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Income Inequality: Economic Disparities and the Middle Class in Affluent Countries | Edited by Janet C. Gornick and Markus Jäntti
"This state-of-the-art volume presents comparative, empirical research on a topic that has long preoccupied scholars, politicians, and everyday citizens: economic inequality. While income and wealth inequality across all populations is the primary focus, the contributions to this book pay special attention to the middle class, a segment often not addressed in inequality literature.
"Written by leading scholars in the field of economic inequality, all 17 chapters draw on microdata from the databases of LIS, an esteemed cross-national data center based in Luxembourg. Using LIS data to structure a comparative approach, the contributors paint a complex portrait of inequality across affluent countries at the beginning of the 21st century. The volume also trail-blazes new research into inequality in countries newly entering the LIS databases, including Japan, Iceland, India, and South Africa."
to:NB  books:noted  inequality  economics  sociology  to_teach:statistics_of_inequality_and_discrimination 
7 weeks ago by cshalizi
Education and Intergenerational Social Mobility in Europe and the United States | Edited by Richard Breen and Walter Müller
"This volume examines the role of education in shaping rates and patterns of intergenerational social mobility among men and women during the twentieth century. Focusing on the relationship between a person's social class and the social class of his or her parents, each chapter looks at a different country—the United States, Sweden, Germany, France, the Netherlands, Italy, Spain, and Switzerland. Contributors examine change in absolute and relative mobility and in education across birth cohorts born between the first decade of the twentieth century and the early 1970s. They find a striking similarity in trends across all countries, and in particular a contrast between the fortunes of people born before the 1950s, those who enjoyed increasing rates of upward mobility and a decline in the strength of the link between class origins and destinations, and later generations who experienced more downward mobility and little change in how origins and destinations are linked. This volume uncovers the factors that drove these shifts, revealing education as significant in promoting social openness. It will be an invaluable source for anyone who wants to understand the evolution of mobility and inequality in the contemporary world."
to:NB  books:noted  inequality  transmission_of_inequality  education  economics  sociology  to_teach:statistics_of_inequality_and_discrimination 
7 weeks ago by cshalizi
The Engineering Tools that Shaped the Rational Expectations Revolution by Marcel J. Boumans :: SSRN
"The rational expectations revolution was not only based on the introduction of Muth’s idea of rational expectations to macroeconomics; the introduction of Muth’s hypothesis cannot explain the more drastic change of the mathematical toolbox and concepts, research strategies, vocabulary, and questions since the 1980s. The main claim is that the shift from “Keynesian economics” to “new classical economics” is based on a shift from a control engineering approach to an information engineering methodology. The paper even shows that the “revolution” was more radical. The change of engineering tools has changed macroeconomics more deeply, not only its methodology but also its epistemology and ontology."
to:NB  economics  history_of_economics  optimization 
9 weeks ago by cshalizi
Food Deserts and the Causes of Nutritional Inequality* | The Quarterly Journal of Economics | Oxford Academic
"We study the causes of “nutritional inequality”: why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry and household moves to healthier neighborhoods, we reject that neighborhood environments contribute meaningfully to nutritional inequality. We then estimate a structural model of grocery demand, using a new instrument exploiting the combination of grocery retail chains’ differing presence across geographic markets with their differing comparative advantages across product groups. Counterfactual simulations show that exposing low-income households to the same products and prices available to high-income households reduces nutritional inequality by only about 10%, while the remaining 90% is driven by differences in demand. These findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality."
to:NB  economics  causal_inference  instrumental_variables  spatial_statistics  food  inequality  via:gabriel_rossman 
12 weeks ago by cshalizi
The Cost of a Carbon-Free Electricity System in the U.S.
"I calculate the cost of replacing all power stations in the U.S. using coal and gas by wind and solar power stations by 2050, leaving electric power generation in the U.S. carbon free. Allowing for the savings in the cost of fossil fuel arising from the replacement of fossil fuel plants this is roughly $55 billion annually. Allowing in addition for the fact that most fossil plants in the U.S. are already old and would have to be replaced before 2050 even if we were not to go fossil free, this annual cost is reduced to $23 billion."

--- Encouraging, if true.
to:NB  economics  climate_change  via:jbdelong 
december 2019 by cshalizi
Planning Without Prices (G. M. Heal, 1969)
Yet Another Lange-ian Central Planning Board:

The CPB sets a utility function in terms of levels of final goods. It also allocates raw materials and intermediate goods. Every firm must report to the CPB the marginal productivity of every resource for making every good; the CPB re-allocates goods towards firms with above-average productivity --- basically gradient ascent. (There is a slight complication here to avoid negative allocations.) This converges to a stationary point of the utility function. The claimed innovations over Lange are (a) no prices, just quantities (except that the CPB needs to use partial derivatives of the utility function that act just like prices for its internal work), (b) could handle non-convexity [sort of --- it'll converge to local maxima very happily], (c) along the path to the stationary point, we always stay inside the feasible set, and (d) the utility function is increasing along the path. The author sets the most store by (c) and (d), and so I'd characterize it as kin to an interior-point method, though without (say) a constraint-enforcing barrier penalty. The informational advantage over Kantorovich-style central planning is that the CPB doesn't have to know all the production functions, it just (!) needs to know every firm's marginal productivity for each possible input, which the firm will report honestly because reasons. (The computational and political difficulties of deciding on an economy-wide utility function are as usual unaddressed.)

--- N.B., the last tag (and my emphasis on what's _not_ here) is because someone pointed me at this (and an earlier paper by Malinvaud, cited by Heal) as disposing of everything I wrote about the difficulties of central planning.
have_read  economics  optimization  distributed_systems  re:in_soviet_union_optimization_problem_solves_you  shot_after_a_fair_trial  in_NB 
december 2019 by cshalizi
Caste and the Indian Economy
"Caste plays a role at every stage of an Indian's economic life, in school, university, the labor market, and into old age. The influence of caste extends beyond private economic activity into the public sphere, where caste politics determine access to public resources. The aggregate evidence indicates that there has been convergence in education, occupations, income, and access to public resources across caste groups in the decades after independence. Some of this convergence is likely due to affirmative action, but caste-based networks could also have played an equalizing role by exploiting the opportunities that became available in a globalizing economy. Ethnic networks were once active in many advanced economies but ceased to be salient once markets developed. With economic development, it is possible that caste networks will cease to be salient in India. The affirmative action programs may also be rolled back, and (statistical) discrimination in urban labor markets may come to an end if and when there is convergence across caste groups. In the interim period, however, it is important to understand the positive and negative consequences of caste involvement across a variety of spheres in the Indian economy."
to:NB  economics  india  caste 
december 2019 by cshalizi
Rationalizing Choice: A Review Essay on Peter Leeson's WTF?!: An Economic Tour of the Weird
"The methodology of economics has been applied with increasing frequency to nonmarket behavior and interactions. Peter Leeson's book WTF?!: An Economic Tour of the Weird illustrates both the promise and the perils of this practice. When applied judiciously to environments in which the strategic obfuscation of true motives is widespread, the economic approach can yield valuable insights. But when applied without proper attention to prevailing norms and values, the attempt to rationalize behavior can fall flat and invite ridicule. Economists seeking to understand cultural practices would do well to import insights from other disciplines, and temper their eagerness to export narrow conceptions of rationality."
to:NB  books:noted  book_reviews  economics  sethi.rajiv 
december 2019 by cshalizi
Too Much Data: Prices and Inefficiencies in Data Markets
"When a user shares her data with an online platform, she typically reveals relevant information about other users. We model a data market in the presence of this type of externality in a setup where one or multiple platforms estimate a user’s type with data they acquire from all users and (some) users value their privacy. We demonstrate that the data externalities depress the price of
data because once a user’s information is leaked by others, she has less reason to protect her data and privacy. These depressed prices lead to excessive data sharing. We characterize conditions under which shutting down data markets improves (utilitarian) welfare. Competition between platforms does not redress the problem of excessively low price for data and too much data sharing, and may further reduce welfare. We propose a scheme based on mediated data-sharing that improves efficiency."

