"Mix and Match"

Gene Epstein of Barrons writes, asking:

I wish Brad DeLong would just open my book [Econospinning] "at random" to the 12 pages that make up the second chapter (called "Two Ways to Measure Employment").

The chapter recounts a garden-variety case of econospinning by New York Times columnist Paul Krugman. My version of the story is that Krugman not only confused one set of employment data with another to make a point about the job outlook in a May 2004 column. A year later, when Krugman was given the chance to correct the error by then-Public Editor Daniel Okrent, he denied he had made it. DeLong also weighed in, ostensiby to defend Krugman, but only succeeded in compounding the confusion.

OK.

There is a certain horrifying fascination in watching the right wing's minions and useful idiots in the press attempt to attack Paul Krugman on matters of economic substance. The Mickey Kauses, the Andrew Sullivans, the Donald Luskins, the Danny Okrents--all seem unarmed men in a battle of wits, or perhaps an air assault by a circular firing squad of flying attack monkeys.

Our story so far:

Danny Okrent wrote, conclusively demonstrating to even his closest friends that he was grossly unfit to be New York Times ombudsman:

13 Things I Meant to Write About but Never Did - New York Times: Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults.... [S]ome of Krugman's enemies are every bit as ideological (and consequently unfair) as he is. But that doesn't mean that their boss, publisher Arthur O. Sulzberger Jr., shouldn't hold his columnists to higher standards. I didn't give Krugman... the chance to respond.... I decided to impersonate an opinion columnist...

Paul Krugman responded:

Paul Krugman I: In Daniel Okrent's parting shot as public editor of The New York Times, he levied a harsh charge against me: he said that I have "a disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults." He offered no examples...

And in reply Danny Okrent did come up with an example--but his example was wrong:

Paul Krugman II: When I asked Daniel Okrent for the specifics behind his final attack, he offered two examples of what he claimed was improper use of numbers. This was the first time I heard from him, or anyone else, about either alleged problem. Let me start with the example that, I think, sheds most light on what is going on: Mr. Okrent's claim that I engaged in "blending, without explanation, numbers from the household survey and the establishment survey -- apples and oranges -- apparently in order to make a more vivid political point about Bush (5/25/04)."

He's referring to two different surveys conducted by the Bureau of Labor Statistics, which provide alternative estimates of employment. Some people play games by mixing and matching numbers from the two surveys, and Mr. Okrent has apparently spent the past year firmly believing (without having checked with me) that I did the same thing, to score political points. But I didn't. All the numbers in my 5/25/04 column came from the establishment survey....

In correspondence with Mr. Okrent, I pointed out that his specific attacks -- especially the blatantly wrong characterization of my 5/25/04 column -- were unfair. I asked him to do what he would have expected me to do, and admit that he had been in error. He refused. Let me repeat that Mr. Okrent never raised these issues as public editor. He now says that he didn't because he "experienced your best-defense-is-a-good-offense approach, and found it futile to deal with it"...

Then Danny Okrent committed virtual self-immolation:

For a man who makes his living offering strong opinions, Paul Krugman seems peculiarly reluctant to grant the same privilege to others.... Because only a fool or a supply-sider would eagerly engage in a debate on economics with Prof. Krugman, I'll try to eschew argument and stick to facts.... The mixing of household and establishment numbers in his 5/25/04 column: Missing from the BLS chart he cites is any number that even resembles the 140,000 new jobs each month needed to keep up with the growing population a statistic he cites in the column, and upon which he seems to have based some of his computations. To my knowledge, that number only appeared in the household survey.

None of Okren't sources--whoever they were--egging him on and telling him that Krugman "mixed-and-matched" numbers had, you see, told Okrent that the 140,000-a-month number came neither from the household survey nor from the establishment survey, but was the result of multiplying current payroll employment by a projected non-elderly adult population growth rate from yet a third source--the census.

This made Paul Krugman just the weeniest, teeniest bit irritated:

[3] Paul Krugman III: Okrent is lying to cover his mistake when he accused me of blending data from the household and establishment surveys. He now claims that he was only referring to my estimate of how many payroll jobs the economy needs to add per month [to keep labor market conditions from deteriorating], which for some reason he thinks is based on the household survey. But that's not what he said to me: he claimed that the basic numbers I gave on job growth were mix-and-match. In fact, in our correspondence, when I said that it was all payroll data, he declared that "your insistence that you relied only on one set of numbers is very puzzling. I don't see how the math works any other way; maybe you could further enlighten me." In other words, [Okrent] screwed up completely...

