Seminar: Tom Scheiding

The next speaker for the Economics Department Seminar Series will be Prof. Tom Scheiding (UW Stout). He will present "Boundary Institutions for Reconciliation of Academic Chemistry to Industry: Germany vs. the United States," on Friday, December 2nd at 3:30 pm in room 230 Wimberly Hall.

Seminar: Yamin Ahmad

Professor Yamin Ahmad (UW Whitewater) will be the next speaker in the Economics Department Seminar Series. Professor Ahmad will present "On the Correlation Between Inflation Persistence and The Implicit Inflation Target," at 3:30 in room 122 Wimberly Hall.

Econ Jobs

The Wall Street Journal has a sort-able and search-able list of college majors and unemployment and salary statistics. Here are the 'Economics' stats:

ECONOMICS UNEMPLOYMENT RATE: 6.3%
INCOME (25TH PERCENTILE): $42,000
INCOME (50TH PERCENTILE): $69,000
INCOME (75TH PERCENTILE): $108,000

Nudge

Behavioral Econ gets a department in the UK government. A report on the group and the concept of nudge from BBC4.

Connections and Contagion

What is the potential impact of the Euro crisis? Here is an excellent graphic on the degree of financial market integration.

Corruption in India

The department has more news to share. Nabamita Dutta's research was recently cited in the Wall Street Journal online. She was also interviewed by the BBC!

There have been a few attempts recently by economists to quantify the link between corruption and the informal economy. As my example illustrates, the direction of causality can run in either direction. In other words, the existence of corruption could drive people into the informal sector, but likewise the existence of an informal sector can itself give rise to corruption. Is it possible to disentangle these effects?

The most promising recent attempt is a study by economists Nabamita Dutta, Saibal Kar and Sanjukta Roy. They combine data on corruption from Transparency International with official Government of India data on employment in the informal sector, which in turn is culled from 2004/05 National Sample Survey and the 2001 Census.

The statistical results in the study confirm the intuition that, other things equal, more corruption leads to a larger informal sector. They also perform statistical tests to rule out what economists call “reverse causality” – the possibility that it’s a larger informal sector that’s causing more corruption.

Brewers Baseball

The Brewers disappointed me again, just as they did in 1982, only this time I didn’t cry. And according to our esteemed sports economist colleague Mike Haupert, they were lucky to do what they did. Check out Mike’s article in the Washington Post.

As an economist, I am interested in efficiency. The best manager is the one who produces the most with the talent he is given. After all, how hard can it be to manage the deep-pocket Yankees, who can purchase the best players each year to satisfy their manager’s every desire? What a dream for a manager. Need a cleanup hitter? Enter Mark Teixeira. A mound ace? Enter C.C. Sabathia. Each earns upward of $20 million per year. Quality does not come cheap, but cost is no object when your average ticket sells for $98 and your television revenue rivals the GDP of some nations.

Managing the Yankees is easy. Just buy the best players and put them in the lineup. But what if you have to manage the Brewers? What if you don’t get to spend a fortune to pluck the best talent from the rest of the league, but you have to manage on a budget? After all, the owner of a team is looking for a return on his investment, so producing on a budget is not a crazy concept.

If efficiency—getting the best output from your available inputs—matters, which it should, then Ron Roenicke is your man. He was the best manager in baseball in 2011 because he was the most efficient. The manager can only work with the players he is provided, but it is his job to make the most of the situation. Let’s consider the job the Brewers’ skipper did this year.

First of all, the Brewers won 96 games, capturing the central division crown and securing home field advantage in the first round of the playoffs. It’s hard to ask for more than that. Consider that Roenicke, in his first year at the helm, accomplished this with a lineup that was largely unchanged from the same team that won only 77 games the previous year. That accomplishment alone merits serious consideration for Roenicke.

Seminar: Larry Neal

Economics Department Seminar: Larry Neal, Professor Emeritus, Univ of Illinois, will be here on Friday October 21, 2011 to present "I am not master of events: the speculations of John Law and Lord Londonderry during the Mississippi and South Sea bubbles." The seminar will be in room 122 Wimberly Hall at 3:30.

