J. Bradford DeLong is Professor of Economics at U.C. Berkeley, and was Deputy Assistant Secretary for Economic Policy of the U.S. Treasury during the Clinton Administration. He is completing “Slouching Towards Utopia?”, an overly-long economic history of the world in the twentieth century.
He is best known for “Noise Trader Risk in Financial Markets” (JPE, 1989), “Fiscal Policy in a Depressed Economy” (BPEA, 2012), “Did JP Morgan’s Men Add Value?” (book chapter, 1991), “The Survival of Noise Traders in Financial Markets” (JF, 1991), “America’s Peacetime Inflation: the 1970s” (book chapter, 1997), “Is Increased Price Flexibility Stabilizing?” (AER, 1986), “Speculative Microeconomics for Tomorrow’s Economy” (First Monday, 2000), “Meltdown to Moral Hazard: the International Monetary and Financial Policies of the Clinton Administration” (book chapter, 2001), “Have Productivity Levels Converged? Productivity Growth, Convergence, and Welfare in the Very Long Run” (AER, 1989), and “Should We Fear Deflation?” (BPEA, 1989).
Lunchtime Must-Read: Ah. But, Mark, what real-world questions were DSGE models built to answer? I cannot think of any...
...IS-LM models were built to answer exactly the kinds of questions we encountered during the Great Recession and... provided good answers.... DSGE models were built to address other issues, and it's not surprising they didn't do very well when they were pushed to address questions they weren't designed to answer...
Live from La Farine: Mother Nature Is Scaring Me:
I must say: Mother Nature giving Berkeley the climate of Malibu this winter has made it extremely pleasant to be here--especially when one thinks that one might be in Boston.
But it does make me raise my estimate of the disruptions to be caused even during my lifetime by global warming.
I am not really scared yet: but give me another two drought years in a row, and I will be...
To Be Kept Updated:
Rescued from Linkrot:
Someday I will remember that walking from the BART to the Fairmont/Ritz-Carlton/University Club will not repeat NOT make me happy...
So how cheap does this make all of the hardware and software needed for all the econometrics and dynamic modeling I might ever ask an undergraduate to do in a class?
Ken Kleiman: RStudio in the Cloud, for Dummies:
You can have your own cloud computing version of R, complete with RStudio. Why should you? It's cool! Plus, there's a lot more power out there than you can easily get on your own hardware. And, it's R in a web page. Run it from your tablet. Run it from work, even if you're not supposed to install software. Run it from your boyfriend's laptop while he's on a beer run.... Louis Alsett... doctoral work at Trinity College, University of Dublin. We had thought that running a cloud compute application was beyond our current technical abilities, but Louis' work makes it pretty easy to do....
Mireille Miller-Young... angered by the [anti-abortion] sign... snatched the sign, took it back to her office to destroy it, and shoved one of the Short sisters...
The next Clinton presidential campaign... [Hillary Rodham] Clinton enters... in a much stronger position... her supporters may find it irresistible to amplify p.c. culture’s habit of interrogating the hidden gender biases in every word and gesture against their side...
When Jonathan Chait says "The P.C. Movement", both of these are in what he fears and opposes--everyone from vandals and bullies to the "supporters" of our likely next president, and everyone in between. In Chait's envisioning, they are all, along with everyone in between them part of a single Monstrous Regiment of Women (and others) that needs to be opposed in the interest of something equally if not more amorphous called "liberalism"...
It is a true fact that Jon Chait's extremely ill-advised New York Magazine article crossed my desk at the same moment that I was watching this equally ill-advised piece by Meg Perrett and Rodrigo Kazuo go by. They try to condemn an eight-person classical moral-philosopher reading list for various sins against leftism1. The interesting thing is that they get no traction whatsoever, even though they are here at the University of California Berkeley at what Jonathan Chait imagines to be the hotbed of American crazy leftism.
Belle Waring administers the smackdown:
As someone who thinks that the "great books" approach to classical social theory is past its sell-by date, I am now distressed. I confess that I believe that, over in sunny California, the Daily Cal is trolling us all when it decides to print this:
...in the social sciences and humanities. This call to action was instigated by our experience last semester... [with] a standardized canon of theory that began with Plato and Aristotle, then jumped to... Hobbes, Locke, Hegel, Marx, Weber and Foucault, all of whom are white men... pretend[ing] that... economically-privileged white males from five imperial countries (England, France, Germany, Italy and the United States)... are the only people to produce valid knowledge.... We must demand the inclusion of women, people of color and LGBTQ* authors on our curricula...
Can someone please tell me why my computer keeps trying to join ATTWiFi rather than AirBears?
