The twice-wrong analogy

Paul Krugman has been hammering away at the economy as household analogy for ages now, pointing out that the idea of belt-tightening becomes problematic when applied to groups that include both debtors and creditors. I'm wondering, though, if he's wrongly conceding a comparably serious point.

Let's assume we have a household that is running in the red because one of the breadwinners has been laid off. Also assume that the household has been offered a line of very cheap credit, virtually zero interest in real terms. Consider the following purchases:

1. Long deferred car maintenance;

2. Having some cavities filled;

3. Taking a career-relevant training course;

4. Buying a new suit for interviewing;

5. Getting a really big TV;

6. Vegas.

Let's group these in twos and think about the following choices:

A. Take a loan to cover 1 and 2;

B. Take a loan to cover 3 and 4

C. Take a loan to cover 5 and 6

D. Don't take a loan.

I could imagine a heated argument over the merits of A (the cost of putting these things off is far more than the interest) and B (If these purchases lead to a job they will have paid for themselves many times over), but I can't imagine a good argument for D.

It is certainly possible to find government purchases that resemble C but most of the proposed spending we've been talking about recently (infrastructure, education, research, public safety) seem to fall alongside A and/or B. Advocates of austerity could try to argue that these things don't have the potential to save money in the long run, but that's not what we've been hearing. Instead we simply get the argument that, even with essentially zero-interest loans, a household in the red should never borrow money.

What's worse, people take this seriously.

Along these lines, check out the following from Frank Rich via Thoma:

... The most important single step toward a brighter future is to repair our economy as soon as possible. And one of the surest ways to do so is a large and immediate infrastructure refurbishment program.

This path would not require Republicans to concede the merits of traditional Keynesian stimulus policy. Nor would it require them to abandon their concerns about the national debt. In short, the philosophical foundation for an agreement is already firmly in place.

If it doesn’t happen, the coming political campaign will provide a golden opportunity to learn why. At the inevitable town hall meetings, voters who are tired of gridlock should ask candidates when they think that long-overdue infrastructure repairs should begin. The only defensible answer is “Right now!” Candidates who counsel further delay should be pressed to explain why.

Subway cars and shipping containers

A quick thought, inchoate and probably none too original, but here it is.

I took the subway earlier today. I do that about once or twice a month when I'm out and about on the weekend and I don't feel like messing with traffic. I considered heading over to East LA for burrito at Al and Bea's but I decided against it because I didn't feel like waiting through multiple stops and changing trains. I never even considered a destination that would entail getting transferring to a bus -- that's only worth the trouble when there's a large cost to driving and parking (traveling to the airport is the only example I can think of)

That's the real hassle of public transportation, not the business of actually getting people from A to B, but the waiting, the loading, the unloading, the transferring and repeating the process. And that's just for a simple there-and-back trip. If you have multiple stops what would be a couple of hours of errands by car can take a day.

I got to thinking about the analogy between that and shipping before the advent of intermodal freight containers. Back then much of the time and most of the cost of shipping came from transferring items from ships to trucks then from trucks to trains then from trains to trucks. It was the innovation of putting all those items in a big, reusable metal box that made the modern age of cheap trade possible.

It struck me that we're still waiting for an analogous innovation (or set of innovations) in transportation, not just in buses and light rail but in trains and even air travel (what percentage of your last trip was actually spent moving from A to B?). Why we haven't seen more progress is question for another post (trying to avoid hydra blogging here).

Hydra posts

I'm working on a post about this NPR story (take a look here and here and let me know if you have any reactions*). It started out as a post on kids and reading, then it became a post on kids and reading and the way we frame research questions, then it became a post on kids and reading and the way we frame research questions and the Hawthorne effect, then it became a post on kids and reading and the way we frame research questions and the Hawthorne effect and...

I assume I'm not alone in struggling with Hydra posts. They've always been a problem but since my schedule's gotten busier with contract work they've really  been coming fast and furious thanks to the double whammy of having less time and suffering from a strange ailment that reacts to tight schedules by coming up with more things to do.

