Noted for Your Afternoon Procrastination for March 27, 2014
Afternoon Must-Read: Steve Randy Waldmann: The Information Asymmetry Industry

Things to Read on the Afternoon of March 27, 2014


  1. Tony Atkinson and Salvatore Morelli: The chartbook of economic inequality: "Inequality – long ignored – is now centre stage.... This column introduces the Chartbook of Economic Inequality, a summary of long-run changes in economic inequality for 25 countries over more than 100 years.... Public discourse has started to openly debate the economic implications as well as the legitimacy of increasingly powerful elites seizing a growing share of the national pie year after year. These concerns, led the Managing Director of the IMF, Christine Lagarde to indicate the need for “addressing inequality and building inclusive growth” as one of three ‘milestones’ of the future global economy, in her October 2012 Annual Meetings Speech in Tokyo.... Researchers and scholars have also began to single out inequality as one of the structural causes of the recent financial crisis. This has led us to compile the Chartbook of Economic Inequality..." Brazil Chartbook of Economic Inequality

  2. Paul Krugman: Data as Slogan, Data as Substance: "what would real data-driven reporting look like?... Charles Gaba’s Gaba, a website developer, realized that nobody was systematically keeping track of enrollment data for Obamacare, and has turned himself into one-stop shopping.... And he really fills a need: when you read news reports on Obamacare, you can tell right away which reporters have been reading Gaba and know what’s happening and which reporters are relying solely on official announcements--or, worse, dueling political spin. For the record, Gaba’s take on the program so far is fairly optimistic: he projects 6.3 million... by March 31.... The main point is that he’s filling a niche by using a lot more data than the mainstream media. That’s what we thought Nate Silver would be doing, and maybe he eventually will. But for now, Gaba is the model."

  3. Noah Smith: Needs to Step Up Its Game: "I'm a big Nate Silver fan, but let me join the chorus... looking at his new 'data-driven' blog site... it's barely data-driven at all! For example, take this post about how climate change is not increasing the cost of natural disasters.... Let's focus on the idea that this post represents 'data-driven' journalism at all. It doesn't. The 'data' in the post consists of one annual time series with a sample size of 23. That's too small to do any sort of statistical analysis on, but then again, the post doesn't do any statistical analysis. It shows a trendline, and from that trendline it draws broad, sweeping conclusions.... Every newbie blogger and his dog draws a trendline and extrapolates it--and if the blogger is worth his salt, he'll at least have the common decency to qualify his extrapolation with 'if this trend continues', which Pielke does not. Furthermore, Pielke's analysis is just sloppy. What happens if you strip out earthquakes, tsunamis, volcanoes, etc. from the data? What if you extend the trend back 40 years? How does the recent trend compare with the trend from before climate change started significantly affecting global temperatures?... And the economic theory behind the conclusion is even sloppier... costs of mitigation... variance... people [are] risk-averse..."

  4. James Fallows: Another Bloomberg Editor Explains Why He Has Resigned, Over Its China Coverage: "The New York Times... contend[ed] that Bloomberg editors had quashed an investigative report about corruption among leaders in China.... Higher-ups at Bloomberg were worried that the story would hurt the company's sales of financial terminals—the mainstay of its business—inside China, since the main purchasers would be directly or indirectly subject to government control... Bloomberg was already 'on probation' with the Chinese government, because of some very brave and probing official-corruption stories the previous year—including the one on 'Red Nobility'.... The FT did a similar report... saying that Matthew Winkler, Bloomberg's editor-in-chief, had ordered the story killed, for fear of ramifications.... Amanda Bennett... promptly resigned as head of Bloomberg's investigative unit.... Michael Forsythe... joined the NYT staff. Bloomberg continued to deny the allegation of knuckling-under but refused to address any specifics. The story that reportedly was underway has not yet appeared.... I wrote to the man who reportedly gave the spiking order, editor-in-chief Matthew Winkler, and did not hear back.... The latest news... is Ben Richardson's resignation as a Bloomberg editor.... I wrote to Richardson asking if he would say more about the situation.... Ben Richardson: 'I was one of the two editors on the story that was spiked last year, and one of three who helmed the 2012 stories on the hidden wealth of China's Communist Party leaders, so I have a pretty intimate knowledge of what happened. Unfortunately, I am bound by a confidentiality agreement that prevents me from disclosing the details. That said, much has already become a matter of public knowledge. I felt the NYT and FT articles were a fair account...'"


  1. David Cutler et al.: To what extent is health care responsible for our longer lives? : "Analyses aggregated from treatments clearly shown to be medically effective suggest that at least half the life-expectancy gains since 1950 are due to medical advances. About 90 percent of the gains in life expectancy are attributable to improvements in the rates of death in infancy and the rates of death from cardiovascular disease. Prevailing estimates suggest that at least half the reduction in these rates are due to medical care.[ We therefore assumed in our base case that 50 percent of the total gains in life expectancy were due to medical care.[...] This assumption is likely to be reasonable, given our finding that 90 percent of the increases in life expectancy during the past four decades have resulted from reductions in the rate of death from cardiovascular disease and death in infancy. Although reductions in the rate of death from cardiovascular causes are multifactorial, prior research has suggested that at least half the reductions in the rate have resulted from medical advances. Among infants, more than half the reduction in the mortality rate between 1960 and 2000 resulted from a reduced rate of neonatal death among low birth-weight infants (weighing <2500 g), which is due almost entirely to medical advances."