65F, bright and sunny, 11:00 AM as of a Sunday morning...
During our 2.7 miles around the Lafayette Reservoir we met :
525 people is a very substantial proportion of the 25,000 population of Lafayette, CA.
But where were the missing men?
138 of them.
They were not at work. They were not preparing brunch. They were not even watching tv sports. So what were they doing?
and that the building of new housing in downtown Berkeley will continue. Let’s build on this momentum, and get serious about addressing the massive housing shortage in our community that is hitting working families hard. Downtown is great, but we have to do an order of magnitude more to bring supply and demand into balance.
Only 18% of Alameda County families can afford to buy the average home. In San Francisco the average rent is a staggering 46% of the average household income. According to the National Low Income Housing Coalition, a family must earn $37.62/hour to afford the average 2 bedroom in San Francisco, and $30.35 to rent a 2 bedroom in the “affordable” East Bay. And the trend line is pointing way up.
For folks who want an overview of how we got in this situation, I highly recommend this article from back in April. It’s a long read and has a SF/tech industry perspective, but the dynamics discussed here apply to the whole Bay Area.
A few of the takeaways that I think are particularly pertinent to Berkeley:
J. Bradford DeLong is on sabbatical leave this 2014-2015 academic year, but is eager to talk. He can be reached via email firstname.lastname@example.org, phone 925-708-0467, FaceTime, or Skype
He has taught at MIT, Boston University, and Harvard University as well as Berkeley, and has guest-lectured elsewhere. He is Professor of Economics here at Berkeley, an affiliate of the Institute for New Economic Thinking-funded Berkeley Economic History Laboratory a Research Associate at the National Bureau of Economic Research, a Weblogger at the Washington Center for Equitable Growth, and was Deputy Assistant Secretary of the U.S. Treasury from 1993-1995 and Chair of the Political Economy major here at U.C. Berkeley from 2002-2012.
His home intellectual base is Economic History, with excursions into Macroeconomics, Finance, and both Historical and Contemporary Political Economy.
Alan Moore: Watchmen
Walter Kovacs/Rorschach: I heard joke once:
Man goes to doctor. Says he's depressed, life is harsh and cruel. Says he feels all alone in threatening world.
Doctor says, "Treatment is simple. The great clown Pagliacci is in town. Go see him. That should pick you up."
Man bursts into tears. "But doctor," he says, "I am Pagliacci."
Roll on snare drum.
Rick Perlstein: 40 Years Ago: How Nixon's Resignation Paved The Way For Ronald Reagan: "It seemed that by April 30 Richard Nixon had no choice...
...but to say something about Watergate: six Republican senators said they would not run for reelection unless he did. Young men who last month bestrode Washington like colossi were hiring lawyers under threat of indictment, leaking accusations against colleagues, writing messages on legal pads rather than speaking them aloud—who knew whether their offices, too, were bugged?
(Roughly) the way Cosma Shalizi puts it:
Because "integrating over the posterior distribution is the whole point of Bayesian decision theory", a Bayesian cannot be uncertain about the probability of an observable. Bayesians are uncertain about the values of parameters. Bayesians are uncertain about the truth of hypotheses. But they cannot be uncertain about the probabilities of observables--and thus they cannot be uncertain about whether to take bets or not.
Can a Bayesian come close to being uncertain about the probability of an observable?
NIMBYism taken to extremes with astroturf "neighborhood associations":
April Gilbert: Berkeley restaurant has been approved: Let’s let it open: "I am a homeowner on Russell Street just below College...
and thus an Elmwood resident. A year ago, I heard that the owners of Comal on Shattuck Avenue were proposing a restaurant for the old Wright’s Garage space on Ashby and I was thrilled. It sounded like just the ticket to round out the dining options in our little neighborhood. Finally, we would have an upscale spot with a nice atmosphere and a small bar space--just what I felt had been missing. Then, I heard there was opposition from a group called the “Elmwood Neighborhood Association”(ENA)--strange given that I’d never heard of this organization despite living smack in the middle of Elmwood for eight years.... In all my years in Berkeley, I have never encountered this group. I have not gotten an email, a phone call, or a flyer in my mailbox. ENA is positioning itself as the voice of our neighborhood, which it is not. In contrast, I am quite familiar with CENA, the Claremont-Elmwood Neighborhood Association. CENA has not taken a stand on the proposed new restaurant on Ashby, but when it polled its members, the majority of its Elmwood resident members was enthusiastic about having a good restaurant open and supported the Comal owners’ efforts.
