An Economist Answers "Which issues are important (to me)?"

TheMoneyIllusion » Which issues are important (to me)?

I used a utilitarian criterion. On another day, I’d put many of these in totally different categories, but that’s how I feel today. On many of the key issues I’m not really with either party, but perhaps lean a bit Dem on the top issues. I vote libertarian. I left out some issues like feminism, racial equality, gay rights, etc., because it’s hard to pin down the specific public policy issues that are relevant today. Thus instead of feminism I have abortion and prostitution, issues that especially impact women. Obviously I support the gains that various groups have made over time in achieving greater respect and legal rights. I suspect that animal rights should be high on the list, but don’t know much about the issue. 

PS. The importance of an issue reflects the interaction if its intrinsic importance, and the plausibility of changing the outcome with different public policies.

Get Off The Computer And Complete This Italian Teacher's Summer Assignment. You Won't Regret It.

Get Off The Computer And Complete This Italian Teacher's Summer Assignment. You Won't Regret It.

1. Sometimes, in the morning, go take a walk along the seashore completely alone: look at the way sunlight is reflected on the water and think about the things you love the most in your life; be happy.

2. Try to use some of the new words we learned together this year: the more things you manage to say, the more things you’ll manage to think; and the more things you think, the freer you’ll be.

3. Read as much as you possibly can. But not because you have to. Read because summers inspire adventures and dreams, and when you read you’ll feel like swallows in flight. Read because it’s the best form of rebellion you have (for advice on what to read, come see me).

4. Avoid things, situations and people who make you feel negative or empty: seek out stimulating situations and the companionship of friends who enrich you, who understand you and appreciate you for who you are.

5. If you feel sad or afraid, don’t worry: summer, like every marvelous thing in life, can throw the soul into confusion. Try keeping a diary as a way to talk about how you feel (in September, if you’d like, we’ll read it together).

6. Dance, shamelessly. On a dance floor near your house, or alone in your room. Summer is dance, and it’s foolish not to take part.

7. At least once, watch the sunrise. Stay silent and breathe. Close your eyes, be thankful.

8. Play a lot of sports.

9. If you meet someone you find enchanting, tell him or her as sincerely and gracefully as you can. It doesn’t matter if she or he doesn’t understand. If they don’t, she or he wasn’t meant to be; otherwise, summer 2015 will be a golden time together (if this doesn’t work out, go back to point number 8).

10. Review your notes from our class: Compare the things we read and learned to the things that happen to you.

11. Be as happy as sunlight, as untamable as the sea.

12. Don’t swear. Always be well-mannered and kind.

13. Watch films with heartbreaking dialogue (in English if you can), in order to improve your language skills and your ability to dream. Don’t let the movie end with the final credits: live it again while you’re living and experiencing your summer.

14. In sparkling sunlight or hot summer nights, dream about how your life could and should be. During the summer, always do everything you can to avoid giving up, and everything you can to pursue your dream.

15. Be good.

Red Nose Day - Jack Black and Felix

I don't actually know what Red Nose Day is, nor did I look at the website, but the video itself is quite powerful. There are terrible living conditions in much of the world with horrible experiences happening every day.

The boy's wish is to learn.

At a school like ours, we have every opportunity to learn, but I often see students not taking advantage of it. I see it as a moral obligation to learn the most we can in order to make the world a better place and help others like the boy in this video. We are quite fortunate and should take advantage of the privileges we have each day.

Don’t Trust Anyone Under 500: Dale Davidson’s Unconventional Advice for Graduates

Below are a few quotes from a nice article on building a meaningful life after graduation beyond what modern catch phrases and pop writers propose. 

Interestingly, Haruki Murakami, a very famous Japanese writer, suggests in one of his books that you only read books over 30 years old. While not as extreme as the 500 year old cutoff this article recommends, the idea of biasing who you take advice from to older sources is the same.

Don’t Trust Anyone Under 500: Dale Davidson’s Unconventional Advice for Graduates - Study Hacks - Cal Newport

Modern advice tells us to pursue accomplishments. 

Ancient wisdom tells us to live virtuously. 

Modern advice tells us to enlarge the self. 

Ancient wisdom tells us diminish the self for others. 

Modern advice encourages us to achieve work-life balance. 

Ancient wisdom tells us to work hard at building a life.

A Series of Interesting Posts over at Marginal Revolution

Below are a series of links to posts from George Mason University economist Tyler Cowen at Marginal Revolution. The first two were posted yesterday and today respectively. The third is a link from the blog posts by Cowen providing "evidence" of the effectiveness of being a miser. All of these posts discuss a recent gift of $400 million to Harvard University by a wealthy donor.