The sad part is that the most substantive posts are the ones most likely to keep sprouting heads. It's the trivial ones that are easy to finish. I wonder if, in general, the unimportant writing in the blogosphere tends to drive out the important, sort of a Gresham's Law of blogging. 

* One of the points I'm curious about. I always assumed that the rationale behind reading to young children was to model the behavior, create positive associations and cultivate an appetite for stories and the written word. Did anyone else have a similar take on this?

Mixed Markets

Hoisted from the comments over at Dean Dad's blog:

This is also the core of the social security privatization movement. SS is a visible example of government helping people, it's very popular, and it's highly efficient.

(Well, the ideological affront of it all, plus what a sudden, massive infusion of taxpayer cash into the stock market would do for people who already have large holdings. Ahem.)

Gov't does a lot of things poorly, but social security, like higher ed, isn't one of 'em.

 Is there a reason that we are allergice to the idea that different approaches work better for different problems?  A screwdriver is a very useful tool but sometimes you need a saw instead.  I would think that adaptability is the most important feature of a society or an economy.  But for some reason we refocus adaptability to be entirely framed as competition between private firms without asking hard questions about where different approaches might have a comparative advantage.

I find it mystifying that efficiency is so under-rated in the discourse. 

"Wesleyan University offers a three-year bachelor's degree"

It's not exactly the way I'd do it, but on the whole I'd say this is a good idea.

Dual Class shares and free markets

Andrew Gelman weighs in on dual class shares: 

Now I’m just confused here. Who’s supposed to be “concerned” here? As a New Yorker subscriber, am I supposed to be concerned that dual-class firms underperformed the market? I just don’t get it. Why should I care? If the shares underperform the market, people can buy a piece of Facebook for less. That’s fine too, no?

I think that Andrew would be completely correct in a perfect market (one in which all of Mark Thoma's issues are not present).  If some financial products give a piece of the return while others give ownership plus return then people could choose which ones to purchase. 

However, the modern American economy has fallen in love with the 401(k) as an investment vehicle.  This leads to two problems.  One, investors are generally not free to switch to a different fund because they dislike the investment decisions of the fund that they are in.  Since the individual investor bears all of the losses of bad decisions but the employer has control of the fund (and has an incentive to cut costs) you have a classic principal agent problem.

This problem is made worse by giving a limited group of people control over a group investment.  One can easily imagine the small group making decisions that benefit them at the expense of the majority of shareholders.  Again, not necessarily a problem in an open market.  But with the constraints that individual investors are under this could be problematic as they lack the freedom to enter or exit the market. 

This is why I wax poetic about Social Security (or the Canada Pension Plan): they shift the risk from small investors (who generally can't bear it) to large entities (that can).  I totally get that there are total social resources constraints, but I would rather that they be dealt with openly.  Instead I see the stock market becoming a worse and worse deal just as a large American cohort (the "Baby Boom") is about to retire. 

I am not sure that this is a good thing. 

See also Matt Ygelasis and Felix Salmon.

The other (non-Shakespearean) thing I learned in my college Shakespeare class.

I've already mentioned that the tests in this class were unusual; the way I studied for them was a bit odd as well and though it wasn't a method that I'd recommend for wide usage, in this context it worked well.

I was, in my younger days, something of a procrastinator (a trait I've outgrown, of course, -- ask anybody). Papers were generally started at the last minute but I did, at least, make an effort to keep up with my reading (I was earning a BFA in creative writing so writing and keeping up with my reading was pretty much all that was asked of me).

Shakespeare was the exception with reading assignments being pushed back to marathon sessions the weekends before the tests. I wasn't that I didn't enjoy the material -- I did -- but the plays required a commitment and a focus that made them easy to put off.

I would therefore find myself with three or four plays that I had to know in considerable detail forty-eight hours after I cracked open my copy of the Riverside Shakespeare (which I still have, by the way). It's difficult to imagine a worse approach to studying but in this case it worked out surprisingly well.