--- My usual issue with Acemoglou's theoretical papers is that the assumptions are _very_ much stacked in favor of certain conclusions. (My issue with his empirical papers is that he has apparently never heard of regression diagnostics.) In this case, the conclusions are ones that reinforce my prejudices, but the last tag applies.
to:NB  privacy  data_mining  market_failures_in_everything  economics  acemoglou.daron  to_be_shot_after_a_fair_trial 
november 2019 by cshalizi
Did Austerity Cause Brexit?
"This paper documents a significant association between the exposure of an individual or area to the UK government's austerity-induced welfare reforms begun in 2010, and the following: the subsequent rise in support for the UK Independence Party, an important correlate of Leave support in the 2016 UK referendum on European Union membership; broader individual-level measures of political dissatisfaction; and direct measures of support for Leave. Leveraging data from all UK electoral contests since 2000, along with detailed, individual-level panel data, the findings suggest that the EU referendum could have resulted in a Remain victory had it not been for austerity."
to:NB  causal_inference  economics  political_economy  the_continuing_crises 
october 2019 by cshalizi
How to Use Economic Theory to Improve Estimators: Shrinking Toward Theoretical Restrictions | The Review of Economics and Statistics | MIT Press Journals
"We propose to use economic theories to construct shrinkage estimators that perform well when the theories' empirical implications are approximately correct but perform no worse than unrestricted estimators when the theories' implications do not hold. We implement this construction in various settings, including labor demand and wage inequality, and estimation of consumer demand. We provide asymptotic and finite sample characterizations of the behavior of the proposed estimators. Our approach is an alternative to the use of theory as something to be tested or to be imposed on estimates. Our approach complements uses of theory for identification and extrapolation."
to:NB  economics  econometrics  statistics  estimation  shrinkage 
october 2019 by cshalizi
Beauty, Job Tasks, and Wages: A New Conclusion about Employer Taste-Based Discrimination | The Review of Economics and Statistics | MIT Press Journals
"Using novel data from the Berea Panel Study, we show that the beauty wage premium for college graduates exists only in jobs where attractiveness is plausibly a productive characteristic. A large premium exists in jobs with substantial amounts of interpersonal interaction but not in jobs that require working with information. This finding is inconsistent with employer taste-based discrimination, which would favor attractive workers in all jobs. Unique task data address concerns that measurement error in the importance of interpersonal tasks may bias empirical work toward finding employer discrimination. Our conclusions are in stark contrast to the findings of existing research."
to:NB  economics 
october 2019 by cshalizi
Firms' Internal Networks and Local Economic Shocks
"Using confidential establishment-level data from the US Census Bureau's Longitudinal Business Database, this paper documents how local shocks propagate across US regions through firms' internal networks of establishments. Consistent with a model of optimal within-firm resource allocation, we find that establishment-level employment is sensitive to shocks in distant regions in which the establishment's parent firm is operating, and that the elasticity with respect to such shocks increases with the firm's financial constraint. At the aggregate regional level, we find that aggregate county-level employment is sensitive to shocks in distant counties linked through firms' internal networks."
to:NB  economics 
october 2019 by cshalizi
[1910.07781] Econometric Models of Network Formation
"This article provides a selective review on the recent literature on econometric models of network formation. The survey starts with a brief exposition on basic concepts and tools for the statistical description of networks. I then offer a review of dyadic models, focussing on statistical models on pairs of nodes and describe several developments of interest to the econometrics literature. The article also presents a discussion of non-dyadic models where link formation might be influenced by the presence or absence of additional links, which themselves are subject to similar influences. This is related to the statistical literature on conditionally specified models and the econometrics of game theoretical models. I close with a (non-exhaustive) discussion of potential areas for further development."
to:NB  social_networks  network_data_analysis  economics  statistics 
october 2019 by cshalizi
[1910.07166] Evidence for localization and urbanization economies in urban scaling
"We study the scaling of (i) numbers of workers and aggregate incomes by occupational categories against city size, and (ii) total incomes against numbers of workers in different occupations, across the functional metropolitan areas of Australia and the US. The number of workers and aggregate incomes in specific high income knowledge economy related occupations and industries show increasing returns to scale by city size, showing that localization economies within particular industries account for superlinear effects. However, when total urban area incomes and/or Gross Domestic Products are regressed using a generalised Cobb-Douglas function against the number of workers in different occupations as labour inputs, constant returns to scale in productivity against city size are observed. This implies that the urbanization economies at the whole city level show linear scaling or constant returns to scale. Furthermore, industrial and occupational organisations, not population size, largely explain the observed productivity variable. The results show that some very specific industries and occupations contribute to the observed overall superlinearity. The findings suggest that it is not just size but also that it is the diversity of specific intra-city organization of economic and social activity and physical infrastructure that should be used to understand urban scaling behaviors."
to:NB  cities  economics  economic_geography  re:urban_scaling_what_urban_scaling  i_told_you_so 
october 2019 by cshalizi
Phys. Rev. E 100, 032307 (2019) - May's instability in large economies
"Will a large economy be stable? Building on Robert May's original argument for large ecosystems, we conjecture that evolutionary and behavioural forces conspire to drive the economy towards marginal stability. We study networks of firms in which inputs for production are not easily substitutable, as in several real-world supply chains. Relying on results from random matrix theory, we argue that such networks generically become dysfunctional when their size increases, when the heterogeneity between firms becomes too strong, or when substitutability of their production inputs is reduced. At marginal stability and for large heterogeneities, we find that the distribution of firm sizes develops a power-law tail, as observed empirically. Crises can be triggered by small idiosyncratic shocks, which lead to “avalanches” of defaults characterized by a power-law distribution of total output losses. This scenario would naturally explain the well-known “small shocks, large business cycles” puzzle, as anticipated long ago by Bak, Chen, Scheinkman, and Woodford."
to:NB  economics  macroeconomics  input-output  to_be_shot_after_a_fair_trial 
september 2019 by cshalizi
[1909.04706] Regression to the Mean's Impact on the Synthetic Control Method: Bias and Sensitivity Analysis
"To make informed policy recommendations from observational data, we must be able to discern true treatment effects from random noise and effects due to confounding. Difference-in-Difference techniques which match treated units to control units based on pre-treatment outcomes, such as the synthetic control approach have been presented as principled methods to account for confounding. However, we show that use of synthetic controls or other matching procedures can introduce regression to the mean (RTM) bias into estimates of the average treatment effect on the treated. Through simulations, we show RTM bias can lead to inflated type I error rates as well as decreased power in typical policy evaluation settings. Further, we provide a novel correction for RTM bias which can reduce bias and attain appropriate type I error rates. This correction can be used to perform a sensitivity analysis which determines how results may be affected by RTM. We use our proposed correction and sensitivity analysis to reanalyze data concerning the effects of California's Proposition 99, a large-scale tobacco control program, on statewide smoking rates."
