Measuring the dependency of different variables

I expect that both Portugal and Ireland have had, for some years, some ultra-secret study groups on plans to leave the Euro. Especially for Portugal, that would be the best option, for reasons that Tyler Cowen makes clear.

It is a thorny problem, but it could be done.

I expect that both Portugal and Ireland have had, for some years, some ultra-secret study groups on plans to leave the Euro. Especially for Portugal, that would be the best option, for reasons that Tyler Cowen makes clear. It is a thorny problem, but it could be done.

1. The parable of the frog who dies in boiling water when the temperature is raised slowly* is often invoked when the discussion turns to such themes as the debt problem or global warming.

2. It is, however, the fallacy of the we, where the argument made as if there was a we which makes the decision: if we don’t do something about global warming…. As Russ Roberts would point out, though, there is no we which decides. There is no frog, there are many many different screaming entities in the pot. Some say it’s getting too hot, others say, no it’s fine, just stay a bit longer. It’s not that we don’t notice; rather there is a bunch of screaming about the water temperature from all sides.

3. Another parable is that of the Thanksgiving turkey. In the months before November, the turkey is not sure of whether its human masters are benign or evil. There are rumours of an upcoming slaughter. However, each day that passes only soothes the turkey. The “humans are nice” party has the best arguments: humans come and give food. The “humans want to kill us” party is a bunch of pessimistic killjoys, who are proven wrong everytime. That is, until they aren’t and all the turkeys are, in fact, killed.

4. Government spending has been a part of the public discourse in Portugal for the past 15 years or so. For years, the party of “markets are nice and will always lend us money” (normally phrased as “we can always roll over the debt”) and “there is life beyond worrying about the deficit” were, apparently, proven right (the government could spend and just borrow more). Mostly they were elected too. After all, why curtail spending when you can do it with impunity? The fiscal conservatives were heartless kill-joys (like the global warming alarmists are granola bar munching kill-joys).

6. Then, in less than a year, the “we cannot cut spending in this economy” party wasn’t right anymore. The problem was real (the truth became that we cannot borrow in this economy). Oh, and it was also too late to do something about it. That’s how the country ended up needing a bailout to pay the basic bills (nobody has any idea yet of what will happen in the longer term). It didn’t happen in a fit of absent mindness; nobody was caught unawares. People thought about it, heard the arguments, and elected those that made the wrong choices.

7. As I tweeted before, deficit spending is like driving drunk: most of the time nothing happens and it might even be fun, but do not be fooled into thinking it’s safe.

* Yes , it is not true. As it is not true that a turtle ever raced a hare. Can we just agree that it is a useful parable.

1. The parable of the frog who dies in boiling water when the temperature is raised slowly* is often invoked when the discussion turns to such themes as the debt problem or global warming. 2. It is, however, the fallacy of the we, where the argument made as if there was a we which makes ...

1. Most people agree that we are not motivated by money alone. In fact, a favorite economics straw-man is to say that economists think that people only act out of interest for money (economists tend to assume that people act in their self-interest and, in many economic situations, that is the interest for money; but it is often something else).

2. However, there are areas where we think that only money is a motivator. For example, in science, it has become common for articles to carry a “conflict of interest” declaration where one is expected to state whether one has a financial interest in the outcome of the presented research.

3. Some publications use the phrasing “financial conflict of interest,” but others just write “conflict of interest.” However, even in this last case, it is only the financial conflict of interest that is meant. As if there were not other motivations to slightly cheat or embelish the results. The research community (and the public in general) fall into this naïvely cynical view of human motivation where only money is a motivation for non-exemplary behaviour.

4. I’d love to see at the end of a scientific paper: The senior author is up for tenure review at the end of this year and had, so far, not published in a high profile journal. Would such a statement lead you to weight the claims in the paper differently?

1. Most people agree that we are not motivated by money alone. In fact, a favorite economics straw-man is to say that economists think that people only act out of interest for money (economists tend to assume that people act in their self-interest and, in many economic situations, that is the interest for money; ...

Slobodan Milosevic arrives at the UN War Crimes Tribunal in The Hague, 2000

1. Rumours abound that Qaddafi might be seeking an exit strategy. One of the issues that must be on the table is whether Qaddafi should stand trial for his crimes. Officially, Britain is saying that yes, of course.

2. Traditionally, the outcome for Qaddafi would be a nice comfy house in the French Riviera, forever surrounded with syncophants scheeming a return to power and eventual, embittered death in luxury. Not sightly, immoral even.

3. However, as Benjamin Constant pointed out 200 years ago, you should never give a man in power the choice between keeping that power (by any means possible) and facing the guillotine. While the guillotine is off the table, the feeling remains. Qaddafi must now either (1) fight it out or (2) end in humiliation.

4. If Milosevic had reasonably expected to end up in court, would he have given up so peacefully? Milosevic is the best-case-scenario for the American action: an example of an air force only action that resulted in the desired political objectives.

