Throw the bums out

A nice summary on voter irrationality from Larry Bartels:

"While voters are busy meting out myopic, ­simple-­minded rewards and punishments, political observers are often busy exaggerating the policy content of the voters’ verdicts. The prime example in American political history may be the watershed New Deal election of 1936. Having swept into office on a strong tide of economic discontent in 1932, Franklin Roosevelt initiated a series of wide-ranging new policies to cope with the Great Depression. According to the most authoritative political scholar of the era, V. O. Key, “The voters responded with a resounding ratification of the new thrust of governmental policy”—a stunning 46-state landslide that ushered in an era of Democratic electoral ­dominance.24

The 1936 election has become the most celebrated textbook case of ideological realignment in American history. However, a careful look at ­state-­by-­state voting patterns suggests that this resounding ratification of Roosevelt’s policies was strongly concentrated in the states that happened to enjoy robust income growth in the months leading up to the vote. Indeed, the apparent impact of ­short-­term economic conditions was so powerful that, if the recession of 1938 had occurred in 1936, Roosevelt probably would have been a ­one-­term ­president.25

It’s not only in the United States that the ­Depression-­era tendency to “throw the bums out” looks like something less than a rational policy judgment. In the United States, voters replaced Republicans with Democrats in 1932 and the economy improved. In Britain and Australia, voters replaced Labor governments with conservatives and the economy im­proved. In Sweden, voters replaced Conservatives with Liberals, then with Social Democrats, and the economy improved. In the Canadian agricultural province of Saskatchewan, voters replaced Conservatives with Socialists and the economy improved. In the adjacent agricultural province of Alberta, voters replaced a socialist party with a right-leaning party created from scratch by a charismatic radio preacher peddling a flighty ­share-­the-­wealth scheme, and the economy improved. In Weimar Germany, where economic distress was deeper and ­longer ­lasting, voters rejected all of the mainstream parties, the Nazis seized power, and the economy improved. In every case, the party that happened to be in power when the Depression eased went on to dominate politics for a decade or more thereafter. It seems far-fetched to imagine that all these contradictory shifts represented ­well-­considered ideological conversions. A more parsimonious interpretation is that voters ­simply—­and ­simple-­mindedly—­rewarded whoever happened to be in power when things got ­better.

Stupid? No, just human. And ­thus—­to borrow the title of another current ­best­seller, by behavioral economist Dan ­Ariely—­“predictably irrational.” That may be bad ­enough."

GOTV and likely voters

Via realclearpolitics--This is what the the Washington Post wrote on Sunday:

Sen. Barack Obama's campaign intends to avoid a (2004) repeat by building an
organization modeled in part on what Karl Rove used to engineer Bush's victory:
a heavy reliance on local volunteers to pitch to their own neighbors,
micro-targeting techniques to identify persuadable independents and Republicans
using consumer data, and a focus on exurban and rural areas. But in scale and
ambition, the Obama organization goes beyond even what Rove built. The campaign
has used its record-breaking fundraising to open more than 700 offices in more
than a dozen battleground states, pay several thousand organizers and manage
tens of thousands more volunteers.

And this is what Gallup has to say regarding how this get out the vote strategy may affect its survey-weighting methods:

Likely Voter Estimates
"Obama's current advantage is slightly less when estimating the preferences of likely voters, which Gallup will begin reporting on a regular basis between now and the election. Gallup is providing two likely voter estimates to take into account different turnout scenarios.
The first likely voter model is based on Gallup's traditional likely voter assumptions,which determine respondents' likelihood to vote based on how they answer questions about their current voting intention and past voting behavior. According to this model, Obama's advantage over McCain is 50% to 46% in Oct. 9-11 tracking data.
The second likely voter estimate is a variation on the traditional model, but is only based on respondents' current voting intention. This model would take into account increased voter registration this year and possibly higher turnout among groups that are traditionally less likely to vote, such as young adults and racial minorities (Gallup will continue to monitor and report on turnout indicators by subgroup between now and the election). According to this second likely voter model, Obama has a 51% to 45% lead over McCain. "
(Click here to see how the race currently breaks down by demographic subgroup.)