to:NB  causal_inference  statistics  economics  small.dylan  synthetic_controls 
september 2019 by cshalizi
On Whorfian Socioeconomics by Thomas B. Pepinsky :: SSRN
"Whorfian socioeconomics is an emerging interdisciplinary field of study that holds that linguistic structures explain differences in beliefs, values, and opinions across communities. Its core empirical strategy is to document a correlation between the presence or absence of a linguistic feature in a survey respondent’s language, and her/his responses to survey questions. This essay demonstrates — using the universe of linguistic features from the World Atlas of Language Structures and a wide array of responses from the World Values Survey — that such an approach produces highly statistically significant correlations in a majority of analyses, irrespective of the theoretical plausibility linking linguistic features to respondent beliefs. These results raise the possibility that correlations between linguistic features and survey responses are actually spurious. The essay concludes by showing how two simple and well-understood statistical fixes can more accurately reflect uncertainty in these analyses, reducing the temptation for analysts to create implausible Whorfian theories to explain spurious linguistic correlations."
in_NB  linguistics  economics  social_science_methodology  pepinsky.thomas_b.  debunking  evisceration  have_read  to_teach:linear_models  have_sent_gushing_fanmail  to:blog  to_teach:data_over_space_and_time 
september 2019 by cshalizi
[1909.03968] Tree-based Control Methods: Consequences of Moving the US Embassy
"We recast the synthetic controls for evaluating policies as a counterfactual prediction problem and replace its linear regression with a non-parametric model inspired by machine learning. The proposed method enables us to achieve more accurate counterfactual predictions. We apply our method to a highly-debated policy: the movement of the US embassy to Jerusalem. In Israel and Palestine, we find that the average number of weekly conflicts has increased by roughly 103 % over 48 weeks since the movement was announced on December 6, 2017. Using conformal inference tests, we justify our model and find the increase to be statistically significant."

--- I am very skeptical of the application, but interested in the methodology.
to:NB  causal_inference  statistics  economics  nonparametrics  regression  re:ADAfaEPoV  synthetic_controls 
september 2019 by cshalizi
Capitalism, Alone — Branko Milanovic | Harvard University Press
"We are all capitalists now. For the first time in human history, the globe is dominated by one economic system. In Capitalism, Alone, leading economist Branko Milanovic explains the reasons for this decisive historical shift since the days of feudalism and, later, communism. Surveying the varieties of capitalism, he asks: What are the prospects for a fairer world now that capitalism is the only game in town? His conclusions are sobering, but not fatalistic. Capitalism gets much wrong, but also much right—and it is not going anywhere. Our task is to improve it.
"Milanovic argues that capitalism has triumphed because it works. It delivers prosperity and gratifies human desires for autonomy. But it comes with a moral price, pushing us to treat material success as the ultimate goal. And it offers no guarantee of stability. In the West, liberal capitalism creaks under the strains of inequality and capitalist excess. That model now fights for hearts and minds with political capitalism, exemplified by China, which many claim is more efficient, but which is more vulnerable to corruption and, when growth is slow, social unrest. As for the economic problems of the Global South, Milanovic offers a creative, if controversial, plan for large-scale migration. Looking to the future, he dismisses prophets who proclaim some single outcome to be inevitable, whether worldwide prosperity or robot-driven mass unemployment. Capitalism is a risky system. But it is a human system. Our choices, and how clearly we see them, will determine how it serves us."
to:NB  books:noted  milanovic.branko  economics  political_economy 
september 2019 by cshalizi
The Great Reversal — Thomas Philippon | Harvard University Press
"In this much-anticipated book, a leading economist argues that many key problems of the American economy are due not to the flaws of capitalism or the inevitabilities of globalization but to the concentration of corporate power. By lobbying against competition, the biggest firms drive profits higher while depressing wages and limiting opportunities for investment, innovation, and growth.
"Why are cell-phone plans so much more expensive in the United States than in Europe? It seems a simple question. But the search for an answer took Thomas Philippon on an unexpected journey through some of the most complex and hotly debated issues in modern economics. Ultimately he reached his surprising conclusion: American markets, once a model for the world, are giving up on healthy competition. Sector after economic sector is more concentrated than it was twenty years ago, dominated by fewer and bigger players who lobby politicians aggressively to protect and expand their profit margins. Across the country, this drives up prices while driving down investment, productivity, growth, and wages, resulting in more inequality. Meanwhile, Europe—long dismissed for competitive sclerosis and weak antitrust—is beating America at its own game.
"Philippon, one of the world’s leading economists, did not expect these conclusions in the age of Silicon Valley start-ups and millennial millionaires. But the data from his cutting-edge research proved undeniable. In this compelling tale of economic detective work, we follow him as he works out the basic facts and consequences of industry concentration in the U.S. and Europe, shows how lobbying and campaign contributions have defanged antitrust regulators, and considers what all this means for free trade, technology, and innovation. For the sake of ordinary Americans, he concludes, government needs to return to what it once did best: keeping the playing field level for competition. It’s time to make American markets great—and free—again."
to:NB  books:noted  economics  political_economy  economic_policy  market_failures_in_everything  class_struggles_in_america 
september 2019 by cshalizi
Unbound — Heather Boushey | Harvard University Press
"Do we have to choose between equality and prosperity? Many think that reducing economic inequality would require such heavy-handed interference with market forces that it would stifle economic growth. Heather Boushey, one of Washington’s most influential economic voices, insists nothing could be further from the truth. Presenting cutting-edge economics with journalistic verve, she shows how rising inequality has become a drag on growth and an impediment to a competitive United States marketplace for employers and employees alike.
"Boushey argues that inequality undermines growth in three ways. It obstructs the supply of talent, ideas, and capital as wealthy families monopolize the best educational, social, and economic opportunities. It also subverts private competition and public investment. Powerful corporations muscle competitors out of business, in the process costing consumers, suppressing wages, and hobbling innovation, while governments underfund key public goods that make the American Dream possible, from schools to transportation infrastructure to information and communication technology networks. Finally, it distorts consumer demand as stagnant wages and meager workplace benefits rob ordinary people of buying power and pushes the economy toward financial instability.
"Boushey makes this case with a clear, accessible tour of the best of contemporary economic research, while also injecting a passion for her subject gained through years of research into the economics of work–life conflict and policy work in the trenches of federal government. Unbound exposes deep problems in the U.S. economy, but its conclusion is optimistic. We can preserve the best of our nation’s economic and political traditions, and improve on them, by pursuing policies that reduce inequality—and by doing so, boost broadly shared economic growth."
to:NB  economics  inequality  political_economy  class_struggles_in_america 
september 2019 by cshalizi
[1908.08702] Economically rational sample-size choice and irreproducibility
"Several systematic studies have suggested that a large fraction of published research is not reproducible. One probable reason for low reproducibility is insufficient sample size, resulting in low power and low positive predictive value. It has been suggested that insufficient sample-size choice is driven by a combination of scientific competition and 'positive publication bias'. Here we formalize this intuition in a simple model, in which scientists choose economically rational sample sizes, balancing the cost of experimentation with income from publication. Specifically, assuming that a scientist's income derives only from 'positive' findings (positive publication bias) and that individual samples cost a fixed amount, allows to leverage basic statistical formulas into an economic optimality prediction. We find that if effects have i) low base probability, ii) small effect size or iii) low grant income per publication, then the rational (economically optimal) sample size is small. Furthermore, for plausible distributions of these parameters we find a robust emergence of a bimodal distribution of obtained statistical power and low overall reproducibility rates, matching empirical findings. Overall, the model describes a simple mechanism explaining both the prevalence and the persistence of small sample sizes. It suggests economic rationality, or economic pressures, as a principal driver of irreproducibility."