5. The embarassing thing is that No one has the power to negociate peace with Qaddafi. No one can negociate away the possibility of ICC prosecution in exchange for peace. Effectively, the ICC treaties have made peace negotiations illegal. Not all peace negotiations, of course, just those that would interest Qaddafi. Which is effectively the same.

6. The last point is not strictly true, the US could give Qaddafi exile privileges. Probably. How would the American Courts react to an extradition request?

Slobodan Milosevic arrives at the UN War Crimes Tribunal in The Hague, 2000 1. Rumours abound that Qaddafi might be seeking an exit strategy. One of the issues that must be on the table is whether Qaddafi should stand trial for his crimes. Officially, Britain is saying that yes, of course. 2. Traditionally, the outcome for ...

Consider the following thought experiment: Congress passes a law saying that all the living Nobel Prize winners in Economics are to gather. Whatever they decide by unanimous vote will automatically become law. Basically, everyone who has won a Nobel Prize gets a veto.
(You can run the same experiment with only the American Nobelists, if you prefer).

What sort of laws would come out of this committee? I’d wager they’d look more like soft libertarianism than anything else. Here are some of the ideas that I think would win:

1. Curbs on occupational licensing.
2. Reducing (maybe ending) the tax subsidy for employer-based health insurance.
3. End a bunch of subsidies for special interests (e.g., agriculture).
4. More unilateral free-trade.
5. Some form of school vouchers.

Here are a few maybes:

1. A carbon tax
2. Simplified tax code
3. Lower corporate tax rates

Here are some of the ideas where there would be no consensus:

1. Which taxes to raise or lower
2. Anything about about health care (except on the employer tax benefit)
3. Anything about higher education.

*

Here is the most interesting part of the exercise: where there is no consensus in economics about what the government ought to do is exactly where the government is most likely to act; where there is consensus, the government is most likely to do nothing.

Consider the following thought experiment: Congress passes a law saying that all the living Nobel Prize winners in Economics are to gather. Whatever they decide by unanimous vote will automatically become law. Basically, everyone who has won a Nobel Prize gets a veto. (You can run the same experiment with only the American Nobelists, if ...

It’s the Republicans. At least, if you look at who votes for them.

Note that this does not extend to conservatives being more pro-science. It’s the non-conservative Republicans who are pulling the Republican scores up.

It's the Republicans. At least, if you look at who votes for them. Note that this does not extend to conservatives being more pro-science. It's the non-conservative Republicans who are pulling the Republican scores up.

One sentence from D. McIntyre struck me: Detroit presents America with that rare problem which has no solutions.

I don’t know if it is American optimism or unbridled leftism that better characterises that sentence, but I don’t think that problems for which no solution exists are at all rare. In public policy, they are rather the norm: every solution has its own problems and you cannot do better than trading off one issue against the other.

One sentence from D. McIntyre struck me: Detroit presents America with that rare problem which has no solutions. I don't know if it is American optimism or unbridled leftism that better characterises that sentence, but I don't think that problems for which no solution exists are at all rare. In public policy, they are rather ...

When it comes to whether to buy organic produce or the regular kind, I’ve come upon a pretty good heuristic: buy organic only when the price difference is big. Otherwise, I just get the regular.

The reasoning is the following: I’m looking for a better tasting, more aromatic, product; not one grown according to the technology that existed before 1913. Often, the more premium products tend to be organic, but cheap, supermarket organic, is just as flavourless as the regular kind; so I might as well save a few cents.

Also, I’m briging the organic movement back to its original roots: to look down at people who don’t want to pay 4$/lb for tomatos.

When it comes to whether to buy organic produce or the regular kind, I've come upon a pretty good heuristic: buy organic only when the price difference is big. Otherwise, I just get the regular. The reasoning is the following: I'm looking for a better tasting, more aromatic, product; not one grown according to the ...

1. Given how the profession failed to prevent the worst financial crisis ever, it is clearly not a science.

2. Physics failed to prevent the nuclear problems in Japan (and earlier in Chernobyl and Three Miles Island—a dismal history of failure). So, physics is not a science.

3. Geologists did not warn us about earthquakes and several of them thought that Japan was a pretty nice place to live even a few weeks ago! So, geology is not a science.

4. I used to have an old car that, at one point, had a lot of engine problems. Thermodynamics is obviously not a science either.

5. Sometimes, people I don’t like win elections. Political science is a fraud.

6. The postal office loses mail all the time, so even stamp collecting is not a science.

Amazingly, example 1 is often taken seriously.

1. Given how the profession failed to prevent the worst financial crisis ever, it is clearly not a science. 2. Physics failed to prevent the nuclear problems in Japan (and earlier in Chernobyl and Three Miles Island—a dismal history of failure). So, physics is not a science. 3. Geologists did not warn us about earthquakes and ...

Craig Venter encoded a line from James Joyce in a bacteria’s genome. Now, he is being sued from copyright infrigement.

Craig Venter encoded a line from James Joyce in a bacteria's genome. Now, he is being sued from copyright infrigement.