Great Moments as a 40YOF #2

Today in my macro class the professor started off with, "Most of you were pretty young when we went through something called the dot-com boom."

Speak up, sonny!

Google Billionaires Say Happy Days Are Here Again

Gawker:

Alan Greenspan, an actual economist and former Federal Reserve Board chair, predicts the economy will just get worse and then stagnate for a good long while. But he cited absolutely zero Google statistics for his prediction, nor does he get free food and laundry and transportation and snacks and internet access and literally actual trips to Disneyland provided for him free at work, so can you really trust it?

But seriously, this goes to my earlier question: if the overall economy is bad, does that necessarily mean I'm worse off?

A Question for Dr. Krugman

Paul Krugman is soliciting questions. Here's mine, #453 of the 915 accepted (!) before the editors shut it down:

Dr. Krugman-

It’s commonly assumed that growth is good, unemployment is bad, and deficits are… well, at least unpopular. But I’m left wondering what it all means to me personally.

For instance, unemployment may be nearing a post-Depression high, but I’m self-employed and run a small business. If I needed to shut down my company and get a job the u-rate would worry me greatly. But as it is, what I see are more highly-skilled potential employees demanding lower wages. (That being said, I’m certainly not unsympathetic to those out of work. I have friends and family members who are unemployed. It’s a stress I wouldn’t wish on anyone.)

Similarly, manufacturing output is growing more slowly than manufacturers (and macroeconomists) would like, but I don’t produce those goods; I consume them. If their business is hurting, shouldn’t that lead to lower prices for me?

Economists are well-known for being two-handed, but when they talk about the gloom and doom in the economy these days I don’t hear much “on the other hand”. I’m hoping you can help with that.

Thanks,
Charlie

If he answers my question (as did Buzz Aldrin—thanks, Buzz!) I'll post his reply here.

Great Moments as a 40YOF #1

A guy in my class complains to me about his hangover. I complain to him about my hip. I am not joking.

January 2009 Jobs Forecast with Updated Results

In January I wrote a post titled Predicting the Recovery about the Obama administration's report a out the job impact of the stimulus package.

For reference, here's the chart from that post showing predictions about unemployment both with and without the plan:



Here, thanks to Greg Mankiw, is the same chart updated with some actual numbers from the period since January:



Mankiw's analysis:

What does this mean? One interpretation is that the fiscal stimulus has failed to achieve what Team Obama thought it would. Another interpretation is that the baseline was worse than they believed at the time. I am confident the report authors would adopt the second interpretation. If so, that fact is consistent with what I said in a previous post: In light of the shifting baseline, it is impossible to hold the administration accountable for whether its policies are achieving their intended effects.

My analysis:

We're only now understanding the scope and depth of this recession.

Mandelbrot on Risk

In-depth (48 minute) interview from the Financial Times with Benoit Mandelbrot on why efficient markets collapse:



Also, a fan-made video for Jonathan Coulton's "Mandelbrot Set":



Don't forget to buy the MP3.

Common Sense in Economics

From Seduced by a Model on the New York Times Economix Blog:

David Colander made this point about economic models: The sociology of the economics profession gave preference to elegant mathematical models that could describe the world using the smallest number of parameters. “Common sense does not advance one very far within the economics profession,” he says.

So Far, So Good

Grades have been posted for the first macro exam and I'm pleased to report that I didn't answer anything incorrectly.

I don't yet know how I did on the first Health Econ test, but I feel pretty good about maintaining my 4.0 in economics this semester.

Later this morning I have a scheduled Strategic Advising Session (sounds official!) to talk to the department about taking some honors economics classes despite my awful GPA from 20 years ago.

May the force be with me.

Longhorn Football on Google Calendar

Google Calendar has added college football schedules, including one for our beloved Texas Longhorns. Sadly, Ohio State and Michigan both have more fans, at least according to number of calendar subscribers.

So go subscribe!

Two Exams One Day

I just sat down to plug the important dates from both of my classes into my calendar and discovered that the first exam for both of my classes is on September 25. Boo!

The good news is that there aren't any other collisions the rest of the semester. Yay!

First Macro Quiz Today

I find exams, and to a lesser extent quizzes, to be among the most exciting things about school. I'm such a nerd.

Today I'll take my first macro quiz. It will cover the circular flow diagram, PPF's, the Law of Increasing Opportunity Cost, supply and demand curve shifts, nominal vs. real GDP, the GDP deflator, and a bit of inflation. All very exciting.

I've reserved a group study room in PCL (5.120A) for anyone who wants to get together the hour before class to discuss the homework assignments and the quiz.

Update: A great group showed up for the review. The quiz went well. And there was much rejoicing.

Whoa!

Best Daily Economics News

I read a bunch of economics news online, and find Real Time Economics from the Wall Street Journal to be the best source of macroeconomic news and analysis.

