Tyler Cowen's Blog, page 397

Krugman on the minimum wage

I am always happy to link to interesting new arguments which have not been considered on this blog before:

…the usual notion that minimum wages and the Earned Income Tax Credit are competing ways to help low-wage workers is wrong. On the contrary, raising the minimum wage is a way to make the EITC work better, ensuring that its benefits go to workers rather than getting shared with employers. This actually is Econ 101, but done right: given a second-best world in which you use imperfect tools to help deserving workers, two tools together can produce a better outcome than either one on its own.

He is drawing from this Rortybomb post.  For other, different arguments, here is Angus and here is David Henderson.

Assorted links

1. Reddit thread on queuing.

2. Addition by subtraction?, or more on the Patrick Ewing theory.

3. How Australia handles youth, disabilities, and minimum wages.  (Their “assessed capacity” metric seems screwy to me; who gets to decide and on what basis?)

4. Robert Cottrell on how to read the internet.

5. How are the details on the preschool plan developing?

6. The culture that is North Korea (music video, not Gangnam style, recommended nonetheless).

Are Government Spending Multipliers Greater During Periods of Slack?

The embarrassing result here is that no, it seems they are not:

A key question that has arisen during recent debates is whether government spending multipliers are larger during times when resources are idle. This paper seeks to shed light on this question by analyzing new quarterly historical data covering multiple large wars and depressions in the U.S. and Canada. Using an extension of Ramey’s (2011) military news series and Jordà’s (2005) method for estimating impulse responses, we find no evidence that multipliers are greater during periods of high unemployment in the U.S. In every case, the estimated multipliers are below unity. We do find some evidence of higher multipliers during periods of slack in Canada, with some multipliers above unity.

That is from a new paper by Michael T. Owyang, Valerie A. Ramey, and Sarah Zubairy.

I see a few views (among others) of the multiplier:

1. The crude form of Say’s Law is true and fiscal policy simply remixes funds with no real impact.

2. Say’s Law is not really true as stated, but why should we be so impressed with a one-time uptick in monetary velocity, also called fiscal policy, unless the supply-side effects are also really good?

3. Fiscal policy effectively targets and mobilizes unemployed resources.

4. Fiscal policy postpones adjustment issues (this can be from AD too, it doesn’t have to be a “structural” problem), and may usefully smooth consumption, but it doesn’t do a good job targeting and mobilizing unemployed resources.

5. The size of the multiplier is determined by the expected monetary policy accommodation, and not by the quantity of unemployed resources.

I would say this paper provides evidence against #1 and #3.

Quotations from China

“The genetic basis of intelligence has been ignored for a very long time,” says Mr. Zhao. “Our data will be ready in three months’ time.”

There is more here.  Here is some further explanation:

At the Hong Kong facility, more than 100 powerful gene-sequencing machines are deciphering about 2,200 DNA samples, reading off their 3.2 billion chemical base pairs one letter at a time. These are no ordinary DNA samples. Most come from some of America’s brightest people—extreme outliers in the intelligence sweepstakes.

Assorted links

1. Should you foul when you are up by three points?

2. Izabella Kaminska on cash hoarding.

3. Sequestration?  Defense stocks are rising in line with the S&P 500.

4. Ear bounties in Azerbaijan?

5. Does fertility stand a chance?  If so, when?  And why give someone else this kind of foothold?

6. Some pre-K studies from Latin America, and here is more on Oklahoma.

Interview with James Heckman

More than just the usual, this is a real interview, recommended.  Excerpt:

James Heckman:  Well, the reason why I’m skeptical is that the most salient work on Head Start is this new evaluation which came out last October. It actually came out later than I responded to Deming. I am skeptical for the following reason. It’s really heterogeneous, and I’m sure there are some very high quality programs and some very weak ones. The latest study showed very weak effects. That was a short-term followup. Head Start has never had a long-term followup.

I was surprised by the extent to which he defends Head Start, and to the extent he sees part of that program as Perry follow-ups.

Ronald Dworkin has passed away at age 81

Here is one brief account.  There is more here (an excellent obituary).  His works are worthy of close study.

Pictures on ethnic menus

Blake Shurtz, a perceptive MR reader, asks:

What are your thoughts on pictures, or a lack thereof, on ethnic food menus? Do you think better dishes have pictures? Why doesn’t every dish have a picture? The logic of fast food is to show pictures/numbers for non-english speakers to be better informed, but the converse doesn’t seem to happen as often.

Pictures are most likely a good sign when they are dingy and the menu plastic is peeling off.  Even then the food may be bad, but at least you know you have a mom and pop operation which is not very polished on the tech side.  “Nice” pictures are a bad sign.  Pictures are least likely to be a bad sign for Vietnamese food, when they are basically neutral and also fairly common.  Think of the Vietnamese as trying to go mainstream with their food but in any case failing.  Pictures for Thai food are becoming a worse sign over time.  As more people come to learn Yam huapli thot, the pictures are coming to signal that the restaurant is making a determined appeal to uninformed buyers.  There is a subset of cranky but excellent Chinese restaurants which offer (non-corporatized) pictures of some of their dishes, including those with tofu.  This segment of the market is dwindling but still can be found.  The choice of what gets a photo is determined by the expected quality of the image (whole fish get showcased), rather than the taste of the dish per se.

TANSTAAFL?

Love actually rings in at $43,842.08, according to RateSupermarket.ca, which has calculated the price tag of the typical modern relationship – from a one-year courtship, followed by a one-year engagement to the wedding day.

And it is itemized:

The Toronto-based independent financial products comparison website pegs the price of courtship at $6,936.74. That includes a dozen “fancy dates” (nice restaurants and theatre tickets), a dozen movie dates, 36 “casual dates” (take-out food, coffee and movie rentals), weekend getaways, a beach vacation plus random other expenses for things such as “apology flowers,” treats and new clothes.

The engagement period rings in at $9,944.34, which includes more dates, an engagement party with a price tag of $2,000 and the big ticket item, a ring with an average estimated cost of $3,500. (The popular wedding website TheKnot.com estimates that cost at around $5,000, but RateSupermarket.ca pointed that that it doesn’t consider rings purchased from lower-end retailers such as Walmart.)

Oh, and the wedding? Well that’s another $26,961.

Here is more, with the pointer from Chad R.

Equal Population US States

Here is one proposal/art project to divide the United States into 50 equal population states, thereby creating a more balanced Senate. The geographic clusters are  based on county proximity, urban area, and commuting patterns. Here is my earlier post calling for many more states.

Hat tip: Kottke.