The Greenspan bubble & Argentina
I have now read many instances of the Argentina problems being blamed on the fact that "tying the Argentine currency to the US dollar made that economy seriously uncompetitive". But I thought the measure of an uncompetitive currency was falling exports & rising imports. And that Argentina had had slowly rising exports. Where are the most authoritative figures for such export/ import measures and claims for currency competitiveness? Thanks, Tom Grey
Re: Return to Education and IV
William Dickens wrote: > > As I remember the standard neo-classical answer to this is that the main > source of endogenaity isn't ability bias but discount rate bias - - that > people with below average discount rates get more schooling. I hadn't thought of that (or heard it). Is there actually any evidence on discount rates and educational attainment? We both know there is a lot of evidence on ability (IQ) and educational attainment. High estimated returns to education are usually claimed to be evidence of credit market imperfections. It seems that the welfare implications are quite different if the real problem is high discount rates. > So if the > question you want to know is the effect of attending high school vs. > only going through the 11th grade for the average person the return > appears lower if you don't take into account that the average discount > rate of people who drop out at 11 is much higher than the average > discount rate of those who finish high school. > - - Bill Dickens > > William T. Dickens > The Brookings Institution > 1775 Massachusetts Avenue, NW > Washington, DC 20036 > Phone: (202) 797-6113 > FAX: (202) 797-6181 > E-MAIL: [EMAIL PROTECTED] > AOL IM: wtdickens > > >>> [EMAIL PROTECTED] 10/16/02 02:13PM >>> > I've occasionally heard that instrumental variables (IV) estimators of > the return to education yield markedly higher estimates than OLS. Is > this true? And how can this make any intuitive sense? If IV is > correcting for endogeneity, you would expect things to go the other > way. > Why? With a medical treatment, you would expect endogeneity to > understate the benefit, because sicker people are more likely to > voluntarily seek treatment. But with education, you would expect > endogeneity to overstate the benefit, because able people are more > likely to voluntarily enroll. > -- > Prof. Bryan Caplan >Department of Economics George Mason University > http://www.bcaplan.com [EMAIL PROTECTED] > > "He wrote a letter, but did not post it because he felt that no one >would have understood what he wanted to say, and besides it was not > >necessary that anyone but himself should understand it." >Leo Tolstoy, *The Cossacks* -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it." Leo Tolstoy, *The Cossacks*
Re: Return to Education and IV
Just a note on discount rates. The late sociologist Ed Banfield had an entire theory of poverty, education, crime, and in general, class distinction based not on income but on discount rates, e.g. higher rates, less education, more crime, lower-class behavior. It was very intuitive in terms of a lot of observed behavior but I don't believe he explained well how how you empirically measure individual discount rates Seems the name of the book was The Unheavenly City. He was influential early on in the Nixon administration. Rodney Weiher Bryan Caplan wrote: > William Dickens wrote: > > > > As I remember the standard neo-classical answer to this is that the main > > source of endogenaity isn't ability bias but discount rate bias - - that > > people with below average discount rates get more schooling. > > I hadn't thought of that (or heard it). Is there actually any evidence > on discount rates and educational attainment? We both know there is a > lot of evidence on ability (IQ) and educational attainment. > > High estimated returns to education are usually claimed to be evidence > of credit market imperfections. It seems that the welfare implications > are quite different if the real problem is high discount rates. > > > So if the > > question you want to know is the effect of attending high school vs. > > only going through the 11th grade for the average person the return > > appears lower if you don't take into account that the average discount > > rate of people who drop out at 11 is much higher than the average > > discount rate of those who finish high school. > > - - Bill Dickens > > > > William T. Dickens > > The Brookings Institution > > 1775 Massachusetts Avenue, NW > > Washington, DC 20036 > > Phone: (202) 797-6113 > > FAX: (202) 797-6181 > > E-MAIL: [EMAIL PROTECTED] > > AOL IM: wtdickens > > > > >>> [EMAIL PROTECTED] 