Вторник, 22 Мая 2012 г.

Confirmation, 26 Years Later

15:44 18/04/2012

A new paper on cyclical income risk reports the following:
we study the cyclical nature of idiosyncratic shocks, once observable factors are accounted for. Contrary to past research, we find that income shock variances are not countercyclical. However, uncertainty does have a significant countercyclical component, but it comes from the left-skewness increasing during recessions. That is, during recessions, the upper end of the income shock distribution collapses—large upward income movements become less likely—whereas the bottom end expands—large drops in incomes become more likely....Our findings are more in line with the way Mankiw (1986) modeled idiosyncratic shocks. Basically, he showed that one can resolve the equity premium puzzle if idiosyncratic shocks have countercyclical left-skewness—as found in the current paper.


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My New Job

00:10 14/04/2012

As of July 1, I will become the chairman of the Harvard economics department.  I will continue teaching ec 10 and revising my favorite textbooks, but I will have to cut back on my other teaching roles and various professional activities.  In particular, over the next three years, I will blog less and travel less to give talks at other venues.  I will be spending my time trying to make the world's best economics department even better.


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But will he have time to finish his dissertation once he is elected?

17:07 13/04/2012

Dan Marcin, a economics PhD student at the University of Michigan, is running for Congress.  Here is his website.  Notice that he is a proud member of the Pigou Club.


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Really, Mr. Chait, Really?

23:13 05/04/2012

Consider two passages.  First, a definition:

Social Darwinism is a belief, popular in the late Victorian era in England, America, and elsewhere, which states that the strongest or fittest should survive and flourish in society, while the weak and unfit should be allowed to die.

Second, a statement about public policy:

Public goods and Pigovian subsidies lead naturally to a tax system in which higher income individuals pay more in taxes. Surely, those with higher income and greater property benefit more from a governmental system that protects property rights. Moreover, the monetary value attached to other public goods (such as parks and playgrounds) and to positive-externality activities (such as basic research) very likely rises with income as well. Indeed, if the income elasticity of demand for these services exceeds one, as is plausible, a progressive tax system is perfectly consistent with the Just Deserts Theory.

What about transfer payments to the poor? These can be justified along similar lines. As long as people care about others to some degree, antipoverty programs are a type of public good. [Thurow 1971] That is, under this view, the government provides for the poor not simply because their marginal utility is high but because we have interdependent utility functions. Put differently, we would all like to alleviate poverty. But because we would prefer to have someone else pick up the tab, private charity can’t do the job. Government-run antipoverty programs solve the free-rider problem among the altruistic well-to-do.

Now here is the question: Is the person who wrote the second passage a Social Darwinist as defined in the first passage?

I think the answer is pretty clearly NO.  But nonetheless, Jonathan Chait calls me a Social Darwinist, citing as evidence the paper from which the second passage above is taken.  True, he quotes a different passage from that paper, but one would think a prominent journalist like Mr. Chait would read the entire paper and characterize the arguments fully before throwing around a pejorative like "Social Darwinist."


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The Best 300 Professors

20:30 03/04/2012

...according to The Princeton Review.   I cannot judge the reliability of the list, but it is still nice to be included.


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