Skip to content
Archive of posts filed under the Economics category.

Collaborative filtering, hierarchical modeling, and . . . speed dating

Jonah Sinick posted a few things on the famous speed-dating dataset and writes: The main element that I seem to have been missing is principal component analysis of the different rating types. The basic situation is that the first PC is something that people are roughly equally responsive to, while people vary a lot with […]

What I got wrong (and right) about econometrics and unbiasedness

Yesterday I spoke at the Princeton economics department. The title of my talk was: “Unbiasedness”: You keep using that word. I do not think it means what you think it means. The talk went all right—people seemed ok with what I was saying—but I didn’t see a lot of audience involvement. It was a bit […]

A question about physics-types models for flows in economics

Phillip Middleton writes: I’ve been attempting to generate a set of visually (animated in fact) mappable models which represent measurable forces that demonstrate effects on localized economic (census block level) outcomes, which in turn affect and are affected by regional education dynamics, brick/mortar business development, etc… This is coming out of some reading and observation […]

Online predictions from ipredict

Following up on our post on PredictWise, Richard Barker points to this fun site of market-based predictions. It’s subtitled, “Buy and sell stocks in future political and economic events.” It’s based in New Zealand so you can bet on wacky propositions such as, “David Carter to be next High Commissioner from New Zealand to the […]

Go to PredictWise for forecast probabilities of events in the news

I like it. Clear, transparent, no mumbo jumbo about their secret sauce. But . . . what’s with the hyper-precision: C’mon. “27.4%”? Who are you kidding?? (See here for explication of this point.)

Gigerenzer on logical rationality vs. ecological rationality

I sent my post about the political implication of behavioral economics, embodied cognition, etc., to Gerd Gigerenzer, who commented as follows: The “half-empty” versus “half-full” explanation of the differences between Kahneman and us misses the essential point: the difference is about the nature of the glass of rationality, not the level of the water. For […]

Another stylized fact bites the dust

According to economist Henry Farber (link from Dan Goldstein): In a seminal paper, Camerer, Babcock, Loewenstein, and Thaler (1997) find that the wage elasticity of daily hours of work New York City (NYC) taxi drivers is negative and conclude that their labor supply behavior is consistent with target earning (having reference dependent preferences). I replicate […]

“Thinking about the possibility of spurious correlation isn’t a matter of liking—it should be pretty much automatic.”

I agree with sociologist David Weakliem when he writes the above sentence. Here’s the full paragraph: Krugman says, “you can, if you like, try to argue that this relationship is spurious, maybe not causal.” Actually, I [Weakliem] liked his original figure, since I agree with Krugman on economic policy. But thinking about the possibility of […]

Time-release pedagogy??

Mark Palko points to this report and writes: Putting aside my concerns with the “additional years of learning” metric (and I have a lot of them), I have the feeling that there’s something strange here or i’m missing something obvious. That jump from 3-year impact to 4-year seems excessive. The press release links to a […]

Adiabatic as I wanna be: Or, how is a chess rating like classical economics?

Chess ratings are all about change. Did your rating go up, did it go down, have you reached 2000, who’s hot, who’s not, and so on. If nobody’s abilities were changing, chess ratings would be boring, they’d be nothing but a noisy measure, and watching your rating change would be as exciting as watching a […]

What do CERN, the ISS, and Stephen Fry have in Common?

You’ll have to read the New Yorker article on Richard M. Stallman and the The GNU Manifesto by Maria Bustillos to find out! And what’s up with Tim O’Reilly’s comments about the Old Testment vs. New Testament?   That’s an ad hominem attack of the highest order, guaranteed to get the Judeo-Christians even more riled […]

“Unbiasedness”: You keep using that word. I do not think it means what you think it means. [My talk tomorrow in the Princeton economics department]

The talk is tomorrow, Tues 24 Feb, 2:40-4:00pm in 200 Fisher Hall: “Unbiasedness”: You keep using that word. I do not think it means what you think it means. Andrew Gelman, Department of Statistics and Department of Political Science, Columbia University Minimizing bias is the traditional first goal of econometrics. In many cases, though, the […]

Oh, it’s so frustrating when you’re trying to help someone out, and then you realize you’re dealing with a snake.

This happens sometimes. Someone comes to you with a request, maybe it’s a student or a potential student or just someone who has a question relating to your field of expertise. You’re in a good mood so you decide to help out, or maybe you feel it’s your duty to be helpful, or, who knows, […]

Economics/sociology phrase book

Mark Palko points me to this amusing document from Jeffrey Smith and Kermit Daniel, translating sociology jargon into economics and vice-versa. Lots of good jokes there. Along these lines, I’ve always been bothered by economists’ phrase “willingness to pay” which, in practice, often means “ability to pay.” And, of course, “earnings” which means “how much […]

Cognitive vs. behavioral in psychology, economics, and political science

I’ve been coming across these issues from several different directions lately, and I wanted to get the basic idea down without killing myself in the writing of it. So consider this a sketchy first draft. The starting point is “behavioral economics,” also known as the “heuristics and biases” subfield of cognitive psychology. It’s associated with […]

What’s misleading about the phrase, “Statistical significance is not the same as practical significance”

You’ve heard it a million times, the idea is that if you have an estimate of .003 (on some reasonable scale in which 1 is a meaningful effect size) and a standard error of .001 then, yes, the estimate is statistically significant but it’s not practically significant. And, indeed, sometimes this sort of thing comes […]

Relaxed plagiarism standards as a way to keep the tuition dollars flowing from foreign students

Interesting comment thread at Basbøll’s blog regarding the difficult position of college writing instructors when confronted with blatant student plagiarism. Randall Westgren writes: I believe the easiest part of the patchwriting [plagiarism] phenomenon to understand is why writing instructors are leading the charge. Professor Howard is caught between a herd of high-value (i.e. full-tuition and […]

It’s Too Hard to Publish Criticisms and Obtain Data for Replication

Peter Swan writes: The problem you allude to in the above reference and in your other papers on ethics is a broad and serious one. I and my students have attempted to replicate a number of top articles in the major finance journals. Either they cannot be replicated due to missing data or what might […]

Message to Booleans: It’s an additive world, we just live in it

Boolean models (“it’s either A or (B and C)”) seem to be the natural way that we think, but additive models (“10 points if you have A, 3 points if you have B, 2 points if you have C”) seem to describe reality better—at least, the aspects of reality that I study in my research. […]

“Now the company appears to have screwed up badly, and they’ve done it in pretty much exactly the way you would expect a company to screw up when it doesn’t drill down into the data.”

Palko tells a good story: One of the accepted truths of the Netflix narrative is that CEO Reed Hastings is obsessed with data and everything the company does is data driven . . . Of course, all 21st century corporations are relatively data-driven. The fact that Netflix has large data sets on customer behavior does […]