Role for Fiscal Policy and the Economic Outlook

Today Ben Bernanke testified on the rather dismal economic outlook before the Joint Economic Committee of U.S. Congress.

http://federalreserve.gov/newsevents/testimony/bernanke20111004a.htm

That might not be news, but in it, I thought Bernanke very clearly described how Fiscal policy should be implemented both in the short run and long run:

"To be sure, fiscal policymakers face a complex situation. I would submit that, in setting tax and spending policies for now and the future, policymakers should consider at least four key objectives. One crucial objective is to achieve long-run fiscal sustainability. The federal budget is clearly not on a sustainable path at present. The Joint Select Committee on Deficit Reduction, formed as part of the Budget Control Act, is charged with achieving $1.5 trillion in additional deficit reduction over the next 10 years on top of the spending caps enacted this summer. Accomplishing that goal would be a substantial step; however, more will be needed to achieve fiscal sustainability.

"A second important objective is to avoid fiscal actions that could impede the ongoing economic recovery. These first two objectives are certainly not incompatible, as putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implications of fiscal choices for the recovery in the near term. Third, fiscal policy should aim to promote long-term growth and economic opportunity. As a nation, we need to think carefully about how federal spending priorities and the design of the tax code affect the productivity and vitality of our economy in the longer term. Fourth, there is evident need to improve the process for making long-term budget decisions, to create greater predictability and clarity, while avoiding disruptions to the financial markets and the economy. In sum, the nation faces difficult and fundamental fiscal choices, which cannot be safely or responsibly postponed."

Seminar: Jeff Williamson

The economics department will sponsor its first seminar speaker of the 2011-12 season on Friday, October 7th. Jeff Williamson, Laird Bell Professor emeritus, Harvard University, and Professor of Economics, University of Wisconsin - Madison, will be here to discuss his latest book, "Trade and Poverty: When the Third World Fell Behind." We will meet in room 122 Wimberly Hall at 3:30 pm.

Taxi Cartel

Here is a nice piece on the Milwaukee Taxi Cartel. Who is helped and who is hurt by the fact that no new taxi permits have been issued since 1992?

The city of Milwaukee capped the number of taxi permits at 321 way back in 1992, and consequently the price of a permit on the secondary market has risen to $150,000. That’s excellent news for people who made well-timed investments in Milwaukee taxis, but obviously it’s bad news for would-be taxi entrepreneurs who’d like to get into the market. Fewer permits means fewer jobs for cab drivers, and it means less access to taxis in the city. Dynamics of who uses taxis, what they cost, and where they’re available differ a lot from city to city and I’m not familiar with Milwaukee so I can’t say who in particular is disadvantaged by taxi scarcity but it’s not the sort of thing that helps a city’s quality of life or economy. Apparently the Institute of Justice, a libertarian law firm, thinks they have a chance of winning a legal argument that this is unconstitutional which I actually would find pretty surprising, but there’s no doubt that it’s bad policy. As I’ve noted before, when it comes to taxi cartels the proponents normally don’t even bother to make a public interest argument:

Deficit and Stimulus

Here is a very useful graphic on the budget deficit and its history. And here is a useful collection of papers on the effectiveness of the previous stimulus.

How to Study

Welcome to the Fall 2011 semester. Want to know how to do a better job of studying this semester? Check out this quick series of videos from a cognitive psychologist.

Research: James Murray

James Murray's research is featured in the news.

Thousands of UW-La Crosse students will be moving onto campus this weekend. A study co-authored by a UW-L professor shows such a move could help them make the grade.

James Murray, UW-La Crosse assistant professor of economics, has found evidence that living on campus causes students to perform better academically.

The study of about 360 students at Indiana University-Purdue University found both an immediate effect and a more long-term effect of on-campus living. Students who were presently living on campus had a GPA from .3 to .9 higher than those who didn’t. Students who had once lived on campus continued to perform better academically even after moving off campus. Their GPA was from .3 to .5 higher.

“This may help universities take measures to improve their on-campus student life — to try to encourage behavior that leads to better academic performance,” says Murray.

See the story in this Metro News online article.

Reasoning in Economics

Here is a discussion about behavioral econ, psych, and inductive versus deductive reasoning. It is wonderful throughout.

Lessons in Tax Incidence

Apparently FAA taxes are temporarily suspended since congress has failed to act on renewing them. And it appears airlines are charging rates as if they were still collecting the tax. Any student of economics will recognize this as an issue of tax incidence. The fact that the price to the consumer remains unchanged, suggests that the incidence of the tax fell entirely on the airlines (suppliers). Rather than being angry this is something to be happy about. It means that consumers weren't harmed by the FAA taxes in the first place, and it also means demand for flying is highly elastic. The quote at the end of the block below suggests this might be true:

Several aviation taxes expired after midnight Friday when Congress failed to reauthorize the Federal Aviation Administration, which collects the revenue. The suspended taxes could save passengers 10% to 15% on their ticket prices, but most U.S. carriers have boosted fares to the levels ticket prices would have been with the taxes still in place, allowing the airlines to take in roughly an extra $25 million a day, says Rick Seaney of FareCompare.com.

