economics

The economist reproduces one particularly unhelpful graph/table:

I hate this aggregate analysis. Regional variations in most of these countries completely invalidates the analysis. How do you  make sense of the magnitude of the US housing problem with this kind of regional variation?

You don’t, is how. And even the Case-Shiller doesn’t comment on the economic importance of the various cities.

Have a care when drawing conclusions from gigantically rolled-up economic aggregates. They’re way too easy to fudge in favor of bias.

AMR was the last of the major legacy airline companies in the United States to file for Chapter 11. Analysts said that its reluctance to do so earlier had left it less nimble than many of its competitors.

More here.

Deregulation created an industry that looks very little like the one that preceded it. This can only happen through the destruction of the previous regime.

It works.

This was an interesting take:

The WSJ has a very interesting table of the unemployment and wage distributions for various majors. There’s lots to talk about, particularly the STEM/humanities/social/vocational divide, but one thing that struck me was that the highest and lowest unemployment rates were dominated by tiny majors. In general, small populations tend to have more widely varying outcomes just as a function of standard error, which is why you should always ignore headlines about big jumps in the crime rate for small towns. Anyway, I downloaded the data, generated some plots, and yup, it’s your classic funnel.

He then throws in some graphs:

His conclusion

Moral of the story, don’t change your major from clinical psych to actuarial science just yet. On the other hand, nursing, elementary education, and general education really do appear to be real deal outliers of low unemployment.

Putting aside how impressed I was with this analysis and how jealous I was that I didn’t think of it first, my gut said this wasn’t the last word.

I took the data and changed the y axis from employment to median income:

And 75h percentile income:

I’ve circled two very different kind of outliers in my analysis. My little circle surrounds three majors in both images. They are:

• Elementary Education
• General Education
• Psychology

Low unemployment isn’t everything.

I’m not here to comment on Krugman’s main point in this post, which is that there isn’t any substance to the idea that high income earners contribute something called “job creation” to the economy. But I do take issue with this:

Yet textbook economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period.

As someone who often works with extremely productive people I have to respectfully disagree. They teach me when they work with me. They might make me more productive directly and so earn their higher wages, but they make me more productive IN THE FUTURE, whether they stick around or not.

And the longer they stick around, the more productive I will ultimately become.

Model that!

Robin Hanson:

Like democracy fans who insist the only acceptable solution to democracy’s failings is more democracy, for many school fans the only acceptable solution to school failings is more school.

A variant on this is Arnold Kling‘s:

The other camp argues, “Markets fail, and that’s why we need government.” The idea is that markets are prone to excesses and imbalances and need the thoughtful, steadying hand of government to protect consumers and investors from flaws and uncertainties of the market. This camp believes that wise technocrats can and will bring order to the markets.

Markets fail; but they learn from their failures. That’s why we need markets.

I briefly overheard an impassioned case for increasing the minimum wage on some morning news program today. The reason? “Rent is too high to pay on $7.25 an hour”

Indeed, rent is high in this city. I can’t imagine earning the min and making ends meet, certainly not in Manhattan, and certainly not in a nice neighborhood without a bunch of roommates.

But read Ryan Avent’s minibook (or listen to an interview with him) and think about this a bit.

High house prices are much a product of regulation designed to limit urban development. Incumbent house-owners lobby to enhance zoning laws and other regulations that stifle development to constrict supply. Now why would you want to constrict supply of something you own?

So the price goes up.

It’s policies that favor the rich that supply the strongest case for increasing the minimum wage.