--- To be clear, my skepticism here isn't about the basic idea, which has been articulated about a zillion times (back to Meehl at least...), but rather whether mathing it up with dubious simplifying assumptions adds anything of value.
to:NB  to_be_shot_after_a_fair_trial  bad_data_analysis  statistics  sociology_of_science  economics 
september 2019 by cshalizi
[1908.09021] The Path to Nash Equilibrium
"It has been proved that every non-cooperative game has a Nash equilibrium point. Although many existing algorithms are capable of finding equilibrium points, it is still unclear what force is driving the players to them in the real world. We show that, the players' immediately and constantly pursuing profitable strategies is sufficient for the game to evolve towards equilibrium point, and meanwhile the game needs minimum information exchange among players and no mediation from beyond players. Accordingly, we suggest that in reality the tendency towards Nash equilibrium could be more pervasive and irresistible than expected. Technically, the players' pursuit of profitable strategies gives rise to a sequence of adjusted strategies for our study its approximation to the true equilibrium point.And the sequence can be nicely visualized as a clear path towards an equilibrium point. Our theory has the limitation in optimizing the accuracy of equilibrium point approximation."
to:NB  game_theory  learning_in_games  economics  re:do-institutions-evolve 
august 2019 by cshalizi
Universal Basic Income: Some Theoretical Aspects | Annual Review of Economics
"In this article, we review the desirability and feasibility of a universal basic income (UBI) scheme from the theoretical point of view. We first discuss the possible theoretical justifications of UBI, contrasting the unconditionality of UBI with the many conditions that typically accompany other welfare policies. These justifications range from pure normative reasons to practical reasons due to the problem of screening beneficiaries and imperfections in institutions in charge of implementing tax and welfare policies. Next, we explore the conditions that determine the feasibility and size of a UBI. The broad picture that emerges from our review is that both normative and practical considerations make UBI easier to defend as a tool of poverty alleviation in developing countries than as a tool to achieve social justice in developed ones."
to:NB  universal_basic_income  economics 
august 2019 by cshalizi
Has Dynamic Programming Improved Decision Making? | Annual Review of Economics
"Dynamic programming (DP) is a powerful tool for solving a wide class of sequential decision-making problems under uncertainty. In principle, it enables us to compute optimal decision rules that specify the best possible decision in any situation. This article reviews developments in DP and contrasts its revolutionary impact on economics, operations research, engineering, and artificial intelligence with the comparative paucity of its real-world applications to improve the decision making of individuals and firms. The fuzziness of many real-world decision problems and the difficulty in mathematically modeling them are key obstacles to a wider application of DP in real-world settings. Nevertheless, I discuss several success stories, and I conclude that DP offers substantial promise for improving decision making if we let go of the empirically untenable assumption of unbounded rationality and confront the challenging decision problems faced every day by individuals and firms."

--- Of course, part of the revolutionary impact on economics was the assumption that individuals and firms _already_ solve dynamic programming problems _all the time_...
to:NB  optimization  economics 
august 2019 by cshalizi
Machine Learning Methods That Economists Should Know About | Annual Review of Economics
"We discuss the relevance of the recent machine learning (ML) literature for economics and econometrics. First we discuss the differences in goals, methods, and settings between the ML literature and the traditional econometrics and statistics literatures. Then we discuss some specific methods from the ML literature that we view as important for empirical researchers in economics. These include supervised learning methods for regression and classification, unsupervised learning methods, and matrix completion methods. Finally, we highlight newly developed methods at the intersection of ML and econometrics that typically perform better than either off-the-shelf ML or more traditional econometric methods when applied to particular classes of problems, including causal inference for average treatment effects, optimal policy estimation, and estimation of the counterfactual effect of price changes in consumer choice models."
to:NB  machine_learning  data_mining  nonparametrics  statistics  economics  athey.susan 
august 2019 by cshalizi
Universal Basic Income in the United States and Advanced Countries | Annual Review of Economics
"We discuss the potential role of universal basic incomes (UBIs) in advanced countries. A feature of advanced economies that distinguishes them from developing countries is the existence of well-developed, if often incomplete, safety nets. We develop a framework for describing transfer programs that is flexible enough to encompass most existing programs as well as UBIs, and we use this framework to compare various UBIs to the existing constellation of programs in the United States. A UBI would direct much larger shares of transfers to childless, nonelderly, nondisabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. We review the labor supply literature for evidence on the likely impacts of a UBI. We argue that the ongoing UBI pilot studies will do little to resolve the major outstanding questions."
to:NB  universal_basic_income  economics 
august 2019 by cshalizi
Universal Basic Income in the Developing World | Annual Review of Economics
"Should developing countries give all of their citizens enough money to live on? Interest in this idea has grown enormously in recent years, reflecting both positive results from a number of existing cash transfer programs and dissatisfaction with the perceived limitations of piecemeal, targeted approaches to reducing extreme poverty. We discuss what we know (and what we do not) about three questions: what recipients would likely do with the incremental income, whether this would unlock further economic growth, and whether giving the money to everyone (as opposed to targeting it) would be wise."
to:NB  universal_basic_income  economics 
august 2019 by cshalizi
Production Networks: A Primer | Annual Review of Economics
"This article reviews the literature on production networks in macroeconomics. It presents the theoretical foundations for the role of input–output linkages as a shock propagation channel and as a mechanism for transforming microeconomic shocks into macroeconomic fluctuations. The article also provides a brief guide to the growing literature that explores these themes empirically and quantitatively."
to:NB  economics  macroeconomics  input-output_analysis  leontief_died_for_your_sins 
august 2019 by cshalizi
Bootstrap Methods in Econometrics | Annual Review of Economics
"The bootstrap is a method for estimating the distribution of an estimator or test statistic by resampling one's data or a model estimated from the data. Under conditions that hold in a wide variety of econometric applications, the bootstrap provides approximations to distributions of statistics, coverage probabilities of confidence intervals, and rejection probabilities of hypothesis tests that are more accurate than the approximations of first-order asymptotic distribution theory. The reductions in the differences between true and nominal coverage or rejection probabilities can be very large. In addition, the bootstrap provides a way to carry out inference in certain settings where obtaining analytic distributional approximations is difficult or impossible. This article explains the usefulness and limitations of the bootstrap in contexts of interest in econometrics. The presentation is informal and expository. It provides an intuitive understanding of how the bootstrap works. Mathematical details are available in the references that are cited."
to:NB  bootstrap  statistics  economics  to_teach:undergrad-ADA  horowitz.joel 
august 2019 by cshalizi
Global Wealth Inequality | Annual Review of Economics
"This article reviews the recent literature on the dynamics of global wealth inequality. I first reconcile available estimates of wealth inequality in the United States. Both surveys and tax data show that wealth inequality has increased dramatically since the 1980s, with a top 1% wealth share of approximately 40% in 2016 versus 25–30% in the 1980s. Second, I discuss the fast-growing literature on wealth inequality across the world. Evidence points toward a rise in global wealth concentration: For China, Europe, and the United States combined, the top 1% wealth share has increased from 28% in 1980 to 33% today, while the bottom 75% share hovered around 10%. Recent studies, however, may underestimate the level and rise of inequality, as financial globalization makes it increasingly hard to measure wealth at the top. I discuss how new data sources (leaks from financial institutions, tax amnesties, and macroeconomic statistics of tax havens) can be leveraged to better capture the wealth of the rich."