The percentage of uninsured Californians has been cut in half since the federal health law began expanding coverage nine months ago, according to a new national survey. In September of 2013, 22 percent of California adults were uninsured. By last month, that number had fallen to just 11 percent, the biggest drop among the nation’s six largest states. The survey of more than 4,400 people by the Commonwealth Fund, a national healthcare foundation, also found that nationwide, the uninsured rate fell from 20 percent to 15 percent during the same period.... The Commonwealth Fund survey found that 61 percent of those who were newly insured said they felt better off thanks to their new coverage. And nearly four out of five said they were somewhat or very satisfied with their new coverage.
The survey also found that since last year, awareness of the Affordable Care Act has increased significantly, although that awareness still lags among poorer Americans. For example, more than half of the poorest people surveyed still did not know that the federal health law makes subsidies available to help pay for health insurance.
I must say that where the rubber meets the road this thing is doing somewhat better than I expected back at the end of 2009. But the big question will be: what will be the deltas for health and economic security?
Ann Marie Marciarille: Berkeley's Medical Marijuana Dispensaries Required to Engage in Charity Care: "Berkeley California has been agonizing for years...
...about whether to authorize a fourth medical marijuana dispensary within city limits. The City Council's deliberations on this are always interesting, particularly involving the distinction between "coops" and "dispensaries" and the grandfathering in of "certain entities". So, whatever the number and configuration of Berkeley's medical marijuana facilities, more do appear to be in the offing.
Writers with Drinks: An Evening of Oversharing About Money: 7:30 p.m. July 12 :: Make-Out Room :: 3225 22nd St. San Francisco, CA :: Price: $5-$20 http://writerswithdrinks.com: "If time is money, then consider this evening with Charlie Jane Anders, J. Bradford DeLong, Frances Lefkowitz, Farhad Manjoo, and Carol Queen to be a good investment..."
J. Bradford DeLong
A few short years ago we lived, for the school district, in Lafayette. Lafayette is close to here in space and time, but distant in attitude. Lafayette is a place an unkind observer based in and comfortable in San Francisco might describe as an unholy mix of the worst parts of northern and southern California. There we had a neighbor, Bie Bostrom. She had been the oldest Peace Corps volunteer in East Africa. She kept in touch with what had been her town: Ahero, population 10K, in Nyando District, Nyanza Province, Kenya. And there she funds and runs a one-elderly-woman one-town NGO with zero administrative overhead: Grandmothers Raising Grandchildren. That's http://grgahero.org: godzilla-rath of Khan (with an r)-godzilla-alien-hitchhiker-empire strikes back-rath of Khan-omen-dot-omen-rath of Khan-godzilla. No, I'm not going to hit you up--you've been hit up already coming here, at the door.
No sooner do I manage to get my act together to deal with the shortage of high-quality DeLong Smackdowns by starting a close reading of David Graeber's Debt but Cosma Shalizi manages to show up with a high-quality DeLong smackdown. So the reading of the first text page of Graeber's chapter 11--which is, I think, thorough in chapter 11, if not chapter 7--and the first five historical errors he commits must wait until next week.
The eminent Cosma Shalizi writes:
Charlie Jane Anders: Brad DeLong, Carol Queen and Farhad Manjoo at Writers With Drinks!:
We bring you "An Evening of Oversharing About Money"!
When: Saturday, July 12, from 7:30 PM to 9:30 PM, doors open 6:30 PM
Who: J. Bradford DeLong, Carol Queen, Farhad Manjoo, Frances Lefkowitz and Charlie Jane Anders
How much: $5 to $20, all proceeds benefit the Center for Sex and Culture.
Where: The Make Out Room, 3225 22nd. St., San Francisco
Cardiff Garcia: The growth of US student loan debt: causes and consequences: "Both rising tuition and a higher share of students borrowing...
...have contributed just as much as higher student enrollment.... A recent New York Fed report:
Between 2004 and 2012, the number of borrowers increased by 70% from 23 million borrowers to 39 million. In the same period, average debt per borrower also increased by 70%, from about $15,000 to $25,000.
From 2002 to 2012, inflation-adjusted (2012 dollars) college costs—defined as the sum of room, board and “net tuition” (tuition costs after subtracting federal, state, and private [non-loan] aid, as well as any discounts offered by the institution)—rose by 41 percent within public four-year institutions, by 9 percent for private four-year institutions, and actually fell 7 percent for two-year public institutions... average college costs rose by about 16 percent....
Furthermore, there is evidence that many students and households don’t understand what they’re getting themselves into.... That’s the background against which Obama is now proposing a plan to expand the number of borrowers who can cap their loan repayments at 10 per cent of their income, along with endorsing a bill that would allow more students to refinance at lower rates. (The latter is unlikely to get through Congress, as the proposed budgetary offset is the proposed closing of loopholes for the wealthy. Republicans are already pushing back.)