And for the "registered voters" sample, the figures are 50% Obama, 43% McCain. This means that the different weighting method leads to three different forecasts, with margins of victory ranging from a 4 to 7 percent lead in favor of Obama. With sampling errors of roughly 2%, the weighting method will be crucial in predicting heavily contested states such as Virginia.

Populist revolts

An historical vignette from Andrew Selgman’s blog

Mavericks of the past

Phil Klinkner writes:

History doesn't repeat itself, the saying goes, but it does rhyme.

To me [Klinkner], the recent House defeat of the financial bailout bill echoes the defeat of the national sale tax in 1932. The Depression dried up federal revenues, so the Hoover administration proposed a national sales tax to raise money. Business and the leadership of both parties favored the bill, but the public was overwhelmingly opposed. Liberal Republican Fiorella LaGuardia led a bipartisan revolt against the bill. House Speaker John N. Garner (D-TX) actually left the speaker's chair to go into the well and plead with his fellow Democrats to pass the bill. Garner normally had tight control on his party, but not this time. The bill was defeated 153-223.

In both cases, an unpopular Republican administration put forward a proposal to deal with an economic crisis, supported by the Democratic leadership in the House and the vast majority of the business community. Nonetheless, a bipartisan populist revolt sent it down to defeat.

And, Phil forgot to mention, James Garner was Maverick.

Poll of polls

This is an up to date poll of polls for the 2008 National Presidential General Election.

Maps and more in depth analysis at pollster.com

Y is not about X

Is everything about status? These are some sentences of wisdom from Robin Hanson at Overcoming Bias.

Clothes aren't about Comfort
Marriage isn't about Romance
Talk isn't about Info
Charity isn't about Helping
Church isn't about God
Medicine isn't about Health
Consulting isn't about Advice
School isn't about Learning
Research isn't about Progress
Politics isn't about Policy

High school students are easily engaged to elect class presidents, even though they have little idea what if any policies a class president might influence. Instead such elections are usually described as "popularity contests." That is, theses elections are about which school social factions are to have higher social status. If a jock wins, jocks have higher status. If your girlfriend's brother wins, you have higher status, etc. And the fact that you have a vote says that others should take you into account when forming coalitions - you are somebody.

Civics teachers talk as if politics is about policy, that politics is our system for choosing policies to deal with common problems. But as Tyler Cowen suggests, real politics seems to be more about who will be our leaders, and what coalitions will rise or fall in status as a result. Election media coverage focuses on characterizing the candidates themselves - their personalities, styles, friends, beliefs, etc. ...As with high school class presidents, we care about policies mainly as clues to candidate character and affiliations. And to the extend we consider policies not tied to particular candidates, we mainly care about how policies will effect which kinds of people will be respected how much.

For example, we want nationalized medicine so poor sick folks will feel cared for, military actions so foreigners will treat us with respect, business deregulation as a sign of respect for hardworking businessfolk, official gay marriage as a sign we accept gays, and so on. This perspective explains why voters tend to prefer proportional representation, why many refuse to vote for any candidate when none have earned their respect...

Also related: Cowen's relative status and ideology is here.

...and yes, perhaps this blog is not about "scholarly ideas" but about using whatever I think is interesting as a signal...

The mother of all bailouts

The draft of the LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS in the US is so short even I could understand most of it. These are some excerpts of note (y algunos comentarios al vuelo):

Sec. 2. Purchases of Mortgage-Related Assets.

(a) Authority to Purchase.--The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.

(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation: (1) appointing such employees as may be required to carry out the authorities in this Act and defining their duties; (2) entering into contracts, including contracts for services authorized by section 3109 of title 5, United States Code, without regard to any other provision of law regarding public contracts; (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them; (4) establishing vehicles that are authorized, subject to supervision by the Secretary, to purchase mortgage-related assets and issue obligations; and (5) issuing such regulations and other guidance as may be necessary or appropriate to define terms or carry out the authorities of this Act.

Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for--(1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer.

(Comparado con la detallada lista de "acciones necesarias", los "consideraciones" son breves y ambiguas: ¿cómo se mide la estabilidad financiera y/o la protección del contribuyente?)

Sec. 4. Reports to Congress.