That's the back story. Now for the new episode, in which Gene Epstein of Barrons arrives at the scene to do what Danny Okrent won't--to defend Okrent's claim of Krugman's "mixing and matching"--and thus to join Okrent in virtual self-immolation:

Epstein: Just re-read the second-to-last paragraph in [Krugman's May 25, 2004] column.

And employment is chasing a moving target: it must rise by about 140,000 a month just to keep up with a growing population. In April, the economy added 288,000 jobs. If you do the math, you discover that President Bush needs about four years of job growth at last month's rate to reach what his own economists consider full employment."

Isn't "140,000" a number? It comes from the Household Survey--more formally known, as I needn't tell you, as the Current Population Survey--which ties in with the reference to the "growing population." As I explain in my book, that 140,000 is clearly based on the plausible, ball-park expectation that the Civilian ( i.e., employment-eligible) Population will be increasing at an average of about 210,000 a month, and that the labor force participation rate will run about two-thirds. Since two-thirds of 210,000 is 140,000, the plausible assumption is that the labor force will grow by 140,000 a month. And what the first sentence of that paragraph is saying is that "employment... must rise by about 140,000 a month to keep up with a growing population" because if it doesn't, there will be unemployment....

The only way to get Krugman's "four years" is to mix the data together--"apples and oranges"--exactly as Daniel Okrent had originally said. As I point out in the book, that does not even make "good nonsense," but you do get Krugman's result!

Is Epstein correct?

No.

As I emailed Epstein:

No [the 140,000 a month number] doesn't [come from the Household Survey]:

The CPS is a survey. Each month, it surveys 18,000 clusters of about four housing units each in 754 sample areas. The CPS produces estimates of things like employment-to-population ratios, unemployment rates, unemployment durations, labor status transition properties. It doesn't produce any information about trend labor force growth. It doesn't produce any information about how fast payroll employment has to expand to keep the labor market at about the same level of tightness. It can't--it is a survey of households, not a count of how fast the number of households and thus the number of potential workers is growing.

IIRC, Paul calculated the 140,000 number by taking Census--not CPS--estimates of the rate of adult population growth and multiplying that growth rate by the current level of payroll employment.

I don't see how the CPS could have entered into it.

You see, the "plausible, ball park expection that... [adult, non-elderly, civilian] population will be increasing at an average of about 210,000 a month comes from census projections, not from the household survey.

And it gets worse.

You see, the Bush Administration in its 2004 Economic Report of the President did the same calculation as Krugman, using the same census and establishment survey sources. You can see it on p. 94:

The Labor Market: Nonfarm payroll employment fell an average of 50,000 workers per month in the first seven months of 2003, before increasing 35,000 in August, 99,000 in September, and an average of 48,000 per month in the fourth quarter.... In the fourth quarter, the unemployment rate averaged 5.9 percent.... Because the labor force is constantly expanding, employment must be growing moderately just to keep the unemployment rate steady. For example, if the labor force is growing at the same rate as the population (about 1 percent per year), employment would have to rise 110,000 a month just to keep the unemployment rate stable, and larger job gains would be necessary (and are expected) to induce a downward trend in the unemployment rate...

The only difference between the Bush Administration and Krugman is that the Bush Administration assumed 1% per year as the rate of adult non-elderly population growth, and hence concluded that nonfarm payroll employment had to grow at 1/12 of a percent per month--110,000, that is--in order to keep labor market conditions stable. But growth is more like 1.25% per year. With payroll employment of 130 million, that's Krugman's number of about 140K per month.

Sigh.

As I said, a certain horrifying fascination.

Why oh why can't we have a better press corps?

Comments

[Robert Waldmann]

Now Brad, you know perfectly well that Danny Okrent threatened to post the videos of goats and [name deleted] on youtube to force [name deleted] to claim to be convinced by his totally idiotic argument about how the current population survey measures population. Otherwise people would think that no body but Danny Okrent (and Donald Luskin of course) are ignorant and stupid enough to be so confused.