10/16/02 02:13PM >>> > > I've occasionally heard that instrumental variables (IV) estimators of > > the return to education yield markedly higher estimates than OLS. Is > > this true? And how can this make any intuitive sense? If IV is > > correcting for endogeneity, you would expect things to go the other > > way. > > Why? With a medical treatment, you would expect endogeneity to > > understate the benefit, because sicker people are more likely to > > voluntarily seek treatment. But with education, you would expect > > endogeneity to overstate the benefit, because able people are more > > likely to voluntarily enroll. > > -- > > Prof. Bryan Caplan > >Department of Economics George Mason University > > http://www.bcaplan.com [EMAIL PROTECTED] > > > > "He wrote a letter, but did not post it because he felt that no one > >would have understood what he wanted to say, and besides it was not > > > >necessary that anyone but himself should understand it." > >Leo Tolstoy, *The Cossacks* > > -- > Prof. Bryan Caplan >Department of Economics George Mason University > http://www.bcaplan.com [EMAIL PROTECTED] > > "He wrote a letter, but did not post it because he felt that no one >would have understood what he wanted to say, and besides it was not >necessary that anyone but himself should understand it." >Leo Tolstoy, *The Cossacks*
Re: Return to Education and IV
Rodney F Weiher wrote: > > Just a note on discount rates. The late sociologist Ed Banfield had an entire > theory of poverty, education, crime, and in general, class distinction based > not on income but on discount rates, e.g. higher rates, less education, more > crime, lower-class behavior. Yes, it is a great book that I cite in my recent working paper with Scott Beaulier. > It was very intuitive in terms of a lot of observed behavior but I don't > believe he explained well how how you empirically measure individual discount > rates > > Seems the name of the book was The Unheavenly City. He was influential early > on in the Nixon administration. > > Rodney Weiher > > Bryan Caplan wrote: > > > William Dickens wrote: > > > > > > As I remember the standard neo-classical answer to this is that the main > > > source of endogenaity isn't ability bias but discount rate bias - - that > > > people with below average discount rates get more schooling. > > > > I hadn't thought of that (or heard it). Is there actually any evidence > > on discount rates and educational attainment? We both know there is a > > lot of evidence on ability (IQ) and educational attainment. > > > > High estimated returns to education are usually claimed to be evidence > > of credit market imperfections. It seems that the welfare implications > > are quite different if the real problem is high discount rates. > > > > > So if the > > > question you want to know is the effect of attending high school vs. > > > only going through the 11th grade for the average person the return > > > appears lower if you don't take into account that the average discount > > > rate of people who drop out at 11 is much higher than the average > > > discount rate of those who finish high school. > > > - - Bill Dickens > > > > > > William T. Dickens > > > The Brookings Institution > > > 1775 Massachusetts Avenue, NW > > > Washington, DC 20036 > > > Phone: (202) 797-6113 > > > FAX: (202) 797-6181 > > > E-MAIL: [EMAIL PROTECTED] > > > AOL IM: wtdickens > > > > > > >>> [EMAIL PROTECTED] 10/16/02 02:13PM >>> > > > I've occasionally heard that instrumental variables (IV) estimators of > > > the return to education yield markedly higher estimates than OLS. Is > > > this true? And how can this make any intuitive sense? If IV is > > > correcting for endogeneity, you would expect things to go the other > > > way. > > > Why? With a medical treatment, you would expect endogeneity to > > > understate the benefit, because sicker people are more likely to > > > voluntarily seek treatment. But with education, you would expect > > > endogeneity to overstate the benefit, because able people are more > > > likely to voluntarily enroll. > > > -- > > > Prof. Bryan Caplan > > >Department of Economics George Mason University > > > http://www.bcaplan.com [EMAIL PROTECTED] > > > > > > "He wrote a letter, but did not post it because he felt that no one > > >would have understood what he wanted to say, and besides it was not > > > > > >necessary that anyone but himself should understand it." > > >Leo Tolstoy, *The Cossacks* > > > > -- > > Prof. Bryan Caplan > >Department of Economics George Mason University > > http://www.bcaplan.com [EMAIL PROTECTED] > > > > "He wrote a letter, but did not post it because he felt that no one > >would have understood what he wanted to say, and besides it was not > >necessary that anyone but himself should understand it." > >Leo Tolstoy, *The Cossacks* -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it." Leo Tolstoy, *The Cossacks*
