Worthwhile Canadian Initiative

How quickly does hotness fade?

Ratemyprofessors.com allows students to grade a professor's clarity, helpfulness, ease and - just for fun - rate their appearance as "hot" or "not". A professor with more hot than not votes is awarded a chili pepper on the ratemyprofessors.com web site.

Hotness declines with age, but how quickly? To find out, I combined ratemyprofessors hotness scores with information on when professors acquired their PhD - the best available measure of a professor's age (this information was gathered jointly with my co-author, Anindya Sen, and his co-authors). 

What happened in 2008?

1. Did a financial crisis cause a fall in expected and actual aggregate demand? (With central banks being unable or unwilling to do enough to stop it).

2. Or did a fall in expected and actual aggregate demand cause (or worsen) a financial crisis? (With central banks being unable or unwilling to do enough to stop it).

Obviously, there is a positive feedback multiplier between financial crises and expected and actual aggregate demand growth. (If central banks are unable or unwilling to prevent there being positive feedback.)

I started to write a post on this, but scrapped it, because I couldn't think of any way to provide good evidence one way or the other.

Now David Beckworth has a very important post which provides evidence for the second hypothesis. Go read it. Or simply look at the picture. US households' expected dollar income growth started to fall well before the US financial crisis.

[Update: see also Marcus Nunes' post and graph.]

The purpose of this post is simply to draw attention to David's post, and to raise a few minor points:

The (slowly) changing face of Ontario economics departments

When I was an undergraduate, many of my professors were Canadian born and American trained. The demographic profile of Canada, and of Canadian economics classrooms, has changed since then, as our country has recruited high skilled immigrants from around the world. But has there been a corresponding change in the demographic composition of the professoriate?

As part of my on-going research project with Anindya Sen and Marcel Voia on hotness and earnings, I've been gathering data on the educational backgrounds of Ontario economics professors - where they received their first degrees, and where they studied for their PhDs. Some preliminary results are shown over the fold:

Begging the long run question: inflation variability vs NGDP growth variability

Forget about the short run benefits of NGDP targeting. This post is about the long run benefits.

Just suppose, in some alternative universe, the Bank of Canada for the last 20 years had been targeting 5% NGDP growth rather than 2% inflation. And that everyone had gotten used to NGDP growing at 5%. And suppose that, like in the real world, real GDP growth had been around 3%, and inflation had been around 2%. (3% real growth + 2% inflation = 5% NGDP growth).

Now suppose that some heretic then came along and said that Canada should switch to targeting 2% inflation instead. I can guess what the reaction would be:

"But suppose there's a productivity growth slowdown and real GDP growth slows to (say) 2% in future. Your 2% inflation target would then mean that NGDP would only grow at 4%. That's the problem with inflation targeting. If long run real growth rates vary, inflation targeting would mean variable NGDP growth. Unless you adjust the inflation target to take account of changes in the long run real growth rate, but then it isn't really inflation targeting, is it?"

Debt and Growth

As you probably all know, the Reinhart-Rogoff  2010 study found economic growth slows when the debt to GDP ratio exceeds 90 percent.  They used data for 44 countries over a 200-year period and found the relationship between debt and real GDP growth was weak for debt to GDP ratios below 90 percent.  However, above 90 percent, economic growth dropped considerably more.  Thomas Herndon, an economics graduate student at the University of Massachusetts-Amherst, has challenged this result.  Using the Reinhart-Rogoff Data data, he found that economic growth slows but not as dramatically as the Reinhart-Rogoff result.  Well, the recent debate over the relationship between debt and economic growth has spurred me to do my own quick analysis.

Did inflation targeting make the Phillips Curve really flatter or just look flatter?

We know that inflation targeting failed. But we don't know why it failed.

One theory is that inflation targeting failed because inflation targeting made the Phillips Curve flatter. It made the Phillips Curve so very flat that keeping inflation close to target wasn't enough to keep output and employment close to potential. Inflation targeting contained the seeds of its own destruction. It destroyed the usefulness of inflation as a signal of whether money should be tightened or loosened.

We want to test that theory.

The trouble is, it is hard to distinguish econometrically between: inflation targeting made the Phillips Curve really flatter, and; inflation targeting made the Phillips Curve look flatter.

Notation: a beginner's guide

My colleague Lynda Khalaf's favourite saying is: Notation, notation, notation. Bad notation makes a paper difficult to follow. Papers that are hard to read and understand get rejected, or receive lower grades.

Montreal: An Island of Calm?

The latest release on the value of building permits for Canada's CMAs by Statistics Canada provides an interesting perspective on a slowing economy.  The numbers show that there has been a downward trend in the total value of permits since late 2012.

A day in the life of a behavioural economist

A key insight of behavioural economics is that people don't always do what is in their own long term interests. Our inner planner sets goals - complete that paper, write that referee's report, floss. Our inner doer - who has all the perseverance of Homer Simpson -  fails to follow through, and sabotages the planner's best intentions. As a review of Nudge by Tim Leonard puts it:

Too often, our impulsive, myopic, unreflective reptile half seizes the levers of choice from our resolute, farsighted, thoughtful human half. The upshot: we are more Homer Economicus than Homo Economicus. 

What's a man worth on the dating market?

Last fall I stopped talking about the economics of gender, and began talking about the economics of sex. It was wonderful. 

