Art Diamond – Page 220 – artdiamondblog.com

Analytical Solutions Require Unrealistic Assumptions that Make Models Useless for Policy

Source of book image: http://www.anderson.ucla.edu/faculty/edward.leamer/images/COVER%209120_jkt_Rev1.jpg

(p. 190) When I was a younger man, I and all of my cohort were apprehensive if we saw Ed Leamer in the audience when we were presenting a paper. His comments were blunt, incisive, and often negative. But what truly terrified us was that he was almost always right. . . .

Leamer has produced a highly original little book, with big insights and lessons for us all. He explores the tension between economics that is mathematically sophisticated and complex but often vacuous, versus economics that may be vague but which is useful and carries a message. It is frankly a remarkable work, full of insights and persuasive arguments that need to be read, debated, and taken seriously.
. . .
(p. 191) But this is no rant of an old guy. Leamer gets very specific about his notions of usefulness versus rigor. A good drum to bang on is Samuelson, an important “mathematizer.” I would strongly encourage all young trade economists and perhaps all graduate students who have been subjected to a traditional international trade course at any level, to read the section on factor-price equalization. This is beautifully done and even exciting and funny at times. As told by Leamer, the young Samuelson excoriates Ohlin for largely dismissing the possibility of factor-price equalization and then presents his (Samuelson’s) “proof” of factor-price equalization. The latter, of course, is a theorem that is mathematically correct given the assumptions, but Ohlin is talking about its usefulness in understanding the world and constructing policy. The factor-price-equalization theorem is indeed a prime example of something that is valid but not useful.
. . .
Yet at the same time, I have thought long and hard about exactly what message should be given to graduate students and assistant professors without much success. The journal publishing business puts a huge premium on rigor over usefulness and few referees or editors are inclined to take the chance inherent in accepting papers that are a bit loose in their analytical or econometric structures, no matter how exciting they might be. If you accept that, then the profession as a whole has to rethink our view of what is an important scientific contribution: I cannot simply tell graduate students to think more broadly and worry less about elegance. Some will of course deny that there is any tension, but I side with Leamer. Over and over again, I hear, read, and/or referee papers (p. 192) where, in order to get an analytical solution to a model, the author has to assume away almost every interesting feature of the problem to the point that the remaining model is uninteresting and uninformative. But that at least qualifies the paper for possible publication in Econometrica, RESTud, or JET.

For the full review, see:
Markusen, James R. “Book Review of Ed Leamer’s the Craft of Economics.” Journal of Economic Literature 51, no. 1 (2013): 190-92.
(Note: ellipses added; italics in original.)

The book under review is:
Leamer, Edward E. The Craft of Economics, Ohlin Lectures. Cambridge, MA: The MIT Press, 2012.

“The French Work Force Gets Paid High Wages But Works Only Three Hours”

(p. B1) PARIS — “How stupid do you think we are?”
With those choice words, and several more similar in tone, the chief executive of an American tire company touched off a furor in France on Wednesday as he responded to a government plea to take over a Goodyear factory slated for closing in northern France.
“I have visited the factory a couple of times,” Maurice Taylor Jr., the head of Titan International, wrote to the country’s industry minister, Arnaud Montebourg, in a letter published in French newspapers on Wednesday.
“The French work force gets paid high wages but works only three hours. They have one hour for their breaks and lunch, talk for three and work for three.”
“I told this to the French unions to their faces and they told me, ‘That’s the French way!’ “

For the full story, see:
LIZ ALDERMAN. “Quel Brouhaha! A Diatribe on Unions Irks the French.” The New York Times (Thurs., February 21, 2013): B1 & B6.
(Note: the online version of the story has the date February 20, 2013.)

For a similar account, see:
GABRIELE PARUSSINI. “U.S. CEO to France: “How Stupid Do You Think We Are?” The Wall Street Journal (Thurs., February 21, 2013): B1.
(Note: the online version of the story has the date February 20, 2013, and has the title “U.S. CEO Blasts French Work Habits.”)

New Technology Allows Maple Syrup Farms to Adapt and Thrive with Global Warming

“Tom Morse, left, and his father, Burr, at work on their maple farm in Vermont.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 11) Scientists say the tapping season — the narrow window of freezing nights and daytime temperatures over 40 degrees needed to convert starch to sugar and get sap flowing — is on average five days shorter than it was 50 years ago. But technology developed over the past decade and improved in recent years offers maple farmers like Mr. Morse a way to offset the effects of climate change with high-tech tactics that are far from natural.

Today, five miles of pressurized blue tubing spider webs down the hillside at Morse Farm, pulling sap from thousands of trees and spitting it into tubs like an immense, inverse IV machine. Modern vacuum pumps are powerful enough to suck the air out of a stainless steel dairy tank and implode it, and they help producers pull in twice as much sap as before.
“You can make it run when nature wouldn’t have it run,” Mr. Morse said.
His greatest secret weapon is a reverse-osmosis machine that concentrates the sap by pulling it through sensitive membranes, greatly increasing the sugar content before it even hits the boiler. The $8,000 instrument with buttons and dials looks like it belongs in a Jetsons-era laboratory more than in a Vermont sugarhouse. But it saves more fuel and money than every other innovation combined. With it Mr. Morse can process sap into syrup in 30 minutes, something that used to take two hours.
. . .
The biggest United States maple farmers have expanded their production acreage and are tapping more trees than ever before: the total was 5.5 million taps last year, compared with slightly over 4 million taps 10 years earlier.
As a result, United States maple syrup production hit a new high in 2011. In Vermont, the top-producing state, sap yield per tap has risen over the past decade.