I also keep a list of bookmarks to interesting economics-related stories here. (You can see the most recent of these in the "Interesting (?) Articles" sidebar on the web version of The 40-Year-Old Freshman.

Getting Past Chapter 2

My macro class is proving to be a bit slow off the line—in three class meetings we have yet to make it out of the review of basic material from micro: supply and demand, equilibrium, PPF's, etc. I mean, we all know this stuff and agree on it, right?

But yesterday we got to something interesting: irony and a meta-commentary on economics itself. Whoa.

Innocently enough, we talked about some common problems that crop up in economic reasoning, including omitted variables and reverse causality (which is both less common and less problematic than affirming the consequent, but let's keep moving).

"Hey!" I thought, "I read examples of an economist making both of these errors just this week!"

The irony? They were made by the author of the textbook, on his blog. While Dr. Mankiw's post was ostensibly pointing out an ommitted variable bias in someone else's graph, it included problems of its own:

Smart parents make more money and pass those good genes on to their offspring.

Well, that's quite a statement. Paul Krugman jumped on it, and it was on! Well, as much as it's ever on between two world-renowned economists who are also Ivy League professors. Which is to say, lots of passive aggression and condescension.

Fiscal stimulus? Health care reform? Forget it. Apparently even after you earn your Ph.D., a professorship at Harvard or Princeton, tenure, and maybe even a Nobel Prize, you won't even agree with other economists about what's covered in Principles of Macroeconomics, Chapter 2. Which one of you wrote.

Ask A College Professor Having Trouble With The Audiovisual Equipment

Apropos of my macro class: Ask A College Professor Having Trouble With The Audiovisual Equipment, from The Onion.

So far every class session has started with 5-10 minutes of AV equipment futzing.

Mankiw's Freshman Seminar Reading List

From a post on his blog, with links each on to Amazon:

• The Worldly Philosophers, by Robert Heilbroner
  
• Spin-Free Economics, by Nariman Behravesh
  
• Capitalism and Freedom, by Milton Friedman
  
• Equality and Efficiency: The Big Tradeoff, by Arthur Okun
  
• Nudge, by Richard Thaler and Cass Sunstein
  
• The Return of Depression Economics, by Paul Krugman
  
• Animal Spirits, by George Akerlof and Robert Shiller
  
• The Myth of the Rational Voter, by Bryan Caplan
  
• Economic Gangsters, by Raymond Fisman and Edward Miguel
  
• The Price of Everything, by Russell Roberts

The Economics of Doing What You Love

From the Freakonomics Blog:

To an economist, the choice is still a no-brainer. We think you should only do what you love, and pay for it by doing what you are good at.

Nice Little Gift from Amazon

Just got this in an email from Amazon:

As someone who recently purchased at least $75 in qualifying textbook item offered in the Amazon.com Books store, you have automatically qualified for $5 worth of any Amazon MP3 downloads. Use your credit toward the purchase of a full MP3 album or a single song.

Since I didn't even know about this offer before I made my purchase, it doesn't count as an incentive. But it does make me feel more positive about Amazon, which will probably influence my future buying decisions. How does one account for that in economic terms?

Now, what MP3's to buy with my $5 credit? Any suggestions?

Books Bought, Lesson Learned

I just bought the textbooks for my two courses at the University Co-Op ("Proudly serving the University of Texas at Austin since 1896"). Total price $351.43. When I got back to my office I found that they were both in stock at Amazon. Total price, including standard shipping, $270.89.

When my package arrives from Amazon in a few days I'll return the books to the Co-Op for a full refund (which I can do until September 11) and realize $80 in savings.

Thanks for, uh, serving me, Co-Op.

Update: Amazon says that Health Economics won't arrive until September 22, so I canceled that. It was only $10 cheaper than the Co-Op anyway. But I'm still saving a ton on the Mankiw book, which should be here on September 1. Whew!

Yes!

From the Regustrar's office:

Congratulations, waiting for classes paid off! You were added into a course off of the waitlist. Please check your class listing at https://utdirect.utexas.edu/registration/classlist.WBX to see your new class schedule.

If you're in Helen Schneider's Health Economics course with me (MWF 11-12) let me know. See you Wednesday!

Movin' On Up (the Health Economics Waitlist)

Last time I checked, I was #6 out of 9 on the waitlist for ECO 330T: Health Economics. Today I'm #2 out of 5. With a couple more add/drop days left before the semester starts, I think I have a pretty good shot at getting in. That would be awesome for a couple of reasons.

First, I can't imagine a better time to be studying health economics. The national debate—if it can be called that—will be heating back up when Congress gets back from its "Summer District Work Period", which coincides nicely with the start of the semester. If the course content is what I hope it is, it will provide ample opportunity for timely discussions.