Did the Wisconsin state system just abolish tenure?

A tweet in the form of a blog post, with an addendum, #Paulson, #Harvard

What I Like About Scrooge

It seems to me that author is confusing miserliness defined as "excessive desire to save money; extreme meanness" with asceticism, which is defined as "severe self-discipline and avoiding of all forms of indulgence, typically for religious reasons."

In any instance, the entire debate seems to hinge around the marginal benefit supplied by Harvard receiving an additional $400 million on top of its already huge endowment of $36 billion. I'd imagine the marginal benefit is quite small, which implies the opportunity cost of this donation is quite large as $400 million is capable of having dramatic impact when given to another organization whose marginal benefit would be quite higher.

Even excluding the moral weight a decision like this carries, we can look at the marginal propensity to consume (MPC) of various economic classes to decide this isn't the best use of $400 million from an economic standpoint. Harvard essentially serves the most elite of the economic world. The wealthy have a lower MPC than the poor and so a gift of this magnitude would have a larger economic effect on growth by ensuring it gets into the hands of the poor instead of the elite.

What is Wrong With Our Culture [Alan Watts]

Below is a video that was shared on FB by one of the other teachers at school. It reminds me of the renown economist John Kenneth Galbraith's book The Affluent Society, which I read in college and still remember quite well.

Growing wealthy is not the point of economics or even personal and individual finance. The point is to enrich your own life and those of others. As the short video quotes Gandhi, "Be the change you wish to see in the world." 

Noam Chomsky - On Being Truly Educated

Core requirements of fulfilled human beings are the abilities to:

1. Inquire
2. Create constructively and independently
3. Without external controls

What needs and requirements do you need met for a fulfilled human life?

Robert Solow in Conversation with Paul Krugman: "Inequality: What Can Be Done?"

Ten Ideas to Save the Economy #5: How to Reinvent Education - YouTube

Below is a very short video from Robert Reich on his thoughts for reinventing education for the modern American economy. It's important to realize it's specifically aimed at America, because not every idea would be important for other countries.

Executive summary from the last slide of the video:

How would you guys reinvent education if you were in charge?

Shawn Anchor on "The Happiness Advantage"

Here is a fantastic video that was just recommended to me by our new Managing Director at Stamford. He mentioned that not only is it a clinic in how to give an awesome presentation, but also contained fantastic content. He was absolutely right.

Here is my favorite screen shot from the presentation. A quick "action list" of ways to create more positivity in your life, leading to happiness, and then greater success, achievement, and accomplishment.

And, while not very explicit in the video or screen shot, strong social relationships should also be mentioned. They have been the central finding in the majority of positive psychology research on what leads to "the good life" or eudaimonia as Aristotle wrote about 2300 years ago.

Learning Your Character Strengths

The Good In You
Character strengths are the psychological ingredients for displaying human goodness and they serve as pathways for developing a life of greater virtue. While personality is the summary of our entire psychological makeup, character strengths are the positive components— what's best in you. The 24 VIA Character Strengths are universal across all aspects of life: work, school, family, friends, and community. The 24 strengths fall under six broad virtues (wisdom, courage, humanity, justice, temperance and transcendence) and encompass our capacities for helping ourselves and others. Whereas most personality assessments focus on negative and neutral traits, the VIA Survey focuses on what is best in you and is at the center of the science of well-being. Completing the free VIA Survey will result in your Character Strengths Profile, detailing a strengths palette of the real “you.”

The Science Of Character

My Results

I took the survey to learn more about my character strengths and found out my top seven were:

1. Forgiveness
2. Love
3. Judgement
4. Humor
5. Curiosity
6. Hope
7. Love of Learning

What are your strengths? List your top 5-7 in the comments.

How to Shape Culture

These six steps come from a book I'm currently reading titled Blended:

1. Define a problem or task the recurs again and again.
2. Appoint a group to solve the problem.
3. If they fail, ask them to try again with a different process.
4. If they succeed, ask the same group to repeat the process every time the problem recurs.
5. Write down and promote your culture.
6. Live in a way that is consistent with your culture.

Looking at step one, are there any problems or tasks that recur frequently in your classes, school, or life that could use a solution? Write suggestions in the comment section.

... culture matters. And I am not talking about walking single-file lines. I am talking about holding students to high expectations for behavior and having rewards and consequences for every positive and negative behavior we don't tolerate, without excuses. This is even more important if you are building for open-learning environments. We needed to prioritize this so learning could happen.

