Tuesday, August 18, 2009

this shows why social security is in trouble

This animated chart shows the change in the age distribution of the U.S. between 1950 and 2050:

Found here.

Sunday, August 9, 2009

hopeful signs for u.s. jobs

That was the headline of a front-page article about July's unemployment rate in yesterday's Wall Street Journal. Not only is this inference not derivable from the evidence, but only serves as another sad indicator that the quality of our leading financial paper has been slipping since News Corp bought it.

The "decline" of the 9.4% unemployment rate in July from the 9.5% rate in June is not statistically significant. The unemployment data is based on a survey. Like any survey there is always a chance that those surveyed may not identically represent the whole population. For example, remember all those public opinion polls before the last election? They often mentioned a margin of error like plus or minus 5 points. The unemployment data has a margin of error but due to the large number surveyed, it is only 1/10 of 1%.

Does that mean unemployment was about the same? Most of the timeit would, but not last month.

Jobs losses in July were 247,000. Just less than a quarter of a million fewer people employed is not good news.

Mathematically, how can the unemployment rate go down, even if it was not a statistically significant change, if there are a lot more people losing jobs?

The rate is merely is a percentage of the unemployed divided by the labor force. Unfortunately both of these, the numerator and the denominator, can change from month to month. To be unemployed one must not have not worked but actively sought employment. No job, not looking? Then not counted in the labor force. In July there were a lot of job loses but there were also 422,000 who dropped out of the labor force. That is, they were out of a job but not actively seeking employment.

The unemployment rate is inherently a less-than-useful gauge of changes in the unemployment situation. Funny things can happen to a ratio when both the numerator and denominator change at the same time. That is what happened in July. This kind of quirk in the unemployment rate happens infrequently, but is not a rare event.

Bottom line: When a quarter of a million jobs are lost in one month this is not good news.

Although journalists may be very good writers, and write with seeming confidence, please do not assume they know what they are writing about.

Be blessed.

NOTE: You can check out the employment/unemployment stats by going here.

Friday, August 7, 2009

where, not how, to get p.o.'d about the rain forest

Posted on Freakonomics:

According to the Brazilian environmental organization SOS Mata Atlantica, a household that flushes its toilet one less time per day saves more than 1,100 gallons of water per year. So the organization has launched a TV ad campaign encouraging Brazilians to avoid a flush by peeing in the shower. The ad shows cartoons of everyone — from aliens to King Kong — urinating in the shower and ends with the slogan: “Pee in the shower! Save the Atlantic rainforest!”

Here's the TV ad (rated PG-13 for poor taste in Portuguese):

Thursday, August 6, 2009

the economics of marriage in iraq

From AP - Muhanad Talib, a Sunni Muslim, married his Shiite bride because she was a "suitable woman" for him. It also didn't hurt that their vows made them eligible for a $2,000 payout from the government.

Talib and his wife are among more than 1,700 newlywed couples who have accepted cash from a government program that encourages Sunnis and Shiites to tie the knot. The government has held 15 mass weddings for inter-sect couples from all over Iraq, with the most recent taking place last month at a club in western Baghdad once used by Saddam Hussein's army. » Full Story on Yahoo! News

"It's encouraging that according to the AP story such marriages are on the rise and the money seems to be treated more like a bonus than a compensating differential for risk" (Alex Tabarrok).

Another way to look at this cash payout is that it is a sort of Pigouvian subsidy (a.k.a., a negative Pigouvian tax) needed to overcome the reduced number of mixed marriages caused by the inefficient lack of government protection.

Be blessed!

BONUS: Oxymoron of the Day: A sentimental economist.

Monday, August 3, 2009

tax burden of top 1% now exceeds that of bottom 95%

From the Tax Foundation's Tax Policy Blog:

Newly released data from the IRS clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes.

Indeed, the IRS data shows that in 2007—the most recent data available—the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1 percent paid 24.8 percent of the income tax burden in 1987, the year following the 1986 tax reform act.

Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.

To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.

Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.—not France or Sweden—has the most progressive income tax system among OECD nations. We rely more heavily on the top 10 percent of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation.

We are definitely overdue for some honesty in the debate over the progressivity of the nation's tax burden before lawmakers enact any new taxes to pay for expanded health care. [Found here.]

There's lots a data to dig into here if you are one of those weird people that actually enjoys fact-based policy discussions.

I gotta admit it, I love this stuff. I love to dig into the numbers and finding out that while the top 1% of taxpayers pay about 40% of taxes, the top 1/10th of 1% pay about half of that. BTW, to make the top 1/10th of 1% in 2007 you had to earn over 2.16 million. To be in the top 1% took an income level of at least 410,000. If you earned over $33,000 you were in the top 50% (Table 7).

The federal income tax is progressive in that higher income groups pay a larger proportion of income taxes. In 2007 the top 1% earned 22.8% of income but paid 40.4% of all income taxes. The bottom 50% had 12.3% of total income but paid less than 3% of all income taxes (Tables 5 & 6).

Be blessed!

P.S. The higher share of taxes paid by the rich is the result of both higher tax rates and changes in the distribution of income.

Sunday, August 2, 2009

Saturday, August 1, 2009

unfair but funny

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Home Crisis Investigation
Daily Show
Full Episodes
Political HumorJoke of the Day

Found here.

why i teach naked

I am a firmly in the camp of those who teach naked. Teaching naked causes students to pay more attention in class and become more active learners. There is more than enough research to show teaching naked increases student learning. I've found to teach economics effectively I must teach naked.

Isn't student learning what is important?

Oh, did I mention that to teach naked is to not use technology in the classroom? That is, to teach without computers.

The most often used technology in the classroom is PowerPoint (ppt). PPT presentations make it easy to follow lectures and the slides can be posted online for students to reference later. The only problem is that ppt has been shown to lower learning outcomes. Students are not actively involved. It is better for student learning to have them just copy notes from a chalkboard than to sit passively listening to a lecture and watching the pretty pictures on the ppt slides. The worst active learning beats the best passive learning.

Here is a sad commentary on higher education. Recently I was talking with a yet-to-be-tenured colleague from another department who mentioned she felt pressured to use technology in the classroom. So far she has resisted the pressure because she cares about student learning. However, she also has to receive tenure to keep teaching.

A recent post on Freakonomics cites articles and findings about ppt. PPT is not only destroying student learning but according to the Armed Forces Journal, PowerPoint is hurting our national defense by diminishing decision-making skills at the Pentagon.

Power corrupts, PowerPoint corrupts absolutely. Six years ago that was the quite appropriate sub-title of the first known ppt-hating article. The title of that article was:

PowerPoint is Evil.

Be blessed.

P.S. I do require my students to use Aplia outside of class to do both practice and graded problem sets and assignments. However, this requires active learning.