Within three months of the first exercise of the authority granted in section 2(a), and semiannually thereafter, the Secretary shall report to the Committees on the Budget, Financial Services, and Ways and Means of the House of Representatives and the Committees on the Budget, Finance, and Banking, Housing, and Urban Affairs of the Senate with respect to the authorities exercised under this Act and the considerations required by section 3.

(Nótese que, de ser aprobada esta iniciativa, el primer reporte de resultados se entregaría en diciembre--pasada la elección presidencial y antes de que Bush deje el poder.)

Sec. 6. Maximum Amount of Authorized Purchases.

The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.

(Nótese que el gobierno puede comprar o vender más de 700mil mdd, pero el "balance diario" nunca podrá exceder dicho monto.)

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

(Ojo, estamos hablando de poderes discrecionales sobre 700mil mdd.)

The complete proposal text is here.

Taleb on the Limits of Statistics

Taleb's classical metaphor: "A turkey is fed for a 1000 days—every days confirms to its statistical department that the human race cares about its welfare 'with increased statistical significance'. On the 1001st day, the turkey has a surprise."



Some quotable quotes from Taleb's essay:

"Statistical and applied probabilistic knowledge is the core of knowledge; statistics is what tells you if something is true, false, or merely anecdotal; it is the "logic of science"; it is the instrument of risk-taking; it is the applied tools of epistemology; you can't be a modern intellectual and not think probabilistically—but... let's not be suckers. The problem is much more complicated than it seems to the casual, mechanistic user who picked it up in graduate school. Statistics can fool you. In fact it is fooling your government right now.

"By the "narrative fallacy" the turkey economics department will always manage to state, before thanksgivings that "we are in a new era of safety", and back-it up with thorough and "rigorous" analysis. And Professor Bernanke indeed found plenty of economic explanations—what I call the narrative fallacy—with graphs, jargon, curves, the kind of facade-of-knowledge that you find in economics textbooks. This is the find of glib, snake-oil facade of knowledge—even more dangerous because of the mathematics. (...) I have nothing against economists: you should let them entertain each others with their theories and elegant mathematics, and help keep college students inside buildings. But beware: they can be plain wrong, yet frame things in a way to make you feel stupid arguing with them.

What Is Wise To Do (Or Not Do) In The Fourth Quadrant

(NB: The 4th quadrant basically refers to heavy-tailed or unknown probability distributions with complex or nonlinear payoffs)

1) Avoid Optimization, Learn to Love Redundancy. Psychologists tell us that getting rich does not bring happiness—if you spend it. But if you hide it under the mattress, you are less vulnerable to a black swan. (...) Biological systems—those that survived millions of years—include huge redundancies. (...) Historically populations tended to produced around 4-12 children to get to the historical average of ~2 survivors to adulthood.

2) Avoid prediction of remote payoffs—though not necessarily ordinary ones. Payoffs from remote parts of the distribution are more difficult to predict than closer parts. A general principle is that, while in the first three quadrants you can use the best model you can find, this is dangerous in the fourth quadrant: no model should be better than just any model.

3) Beware the "atypicality" of remote events. There is a sucker's method called "scenario analysis" and "stress testing"—usually based on the past (or some "make sense" theory).

4) Time. It takes much, much longer for a times series in the Fourth Quadrant to reveal its property. At the worst, we don't know how long. Things that have worked for a long time are preferable—they are more likely to have reached their ergodic states.

5) Beware Moral Hazard. Is optimal to make series of bonuses betting on hidden risks in the Fourth Quadrant, then blow up and write a thank you letter.

6) Metrics. Conventional metrics based on type 1 randomness don't work. Words like "standard deviation" are not stable and does not measure anything in the Fourth Quadrant. 70-90% of the Kurtosis in Oil, SP500, Silver, UK interest rates, Nikkei, US deposit rates, sugar, and the dollar/yet currency rate come from 1 day in the past 40 years.

Tracking the 2008 US presidential election

This is an up to date graph of the Obama and McCain contracts at intrade.com:

This is Obama's contract (more details here):


This is McCain's contract (more details here):


This is what the latest polls say

And this is how the red/blue/purple state map looks like

What makes people vote republican? (morality vs. policies)

Aunque estoy poco capacitado para evaluar la originalidad del argumento, este ensayo me parece bastante interesante.  If he is right, are (some sort of) political scientists also missing an important point?  Saludos!