How can class be made better? What areas can/should you expect more of yourself inside and outside of class?

On the Importance of Ethics in Economics

This is perhaps the most concise explanation for why the notion that people get what they deserve in the free market is absurd. The notion that some people are more "deserving" than others simply does not hold up to any reasonable thinking in light of evidence from psychology, genetics, sociology, or neuroscience.

Noahpinion: I get what you get in ten years, in two days

Now suppose Mike goes to Greg Mankiw and asks: "Dr. Mankiw, why is it right and just that it took me 4% of my entire lifespan to buy this car, with all my heroic efforts and harsh self-denial, when it took that Brad CEO guy less than a day? I put in every bit as much effort as he does, day after day. Why does he deserve to get things with so much less effort than I put in?" 

Dr. Mankiw responds: 

I am more persuaded by the thesis advanced by Claudia Goldin and Lawrence Katz (2008) in their book The Race between Education and Technology. Goldin and Katz argue that skillbiased technological change continually increases the demand for skilled labor. By itself, this force tends to increase the earnings gap between skilled and unskilled workers, thereby increasing inequality...The story of rising inequality, therefore, is not primarily about politics and rent-seeking but rather about supply and demand... 

If Goldin and Katz are right that the broad changes in inequality have driven by the interaction between technology and education...then it would seem an unlikely coincidence that the parallel changes at the top have been driven by something entirely different. Rather, it seems that changes in technology have allowed a small number of highly educated and exceptionally talented individuals to command superstar incomes in ways that were not possible a generation ago. 

"OK," Mike says. "But why, then, is Brad CEO so much more productive than I am? Where does his $30 million productivity come from?" 

Dr. Mankiw responds: 

[T]he intergenerational transmission of income has many causes beyond unequal opportunity. In particular, parents and children share genes, a fact that would lead to intergenerational persistence in income even in a world of equal opportunities. IQ, for example, has been widely studied, and it has a large degree of heritability. Smart parents are more likely to have smart children, and their greater intelligence will be reflected, on average, in higher incomes. Of course, IQ is only one dimension of talent, but it is easy to believe that other dimensions, such as self-control, ability to focus, and interpersonal skills, have a degree of genetic heritability as well. 

"So let me get this straight," Mike says. "Brad deserves to be so much richer than me because of ability he was born with? People who are lucky enough to be born with high skills deserve to be able to get a Civic in half a day, while people who were born with fewer skills deserve to have to slave away for years if they want a Civic?"

More Evidence on the Importance of Learning the Humanities

This article discusses the importance of the humanities and a broad liberal arts education alongside more technical fields. I've selected a few of the best paragraphs, but have not included the entire article.

On a personal note, it's always fun to see leading writers espouse things like,
I'd be an economics major with a foot in the humanities," which corresponds to exactly with the path I chose through school.

Starving for Wisdom - NYTimes.com

Among college graduates in 1971, there were about two business majors for each English major. Now there are seven times as many. (I was a political science major; if I were doing it over, I’d be an economics major with a foot in the humanities.)

“A broad liberal arts education is a key pathway to success in the 21st-century economy,” says Lawrence Katz, a labor economist at Harvard. Katz says that the economic return to pure technical skills has flattened, and the highest return now goes to those who combine soft skills — excellence at communicating and working with people — with technical skills.

“So I think a humanities major who also did a lot of computer science, economics, psychology, or other sciences can be quite valuable and have great career flexibility,” Katz said. “But you need both, in my view, to maximize your potential. And an economics major or computer science major or biology or engineering or physics major who takes serious courses in the humanities and history also will be a much more valuable scientist, financial professional, economist, or entrepreneur.”

My second reason: We need people conversant with the humanities to help reach wise public policy decisions, even about the sciences. Technology companies must constantly weigh ethical decisions: Where should Facebook set its privacy defaults, and should it tolerate glimpses of nudity? Should Twitter close accounts that seem sympathetic to terrorists? How should Google handle sex and violence, or defamatory articles?

To weigh these issues, regulators should be informed by first-rate science, but also by first-rate humanism.

John Adams had it right when he wrote to his wife, Abigail, in 1780: “I must study Politicks and War that my sons may have liberty to study Mathematicks and Philosophy. My sons ought to study Mathematicks and Philosophy, Geography, natural History and Naval Architecture, navigation, Commerce and Agriculture, in order to give their Children a right to study Painting, Poetry, Musick, Architecture, Statuary, Tapestry and Porcelaine.”

Collaborative decision making: Students hiring teachers in Australia

How many of you would be interested in participating in an experience like this during new teacher hiring?

