A correspondent sends me the lovely FiveThirtyEight site, on how to p-hack your way to scientific glory.
Should I be proud or ashamed that it only took me 30 seconds to get a 1% p value? I fault it though for much too modest an effort, compared to many papers I have read. Include judges, mayors, state legislators. Measure performance with levels, growth rates, unemployment, inequality, demographic breakdowns, house prices, health measures, investment, exports and more. Control for far more than recessions -- exchange rates, or all the other outcome measures. Let each variable take its turn on right and left hand sides. Instruments...
Have fun
Every effect is significant if you collect enough data...
ReplyDeleteyou can make it significant by adding data, but it will be still irrelevant
DeleteAvoiding p-hacking takes a lot of personal introspection and a willingness to cope with disappointment. The incentives shall we say are still bent so far in the other direction. Only soft shaming from statistical sticklers/polyannas represent the downsides.
ReplyDeleteBoy, did I show how bad Democrats are! Took me 120 seconds, though. :-)
ReplyDeleteThey should show students this website on the first day of class in any Econ Phd program.
ReplyDeleteThe "Almost" status is absolutely hilarious
1. Correlation is not causality
ReplyDelete2. Economic policy changes act with a lag
3. Stable economic policies matter more than specific policy changes
You say - Democrats / Republicans are better than Republican / Democrats when it comes to economic policy and it shows up in the numbers.
ReplyDeleteI say - People vote Democrat / Republican when economic conditions are great and vote Republican / Democrat when economic conditions are poor and it shows up in the numbers.
From the data, which one of us is correct?
"Stable economic policies matter more than specific policy changes"
ReplyDeleteBecause my individual voice, which asks for specific policy changes that would greatly enhance my welfare while having virtually no negative impact on others, is easily silenced, simply written out of the story?
RSM,
DeleteAs James Carville once quipped "It's the economy, stupid". As long as the economy is doing well, people will likely keep the party of power in power. And that applies whether Republicans or Democrats are in office.
You could have a great economy under an authoritarian regime, and that regime would likely maintain it's hold on political power.
"Because my individual voice, which asks for specific policy changes that would greatly enhance my welfare while having virtually no negative impact on others, is easily silenced, simply written out of the story?"
Individual liberties are important, but it terms of voting trends, they take a back seat to economic performance.
The case has been made and will always be made that maximizing economic freedom leads to better economic performance as long as policies enacted operate in a non-rivalrous way - meaning government does not infringe on property rights or allow others to do the same (see decriminalizing theft) and does not operate in an exclusionary manner (see voting suppression).
And so, if a sitting government has a policy prescription that may benefit some without infringing upon others, then it should at least be considered. In the spirit of fairness, policy prescriptions should also be non-exclusionary and offer the same level of opportunity to all individuals.
There are two parts to the definition of a public good - it must be non-rivalrous and must also be non-exclusionary.
For instance, the right to vote can be considered both non-rivalrous (my voting does not impede your ability to vote as well) and non-exclusionary (both you and I are permitted to vote). Obviously there are limitations on voting (must be age 18 or older, etc.).
FRestly, why try to force Treasuries into some arbitrary classification scheme?
DeleteDoes rehypothecation essentially multiply Treasuries across balance sheets in operational practice (as documented by Singh at the IMF for one example, further evidence submitted upon request), posing a problem for the "rivalrous good" theory?
Can't Treasury just sell new bonds faster, often at higher price, to pay off redemptions without needing taxes at all?
Is the Fed's Reverse Repo Facility paying 5 basis points for private agents to borrow $1.6 trillion's worth of Treasuries, and how does that fit in with rival goods theory?
In short, are you neglecting finance in your story?
RSM,
Delete"Can't Treasury just sell new bonds faster, often at higher price, to pay off redemptions without needing taxes at all?"
See Ponzi Scheme:
https://en.wikipedia.org/wiki/Ponzi_scheme
"A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors."
This is essentially what you are describing - early bond buyers are paid principle and interest by the firm (Treasury) through the selling of new securities (Government Bonds).
Ponzi schemes tend to be unstable because of the dual party nature of them (similar to a two legged stool). With a Ponzi scheme, you have two groups - the issuer (Treasury) and the investor (bond purchasers). If either group walks away, then the system collapses (similar to a two legged stool collapsing under someones weight).
With interest payments on government bonds paid by the taxpayer you have three different groups (a three legged stool) - the issuer, the investors, and the taxpayers. If any single group walks away, then the system is still intact (though less stable than what is formerly was).
"In short, are you neglecting finance in your story?"
I am neglecting Ponzi finance in my story because of it's inherent instability.
And a shout out to OEE - yes, engineers know quite a bit about creating stable systems, whether they are economic, structural, or of some other form.
RSM,
Delete"FRestly, why try to force Treasuries into some arbitrary classification scheme?"
It is not an arbitrary classification but rather one of many legal distinctions between debt and equity.
With a debt contract, the issuer is limited in his liability to the owner of that contract. If I borrow $1000, I am legally obligated to pay back that $1000 plus whatever interest is agreed upon, and no more.
It's not like someone can pay $2000 for a government bond with interest and principle payments worth $1000 and demand $4000 from the government when the government wants to retire that debt.
Contrast that with corporate equity shares. If the issuer wishes to purchase back shares that have been sold in the market, he/she must be willing to pay whatever price the market deems worthy.
FRestly, where's the fraud in Treasury sales? Don't the purchasers know the scheme upfront and choose to participate because they make lucrative profits in secondary markets?
DeleteIf I borrow $1000 and pay it back by borrowing another $1000 or 2, often at lower interest, how are my redemptions rivalrous for tax revenue?