I would spend the first couple of hours cursing myself for being an irresponsible moron and calculating how much sleep I'd be able to get if I continued reading at that glacial pace. After that, though, something changed: the rate at which I was reading increased; it became easier to focus; the characters became more vivid and the stories more coherent.

It wasn't until after the second test that I realized what was going on. Shakespeare is one of the most and least accessible writers most of us will ever read. He wrote in language that hasn't been used for centuries but if you can get past those centuries of linguistic drift, you find someone who could hold the interest of intellectuals like Ben Jonson while keeping what we would now call the cheap seats cheering and stomping instead of throwing rotten eggs.

If I would have shown some discipline and diligently put aside an hour a night to study for that course I would have devoted more time to it but I strongly suspect I would have done worse and gotten less out of it. I doubt that an hour, even an hour every night would have been enough time to acclimate myself to the language; I would have spent my time translating instead of reading. It took two or three hours to forget the plays weren't in the everyday vernacular.

It's important to note that waiting till the weekend before a test then doing a marathon study session would have been, in almost every other context, a horrible idea. Even in cases where language is a barrier (which includes math), you'd generally be better off working your way through in bite-sized chunks, but the plays were written to be experienced in a single sitting (or standing) and that's probably still how they work best.

So my experiences in that one class shouldn't suggest a general approach to studying but it is another reminder of the often made point that the "best" pedagogical methods are context sensitive, varying from student to student, teacher to teacher and subject to subject to subject. Beware of blanket solutions.

If we're going to discuss education, we need to make sure everyone's heard this one

From Bullfinch's Age of Fable:

Several similar contests with the petty tyrants and marauders of the country followed, in all of which Theseus was victorious. One of these evil-doers was called Procrustes, or the Stretcher. He had an iron bedstead, on which he used to tie all travellers who fell into his hands. If they were shorter than the bed, he stretched their limbs to make them fit it; if they were longer than the bed, he lopped off a portion. Theseus served him as he had served others.

"Of course, Shakespeare was much newer at the time"

Back when I was an undergrad I took a class in Shakespeare. I'm mentioning this because a couple of aspects came back to me recently while thinking about education. The first was the format of the tests the teacher used. They consisted of a list of quotes from the four plays we had covered since the last test. Each quote had a pronoun underlined which came with a two part question: who was the speaker and who was the antecedent?

I've never seen that format used in another class (even by the same teacher) and I always thought it was an interesting approach. I wouldn't necessarily recommend using it widely but I'm glad I had it in at least one course. It was a method that encouraged attentive reading (particularly useful with Shakespeare).

Experiencing different styles of teaching and evaluation are part of a well-rounded education. I've seen a wide range approaches. Some were successful. Some were not. Some successful as one-shots but weren't models I'd suggest routinely following, like the number theory class I took that didn't allow mathematical notation (all proofs had to be written out in grammatical sentences without abbreviations or symbols -- more or less the way Fermat would have done it). That pedagogical diversity has been of immense value.

A book on quality control I read a few years ago said that quality in a QC sense was equivalent to a lack of variation; quality meant all parts came out the same. Sometimes I'm afraid that the some in the education reform movement are starting to think of uniformity as an end to itself.

At the risk of stating the obvious, lots of cool things come out of MIT.

The secret is in a futuristic substance known as "LiquiGlide," a non-toxic, FDA-approved coating that can be applied to the interior of bottles. According to MIT PhD candidate Dave Smith, it's "kind of a structured liquid — it's rigid like a solid, but it's lubricated like a liquid." Regardless of what the bottle is constructed of, liquid or plastic, ketchup will flow out of it nearly effortlessly.

...
Interestingly enough, LiquiGlide wasn't initially designed to be used for ketchup — the original idea had the coating being used as an anti-icing coating, or a pipe coating that might help reduce oil and gas clogs. But as Smith explains, "most of these other applications have a much longer time to market; we realized we could make this coating for bottles that is pretty much ready. I mean, it is ready."