Why You Shouldn't Copy Your Classmates

A Shout Out to "Effective Altruism" from Marginal Revolution

Here is a short blog post with a bunch of good links. "Effective altruism" is the idea that giving or donating to charity should be economically effective in terms of its cost/benefit ratio. Many of the organizations mentioned in the post below do just that. They use high level economic/finance evaluation to make decisions on the best charities to support.

Nerd Altruism is Becoming Cool!

"It’s exciting to see randomized trials, measurement and data science applied to philanthropy. Groups like GiveDirectly, GiveWell and The Center for Effective Altruism are creating a new culture of giving, they are making Nerd Altruism cool. We have a long way to go but it says something when billionaires are mocked for giving millions to Yale. In contrast, entrepreneurs like Dustin Moskovitz, Elon Musk and Bill Gates are making it cool to evaluate charities with the same rigor that business people use to evaluate business investments."

If this type of giving appeals to you, I highly recommend checking out the books The Life You Can Save and The Most Good You Can Do on my further reading page above. You can also check out this the Global Rich List to input your income or wealth (or your parents) to see how you (or your family) stack up against the entire world.

If you're a conservative, I'm not your friend | Practical Ethics

Below are the final two paragraphs from the linked blog post. It created hundreds of comments and reactions, but the author originally seems to defend her argument based on moral and economics reasons. I found both the post and many of the comments very engaging.

If you're a conservative, I'm not your friend | Practical Ethics

"So, unfriending. Is it okay? Well, the view that I have arrived at today is that openly supporting a political party that—in the name of austerity—withdraws support from the poor, the sick, the foreign, and the unemployed while rewarding those in society who are least in need of reward, that sells off our profitable public goods to private companies while keeping the loss-making ones in the public domain, that boasts about cleaning up the economy while creating more new debt than every Labour government combined, that wants to scrap the Human Rights Act and (via the TTIP) hand sovereignty over some of our most important public institutions to big business—to express one’s support for a political party that does these things is as objectionable as expressing racist, sexist, or homophobic views. Racism, sexism, and homophobia are not simply misguided views like any other; views that we can hope to change through reasoned debate (although we can try to do that). They are offensive views. They are views that lose you friends and respect—and the fact that they are socially unacceptable views helps discourage people from holding (or at least expressing) them, even where reasoned debate fails. Sometimes the stick is more effective than the carrot. 

For these reasons, I’m tired of reasoned debate about politics—at least for a day or two. I don’t want to be friends with racists, sexists, or homophobes. And I don’t want to be friends with Conservatives either."

Feel free to share any thoughts, feelings, or reactions in the comments!

Wealth inequality and the marginal propensity to consume - Washington Center for Equitable Growth

Here is an interesting link to today's discussion on the MPC for wealthy and less wealthy individuals and its impact on the economy. As noted in class, the poor of a nation tend to have a much higher MPC than the wealthy. Knowing this can lead to much better economic stimulus overall when deciding on policies that allocate government spending.

Wealth inequality and the marginal propensity to consume - Washington Center for Equitable Growth

Carroll and his co-authors find an aggregate MPC, or average MPC for all households, ranging between 0.2 and 0.4. Their estimate is on the high end of other estimates. Their results mean, to return to the question posed above, if I gave you $10, you’d spend between $2 and $4.

Not everyone would spend these extra bucks the same way, of course, because not everyone has the same marginal propensity to consume. The authors find a wide dispersion in the MPC across the wealth distribution. For the most part, less wealthy households have much higher MPCs than wealthier households. But the economists find that the ratio between wealth and income is the key determinant of the MPC. 

There are actually quite a few households in their model that have a fair amount of wealth, but a low wealth-to-income ratio, which in turn results in a high marginal propensity to consume. These households may be the “wealthy hand-to-mouth” that economist Greg Kaplan and Justin Weidner, both of Princeton University, and Giovanni L. Violante, of New York University, have written about. In contrast, a household that has a lot of liquid assets, such as investments in the stock market they could easily withdraw, tend to have a much lower MPC. 

So what’s the actual real world importance of estimating marginal propensities to consume? Knowing which households are the most likely to spend an extra dollar can help make fiscal policy more effective. According to Carroll and his co-authors, any fiscal stimulus targeted toward individuals in the bottom half of the wealth distribution would be 2 to 3 times more effective than just a blanket stimulus.

INEQUALITY FOR ALL - Official Trailer - YouTube

I haven't watch this documentary yet, but it looks interesting and something that I will probably get to this weekend. The full documentary can be found on YouTube last time I looked.