 

WHAT MAKES PEOPLE VOTE REPUBLICAN?

By Jonathan Haidt

What makes people vote Republican? Why in particular do working class and rural Americans usually vote for pro-business Republicans when their economic interests would seem better served by Democratic policies? We psychologists have been examining the origins of ideology ever since Hitler sent us Germany's best psychologists, and we long ago reported that strict parenting and a variety of personal insecurities work together to turn people against liberalism, diversity, and progress. But now that we can map the brains, genes, and unconscious attitudes of conservatives, we have refined our diagnosis: conservatism is a partially heritable personality trait that predisposes some people to be cognitively inflexible, fond of hierarchy, and inordinately afraid of uncertainty, change, and death. People vote Republican because Republicans offer "moral clarity"—a simple vision of good and evil that activates deep seated fears in much of the electorate. Democrats, in contrast, appeal to reason with their long-winded explorations of policy options for a complex world.

 

Diagnosis is a pleasure. It is a thrill to solve a mystery from scattered clues, and it is empowering to know what makes others tick. In the psychological community, where almost all of us are politically liberal, our diagnosis of conservatism gives us the additional pleasure of shared righteous anger. We can explain how Republicans exploit frames, phrases, and fears to trick Americans into supporting policies (such as the "war on terror" and repeal of the "death tax") that damage the national interest for partisan advantage.

 

But with pleasure comes seduction, and with righteous pleasure comes seduction wearing a halo. Our diagnosis explains away Republican successes while convincing us and our fellow liberals that we hold the moral high ground. Our diagnosis tells us that we have nothing to learn from other ideologies, and it blinds us to what I think is one of the main reasons that so many Americans voted Republican over the last 30 years: they honestly prefer the Republican vision of a moral order to the one offered by Democrats. To see what Democrats have been missing, it helps to take off the halo, step back for a moment, and think about what morality really is.

(...)

If Democrats want to understand what makes people vote Republican, they must first understand the full spectrum of American moral concerns. They should then consider whether they can use more of that spectrum themselves. The Democrats would lose their souls if they ever abandoned their commitment to social justice, but social justice is about getting fair relationships among the parts of the nation. This often divisive struggle among the parts must be balanced by a clear and oft-repeated commitment to guarding the precious coherence of the whole. America lacks the long history, small size, ethnic homogeneity, and soccer mania that holds many other nations together, so our flag, our founding fathers, our military, and our common language take on a moral importance that many liberals find hard to fathom.

Unity is not the great need of the hour, it is the eternal struggle of our immigrant nation. The three Durkheimian foundations of ingroup, authority, and purity are powerful tools in that struggle. Until Democrats understand this point, they will be vulnerable to the seductive but false belief that Americans vote for Republicans primarily because they have been duped into doing so.

 

JONATHAN HAIDT is Associate Professor of Psychology at the University of Virginia, where he does research on morality and emotion and how they vary across cultures. He is the author of The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom.

 

El ensayo completo (y un debate en torno al mismo) están aqui:

http://www.edge.org/3rd_culture/haidt08/haidt08_index.html

 

Obama vs. McCain

A few notable paragraphs of Obama speech at the Democratic National Convention (August 28th, 2008).  His criticism of McCain is a bit more nuanced than Palin--because you don't want to go ballistic with McCain the hero.

"Tonight, I say to the American people, to Democrats and Republicans and Independents across this great land - enough!  This moment - this election - is our chance to keep, in the 21st century, the American promise alive.  Because next week, in Minnesota, the same party that brought you two terms of George Bush and Dick Cheney will ask this country for a third.  And we are here because we love this country too much to let the next four years look like the last eight.  On November 4th, we must stand up and say: "Eight is enough."

Now let there be no doubt.  The Republican nominee, John McCain, has worn the uniform of our country with bravery and distinction, and for that we owe him our gratitude and respect.  And next week, we'll also hear about those occasions when he's broken with his party as evidence that he can deliver the change that we need. But the record's clear: John McCain has voted with George Bush ninety percent of the time.  Senator McCain likes to talk about judgment, but really, what does it say about your judgment when you think George Bush has been right more than ninety percent of the time?  I don't know about you, but I'm not ready to take a ten percent chance on change.

