faulker020

This is purely my impression, buttressed with some anecdotes; I don't have any systematic data to back this up. But in both papers and casual discussion, I'm seeing macro people taking behavioral ideas more seriously.  "Behavioral" is a very squishy idea, but basically I think of it as meaning "imperfect use of information". The difficulty with labeling a model "behavioral" is that we don't really know what information is available. This is why I believe there's a fundamental equivalence between behavioral and informational models - for any "informational" model where agents don't know all of the facts, there's an observationally equivalent "behavioral" model where they do observe the facts and just don't make use of them.  But anyway, in macro, most models use Rational Expectations, so let's think of "behavioral" as just meaning "non-RE". Actually, non-RE models have been kicking aro...

I wrote a Bloomberg View post about the Permanent Income Hypothesis . Basically, more and more research is piling up showing that it doesn't fit real consumption patterns. Some consumption smoothing takes place, but there's also a substantial amount of hand-to-mouth consuming going on. Most economists I know of have already accepted this fact, and usually chalk the hand-to-mouth behavior up to liquidity constraints (or, less commonly, to precautionary saving). But a new paper on unemployment insurance extension casts major doubt on these standard fixes, especially on liquidity constraints as the culprit. A long-anticipated transitory shock - UI expiration -- shouldn't produce a big bump in consumption even if people are liquidity constrained. Nor is home production the answer, since unemployed people are already at home long before UI expires. Something else is going on here - either people interpret UI expiration as a (false) signal of the expected duration of unemployme...

If you don't live in a sensory deprivation tank, you probably noticed that the 2016 presidential election was rather racially charged. Many on the Democratic side charged Trump and his voters with racism, white supremacism, etc. Political scientists found that Trump's most ardent supporters were especially likely to score high on what they call "racial resentment" - their term for the belief that black Americans are getting more than they deserve. Meanwhile, the election results were very polarized by race: Trump's victory was almost entirely furnished by the white vote, while Clinton overwhelmingly won all minorities. This repeated the pattern of 2012 .   Race has always been important in American politics - except for a brief period in the mid 20th century, blacks and Southern whites have always been on opposite sides of the partisan divide. The 1964 Civil Rights Act is widely acknowledged to have spurred the shift of Southern whites from the Democrats to the...

One of the more interesting arguments these days is between proponents of a universal basic income (UBI) and promoters of policies to help people get jobs, such as a job guarantee (JG). To some extent, these policies aren't really in conflict - it's perfectly possible for the government to mail people monthly checks and try to help them get jobs. But there are some tradeoffs here. First, there's money - both UBI and JG cost money, and more importantly cost real resources, which are always in limited supply. Also, there's political attention/capital/focus - talking up UBI takes time and attention away from talking up JG and other pro-employment policies. One of the key arguments used by supporters of pro-employment policies - myself included - is that work is essential to many people's sense of self-worth and dignity. There's a more extreme variant of this argument, which says that large-scale government handouts actually destroy dignity throughout society. Jos...

How much of the responsibility for understanding lies with the writer of an article, and how much with the reader? This is not an easy question to answer. Obviously both sides bear some responsibility. There are articles so baroque and circuitous that to get the point would require an unreasonable amount of time and effort to parse, even for the smartest reader. And there are readers who skim articles so lazily that even the simplest and most clearly written points are lost. Most cases fall somewhere in between. And the fact that writers don't usually get to write their headlines complicates the issue. See what you think about this one. The other day, Susan Dynarski wrote an op-ed in the New York Times criticizing school vouchers (a subject I've written about myself ). Dynarski opens with the observation that economists are generally less supportive of vouchers than they are of most free-market policies: You might think that most economists agree with this overall approach, be...

The Fundamental Fallacy of Pop Economics (which I get to name, because this is my blog and I can do whatever I want, mwahahaha) is the idea that the President controls economic outcomes . The Fundamental Fallacy is in operation every time you hear a phrase like "the Bush boom" or "the Obama recovery". It's in effect every time someone asks " how many jobs Obama has created ". It's present every time you see charts of economic activity divided up by presidential administration. For example, here's a chart from Salon writer Sean McElwee , using data from a paper by Alan Blinder and Mark Watson : Blinder and Watson attribute the difference to "shocks to oil prices, total factor productivity, European growth, and consumer expectations of future economic conditions", but McElwee attributes it to progressive economic policy. Larry Bartels has made headlines with similar analyses about inequality: But the worst perpetrators of this fallacy...

Lots of people are freaking out about the " post-truth world " and the " war on science ". People are blaming Trump, but I think Trump is just a symptom.  For one thing, rising distrust of science long predates the current political climate; conservative rejection of climate science is a decades-old phenomenon. It's natural for people to want to disbelieve scientific results that would lead to them making less money. And there's always a tribal element to the arguments over how to use scientific results; conservatives accurately perceive that people who hate capitalism tend to over-emphasize scientific results that imply capitalism is fundamentally destructive. But I think things are worse now than before. The right's distrust of science has reached knee-jerk levels. And on the left, more seem willing to embrace things like anti-vax, and to be overly skeptical of scientific results saying GMOs are safe.  Why is this happening? Well, tribalism has gotten...