Relevant and even prescient commentary on news, politics and the economy.

Repairing Macroeconomics

Here are some vague thoughts on the state of academic macroeconomic research and how it might be improved*. The current mainstream macroeconmic research program has recently been severely criticized by so many extremely emminent econonmists, that it is hard to consider it the main stream. However, the many efforts to present an alternative approach (including this one) are vague and tentative. I am one of those who think a good first step is to go back to the old Keynesian research program, to research done 40 or more years ago, and pick up where Tobin, Solow and Samuelson left off.

To publish, researchers need to address questions which are neither too easy nor too hard. Answering an easy question is not significant original research, while answering a very difficult question is very difficult. I think macroeconmic research has suffered because the questions to be addressed are either too easy or too hard. I think it is very hard to answer any question about behavior which depends on long term expectations. I think it is too easy to understand macroeconomic issues which don’t depend on long term expectations. This is the view expressed 80 years ago in “The General Theory of Employment, Interest, and Money”. I think subsequent research has tended to demonstrate it to be valid.

The appeal of assuming rational expectations is that models with rational expectations are tractable but not trivial. I think the resulting advantages for the academic made the assumption irresistable. Unfortunately, I think it leads to a sterile research program. I think it might be wise for all macroeconomists to try at least once to understand economic aggregates without even any appeal the rational expectations assumption. I think this is a good way to realize how central it is. This isn’t my first attempt to do so, but I aim here to consistently avoid the concept of model consistent expectations.

Excessively Easy Problems

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On The new heavyweight macro critics

I strongly advise you to read this post by Noah Smith and then click his links and read all of Romer (I have) and Kocherlakota (I haven’t yet but advise myself to do it now).
update: Kocherlakota’s post is very brief non-technical and brilliant. I advise you to read it now.
end update.

Noah recalls that he has long argued that current mainstream academic macroeconomics is no good at all. I too have argued this. So have the somewhat better known Larry Summers and Paul Krugman. Relatively recently Paul Romer denounced his former field. Most surprisingly so has Narayana Kocherlakota (links in the post). Olivier Blanchard (pdf) and Simon Wren-Lewis are very polite but clearly agree (actually now that I re-read it Wren-Lewis is (finally) getting pretty frank). Robert Shiller, George Akerlof and Janet Yellen have long been at least as harsh as Kockerlakota (although no one is quite as snarky as Romer).

I have really one question. Given the extreme prominence of the critics of the current orthodoxy, how can the orthodoxy remain an orthodoxy ? In particular, all of the linked authors agree that the current mainstream consists of New Keynesian DSGE models. But collectively they are much more prominent than all New Keynesian DSGE modelers put together.

more after the jump

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Unskewing 538

Different data journalists have different estimates of the probability that Hillary Clinton will be elected. The numbers will be updates, so I type the current ones before discussing.

Five Thirty Eight polls plus 55.7%
Five Thirty Eight polls only 57.1 %
Daily Kos 63%
Upshot 75%
Princeton Election Consortium (Sam Wang) (random drift) 71%
(Bayesian) 81%

As usual Nate Silver and Sam Wang are the extremes with Silver estimating probabilities closer to 50%. This happens mostly because Silver estimates distributions of parameters which Wang assumes to be known constants. I have to admit I generally agree with Silver.

Silver explained at least part of the difference with other aggregators

High numbers of undecided and third-party voters are associated with higher volatility and larger polling errors. Put another way, elections are harder to predict when fewer people have made up their minds. Because FiveThirtyEight’s models account for this property, we show a relatively wide range of possible outcomes, giving Trump better odds of winning than most other statistically based models, but also a significant chance of a Clinton landslide if those undecideds break in her favor.

This is a bit reassuring to me. I think there are a lot of #NeverTrump voters who are very unenthusiastic about Clinton. These are voters who say he is unqualified and temperamentally unsuited to be President. I tend to guess many of them will reluctantly vote for Clinton if and only if it seems necessary and otherwise stay home of vote 3rd or 4th party. I remember 2000 (and some of these voters don’t) but I am not as alarmed as I would be without this argument.