Putting our money in seed corn -- literally

Noah Smith has an excellent post arguing that spending our limited research dollars on bigger and bigger particle accelerators is, at this point in history, a bad idea.

Weinberg is a particle physicist, one of the heroes who developed the Standard Model. Thus it is not surprising that most of his article concentrates on particle physics experiments. Unfortunately, I think that appeals for governments to pour more money into particle accelerators are A) doomed to fall on deaf ears, and B) not really very convincing in the first place. Let me explain why.
First of all, the Standard Model of particle physics is good. Really good. In fact, we've never conducted an experiment where it makes an incorrect prediction at any level of precision!! In that sense, it is one of the most successful theories ever. Now, the Model may or may not fail at ultra-high energies (such as those that could be produced inside a black hole or a multibillion-dollar particle accelerator), or at galactic distances. But these are not environments that will ever matter for human beings on Earth. 

As Weinberg points out, the Standard Model is incomplete. It doesn't include gravity. But we have another theory, general relativity, whose track record is just as good, to describe gravity. Unifying these theories would increase our understanding of the nature of the Universe, but it's not clear whether it would improve our ability to predict our immediate surroundings. 

In other words, new particle accelerators may be able to answer interesting questions, but they are unlikely to produce much of technological value.

In fact, this has proven true for the last several generations of particle accelerators. We've discovered a zoo of new particles, and these discoveries have improved our theories greatly. But none of these new particles has been something we can exploit for technological applications. In the early 20th century, new fundamental physics led rapidly to applications like nuclear bombs, semiconductors, lasers, and GPS. But to my knowledge, nobody is even trying to make a device that exploits the properties of B-mesons or neutrino mass. 

To this, add another problem, which Weinberg discusses: We actually have no idea if the "next generation" of particle accelerators would find anything useful. In the past, we always had new theories that predicted stuff we should expect to see if bigger accelerators were built (for example, the Large Hadron Collider was built to search for the predicted Higgs Boson). As of now, new physics theories have made no new concrete predictions about what should come out of bigger and more expensive accelerators. If we build those accelerators, it will purely for speculative, exploratory purposes - to see what might be out there. 

Smith's piece was still fresh in my mind when I read this previously cited piece in the Washington Post:

On Wednesday afternoon, [Rep. Jim] Cooper rose to the defense of taxpayer-funded research into dog urine, guinea pig eardrums and, yes, the reproductive habits of the parasitic flies known as screwworms--all federally supported studies that have inspired major scientific breakthroughs. Together with two House Republicans and a coalition of major science associations, Cooper has created the first annual Golden Goose Awards to honor federally funded research “whose work may once have been viewed as unusual, odd, or obscure, but has produced important discoveries benefiting society in significant ways.” Federally-funded research of dog urine ultimately gave scientists and understanding of the effect of hormones on the human kidney, which in turn has been helpful for diabetes patients. A study called “Acoustic Trauma in the Guinea Pig” resulted in treatment of early hearing loss in infants. And that randy screwworm study? It helped researchers control the population of a deadly parasite that targets cattle--costing the government $250,000 but ultimately saving the cattle industry more than $20 billion, according to Cooper’s office.

My natural bias is pro-research and if the amount of money we spent on particle accelerators was unrelated to the amount of money spent on other research I'd probably say go for it, but in an era of tight money (or the perception of tight money), there are other areas that score higher on almost every non-ddulite criteria.

Smith suggests a number of projects related to replacing fossil fuels. Joseph would probably have a number of suggestions involving health and medicine. My first thoughts are agricultural. For starters I'd like to see something like the Human Genome Project for species that can have a potential impact (positive or negative) on our food supply.