So much can be discussed under the rubric of economics of sex. Take, for example, the pick-up artist phenomenon, described in books like The Game. It's like Cesar Millan's Dog Whisperer books, urging men to be alphas, take a leadership role, and ignore begging and requests for attention. The major difference as far as I can see is that pick-up artists aim to make women come to bed, rather than dogs come to heel. 

Canadian universities: reading the writing on the wall

The Royal Military College of Canada (RMCC) is the only university under direct federal control, thus recent developments there indicate the Harper government's vision for post-secondary education. 

This CAUT-commissioned report, whose authors include eminent economist Robin Boadway (an RMCC grad and ardent supporter of the college), describes a number of developments that merit close attention.

Diagnosing Hospitals

CBC’s Fifth Estate has put together a ranking of Canadian hospitals and the results are out.  They provide a new online tool that grades hospitals on key performance indicators reported by hospitals and justify it as a call for more accountability and transparency in the Canadian health care system.  Given the inevitable complexity of ranking hospitals with differences in provincial health status and population characteristics, the fact that they only are able to rank 239 out of 600 plus hospitals, and the reluctance of most provinces and territories to provide some of the requested information, it is a limited picture.  Yet, it is information that will be used.

We're free up here too, eh?

Paul Krugman has recently taken aim at the rhetoric of the US right:

From the enthusiastic reception American conservatives gave Friedrich Hayek’s “Road to Serfdom,” to Reagan, to the governors now standing in the way of Medicaid expansion, the U.S. right has sought to portray its position not as a matter of comforting the comfortable while afflicting the afflicted, but as a courageous defense of freedom.

That got me to thinking. When I read or watch the US media, I hear lots of talk about freedom - much more than in Europe, say. But do Americans actually feel freer than people elsewhere?

Who Gets What Federalism

The recent Mowat Centre report on Ontario’s fiscal gap with Ottawa and the lament that Ontario puts more into Confederation than it gets out brought to mind a poll done in 2005 by EKOS that showed that 51 percent of Canadians believed their province was putting more money into Confederation than it gets out. Of course, the proportion varied by province with 70 percent of Albertans feeling this way, 55 percent of Ontarians, 45 percent of Atlantic Canadians and 44 percent of Quebecers.  According to Frank Graves, the President of Ekos:  “Such a pervasive sense of being short-changed does not augur well for the health of federalism”.

Things students do that aren't annoying

Female Science Professor's blog recently featured a discussion of annoying things students do, like asking "Did I miss anything important" or "Is that going to be on the test" (the two questions FSP's readers voted the most annoying.) The purpose of the FSP posts is, in part, to generate good practical advice for students, and they do. For example, when in doubt, start an email to a professor with "Dear Professor X..."  When sending a file to a professor, use a title like "MyName_resume.doc" rather than "resume.doc".

Modern LM curves are vertical

Modern teaching of modern macroeconomics and modern monetary theory should reflect modern monetary policy -- what modern central banks actually do nowadays. That means the modern LM curve is vertical.

Can an element of danger make life safer?

 

photo from ncc.gc.ca

In Ottawa-Gatineau, the standard rules of the road apply to recreational pathways. People cycle, roller-blade or walk on the right. Slower traffic keeps to the far right-hand side of the path. 

 

In theory, it's safe. Everyone knows which side of the pathway they are supposed to be on. Having a yellow line in the middle of the pathway reduces the chances that cyclists will plow into each other, causing a nasty accident. 

Minding the Gap

The Mowat Centre has issued a new report on Ontario’s fiscal balance within the Federation called "Filling the Gap: Measuring Ontario's Balance within the Federation." The report finds that: “based on the latest available figures, Ontarians transfer approximately $11B on net to the rest of Canada. This transfer is equivalent to 1.9% of the province’s GDP. This can be referred to as the gap between what Ontarians contribute to the federal government and what is returned to the province in the form of transfers and spending. This gap exists despite the fact that Ontario’s fiscal capacity is below the Canadian average.”  This report is the latest installment in an effort by Ontario to redress the fiscal balance.  That the size of the fiscal gap is almost identical to the current size of Ontario’s deficit is a convenient juxtaposition.

A truly unimpressive accomplishment

Note: I have re-written this post in response to comments from biostatistician Thomas Lumley below.

It made headlines around the world: Facebook ‘likes’ can reveal users’ politics, sexual orientation, IQ. According to Michal Kosinski, the lead researcher, information on "gender, race, political views, religion, sexual orientation, personality, IQ and so on," can be extracted from the knowledge that a person likes Lady Gaga or Harley-Davidsons. 

Apparently:

The study noted that many of the most predictive "likes" weren't obvious ones. For example, fewer than five per cent of users labelled as "gay" were connected with gay groups such as the "No H8 campaign." Instead, likes such as "Britney Spears" and "Desperate Housewives" were "moderately indicative of being gay."

Meanwhile, the "likes" most correlated with high intelligence were thunderstorms, The Colbert Report, science and curly fries...

DSGE and me, or Why I ended up being an applied econometrician

I've never used Dynamic Stochastic General Equilibrium (DSGE) modeling techniques for pretty much the same reasons that Noah Smith outlines. I keep meaning to write a post about my misgivings about DSGE, and it appears now is the time. This is going to be a pretty technical and wonkish post, but there's really no way around that: the issue is technical and wonkish.