The truth is, on issue after issue that would make a difference in your lives - on health care and education and the economy - Senator McCain has been anything but independent.  He said that our economy has made "great progress" under this President.  He said that the fundamentals of the economy are strong.  And when one of his chief advisors - the man who wrote his economic plan - was talking about the anxiety Americans are feeling, he said that we were just suffering from a "mental recession," and that we've become, and I quote, "a nation of whiners."
(…)
Now, I don't believe that Senator McCain doesn't care what's going on in the lives of Americans.  I just think he doesn't know.  Why else would he define middle-class as someone making under five million dollars a year?  How else could he propose hundreds of billions in tax breaks for big corporations and oil companies but not one penny of tax relief to more than one hundred million Americans?  How else could he offer a health care plan that would actually tax people's benefits, or an education plan that would do nothing to help families pay for college, or a plan that would privatize Social Security and gamble your retirement?  It's not because John McCain doesn't care.  It's because John McCain doesn't get it.

For over two decades, he's subscribed to that old, discredited Republican philosophy - give more and more to those with the most and hope that prosperity trickles down to everyone else.  In Washington, they call this the Ownership Society, but what it really means is - you're on your own.  Out of work?  Tough luck.  No health care?  The market will fix it.  Born into poverty?  Pull yourself up by your own bootstraps - even if you don't have boots.  You're on your own.

Well it's time for them to own their failure.  It's time for us to change America."

 

Palin goes negative

I really like (some of) the smears and negative campaigning that we have heard in both the Democratic and Republican convention.  If nothing else, they make it easy for even the most undecided or uninformed voters to contrast and ponder each candidate's strenghts and weaknesses.  Obviously, you have to hear both sides. VP candidates are the official attack dogs in presidential campaigns. These two are excerpts from Sarah Palin speech at the RNC that I particularly liked:

 

"Before I became governor of the great state of Alaska, I was mayor of my hometown. And since our opponents in this presidential election seem to look down on that experience, let me explain to them what the job involves. I guess a small-town mayor is sort of like a "community organizer," except that you have actual responsibilities. I might add that in small towns, we don't quite know what to make of a candidate who lavishes praise on working people when they are listening, and then talks about how bitterly they cling to their religion and guns when those people aren't listening."

 

"I've noticed a pattern with our opponent. Maybe you have, too. We've all heard his dramatic speeches before devoted followers. And there is much to like and admire about our opponent. But listening to him speak, it's easy to forget that this is a man who has authored two memoirs but not a single major law or reform — not even in the state senate. This is a man who can give an entire speech about the wars America is fighting, and never use the word "victory" except when he's talking about his own campaign. But when the cloud of rhetoric has passed ... when the roar of the crowd fades away ... when the stadium lights go out, and those Styrofoam Greek columns are hauled back to some studio lot — what exactly is our opponent's plan? What does he actually seek to accomplish, after he's done turning back the waters and healing the planet? The answer is to make government bigger..."

 

Coming soon: my fav excerpts from the DNC speeches...

 

The political power of daugthers

Daughters and Left-Wing Voting

Andrew J. Oswald (University of Warwick and Cornell University) Nattavudh Powdthavee (University of London and University of York)

