news: May 2011

Tuesday, May 31, 2011

Household Expectations

The University of Michigan’s Survey of Consumers asks households about their future income prospects. They are asked: “By about what percent do you expect your (family) income to increase during the next 12 months?” Here is the result:

Via the Cleveland Fed. Thanks to Mark Thoma for the pointer.

The level of pessimism displayed here is striking.

How to Fix the Long-Term Fiscal Problem

A menu of plans, courtesy of the Peterson Foundation.

Monday, May 30, 2011

New Music Desktop 2011

Sunday, May 29, 2011

Love Background Wallpapers

Smile Flower Picture

New Green Flower Wallpapers

Cute Baby Picture

Free Unique Wallpapers

New Tulip Wallpapers Collection

Saturday, May 28, 2011

Justin Bieber and Sculpture Candle

Titi Sjuman, Indonesian Woman Drummer Picture

Jerry Yan New Picture

Friday, May 27, 2011

Advice for the Recently Tenured

From Bob Hall. This is a couple years old, but I only just ran across it. One tidbit from it:

Potomac fever is contagious and incurable. I know one economist who deliberately hired an undocumented nanny as a commitment device to avoid the temptation of government.

Feldstein on Greece

Marty suggests a temporary leave from the Euro. How that would work, logistically, is unclear to me. Introduce a new currency, devalue it, then go back to the Euro at the new exchange rate? It seems that Marty is mainly trying to figure out a way to rewrite wage contracts with a new lower level of nominal wages.

Thursday, May 26, 2011

Barney & Fannie

Perhaps because Barney Frank is my congressman, I took a special interest in this interview of Gretchen Morgenson, New York Times reporter and coauthor of Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon:

DAVIES: What's fascinating about this story is that you have this entity [Fannie Mae], which you said became the largest and most powerful financial organization in the world, you had this entity, which has government guarantees and government subsidies, although perhaps indirect, but it engages in major political contributions and lobbying expenses. How big a player were they in terms of contributing to politicians and lobbying?

Ms. MORGENSON: They were very large. The numbers might not seem large in today's terms, but they were extremely shrewd and, you know, took great care, especially of the congressmen that were on the House Financial Services Committee and the senators on the Banking Committee.

They knew that these were very important people to their livelihood and to maintaining the government perquisites as they were.

One of the really big beneficiaries, albeit indirectly, was Congressman Barney Frank of Massachusetts. Back in 1991, when Congress was writing the legislation that would, you know, enhance or improve the oversight of Fannie Mae, or so they thought, Frank actually called up the company and asked them to hire his companion, who had just gotten an MBA from the Amos Tuck School of Business.

Of course the company was happy to provide a job for his companion and rolled out the red carpet in a series of interviews with a variety of executives, and it ultimately did hire the man. And he stayed there for I believe seven years.

So that was an example of the kind of thing that Fannie Mae would do. Now, when I asked Mr. Frank about this, I asked him, did it have any impact on his approach to the company. You know, was it a conflict? Did he feel that it had been a conflicted, put him in a conflicted spot? And he said absolutely not, that he didn't really remember being interested or having much to do with the 1992 legislation.

But the record shows that he was very aggressive and really tough on those who were testifying in Congress about reining in Fannie Mae and Freddie Mac. He was very aggressive to, for instance, the head of the Congressional Budget Office at that time, who was trying to call for increased capital requirements and to call for a focus on safety and soundness at Fannie Mae, that Frank really took him apart in testimony.

DAVIES: Right, and you write there were a number of occasions on which he defended Fannie and their record of promoting home ownership but in the end had a different view of the company, right?

Ms. MORGENSON: Well, after the taxpayers had to take it over, he, you know, came around, finally. But by then it was too late. He said: Well, we should shut them down. But, you know, it really was far too late, and he had been such a vocal supporter for so long that it was sort of an odd turnabout.

Wednesday, May 25, 2011

A regression I would like to see

In his column today, David Leonhardt writes the following about college admissions:

But all else equal, a low-income applicant was no more likely to get in than a high-income applicant with the same SAT score. It’s pretty hard to call that meritocracy.

When I first read this pair of sentences, they struck me as odd. But in the context of the whole article, they have some logic. David suggests that high-income applicants' SAT scores are, in some sense, an overstated measure of ability, because these applicants have the benefit of tutors, mulitiple testing opportunities, and so on. As a result, he says that we should correct for this by giving a preference to lower-income applicants.

Maybe David is right, but to convince me, here is what I would like to see. Regress some measure of college success (such as GPA) on SAT scores and the student's family income. If David is right, then the coefficient on family income should be negative. That is, a lower-income student should do better in college, holding reported SAT score constant, because he managed to get that SAT score without all those extra benefits. This is a regression that some enterprising college admissions committee could easily do. (Maybe someone has already done it, and I am just not aware of the study.)

If the coefficient does turn out to be significantly negative, that finding would provide strong evidence for the thesis of David's article. Right now, I would venture to guess that the data would not support David's story, but I am always ready to be proven wrong.

Update:Todd Stinebrickner, an economist at The University of Western Ontario, emails me this comment:

It does seem reasonable to believe that, if a low income student and a high income student have the same SAT scores at the time of college entrance, the low income student was probably born with higher "inherent" ability. At the same time, SAT scores may not capture all of the educational benefits of being from a high income family that may continue to matter in college. For example, a student's score on the Math SAT may not capture whether the student had the opportunity to take a Calculus course in high school. This suggests that, from a theoretical standpoint, the effect of family income on college grades conditional on SAT scores is ambiguous. As part of an ongoing in-depth case study at one particular school (motivated particularly by an interest in college dropout), we discuss this issue and run the type of regression you suggest in Table 3 of a 2003 JHR paper "Understanding educational outcomes of students from low-income families." It is worth noting that everyone in our sample is of moderate or low family income. Regardless, within the income groups we examine, students from higher income backgrounds have significantly higher grades throughout college conditional on college entrance exam (ACT) scores.

The finding in the last sentence (which I put in bold) is the opposite of what the Leonhardt story suggests. What this means is that if you are a college admissions officer trying to identify the students who will do best in college, as measured by grades, you would give positive rather than negative weight on family income. I am not proposing that they should do this, as colleges have many goals when putting together a class. But it does seem that the hypothesis implicit in Leonhardt's article is not supported by the data.

Monday, May 23, 2011

Funny Strange Wallpapers

Eva Anindita Sexy Picture Gallery