to:NB  inequality  class_struggles_in_america  economics 
august 2019 by cshalizi
Markets for Information: An Introduction | Annual Review of Economics
"We survey a recent and growing literature on markets for information. We offer a comprehensive view of information markets through an integrated model of consumers, information intermediaries, and firms. The model embeds a large set of applications ranging from sponsored-search advertising to credit scores to information sharing among competitors. We then zoom in to one of the critical elements in the markets for information: the design of the information. We distinguish between ex ante sales of information (the buyer acquires an information structure) and ex post sales (the buyer pays for specific realizations). We relate this distinction to the different products that brokers, advertisers, and publishers use to trade consumer information online. We discuss the endogenous limits to the trade of information that derive from the potential adverse use of information to the consumers. Finally, we discuss recommender systems and other information filtering systems that use artificial intelligence to predict ratings or preferences in markets for indirect information."
to:NB  economics  scores_and_classes 
august 2019 by cshalizi
The Economics of Kenneth J. Arrow: A Selective Review | Annual Review of Economics
"Kenneth Arrow is a giant among economists. In the latter half of the twentieth century, only Paul Samuelson had a comparable effect on the economics profession.1 Arrow created modern social choice theory, established most of the major results in general equilibrium theory, pioneered conceptual tools for studying asymmetric information and risk, and laid foundations for endogenous growth theory, among many other contributions to economics.
"His papers are frequently abstract and technically difficult. However, the abstractions enable readers to see the essentials of a complicated issue. Indeed, his work, although highly theoretical, has had significant repercussions for much applied research (e.g., computable general equilibrium and health care economics) and for many fields outside economics, including political science, philosophy, mathematics, operations research, and ecology.
"Arrow's academic output was enormous (on the order of 300 research papers and 22 books), and his work has been exposited many times before (see, for example, Shoven 2009). Thus, I am highly selective in my choice of articles and books to discuss in this review; indeed, I concentrate primarily on the work for which he was awarded the Nobel Memorial Prize: social choice and general equilibrium. By presenting the major results in some detail, I hope to make up for in depth what this review lacks in breadth.
"I begin in Section 2 with a short biographical sketch. Section 3 then discusses social choice, and Section 4 treats general equilibrium. I briefly mention Arrow's most influential other work in Section 5. I conclude in Section 6 with a discussion of his contributions beyond research. In Sections 3 and 4, I first present the material nontechnically and then, in most cases, offer a more formal treatment in the asterisked version of that section.2 Readers uninterested in technicalities, however, can safely skip over the asterisked sections."
to:NB  lives_of_the_scientists  arrow.kenneth  economics 
august 2019 by cshalizi
The Myth of Millionaire Tax Flight: How Place Still Matters for the Rich | Cristobal Young
"In this age of globalization, many countries and U.S. states are worried about the tax flight of the rich. As income inequality grows and U.S. states consider raising taxes on their wealthiest residents, there is a palpable concern that these high rollers will board their private jets and fly away, taking their wealth with them. Many assume that the importance of location to a person's success is at an all-time low. Cristobal Young, however, makes the surprising argument that location is very important to the world's richest people. Frequently, he says, place has a great deal to do with how they make their millions.
"In The Myth of Millionaire Tax Flight, Young examines a trove of data on millionaires and billionaires—confidential tax returns, Forbes lists, and census records—and distills down surprising insights. While economic elites have the resources and capacity to flee high-tax places, their actual migration is surprisingly limited. For the rich, ongoing economic potential is tied to the place where they become successful—often where they are powerful insiders—and that success ultimately diminishes both the incentive and desire to migrate.
"This important book debunks a powerful idea that has driven fiscal policy for years, and in doing so it clears the way for a new era. Millionaire taxes, Young argues, could give states the funds to pay for infrastructure, education, and other social programs to attract a group of people who are much more mobile—the younger generation."
to:NB  books:noted  inequality  economics  taxes  class_struggles_in_america 
august 2019 by cshalizi
Creating Moves to Opportunity: Experimental Evidence on Barriers to Neighborhood Choice∗
"Low-income families in the United States tend to live in neighborhoods that offer limited opportunities for upward income mobility. One potential explanation for this pattern is that families
prefer such neighborhoods for other reasons, such as affordability or proximity to family and
jobs. An alternative explanation is that they do not move to high-opportunity areas because
of barriers that prevent them from making such moves. We test between these two explanations using a randomized controlled trial with housing voucher recipients in Seattle and King
County. We provided services to reduce barriers to moving to high-upward-mobility neighborhoods: customized search assistance, landlord engagement, and short-term financial assistance.
The intervention increased the fraction of families who moved to high-upward-mobility areas
from 14% in the control group to 54% in the treatment group. Families induced to move to
higher opportunity areas by the treatment do not make sacrifices on other dimensions of neighborhood quality and report much higher levels of neighborhood satisfaction. These findings
imply that most low-income families do not have a strong preference to stay in low-opportunity
areas; instead, barriers in the housing search process are a central driver of residential segregation by income. Interviews with families reveal that the capacity to address each family’s needs
in a specific manner – from emotional support to brokering with landlords to financial assistance
– was critical to the program’s success. Using quasi-experimental analyses and comparisons to
other studies, we show that more standardized policies – increasing voucher payment standards
in high-opportunity areas or informational interventions – have much smaller impacts. We conclude that redesigning affordable housing policies to provide customized assistance in housing
search could reduce residential segregation and increase upward mobility substantially."
to:NB  economics  experimental_economics  inequality  economic_geography  via:??? 
august 2019 by cshalizi
[1907.13087] Government as Network Catalyst: Preferential Attachment in the High-Technology Sector
"Governments have long standing interests in preventing market failures and enhancing innovation in strategic industries. Public policy regarding domestic technology is critical to both national security and economic prosperity. Governments often seek to enhance their global competitiveness by promoting private sector cooperative activity at the inter-organizational level. Research on network governance has illuminated the structure of boundary-spanning collaboration mainly for programs with immediate public or non-profit objectives. Far less research has examined how governments might stimulate private sector cooperation to prevent market failures or to enhance innovation. The theoretical contribution of this research is to suggest that government programs might catalyze cooperative activity by stimulating the preferential attachment mechanism inherent in social networks. We analyze the long-term effects of a government program on the strategic alliance network of 451 organizations in the high-tech semiconductor industry between 1987 and 1999, using recently developed stochastic network analysis methods for longitudinal social networks."
to:NB  economics  social_networks  network_data_analysis 
august 2019 by cshalizi
Food Deserts and the Causes of Nutritional Inequality* | The Quarterly Journal of Economics | Oxford Academic
"We study the causes of “nutritional inequality”: why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry and household moves to healthier neighborhoods, we reject that neighborhood environments contribute meaningfully to nutritional inequality. We then estimate a structural model of grocery demand, using a new instrument exploiting the combination of grocery retail chains’ differing presence across geographic markets with their differing comparative advantages across product groups. Counterfactual simulations show that exposing low-income households to the same products and prices available to high-income households reduces nutritional inequality by only about 10%, while the remaining 90% is driven by differences in demand. These findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality."
to:NB  economics  food  inequality  class_struggles_in_america  causal_inference 
august 2019 by cshalizi
Protecting Competition in the American Economy: Merger Control, Tech Titans, Labor Markets
"Accumulating evidence points to the need for more vigorous antitrust enforcement in the United States in three areas. First, stricter merger control is warranted in an economy where large, highly efficient and profitable "superstar" firms account for an increasing share of economic activity. Evidence from merger retrospectives further supports the conclusion that stricter merger control is needed. Second, greater vigilance is needed to prevent dominant firms, including the tech titans, from engaging in exclusionary conduct. The systematic shrinking of the scope of the Sherman Act by the Supreme Court over the past 40 years may make this difficult. Third, greater antitrust scrutiny should be given to the monopsony power of employers in labor markets."

