Angus Deaton Archives

Must-Read: Andrew Gelman: Asking the Question Is the Most Important Step

Posted on November 16, 2015November 16, 2015 by Brad DeLong

Must-Read: Something very, very peculiar is going on with middle-aged American whites in the Bush 43 and Obama years–much more so for women–and it is distinctly odd:

Andrew Gelman: Andrew Gelman: Asking the Question Is the Most Important Step: “I worked super-hard to make the graph… that helped me understand what was going on…

Asking the question is the most important step Statistical Modeling Causal Inference and Social Science

…But, from the social science perspective, what’s far more important is asking the question in the first place, which is what Case and Deaton…. That’s what got the ball rolling. (And, to be fair, they also rolled the ball most of the way.) I’m happy to have refined their analyses and, as noted yesterday, I wasn’t so thrilled by one of Case’s offhand remarks, but let me emphasize that all this discussion is predicated on their effort, on their knowing what to look at, which in turn derives from their justly well-respected research on public health and economic development. That’s the big picture….

Statisticians such as myself have our place in the research ecosystem, but all the bias correction and modeling and clever graphics in the world won’t help you if you don’t know what to look at. And in this particular example, I had no idea of looking at any of this until I was pointed to Case and Deaton’s work…. None of our contributions could’ve happened without the work by the original authors. It’s not Us vs. Them. It’s never Us vs. Them. It’s Us and Them. Or, perhaps more accurately, THEM followed by a little bit of us. And that’s one reason I want them to respect and understand us, not to fear us and be defensive”

Must-Read: Noah Smith: Case-Deaton and the Human Capital Debate

Posted on November 9, 2015November 9, 2015 by Brad DeLong

Noah Smith: Case-Deaton and the Human Capital Debate: “A tendency toward healthy behavior is a powerful and important form…

…of human capital. It is not at all clear that this kind of human capital can (or will) be created by MOOCs, self-study, or other forms of online learning that are being touted as replacements for college. In fact, right now it looks like the health-related human capital boost from college is all that is holding it together for our upper middle class.

Must-Read: Anne Case and Angus Deaton: Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century

Posted on November 4, 2015November 6, 2015 by Brad DeLong

Must-Read: Anne Case and Angus Deaton: Rising morbidity and mortality in midlife among white non-Hispanic Americans in the 21st century: “This paper documents a marked increase in the all-cause mortality of middle-aged white…

…non-Hispanic men and women in the United States between 1999 and 2013… revers[ing] decades of progress in mortality… unique to the United States… confined to white non-Hispanics… at midlife… increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis…. Those with less education saw the most marked increases. Rising midlife mortality rates of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population…

Www pnas org content early 2015 10 29 1518393112 full pdf

An Excellent Nobel Prize for Angus Deaton–But Was Eugene Fama Always Such a Total [Redacted]?

Posted on October 12, 2015October 12, 2015 by Brad DeLong

A truly excellent economics Nobel Prize–I have learned a lot from Angus Deaton.

And I look at my desk and see my copy of Akerlof and Shiller’s Phishing for Phools that I am halfway through on my desk. And I think about the panel I was on with Paul Krugman at New York Comic Con yesterday. There is a subset of economics Nobel Prize winners who are true geniuses, from whom I have learned and continue to learn an immense amount.

But then I turn to my computer to sort through my unread browser tabs.

And the first thing that comes up is: Eugene Fama: http://www.chicagobooth.edu/capideas/magazine/fall-2015/whos-really-in-charge.

And all I can think is: “What a maroon!”

I first remember becoming really aware of Eugene Fama in the aftermath of the stock market’s Black Monday in 1987. He and Merton were out there in its aftermath opining that the 25% fall in the value of equities on Black Monday was a rational revaluation in response to that day’s market news–it was just that we economists were just not smart enough to figure out what that news was that the marginal trader on Wall Street had learned that day, but it was probably something about the tax treatment of takeovers.

That struck me as moronic. I asked my elders: “They’re kidding, aren’t they?” My elders said: “Nope.”

Today I find Eugene Fama saying something else that strikes me as equally moronic:

Is Sally taking Lucy for a walk, or is Lucy taking Sally for a walk?… The Fed isn’t all powerful. Obviously, they couldn’t set interest rates at 10% and leave them there forever, any more than Sally could make Lucy go for a walk if she really didn’t want to. So who’s really in charge?… 83% of the movements in the Fed’s target rate just follow other short-term rates. There are a lot of forces affecting interest rates, and the Fed is just one small part…. And remember, this isn’t the interest on one loan–the Fed claims to control all the interest rates in the economy…

We did this experiment of seeing who was taking whom for a walk–or, rather, the German Reichsbank did it.

The Reichsbank did it back in the 1910s. It set its discount rate at 5%/year nominal. It left it there. It had no problem doing so. There was none of this “the Fed can’t make the market go for a walk if it really didn’t want to…” BS.

Of course, the Reichsbank wished, after the fact, that it had not done so.

By 1922 its policy of fixing the discount rate at 5%/year nominal had created one hell of an inflationary mess: