Saturday, October 21, 2017

24 people ACTUALLY worth following on Twitter. The definitive list.

Two lists of 25 people you should follow on Twitter caught my eye. Of course, there's Salon's 25 conservatives actually worth following, many of whom aren't conservative or worth following (Jennifer Rubin and, not one, but two Federalist-obsessed millennials). Then there's a list of 25 Not Salon-Approved Conservatives Worth Following on Twitter from Mike LaChance at Legal Insurrection. Trump syncophancy is the sole qualification of many of these, so the list includes a lot of dross (I mean, come on. Jim Hoft and John Nolte?)

Combined, the two lists provide 24 people worth following (13 from the former and 11 from the latter). I admit to not knowing much about some of them, which I take as evidence that you're not missing much.

Anyway, here's the list of 24 you should follow:
Kilgore Trout @kt_so_it_goes
Ben Howe @benhowe
Ken White @popehat
Haley Byrd @byrdinator
Josh Jordan @numbersmuncher
Tom Nichols @radiofreetom
Allahpundit @allahpundit
Kat Timpf @kattimpf
Noah Rothman @noahrothman
Jay Caruso @jaycaruso
Rick Wilson @therickwilson
John Podheretz @jpodhoretz
Stephen Hayes @stephenfhayes
Katie Pavlich @katiepavlich
Stephen Miller @redsteeze
Ben Shapiro @benshapiro
William Jacobsen @leginsurrection
Greg Gutfield @greggutfield
Christina Sommers @chsommers
Rob Province @robprovince
IowaHawk @iowahawkblog
Sean Davis @seanmdav
Asche Schow @ascheschow
Mollie Hemingway @mzhemingway

Tuesday, June 27, 2017

Most-qualified presidential candidate ever?

We've heard for a while from certain people that Hillary Clinton was the most-qualified presidential candidate in our great nation's history. Somehow there were lots of her supporters who were able to keep a straight face while saying this, so I'll assume they were sincere. But, if they were sincere, then they were instead blindingly ignorant of US history.

I have often tweeted a list of more-qualified candidates, so I decided to just post them here to save time later. Note that I am restricticting myself to just the post-war period. My view is that Clinton was more qualified than only two candidates of the era: Obama and Trump, but the list below is limited to those who were inarguably more qualified the first time they ran. Note that making the list does not make one a good candidate, simply a qualified one based on prior experience.

Truman, Dewey, Eisenhower, Nixon, Goldwater, Johnson, Humphrey, McGovern, Ford, Reagan, Mondale, GHW Bush, Dole, Gore, Kerry, McCain, Romney.

So, best case is 18th most qualified in the post-war era.

Friday, May 19, 2017

Seattle Minimum Wage Analyzed Correctly

Many cities across the country have decided to increase their minimum wages above that of their state. Economists of all political stripes, even those who are broadly in favor of higher state and national minimum wages, are opposed to these policies because of the harm that they will do to a city's growth and employment, especially the employment of the lowest-skilled.

David Neumark remains the best source for balanced analysis of the minimum wage in theory and practice. This piece published by IZA is an excellent and accessible summary of the issue.

A minimum wage prices the least-skilled workers out of employment because firms would have to pay them more than they are able to provide in terms of productivity and revenue. As a consequence, some firms will shut down, some will substitute higher-skilled labor, and others will increase automation. In the end, low-skilled workers are shut out of the labor market and are denied the opportunity to gain experience through on-the-job training, thereby exiling them from employment now and perhaps into the future.

Because the least-skilled are the most vulnerable to job loss under a minimum wage, empirical studies tend to focus on the effects on 16-19 year olds or on industries, such as restaurants, which are relatively reliant on low-skilled workers. Competently done studies that look at these groups tend to find that increases in the minimum wage do indeed lead to lower employment. Studies that focus on overall employment are not as uniform in their findings. This has more to do with the fact that some higher-skilled types of labor see higher employment as they are hired to replace the now-overpriced low-skilled workers, thereby making statistical significance more elusive.

City minimum wages introduce an extra dimension by which employers can respond to a minimum wage hike. For a city like Seattle, which is part of a much larger metro area, firms can substitute locations outside the city for locations within the city. As a result, employment within the city is more responsive to changes in a minimum wage than if the labor market (the whole metro area) had a uniform minimum wage.

Because Seattle has had its minimum wage in place the longest, it's the city that has been analyzed most frequently in the debate over city minimum wages. For the most part, the analysis that has been done has been pretty shoddy. One common piece of shoddiness is a failure to control for changes in overall economic conditions. For example, one could look at Seattle before and after the higher minimum wage was in place and see that employment has risen over time. One might conclude from this that the minimum wage did not harm employment, and might even have helped it. But the relevant comparison is to what would have happened in the absence of the higher minimum wage, which means that general trends need to be controlled for. Thus, it's not enough to look at Seattle alone, it must be compared to what happened in the entire metro area, which was presumably facing very similar long-term trends and the same business cycle.

A second common source of shoddiness uses inappropriate data. Largely because of data availability, some have compared the unemployment rates of Seattle and its surrounding counties. The idea being that the effects of the minimum wage can be detected if there were changes in Seattle's unemployment rate that don't happen to its neighbors'. That is, it's assumed that the movement of Seattle's unemployment rate in the absence of the higher minimum wage would look like that of the other parts of its metro area.

The problem with this analysis is that the unemployment rate is simply a very poor indicator of changes in labor market conditions. This is because events usually affect the numerator and denominator of the unemployment rate at the same time. For instance, an increase in the minimum wage is expected to reduce the number of people employed and the number of people in the labor force (people give up even looking for work in the absence of employment prospects). As these discouraged workers are not counted as either unemployed or as in the labor force, the unemployment rate can fall after the introduction of a higher minimum wage. As a result, a higher minimum wage in Seattle might lead to lower unemployment rate in the city and in its surrounding area, but for completely opposite reasons: Employment and the labor force would both fall in Seattle and both rise in the surrounding areas.