The absolutely amazingly wonderful thing is that [name deleted] seems to have chosen that sorry episode, which by itself demonstrates his [or her] idiocy, as the ground on which to challenge you.

Now why am I deleting that name ? Got nothing against goats, but I fear if I typed it, my computer would become stupid.

So do you still think Donald Luskin is the stupidest man alive ?

[Movie Guy]

One. Excellent. Post.

[Movie Guy]

The Phlogiston Theory of Fire...

For those who don't recall, Gene Epstein has been battling with Paul Krugman for many years.

Note this Epstein interview on March 25, 2000 with Austrian Economics Newsletter (AEN) via the Ludwig von Mises Institute.
http://www.mises.org/journals/aen/aen20_2_1.asp

Epstein attack on Krugman at the end of the interview.

And, yeah. Epstein used to be the chief economist for the NYSE. Imagine that...

[Jon Fernquest]

An ultra-precise and concise idiot proof citation system for econ stats that holds the hands of people like Okrent who are having a little trouble, gently calming them down, leading them to the truth!

Alternatively, a web mashup, pulling the stats out of their web crannnies/sources, amplifying them visually 10X, and explaining their significance in simple English underneath.

Then Okrent could have a "strong opinion"

[Piaw Na]

The problem is that while most of the intelligensia is capable of understanding the issues, that's not most of the public, and the public's eyes just glaze over when it comes to the hard numbers, having ultimately been trained by the media that it's coming down to a "he said", "she said" battle.

That says to me that the right-wing's minions are succeeding in sowing confusion where there shouldn't be any, which is one of the many ways the right wing has managed to stay in power over the last several years.

[SZ]

Is it really this bad? I hadn't realized what a weird person Daniel Okrent is.

This makes me wonder - are we seeing a bumper crop of incompetent readers' ombuds at newspapers, or are we now more easily able to fact-check them?

SZ, who recommends a new performance requirement for newspaper ombuds and columnists; they must be fired if they don't at least match the truth-telling ability of a broken clock. This may seem like a low bar, but SZ's betting that the Washington Post ombuds couldn't hurdle it.

[Ginger Yellow]

Thanks for reminding me of this incident, which confirmed beyond any doubt Okrent's unbelievable hackery. It still stuns me that someone like that was ombudsman of possibly the most influential newspaper in the world.

[malcolm]

Another question:
The first time I heard the number of job creation required to keep U steady it was at 150,000 jobs per month. The most recent
version of this number I've heard is 130,000
jobs per month. What assumption has changed to get to that number

[Female labor force participation has stopped increasing. I would say that looking forward 120,000 is probably a better number...]

or should I stick with the 140,000 job per month yard stick for my teaching of intro macro? Does
a declining labor force participation rate
come into play? What does the decline in the steady state requirement say about the US economy?

[CapitalistImperialistPig]

I reserve my horrified fascination for those who find the Epstein - Okrent - Luskin type of reasoning credible.

[pgl]

Okrent's reasoning goes like this. He sees rightwingers like Luskin, Kudlow, and (dare I say) Treas. Sec. Jack Snow mix and matches the two employment surveys in order to distort the true picture. He then "reasons" that Krugman is a leftie so he must be doing the same thing. Thank goodness he is no longer in his old position at the NYTimes. This way - he can start writing for the National Review!

[Cranky Observer]

> This makes me wonder - are we seeing a
> bumper crop of incompetent readers' ombuds
> at newspapers, or are we now more easily
> able to fact-check them?

I remember as a young, fresh-faced undergraduate working as a TA how proud I was that the professor I was working for designated me as the lead TA to handle the entire cycle for the midterm exam. Including doing the test review the next class period. What tremendous responsibility at such a young age.

It was only after staggering out of the classroom that morning following a serious drubbing from the students (who were no dummies) that I realized there might just have been another motive to putting a disposable undergradute TA upfront for the testing process. Serving as a disposible lightning rod, perhaps?

Same thing with these "ombudsmen" at the NYT and WaPo. Owners and senior management of those organizations are quite satisfied with the direction of their propaganda outlets. But in order to keep up illusions they need some sort of safety valve/lightning rod. They pick various chumps for the job, put them out there, and are then quite content to deflect any criticism of their actions: "we HAVE an ombudsman".