The point (if any) of this post is that fivethirtyeight normalizes polls in which only Trump and Clinton are named to the standard of polls in which Johnson & Stein are also named. They will be on the ballot, but this seems to me to be a mistake. Respondents can volunteer that they will vote for another person if asked to choose between Trump and Clinton. I think the pressure due to naming only Trump and Clinton is weaker than the pressure of an upcoming election and fear of wasting a vote. So I’d guess polls which name only 2 candidates give more accurate forecasts. I think this is historically true (sorry no link). Certainly declared support for 3rd party candidates in September polls regularly vastly exceeds actual votes for 3rd party candidates.

I don’t know the fivethirtyeight correction term (sorry I could probably find it there if I looked). My impression is that Clinton averages 1 or 2% better in polls which name only Trump and her. Currently The Huffington Post says 1% nationwide (Clinton 4% ahead in 2 name polls 3% ahead in 3 name polls including Johnson (including Stein has to hurt Clinton)). Given the confidence interval and the fact that all aggregators assume normality, a 1% difference in means corresponds to about the difference between 57% and 75% (this is a very rough BS pseudo calculation).

An even more striking pattern over at The Huffington Post is that the fitted curve for the Clinton Vs Trump Vs Johnson is much smoother than the fitted curve for Clinton-Trump. This is partly due to their smoothing algorithm which smooths more if there are few data points (it is a compromise between don’t want to use very few points and don’t want to use very old data). But eyeballing, I am fairly sure it isn’t just that. Also the moderately smoothed Clinton support in 2 way polls varies more (including conventions roughly 44-48 for Clinton and 40-42 for Trump). I think this shows a lot of the variance is in the willingness of #NeverTrumpers to say they will vote for Clinton if pressed.

So after pychoanalyzing data ananylis, I conclude that the key issue is whether people who think Trump should not be elected, but don’t want to vote for Clinton end up reluctantly voting for Clinton. What an original thought. Bet no one has written that already in 2016.

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Damnable Diatribes on the Monstrous Macroecomic Mess Maelstrom

Being born on November 9th, I will get the end of this campaign for my birthday (tough luck Josh Barro of course this also means that I couldn’t vote in 1978 the year I turned 18 (but neither could J Barro so there)).

It also means that my astrological sign is scorpio, which is relevant to this post.

The humiliation of contemporary macroeconomics has become extremely acute. Leading macroeconomist Paul Romer ruthlessly mocked his own approximate field of study.

Now Daniel Drezner wrote in the Washington Post

The state of macroeconomics is not good

If you think international relations theory has problems, let me introduce you to the most influential and problematic subfield of economics.

Pwnd. Sick burn. I mean to be mocked by a fellow macroeconomist is bad, but for an professor of international releations to look down on macroeconomics with pity is humiliating.

I am afraid to check my horoscope. I expect it will read

Scorpio: Reading The Washington Post today will cause you to both laugh out loud and curse the day you chose your idiotic career (but mostly laugh).

Yes I just equated the scientific values of international relations theory, modern macroeconomics, and astrology.

The point of this post (if any) is that this isn’t new. Back in the 80s I entered an inner sanctum of economics — the NBER main office at 1050 Mass Avenue. This was a tiny researc on one floor of a medium sized building which had the right to host NSF grants & so was drowning in money. Many of the few offices had eminent occupants including Paul Krugman & Larry Summers. There was a main entrance but, after hours research assistants and such entered by side doors. Immediately after entering one, we saw a desk displaying a poster which claimed to illustrate an astrological model of the business cycle. It was used by one of the resident labor economists who had a very 21st century view of the scientific status of macroeconomics.

Brad DeLong also worked there and said in 1983 or so that he had decided not to concentrate in macroeconomics, because he thought the field had entered a blind alley where it would be stuck for decades. Thus he both denounced and displayed rational expectations.

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What’s Aleppo ?

“worse than you imagine possible even taking into account the fact that it is worse then you imagine possible” — Brad DeLong

OK so Gary Johnson former governor and libertarian candidate for president asked Mike Barnicle “What’s Aleppo”. This is shocking and appalling, but the New York Times managed to top it.

