Determining whether to apply for a Ph.D. program or not, going through each application, and then finally making a decision is exhausting. It forces, rightfully so, the young economist to look on his experiences and his goals. I asked myself over and over about where I had been, where I am, and where I want to go. Here are some of my reflections.
How the heck did I end up here?
Some people find their vocation early in life and take the exact right steps. Other people find their vocation while reading Exchange and Production after a long workday. I took this indirect route. Until I discovered economics, academics were the means and not the ends for me. During my undergraduate, I did well in difficult physics and political science programs and on the football field. This ultimately led to an enjoyable well-paying job. That was my goal for college and I surpassed it.
Happy New Year to the entire GSE community! I’m sure that I am not the only one with a resolution to read more books, so I thought I would try to help. Since few people fell in love with economics through graduate textbooks, here are some recreational economic reads to look forward to in 2014.
Happy Holidays to everyone in the GSE community and beyond!
In honor of this day of massive signaling (and possible deadweight losses), I wanted to share a post by Derek Thompson of The Atlantic. The topic is “If Economists Wrote Christmas Cards.” I doubt that Hallmark cards hires economists as writers. Derek Thompson explains-
Cash is the most efficient gift, according to economists. Cash is also a terrible gift,according to economists. By guaranteeing that the recipient can buy exactly what she wants, you guarantee that the recipient will consider you an unemotional robot.
That’s why the vast majority of economists in the University of Chicago’s IGM poll said it’s absurd to give cash to loved ones for the holidays. “In some cases,”Steven Kaplan said, in a stirring defense for thoughtful gifts, “non-pecuniary [not cash-related] values are important.”
For everyone in the community, both those who will be giving and receiving gifts this holiday season and those who will not, I wish that your highest ordinal rankings be satisfied and may your deadweight losses not be too large!
While deep methodological differences exist across economists, many disagreements involve “talking past each other.” Each side uses similar words to discuss fundamentally distinct, though related, concepts. This is especially a problem with every-day language words and leads to more confusion than understanding.
One problematic term is information. Everyone believes they have a reasonable definition and that others have the same concept in mind. This is unfortunate and stagnated the discussion. Only through clarity of thought and language can these issues be resolved.
Complete and Perfect Information, or Ignore for Now
Doing what was necessary for early models, the economists started easy. They ignored it. They approximated that every actor knows everything. That made life easy.
Since Marshall and Walras, economics focused on equilibria. Starting from perfect competition, complete and perfect information are crucial. How do supply and demand equilibrate? Everyone knows everything. After a few easy steps, boom, supply=demand.
While all economists admit perfect information is an untrue assumption, it is still the default in many models.
Conclusions are easy to draw. I can look at any study and draw many different conclusions or policy prescriptions. That does not mean I am right or even that the data supports my argument.
Floyd Norris of the NYTEconomix fell into this trap yesterday. He claimed, indirectly, that the US federal government is not bloated. I take bloated to mean too big or too intrusive. To argue this, he cites the latest job numbers.
In September, before the government shutdown, the government had 2,723,000 employees, according to the latest job report, on a seasonally adjusted basis. That is the lowest figure since 1966. Continue reading “Jumping to Conclusions”
In many countries, including the UK, a fraction of the population enjoys public and private health insurance covering a similar portfolio of services; hence, they have duplicate coverage. In principle, this could translate into lower healthcare costs in the public health system. Indeed, an emprirical study by Pau Olivella and Marcos Vera-Hernandez (UCL), suggests that people in the UK who buy their own private health insurance are more likely to use healthcare services than those who receive insurance as a fringe benefit of their job. For example, they are 50% more likely to be hospitalised than those who got insurance through their employer.
But are these individuals really in worse health? Analysis of data from the British Household Panel Survey shows they are not. Indeed, on average, the number of health problems faced by those who purchase private insurance is the same as for those who get insurance through the employer. In fact, the higher tendency of insurance buyers to use healthcare services comes from their preferences for health. In particular, they are 7 percentage points more likely to state that health is very important for them. Therefore, it all boils down to another empirical question for further investigation: what are the true drivers of healthcare costs?
After three weeks of math brush-up courses and a week of fall term, it is nice to know we can “start” the year here at BGSE. While cava and food were incentives to attend, there was another reason. Professor Otmar Issing, President of the Center for Financial Studies and former member of the Executive Board of the European Central Bank, was giving the opening lecture on monetary policy. While there are about as many opinions about monetary policy as people, Otmar Issing has the academic and policy credentials to deserve a serious listen. He isn´t some no name student on a blog.
Joel Slemrod is the Paul W. McCracken Collegiate Professor of Business Economics and Public Policy at the Stephen M. Ross School of Business at the University of Michigan, and Professor of Economics in the Department of Economics. He also serves as Director of the Office of Tax Policy Research, an interdisciplinary research center housed at the Ross School of Business. A leading expert on tax policy, professor Slemrod received the B.A. degree from Princeton University in 1973 and the Ph.D. in economics from Harvard University in 1980. Professor Slemrod has been a consultant to the U.S. Department of the Treasury, the Canadian Department of Finance, the New Zealand Department of Treasury, the South Africa Ministry of Finance, the World Bank, and the OECD. Besides numerous articles in top economics journal, professor Slemrod also produced highly acclaimed books on taxation. He is the co-author with Jon Bakija of Taxing Ourselves: A Citizen’s Guide to the Debate over Taxes, whose 5th edition will be published in 2013, and with Len Burman of Taxes in America: What Everyone Needs to Know, published in 2012. From 1992 to 1998 Professor Slemrod was editor of the National Tax Journal. In 2012 he received from the National Tax Association its most prestigious award, the Daniel M. Holland Medal for distinguished lifetime contributions to the study and practice of public finance.
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