In my analysis, I look at employment and labor force trends in the city of Seattle relative to the entire Seattle metro area. You can't see much by simply comparing the two data series unless there is some way to control for the normal trends underlying them. These trends are the business cycle, which should affect both in very similar ways, and the location-specific trends that would make the city and the metro area grow at different rates regardless of changes in the minimum wage. To control for these trends, I simply take Seattle's share of metro employment and see if there are any changes to it that are coincident with minimum wage policy. The result is the following chart:

The chart looks at household employment and labor force from 2006 through 2016. As you can see, starting with the beginning of 2009, Seattle's employment and labor force were both growing at a faster rate than its metro area's. Thus, Seattle's economy was becoming larger relative to the metro area as a whole. This trend came to a halt in June 2014, however, the exact month in which Seattle passed its minimum wage increase. Because hiring and expansion decisions are made with future conditions in mind, the deleterious effects of the minimum wage were felt as soon as it was passed. The first of the scheduled minimum wage increases occurred in April 2015, at which time Seattle's relative employment took an other downward turn, which is indicated by the fact that the city's employment share in April 2016 was lower than in April 2015. (Note that there appears to be some seasonality in these ratios, so it's best to compare year-over-year changes.)

Unless someone can point to other events that occurred precisely at these times, this picture shows very clearly that Seattle's minimum wage law had a negative effect on the Seattle labor market. Unfortunately, this chart doesn't provide us with an estimate of the size of the effect in terms of the change in the level of employment. It should, however, put to rest the notion that the city's minimum has had anything but a negative effect on the city's employment.

Saturday, April 22, 2017

Lies, Damn Lies, and Phony Statistics Graphics

The graphic below showing the changing distribution of US income has making the rounds for over a year, including in this story in the FT. It sure looks scary, doesn't it? That big mountain of super rich people has just been growing and growing since 1971, while the middle class has been getting squashed down. Boy oh boy has the US become polarized! Yikes! What inequality!

The thing about the graphic is that it's complete nonsense. If you look at what's been happening. the income distribution has been stretching out as nearly every low-income group (except the very very poorest) has become smaller, while higher-income groups have become larger. But at what cost? If this graphic is to be believed, it's that we've let the benefits of growth become so skewed that we've created a class of super-rich who have become distinct from the rest of us. But it's nothing more that a graphical trick. By truncating the x-axis at $200k and collecting together all those above that income level into one group, this apparent growing upper class will happen even if there is no change in inequality. 

To illustrate this point, I've created a simple graphic that does exactly the same as the one above. The blue bars are represent the income distribution in year 1, and the red bars are the distribution in year 2. Median income rises, but there's disproportionate growth in the group of super-rich folks ($110k and above in the example). Awful, isn't it?

It turns out that the data underlying the above figure is nothing but good news. The figure below removes the arbitrary top group and displays the whole income distribution. Every group from the lowest to the median sees a decrease in the number of people, while all higher groups see smaller increases. Is this change in the income distribution bad? If you think it is, then you're nuts. But it's exactly the same as the one right above, which looked so evil.

Saturday, February 11, 2017

Silly and ignorant criticisms of economics

Economics, as does any academic discipline, has its share of problems. Unfortunately, most of the criticism one hears in popular publications or other non-academic places are based on a near complete ignorance of what economists do. A few years ago, Chris Auld came up with a handy list of the most common and dumbest criticisms. I've reproduced them here because they now reside on a site that has appropriated his name, and I want to send people to them.
Every mainstream science which touches on political or religious ideology attracts more than its fair share of deniers: the anti-vaccine crowd v mainstream medicine, GMO fearmongers v geneticists, creationists v biologists, global warming deniers v climatologists. Economics is no different, but economics cranks differ in that they typically make false claims about the content of economics itself, as opposed, or as a prelude, to false claims about the way the world works. That target sometimes making it hard for non-economists to differentiate crankery from solid criticism.
Here, then, are some symptoms of bad critiques of economics:
  1. Treats macroeconomic forecasting as the major or only goal of economic analysis.
  2. Frames critique in terms of politics, most commonly the claim that economists are market fundamentalists.
  3. You believe that “gambling” is a bad word. Not knowing the difference between risk vs. reward and therefore never depositing at the online casino of life. If you don’t play, you can never win.
  4. Uses “neoclassical” as if it refers to a political philosophy, set of policy prescriptions, or actual economies. Bonus: spells it “neo-classical” or “Neo-classical.”
  5. Refers to “the” neoclassical model or otherwise suggests all of economic thought is contained in Walras (1874).
  6. Uses “neoclassical economics” and “mainstream economics” interchangeably. Bonus: uses “neoliberal economics” interchangeably with either.
  7. Uses the word “neoliberal” for any reason.
  8. Refers to “corporate masters” or otherwise implies economists are shills for the wealthy or corporations.
  9. Claims economists think people are always rational.
  10. Claims financial crisis disproved mainstream economics.
  11. Explicitly claims that economics is not empirical, or does so implicitly by ignoring empirical economics.
  12. Treats all of economics as if it’s battling schools of macroeconomics.
  13. Misconstrues jargon: “rational.”
  14. Misconstrues jargon: “efficient” (financial sense) or “efficient” (Pareto sense).
  15. Misconstrues jargon: “externality“.
  16. Claims economists only care about money.
  17. Claims economists ignore the environment. Variant: claims economics falters on point that “infinite growth on a finite planet is impossible.”
  18. Goes out of its way to point out that the Economics Nobel is not a real Nobel."