Worthwhile Canadian Initiative

Crime and Police

Statistics Canada has released its most recent report on police personnel and expenditures and notes that police strength measured as officers per capita declined in 2012 by 1 percent.   Moreover, there has been a slight decline in police expenditures overall with spending in 2011 totaling 12.9 billion – a decline of 0.7 percent from the previous year.  However, spending and officers per capita have generally grown over the last decade and police forces and police spending are higher than they used to be.  What is of more interest to me are the numbers at the CMA level and their relationship with crime rates.

Measuring Popes

With the Conclave of Cardinals about to convene to choose a successor to Benedict XVI, it is worth taking a look at some statistics regarding the line of popes over the course of 2000 years.  Based on the list in the Catholic Encyclopedia, Benedict XVI was the 267^th pope in a line stretching back to Peter and his eight year reign was actually slightly above the average tenure for all popes but below average for those who have served more recently.  Indeed, the reign of popes probably provides an interesting long-term perspective on longevity and the standard of living given that since popes usually served until death, the length of reign is likely correlated with longevity.

The Year Ahead

The New Year is when we  try to look ahead and project what we think the economy will be like.  There is no shortage of forecasts from banks, international economic agencies and independent forecasters as to how the Canadian, US and world economies will fare over the next year. 

Capital and interest in the steady state

My meandering musings. Mostly to try to clarify my own thoughts. Read at your own risk.

What's wrong with this picture?

In praise of General Equilibrium Models

Q1. What happens if they built robots that could do my job as well as I could, and those robots got cheaper and cheaper over time? My wages would have to fall so I could compete with the robots, and I would be worse off.

Q2. What happens if they built robots that could do everyone's job as well as they could, and those robots got cheaper and cheaper over time? Everyone's wages would have to fall so they could compete with the robots, and everyone would be worse off.

Q1 is a partial equilibrium question and answer.

Q2 is a general equilibrium question and answer.

If you say "Therefore" between my Q1 and Q2, you are committing a Fallacy of Composition. The Fallacy of Composition is when you assume that what is true for each of the parts must be true of the whole. (The classic example is "If any individual stands up at the theatre that individual can see the stage better; therefore if every individual stands up every individual can see the stage better.")

Wikipedia nails it

Wikipedia entries on economics seem to be written mostly by graduate students, eager to share their knowledge with others, and a disproportionate number of Austrian, feminist and other heterodox economists. 

Sometimes they get it pretty much exactly right, as with this description of the practice of economics:

Is the Stationary State Coming?

Robert Gordon has recently published an NBER paper titled “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds”.  The paper questions the universal assumption that gained currency in the 1950s with Robert Solow's work that economic growth is a continuous process that will persist forever.  Indeed, Gordon suggests that the past 250 years could be a very unique period in human history and we will be returning to an era of low economic growth – a state that has characterized human history prior to the 1750s.  For example, the UK’s real per capita GDP grew at an annual rate of 0.2 percent in the four centuries leading up to 1700.

Economic Forecasting: Is Google Trends the Future?

Google Trends is a quick and popular way to assess the importance of ideas, events and trends by looking at the results of people’s web searches.  In fact, as is well known, it has been used to study flu activity based on searches for flu related terms. And, right here on WCI, it has been used to study marital discord  and the holiday spirit. Indeed, it can also provide economic information and is apparently even becoming a way to supplement economic forecasting tools.  If the searches for something are trending up, it is suggestive that it is growing in importance as an economic force.

Joint outputs

There's something a bit weird about the way we normally do economics. Or maybe it's just the examples we normally use. My mind isn't quite clear on it yet. So I'm writing this blog post.

We usually talk about multiple inputs producing one output. Labour, land, and capital are inputs used to produce apples. Three inputs, and one output. We know that's a simplification. It's lots more than just three. There are lots of different types of labour, natural resources, and capital goods, and all combine together to produce one output good. Then we go on to talk about the degree of substitutibility between different inputs in the production function. At one extreme we have perfect substitutibility, so Y=AXa + BXb + CXc; and at the other extreme we have the fixed proportions, so Y = min{AXa , BXb , CXc}. In between we have imperfect substitutibility like Y=Xa^a.Xb^b.Xc^c.

Why isn't it the other way around? Why not one input producing multiple outputs?

Or at least, n inputs producing m outputs, where m could either be bigger or smaller than n?

Is it because that's just how the world usually is?

How I spent my gap year

Some economists think the 1871 revolution was a big mistake, and led economics down the wrong path. They take their inspiration from pre-1871 economics, especially Ricardo and Marx, and proceed from there. Many of them are very smart and knowledgeable people. They think that most academic economists ignore them and know little or nothing about their work. I think they are right about that. And I think that many of them get frustrated because they think they've got something important to say and the people who most need to hear it don't listen or don't even know they exist and so continue down their wrong path in blissful or even willful ignorance.

Bureaucratic Entropy?

