It's Caroline Joy Kuehn's first birthday today!

Hard to believe it's been a year.

Brief Thoughts on Piketty on EconTalk

Piketty does a great job on EconTalk, discussing his book with Russ Roberts. This was my favorite part of the whole discussion. It comes after Russ is asking about people who get wealthy in various ways - including very legitimate ways. I think this encapsulates so many of the criticisms of the book:

"Roberts: But I think as economists we should be careful about what the causal mechanism is. It matters a lot.

Piketty: Oh, yes, yes, yes. But this is why my book is long, because I talk a lot about this mechanism."

The book is long for at least two reasons. First I think he adds a bunch of stuff in there that doesn't need to be in there (the policy stuff, the discussion of the social state, could probably all be in a separate book - he could probably cut a third of the book by removing this material). But the second reason is that he is far more exhaustive than many of his critics seem to give him credit for. There is this notion that the book is all about inheritance and ill-gotten gains. The latter is a relatively small discussion and the former is a more sizable discussion but comes way late in the book and is not some kind of exclusive focus.

Generally I think this was a great EconTalk. My only criticism is along these lines. Several times Russ chimed in with a different version of "but this guy is wealthy because he improved the world!", and each time Piketty basically said "right, I agree, and I've never challenged the point" (of course it's Piketty so he spends much longer saying that). If Russ didn't keep asking those questions or if Piketty just replied "asked and answered" I think they could have gotten much deeper into the material. But still a very nice talk.

New Review of Industial Organization article is up!

It's not assigned to an issue yet, but a paper I co-authored titled Explaining Variation in Title Charges: A Study of Five Metropolitan Residential Real Estate Markets is available here.


It's an interesting situation - you'll notice I have two affiliations (American University and Urban Institute). This work started several years ago as a project for the Department of Housing and Urban Development when I was at the Urban Institute. Since then I left for AU and now have put the finishing touches on it back at the Urban Institute after being gone for three years.


The lead author, Bob Feinberg, is a great guy that's on my dissertation committee. I can't speak highly enough of two other co-authors, Signe-Mary and Doug, both at Urban. I've learned at least as much econometrics from Doug Wissoker as I have from any of my econometrics professors (and that's a compliment to Doug, not a knock on my econometrics professors who have really all been excellent). Sisi was at the Urban Institute, and is now teaching in China.

An alternative Venn Diagram for Mark Perry

I really hope I don't have to explain to everyone what's so wrong about this post by Mark Perry on the minimum wage.

All the law of demand says is that demand curves slope down.

No one that I know that is doubtful about modest minimum wages hurting employment disagrees that demand curves slope down. If you think they are arguing demand curves slope up you need work a little harder at understanding the conversation you are inserting yourself into.

Documents on Koch intentions on FSU econ department hiring

Here.

Note, this is an internal memo about the Kochs' expectations. Because of the outrage this caused (even in the absence of these documents) the advisory group was eventually restricted in how much they could impact these decisions.

This is really not good for anyone that cares about economics as an objective science and people who receive Koch money (which is not inherently bad at all of course), should be saying that.

If movies tell me anything it's that the Sudanese need to watch out

My minimum wage paper is out at EPI

You can find it here. The idea is to communicate to a broad audience the fact that the "credibility revolution" in econometrics matters a great deal for the minimum wage debate, and that if we divide studies according to whether they employ quasi-experimental methods or fixed effects models the quasi-experimental methods (which are strongly preferred) tend to produce the "no disemployment effect" results. That should matter for the debate.

I also include some cautions about how to apply this research to policy. These are every bit as important. I've had one discussion with a journalist so far about the paper and the fast-food strike for a $15 minimum. I did the math for him on how big an increase that $15 would entail and compared it to Figure A in my paper and flatly told him that you can't justify this with the existing research - our strong priors ought to be that it will reduce employment, with perhaps a few high wage metropolitan areas as the exception.

An excerpt from the report I like ("matching methods" is a more user-friendly term that I use to talk about quasi-experimental methods - that is all well-defined up front and defined in even more detail in the endnotes - the idea is that in all quasi-experimental methods you are matching some treatment case to some comparison case):

"It is difficult to overstate how uncontroversial it is in the field of labor market policy evaluation to assert the superiority of matching methods to the nonmatching approaches described above.⁹ The seminal evaluations of the effects of job training programs, work-sharing arrangements, employment tax credits, educational interventions, and housing vouchers all use at least some sort of matching method, if not an actual randomized experiment. In their widely cited survey article on non-experimental evaluation, Blundell and Costa Dias (2000) do not even mention state-level fixed-effects models when they list the five major categories of evaluation methods. In a similar article, Imbens and Wooldridge (2009) do mention fixed-effects models as a tool for policy evaluation, but clarify that these were used before more advanced methods were developed, noting that the modern use of fixed-effects models is typically in combination with other more sophisticated techniques. For example, Dube, Lester, and Reich (2010) also use a fixed-effects model, but more importantly it is a fixed-effects model that utilizes rigorous matching strategy to identify the effect of the minimum wage. Sometimes fixed-effects models are the best available option if no natural experiment or other matching opportunity emerges to provide a more rigorous approach. Well specified fixed-effects models can still be informative. But faced with the choice between a well matched comparison group and a fixed-effects model, the former is unambiguously the stronger study design."