  2. Alan Pyke: Payday Loan Companies Make Their Money By Trapping Customers In Debt: "More than 80 percent of all payday loans are taken out as part of an expensive, dead-end cycle of borrowing, according to a new report from the Consumer Financial Protection Bureau (CFPB). The report separates new borrowing from repeated payday loans, and finds that roughly 45 percent of new loans end up getting renewed multiple times before they are paid off. One in seven gets renewed 10 or more times. The industry relies on these repeat borrowers for the vast majority of its business. More than four in five loans was part of one of these misery cycles in which a borrower is unable to get out of debt. Given that each new loan incurs a 15 percent fee, the volume of lending to these repeat borrowers is accounting for the vast majority of lender income. The industry 'depends on people becoming stuck in these loans for the long term', CFPB head Richard Cordray said Tuesday in Nashville..."

  3. Gregory Ferenstein: TurboTax Maker Funnels Millions To Lobby Against Easier Tax Returns: "In the most technologically advanced countries, filing a tax return is free, easy and fast: Instead of taxpayers painstakingly calculating figures themselves, the government provides estimates of what they owe based on the very bank records and wages it already collects. Intuit, maker of the popular tax preparation software, TurboTax, has funnelled millions to oppose every effort to make tax day less painful... spent $11.5 million lobbying the federal government.... Former California Senator, Tom Campbell, who felt Intuit’s power during his proposal for an easy-file system in California, wrote that he 'never saw as clear a case of lobbying power putting private interests first over public benefit.'... Intuit’s efforts have made friends from the most tech-savvy members of Congress, including Republican House Majority Leader Eric Cantor (CrunchGov Grade: A) and Rep. Zoe Lofgren (CrunchGov Grade: A).... (Publica, which filed the investigative report, stated that Lofgren declined to comment for the story, but her office quickly responded to us with this letter.)... One day, Americans may be as advanced as Estonia, Denmark and Sweden. Until then, try not to procrastinate doing your taxes — it’s a long and complicated process."

Should Be Aware of:

  1. Scott Sumner: Could We Have Had a Severe Recession Without the 2008 Financial Crisis?: "I have trouble with DeLong’s implicit assumption is that the financial crisis caused the Great Recession.... The years leading up to 1990 saw Australian-level NGDP growth, if not more. So even if lending standards tightened sharply in the wake of the 1989-90 crisis, there was no possibility of hitting the zero bound.... With no zero bound in prospect, there’d be no reason for markets to expect an NGDP collapse.... Even if we had managed the 2007-08 subprime crisis very well from a regulatory/resolution perspective, there is no question that banks would have tightened lending standards sharply. That effectively reduces the demand for credit.... It’s quite plausible that the Wicksellian equilibrium natural rate would have fallen to zero in late 2008, even with a better resolution of the banks.... One area where I slightly disagree with Krugman is his focus on inflation. A 5% NGDPLT target path would have been enough, we didn’t need 4% trend inflation. Nor do we need fiscal stimulus.... All stabilization policies eventually fail.... The trick is to have a modest failure like Clinton or Obama, not a serious failure like FDR or Nixon. NGDPLT would have given us just that in 2008-09."

  2. Isaac Chotiner: Gregory Mankiw New York Times Op-Ed on Obamacare and Philosophy: "The former Bush administration economist N. Gregory Mankiw is well known for his love of rich people and his outspokenness on economic matters.... Apparently feeling that good objections to Obamacare and a higher minimum wage come from philosophy as well as economics, he has attempted, unsuccessfully, to write a piece that combines both.... Mankiw wants utilitarianism to appear silly, since he sees it as underpinning policies such as Obamacare and a higher minimum wage. But like many critiques of utilitarianism, this one starts to seem.. .oddly utilitarian. 'Another problem with the utilitarian approach is that there is no objective way to compare one person’s happiness with another’s, especially when people have different preferences. Peter may work long hours at a dreary job to earn a high income because he gets a lot of utility from money. Paul may be forgoing a higher income for a job that requires fewer hours or offers more personal satisfaction because he doesn’t care as much about money. In this case, equalizing incomes by moving a dollar from Peter to Paul could reduce total utility.' Notice that Mankiw first claims there is no way to compare people's happiness, and then he goes ahead and... makes a comparison.... If Mankiw is able to do this in a tossed off column, is it really surprising to think that healthcare policymakers could also do it?... [And] what's so interesting... is the way... [Mankikw] views the pre-Obamacare status quo. Ask yourself this: would someone who didn't have health insurance ever describe the pre-Obamacare system in these terms?... Was taking the plan from your employer a choice? In Mankiw's world, however, things only became disruptive after Obamacare. The status quo... was not just some completely fair system that is now being messed with by statist liberals."

  3. Matthew Yglesias: Hippie-Punching Before and During the Iraq War: "Driving the ineffectual liberal response was the continuing near-pathological obsession with the far left, the sentiment that in a moment of national crisis the most important task facing liberalism was not to combat the errors of in-power conservatism but those of the hopelessly marginal left, who became the primary target of their rhetoric. In some cases, it seems reasonably clear that simple loathing of left-wing antiwar activists pushed liberal intellectuals into support of the Iraq War. But even many mainstream writers and pundits who would eventually reject the war contributed to the problem in the early postattack months, in effect firing in the wrong direction for so long that they wound up outnumbered and outgunned when they finally switched targets."

  4. Erik Loomis: Water in the West: "Agriculture is going to lose out in the water wars of the West. With continued urban growth and the political weight behind water-guzzling energy production, there just isn’t the water and despite agribusiness’ power, the don’t have the political weight because they can’t mobilize the votes (the decentralized nature of agricultural production also matters here since it’s left to these local farmers who are forced to work with Monsanto or Cargill or whoever left to do a lot of the local political work). Of course, short of meaningful water planning that sharply rethinks western water law, there won’t be enough water to go around anyway. And no politician wants to touch this problem."