Correlation, causation and data

Here's a cool short post from the guys at Freakonomics about using data to advocate a viewpoint. You may recognize the name of the purported offender.

Many of you have had econometrics or are now enrolled in 422 (others will have me for 422 next spring), so hopefully if you can't relate to this, you soon will. People want answers. Analysts included. During tumultuous economic times this is especially so. Our job as economists is to seek those answers, find the truth, whatever it may be, and report it as objectively as possible. But many times the truth is "we don't know". People (especially those paying for analysis) don't seem to like that answer, which can create unfortunate pressures that can lead to tenuous conclusions.

Hopefully this class has increased your awareness that economics is messy, and "one size fits all" solutions are very rare.

For your work, be open about what you know, what you don't know, and what your assumptions are. When reading the work of others, question assumptions, check the data and always know your sources.

Thanks to RH for the link.

Dutch Disease in Africa and Latin America

Nice short article here at the WSJ.

Excellent reading here at Business Spectator.

Health and economic growth in India

Here's a quick summary of a study suggesting that gains in economic growth did not result in gains in child nutrition.

Why might this be the case?

More on the college premium

Krugman follows up on his Sunday piece with a recent blog post at NYT and another here where he answers my question.

Obviously the question of whether the college premium is going up, going down or staying flat is a matter of supply and demand for labor. On the demand side, technology can be a substitute for labor, and as tech improves (cheaper, better/smarter machines) the demand for substitutable labor should fall. But labor can also be a complement to technology, so as tech improves we should see an increase in demand. I think the jury is out in terms of the net effect, but clearly this is a matter of what types of labor serve as complements and what types are easily substituted.

Good stuff here from NBER.

As for the supply... here's a bit of info from the economist.

Interesting and related material here.

Krugman flips the script on education and growth

From today's NYT.

Krugman notes that the outsourcing of low-education jobs may be reaching a plateau, and that outsourcing of high-ed jobs may be speeding up. If so, strong education policy may not be the golden ticket to growth. Interesting perspective. I buy the "hole in the middle" argument, though I'm not sure I buy the idea that high-tech or high-ed jobs are "more offshorable". I haven't yet read the Blinder and Krueger paper, but it seems there's a parallel between these ideas and traded goods vs. non-traded goods. Which types of labor are easily outsourced to the lowest and/or most educated bidder?

How might this affect the college premium? The grad school premium? Will the effects vary by discipline? What might this do to the demand for certain college majors in the U.S.?

Boomers and the dependency ratio

From the Census Bureau.

Cause for concern?

Kristof on Islam and economic growth

Nicholas Kristof has a great column in Sunday's NYT.
Note the role of the accumulation of capital.

He has a brief follow-up in his blog today.