From the paper introduction:
“In remarkable research, the sociologist Rebecca Warner and the economist Ebonya Washington have shown that the gender of a person’s children seems to influence the attitudes and actions of the parent.
Warner (1991) and Warner and Steel (1999) study American and Canadian mothers and fathers. The authors’ key finding is that support for policies designed to address gender equity is greater among parents with daughters. This result emerges particularly strongly for fathers. Because parents invest a significant amount of themselves in their children, the authors argue, the anticipated and actual struggles that offspring face, and the public policies that tackle those, matter to those parents. In the words of Warner and Steel (1999), “child rearing might provide a mechanism for social change whereby fathers' connection with their daughters undermines … patriarchy”. The authors demonstrate that people who parent only daughters are more likely to hold feminist views (for example, to favor affirmative action). By collecting data on the voting records of US congressmen, Washington (2004) is able to go beyond this. She provides persuasive evidence that congressmen with female children tend to vote liberally on reproductive rights issues such as teen access to contraceptives. In a revision, Washington (2008) argues for a wider result, namely, that the congressmen vote more liberally on a range of issues such as working families flexibility and tax-free education.
Our aim in this paper is to argue, with nationally representative random samples of men and women, that these results generalize to voting for entire political parties. We document evidence that having daughters leads people to be more sympathetic to left-wing parties. Giving birth to sons, by contrast, seems to make people more likely to vote for a right-wing party. Our data, which are primarily from Great Britain, are longitudinal. We also report corroborative results for a German panel. Access to longitudinal information gives us the opportunity -- one denied to previous researchers -- to observe people both before and after they have a new child of any particular gender. We can thereby test for political ‘switching’. Although panel data cannot resolve every difficulty of establishing cause-and-effect relationships, they allow sharper testing than can simple cross-section data. The paper checks that our result is not an artifact of family stopping-rules, discusses the predictions from a simple economic model, and tests for possible reverse causality.”

Also related:

Washington, Ebonya. (2008) “Family socialization: How daughters affect their legislator fathers’ voting on women’s issues.” American Economic Review, forthcoming.


Abstract. “Economists have long concerned themselves with environmental influences, such as neighborhood, peers and family on individuals' beliefs and behaviors. However, the impact of children on parents' behavior has been little studied. Parenting daughters, psychologists have shown, increases feminist sympathies. I test the hypothesis that children, much like neighbors or peers, can influence adult behavior. I demonstrate that the propensity to vote liberally on reproductive rights is significantly increasing in a congress person's proportion of daughters. The result demonstrates not only the relevance of child to parent behavioral influence, but also the importance of personal ideology in a legislator's voting decisions as it is not explained away by voter preferences.”

Set Theory 101

I found this on a good friend's website. Not only it is very true but it could also help teach some basic lessons in set theory, trade offs and the pareto frontier. Enjoy.

Lant Pritchett - Let their people come

Acaba de salir un libro sobre los beneficios potenciales de una mayor movilidad internacional de la mano de obra (léase migración).  La premisa de Lant Pritchett--economista de MIT, profesor de Harvard e investigador del World Bank--es sencilla:  en el mundo actual, las ganancias de  una mayor movilidad laboral son mucho mayores que las ganancias de disminuir, aun más, las barreras al comercio internacional. 

¿Por qué?  Imperfectos  como lo son, los aranceles y tarifas promedio del mundo ya son relativamente bajos.  En cambio, las barreras migratorias siguen siendo gigantescas y socialmente costosas.  ¿Evidencia?  Los diferenciales en precios de bienes y servicios entre un país rico y uno pobre son de, digamos 30 a 40% (ie, el precio de una ipod o una big mac alrededor del mundo no difiere demasiado).  Sin embargo, los diferenciales en salarios entre un pais rico y uno pobre llegan a ser de más del 500%, es decir, de un orden de magnitud superior.   

In short, in today's world, being pro-migration is much more pro-poor than being pro-trade.

El libro está disponible en linea aqui:
http://www.cgdev.org/content/publications/detail/10174

Dixit (non) system of work

This is Avinash Dixit advice on keeping research simple and papers short:

"Over the last two decades the average length of economics papers has increased quite a lot. Advances in word-processing technology have greatly reduced the cost of producing words, but not the cost of producing ideas, with the result economists should expect -- massive substitution.

My ideal is neatly captured in a question Frank Hahn posed to an author. As an editor of the Review of Economic Studies, Hahn asked the author to cut down his paper from 40 pages to its essential core of three pages. When the author wrote a long and indignant letter, Hahn responded in two sentences: "Crick and Watson described the structure of DNA in three pages. Kindly explain why your idea deserves more space."
(...)
I have saved for the end the most important lesson I have learned from my experience, and which I believe has very general validity. Maintain a youthful sense of freedom to choose problems and the directions of work on them. Imagine yourself at twenty-three, not yet labeled or confined to a particular "field," and not yet pressured to produce something quickly for the approaching tenure review. Try to preserve this mental frame in your research, even as your body, and the part of your mind dealing with other matters, continue to age and decay. 