RSM,
Delete"...where's the fraud in Treasury sales? Don't the purchasers know the scheme upfront and choose to participate because they make lucrative profits in secondary markets?"
Government bonds unsupported by tax revenue are a form of Ponzi finance (aka pyramid scheme) and are considered fraudulent under 18 U.S.C. Section 3301 and 18 U.S.C Section 1348.
Even government officials are bound by the laws that they are sworn to protect.
You argument is what exactly - that lucrative profits justify fraudulent activity? That government officials are above the laws that you and I live by?
"If I borrow $1000 and pay it back by borrowing another $1000 or 2, often at lower interest, how are my redemptions rivalrous for tax revenue?"
Presuming that you are the federal government, it's not your redemptions that are rivalrous to tax revenue, it is your interest payments that are rivalrous to tax revenue.
FRestly, again, where's the fraud? If buyers know Treasury can redeem bonds and interest with proceeds from new bond sales, who is being defrauded? Doesn't Treasury contract simply to pay the face value, without specifying anything about tax revenues being the source? Can't they legally coin money to repay loans, or have the Fed create money via QE-like operations to repay loans?
DeleteRSM,
Delete"FRestly, again, where's the fraud? If buyers know Treasury can redeem bonds and interest with proceeds from new bond sales, who is being defrauded?"
Buyers don't know that Treasury can redeem interest with proceeds from new bonds. I have already said this - even government officials are bound by law.
"Doesn't Treasury contract simply to pay the face value, without specifying anything about tax revenues being the source? Can't they legally coin money to repay loans..."
Yes Treasury (under the direction of Congress) can legally coin money and conceivably could repay loans with that coined money.
"...or have the Fed create money via QE-like operations to repay loans?"
No, the Fed can conduct open market operations to purchase the loan, but that does not extinguish or pay back the loan. The liability to the taxpayer still exists even when the Fed owns the bond.
RSM,
Delete"If buyers know Treasury can redeem bonds and interest with proceeds from new bond sales, who is being defrauded?"
The buyers don't know that. Issuance of debt is ultimately governed by Congress and it is entirely reasonable to expect the Congress to raise taxes and / or cut spending if interest expense becomes a significant a portion of tax revenue.
This comment has been removed by the author.
Delete"Can't they legally coin money to repay loans..."
DeleteAnd they can legally coin money to pay for every excursion a warlord king decides to involve the country in. Bonds are rivalrous for a reason - to act as check on the power of Congress and the President to wage war.
You think the "bond mark vigilantes" were concerned about inflation? Nope, they were concerned about a Congress and President unchecked by a gold standard waging a never ending string of wars.
RSM,
DeleteCan you concede that we as a society should restrict certain activities even if both parties involved are willing participants?
Should we condone and accept gun violence as long as both parties are equally armed and willing to partake in that violence?
Should we condone and accept drug abuse as long as both the buyer and seller for the drugs are willing participants?
And even more so, should we hold elected officials to a higher standard in terms of acceptable behavior?
If I know Trump is lying about the results of the election and you know that Trump is lying about the results of the election and all his attempts to overturn the election were thwarted - does that mean that his lies and attempts are okey-dokey?
RSM,
DeleteJamie Dimon (CEO of JP Morgan) is quoted as saying:
https://finance.yahoo.com/news/dimon-get-rid-of-debt-ceiling-132239347.html
"We should get rid of the debt ceiling"
And is supported by Janet Yellen here:
https://www.cnbc.com/2021/09/30/yellen-lends-support-for-effort-to-remove-the-debt-ceiling-altogether.html
One reason the debt ceiling exists is because our federal government absolutely sucks at cost control (Something that Joe Manchin is well aware of). A debt ceiling gives Congress the ability to pause and re-consider it's commitment to various expenditures.
Another reason the debt ceiling exists is that prevents the Treasury from selling government bonds on demand to any bank with access to the Fed's discount window.
This is why I think that there should be a Congressional Statistics Office which should vet the work of every witness before they are allowed to testify before Congress. The first head should be John Ioannidis or Andrew Gelman.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI opened the link. It cannot be real. This is a joke, yes?
DeleteOEE,
Delete"It is an interesting, and thoroughly referenced article, as one would expect of a Princeton University professor of law."
I believe that Miss Omarova is from Cornell, not Princeton.
https://scholarship.law.cornell.edu/facpub/1013/
OEE,
Delete“Freedom makes a huge requirement of every human being. With freedom comes responsibility. For the person who is unwilling to grow up, the person who does not want to carry his own weight, this is a frightening prospect.” - Eleanor Roosevelt
Do you see any grown ups on Wall Street that are not looking for a government bailout when things turn south? Were the actions of Ben Bernanke, Hank Paulson, and Tim Geithner consistent with grown ups making responsible decisions? Not to say that Miss Omarova is suggesting a more responsible path forward - but as they say, what's good for the goose is good for the gander.
"One might ask, What could go wrong with this?"
One might ask the same question to the fire hose kings:
https://www.google.com/books/edition/Firefighting/TjR1DwAAQBAJ?hl=en&gbpv=1&printsec=frontcover
A fun tool from 538.
ReplyDeleteHowever, what 538 doesn't realize, is that the key metric for government value-add is real changes in national land-value. Nominal GDP, inflation, unemployment, and nominal stock prices have nothing to do with the quality of life in a geography.
Also, unlike all the above metrics, land-valuations are forward looking. That means that we can get a clear picture of the impact of a government instantly, without worrying much about delayed effects of old policies.
One day, my friends, not only will people stop data-snooping, but we'll also be measuring the quality of life in a geography by how people value it.
This comment has been removed by the author.
ReplyDelete