Monthly Archives: August 2011

More on the quality of governmental decision making

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Who cares about the process? According to political scientists John Hibbing and Elizabeth Theiss-Morse, the authors of the book Stealth Democracy, it is the failure of politicians to satisfy the common folk’s “process preferences” that leads people to mistrust government. What does not lead to political mistrust, they forcefully argue, is any kind of dissatisfaction with the policies that governments pursue, whether ideological dissatisfaction or simple incompetence. These types of concerns, they write, are too complicated for most citizens to grasp; process matters, however, are simple.

I’ve always–for the few months I’ve been familiar with it–found this argument intriguing, but puzzling. Process, for one, is actually quite complicated, and most people have only a very basic grasp of how government works. Who then should we expect to care about process?

People like Ben Bernanke, who recently said that “The country would be well served by a better process for making fiscal decisions,” according to this New York Times story (via the Globe). The headline was that the “Fed chief blames politics for angst,” and this was the only relevant quote, so I tried to find a more extended quote. Here it is.

Finally, and perhaps most challenging, the country would be well served by a better process for making fiscal decisions. The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses. Although details would have to be negotiated, fiscal policymakers could consider developing a more effective process that sets clear and transparent budget goals, together with budget mechanisms to establish the credibility of those goals. Of course, formal budget goals and mechanisms do not replace the need for fiscal policymakers to make the difficult choices that are needed to put the country’s fiscal house in order, which means that public understanding of and support for the goals of fiscal policy are crucial.

The full speech is linked to from there. Note who Bernanke thinks does–markets, investors–and does not–no mention of the public–care about process here. The public is mentioned at the end, but only insofar as the public understands “the goals” of fiscal policy–not how the sausage is made.

Of course, I still don’t think there is anything inherently wrong with how we make decisions in this country–or if I do, I don’t have any evidence to support my beliefs. What seems to be going on, instead of any sensible discussion about how government works, is a kind of democracy-bashing, mostly by the business community. E.g.,

Eric Thaler, “Washington Should Try a Little Prudent Self-Restraint,” New York Times
Neil Irwin, “IMF’s Lagarde: View is growing that policymakers can’t make tough choices,” Washington Post

What exactly are these “tough choices?” And would economists / IMF officials do any better if they were in Congress’ shoes?

David Leonhardt writes about how the Fed takes a rather narrow view of economic policy, relative to the universe of economists.

Why does the Fed skew more hawkish than the economics profession as a whole? Part of the answer lies in the way the 12 voting members of the policy-setting committee are chosen. They are a mix of presidential nominees subject to Senate approval, with 14-year terms, and regional Fed presidents, who are chosen by outside boards that are made up partly of private-sector finance executives.

And maybe the shutdown compromise will actually lead to more “stability”, the New York Times reports (page A20).

Inferring Politicians’ Competence from Economic Performance: Luck or Skill?

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This New York Times blog post asks “Can We Judge Economic Success? Perry Versus Obama.” The author rightly points out that distinguishing competence from luck is apparently the critical task of voters, also emphasizing repeatedly that this is a problem of causal inference.

Even if we agree that the person in charge deserves some credit (or blame) for the state of the economy, it doesn’t follow that different policies would have produced a significantly different result. Obama’s stimulus and bailout programs may have helped reverse the decline in gross national product, but that doesn’t mean that conservative tax-cuts and relaxed regulation would not have had a similar effect. Conversely, Obama’s policies might have worked in Texas as well as Perry’s.

Of course, it is often easy to see that a particular policy produced a short-term economic effect: Obama’s cash-for-clunkers program caused an increase in car sales. But it is much more difficult to determine what effect an administration’s overall policies had on long-run economic health. Expert economic analysis might in principle produce some creditable conclusions. But there is little chance of a consensus among economists on such an analysis, particularly when political stakes are high. We ordinary citizens are left with no reliable professional guidance.

The rest of the post, I think, is a little too committed to the idea that luck plays a disproportionate role in determining performance.

(So higher political stakes make for poorer research? Hm…)

The very same insight is made in this 1993 paper by economist Alberto Alesina and political scientists John Londregan and Howard Rosenthal:

Administrations vary in their degree of “administrative competence.” For a given rate of inflation (expected or unexpected), a more competent administration is likely to produce more growth than a less competent one (Persson and Tabellini 1990). Since voters prefer more competence to less, elections will turn on not only partisan preferences but also efficiency arguments. However, a voter can not observe “competence” directly but only its effect on the economy. Since the economy is also affected by technological innovations, oil price changes, wars, and other matters that have little to do with administrative competence, voters cannot immediately distinguish competence from “luck.” A “rational”retrospective voter can only use available information to make a forecast of the incumbent’s post electoral competence. This forecast, as we shall show, leads economic growth to affect electoral results in a manner distinct from “naive” retrospective voting, where no attempt is made to distinguish good luck from good government.