The Association of Ontario Municipalities is having its annual conference August 19-22 in Ottawa, the mother city of all governments in Canada.  Among the items on the agenda are the keynote address on:  “new secrets to leadership with five powerful tools to improve negotiation effectiveness”, a speech by Ontario’s premier (followed by the opposition leaders the day after), and concurrent sessions of how to build a better school, fiscal sustainability of infrastructure and managing municipal risk.  This is even a session called “Bring Back the Wild” which my councilors and city officials should find of interest given the recent spate of bear and alleged cougar sightings in Thunder Bay.  And of course, my personal favorite is “The Beer Store: Your Partner in Economic and Environmental Success” sponsored of course by The Beer Store. What you won’t find on the agenda is a discussion of bureaucratic entropy.

Selection bias and disagreement in blogging

Paul Krugman wrote a post about the ECB yesterday. I agree with it about, I don't know, say 90%. Here's where I disagree:

1. Paul and I both want easier monetary policy for the ECB, but he thinks of that as a temporarily higher target inflation rate, and I think it would be better to have a temporarily higher NGDP growth rate leading to a level path for NGDP.

2. I think it would have been useful if Paul had distinguished between what is necessary to save the Euro and whether it is worth saving.

3. Ummmm. I think a reference to a "Darwin Award" for the ECB, like in my old post, would have made a sexier title than "ECB Death Wish". Plus, he could have linked to my old post, which would have given me more fame and readers.

This post doesn't really have any point, does it? It's really not worth writing.

But that is exactly my point, and why I wrote it.

Why is JSTOR so difficult (for idiots like me) to use? (Updated X2 with good news)

[Update 1: see the response from Brian Larsen, User Services Manager, JSTOR, in the comment below. I commend them for reading, responding, and for trying to make JSTOR easier to use.]

[Update 2: IT WORKS! Brian has done it (for Carleton anyway, and I think he's working on the rest). And I don't even have to dowload a pdf!]

OK, I know I'm really bad at doing this sort of thing, but all the same. It has just taken me about 15 minutes, plus a lot of sweat, to get access to an article via JSTOR. It's "free" for me, because Carleton University pays for a subscription; but it's certainly not "free" in terms of my time and sweat. I find the whole thing incredibly frustrating. It's not just the time and sweat; I don't like being reminded I'm an idiot at this sort of thing. It makes me angry.

And it makes me wonder what it all means, for the future, for many of us, and not just for JSTOR.

Coming Soon to a University Near You...H-Index Rankings

Most of us are familiar with the metric known as the h-Index.  Developed by Jorge Hirsch, the h-index  is a measure that says that if you have an index of h, you have published h papers each of which has been cited at least h times. 

Canada: No country for old men (or women)

The Canadian population is aging, and getting old sucks - for economies, as well as for people.

There is nothing that can stop an individual from aging. Not face cream. Not hot yoga. 

The Balance of the Federation

The Canadian Federation is an institutional arrangement whereby the constituent units are able to both cooperate and compete with jurisdictions that are both separate and coordinate. The debate over the respective roles of the federal and provincial governments has taken various forms over time with views that emphasize the centrality of the federal government along with others that emphasize the federation as a compact amongst equals with the federal government as more of a coordinator.  I suppose this could also be termed executive versus classical federalism as Tom Flanagan described it in a recent Globe and Mail piece. Given that political discourse and decision making out of Ottawa has recently been taking a more decentralized tone when it comes to federal-provincial matters, it might be instructive to take a look at the numbers to see what the balance is between the respective tiers of the Canadian federation.

What not to wear, economist edition

What should you wear for an academic job interview? Ariel Rubinstein suggests casual attire:

I would argue that wearing jeans and a t-shirt is your dominant strategy:

If you are a good student, then a department that will not give you a job because of your "sloppy" appearance does not deserve to have you.

If you are mediocre, then there are many other candidates like you and dressing casually is the only way for you to get noticed.

Shakespeare, speaking through the character of Polonius, suggests buying the most expensive clothes you can afford: 

Costly thy habit as thy purse can buy,
But not express’d in fancy; rich, not gaudy:
For the apparel oft proclaims the man;

These two pieces of fashion advice are not as diametrically opposed as they might seem. Both recognize that clothes act as signals. The question "what not to wear?" is asking what should, or shouldn't, a person be signalling.

Difficulty with comments

There's been a recent surge in the number of comments taken hostage by our spam filter. If you don't see your comment within a short period of time, please send an e-mail to either me or the post's author, or post a short comment to the effect that a previous comment doesn't seem to have been published. We'll try to rescue it.

We apologise for the inconvenience.

What is actuarially fair insurance?

Actuarially fair insurance has an expected net pay-off of zero. From a consumer's point of view, an insurance contract is actuarially fair if the premiums paid are equal to the expected value of the compensation received. This expected value is, in turn, defined as the probability of the insured-against event occurring multiplied by the compensation received in the event of a loss.

Miles Corak has a blog. Subscribe now

Miles Corak, a labour economist formerly of Statistics Canada, currently at the University of Ottawa, has started a blog. He's off to a great start; go read what he's written, and then go back for more. I know I will.