andrew_gelman_stats andrew_gelman_stats-2011 andrew_gelman_stats-2011-814 knowledge-graph by maker-knowledge-mining
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Introduction: Economist David Backus writes : A casual reader of economic news can’t help but get the impression that the way to get the economy moving is to have people spend more — consume more, in the language of macroeconomics. Seems obvious, doesn’t it? At the risk of making the obvious complicated, I’d say it’s not so obvious. It’s also not obvious that consumption has gone down since the crisis, or that saving has gone up. So what’s going on with the labor market? I’ll get to the rest of the explanation, but first some background. The other day, I posted posted this remark from Backus: This is from my area of work, macroeconomics. The suggestion here is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true
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1 It’s also not obvious that consumption has gone down since the crisis, or that saving has gone up. [sent-4, score-0.631]
2 The suggestion here is that the economy is growing slowly because consumers aren’t spending money. [sent-8, score-0.741]
3 But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. [sent-9, score-0.741]
4 What I’d call the demand-side story (more spending leads to more output) is everywhere, including this piece, from the usually reliable David Leonhardt. [sent-11, score-0.351]
5 But here’s an important clue: If a weak economy inexorably led to weak consumer spending, which in turn led to an even weaker economy, we would never escape recessions. [sent-13, score-1.319]
6 Robert Barbera, an economist and author, will sometimes tick off this list of the grim realities in the late stages of a recovery and then conclude by bellowing, “And it was ever thus! [sent-19, score-0.55]
7 ” His point is that recoveries are able to begin even when consumers seem to have little available money, and he’s absolutely right. [sent-20, score-0.313]
8 After the 2001 recession, the economy did not begin adding jobs until 2003 — but consumer spending was rising again by the end of 2001. [sent-21, score-1.128]
9 Likewise, in the early 1990s, job gains did not start until the spring of 1992, but consumer spending began to recover in 1991. [sent-22, score-0.718]
10 In 1982, consumer spending started to pick up speed in the summer, while the economy was still shedding hundreds of thousands of jobs. [sent-23, score-0.896]
11 Even before employers begin adding jobs again, the pent-up demand that exists in the late stages of a recession — for new cars, appliances, even vacations — asserts itself. [sent-25, score-0.737]
12 An improving job market would, of course, play a big role in lifting consumer spending and the economy. [sent-31, score-0.774]
13 But I think it’s a mistake to view consumer spending as merely, or even predominantly, an effect of other economic changes. [sent-32, score-0.782]
14 This sentence, for example: “If a weak economy inexorably led to weak consumer spending, which in turn led to an even weaker economy, we would never escape recessions. [sent-35, score-1.319]
15 Leonhardt doesn’t mention this, but there’s another issue on this one: consumer spending isn’t falling, it’s rising. [sent-37, score-0.66]
16 g=19y * Personal saving — in some ways the opposite of spending — has risen, as many have noted, but it looks to me like an oddity: the government’s saving has fallen enough to more than reverse this. [sent-51, score-0.923]
17 * Household net worth (expressed as a ratio to GDP) shows at most a modest uptick in the recent past, so the increase in personal saving has yet to make a significant dent in household balance sheets: http://pages. [sent-54, score-0.479]
18 pdf * Where Leonhardt is exactly right is on durable goods spending (cars, appliances, furniture) and residential construction (new houses). [sent-58, score-0.404]
19 (i) Employment recovery has been slow coming out of every recession since 1990-91. [sent-69, score-0.37]
20 We also know from earlier episodes that once recovery is well established, jobs will bounce back as well. [sent-72, score-0.354]
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Introduction: Economist David Backus writes : A casual reader of economic news can’t help but get the impression that the way to get the economy moving is to have people spend more — consume more, in the language of macroeconomics. Seems obvious, doesn’t it? At the risk of making the obvious complicated, I’d say it’s not so obvious. It’s also not obvious that consumption has gone down since the crisis, or that saving has gone up. So what’s going on with the labor market? I’ll get to the rest of the explanation, but first some background. The other day, I posted posted this remark from Backus: This is from my area of work, macroeconomics. The suggestion here is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true