I mean, come on guys. The simplest explanation that fits the facts is that the NYT and the WaPo are doing exactly what their owners want them to do.

Cranky

[kharris]

Now hold on. Gene Epstein is not a right-winger. He has no desire to serve the interests of either side of a partisan debate. Wanna know how I know that? I heard him say it on NPR. I believe it was their afternoon PRI (?) business show.

The guy has a book that accuses well regarded economists of making stupid mistakes. He gets air time on the same radio show that routinely lets the WSJ OpEd page's new tax liar, whatsisname Moore?, have air time. Odd thing is, the same show does some of the least business-friendly business reporting in the mainstream press. I can't figure out what their editorial policy is, but it is mighty clear they have decided not to bother with high-quality views from the right.

[Jim Dandy]

"None of Okrent's sources--whoever they were--egging him on and telling him that ..."

How cute! We certainly know who "they" were, but that flying attack monkey shall remain unnamed, having already been confined to "stupidest man" territory.

[anne]

http://www.calvorn.com/gallery/photo.php?photo=6835&u=96|1|...

Wilson's Phalarope
Jamaica Bay NWR East Pond, Queens, New York.

Imagine being a phalarope, Robert.

[RT]

Brad - I'm gratified to see that someone actually reads the literature describing the CPS sample design! However, I should let you know that the figure of 754 sample areas was for the CPS sample design based on the 1990 Census; the Census 2000-based design which was phased in during 2004-05 has 824 'primary sampling units,' as they're called. Other than that, your CPS facts are correct.

If I could address Epstein, I'd tell him that if he's gonna talk about the "Civilian (i.e. employment-eligible) Population," then he needs to at least say "Civilian *Noninstitutional* Population," since the roughly 4 million persons who are part of the institutional group quarters population - residing in prisons and jails, nursing homes, hospitals and other medical facilities - are also ineligible for employment. The CNIP, as it's known for short, is the universe that the CPS draws its monthly samples from. See the second paragraph at the link:
http://www.census.gov/hhes/www/income/p60_231sa.pdf

wid123 - it does take persons entering and leaving the workforce into account, by the simple means of assuming that the rates of persons entering and leaving the workforce don't change very rapidly, so roughly the same proportion of Americans are going to want to participate in the workforce from one year to the next.

[mickslam]

2x4, meet face.

Thats the only way of dealing with these people, no compassion.

thanks Brad

[Auros]

I've provided an Amazon review documenting how Epstein will mislead lay readers. Should anyone wish to stop by and up-rate the review, it would be much appreciated; I'm sure the right-wing drones -- the kind who write reviews saying that Keynes is "almost as bad as Marx", his theories discredited, and all that sort of drivel -- will be down-rating it. :-P

[save the rustbelt]

Economics is tough to communicate to a mass audience under any circumstances, by economists, politicians and/or or journalists.

None of the three do a particularly good job, although in Krugman-v-Luskin cage match the clear winner is Krugman.

But then I was trained as an accountant, and we can write annual reports so no one understands much of anything.

[JRossi]

Couldn't this particular type of teapot tempest be avoided by Krugman posting his sources and calculations at the same time the editorials appear?

[No. It couldn't. Remember: there were no "complaints" for *an entire year*.]

[howard]

JRossi, what you are really pointing to is the future of op-ed punditry, and so just to take a stroll away from the particulars, let me say that in the confines of the print NY Times (or any paper), what you ask for isn't possible.

in a blog, it is.

and that's why even though i'm not a blogging triumphalist, i sincerely believe that the era of the overpaid op-ed pundit is going to end sooner and not later: the costs are too high, the output too little, for any rational publisher to continue the practice.

and sooner or later, there will be a rational publisher succeeding pinch sulzberger and/or donald graham....

[Auros]

As a a matter of fact, these days, behind the subscription wall (and running beyond the few hundred words Krugman is confined to in print), Krugman often DOES post his sources. Often with links.

[anne]

Yes; Paul Krugman has been posting sources first on his website, second on the PKarchive, http://www.pkarchive.org/ and third on the NYTimes blog, http://krugman.page.nytimes.com/.

[anne]

Paul Krugman's older websites:

http://www.wws.princeton.edu/pkrugman/
http://web.mit.edu/krugman/www/

[Uncle Jeffy]

Daniel Okrent and Gene Epstein - putting the "con" in conservative for God only knows how long now...