Re: Return to Education and IV
Bill is quite correct that variation in "discount rates," (which could also be something like how much you enjoy schooling for its own sake) can explain the fact that IV estimates are higher than OLS estimates. Bryan's question, however, can be rephrased as not how do you explain the data (low ability bias and high discount rate bias) but why is it that ability bias appears low? In other words aren't there good grounds for thinking that ability bias is large? And if so how is it that this doesn't show up in the data? Alex -- Alexander Tabarrok Department of Economics, MSN 1D3 George Mason University Fairfax, VA, 22030 Tel. 703-993-2314 and Director of Research The Independent Institute 100 Swan Way Oakland, CA, 94621 Tel. 510-632-1366
Re: Return to Education and IV
Alex T Tabarrok wrote: > Bryan's question, however, can be rephrased as not how do you explain > the data (low ability bias and high discount rate bias) but why is it > that ability bias appears low? Ability bias isn't really low. Using the NLSY data, for example, controlling for AFQT scores reduces the naive estimate of the return to education from 12.6% to 7.5%. Ability bias *after* controlling for intelligence might be low, though. > In other words aren't there good grounds > for thinking that ability bias is large? And if so how is it that this > doesn't show up in the data? > > Alex > > -- > Alexander Tabarrok > Department of Economics, MSN 1D3 > George Mason University > Fairfax, VA, 22030 > Tel. 703-993-2314 > > and > > Director of Research > The Independent Institute > 100 Swan Way > Oakland, CA, 94621 > Tel. 510-632-1366 -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it." Leo Tolstoy, *The Cossacks*
Re: (book review)The Case against Government Science
On Tue, Oct 15, 2002 at 11:28:04PM -0400, Warnick, Walt wrote: > Anecdotal evidence abounds to show that basic research selected and funded > by the Federal government has produced enormous benefits. [...] I am amazed to find here such a blatant example of the "What is seen and what is not seen" fallacy. The point is not whether government did some good. By that measure, the russians being richer in 1991 than in 1917, we could say that communism was a wonderful experience (please replace by whichever phenomenon you love to hate, that lasted long enough - absolute monarchy? slavery? protectionism? belief in a flat earth? some or some other official religion?). The fallacy is that you don't choose between the past and the future. You choose between several futures. Comparing the state of science in 1950 to the state of science in 1980, and saying "hey, government did great!" is an utter fallacy. What you must compare is the state of science in 1980 under some assumptions to the state of science in 1980 under some other assumptions - and then find which assumption is more favorable. But even then, science is not the only thing to consider so as to judge - and you must consider other factors, too. When comparing benefits, you must compare the cost - and time itself is part of the cost; it is a resource that could have been used in different ways. Said other wise: only choices matter. The only costs are opportunity costs, and so are the only benefits. > Determining an optimal level of funding for basic research is a problem that > has not, so far, yielded to analytic solution. Rather, setting levels of > research is an entirely political process. In recent years, NIH has been > growing by leaps and bounds. You speak like a technocrat: your discourse is full of anerisms, and false solutions to false problems. The emptiness of your discourse is directly tied to your statist point of view (see the origins of the word "statistics", e.g. in the recent book "Damn Lies and Statistics"). Statist economy is an intellectual fraud, and I'm afraid you're part of it. I thought this mailing-list was precisely about showing how the praxeological "economist" point of view applies to all fields of human action. I suppose it also shows how statist economists may invade just any field of knowledge, so as to further their sick memes. [ François-René ÐVB Rideau | Reflection&Cybernethics | http://fare.tunes.org ] [ TUNES project for a Free Reflective Computing System | http://tunes.org ] There is no such thing as a "necessary evil". If it's necessary, then it cannot be evil, neither can it be good: it's a datum.-- Faré
