Worthwhile Canadian Initiative

Copy/paste/re-write; student essays as collages

This is not about economics. Maybe it's about teaching. Maybe it's about the internet. I only have anecdata, and it is compromised by sample selection bias. I don't have any theory, and I don't have a proposed policy.

The economics of paywalls

With on-line advertising revenues stagnant at best, and print in terminal decline, newspapers are starting to build paywalls. 

The economics of on-line media is a little different from the economics of print, and a lot different from the economics of, say, potatoes. The difference is shown in the diagram below. 

"The Invisible Hand" on CBC radio

CBC radio is running a new program this summer on economics; it's called "The Invisible Hand". The first episode is scheduled to be broadcast Wednesday morning (this Wednesday - June 27) at 9:30 am and will be re-broadcast the following Saturday morning at 11:00 am. (Half an hour later in Newfoundland, of course.)

I am well-placed to tell you that the show is much, much better than you may be thinking and that you should give it a listen.

Why the distribution of reality is skewed and so newspapers are biased towards bad news

"News" is the difference between what happens and what you expected to happen. If you have rational, and hence unbiased, expectations, then the news, on average, should be neither good nor bad. The good news and the bad news should cancel out.

So why does the news that gets reported seem mostly bad news? Does bad news sell more newspapers than good news? Are newspapers biased?

Suppose reality is skewed. The distribution of the news has a zero mean by assumption, if our expectations are unbiased. But suppose the distribution has a long tail on the bad news side, and a short tail on the good news side. And suppose newspapers only report on big news, that's (say) one standard deviation or more away from the mean. Then most of the news reported would be bad news, because there are very few good news stories that are big enough to be worth reporting, just lots and lots of little good news events. "There were no serious accidents today on highway 401" never makes it into the newspapers.

But why should reality be skewed? That's the tricky question. But I think I can answer it.

Real wages during the recession

I've seen a few stories about recent trends in wages, and too many of them seem to be trying to make a big deal out of movements that - when in put in context - are really too small to say much of anything.

[Updated in an almost-certainly futile attempt to combat confirmation bias.]

Reality TV as union busting?

TV writers and actors get paid decent money, because they're unionized. The American Federation of Television and Radio Artists's contract specifies fees for every type of TV appearance.

Reality TV stars are not "television and radio artists" and do not need to be paid union rates. Reality television shows can feature non-union performers without violating AFTRA agreements. 

This is why reality TV dominates television: it's cheap to produce.

The Fed's Dark Age communications strategy

One sentence in Fed vice-chair Janet Yellen's speech caught my eye:

"Indeed, I believe that the Federal Reserve qualifies as one of the most transparent central banks in the world."

That is total bullshit. The Fed is one of the least transparent central banks in the world.

Ironically, in the excellent paragraph immediately following her bullshit sentence, Janet Yellen tells us precisely why it is a bullshit sentence:

Literary You-genics

In days of old, literature was subject to strict population controls. As John A Hobson put it back in 1910: 

"Before the arts of printing and of reading became common, most of the great deeds of man, his finest thoughts, his noblest feelings, perished for lack of enduring record and easy accurate communication.... Almost all that was original and beautiful or serviceable in the intellectual and spiritual life of primitive man inevitably died as soon as it was born." 

The rise of the public economist

Canadian Business blogger Andrew Potter calls it the economists' election. "This is the first election," he writes, "in which a large number of Canadian economists are making direct, unmediated, real-time interventions into the debates over policy and the various party platforms." 

The obvious story is that technological change has made it possible for economists to blog, tweet, etc. But sociologists could be blogging, or political scientists, or philosophers. Why economists?

Blogging and the iron law of oligarchy

Earlier this year, the New York Times announced (once again) the death of blogging. Immediately, signs of blogging's demise appeared all around me. The Palgrave Econolog, which ranks blogs, went off-line (it's now back). Posts on Worthwhile Canadian Initiative have become less frequent. The latest confirming instance: Scott Sumner is taking a break from blogging.

Does tweeting signal success?

More than one person has suggested that I start tweeting, but I'm afraid to. As my nearest and dearest have observed "Who would follow you on twitter?" It would be mortifying to be on twitter and have no followers.

Yet tweeting is like bird song.  A bird who sings early, long, and well will typically be healthier, and a better mate, than a bird with a weak and feeble song. Bird song thus signals reproductive fitness. So why do birds with low quality songs still sing? Because a quiet bird is signalling loud and clear that their song isn't worth listening to. Unless one is the most tuneless bird in the forest, singing is always the optimal strategy.

Revealed preference for newsprint and the rise of Fox News.