It's easy to argue the economic benefits for this kind of research (discoveries like this can be worth $100 million a year which means, after a decade or two, you're talking real money). It's not so easy, however, to get journalists and politicians to give these fields the respect and support they deserve. Part of this comes from a combination of ddulite tendencies and scientific illiteracy -- the reporters love the high-tech stuff but really don't understand it -- but another (albeit related) problem is the tendency to approach the debate as a conflict between practical and pure science. The distinction is artificial and not particularly productive and it's less than clear which side the evidence comes down on.

I'd argue that, given the current state of the disciplines, you're more likely to make a major, change-the-way-we-see-the-world scientific advance digging for parasites in pig manure than analyzing results from the Large Hadron Collider. That's not to say that these results won't prove important, just that we're more likely to see bigger advances in the life sciences in the next few years and agricultural research is one of the best ways to pursue those advances (if not the best).

This could be an important shift

Felix Salmon:

And more generally, college is slowly moving from the “things which are bought” column into the “things which are sold” column — for-profit colleges, in particular, recruit aggressively in ways that would have been unthinkable to an earlier generation of tertiary educators. As a result, people drop out of college not just because it’s statistically certain that in any college class there will be some students who drop out, but increasingly because a lot of students, especially in courses offered by for-profit colleges, really can’t and shouldn’t be in those classes in the first place.

I think that this is a really dangerous trend for a purchase that is as expensive as education. Buying the wrong education is much worse of a mistake than buying the wrong car or house -- at least partially because you can have a car or house foreclosed on.  Furthermore, the focus on marketing will tend to make it more difficult to assess universities on quality.  Look at how hard it is to get good information on something as simple as an automobile (using Edmunds.com, for example).  Now considering needing to assess something as complicated as an educational program.

I do not think that this is a good trend at all.

"An overdose of pharmacy students"

As mentioned before, American Public Media's Marketplace has been doing exceptional work. Here's an example of particular interest to OE readers.

Exhibit A for our purposes today is the professional pharmacist. Just five years ago, a pharmacy degree was a near guarantee of permanent and well-paid employment. So much so that a lot of universities started their own schools of pharmacy. In Tennessee, they went from one pharmacy school to half a dozen. So you know what happens next.

More on the reaction to gutting the census

Mark Thoma sums it up:

The good news is this vote is being criticized across the political spectrum ... 

From the WSJ: Republicans try to kill data collection that helps economic growth... From the NY Times: Operating in the Dark... From AEI's Norman Ornstein at Roll Call: Research Cuts Are Akin to Eating Seed Corn... From the WaPo: The American Community Survey is a count worth keeping... And from Menzie Chinn at Econonbrowser: The War on Data Collection

"[N]ot a scientific survey. It’s a random survey.”

The first from DeLong. The LA Times ran a recent Op-Ed by John M. Ellis and Charles L. Geshekter complaining about liberals in academia.

Perhaps this is not surprising given that the tilt to the left among college faculty members has been growing nationwide for several decades. At UC Berkeley, the ratio of Democrats to Republicans even in the hard sciences had grown to 10 to 1 in 2004, many times what it was 30 years ago, according to a study by Daniel Klein and Andrew Western.

And the second courtesy of EconoSpeak

Catherine Rampell quotes Daniel Webster, who sponsored a bill to eliminate the American Community Survey, which was passed by the full House of Representatives: “We’re spending $70 per person to fill this out. That’s just not cost effective, especially since in the end this is not a scientific survey. It’s a random survey.” 

It should be noted that the LA Times Op-Ed is more or less a press release from the National Association of Scholars (Ellis, Geshekter, Klein and Western are all associated with the organization in some way) and that politically the NAS falls somewhere between the John Birch Society and Genereal Bullmoose.* Those concerned about subsidized research will find much to worry about here.

Just for the sake of argument, though, let's assume that the Klein and Western finding is valid. Is it possible that certain positions, statements and attitudes from prominent Republicans might have made people with scientific training uncomfortable with today's GOP?

In case you just joined the party, here are some previous posts of the anti-census initiative.



*obscure pop culture reference.