--- Interesting to see this from the co-author of Hal Varian...
to:NB  economics  imperfect_competition  market_failures_in_everything  our_decrepit_institutions 
august 2019 by cshalizi
Food Deserts and the Causes of Nutritional Inequality* | The Quarterly Journal of Economics | Oxford Academic
"We study the causes of “nutritional inequality” : why the wealthy eat more healthfully than the poor in the United States. Exploiting supermarket entry and household moves to healthier neighborhoods, we reject that neighborhood environments contribute meaningfully to nutritional inequality. We then estimate a structural model of grocery demand, using a new instrument exploiting the combination of grocery retail chains’ differing presence across geographic markets with their differing comparative advantages across product groups. Counterfactual simulations show that exposing low-income households to the same products and prices available to high-income households reduces nutritional inequality by only about 10 percent, while the remaining 90 percent is driven by differences in demand. These findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality."
to:NB  economics  inequality  food  instrumental_variables  causal_inference 
june 2019 by cshalizi
(Not) Getting Paid to Do What You Love | Yale University Press
"Profound transformations in our digital society have brought many enterprising women to social media platforms—from blogs to YouTube to Instagram—in hopes of channeling their talents into fulfilling careers. In this eye-opening book, Brooke Erin Duffy draws much-needed attention to the gap between the handful who find lucrative careers and the rest, whose “passion projects” amount to free work for corporate brands.
"Drawing on interviews and fieldwork, Duffy offers fascinating insights into the work and lives of fashion bloggers, beauty vloggers, and designers. She connects the activities of these women to larger shifts in unpaid and gendered labor, offering a lens through which to understand, anticipate, and critique broader transformations in the creative economy. At a moment when social media offer the rousing assurance that anyone can “make it”—and stand out among freelancers, temps, and gig workers—Duffy asks us all to consider the stakes of not getting paid to do what you love."
to:NB  books:noted  ethnography  networked_life  class_struggles_in_america  economics  social_life_of_the_mind  re:actually-dr-internet-is-the-name-of-the-monsters-creator 
may 2019 by cshalizi
Wealth Distribution and Social Mobility in the US: A Quantitative Approach
"We quantitatively identify the factors that drive wealth dynamics in the United States and are consistent with its skewed cross-sectional distribution and with social mobility. We concentrate on three critical factors: (i) skewed earnings, (ii) differential saving rates across wealth levels, and (iii) stochastic idiosyncratic returns to wealth. All of these are fundamental for matching both distribution and mobility. The stochastic process for returns which best fits the cross-sectional distribution of wealth and social mobility in the United States shares several statistical properties with those of the returns to wealth uncovered by Fagereng et al. (2017) from tax records in Norway."
to:NB  inequality  economics  heavy_tails 
may 2019 by cshalizi
Networks and Trade | Annual Review of Economics
"Trade occurs between firms both across borders and within countries, and most trade transactions include at least one large firm with many trading partners. This article reviews the literature on firm-to-firm connections in trade. A growing body of evidence coming from domestic and international transaction data has established empirical regularities that have inspired the development of new theories emphasizing firm heterogeneity among both buyers and suppliers in production networks. Theoretical work has considered both static and dynamic matching environments in a framework of many-to-many matching. The literature on trade and production networks is at an early stage, and there are many unanswered empirical and theoretical questions."
to:NB  social_networks  economics  to_teach:baby-nets 
may 2019 by cshalizi
Spatial Patterns of Development: A Meso Approach | Annual Review of Economics
"Over the past two decades, the literature on comparative development has moved from country-level to within-country analyses. The questions asked have expanded in scope as economists have used satellite images of light density at night and other big spatial data to proxy for development at the desired level. The focus has also shifted from uncovering correlations to identifying causal relations, using elaborate econometric techniques including spatial regression discontinuity designs. In this review, we show how the combination of geographic information systems with insights from disciplines ranging from the earth sciences to linguistics and history has transformed the research landscape on the roots of the spatial patterns of development. We discuss the limitations of the luminosity data and associated econometric techniques and conclude by offering some thoughts on future research."
to:NB  economics  economic_geography 
may 2019 by cshalizi
Macroeconomic Nowcasting and Forecasting with Big Data | Annual Review of Economics
"Data, data, data…. Economists know their importance well, especially when it comes to monitoring macroeconomic conditions—the basis for making informed economic and policy decisions. Handling large and complex data sets was a challenge that macroeconomists engaged in real-time analysis faced long before so-called big data became pervasive in other disciplines. We review how methods for tracking economic conditions using big data have evolved over time and explain how econometric techniques have advanced to mimic and automate best practices of forecasters on trading desks, at central banks, and in other market-monitoring roles. We present in detail the methodology underlying the New York Fed Staff Nowcast, which employs these innovative techniques to produce early estimates of GDP growth, synthesizing a wide range of macroeconomic data as they become available."
to:NB  economics  econometrics  macroeconomics  social_measurement  statistics 
may 2019 by cshalizi
"Automation" of Manufacturing in the Late Nineteenth Century: The Hand and Machine Labor Study
"Recent advances in artificial intelligence and robotics have generated a robust debate about the future of work. An analogous debate occurred in the late nineteenth century when mechanization first transformed manufacturing. We analyze an extraordinary dataset from the late nineteenth century, the Hand and Machine Labor study carried out by the US Department of Labor in the mid-1890s. We focus on transitions at the task level from hand to machine production, and on the impact of inanimate power, especially of steam power, on labor productivity. Our analysis sheds light on the ability of modern task-based models to account for the effects of historical mechanization."
to:NB  economics  economic_history  great_transformation 
may 2019 by cshalizi
Artificial Intelligence: The Ambiguous Labor Market Impact of Automating Prediction
"Recent advances in artificial intelligence are primarily driven by machine learning, a prediction technology. Prediction is useful because it is an input into decision-making. In order to appreciate the impact of artificial intelligence on jobs, it is important to understand the relative roles of prediction and decision tasks. We describe and provide examples of how artificial intelligence will affect labor, emphasizing differences between when the automation of prediction leads to automating decisions versus enhancing decision-making by humans."
to:NB  economics  machine_learning 
may 2019 by cshalizi
Work of the Past, Work of the Future
"Urban U.S. labor markets today are vastly more educated and skill-intensive than
they were five decades ago. Yet, urban non-college workers currently perform substantially less skilled work than in prior decades. This deskilling reflects the joint effects
of automation and international trade, which have eliminated the bulk of non-college
production, administrative support, and clerical jobs, yielding a disproportionate polarization of urban labor markets. The unwinding of the urban non-college occupational
skill gradient has, I argue, abetted a secular fall in real non-college wages by: (1)
shunting non-college workers out of specialized middle-skill occupations into low-wage
occupations that require only generic skills; (2) diminishing the set of non-college workers that hold middle-skill jobs in high-wage cities; and (3) attenuating, to a startling
degree, the steep urban wage premium for non-college workers that prevailed in earlier
decades. Changes in the nature of work—many of which are technological in origin—
have been more disruptive and less beneficial for non-college than college workers."

