September 2009 Archives

Jason and I have always been fans of the great presentation of data and it is an important skill in communicating economics. Good examples that we have discussed on this blog include the Democrats health plan diagram, the averages from the American Time Use Dataset, and the breakdown of the Federal Reserve balance sheet. Jason sent me this link to one of the coolest blogs I have ever seen: InformationIsBeautiful.net. This is an entire blog dedicated to the artful and effective visual presentation of data. Below is a graphic from a post about disease case fatality rates if you wash your hands.

Jason and I were PhD students in the economics program at the University of Texas at Austin for five years, and Barry Kahn was a classmate of ours. However, during the last two years of the program while Jason and I were working on dissertations, Barry was spending most of his time on a business idea. Using the tools of game theory, microeconomics, and industrial organization, he was developing a company that would attempt to take back to the original ticket seller some of the profits that scalpers always get on the secondary ticket market. The result is Qcue (pronounced kyoo-kyoo) and the product is called dynamic pricing.

Dan Hamermesh is currently visiting BYU as an invited seminar speaker. I was showing him my picture of the normalized peak plot of employment in the last 14 recessions, and he told me about another labor fact from this recession that astounded me. Look at the picture below of average duration of unemployment in the U.S. since 1947. The average unemployment duration for everyone who said they were unemployed in August 2009 was 25 weeks (nearly 6 months). Compare that to the average of about 15 weeks between 1976 and 1992. This is the 60-year record in the U.S.

My 9-year-old son showed me this today, and we laughed our heads off together.

The most recent winner of the Nobel Prize in Economics and New York Times columnist, Paul Krugman, had an eight-page article a week-and-a-half ago in the New York Times magazine entitled, "How Did Economists Get It So Wrong?" In short (and in its best light), his article was a broad critique of macroeconomics of the last three decades and a call to a return of the macroeconomics of the early 1970s. One of my favorite economists, John Cochrane, who we have cited multiple times on this blog for his biting rebuttals to poorly argued attacks (post 1, post 2), issued another instant classic in his response to Paul Krugman's article. Below are some of the highlights.

Finn Kydland was awarded the Nobel Prize in Economics in 2004 with Ed Prescott for their contributions to dynamic macroeconomics. In Kydland's Nobel lecture, he mentioned a truth that every professor of undergraduate macroeconomics has struggled with. "In the past 20 years, the gap between research and textbooks has grown wider and wider." The economic models outlined in undergraduate macroeconomic textbooks have almost no resemblance to the models used in current research, and the difference is the treatment of decisions across time--dynamics.