Second, taking only one course per semester is the slowest, most expensive path. Taking one three-hour course costs me $1,874 per semester. If I take two courses, my bill goes up to $2,769, an increase of only $895—less than 50% the cost of another one-class semester. And obviously, taking twice as many courses per semester gets me to the finish line in half the time, while still allowing me enough time to get my "work" work done.

So I waited with bated breath. Stay tuned for the exciting conclusion...

My Fall Class(es?)

I'm still registered for ECO 304L: Intro Macro (#33670), meeting in UTC 2.102A MWF 1-2, but the professor has changed. Apparently Dr. Gervais couldn't stand the heat so he got out of the kitchen. Er, Texas.

The class will now be taught by Michael Sadler, who, according to the Course-Instructor Survey (CIS), is the bee's knees. But more importantly, it looks like he's exclusively taught ECO 322: Money and Banking for the last several years, which could make his Macro class especially relevant to the current economic crisis. (See my last post for The Economist's take on how economics and finance should interrelate.)

I'm also on the waitlist for ECO 330T: Health Economics (#33830), which could be very interesting given the current debate about health care. The session meets in UTC 3.132 MWF 11-12 and is taught by Helen Schneider who also got high CIS marks from previous students.

As of today, I'm number six out of nine on the list. I have no idea what that says about my chances of adding the class, but I'm keeping my fingers crossed.

What Went Wrong with Economics

From What went wrong with economics in The Economist:

Economists need to reach out from their specialised silos: macroeconomists must understand finance, and finance professors need to think harder about the context within which markets work. And everybody needs to work harder on understanding asset bubbles and what happens when they burst. For in the end economists are social scientists, trying to understand the real world. And the financial crisis has changed that world.

UT Fall 2009 iCal/Google Calendar

The Registrar has posted the Fall Semester 2009 academic calendar. But since it's in a format that's not terribly useful, I've created a public Google calendar with the same information.

If you have a Mac and use iCal, you can subscribe to it by clicking this link:

UT Fall 2009 Academic Calendar

If you use Google Calendar, just click here:

Classes begin August 26!

What to Do with Your Economics Degree?

"The American Association of Wine Economists (AAWE) is a non-profit, educational organization dedicated to encouraging and communicating economic research and analyses and exchanging ideas in wine economics."

Charlie Munger on Economists

From an interview with Warren Buffett's partner Charlie Munger:

How and why do you think economists have gotten this so wrong?

I would argue that the economists have not been all that good at working concepts of good and evil into their profession. Nor do they understand, at all well, the economic consequences of bad accounting.

HT to Paul Kedrosky

Final Grades, but Not Final Thoughts

Grades for the last homework and the final exam have been posted, and I'm very pleased with mine. The final was tough but I scored 57/60. I'm glad (and, I must admit, relieved) that my first class grade as a readmitted student will be an A.

This semester I've done a lot of thinking—but not much blogging—about both economics and going back to school. Over the summer I plan to organize some of those thoughts and write about them here.

Next semester I'll be taking Dr. Gervais' macro class. If you'll be in my class let me know!

(Early) ECO 304K Final Today

Since I'll be out of town tomorrow I've elected to take the early final exam (my first since December 1992!) today from 3p-6p.

I've reviewed my notes from the semester and am working the problems on the exams from the other section of the class. Then I'll "take" the sample final, make one last run through my notes, and then take the real one.

The best news is that I'll have three hours in which to complete the final but it only has roughly twice as many questions as each of the previous exams, so I shouldn't be time-constrained (ceteris paribus ;).

Wish me luck!

(A #2 pencil is required for the machine-graded multiple choice section of the exam. I honestly can't remember the last time I used a pencil, and couldn't find one in my house. My wife bought me these last night. :)

Extracurricular Economics Reading: The Company of Strangers

I just started reading Paul Seabright's The Company of Strangers: A Natural History of Economic Life. Based on the introduction it looks like it's going to be fascinating.

Much Better!

I got my regraded midterm #2 back today and am pleased to report that I was awarded all of the points I disputed, bringing my score up from 24 to a perfect 30. Much better! I'm not sure what the scribble is below my new score though—is that a heart? Hmm.

Today I also went by the Liberal Arts Dean's Office to transfer to the LA college and change majors from from computer science to economics. I felt guilty, like I should have sent a breakup note to the CS department: "Hey CS, thanks for the degree. I'm leaving you for something new and more interesting." But I didn't.

One nice aspect of my new school is the (slightly) lower tuition. For a full course load, natural sciences students (Texas residents) pay $4,421/semester while liberal arts students pay only $4,260. Even only taking three hours I'll save $71. That's not much but it's not nothing either. (The curious can see the whole tuition schedule here.)