Category: Equitablog

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More energy in the atmospheric system means that the configuration-space point visits more places–including some unusual ones.

Don’t be stupid tomorrow morning, people!

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Must-Reads:

1. Claudia Goldin: A Grand Gender Convergence: Its Last Chapter: “The converging roles of men and women are among the grandest advances in society and the economy in the last century. These aspects of the grand gender convergence are figurative chapters in a history of gender roles. But what must the “last” chapter contain for there to be equality in the labor market? The answer may come as a surprise. The solution does not (necessarily) have to involve government intervention and it need not make men more responsible in the home (although that wouldn’t hurt). But it must involve changes in the labor market, in particular how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who labored long hours and worked particular hours. Such change has taken off in various sectors, such as technology, science and health, but is less apparent in the corporate, financial and legal worlds.”
2. Paul Lewis: US economy losing ‘up to a $1bn a week’ after jobless benefits cut: “The US economy is losing up to a billion dollars a week because of the ‘fiscally irresponsible’ decision to end long-term unemployment benefits…. Lawrence Katz based his assessment on official forecasts of the impact to the economy of 1.3 million jobless Americans losing benefits…. ‘It is actually fiscally irresponsible not to extend unemployment benefits…. The long-run cost to the taxpayers will be much higher from disconnecting people from the labour market.'”
3. Jenny Lawson: The Meemaw Effect: “This isn’t a real post but I just wanted to share…. The last decade has been tough for Victor’s meemaw…. Last week Victor and I were able to get her a pretty, one-bedroom apartment down the street from us…. When she saw the apartment she cried because she told us she never thought she’d ever live anywhere so nice. We are so incredibly lucky to be able to do this for her, and it would not have been possible without you… if you read this blog, or advertised on it, or visited the sponsors, or bought my book, or purchased something from my shop you’ve helped me… to be someone I never thought I could be…. You helped me help other people who then helped others…. I can never thank you enough for the changes you’ve made in so many people’s lives, but I can thank you for the wonderful things you’ve brought to mine. Thank you.”

Continue reading “Noted for Your Lunchtime Procrastination for January 5, 2014” →

Noah Smith has a very nice post this morning:

Noah Smith: Risk premia or behavioral craziness?:

John Cochrane is quite critical of Robert Shiller…. He… thinks that Shiller is trying to make finance less quantitative and more literary (I somehow doubt this, given that Shiller is first and foremost an econometrician, and not that literary of a guy).

But the most interesting criticism is about Shiller’s interpretation of his own work. Shiller showed… stock prices mean-revert. He interprets this as meaning that the market is inefficient and irrational… “behavioral craziness”. But others–such as Gene Fama–interpret long-run predictability as being due to predictable, slow swings in risk premia.

Who is right? As Cochrane astutely notes, we can’t tell who is right just by looking at the markets themselves. We have to have some other kind of corroborating evidence. If it’s behavioral craziness, then we should be able to observe evidence of the craziness elsewhere in the world. If it’s predictably varying risk premia, then we should be able to measure risk premia using some independent data source…

Continue reading “Noise Trading, Bubbles, and Excess Stock Market Volatility: Noah Smith and Robert Shiller and Andrei Shleifer and Jeremy Greenwood vs. John Cochrane and Gene Fama and Company: Progressive vs. Degenerative Research Programs in Finance: The Honest Broker for the Week of January 11, 2014” →

Claudia Goldin: A Grand Gender Convergence: Its Last Chapter:

The converging roles of men and women are among the grandest advances in society and the economy in the last century. These aspects of the grand gender convergence are figurative chapters in a history of gender roles. But what must the “last” chapter contain for there to be equality in the labor market? The answer may come as a surprise. The solution does not (necessarily) have to involve government intervention and it need not make men more responsible in the home (although that wouldn’t hurt). But it must involve changes in the labor market, in particular how jobs are structured and remunerated to enhance temporal flexibility. The gender gap in pay would be considerably reduced and might vanish altogether if firms did not have an incentive to disproportionately reward individuals who labored long hours and worked particular hours. Such change has taken off in various sectors, such as technology, science and health, but is less apparent in the corporate, financial and legal worlds.

Must-Reads:

1. Pedro Nicolaci da Costa: The Fed’s Lopsided Inflation Target: “Is the Federal Reserve being cavalier about consistently undershooting its inflation target?…. Boston Fed President Eric Rosengren, who dissented against the central bank’s decision in December to begin paring back the pace of its bond-buying stimulus by $10 billion to $75 billion per month. ‘I would prefer to wait until the economic improvement that I am forecasting is clearly evident in the data before reducing the size of the asset-purchase program. I think patience remains appropriate at this time’, he said, citing how far the Fed is falling short on both the inflation and employment sides of its dual mandate…. The Fed statement itself cautions that ‘inflation persistently below its 2% objective could pose risks to economic performance’. The Fed has been missing its inflation target for much of the period much since the start of the financial crisis in mid-2007…”

2. Janelle Nanos: Losing Aaron: Bob Swartz on MIT’s Role in His Son’s Death: “After his son was arrested for downloading files at MIT, Bob Swartz did everything in his power to save him. He couldn’t. Now he wants the institute to own up to its part in Aaron’s death…”