“The truth is economists just don’t know the answers to these questions”

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I was listening to this program last night. Too bad they don’t produce transcripts–there was a great exchange where the guests, left right and center, made various claims about whether taxation reduces the incentive to work. One made the claim several times and the other claimed there was no empirical evidence for this “theory.” At one point a journalist for the New York Times jumped in to say something like “Well the truth is economists just don’t know the answers to these questions because there are just so many factors and you can’t isolate the effect of one thing on another.”

On a related note, another study (think tank report) on whether high income taxes lead the wealthy to move out of state (via Tax.com).

Also, this post on Ezra Klein’s blog (but not by Klein) summarizes the economics literature on the effects of the stimulus. I was really impressed with the quality of reporting and the explanation of research design.

Who is to blame for “D.C. deadlock?”

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I thought New York Times writer Sheryl Gay Stolberg did an impressive job surveying political scientists who work on polarization in this weekend review piece. (Indeed my only criticism was that she didn’t talk to John Sides.) Thomas Ferguson (via the Monkey Cage) disagrees, pointing to the rise of political money. That’s an interesting normative debate, I suppose–do we attribute this apparently bad thing to regular old folk or to the special interests?

However, I’m still wondering if too much is being made of this single event (which in fact ended in a compromise). I’m having flashbacks to the shooting of Gabrielle Giffords, when everyone was talking about civility and who was to blame for that–we see how long that discussion lasted. So my question is still whether there is any “deadlock” to be explained by blaming anybody. There could be and probably is “polarization” to be explained, but the connection between that and gridlock doesn’t seem clear cut.

…Just spent a few minutes browsing the literature on this, and I stand by this claim it isn’t clear cut–at least to me! Please, can someone enlighten me with the latest work on polarization and gridlock?

Taking stock

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One thing I’ve noticed upon starting this blog is that my inbox is constantly overflowing with mail. No, not fanmail or notifications of comments, but e-mails to myself reminding me to post about something I read in the paper that morning. It’s impossible to keep up. So I’m thinking of doing something (else) I never thought I’d do: start a Twitter feed. After all, at this point, and in encountering the usual “study reportage”, what more is there really to say?

So in the spirit of experimentation / cleaning out my inbox on a Friday afternoon, here’s what my blog would look like (well, without the cool formatting) if it was just a feed of Twitter posts.

  • NYT: Black Scientists Less Likely to Win Federal Research Grants, Study Reports — I believe it.
  • Boston Globe: Sleep apnea tied to cognitive loss in older women
  • Washington Post: Letter to ed on standardized test cheating scandal in Georgia
  • Boston Globe: Did the atomic bomb cause Japan to surrender in WW2?
  • Boston Globe: “Harvard study says city schools’ anti-sugar policy paying off
  • Boston Globe: How to prevent college students from binge drinking
  • NYT blogger gets philosophical about daily churn of medical studies (and gives props to randomized trials)
  • NYT: G.O.P. on Defensive as Analysts Question Party’s Fiscal Policy — but I thought most economists opposed further stimulus?
  • Boston Globe: Town Meeting again to consider appointments — MA towns have little guidance as they debate whether to elect or appoint local officials

    • Update: Forgot one: Are poor people more likely to be prescribed anti-psychotics today? “These data show that antipsychotics were over twice as likely to be prescribed to African American patients; the poor i.e. patients with public health insurance; and children under 18.” (via NeuroSkeptic)

    Is transparency of methods increasing in quality of research? 2 Education Studies

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    Two reports about education studies caught my eye in recent days, but more for what they have in common aside from education itself.

    The first comes from the free daily Metro newspaper that subway riders in Boston read. Here is a link to the article, but in the past I’ve noticed that their URLs don’t stick around for too long.

    The first study is reported to show that college students who live in dorms perform better academically than those who live off-campus. Worried about the selection bias problem, wherein the types of people who choose to live on or campus might just be more or less committed to their studies? Not to worry!

    Plenty of studies have shown that students who live on campus tend to do slightly better academically. But a recent study out of Indiana University-Purdue University Indianapolis found that not only did on-campus students do significantly better academically, but that living on campus was a big reason why they did better.

    “The big question is causation. Does living in the dorms cause you to do better? Previous studies were just looking at those that live in the dorms versus those that don’t,” explains Dr. James Murray, who co-authored the study with Dr. Pedro De Araujo. “The problem is that students that care more about school may be more likely to want to live at school. So, they may perform better, because they happen to be the better students anyway. But we actually found that living on campus caused students to do better, at least in terms of GPA.”