[howard]

Auros, fascinating (if i could exclusively buy krugman i would, but i'm not paying a penny for the privilege of reading, for example, david brooks) and unsurprising, and exactly to my point.

[SZ]

You all bring up excellent points regarding the low marginal utility of conservative op-ed writers and pundits. However, I wouldn't predict their demise. Since the 70s, conservative commentary had not been able to justify itself in the marketplace. The only reason they exist is because they're well funded by weathy ideologues like Rupert Murdoch. The Weekly Standard, for instance, loses millions of dollars each year.

SZ, who thinks that Stephen Cobert could have made himself much more wealthy by being slightly, only slightly, more disguised in his satire. But how do you satirize a movement whose leading "thinkers" contributions include "the War on Christmas"? More importantly, should we open up a second front against Kwanza? What would Patton do?

[Maestro]

Okrent: You made a mistake here
Krugman: No I didn't!
Okrent: Can you explain it to me?
Krugman: Why can't you admit you're wrong!?

Up until this post by Brad, no one (that I had seen) had offered any explanation as to why Krugman was right. I'm not saying that Okrent went about things the right way, but I am saying Krugman could have nipped this in the bud a long time ago.

[James Wimberley]

PK's posting of sources on the paper website hasn't saved him from fools, but can nevertheless be hailed as an excellent innovation. It should become standard journalistic practice: cite a document in print, source it in the web version.

[Robert Waldmann]

IIRC the original op-ed which Okrent claimed mixed and matched data sets came with links to the data source. Didn't help.

Maestro, you haven't been following the debate. Brad explained the point in real time (as noted by Epstein). Krugman also explained Okrent's error with great clarity. Journalists who write about journalism discussed the issue in a way which made it clear that they understood what a fool Okrent had made of himself. This all took place back in the week or so after Okrent's column.

[Ginger Yellow]

"It should become standard journalistic practice: cite a document in print, source it in the web version."

As I've said before, when old media journalists bang on about how superior print journalism is to blogging, and how much more authoritative it is, they should take a long hard look at practices like this. There's more than one route to authority. Incidentally, the Guardian often provides URLs of sources at the bottom of stories in the print version. For all its flaws, it does understand what the internet means for journalism.

[PJ]

I agree with Brad that Krugman is pretty much unbeatble on his economics. His opinions on politics and diplomacy are just that (his opinions), and are often wrong or only partially right, but whose aren't? And on economics he leaves just about every other econo-journalist standing.

[Nicholas Gruen]

Thanks for taking the time to do the post Brad, but these guys can keep spinning. You must have wondered as you did it, whether it was all part of their plan - to keep you guys going in circles trying to defend sanity while other people can get on with wrecking the place.

[mickslam]

wjd123,

I know a few recruiters who are already telling me there is a huge, huge demand for qualified people, and because of 2 demographic trends, the next 20 years are going to be great for high end jobs.

These trends are:

1. Huge numbers of baby boomers retiring
2. Baby boomers had kids at such a young age that they don't retire when the next generation is really ready to move up.

When they all start to move out, its going to be a golden age for people in Generation X. Which is about right, because we didn't get one before.

[Auros]

wjd123,

I-am-not-an-economist, just an enthusiastic amateur, but...

It's my understanding that at least a small part of the reason the Economic Report of the President used the 110k figure, rather than 140k, is that the administration refuses to officially recognize the actual amount of immigration, legal or not, and thus they underestimate the rate of population growth. Note that even if illegal immigration contributes to economic growth -- creates as many jobs as the immigrants take -- the presence of more people clearly implies a need for more jobs.

This is tied in with the gloomy projections for Social Security used to justify privatization. Illegal immigrants, in particular, often pay in, without gaining the ability to ever draw back out. And pretty much _any_ kind of immigration helps SS, by improving the retiree:worker ratio (both now, and in the future, since immigrants tend to have more kids than native-born citizens) and expanding the pool of taxed labor without requiring us to have paid for the person's youth (schooling, healthcare, etc).

Bruce Webb might know a bit more, since he pores obsessively over each year's report from the SS Trustees. :-)

And your theorizing that as the boomers retire, the required-job-creation number will fall, certainly makes sense to me...