My dog can't talk, but his preferences are revealed by his actions. I know he likes tofu better than chicken because, given a choice between a piece of tofu and a piece of chicken, he will pick the tofu.

Choices reveal human preferences too. In January, my parents arranged for me to have a free three-month subscription to Canada's national newspaper. Six weeks into the subscription, I cancelled it. The choice reveals that my willingness to pay for newsprint is less than zero. A paper is actually a "bad", not a "good", because of the costs of gathering up and disposing of the unread newsprint.

Wikipedia is dominated by men. So what?

About 15 percent of contributors to Wikipedia are women. Sometimes this shows.

The entry for employment equity as of March 5, 2011, ran as follows:

Employment equity refers to Canadian policies that require or encourage preferential treatment in employment practices for certain designated groups: women, people with disabilities, Aboriginal peoples, and visible minorities.^[1] Employment equity goes beyond mere non-discrimination in requiring these specific groups be targeted for proactive treatment.

Whether you like employment equity or loathe it, as a definition, that's simply wrong.

Some corporate tax talking points I wish people would stop talking about

The issue of corporate taxes is becoming an issue, and it may even be an issue that provokes an election. Perhaps unsurprisingly, the debate has deteriorated even faster than I had feared. Here are five Bad Talking Points that I wish people would stop talking about.

Book review: Dan Gardner's "Future Babble"

Dan Gardner of the Ottawa Citizen is one of my very favourite journalists. I first came across his work during the 2008 election campaign, in which he distinguished himself by writing what turned out to be the only article on carbon taxes that made no reference to Stéphane Dion's accent. His piece was a beacon of intellectual curiosity in what was otherwise a very bleak media landscape, for which I was almost pathetically grateful.

Happily, he has also found time to write books. His first book, Risk, dealt with the psychology of how we handle uncertainty, and is well worth tracking down, buying and reading. His most recent book, Future Babble, notes that one of the ways we deal with uncertainty is to rely on the predictions of experts. Unfortunately, experts aren't very good at forecasting, but no-one seems to notice or care. Many of the examples Dan uses are, inevitably, from economics, so this is a good book for economists to read and to take seriously.

The Rise and Fall of Marxism?

My latest time wasting tech toy is Google Ngram Viewer. What's an ngram? A one word phrase, like "Marx" is a one-gram. "Karl Marx" is a two-gram. "K. Marx" is a three-gram (the period counts as a gram too). A phrase of indefinite length is an ngram.

The Ngram viewer is based on Google Books. Google has scanned almost every book (including pamphlets, treatises etc) ever written. It's then counted how often every single word (including names, punctuation marks, etc) appears in every book. For example, in 1860, the word "international" was used 513 times in 162 books published in Britain that year. Google has also counted how often every possible two word phrase was used. Every possible three word phrase.

With a research tool like this I'm like a kid in a candy store - I'm just gazing around hardly knowing where to begin.

A 21st century misery index

The 20th century misery index was the unemployment rate plus the inflation rate. In 1982, Canada's inflation rate stood at 10.9 percent,while unemployment was at 11.0 percent, for a 21.9 percent misery index. 2009, with inflation of 0.3 percent and unemployment of 8.3 percent, didn't even come close by old-style misery index measures.

Yet, as recent commentators on this blog have passionately argued, this generation's misery is real too: "This recession isn't a short, sharp shock. It's a long, drawn out constant torture that wears you down".

Clearly we need a 21st century misery index. And where better to look than that 21st century catalogue of misery, www.fmylife.com?

Worthwhile D.I.Y. Macroeconomics?

The New York Times has just published its 2010 "Year in Ideas" issue. One of the trends it identifies: D.I.Y. Macroeconomics. The financial crisis plus the growing availability of on-line data has given rise to "growing army of knowledgeable 'econo-bloggers'."  

I agree with one of their conclusions: econo-bloggers "offer sophisticated interpretations of economic data and hold passionate debates with their readers over the merits of the data."

Why blogging is hard

Imagine the following question on a PhD comprehensive exam:

"Using a macroeconomic model with monopolistically competitive firms, explain how an increase in the expected future price level will cause an increase in the current price level. Also explain whether there is an effect on real output.

Public Enemy and public goods

Once upon a time, musicians made money by selling albums. Now that people download music, this strategy doesn't work well. But what is the alternative?

In 2007, Radiohead  thrilled fans and economists alike with a new approach to music distribution. They distributed their album In Rainbows electronically, allowing fans to pay any price they chose - a penny, a dollar, or 100 dollars.

It worked for Radiohead - they garnered massive publicity, respectable sales, and a permanent place on public economics exams (download sample question here).