I will assume that angry bear readers know what Aleppo is (it is quite probably the oldest continuously inhabited city although some archaeologists think that Jericho is older) and what has been happening there in the past few years.

Alan Rappeport wrote that Aleppo is the de facto capital of Daesh. Then an anonymous editor added a correction writing that Aleppo is the capital of Syria. So one New York Times article has two highly embarrassing corrections.

Zack Beuchamp tweets.

This is just one of four strange things which happened recently at the New York Times.

One lesson we learn is that the New York Times would be imrproved and Vox.Com worseneedif Alan Rappeport and Zack Beauchampt traded jobs. In general this reminds me that the new journalists who started out as bloggers are vastly superior to the MSM journalists with traditional career paths.

But I think it mainly shows the catastrophic cost of the journalistic field called campaign or political journalism. The Times’ latest catastrophe must have something to do with the fact that an article on “what’s Aleppo” was written by a political journalist not a foreign affairs journalist. Also the editor must be a political journalism sub editor not a general sub editor. The Times also employs Karen Zraik who know a lot about Aleppo.

This rant was meant to be a long introduction to a comment on this post by Jon Chait, who asks why Hillary Clinton is so unpopular.

The key related interesting passage is

The mechanics of campaign coverage add to the problem. One set of reporters covers Trump, and another covers Clinton. The Trump reporters are overwhelmed with evidence of his unsuitability. The Clinton reporters have a job, too — they need to cover their subject in a suitably tough fashion. The toughest subject matter with Clinton is her email and foundation problems. Even when reporters are doing their jobs well, the political narrative that comes through is two different candidates afflicted by different but essentially parallel vulnerabilities. Every day, Trump is nagged by questions about his fitness for office and his racism, and Clinton by questions about her ethics.

By a priori editorial decision the NY Times (and all news organizations) covers Trump and Clinton separately and, therefore, automatically writes (or says) roughtly as much about either. This causes balanced reporting even when fair reporting would be unbalanced. The convention of political journalism is that good reporting is finding a scandal, Ok reporting is finding a gaffe, and discussing a policy proposal is just not done. So a priori it was decided that Clinton is roughly as scandalous as Trump (for the political news pages — the opinion pages are roughly fair and therefore totally unbalanced).

This isn’t the whole story, Chait goes on to note that reporters don’t reliably do their jobs well.

And even within this restrictive framework, journalists don’t always do their job well. The New York Times recently reported a completely innocuous episode — in which the Clinton Foundation requested special visas to help rescue hostages from North Korea and was turned down by a fastidious State Department — as “rais[ing] questions” about “ties.” Matt Lauer grilled Clinton on her emails and let Trump blatantly lie without challenge about having opposed the Iraq War.

He also notes sexism, discussing evidence from experimental psychology that both men and women disapprove of ambition in a hypothetical female politician but not a hypothetical male politician. He also blames Bernie Sanders (this is Chait the anti leftist liberal writing, but he does have data on his side). Finally he notes the disfunctional relationship between Clinton and the press and traces the origin to Clinton’s “paranoia”. Oh well aside from that it is an excellent essay. Reading that word, if felt like screaming “just because they’re out to get you doesn’t mean that you are paranoid.” It seems to me that Clinton’s belief that the press is out to get her is not a psychopathology and is instead the only sensible conclusion consistent with the evidence of the past 24 years.

Ooops slipped into ranting. The relevant point, is that Chait argues that The New York Times fails to inform, because its reporters specialize. So there are Clinton reporters (which means Clinton pseudo scandal reporters) and Trump reporters but no one who writes about the facts of both cases in the same news story. This is like the problem that there are political/campaign reporters and reporters who actually know something about something and they don’t communicate.

This can make the Times a journal of record which can’t answer two questions
1) “What’s Aleppo ?”
2) What’s a scandal ?

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Ballance in the Washington Post part CCCLXXIV

David Weigel balances Ballance with non Ballance in this remarkable passage in which he says that public ignorance about candidate’s policy proposals is and isn’t partly Donald Trump’s fault

Whose fault is that, and whose fault is it swing voters are unsure where Donald Trump stands? Not the media’s — piles and piles of money are spent to get reporters and cameras to the places where candidates deliver policy speeches. Not the candidates’s, though in this particular election Clinton has given exponentially more detail than Trump. (Literally, exponentially. CNN’s Brian Stelter points out that there are 9,000 words about policy on Trump’s campaign site, and more than 100,000 words on Clinton’s.)

