Specialization is for insects

Having children in the 21st century

From the Radical Doula blog:

A woman ... had reached out to me because she was having real difficulty finding a doula [because] 1) She was serving as a surrogate for a gay male couple [and] 2) She had had a “selective reduction” of the resulting twin pregnancies to just have one child.

That story is ready-made to make a moral conservative's head explode: an "unnatural" pregnancy through a surrogate; a gay couple (who will soon be gay parents!); a "selective" abortion (where one twin lives and one twin is "selectively reduced").  Even I admit that this all sounds a little strange.

As proof that I'm an economist, my question after reading this story was "I wonder how much this all costs, and whether it's covered by insurance?"  I imagine the insurance policy would have to be quite generous to let this all fall under "covered fertility treatments."

Dilbert on Economics

Funny video.  Scott Adams really does like economics, though.

cool Stongehenge "enthusiast"

This guy is equal parts Sisyphus and Astronaut Farmer.  Very cool project.  Remember: Impossible is Nothing.

Backronyms

The word-of-the-day is backronym:

A backronym (or bacronym or also retronym) is a phrase that is constructed "after the fact" from a previously existing word or abbreviation, the abbreviation being an initialism or an acronym ... An example of a backronym from the word acronym is as follows.

Acronyms Condense Representations Of Neologisms You Memorize

I learned this word today while reading about "sun sneezing" -- also known as photic sneeze reflex or, alternatively, by the backronym Autosomal Dominant Compelling Helio-Ophthalmic Outburst syndrome (ACHOO syndrome).  Apparently this conditions affects 17% to 35% of humans.  So some of you must have it (I'm pretty sure I don't).

The question I have is whether GNU is a recursive backronym or a recursive acronym?

Worthless money

Slideshow of six of the weakest currencies.  I will admit that despite my supposedly rigorous training in modern macroeconomics, I would have no idea how to begin to deal with 100,000 percent inflation.

Jew-conomics

Appendix A of this paper is hilarious (and almost certainly superfluous given the incredible over-representation of Jews in the field of economics).  Here is the title and abstract (I added the bold part since it sounds plausible to me):

"Is Hanukkah responsive to Christmas?"
We study the extent to which religious activity responds to the presence and activity of other religions. Specifically, we employ individual-level survey data and county-level expenditure data to examine the extent to which Hanukkah celebration among U.S. Jews is driven by the presence of Christmas. We find that: (1) Jews with children at home are more likely to celebrate Hanukkah than Jews without children. (2) The effect of having children on Hanukkah celebrations is higher for reform Jews than for orthodox Jews; and, it is higher for Jews who feel a stronger sense of belonging to Judaism. In contrast, there is no such differential effect of having children on the celebration of other Jewish holidays. (3) Jewish-related expenditures in Hanukkah are higher in counties with lower share of Jews. These findings are all consistent with the hypothesis that Jews increase religious activity during Hanukkah because of the presence of Christmas, and that this response is primarily driven by the presence of children at home. One underlying mechanism that could lead to this is that Jewish parents in the U.S. celebrate Hanukkah more intensively so their children do not feel left out, and/or because they are concerned that their children will convert or intermarry.

For more "Jew-conomics", check out the website of Ran Abramitzky.  In particular, this paper looks interesting.

Rust and Keane on Levitt

This discussion might be a little hard to follow for non-economists, but two economists (Michael Keane and John Rust) recently tried to argue that the "Freakonomics" trend has gone too far, and it's time to bring in more "structure" to applied economics research and get rid of the cute-ness and cleverness.  Keane makes some good points and is very fair, but I think Rust is both unfair and unscientific:

Here's Keane making a good point:

[T]he work by Card and Krueger (1994), Neumark and Wascher (1995), and Deere, Murphy and Welch (1995) on effects of the sharp increases in the national minimum wage from $3.35 on March 31, 1990 to $4.25 on April 1, 1991, and the New Jersey specific increase to $5.05 on April 1, 1992. These quasi-experiments provide important evidence that may help distinguish among competing labor market theories. But progress can only be made if one attempts to interpret the DD estimates of these authors in light of standard theories of labor market equilibrium, such as the search and matching model of Burdett and Mortensen (1989), as well as bringing more data to bear to help resolve some of the ambiguities of the original studies.

And here's Keane being fair:

It is often treated as a feat worthy of praise to simply estimate a structural model, regardless of whether the model can be shown to provide a good fit to the data, or perform well in out-of-sample predictive exercises. I see no reason why an estimated structural model should move my priors about, say, the likely impact of a policy intervention, if it fits the in-sample data poorly and/or has not been shown to perform reasonably well in any validation exercises.