--- Autor's previous papers have a bad habit of defining "skill level of a job" as "type wage level of that job in 1979", making it hard to grasp what he's actually measuring. I will be interested to see if he does any better here.
to:NB  economics  inequality  class_struggles_in_america  re:urban_scaling_what_urban_scaling 
march 2019 by cshalizi
The Class Ceiling: Why it Pays to be Privileged, Friedman, Laurison
"Politicians continually tell us that anyone can get ahead. But is that really true? This important book takes readers behind the closed doors of elite employers to reveal how class affects who gets to the top. Friedman and Laurison show that a powerful ‘class pay gap’ exists in Britain’s elite occupations. Even when those from working-class backgrounds make it into prestigious jobs, they earn, on average, 16% less than colleagues from privileged backgrounds. But why is this the case? . Drawing on 175 interviews across four case studies - television, accountancy, architecture, and acting – they explore the complex barriers facing the upwardly mobile. This is a rich, ambitious book that demands we take seriously not just the glass but also the class ceiling."
to:NB  inequality  sociology  economics  books:noted 
march 2019 by cshalizi
Learning to Coordinate: A Study in Retail Gasoline
"This paper studies equilibrium selection in the retail gasoline industry. We exploit a unique dataset that contains the universe of station-level prices for an urban market for 15 years, and that encompasses a coordinated equilibrium transition mid-sample. We uncover a gradual, three-year equilibrium transition, whereby dominant firms use price leadership and price experiments to create focal points that coordinate market prices, soften price competition, and enhance retail margins. Our results inform the theory of collusion, with particular relevance to the initiation of collusion and equilibrium selection. We also highlight new insights into merger policy and collusion detection strategies."
to:NB  economics  market_failures_in_everything 
january 2019 by cshalizi
The Taxing Deed of Globalization
"This paper examines the effects of globalization on the distribution of worker-specific labor taxes using a unique set of tax calculators. We find a differential effect of higher trade and factor mobility on relative tax burdens in 1980–1993 versus 1994–2007 in the OECD. Prior to 1994, greater openness meant that higher income earners were taxed progressively more. However, after 1994, we document a globalization-induced rise in the labor income tax burden of the middle class, while the top 1 percent of workers and employees faced a reduction in their tax burden of 0.59–1.45 percentage points."
to:NB  globalization  economics  to_teach:undergrad-ADA 
january 2019 by cshalizi
The Geography of the Internet Industry (2008)
"This groundbreaking book analyses the geography of the commercial Internet industry. It presents the first accurate map of Internet domains in the world, by country, by region, by city, and for the United States, by neighborhood.
"Demonstrates the extraordinary spatial concentration of the Internetindustry.
Explains the geographic features of the high tech venture capital behind the Internet economy.
Demonstrates how venture capitalists' abilities to create and use tacit knowledge contributes to the clustering of the internet industry
Draws on in-depth interviews and field work in San Francisco Bay Area and New York City."
to:NB  books:noted  downloaded  economics  economic_geography  internet  market_failures_in_everything 
january 2019 by cshalizi
The Aztec Economic World by Kenneth G. Hirth
"This study explores the organization, scale, complexity, and integration of Aztec commerce across Mesoamerica at Spanish contact. The aims of the book are threefold. The first is to construct an in-depth understanding of the economic organization of precolumbian Aztec society and how it developed in the way that it did. The second is to explore the livelihoods of the individuals who bought, sold, and moved goods across a cultural landscape that lacked both navigable rivers and animal transport. Finally, this study models Aztec economy in a way that facilitates its comparison to other ancient and premodern societies around the world.  What makes the Aztec economy unique is that it developed one of the most sophisticated market economies in the ancient world in a society with one of the worse transportation systems. This is the first book to provide an updated and comprehensive view of the Aztec economy in thirty years."
to:NB  books:noted  native_american_history  aztecs  economic_history  economics 
january 2019 by cshalizi
Economics of Agglomeration by Masahisa Fujita
"Economic activities are not concentrated on the head of a pin, nor are they spread evenly over a featureless plane. On the contrary, they are distributed very unequally across locations, regions and countries. Even though economic activities are, to some extent, spatially concentrated because of natural features, economic mechanisms that rely on the trade-off between various forms of increasing returns and different types of mobility costs are more fundamental. This book is a study of the economic reasons for the existence of a large variety of agglomerations arising from the global to the local. This second edition combines a comprehensive analysis of the fundamentals of spatial economics and an in-depth discussion of the most recent theoretical developments in new economic geography and urban economics. It aims to highlight several of the major economic trends observed in modern societies. The first edition was the winner of the 2004 William Alonso Memorial Prize for Innovative Work in Regional Science."

--- For ZMS's birthday?
to:NB  books:noted  cities  economics  economic_geography  market_failures_in_everything 
january 2019 by cshalizi
Quiggin, J.: Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (Hardcover and eBook) | Princeton University Press
"Since 1946, Henry Hazlitt’s bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can’t explain why they often fail so badly—or what we should do when they stumble. As Nobel Prize–winning economist Paul Samuelson quipped, “When someone preaches ‘Economics in one lesson,’ I advise: Go back for the second lesson.” In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes—and failures—of free markets.
"Economics in Two Lessons explains why market prices often fail to reflect the full cost of our choices to society as a whole. For example, every time we drive a car, fly in a plane, or flick a light switch, we contribute to global warming. But, in the absence of a price on carbon emissions, the costs of our actions are borne by everyone else. In such cases, government action is needed to achieve better outcomes.
"Two-lesson economics means giving up the dogmatism of laissez-faire as well as the reflexive assumption that any economic problem can be solved by government action, since the right answer often involves a mixture of market forces and government policy. But the payoff is huge: understanding how markets actually work—and what to do when they don’t."
to:NB  books:noted  economics  popular_social_science 
january 2019 by cshalizi
Pomfret, R.: The Central Asian Economies in the Twenty-First Century: Paving a New Silk Road (Hardcover and eBook) | Princeton University Press
"This book analyzes the Central Asian economies of Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan, from their buffeting by the commodity boom of the early 2000s to its collapse in 2014. Richard Pomfret examines the countries’ relations with external powers and the possibilities for development offered by infrastructure projects as well as rail links between China and Europe.
"The transition of these nations from centrally planned to market-based economic systems was essentially complete by the early 2000s, when the region experienced a massive increase in world prices for energy and mineral exports. This raised incomes in the main oil and gas exporters, Kazakhstan and Turkmenistan; brought more benefits to the most populous country, Uzbekistan; and left the poorest countries, the Kyrgyz Republic and Tajikistan, dependent on remittances from migrant workers in oil-rich Russia and Kazakhstan. Pomfret considers the enhanced role of the Central Asian nations in the global economy and their varied ties to China, the European Union, Russia, and the United States. With improved infrastructure and connectivity between China and Europe (reflected in regular rail freight services since 2011 and China’s announcement of its Belt and Road Initiative in 2013), relaxation of United Nations sanctions against Iran in 2016, and the change in Uzbekistan’s presidency in late 2016, a window of opportunity appears to have opened for Central Asian countries to achieve more sustainable economic futures."
to:NB  books:noted  central_asia  economics  political_economy  post-soviet_politics 
january 2019 by cshalizi
A Composite Likelihood Framework for Analyzing Singular DSGE Models | The Review of Economics and Statistics | MIT Press Journals
"This paper builds on the composite likelihood concept of Lindsay (1988) to develop a framework for parameter identification, estimation, inference, and forecasting in dynamic stochastic general equilibrium (DSGE) models allowing for stochastic singularity. The framework consists of four components. First, it provides a necessary and sufficient condition for parameter identification, where the identifying information is provided by the first- and second-order properties of nonsingular submodels. Second, it provides a procedure based on Markov Chain Monte Carlo for parameter estimation. Third, it delivers confidence sets for structural parameters and impulse responses that allow for model misspecification. Fourth, it generates forecasts for all the observed endogenous variables, irrespective of the number of shocks in the model. The framework encompasses the conventional likelihood analysis as a special case when the model is nonsingular. It enables the researcher to start with a basic model and then gradually incorporate more shocks and other features, meanwhile confronting all the models with the data to assess their implications. The methodology is illustrated using both small- and medium-scale DSGE models. These models have numbers of shocks ranging between 1 and 7."
to:NB  state-space_models  economics  time_series  macroeconomics  statistics  likelihood  re:your_favorite_dsge_sucks 
january 2019 by cshalizi
Robots at Work | The Review of Economics and Statistics | MIT Press Journals
"We analyze for the first time the economic contributions of modern industrial robots, which are flexible, versatile, and autonomous machines. We use novel panel data on robot adoption within industries in seventeen countries from 1993 to 2007 and new instrumental variables that rely on robots’ comparative advantage in specific tasks. Our findings suggest that increased robot use contributed approximately 0.36 percentage points to annual labor productivity growth, while at the same time raising total factor productivity and lowering output prices. Our estimates also suggest that robots did not significantly reduce total employment, although they did reduce low-skilled workers’ employment share."

