • Each year a panel of doctors sets the coverages of the standard plan subject to a strict budget, namely that the total cost to the government of the vouchers cannot exceed 10 percent of GDP.

Where did these Nobel Laureates come up with such an idea?  Would it work in practice?  It turns out, this basic framework has already been implemented in Switzerland.  I have already written about the Swiss system here, here and here.  One of this plan’s drawback is that risk adjustment will never be exact and adverse selection will always occur to varying degrees.  In addition, believing that a panel of doctors will conserve resources and not simply advocate an expansion benefits to their particular specialties seems a bit naive from my point of view.    Overall, however, I believe that this proposal is eminently reasonable.

 

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Economics Links

January 29, 2010 in Current Events | 2 comments

These set of links focus less on Healthcare and are instead more for my Economist readers.

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Average Salary of Recent Economics PhDs: 2009

January 15, 2010 in Economics - General | No comments

In the past, this blog has reported the average salaries of recent economics PhD graduates.  For Econ PhD graduates in 2009, we can update these figures as follows using more recent data.  For instance, below are the average (median) starting salaries of recent economics grads by the type of institution by which they were hired.

  • University: $92,600 ($89,500)
  • College: $77,100 ($70,000)
  • Policy/Applied Research: $85,800 ($90,000)
  • Central bank: $105,700 ($110,000)
  • Private Firm: $115,500 ($120,000)

Of the people in the survey, the percentage of individuals who accepted jobs at the following types of institutions were:

  • University: 63.6%
  • College: 8.6%
  • Policy/Applied Research: 10.2%
  • Central bank: 6.2%
  • Private Firm: 11.4%

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In Defense of Capitalism

December 30, 2009 in Economics - General | No comments

Capitalism has taken a beating the past few years.  From the mortgage crisis to Bernie Madoff’s ponzi scheme, from a falling stock market to rising unemployment, capitalism does not seems like the best economic system at present.  In fact, Michael Moore even made a movie satirically titled Capitalism: A Love Story.

Yet now is not the time to abandon capitalism.  It offers the best hope to jump start the economy and–more importantly–generate long term progress.  The Economist offers 3 reasons why capitalism must be praised:

  1. Creates cooperation between sometimes antagonistic parties.  ”…companies in fact depend on persuading large numbers of people—workers and bosses, shareholders and suppliers—to work together to a common end. This involves getting lots of strangers to trust each other.”
  2. Increases innovation.  ”Business people do not just invent clever products that solve nagging problems, …[t]hey also create organisations that manufacture these products and then distribute them about the world.”
  3. Maintains political pluralism.  ”Only 202 of the 500 biggest companies in America in 1980 were still in existence 20 years later.”

Most importantly, however, is that capitalism is provides a more open society.  Anyone can earn a living, even if you don’t come from money or are a recent immigrant.  Although of course, privileged individuals do better in any society, capitalism doesn’t preclude individuals from occupations if they are from certain backgrounds or castes.  Further, capitalistic governments tend to meddle less in individuals affairs and uphold individual freedoms.  Least we forget, the Nazi’s were from the National Socialist party. [Although to be fair, socialist governments can uphold individual freedoms and capitalist countries can also oppress minorities as well.]

A paper by the Indepenent Instiute claims that businessmen are more honest than preachers, politicians, and professors.  Although businessmen can make untrue claims just like these other professions, because customers can “test drive” the products sold, the truth regarding the  product will come out eventually. This gives the businessmen an incentive to be honest up front in order to maintain long term relationships with customers and suppliers.

In the words of Winston Churchill, ”The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”

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Quotation of the Day

October 3, 2009 in Economics - General | No comments

“…the lessons of history makes me mindful of a lesson I learned as an operations-research student at the Naval Postgraduate School some years ago. While trying to develop a mathematical model to explain the complexities of naval warfare, I realized that it was simply impossible to develop the perfect model. No amount of mathematical artistry would be sufficient to explain the virtually infinite number of variables in human behavior. The great lesson for all those who use mathematical models as tools to understand the real world is that models provide insights, not answers. I hope our economics community has finally learned that lesson — at least until they forget it again during the next boom cycle.”

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Tell me something I don’t know…

February 11, 2009 in Economics - General | No comments

The Wall Street Journal reports that the tough economic times has lead to a decline in demand for new Economics Ph.D. students.  As someone who is ‘on the job market’ this year, I certainly agree that it has been a tough year.  Many universities who placed job advertisements to hire new Ph.D. Economists have since withdrawn the post due to budgetary considerations.  Just as the WSJ states, the experience of my peers at UCSD has been that “…even qualified candidates went through just a fraction of the usual number of interviews this year, and some schools have canceled flyouts.”

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Bright young Economists

January 21, 2009 in Economics - General | No comments

The Economist magazine has a listing of the eight up-and-coming economists.  Below is a list of their names and some commentary if applicable.

  • Amy Finkelstein.  Dr. Finkelstein researches in the public and health economics fields.  I have featured here work multiple times on this blog (see here, here, here, here and here).
  • Jesse Shapiro.  I met Dr. Shapiro at an IHS conference last spring and have been very impressed with his work.  Some of Dr. Shapiro’s research findings include: harsher jail conditions do nothing to deter prisoners from reoffending and that preschoolers who watch television do better academically than children who don’t.
  • Esther Duflo.  Dr. Duflo is a well known development economist whose work involves randomized interventions. For instance, she found that giving away 1 kg of daal (lentils) when parents take their kids to be immunized greatly improved immunization rates compared to the control group not given the daal.
  • Roland Fryer – Social Economics, the Economics of Affirmative Action/Racism.
  • Raj Chetty – Public Economics, Taxation.
  • Iván Werning – Macroeconomics.
  • Xavier Gabaix – Behavioral Economics, Asset pricing.
  • Marc Melitz – Trade Economics.

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