    The researchers also found that campus life had a positive effect even after the student moved out of the dorms. “Students who once lived on campus were more likely to study with their peers after they moved off campus, but not necessarily while they lived on campus,” explains Murray. “So, if you’re a freshman living on campus, you’re not more likely to study with your classmates, but you formed those relationships in the early years and were able to make use of them later.”

    That’s the entire article (so sue me). It’s worth posting the whole thing to see that while the problem of selection bias and the claim of showing causation are both mentioned, exactly how causation is shown is completely unspecified.

    (Now my usual disclaimer is that we should blame the journalist for the omission. However, I looked up the paper and, to put it tactfully, think that the authors could have done a better job explaining their research design. So it might not be a surprise that the journalist couldn’t figure it out. Also, the researchers are not from the Indiana University-Purdue University Indianapolis, as the first paragraph of the news article indicates; rather, the data for the study are from students at that university. Pretty sure this mistake is the journalist’s fault.)

    Anyway, it boggles the mind that you can get away with stuff like this, even in the Metro.

    Second study is from a NY Times blog post on education, and has a similar format: big question; possible selection bias problem; a vaguely specified fix.

    Each year millions of middle-school students nationwide spend angst-filled months waiting to hear if they scored high enough on an entrance exam to attend a selective public high school. In New York City alone more than 27,000 students apply for precious spots in the three best-known schools: Stuyvesant, Brooklyn Technical and Bronx High School of Science. What Mr. Dobbie and Mr. Fryer wanted to know was just how much of a difference attending one of these high schools makes in the long run for students with similar equal admissions test scores. Some proponents say the benefits of an environment of high achievers, more advanced coursework and higher expectations are obvious. Skeptics counter that these gifted and motivated teenagers would have done well no matter where they went. Students in these schools with low class ranks may even be less competitive when it comes to college admissions. They might be better off in less competitive environments or in schools with a wider range of student abilities. Because there are so many applicants of similar ability and achievement who are not accepted to these New York institutions, the authors were able to compare the average outcomes of students who graduated from different high schools. “We provide the first causal estimate of the impact of attending an exam-high school in the United States on later outcomes,” they write.

    (Also, what is this post doing on an Arts blog at the Times? [Shouldn't it be on the Fashion pages with the other research studies?])

    Actually on second read that doesn’t sound so bad–much better than the first study. The abstract of the article is also nicely done. Basically what they are doing is comparing outcomes for admitted students who attended and admitted students who did not attend, adjusting for observable characteristics like family background and pre-treatment academic performance. Sounds good. But don’t we think that the choice to attend, even in this subsample, may be “endogenous”–that is, that those who choose to attend might just be better/worse academically than those who choose not to?

    Update 8/19: I actually misread the blog post and I made a mistake on the link to the second study paper, and consequently misinterpret their design. Here is the actual link and here is the abstract, which makes it quite clear the authors are using regression discontinuity.

    Publicly funded exam schools educate many of the world’s most talented students. These schools typically contain higher achieving peers, more rigorous instruction, and additional resources compared to regular public schools. This paper uses a sharp discontinuity in the admissions process at three prominent exam schools in New York City to provide the first causal estimate of the impact of attending an exam school in the United States on longer term academic outcomes. Attending an exam school increases the rigor of high school courses taken and the probability that a student graduates with an advanced high school degree. Surprisingly, however, attending an exam school has little impact on Scholastic Aptitude Test scores, college enrollment, or college graduation — casting doubt on their ultimate long term impact.

    Labor’s decline and inequality

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    Title borrowed from this New York Times blog post says it all.

    The decline in organized labor’s power and membership has played a larger role in fostering increased wage inequality in the United States than is generally thought, according to a study published in the American Sociological Review this month.

    The study is by sociologists Bruce Western and Jake Rosenfeld in the American Sociological Review.

    Somalia

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    This Washington Post editorial describes the crisis in Somalia as “man-made.” They also discuss two possible things the US could do: intervene militarily; or lift restrictions on aid.

    The alternative to intervention is to loosen restrictions that have hampered U.S. aid to groups operating in al-Shabab-controlled areas. The movement has been designated a terrorist organization; U.S. aid to Somalia dropped by some 80 percent between 2008 and 2010. According to The Post’s Mary Beth Sheridan, Secretary of State Hillary Rodham Clinton has been working on ways to ensure that aid groups working in Somalia will not face prosecution if they are forced to pay bribes to al-Shabab or if militants divert some food supplies. State Department officials said Tuesday that they were seeking to reassure aid groups that they could deliver food and medicine without running afoul of the law.

    The editorial in fact is a followup on this article:

    No one expects that a U.S. policy change on the anti-terrorism restrictions will end the famine. But aid organizations say that, without the threat of U.S. punishment, their employees will be able to work more easily with their Somali networks to get food into hard-hit areas.

    That article starts out by saying the White House is working toward lifting those restrictions; the article is from August 1 and I haven’t heard anything since.