- Last tag for the instrumental variables (if they look sensible and perhaps especially if they do not)
to:NB  economics  instrumental_variables  robots_and_robotics  to_teach:undergrad-ADA 
january 2019 by cshalizi
A Spatial Knowledge Economy
"Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. The model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities and how variation in these premia emerges from symmetric fundamentals."
to:NB  economics  economic_geography  to_be_shot_after_a_fair_trial  re:urban_scaling_what_urban_scaling 
january 2019 by cshalizi
Models mathematics and methodology in economic explanation | History of economic thought and methodology | Cambridge University Press
"This book provides a practitioner's foundation for the process of explanatory model building, breaking down that process into five stages. Donald W. Katzner presents a concrete example with unquantified variable values to show how the five-stage procedure works. He describes what is involved in explanatory model building for those interested in this practice, while simultaneously providing a guide for those actually engaged in it. The combination of Katzner's focus on modeling and on mathematics, along with his focus on the explanatory performance of modeling, promises to become an important contribution to the field."
to:NB  books:noted  social_science_methodology  modeling  economics  philosophy_of_science 
december 2018 by cshalizi
The World Is Not Yet Flat: Transport Costs Matter! | The Review of Economics and Statistics | MIT Press Journals
"Using microlevel commodity flow data and microgeographic plant-level data, we construct industry-specific ad valorem trucking rate series and measures of geographic concentration to provide evidence on the relationship between transport costs and agglomeration. We find that low-transport-cost industries display significantly more geographic concentration in the cross-sectional dimension and that falling transport costs agglomerate industries in the panel dimension. The effects are large: the fall in trucking rates between 1992 and 2008 implied a 20% increase in geographic concentration on average, all else equal."
to:NB  economics  economic_geography  logistics 
december 2018 by cshalizi
Skewed Wealth Distributions: Theory and Empirics
"Invariably across a cross-section of countries and time periods, wealth distributions are skewed to the right displaying thick upper tails, that is, large and slowly declining top wealth shares. In this survey we categorize the theoretical studies on the distribution of wealth in terms of the underlying economic mechanisms generating skewness and thick tails. Further, we show how these mechanisms can be micro-founded by the consumption-saving decisions of rational agents in specific economic and demographic environments. Finally we map the large empirical work on the wealth distribution to its theoretical underpinnings."
to:NB  heavy_tails  inequality  economics 
december 2018 by cshalizi
The Public Option — Ganesh Sitaraman, Anne L. Alstott | Harvard University Press
"A solution to inequalities wherever we look—in health care, secure retirement, education—is as close as the public library. Or the post office, community pool, or local elementary school. Public options—reasonably priced government-provided services that coexist with private options—are all around us, ready to increase opportunity, expand freedom, and reawaken civic engagement if we will only let them.
"Whenever you go to your local public library, send mail via the post office, or visit Yosemite, you are taking advantage of a longstanding American tradition: the public option. Some of the most useful and beloved institutions in American life are public options—yet they are seldom celebrated as such. These government-supported opportunities coexist peaceably alongside private options, ensuring equal access and expanding opportunity for all.
"Ganesh Sitaraman and Anne Alstott challenge decades of received wisdom about the proper role of government and consider the vast improvements that could come from the expansion of public options. Far from illustrating the impossibility of effective government services, as their critics claim, public options hold the potential to transform American civic life, offering a wealth of solutions to seemingly intractable problems, from housing shortages to the escalating cost of health care.
"Imagine a low-cost, high-quality public option for child care. Or an extension of the excellent Thrift Savings Plan for federal employees to all Americans. Or every person having access to an account at the Federal Reserve Bank, with no fees and no minimums. From broadband internet to higher education, The Public Option reveals smart new ways to meet pressing public needs while spurring healthy competition. More effective than vouchers or tax credits, public options could offer us all fairer choices and greater security."
to:NB  books:noted  progressive_forces  institutions  economics  political_economy 
october 2018 by cshalizi
Research Universities and the Public Good: Discovery for an Uncertain Future | Jason Owen-Smith
"In a political climate that is skeptical of hard-to-measure outcomes, public funding for research universities is under threat. But if we scale back support for these institutions, we also cut off a key source of value creation in our economy and society. Research Universities and the Public Good offers a unique view of how universities work, what their purpose is, and why they are important.
"Countering recent arguments that we should "unbundle" or "disrupt" higher education, Jason Owen-Smith argues that research universities are valuable gems that deserve support. While they are complex and costly, their enduring value is threefold: they simultaneously act as sources of new knowledge, anchors for regional and national communities, and hubs that connect disparate parts of society. These distinctive features allow them, more than any other institution, to innovate in response to new problems and opportunities. Presenting numerous case studies that show how research universities play these three roles and why they matter, this book offers a fresh and stirring defense of the research university."
to:NB  books:noted  economics  academia  education  science_as_a_social_process  innovation 
october 2018 by cshalizi
A Perspective on the Accuracy of Economic Observations on JSTOR
"In 1950 appeared the first edition of Oskar Morgenstern's famous book, The Accuracy of Economic Observations. Nearly half a century later it is timely to return to Morgenstern's diagnosis and to contemplate his therapeutic recommendations. Morgenstern's vision can and should inform the consideration of the topic today because of the continued validity of many of his findings. His work still provides stimuli for studying the general problems of measurement, the varying requirements for accuracy, the issues of aggregate macroeconomic measures, and the prospects for economic and social measurement. This is so even if some of the bleaker assessments by Morgenstern, notwithstanding their technical merits, provide little or no practical guidance for statistical activities. In this context it is enlightening to recall the different practical attitudes adopted by Keynes and by some of his contemporaries in Germany regarding theoretical difficulties with aggregate macroeconomic data."
to:NB  to_read  social_measurement  social_science_methodology  economics  econometrics  on_the_accuracy_of_economic_observations 
october 2018 by cshalizi
Why Do Defaults Affect Behavior? Experimental Evidence from Afghanistan
"We report on an experiment examining why default options impact behavior. By randomly assigning employees to different varieties of a salary-linked savings account, we find that default enrollment increases participation by 40 percentage points—an effect equivalent to providing a 50% matching incentive. We then use a series of experimental interventions to differentiate between explanations for the default effect, which we conclude is driven largely by present-biased preferences and the cognitive cost of thinking through different savings scenarios. Default assignment also changes employees' attitudes toward saving, and makes them more likely to actively decide to save after the study concludes."
to:NB  economics  experimental_economics  re:anti-nudge  afghanistan 
september 2018 by cshalizi
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