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Introduction: David Backus writes: This is from my area of work, macroeconomics. The suggestion here is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true. What I’d call the demand-side story (more spending leads to more output) is everywhere, including this piece, from the usually reliable David Leonhardt. This whole situation reminds me of the story of the village whose inhabitants support themselves by taking in each others’ laundry. I guess we’re rich enough in the U.S. that we can stay afloat for a few decades just buying things from each other? Regarding the causal question, I’d like to move away from the idea of “Does A causes B or does B cause A” and toward a more intervention-based framework (Rubin’s model for
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Introduction: Hank Aaron at the Brookings Institution, who knows a lot more about policy than I do, had some interesting comments on the recent New York Times article about problems with the Dartmouth health care atlas. which I discussed a few hours ago . Aaron writes that much of the criticism in that newspaper article was off-base, but that there are real difficulties in translating the Dartmouth results (finding little relation between spending and quality of care) to cost savings in the real world. Aaron writes: The Dartmouth research, showing huge variation in the use of various medical procedures and large variations in per patient spending under Medicare, has been a revelation and a useful one. There is no way to explain such variation on medical grounds and it is problematic. But readers, including my former colleague Orszag, have taken an oversimplistic view of what the numbers mean and what to do about them. There are three really big problems with the common interpreta
Introduction: Jeff Lax sends along this good catch from Ben Somberg, who noticed this from Washington Post writer Lori Montgomery: If Congress doesn’t provide additional stimulus spending, economists inside and outside the administration warn that the nation risks a prolonged period of high unemployment or, more frightening, a descent back into recession. But a competing threat — the exploding federal budget deficit — seems to be resonating more powerfully in Congress and among voters. Somberg is skeptical, though, at least of the part about “resonating among voters.” He finds that in four out of five recent polls, people are much more concerned about jobs than about the deficit: A Pew Research / National Journal poll from early June asked “Which of the following national economic issues worries you most?” Number one was “job situation” with 41%. “Federal budget deficit” got 23%. An NBC / Wall Street Journal poll from early May asked “Please tell me which one of these items you thi
Introduction: Given Grandma Mankiw’s hypothetical distaste for Sonia Sotomayor’s spending habits (recall that Grandma “would have been shocked and appalled” by the judge’s lack of savings), I expect she (the grandmother) would be even more irritated by the success of Sotomayor’s recent book: Now that Sotomayor has a ton of money coming in, in addition to a well-paying job and pension for life, that would almost seem to validate Sotomayor’s foolish, foolish decision to enjoy herself in middle age rather than sock hundreds of thousands of dollars into a retirement account she likely would never touch during her lifetime. One interesting thing about this example is that Mankiw apparently holds within himself a descriptive and normative view of economics. Descriptively, he models people as “spenders” or “savers.” But, normatively, he seems to attribute higher values to the “savers.” (He also seems to be confused about the relation between saving to intertemporal preference (see my long p
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Introduction: Economist David Backus writes : A casual reader of economic news can’t help but get the impression that the way to get the economy moving is to have people spend more — consume more, in the language of macroeconomics. Seems obvious, doesn’t it? At the risk of making the obvious complicated, I’d say it’s not so obvious. It’s also not obvious that consumption has gone down since the crisis, or that saving has gone up. So what’s going on with the labor market? I’ll get to the rest of the explanation, but first some background. The other day, I posted posted this remark from Backus: This is from my area of work, macroeconomics. The suggestion here is that the economy is growing slowly because consumers aren’t spending money. But how do we know it’s not the reverse: that consumers are spending less because the economy isn’t doing well. As a teacher, I can tell you that it’s almost impossible to get students to understand that the first statement isn’t obviously true
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