Category: Uncategorized

Paid To Be 'Stuck'?

Words matter. So when a recent article in the Wall Street Journal Online proclaims “Workers Stuck in Disability Stunt Economic Recovery,” it sets off the incentive alarms. What do you mean by “stuck in disability” and what role do incentives play in that “stuck”-ness? I mean, if you choose to stay in a sticky situation, are you really stuck?

The quick background:
A very large number of people were disabled by the recent recession (i.e., the number of people who were placed on federal disability jumped dramatically, even by historical standards). The preponderance of this increase in “disability” came from people who were no more disabled than they had been previously. Rather, they are people who lost jobs that they were previously able to endure but jobs they were not able to replace. In short, the new “disability” was really the inability to find new jobs given whatever physical limitations individuals claimed to have, not the physical limitations themselves. This was compounded by States that were able to reduce their welfare and Medicaid costs by shifting people to Social Security disability (SSDI) and Medicare.

Now people are not getting off of disability as rapidly as they have after recessions past. While the official unemployment has been falling of late, it has more reflected a decrease in the labor participation rate than an increase in the number of jobs. The percentage of working-age adults who are in the labor market has decreased, and almost half of that decrease is a result of people moving into “disability” status. Fewer people in the labor market not only makes unemployment look better than it really is, but it also puts a drag on the economy as fewer workers are available to take jobs (supply of labor decreases) and make “stuff”. And “stuff” is what makes the market economy go ’round. If that wasn’t bad enough news, the high disability rate is now predicted to bankrupt the current SSDI system in the next three years.

So, are people really “stuck in disability”? Continue reading “Paid To Be 'Stuck'?”

New POLCON Data Set Released

Witold Henisz (Wharton) has just released the latest update to his POLCON (political constraint) index, which includes data up through 2012. The previous (2010) release included data only up through 2007. The POLCON data uses a spatial modeling technique to synthesize a number of variable characterizing the structures and ideological alignments of countries’ political system, including the number and types of veto points and the party control (and fractionalization) of different government bodies.

The data are made available for no fee except the promise of an appropriate citation. The 2013 release is available for download in both STAT and Microsoft Excel formats and a code book is provided.

This index is an excellent resource for scholars interested in cross-country comparisons that take into account political uncertainty, and Henisz has been doing the academic community a great public service in maintaining and updating this resources since its inception.

Conducting Empirical Legal Scholarship

The 12th Annual Conducting Empirical Legal Scholarship Workshop will take place at the USC Gould School of Law May 22-24, 2013. The workshop is for law school faculty, political science faculty, and graduate students interested in learning about empirical research and how to evaluate empirical work. Leading empirical scholars Lee Epstein and Andrew Martin will teach the workshop, which provides the formal training necessary to design, conduct, and assess empirical studies, and to use statistical software (Stata) to analyze and manage data. Participants need no background or knowledge of statistics to enroll in the workshop. For more information, see the conference website.

Most economics grad students get a lot of exposure to econometric and statistical concepts, but not necessarily to an understanding of how to actually apply that knowledge to conduct empirical research. I suspect the organizers may be willing to let even economics grad students participate.

Wrinkles In The US Raisin Cartel

Cartel sounds much sexier than “marketing order”, doesn’t it? But that’s basically what it is…and some of the cartel members are not happy.

It didn’t receive the attention some other recent US Supreme Court cases did, but a couple weeks ago in Horne v. Department of Agriculture the SCOTUS heard arguments about whether mandatory marketing order set-asides amount to federal takings and should be compensated. This case has tremendous potential impact for upward of 30 agricultural products governed by marketing orders run under the auspices of the USDA. These marketing orders date back to the 1930s and were an attempt by agricultural producers to increase the prices they received for the products by disposing of “excess production”. In other words, farmers of the 1930s got the federal government to institute a national cartel for the purposes of raising the price of food…and those cartels continue to operate today.

So how does that work?

Continue reading “Wrinkles In The US Raisin Cartel”

The Ethics and Economics of Agrifood Competition

My colleague, Harvey James, recently edited a volume for Springer’s The International Library of Environmental, Agricultural and Food Ethics titled The Ethics and Economics of Agrifood Competition. The book is a collection of essays addressing the adequacy and fairness of agrifood competition and includes pieces from a variety of scholars, from philosophy to sociology to economics. The volume includes several essays addressing conceptual issues and questions around agrifood competition and several studies of specific agrifood sectors from around the globe.

One of the chapters, written by yours truly, is titled “The ‘Fallacy’ of Competition in Agriculture.” The abstract reads:

Agriculture has long been viewed by economists as the best example of an industry characterized by perfect competition. However, the history of modern agriculture is marked with differences about just how competitive the industry is and whether competition is in fact a desirable thing. Present debates about competition in agriculture rally discontent with the competitive environment around the mantra of “free and fair competition.” But this populist ideal presents problems of its own. First, what is the economic meaning of “free and fair” competition? Second, how does the argument about the need for free and fair competition meet with the facts of how the agricultural industry behaves? And finally, what are the ethical implications of arguments for government intervention in the agricultural economy?

A copy of an early draft of the chapter is available here. But by all means, buy the book!

Beginning With The Basics

The purpose More Is Better Than Less (MIBTL…I may have to think about that acronym) is to have a venue for sharing information and for sharing my perspective on various economic issues. So I figured it would be good to start with the basics. And I think these basics are so important that I also have a page devoted to them so they’ll be easy to find as the blog grows. If you think economics is too complicated, too mathematical, or just plain stupid, I hope I can convince you otherwise—and that you, too, are capable of wielding the sword of economics to cut through much of the muck and mire that muddles public discourse.

Economics, at its foundation, is simply a framework for understanding how people choose to use the resources available to them; whether money, raw physical goods, knowledge, talents or time. Economists can make it very complicated–to the point of losing the economic intuition in the mathematics of the models they use. But at its foundation economics is based on some very simple premises that don’t take a PhD in economics–or mathematics–to understand and apply to real life. Sadly, too few people understand that–and fewer still use that understanding.

There are three basic assumptions I propose at the beginning of every course I teach. I believe they are sufficient to understand the vast majority of human behavior. And they involve no math: Continue reading “Beginning With The Basics”