For the full story, see:
JULIA SCOTT. “Maple Syrup: Old-Fashioned Product, Newfangled Means of Production.” The New York Times, First Section (Sun., March 31, 2013): 11.
(Note: ellipsis added.)
(Note: the online version of the story has the date March 30, 2013, and has the title “High-Tech Means of Production Belies Nostalgic Image of Maple Syrup.”)

Hunter-Gatherers Complained of Hunger and Food Monotony

(p. 30) Based on numerous historical encounters with aboriginal tribes, we know [hunter-gatherers] often, if not regularly, complained about being hungry. Famed anthropologist Colin Turnbull noted that although the Mbuti frequently sang to the goodness of the forest, they often complained of hunger. Often the com-(p. 31)plaints of hunter-gathers were about the monotony of a carbohydrate staple, such as mongongo nuts, for every meal; when they spoke of shortages, or even hunger, they meant a shortage of meat, and a hunger for fat, and a distaste for periods of hunger. Their small amount of technology gave them sufficiency for most of the time, but not abundance.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.
(Note: “hunter-gathers” substituted for “they” by AMD.)

Chagnon Enraged Cultural Anthropologists By Showing Tribal Violence

Source of book image: http://media.npr.org/assets/bakertaylor/covers/n/noble-savages/9780684855103_custom-4deac679a847f1d6e7d64424b01d0be54b54e3a7-s6-c10.jpg

(p. C) In the 1960s, cultural anthropologists led by Marvin Harris argued that conflict among prestate people was mostly over access to scarce protein. Dr. Chagnon disputed this, arguing that Yanomamo Indians’ chief motive for raiding and fighting–which they did a great deal–seemed to be to abduct, recover or avenge the abduction of women. He even claimed that Indian men who had killed people (“unokais”) had more wives and more children than men who had not killed, thus gaining a Darwinian advantage.

Such claims could not have been more calculated to enrage the presiding high priests of cultural anthropology, slaughtering as it did at least three sacred cows of the discipline: that uncontacted tribal people were peaceful, that Darwinism had nothing to say about human behavior and culture, and that material resources were the cause of conflict.
. . .
Meanwhile the science has been going Dr. Chagnon’s way. Recent studies have confirmed that mortality from violence is very common in small-scale societies today and in the past. Almost one-third of such people die in raids and fights, and the death rate is twice as high among men as among women. This is a far higher death rate than experienced even in countries worst hit by World War II. Thomas Hobbes’s “war of each against all” looks more accurate for humanity in a state of nature than Jean-Jacques Rousseau’s “noble savage,” though anthropologists today prefer to see a continuum between these extremes.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; Farewell to the Myth of the Noble Savage.” The Wall Street Journal (Sat., January 26, 2013): C4.
(Note: the online version of the review has the date January 25, 2013.)
(Note: ellipsis added.)

The Chagnon book that Ridley is discussing:
Chagnon, Napoleon. Noble Savages: My Life among Two Dangerous Tribes — the Yanomamo and the Anthropologists. New York: Simon & Schuster, 2013.

Tax Rates Have Big Effect on Labor Supply and Rate of Entrepreneurial Start-Ups

(p. A23) Higher taxes will produce long-term changes in social norms, behavior and growth. Edward Prescott, a winner of the Nobel Memorial Prize in economics, found that, in the 1950s when their taxes were low, Europeans worked more hours per capita than Americans. Then their taxes went up, reducing the incentives to work and increasing the incentives to relax. Over the next decades, Europe saw a nearly 30 percent decline in work hours.
The rich tend to be more sensitive to tax-rate changes because they’ve got advisers who are paid to be. Martin Feldstein, an economics professor at Harvard, looked into tax changes in the 1980s and concluded that raising rates causes people to shift compensations to untaxed fringe benefits and otherwise suppresses their economic activity. A study last year by the economists Michael Keane and Richard Rogerson found that tax rates can have a surprisingly large influence on how much people invest in education, how likely they are to create businesses and which professions they go into.

For the full commentary, see:
DAVID BROOKS. “The Progressive Shift.” The New York Times (Tues., March 19, 2013): A23.
(Note: the online version of the commentary has the date March 18, 2013.)

The Keane and Rogerson paper summarized by Brooks is:
Keane, Michael, and Richard Rogerson. “Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom.” Journal of Economic Literature 50, no. 2 (June 2012): 464-76.

Scientists May Bring Back Extinct Woolly Mammoths to Help Fight Global Warming

“The Southern gastric brooding frog, extinct for a quarter-century. Scientists made early embryos of the frog but they died.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Last week at a conference in Washington, scientists from Australia reported on their attempt to bring back a weird frog, the Southern gastric brooding frog, that went extinct about a quarter century ago. So far they have only made early embryos, which have died.