Unfortunately, in the US most academics do not regain this freedom until they are thirty-five, by which time it is too late for many of them to be twenty-three. Their research brain is beyond rejuvenation, and it is time for them to leave the research frontier and join the conference circuit or the policy community."

 

Democracy and revolution

A no-nonsense quote of the day from Tyler Cowen in his NYT column:

 

It's an Election, Not a Revolution

This election is certainly important. But based on the historical record, it isn't likely to result in a major swing in economic policy. Fundamentally, democracy is not a finely tuned mechanism that can be used to direct economic policy as a lever might lift a pulley. The connection between what voters want, or think they want, and what ultimately happens in the economy, is far less direct. (...)

Rather than being cynics, we should be realists. Democracy is reasonably good at some things: pushing scoundrels out of office, checking their worst excesses by requiring openness, and simply giving large numbers of people the feeling of having a voice. Democracy is not nearly as good at others: holding politicians accountable for their economic promises or translating the preferences of intellectuals into public policy.

THAT might sound pessimistic, but it's not. Many Americans will be living longer, finding new sources of learning and recreation, creating more rewarding jobs, striking up new loves and friendships, and, yes, earning more money. Just don't expect most of these gains to come out of the voting booth or, for that matter, Washington.

Tracking the 2008 US Presidential election

Aquí están las últimas encuestas de Gallup:
http://www.gallup.com/poll/election2008.aspx

Y las cotizaciones de los betting markets:

Iowa electronic market
2008 U.S. Presidential Vote Share Market
2008 U.S. Presidential Winner Takes All Market
2008 U.S. Democratic Convention Winner Takes All Market
2008 U.S. Republican Convention Winner Takes All Market

Intrade:
Democratic to win Dem convention
Obama to win presidency

Social science and the public

This is Robin Hanson (at Overcoming Bias) on how much social scientists know and how little of it makes it to public or political debates.

Social scientists know lots.
As a physics student and computer science researcher, I assimilated the usual "hard science" perception that "social science" is an oxymoron -- no one knows much about it, so your opinion is as good as anyone's. When I finally decided I needed social science credentials, to turn my institution hobby into a career, I focused on experimental economics, the only sort a hard scientist could trust, and Caltech, with impeccable hard science credentials. But I was soon thoroughly convinced: social scientists know tons.

Why then do so many people think otherwise? Many say it is because social scientists are stupid, or the social world is too complex or uncontrollable. Better answers are that social expertize conflicts with our overconfidence about familiar experience, or with our democratic ideology that everyone's political opinions should get equal weight. But the best answer, I think is that most public talk by social experts reflects little social science. That is, what social experts say in legal or congressional testimony, or in newspapers or magazines, mostly reflects what they and we want and expect to hear, instead of what expert evidence reveals.

(…) social scientists have data and theory giving powerful insight into a great many social issues, at least to those with open minds. Open minded social scientists talking privately can make great intellectual progress. But powerful forces are eager to distort the messages social scientists give the public on important topics. Academics with deserved reputations for careful accurate work on obscure academic topics tend to adopt different standards when writing editorials or advising politicians. Even if most academics would not do this, those selected for such roles usually do.

(…) a mechanism that could cut through this fog and tell the public what honest social scientists really think might have great social value, at least if the public could be shamed into listening to them.

New Hampshire and momentum in presidential primaries

Las elecciones primarias en USA apenas comienzan pero ya arrojan resultados interesantes.   He aquí una especulación sobre las encuestas en New Hampshire y, por otro lado, teoría y evidencia sobre  el "momentum" durante las primarias de 2004.

 

What was going on with the New Hampshire polls?