From $350 billion to $1 trillion in student debt in the eight years from 2004-2012 is an extraordinary increase--so large that even though I have checked and re-checked I cannot help but fear that somewhere an apples-and-oranges comparison has crept into the mix.
It also very strongly suggests that the marginal borrowers do not have a handle on what they are doing. If it made no sense for borrowers to take out more than $350 billion in debt in 2004--if the marginal material and psychological benefit of college then was no greater than the marginal burden of debt repayment--then it really makes no sense for borrowers to take out $1 trillion in debt in 2012. Either of them are little borrowers in 2004 we're irrationally scared of taking on student debt loads, or them are total borrowers today are much too blasé about the burdens--and by "marginal", we mean all those holding all the tranches between $350 billion and $1 trillion.
As I have said before, the key questions are: how likely are those taking on the extra debt to actually finish their B.A. degrees in a reasonable amount of time? How quickly can we move from a regime of fixed repayments to one of income-contingent loans (or, as Aaron Edlin points out, a more attractive system of income-contingent grants)? And how then do we manage the borrowing-attending decision when potential students no longer fear landing in permanent debt peonage?
My instinct is that Clark Kerr had it right: that the best compromise is to make education free for those willing to devote the time, but to make students borrow to cover their living expenses. That treats getting educated as having positive externalities broadly understood equal to the cost of education, and my guess is that is the right order of magnitude. But that is only an instinct.
These are not questions that I can answer with clarity and confidence, or even on which I can guess in a relatively informed manner. So: a question for the internet: who should I take as my guides, and whose analyses should I trust on these questions?
Over at Equitable Growth: The extremely wise Robert Skidelsky has an excellent rant against Anglo-Saxon economics departments:
Robert Skidesky: Knocking the scientific halo off mainstream economists' teaching and research: "The growing discontent of economics students...
...with the university curriculum.... Students at the University of Manchester advocated an approach 'that begins with economic phenomena and then gives students a toolkit to evaluate how well different perspectives can explain it'.... Andrew Haldane, Executive Director for Financial Stability at the Bank of England, wrote the introduction.... Students have little awareness of neoclassical theory’s limits, much less alternatives to it.... The deeper message is that mainstream economics is in fact an ideology--the ideology of the free market.... READ MOAR
Ben Handel, Jonathan Kolstad, and Michael Whinston: Compensation or Information?: Understanding the Role of Information Technology in Physician Response to Financial Incentives https://ashecon.confex.com/ashecon/2014/webprogram/Paper1164.html: "Preventive health care services are often under-provided...
...due both to physician incentives and patient behavior regarding such services. We study the impact of physician financial incentives and physician use of information technology on preventive service take up using a unique proprietary data set from a large insurer that covers most of the population for the state of Hawaii. The data contain micro-level information on patient claims, physician financial incentives / payments, and physician logins to an IT platform designed to help them improve their use of preventive services. We leverage these data, together with exogenous variation in the financial incentives and adoption of IT to quantify the impact of these factors on physician preventive care utilization. We study how IT and financial incentives complement each other for this purpose, and use the micro-data to study physician heterogeneity in use of preventive care as a function of these factors. Finally, we study the relationship between patient cost-sharing incentives, physician use of IT, and physician financial incentives.
Final Exam is Tomorrow, Friday at 8 am - 11 am
234 Hearst Gym
Open Book - paper only
Bring: Blue Books, Calculator, writing pen/pencil. If you don't bring a calculator, you'll have to do the calculations without one. There will be a double-sided answer page to hold the "problem" answers, but you must do the work to arrive at the answers in your blue books.
Final Exam is Tomorrow, Friday at 8 am - 11 am
234 Hearst Gym
Open Book--paper only
Bring: Blue Books, Calculator, writing pen/pencil. If you don't bring a calculator, you'll have to do the calculations without one. There will be an "Answer Paper" to fill out your answers at the end of the exam, but you must turn in your Blue Books.
Last minute administrivia:
Please check your bCourse HW set grades to make sure you have the right scores, etc. Everyone should have all grades for all HW sets. We will add your paper grades this weekend. After tomorrow, all grades will stay as they are.
Please pick up your HW sets from both Connie B and M at the end of the exam.
Lastly, it was a pleasure working with all of you. We hope you stay in touch.
We wish you a lot of luck on the exam and hope you have an amazing summer.
Connie B and M
Contact me via: * Skype:braddelong * email:email@example.com
Hearst Mining 390
Final Exam: Friday May 16, 8-11 AM, Hearst Gymnasium
Open book. Open notes. But no outside-the-room connectivity.