It is the early days for this new endeavor — it could be years before scientists succeed in bringing species back from extinction. But many species are now gleams in scientists’ eyes as they think of ways to bring them back. Woolly mammoths. A 70,000-year-old horse that used to live in the Yukon. Passenger pigeons, a species that obsessed Dr. Church’s former student.
. . .
(p. A16) Before humans killed them, the nation had three billion to five billion passenger pigeons. They would take days to cross a city, noted Hank Greely, the director of the Stanford Center for Law and the Biosciences at Stanford University. “They left cities covered in an inch of guano,” he said.
. . .
But there could be some unexpected advantages to bringing back certain species, or even to adding their DNA to that of today’s species, Dr. Church said. For example, suppose elephants could live again in the Arctic. When woolly mammoths lived in the Arctic they would knock down trees and enable Artic grasses to flourish. Without trees, more sunlight was reflected and the ground was cooler. In winter, they would tramp down snow into the permafrost, enhancing it.
“Permafrost has two to three times more carbon than all the rain forests put together,” Dr. Church said. “All you have to do to release carbon dioxide and methane is to melt it. With rain forests you have to burn it.”
. . .
Mr. Greely cited another argument in favor of bringing back extinct species. He did not quite buy it, he said, but for him it had “a visceral appeal.”
It is an argument about justice. Take the passenger pigeon. “We are the murderers,” Mr. Greely said. “We killed them off. Shouldn’t we bring them back?”

For the full story, see:
GINA KOLATA. “So You’re Extinct? Scientists Have Gleam in Eye.” The New York Times (Tues., March 19, 2013): A1 & A16.
(Note: the online version of the story has the date March 18, 2013.)
(Note: ellipses added.)

Hunter-Gatherers Lived “in the Ultimate Disposable Culture”

(p. 30) In a very curious way, foragers live in the ultimate disposable culture. The best tools, artifacts, and technology are all disposable. Even elaborate handcrafted shelters are considered temporary. When a clan or family travels, they might erect a home (a bamboo hut or snow igloo, for example) for only a night and then abandon it the next morning. Larger multifamily lodges might be abandoned after a few years rather than maintained. The same goes for food patches, which are abandoned after harvesting.

Source:
Kelly, Kevin. What Technology Wants. New York: Viking Adult, 2010.

Academia Rejected Maslow’s Humanistic Psychology

Source of book image: http://www.harpercollins.com/harperimages/isbn/large/9/9780061834769.jpg

(p. 23) Abraham Maslow, humanistic psychology’s founding father, rejected the atomistic approaches of psychoanalysis and behaviorism that dominated the first half of the 20th century. He strove to develop a psychology that provided “a fuller, though still scientific, treatment of the individual” and understood the potential for growth as innate. His ideas got their most welcome reception from industrial management, to which Maslow retreated when academia failed to roll out the red carpet. But Grogan eloquently insists that humanistic psychology subtly revolutionized Americans’ conception of the self and the role of therapy, and asserts that current trends in the field, like positive psychology, owe the theory a debt they have been reluctant to pay.

For the full review, see:
MEGAN BUSKEY. “Nonfiction Chronicle.” The New York Times Book Review (Sun., March 31, 2013): 23.
(Note: the online version of the review has the date March 29, 2013.)

The book under review:
Grogan, Jessica. Encountering America: Humanistic Psychology, Sixties Culture, and the Shaping of the Modern Self. New York: Harper Perennial, 2012.

Non-Paying Nations Send Heavy-Drinking Delegates to United Nations

(p. A20) UNITED NATIONS — When the United Nations began renovating its Manhattan headquarters in 2009, one of the first casualties of the construction was the storied Delegate’s Lounge, where for decades the delicate work of diplomacy was aided by a good stiff drink.
The loss of the bar led to protest from diplomats and their staffs, and a temporary outpost was soon established.
That bar is also now gone, but the thirst for liquor at the United Nations is apparently still strong.
This week, an American diplomat offered what he called a “modest proposal” that he hoped would speed along the United Nations’ notoriously protracted budgetary proceedings. He asked delegates to put a cork in it.
“The negotiation rooms should in future be an inebriation-free zone,” the diplomat, Joseph M. Torsella, said.
. . .
The United States’ plea for sobriety was reported on the Web site of Foreign Policy magazine. The article cited anonymous diplomats saying that the most recent budget negotiations, which concluded in December, featured at least one delegate who became sick from too much alcohol.
. . .
The United States, Japan and western European countries provide the majority of the United Nations’ budget. And many of the dozens of countries that make up the committee that sets the budget have little financial stake in the negotiations, so partaking of alcohol may seem a good way to endure marathon sessions that can last well into the night.

For the full story, see:
MARC SANTORA. “Diplomat Calls for End to Drunkenness During Negotiations at United Nations.” The New York Times (Fri., March 8, 2013): A20.
(Note: the online version of the review has the date March 7, 2013 and has the title “Diplomat Calls for End to Drunkenness During U.N. Negotiations.”)
(Note: ellipses added.)