So he asserted that ignorance about Clinton’s policy proposals is not Clinton’s fault and that ignorancde about Trump’s policy proposals is not Trump’s fault. Then (in parentheses) he noted that ignorance about Trump’s policy proposals has something to do with the fact that he has slogans not policy proposals.

Now Weigel might argue that he didn’t want to write another column about how Trump is unfit to serve as President (OK fine). That it is also true that voters blame others for ignorance which are due the votoers’ laziness (OK fine). He could have illustrated (and proven) his claim by quoting people who complain that they don’t know what policy reforms Clinton has proposed and then providing a link to her campaign’s issues page https://www.hillaryclinton.com/issues/ .

There was no need to even mention Donald Trump. If one wishes to discuss what people could learn, but don’t bother to learn, about candidates policy proposals, Donald Trump is as irrelevant as Kim Kardashian, because neither is a candidate for public office with coherent detectable policy proposals. But noooo, he had to bring Trump into it and say that Trump is and isn’t to blame.

My outraged comment follows.

I think a very large part of the problem is journalists who write things which they know are false to achieve Ballance (TM). YOu claim it is not the candidates’ fault, before noting that no one (especially including Donald Trump) can possible understand Donald Trump’s policy proposals, because they don’t exist. You note the 9000 words, but fail to try to estimate how many he has contradicted when speaking ad lib (A rough guess would be give or take a few 9000 including “and” and “the”).

Voters who claim that Clinton hasn’t told them what she proposes have no one to blame but themselves (as you note). Voters who claim that Trump hasn’t have no one to blame but Trump, because he hasn’t.

One problem is lazy voters who click click bait rather than doing serious research. Another is spineless journalists who do the research, know the facts and refuse to report them frankly, because the facts have a clear liberal bias.

Do you really believe “it’s not the candidates’ fault” ? That means “it is not Clinton’s fault and it is not Trump’s fault” which implies “it is not Trump’s fault”. Do you believe that ? would you swear under oath that you believe that ?

You could have written “it is not Clinton’s fault and it isn’t even entirely Trump’s fault, voters themselves share the blame with Trump”. But you didn’t.

Because telling the truth would violate the rule that when discussing the candidates you must be Ballanced and so must give Trump one break after another. It is not possible to be fair and Ballanced so you have decided to unfairly deny (and in parentheses admit) what Trump is.

“Ballance” refers both the former representative Jack Ballance and also the Washington Post’s tradition of breaking the rules it chose in order to be more than fair to Republicans.

http://rjwaldmann.blogspot.it/2008/07/ballance-at-washington-post-i-use-word.html

I note that the editor in question was not fired or even publicly named.

end comment

Here at AngryBear I notice that David Weigel was briefly assigned to report on the conservative movement, the reassigned because his reporting tended to suggest they were nuts and so wasn’t Ballanced enough. He’s about as frank and blunt as the MSM gets.

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Washington Post Vs Washington Post

In the Washington Post Abby Phillips wrotes “Clinton isn’t doing better than previous Democrats with Latinos — even against Trump”

While Greg Sargent wrote “If this new poll is right, Trump is absolutely shredding the GOP brand with Latinos”

Both are horse race journalism, but Sargent is looking at the horses and Phillips is talking to the usual bed wetters (who are also people demanding more from the campaign).

The difference is clear in the title, Sargent refers to the evidence he considers while Phillips (or an editor) merely assert.

Sargent has a strong case

A new poll of over 3,000 Latino voters just released today will not do much to assuage these fears.

The poll, which was commissioned by America’s Voice and conducted by Latino Decisions, finds Hillary Clinton leading Donald Trump by 70-19 among Latinos. That’s worse than Mitt Romney’s 27 percent in 2012.