3. Marc Andreesen: Andreessen: Tech Bubble Believers ‘Don’t Know What They’re Talking About’: “Within three years, I don’t think it’s going to be possible to buy a phone that’s not a smartphone…. the world where everybody has a supercomputer in their pocket and everybody’s connected. And so we’re just starting to see the implications of that…. Apple and Google are both in extraordinarily powerful positions…”

4. Simon Wren-Lewis: Economic standards: “Imagine you are an academic scientist who is genuinely sceptical about climate change… asked… whether the current spell of cold weather disproves man-made global warming. Perhaps you are tempted to say yes, or ‘yes, although’, because it would encourage scepticism…. I’m almost certain you would instead say ‘of course not’… [and] then give… a little lecture about probabilities, averages, trends… the same answer that a scientist who believes in climate change would give. You do not give the wrong answer just because it is convenient to your overall argument, because you are an academic and a scientist. You have standards.

   “Now imagine (maybe you do not need to) that you are an economist and you are asked… ‘Has George Osborne’s “plan A” [fiscal austerity] been vindicated by the recovery in 2013?’ There is only one correct answer to this question–no. It is the correct answer, even if you believe plan A is the right policy…. It is important to understand that this has nothing to do with whether Plan A was a good or bad policy. What a supporter of Plan A should reply is  ‘No, but I still believe Plan A is the right policy for the following reasons’…. When some economists enter a political arena… they leave their scientific standards behind. Thankfully only two academics answered yes on this occasion, but many more city economists did so. So I should have been braver in my earlier post about the differences between academic and city economists–an explanation I should have added is that some city economists have lower scientific standards. You could say I am naive to expect anything else… economic ideas are influenced by ideology, and it is foolish to pretend otherwise. But our reaction should be to expose these influences and try and reduce them, rather than shrugging our shoulders. What I refuse to accept is that economics cannot be an evidence-based discipline.”

5. Felix Salmon: Netflix’s dumbed-down algorithms: “One huge difference between TV and movies is that audiences have much lower quality thresholds for the former than they do for the latter. The average American spends 2.83 hours per day watching TV–that’s not much less than the 3.19 hours per day spent working. And while some TV is extremely good, most of it, frankly, isn’t. Television stations learned many years ago the difference between maximizing perceived quality, on the one hand, and maximizing hours spent watching, on the other. Netflix has long since started making the same distinction: it wants to serve up a constant stream of content for you to be able to watch in vast quantities, rather than sending individual precious DVDs where you will be very disappointed if they fall below your expectations…. The original Netflix prediction algorithm–the one which guessed how much you’d like a movie based on your ratings of other movies–was an amazing piece of computer technology, precisely because it managed to find things you didn’t know that you’d love…. Netflix… no longer wants to show me the things I want to watch, and it doesn’t even particularly want to show me the stuff I didn’t know I’d love. Instead, it just wants to feed me more and more and more of the same, drawing mainly from a library of second-tier movies and TV shows, and actually making it surprisingly hard to discover the highest-quality content…. This move is surely great for Netflix’s future profitability…. But there’s something a bit screwy about a world where I find iTunes to be a more useful discovery mechanism for Netflix material than Netflix itself.”

Continue reading “Things to Read While Insomniac on the Night on January 4-5, 2014” →

Felix Salmon: Netflix’s dumbed-down algorithms:

One huge difference between TV and movies is that audiences have much lower quality thresholds for the former than they do for the latter. The average American spends 2.83 hours per day watching TV–that’s not much less than the 3.19 hours per day spent working. And while some TV is extremely good, most of it, frankly, isn’t. Television stations learned many years ago the difference between maximizing perceived quality, on the one hand, and maximizing hours spent watching, on the other. Netflix has long since started making the same distinction: it wants to serve up a constant stream of content for you to be able to watch in vast quantities, rather than sending individual precious DVDs where you will be very disappointed if they fall below your expectations….

Continue reading “Late-Evening Must-Read: Felix Salmon: The Diminished Social Utility of Netflix” →

Simon Wren-Lewis: Economic standards: “I have used the following analogy before, but it remains pertinent. Imagine you are an academic scientist who is genuinely sceptical about climate change. I have met them so I know they exist. You are asked… whether the current spell of cold weather disproves man made global warming. Perhaps you are tempted to say yes, or ‘yes, although’, because it would encourage scepticism.

But I’m almost certain you would instead say ‘of course not’… [and] then give… a little lecture about probabilities, averages, trends… the same answer that a scientist who believes in climate change would give. You do not give the wrong answer just because it is convenient to your overall argument, because you are an academic and a scientist. You have standards.

Continue reading “Evening Must-Read: Is Economics a Discipline?” →

The Business Desk with Paul Solman: Nobel Laureate Bob Shiller on Why the Fed Can’t Say There’s a Housing Bubble:

Paul Solman: Can you say in a sentence or two what you got the Nobel Prize for?

Bob Shiller: Ha. I don’t know. … There’s a long scientific background paper on the Nobel website that talks about the three of us — Gene Fama, Lars Peter Hansen and me. As contributors to the same body of literature, which seems a little hard because Gene Fama, especially, takes a different summary view of it all.

Continue reading “Paul Solman’s Interview with Bob Shiller on Finance and Psychology: Weekend Reading” →

Ow.ly – image uploaded by @urbaninstitute:

Probability of Female Survival to Age 50 in the OECD: Graph of the Week*

The U.S. is in red.