As of Tuesday, only Spirit and Alaska seemed to be bucking the trend, Seaney says.

Frequent fliers have noticed.

"While I respect any business' right to set prices as they see fit, this is another example of the airline 'gotcha game,'" says Steven Gordon, a sales manager who lives in Virginia Beach. "It is getting to the point that I feel better about buying a used car than an airline ticket."

Two Charts For Anyone Who Thinks Skipping College Is A Good Idea

From a former student: Two Charts For Anyone Who Thinks Skipping College Is A Good Idea

Dan Ariely and Qualtrics

An interesting interview with Dan Ariely in part about his use of surveys. Particularly interesting for students in Behavioral Econ and BUS 230. From the interview:

WHAT ADVICE DO YOU HAVE FOR MARKET RESEARCHERS?


What people do is not what they say. In general, most of our findings suggest that we should not think very highly of focus groups.


I suspect that many market research companies use focus groups because they want a statement to put in a PowerPoint presentation for a client. But the problem is that what people say doesn’t always reflect what they think or, even more important, the reasons for their actions.


SO, THE QUESTION IS, WHAT SHOULD YOU ASK?


You can ask people what they have done, or what they think they will do in the future. They can answer those questions. But, the moment you get into reasons, into why, interpreting their answers as correct becomes much more tricky.


It is also important to ask about categories that are ones which people can accurately quantify. The more concrete your response scale is, the more likely people are to answer your questions in an informative way.


HOW WOULD YOU RECOMMEND RESEARCHERS USE SCALES?


Take the question, “How often have you done X?”


If you create a scale from “very rarely” to “very frequently”, that’s not as useful as offering, “2 times last week” or “3 times last week”.


The more concrete you get, the more people feel inclined to answer accurately and honestly.


ANY MORE ADVICE ON HOW TO USE SCALES?


Often people use a 5-point response scale, but we find most people have an aversion to the extremes. This means that when we use a 5-point scale, effectively we are using a 3-point scale. That makes our sensitivity of our measurement less useful.


I would encourage researchers to think whether people will have that extreme aversion, and if that is the case, to have more levels. A continuous scale with just 2 anchors in the extremes in such cases is ideal.

Econ Major: What is it Worth?

What is the value of an Economics Major? A lot. The full report is here. The report includes all college majors.

The Value of College Education (and Majors)

A grad school pal of mine, Jeff Strohl works at Georgetown University's Center for Education and the Workforce and they just came out with this study reports that:

[a]n analysis of the projected lifetime earnings of 171 college majors provides a clearer picture of what one bachelor's degree means compared to another in the labor market. And the answer can be as much as $3.64 million.

That's the difference between what petroleum engineering majors can expect to earn over a 40-year career ($4.8 million) and what counseling psychology majors could earn ($1.16 million). Even the lowest-paying major beats the $770,000 average earnings of a person who holds only a high school diploma.

And that gender and race matter:
White workers and men fare best, the Georgetown study found. Even in their highest paid major, electrical engineering, blacks earn $12,000 less a year on average than Asians and $22,000 less than whites with the same major. Women tend to hold the majority of degrees in many of the lower-paying fields, such as education. Female chemical engineering majors earn on average $20,000 less a year than male counterparts.
Here's a link to the full study.

What can the Fed do about stagflation?

The NY Times had a nice article about the Fed's lack of options to fight stagflation and the hope the China's economy doesn't sputter and make things worse for the U.S.

http://www.nytimes.com/2011/04/29/business/economy/29norris.html

FOMC post-meeting press conference

In an effort to be ever-more transparent, Ben Bernanke gave his first ever, of many, press conference. He'll be giving press conferences after every FOMC meeting.

Here is a summary of what he said,

http://www.reuters.com/article/2011/04/27/us-usa-fed-bernanke-highlights-idUSTRE73Q6ZU20110427

Seminar: Lisa Giddings

The final department seminar for the 2010-11 season will be held next week. On Friday, April 29th, our own Lisa Giddings will present "Children, Family Size and Household Specialization: A Comparison of Different-Sex and Same-Sex Couples Using Matching Techniques." The seminar will be at 3:30 in room 230 Wimberly.