“isn’t doing any better” sure looks like 19=27 to me. For quantitative data, Phillips reports on statewide polls in Flordia and Nevada

“In Nevada and Florida, the two battleground states with the highest Latino populations, the Democratic nominee remains locked in a close race with Trump.” This is very crude. Then adds “Clinton is polling about the same as Democrats in previous contests among Latinos nationally, apparently gaining no ground from Trump’s historic unpopularity.” but presents no numbers at all. Note also the contradiction “about the same” implies “gaining no ground”. Now to the innumerate 19 is about like 27, that is Clinton’s failure to gain ground is largely based on the absence of ground to gain.

What happened here ? I think this shows how political journalists are not even capable of calling the horse race (Nate Silver has been showing that for years). Finding people who call themselves experts is not the best way to measure public opinion. Polls have tons of problems and are the worst way of assessing public opinion imaginable except for all the other ways.

I think this also shows how facts are not allowed to get in the way of a narrative. I’m sure Phillips had traveled and interviewed and was working on the story when the America’s Voice poll was published. The numbers reported in that poll were inconvenient and weren’t allowed to mess up the story and ruin the work put into explaining why Trump was doing about as well as Romney with latino Americns.

Also this shows again the superiority of blogs to traditional reporting. Sargent works for the Washington Post but his background is in blogging.

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The Relative Honesty of Clinton and Trump

Why am do I expect you to waste your time reading a post with such a silly title. Obviously, while opinions on Clinton’s honesty differ, everyone knows that Donald Trump is a pathological liar and a crook.

Oh Mr straw blog reader “everyone” eh ? Let’s ask Quinnipiac

“American likely voters say 53 – 42 percent that Trump is not honest. By a huge 66 – 29 percent margin, voters say Clinton is not honest.”

This is the same group of people among whom Clinton had a huge lead in voting intentions “In the battle of the unloved presidential candidates, Democrat Hillary Clinton tops the magical 50 percent mark among American likely voters, leading Republican Donald Trump 51 – 41 percent, according to a Quinnipiac University National poll released today. ”

Arithmetic says there is someone who thinks Donald Trump is honest (already appalling) that Clinton is not honest, and, yet for other reasons (too numerous to count) plans to vote for Clinton.

This poll suggests that a whole lot of people think Clinton is less honest than Trump but should be president because she isn’t an ignorant, spoiled, thin skinned, intellectually lazy, irresponsible, reactionary, racist, selfish, incompetent ….

Sorry to run on, I meant to type “Who plan to vote for her anyway.”

On the other hand Politifact begs to differ .

For a bit more detail, go to Robert [non Wald] Mann at http://www.mormonpress.com/lying_liars_who_lie_2016_edition

lies2

Trump is rated by the Politifact Mann colaberation as the most dishonest and Clinton as second most honest after Obama. Now I know that Mormon’s are notoriously lefty, but the figure has been clipped and posted and tweeted and (I guess) facebooked by many people more prominent than I.

So why do the people polled by Quinnipiac seem to have such a different view ? Why don’t we look at the sober essay “You Failed Chumps” by Josh Marshall, who shows that there is the doublest of double standards here. Trying to understand he wrote

Many reporters and editors simply take it as a given that Trump’s a crook. So stories about Trump’s corruption amount to what journalists call dog bites man stories – not really news because it’s the norm and wholly expected. The second related point is that many reporters and editors at a basic level don’t take Trump seriously as a real candidate.

I’m absolutely sure he is right. Reporters and editors don’t bother proving Trump is dishonest, because they think to themselves “everyone knows Trump is a lying crook”. But not everyone knows that. What they mean is that anyone who doesn’t know that is so far beneath me that I can’t even see that far. Which is distasteful, but wouldn’t bother me so much if I were confident that the people whom they consider beneath their notice won’t elect Donald Trump (they could go over to the upshot to check if their dismissal of Trump as a candidate is based on solid data (and over at the NY Times they are much more sanguine than fivethiryeight or the f*king Daily Kos for Chrissakes.

Trump may be absurd, but he is not a joke (who else was laughed at but turned out to be important ?).

OK so why is the political press doing such a terrible job of reporting on the relative honesty of Clinton and Trump ? I speculate after the jump

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