Here's Rust being unfair and unscientific:

Instead young economists these days can do freakonomics and have Steve Levitt to look up to as their role model. Winner of the 2003 John Bates Clark Award, Levitt openly confesses his ignorance of economics "I mean, I just -- I just don't know very much about the field of economics. I'm not good at math, I don't know a lot of econometrics, and I also don't know how to do theory ... (New York Times, August 3, 2003)."  Levitt exemplifies recent generations of MIT graduates who have been taught that the only tools one really needs in order to be a successful applied economist is a little knowledge of regression and instrumental variables.

...

[I]t is no longer necessary to have a model, or an innovation in econometric methodology, and the question doesn't even have to be important as long as one has a clever instrument and an entertaining topic. In fact, Levitt's work demonstrates that it is no longer even necessary to do the regressions correctly in order to achieve fame and superstar status in the "dumb and dumber" regime we're in. Two of Levitt's most famous papers are false: i.e. his key findings evaporate once elementary programming errors are corrected. This includes his controversial paper with Donohue that claims that the Roe vs. Wade decision was a cause of the significant reduction in crime in the U.S. in the 1990s.

The "elementary" programming errors are indeed embarrassing, but for someone who wants to be "scientific" (rather than just "clever"), I'm surprised that Rust bluntly states that these errors render the papers "false."  I think it's completely inappropriate to dismiss the core findings of Levitt's papers because of these programming errors.  This is one of the main reasons why we are taught to write empirical papers with a "collage" of statistical evidence, so that if one of the pieces turns out to be wobbly you still have several other legs that your paper can stand on.  In the case of Levitt's famous abortion paper, he has six different pieces of evidence to support his theory.  The programming error only affected one of the pieces of evidence (as you can read about here).

It's also a little unprofessional to say that Levitt's work demonstrates "low standards of academic excellence."  I would bet very good money that many of the "structural" papers that Rust (and Keane) discuss have similar "elementary" programming errors.  We don't know the gory details of these errors, however, because (1) it's very very hard to reproduce the results of structural work and (2) people aren't as interested in reproducing the results.

In some sense, I think the fact that people have found Levitt's errors so easily shows a clear benefit of "transparent" empirical work.  Its simplicity is a virtue in terms of ease-of-replication.  And I think almost everyone agrees we should be doing more replication.

Dupree

The "real" name of Spitzer's female companion-for-a-night is Ashley Alexandra Dupree.  Where are all the "You, Me, and Dupree" headlines?  The movie is about a guest who overstays his welcome!

Sudhir Venkatesh writes about the affair on Slate ("Did Eliot Spitzer get caught because he didn't spend enough on prostitutes?").  Also, for some interesting theoretical work on the economics of prostitution, check out this paper.

Inequality in leisure

From the latest paper by the always-interesting Aguiar and Hurst(*):

This paper examines the changing allocation of time within the United States that has occurred between 1965 and 2003-2005. We find that the time individuals have allocated to leisure has increased in the U.S. for both men and women during this period, with almost the entire gain occurring prior to 1985. We also find that post 1985 there has been a substantial increase in leisure inequality, particularly for men.  Over the last 20 years, less educated men increased the time they allocated to leisure while more educated men recorded a decrease in leisure time. While the relative decline in the employment rate of less educated men is important, trends in employment status explain less than half of the increase in the leisure gap.

I think the welfare conclusions from this work depend critically on whether leisure is "involuntary."  But regardless of the welfare implications, as a purely descriptive fact, I think it's a very important one to keep in mind.  I have long maintained that to understand the current median voter's taste for income and wealth redistribution, it is important to realize that earnings inequality and hours inequality have both increased.  The very-rich earn a great deal more than they used to, but they also work a great deal more hours.  100 years ago, the very-rich earned more and worked fewer hours than the poor; now they work many more hours and earn (much) more than the poor.  When the rich were work-a-little "rentiers" there was a widespread feeling that they should be taxed more.  Currently, there is not the same widespread populist view that the rich should be taxed more, and I think the hours and leisure inequality trends play a role in changing tastes for redistribution.

  (*) I am very excited that Erik Hurst will be discussing one of my papers in the January 2009 ASSA meetings; don't ask me why these things get scheduled so far in advance.

Spitzer

Sorry for long delay between posts.  Excuses: combination of wrist strain and furious work towards a new paper draft.  Will be ready to post paper on-line in a few days.  I think it's turned out very nicely. 

Now, a word on Spitzer-gate.  I thought this was the funniest comment on the finance blog of nytimes.com:

This is the man who effectively appointed Chuck Prince as CEO of Citigroup, calling him “a spectacular choice”.  Now, THAT’S poor judgment.