Central Banking Videos

The Federal Reserve has a lot of videos on its website about monetary policy and the federal reserve in general, and even information about recent news monetary policy actions.

Here is one short video about what the Federal Reserve is:
http://bcove.me/yq3ydto2

Here are all of the vidoes:
http://www.federalreserve.gov/mediacenter/media.htm

Inflation and U.S. Federal Government Debt

Here is short interesting article from the St. Louis Fed about the possibility that the Federal Reserve might "monetize" the U.S. debt.

Fiscal Policy and Expected Inflation

Seminar: Lee Lowenfish

The Economics Department, in cooperation with the university's Inclusive Excellence Initiative, will feature its next seminar speaker, Dr. Lee Lowenfish (Columbia University) for two presentations on Thursday, April 14th. The first is a brown bag lunch from 12:30-1:30 in Port O' Call in the Cartwright Center. The topic of discussion will be "Civil Rights in America." Dr. Lowenfish will be joined on a panel by Professor John Grider (History), Professor Alan Bigel (Political Science), and Charles Martin Stanley (Associate Dean CLS). Each panelist will make brief remarks before opening up the topic to discussion with audience members.

Thursday evening (April 14), at 7:30 pm in the Great Hall of the Cleary Center,Dr. Lowenfish will present a public lecture entitled "Conservative revolutionary: how Branch Rickey's signing of Jackie Robinson jump-started the modern civil rights movement."

Dr. Lowenfish received his PH.D. in history from the University of Wisconsin-Madison in 1968. Among his numerous publications are four books, including his most recent: Branch Rickey: Baseball's Ferocious Gentleman, which will be available at both of his presentations.

Students are encouraged to take advantage of this opportunity to be a part of our inclusive excellence program.

Seminar: Robert Lemke

Our next department seminar will be next Friday, March 4, at 3:30 p.m. in room 230 Wimberly Hall. Professor Robert Lemke (Lake Forest College) will present "Explaining Game-to-Game Ticket Sales for Major League Baseball Games Over Time," research he is working on with some of his undergraduate students. Please encourage our upper division econ class students to attend.

In the News

Amy Lewis, President of the UW-L Econ Club, was in the Tribune:

Amy Lewis catches herself browsing the Internet for jobs when she should be doing homework. The University of Wisconsin-La Crosse senior has a world of job opportunities at her fingertips — and many of them are out of state.

“I think now with the way transportation is ... it’s easy to think you can go anywhere in the world,” she said, “and it’s not like you are tied to any one region.”

Some polls suggest Wisconsin’s “best and brightest” graduates leave the state, a phenomenon often called brain drain. But the majority of graduates from University of Wisconsin System schools as well as our local colleges stay in Wisconsin. Sixty-seven percent of University of Wisconsin-La Crosse students, 75 percent of Viterbo students and 90 percent of Western Technical College students found employment or placement in Wisconsin within six months of graduation, based on the schools’ most recent data.

Lewis will graduate in December with degrees in economics and marketing, and
she wants to stay local. She has worked at Pearl Ice Cream Parlor & Confectionery and Features Sports Bar and Grill in West Salem during college, and she likes the small town business feel.

But she’s also a realist.

“I don’t expect to find a career once I graduate, even though I have a four-year degree from a great university,” she said. “I have no skills, no work experience to make me stand out.”

Seminar: Nick Herro

The Economics Department Seminar Series kicks off next week.  Our first speaker will be Nick Herro, UWL Economics Major, working with James Murray.  Nick will present "Measuring Uncertainty in Central Bank Decisions and its Impact on Macroeconomic Outcomes" on Friday, February 18th at 3:30 p.m. in room 230 room 141 Wimberly. 

Spring 2011 Seminars

Month	Date	Presenter	Affiliation	Title
February	18	Nick Herro	UW-L student	Measuring Uncertainty in Central Bank Decisions and its Impact on Macroeconomic Outcomes
March	4	Robert Lemke	Lake Forest College	Sports economics
March	23	Eric Morser	Skidmore College	The Political Economic History of La Crosse
April	8?	Tom Weiss	U of Kansas	Tourism and travel, an economic history
May	6	Lisa Giddings	UW-La Crosse	Children, Family Size and Household Specialization

Open post in a new tab to see seminar titles.

Economics Reading List

Here is a late list of gift giving suggestions for the econerds out there.