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Archive of posts filed under the Economics category.

$ vs. votes

Carlos Cruz writes: Here’s an economics joke. Two economists are walking along when they happen to end up in front of a Tesla showroom. One economist points to a shiny new car and says, “I want that!” The other economist replies, “You’re lying.” The premise of this joke is that if the one economist had […]

“Economic predictions with big data” using partial pooling

Tom Daula points us to this post, “Economic Predictions with Big Data: The Illusion of Sparsity,” by Domenico Giannone, Michele Lenza, and Giorgio Primiceri, and writes: The paper wants to distinguish between variable selection (sparse models) and shrinkage/regularization (dense models) for forecasting with Big Data. “We then conduct Bayesian inference on these two crucial parameters—model […]

“She also observed that results from smaller studies conducted by NGOs – often pilot studies – would often look promising. But when governments tried to implement scaled-up versions of those programs, their performance would drop considerably.”

Robert Wiblin writes: If we have a study on the impact of a social program in a particular place and time, how confident can we be that we’ll get a similar result if we study the same program again somewhere else? Dr Eva Vivalt . . . compiled a huge database of impact evaluations in […]

“The hype economy”

Palko writes: I have no idea whether it is real or apocryphal, but there’s an often referred to study with primates where the they earned tokens that could be exchanged for food. According to the standard version, the subjects soon came to value those tokens more than the treats they could be exchanged for. The […]

Watch out for naively (because implicitly based on flat-prior) Bayesian statements based on classical confidence intervals! (Comptroller of the Currency edition)

Laurent Belsie writes: An economist formerly with the Consumer Financial Protection Bureau wrote a paper on whether a move away from forced arbitration would cost credit card companies money. He found that the results are statistically insignificant at the 95 percent (and 90 percent) confidence level. But the Office of the Comptroller of the Currency […]

“Statistical and Machine Learning forecasting methods: Concerns and ways forward”

Roy Mendelssohn points us to this paper by Spyros Makridakis, Evangelos Spiliotis, and Vassilios Assimakopoulos, which begins: Machine Learning (ML) methods have been proposed in the academic literature as alternatives to statistical ones for time series forecasting. Yet, scant evidence is available about their relative performance in terms of accuracy and computational requirements. The purpose […]

“2010: What happened?” in light of 2018

Back in November 2010 I wrote an article that I still like, attempting to answer the question: “How could the voters have swung so much in two years? And, why didn’t Obama give Americans a better sense of his long-term economic plan in 2009, back when he still had a political mandate?” My focus was […]

The Axios Turing test and the heat death of the journalistic universe

I was wasting some time on the internet and came across some Palko bait from the website Axios: “Elon Musk says Boring Company’s first tunnel to open in December,” with an awesome quote from this linked post: Tesla CEO Elon Musk has unveiled a video of his Boring Company’s underground tunnel that will soon offer […]

The AAA tranche of subprime science, revisited

Tom Daula points us to this article, “Mortgage-Backed Securities and the Financial Crisis of 2008: A Post Mortem,” by Juan Ospina and Harald Uhlig. Not our usual topic at this blog, but then there’s this bit on page 11: We break down the analysis by market segment defined by loan type (Prime, Alt-A, and Subprime). […]

Understanding Chicago’s homicide spike; comparisons to other cities

Michael Masinter writes: As a longtime blog reader sufficiently wise not to post beyond my academic discipline, I hope you might take a look at what seems to me to be a highly controversial attempt to use regression analysis to blame the ACLU for the recent rise in homicides in Chicago. A summary appears here […]

The Golden Rule of Nudge

Nudge unto others as you would have them nudge unto you. Do not recommend to apply incentives to others that you would not want for yourself. Background I was reading this article by William Davies about Britain’s Kafkaesque immigration policies. The background, roughly, is this: Various English politicians promised that the net flow of immigrants […]

Rising test scores . . . reported as stagnant test scores

Joseph Delaney points to a post by Kevin Drum pointing to a post by Bob Somerby pointing to a magazine article by Natalie Wexler that reported on the latest NAEP (National Assessment of Educational Progress) test results. In an article entitled, “Why American Students Haven’t Gotten Better at Reading in 20 Years,” Wexler asks, “what’s […]

A potential big problem with placebo tests in econometrics: they’re subject to the “difference between significant and non-significant is not itself statistically significant” issue

In econometrics, or applied economics, a “placebo test” is not a comparison of a drug to a sugar pill. Rather, it’s a sort of conceptual placebo, in which you repeat your analysis using a different dataset, or a different part of your dataset, where no intervention occurred. For example, if you’re performing some analysis studying […]

A couple more papers on genetic diversity as an explanation for why Africa and remote Andean countries are so poor while Europe and North America are so wealthy

Back in 2013, I wrote a post regarding a controversial claim that high genetic diversity, or low genetic diversity, is bad for the economy: Two economics professors, Quamrul Ashraf and Oded Galor, wrote a paper, “The Out of Africa Hypothesis, Human Genetic Diversity, and Comparative Economic Development,” that is scheduled to appear in the American […]

Mouse Among the Cats

Colleen Flaherty asks: Do you get asked to peer review a lot? I’m guessing you do… This new very short paper says it’s not a crisis, though, since only the people who publish the most are getting asked to review a lot… The authors pose two solutions: either we need to “democratize” the system of […]

“Identification of and correction for publication bias,” and another discussion of how forking paths is not the same thing as file drawer

Max Kasy and Isaiah Andrews sent along this paper, which begins: Some empirical results are more likely to be published than others. Such selective publication leads to biased estimates and distorted inference. This paper proposes two approaches for identifying the conditional probability of publication as a function of a study’s results, the first based on […]

Who spends how much, and on what?

Nathan Yau (link from Dan Hirschman) constructed the above excellent visualization of data from the Consumer Expenditure Survey. Lots of interesting things here. The one thing that surprises me is that people (or maybe it’s households) making more than $200,000 only spent an average of $160,000. I guess the difference is taxes, savings (but not […]

Let’s get hysterical

Following up on our discussion of hysteresis in the scientific community, Nick Brown points us to this article from 2014, “Excellence by Nonsense: The Competition for Publications in Modern Science,” by Mathias Binswanger, who writes: To ensure the efficient use of scarce funds, the government forces universities and professors, together with their academic staff, to […]

It should be ok to just publish the data.

Gur Huberman asked for my reaction to a recent manuscript, Are CEOs Different? Characteristics of Top Managers, by Steven Kaplan and Morten Sorensen. The paper begins: We use a dataset of over 2,600 executive assessments to study thirty individual characteristics of candidates for top executive positions – CEO, CFO, COO and others. We classify the […]

Some thoughts after reading “Bad Blood: Secrets and Lies in a Silicon Valley Startup”

I just read the above-titled John Carreyrou book, and it’s as excellent as everyone says it is. I suppose it’s the mark of any compelling story that it will bring to mind other things you’ve been thinking about, and in this case I saw many connections between the story of Theranos—a company that raised billions […]