What we’re reading (10/11)
“A Nobel Prize For The Credibility Revolution” (Marginal Revolution). “The Nobel Prize goes to David Card, Joshua Angrist and Guido Imbens. If you seek their monuments look around you. Almost all of the empirical work in economics that you read in the popular press (and plenty that doesn’t make the popular press) is due to analyzing natural experiments using techniques such as difference in differences, instrumental variables and regression discontinuity. The techniques are powerful but the ideas behind them are also understandable by the person in the street which has given economists a tremendous advantage when talking with the public. Take, for example, the famous minimum wage study of Card and Krueger (1994) (and here). The study is well known because of its paradoxical finding that New Jersey’s increase in the minimum wage in 1992 didn’t reduce employment at fast food restaurants and may even have increased employment. But what really made the paper great was the clarity of the methods that Card and Krueger used to study the problem.”
“We May Have Reached Peak Earnings” (CNN Business). “Corporate profits soared in the first half of this year, largely because of favorable comparisons to last year's weak earnings. The Covid shutdown of the economy hit major companies hard in the first half of 2020. But as companies get set to report their third-quarter results in the next few weeks, some Wall Street analysts are concerned the rate of earnings increases will start to slow. This may be the peak for the foreseeable future.”
“There Is Shadow Inflation Taking Place All Around Us” (New York Times). “Many types of businesses facing supply disruptions and labor shortages have dealt with those problems not by raising prices (or not by only raising prices), but by taking steps that could give their customers a lesser experience. A hotel room might cost the same as a year ago — but no longer include daily cleaning services because of a shortage of housekeepers. Some restaurants are offering limited service, with waiters stretched thin. Would-be car buyers are being advised to be flexible on the color and even make and model, lest they face a long wait to get their new wheels.”
“San Francisco Fed's Daly: Too Soon To Say Job Market 'Stalling'“ (Reuters). “The U.S. job market will continue to feel the effects of COVID-19, but it is too soon to say it is ‘stalling,’ San Francisco Federal Reserve President Mary Daly said on Sunday. ‘It's going to have these ups and downs, especially with the Delta variant,’ Daly said on the CBS weekend news program ‘Face the Nation’ when asked about a second straight month of disappointing job growth in September.’
“Is It Time For A New Economics Curriculum?” (The New Yorker). “Jonathan Gruber, who teaches introductory economics at M.I.T., felt that core might introduce too much complexity for a foundational course. He worried that so much emphasis on the ethical and political dimensions of economics might make the subject feel like a different discipline altogether. ‘The question is, do you want the students to feel like they’re coming out of, you know, to be blunt, a sociology class or an economics class?’ Gruber said. Still, he welcomed the greater emphasis on the imperfections of markets. ‘Economics is a right-wing science,’ he told me. ‘We teach students that the market is always right. And that’s just wrong.’”