 

Before Iowa, Hillary was beating Obama in NH by like 20 points, or at least double digits. After Iowa, Obama got this huge surge in the polls. You can see the time series here. It's a mystery why the polls were so wrong. I think it comes down to:

 

First - Erikson, Panagopoulos, and Wlezien wrote a paper showing that the Gallup poll overestimates fluctuation in the electorate when using the likely voter screen early in the election. In a nutshell, what happens is this: because the Gallup poll (and most other polls) are interested in interviewing "likely voters" only, they ask a series of screening questions at the beginning of the poll to gauge the respondents' interest in the election. They then have some formula to determine who is a "likely voter", and they throw out the remainder of the results. This paper examined the results that were thrown out along with the poll and found that, when something is going wrong for a candidate, their supporters are less enthusiastic and therefore less likely to be considered "likely voters" during this screening process. As a result, many of the supporters of the "losing" candidate just aren't counted in the poll, because pollsters think they're not going to vote. This makes fluctuations in polling seem more dramatic than they actually are. (…) This means Obama was never actually leading in NH, and all this talk about "something happened in the last 24 hours" is all a load of BS.

Second - survey weighting. Whenever a pollster does a survey, they need to make the poll representative of the voting electorate. (They) essentially guess what the demographic makeup of the electorate is going to be. Usually this is done on historical data and census data, but it's always really hard in primaries because they're not very consistent.  So the pollster will first try to get this breakdown in who they actually talk to, and if they can't, they'll then "weight" the survey to simulate the expected breakdown. (…)The pollsters probably saw how weird the electorate was in Iowa (i.e. so many people turned out, and so many young people), that they probably tried to compensate by weighting young people a ton in the following polls to NH. Now, we know that young people support Obama disproportionately. If the pollsters overcompensated for young people, then Obama's support was artificially strengthened in the polls.

 

MOMENTUM AND SOCIAL LEARNING IN PRESIDENTIAL PRIMARIES

Brian Knight and Nathan Schiff (NBER Working Paper 13637)

http://www.nber.org/papers/w13637

 

Do outcomes of primaries depend upon the sequencing of states? Do sequential, relative to simultaneous, systems lead to different outcomes in terms of the selection of candidates? In our view, the key distinction is that sequential, relative to simultaneous, elections provide late voters with an opportunity to learn about the desirability of the various candidates from the behavior of early voters. This opportunity for late voters to learn from early voting returns can in turn lead to momentum effects.

We develop and estimate a simple model of voter behavior under sequential elections. In the model, voters are uncertain about candidate quality, and voters in late states attempt to infer private information held by early voters from voting returns in early states.  Candidates experience momentum effects when their performance in early states exceeds voter expectations. The magnitude of momentum effects depends upon prior beliefs about the quality of candidates held by voters, expectations about candidate performance, and the degree of variation in state-level preferences. Our empirical application focuses on the 2004 Democratic primary. We find that Kerry benefited substantially from surprising wins in early states and took votes away from Dean, who stumbled in early states after holding strong leads in polling data prior to the primary season.  

The estimated model demonstrates that social learning is strongest in early states and that, by the end of the campaign, returns in other states are largely ignored by voters in the latest states. The voting weights implied by the estimated model demonstrate that early voters have up to 20 times the influence of late voters in the selection of candidates, demonstrating a significant departure from the ideal of "one person, one vote."

Finally, we simulate the election under a number of counterfactual primary systems and show that the race would have been much tighter under a simultaneous system and that electoral outcomes are sensitive to the order of voting. While these results are specific to the 2004 primary, we feel that they are informative more generally in the debate over the design of electoral systems in the United States and elsewhere.

 

 

 

 

Labor market institutions

Next spring, in my political economy course, I want to cover some major public policy areas: education, health, pensions, poverty-alleviation, taxation, energy, trade and competition policy, and obviously, labor regulation. This would be a nice reading assignment:

 

Labor Market Institutions Around the World
Richard B. Freeman
NBER Working Paper No. 13242, July 2007

The paper documents the large cross-country differences in labor institutions that make them a candidate
explanatory factor for the divergent economic performance of countries and reviews what economists
have learned about the effects of these institutions on economic outcomes. It identifies three ways
in which institutions affect economic performance: by altering incentives, by facilitating efficient bargaining,
and by increasing information, communication, and trust. The evidence shows that labor institutions
reduce the dispersion of earnings and income inequality, which alters incentives, but finds equivocal
effects on other aggregate outcomes, such as employment and unemployment. Given weaknesses
in the cross-country data on which most studies focus, the paper argues for increased use of micro-data,
simulations, and experiments to illuminate how labor institutions operate and affect outcomes.

http://www.nber.org/papers/w13242.pdf