Category Archives: economics

Taxing future income to pay for college

How to pay for the seemingly inexorable rise in the cost of college tuition? One idea seems to be having something of a heyday right now: since college graduates earn more money, why not levy a tax on them which … Continue reading

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Chart of the day, Apple vs Microsoft edition

So we went back and took the closing share price of AAPL and MSFT for every day since they went public, and plotted the market cap against the p/e ratio every day. … If you stop looking at individual points and start looking just at the general shapes of the charts, there’s a strong positive correlation on the Microsoft datapoints, and a strong negative correlation on the Apple ones. Continue reading

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When private-school tuition is tax-deductible

Scott Asen, a former trustee and head of the development committee at Groton, a posh private school, has a revealing op-ed in the NYT. He explains that at such schools, the tuition fees, high as they are, fall well short … Continue reading

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When bloggers go offline

Posted in economics | Tagged | 17 Comments

Man U’s weird share price

But as Matt Levine noted that afternoon, after the market closed, the underwriters were clearly supporting the stock at the IPO price of $14, and the volumes being transacted at that level were truly enormous: much bigger than the official greenshoe. … But then something very weird happened when the shares reopened on Monday August 13: after half an hour at $14 per share, they suddenly spiked; at one point that morning they were more than $15 per share. Continue reading

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$5,000-an-hour lawyers

David Lat has the numbers today on how much the top partners at Dewey & Leboeuf were making. At the top of the list are Berge Setrakian and Ralph Ferrara, both of whom made around $12.5 million in 2011. As … Continue reading

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More data on 401(k) loans

In my post about Bob Litan and his estimates of 401(k) loan defaults, one of the key bits of weirdness was the way in which he decided that the total number of 401(k) loans outstanding had doubled since 2009. The … Continue reading

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The secret to success in the arts

If you live in a world of fat tails rather than thin tails, and if you have, say, 1 million operators, then the lucky few get very lucky indeed, even if they don’t have any skill. … But given the sheer number of people they’re competing against, and given the fact that the number of breakout stars in each field is shrinking rather than growing, the fact is that just about everybody with massive success will have got there by sheer luck. Continue reading

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Annals of dubious research, 401(k) loan-default edition

Bob Litan, formerly of the Kauffman Foundation and the Brookings Institution, has recently taken up a new job as director of research for Bloomberg Government, where he’s going to have to be transparent and impartial. But one of his last gigs before moving to Bloomberg — a paper on the subject of people borrowing money from their 401(k) accounts — was neither of those things.

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Posted in economics, statistics | Tagged , , | 3 Comments

The future of hedge funds

While sophisticated risk-allocation strategies are all well and good, at some point one has to ask whether it’s worth paying 2-and-20 to get the level of risk you want, and whether you might not be better off over the long term with less risk optimization and also lower fees. If the hedge fund industry doesn’t grow as much as Citi says it will, the reason will surely be that institutional investors will finally have decided that 2-and-20 is too high a price to pay for what they’re getting. Continue reading

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Newsweek’s Fearful Krugman Profile

Evan Thomas has a profile of Paul Krugman on the cover of Newsweek. The 2,825-word article has six on-the-record quotes about Krugman; none of them — not even the one from his mother — are particularly flattering. No one is … Continue reading

Posted in economics, Media | 3 Comments

How the Economic Sausage is Made

Gregory Clark reveals all: Recently a group of economists affiliated with the Cato Institute ran an ad in the New York Times opposing the Obama stimulus plan. As chair of my department I tried to arrange a public debate between … Continue reading

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Japan’s Whiplash

Edward Hugh has a good summary of what he calls Japan’s “unimaginable” contraction — the one which resulted in that 12.7% annualized fall in GDP in the fourth quarter. One important lesson, here, is that it’s foolish placing much faith … Continue reading

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Chart of the Day: Spiking Unemployment

Jake at EconomPic Data has the chart: narrow unemployment is now at 7.6%, while the broader measure of underemployment is a whopping 13.9%. Clearly this kind of spike is scarily extreme, and equally clearly it’s not showing any signs of … Continue reading

Posted in economics, employment | 1 Comment

Crunched

There’s a small silver lining of good news in today’s atrocious GDP report: the New York Times has started linking to primary sources from its home page. And this isn’t one of those open-in-a-new-window links, either: it’s a proper link, … Continue reading

Posted in economics, Media | 2 Comments

Phil Gramm’s U-Turn

Phil Gramm, November 2008: “There is this idea afloat that if you had more regulation you would have fewer mistakes,” he said. “I don’t see any evidence in our history or anybody else’s to substantiate it.” He added, “The markets … Continue reading

Posted in economics, fiscal and monetary policy, regulation | 1 Comment

The Economics of Liquidation

Andrea Chang has a story about Circuit City shoppers being angry that liquidation discounts aren’t larger: "What happened to 30%? Lies!" shouted customer Gabriel Ifrah, 52, at the Circuit City on La Cienega Boulevard in Los Angeles on Monday, where … Continue reading

Posted in consumption, economics | 3 Comments

The Behavioral Economics of the Stimulus

I knew that there was some serious behavioral economics behind the Obama team’s plans to structure a tax rebate by reducing withheld tax! Jim Surowiecki has chapter and verse: In the words of the behavioral economist Richard Thaler, people put … Continue reading

Posted in economics, fiscal and monetary policy | 2 Comments

The Blogosphere vs Eugene Fama

Eugene Fama has only just started blogging, but already he’s run into some fearsome firepower: his post claiming that a stimulus package won’t boost employment has received no fewer than three rebuttals from Brad DeLong alone. The first claims that … Continue reading

Posted in economics | 2 Comments

Can We Really Guide the Economy?

Ryan Avent says that he thinks the "plausible range of economic outcomes is, at the moment, quite wide indeed", and wonders whether "the size of this conceivable range is actually reflective of potential outcomes, rather than simple ignorance": If it … Continue reading

Posted in economics, fiscal and monetary policy | 2 Comments

Yet Another Gruesome Employment Report

For most of the past decade, I’ve happily ignored the payroll report on the first Friday of every month. The market often got very excited about it, but the headline payrolls number was generally unreliable and full of more noise … Continue reading

Posted in economics, employment | 1 Comment

Why Aren’t Stocks Falling?

As SAR notes, the "longer and deeper recession" meme is "becoming the popular view" — it’s increasingly difficult to find people who really think we’ll bounce back in the second half of this year, and economists generally are much more … Continue reading

Posted in economics, stocks | 1 Comment

The Problem of Regaining Trust

Eric Falkenstein sums up 2008 through a ratings-agency lens: I think 2008′s problem was mainly because after the rating agencies were exposed as making an error on their AAA and AA ratings, all investors viewed such securities skeptically. What was … Continue reading

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Taleb vs Merton, Cont.

Nassim Nicholas Taleb is angry. Not in the YouTube clip of the same name, but rather at Nobel laureate Bob Merton, whom Taleb attacked in a paper he co-wrote with Emanuel Derman of Columbia. In the wake of that paper … Continue reading

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The Invisible Stimulus

This sounds to me like it’s been filtered through some kind of Obama-transition behavioral economics screen: The incoming administration is considering tax cuts of $1,000 for couples and $500 for individuals that will be delivered by reducing the tax withheld … Continue reading

Posted in economics, Politics | 1 Comment