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Ken Schulz
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Sandwichman: Mastery of English will do you no good here; this is cconomics. 'Aggregation' is being used in a narrow sense here: Pareto was trying to finesse the problem of adding 'utility' across individuals - how could I know that my pleasure/pain is commensurate with yours? But notice that he does this by eliminating measurement entirely. Essentially, it gives a veto to every individual; neither the number of vetoes, nor the intensity of any individual's rejection, matters. This is why Farmer erred to say that a non-Pareto state is 'very bad indeed', why it is grossly misleading to use the terms 'optimal' or 'improvement' with 'Pareto' - they apply only as a degenerate case. I think the term 'Pareto stalemate' is the best description of a state from which any change is a loss: stalemate in chess describes a situation in which no further move is permitted by the rules of the game. That is all a Pareto state amounts to.
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Do you have a source for the claim of 5,000,000 excess housing units? If you plot the data at https://www.census.gov/construction/nrc/historical_data/index.html you will see that the area under the curve during the boom, above the long-term average at around 1.5M, is surprisingly small. The peak of 2M starts only occurred in one recent year, 2005; four years in the 1970's exceeded that level. Since the bust, the area between the curve and the long-term average is much greater, suggesting that any excess has been worked off. The boom was mostly a boom in housing prices and housing finance; actual construction 'boomed' much less.
Toggle Commented Nov 11, 2015 on Links for 11-11-15 at Economist's View
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Please do think this through further. I don't know Thaler or Sunstein, but I don't think they kick puppies. And behavioral economics draws from cognitive psychology, not from Skinner. (And nobody is a Skinnerian anymore, though we are all _methodological_ behaviorists now). In any case, there is nothing inherently 'antidemocratic' or 'inhumane' about applying findings of behavioral science in making policy. It is how the policy is made that may or may not be democratic. Look, our representatives make laws that attempt to constrain behavior by far more drastic measures (fines, imprisonment, even execution). I would rather they consider whether 'nudges' like opt-out might work for some behaviors we would like to encourage, but for which we do not want to threaten the citizenry for noncompliance. It is a complex world; lawmakers will be advised by experts in many disciplines, whose advice is difficult for the general public to evaluate. Balancing the influence of the electorate, and of the technocrats, is a problem of governance, but it's not unique to behavioral sciences.
Toggle Commented Jul 23, 2015 on Links for 07-22-15 at Economist's View
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First, sorry about the double post. anne - Oh, I think there's no sign the euro is collapsing; it seems to have been as stable relative to the dollar as, say, sterling. Lafayette and others - 'Reserve currency' = But the dollar has only been a reserve currency since post-WWI, when it was well over a century old. High US GDP-per-capita, US military power - recent developments, historically speaking. Can't explain the 19th century. Lafayette - "Unlike the EU, it has a unified tripartite governance. Washington decides, and the country (more or less) follows - which is not yet the case in Europe." Not at all! US states have independent authority to raise and spend revenues, not derived from Federal authority. Most states have balanced-(operating)-budget clauses in their own constitutions, though they permit themselves to borrow for capital expenditures. Nor does the US Federal government underwrite state and local governments, as I noted. I could have added Illinois, New Jersey and Connecticut (where I live) as states with large pension-financing deficits. No one is suggesting that Texas should bail us out, nor that our problems are due to sharing a common currency with an oil state, nor that we should abandon the dollar so we could devaluate our way out of trouble. I'm a little surprised that the gold bugs haven't swooped in to claim that the dollar functioned well as a common currency because until the 20th century, well, you know. But 'greenbacks' were quite successful without being backed by precious metals.
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First, sorry about the double post. anne - Oh, I think there's no sign the euro is collapsing; it seems to have been as stable relative to the dollar as, say, sterling. Lafayette and others - 'Reserve currency' = But the dollar has only been a reserve currency since post-WWI, when it was well over a century old. High US GDP-per-capita, US military power - recent developments, historically speaking. Can't explain the 19th century. Lafayette - "Unlike the EU, it has a unified tripartite governance. Washington decides, and the country (more or less) follows - which is not yet the case in Europe." Not at all! US states have independent authority to raise and spend revenues, not derived from Federal authority. Most states have balanced-(operating)-budget clauses in their own constitutions, though they permit themselves to borrow for capital expenditures. Nor does the US Federal government underwrite state and local governments, as I noted. I could have added Illinois, New Jersey and Connecticut (where I live) as states with large pension-financing deficits. No one is suggesting that Texas should bail us out, nor that our problems are due to sharing a common currency with an oil state, nor that we should abandon the dollar so we could devaluate our way out of trouble. I'm a little surprised that the gold bugs haven't objected that the dollar functioned well as a common currency because until the 20th century, well, you know. But 'greenbacks' were quite successful without being backed by precious metals.
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George and the Alien are on the track here. Technology is the principal factor in productivity, compared to which trust, motivation, effort, etc are rounding errors. Introduction of more productive technologies is attractive when the cost of labor is relatively high, and when the fixed costs can be amortized over large production runs, i.e. there is a mass market, i.e. lots of well-paid workers. (Though I am using the language of goods manufacture, the same factors operate in the provision of services.) On the other hand, "who gives a shit about productivity when the products are going to a few?" - the rich don't buy yachts because they are cheap transportation (...positional goods, Veblen goods, take your pick). (Later) Not being of the yachting set, I did a little looking around; found a yacht-show report in which all the builders were touting features. Only one mentioned production efficiency and automation; that one (Cheoy Lee) has a significant business in commercial vessels, where costs no doubt are a significant element.
Toggle Commented Dec 10, 2014 on Inequality & productivity at Stumbling and Mumbling
"This is not actually the correct way to compare U.S. and foreign prices: picking a different nation to compare the United States with for each procedure." It is exactly the correct way, if one is interested in process improvement: one always benchmarks against the best-in-class performer. The market-basket comparison is only appropriate if you suppose that nations are in competition for 'customers' who are looking to minimize their lifetime costs for a desired level of quality - not a very realistic view, I would think. Once one has identified best-in-class performance, one compares in detail to learn what elements in one's own process can be improved, or eliminated. I believe this will only happen when medical-care providers are willing to team with engineering disciplines who have expertise in process efficiency and safety assurance. This approach is independent of the choice of professional or competitive models.
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Prof. Woolley, you need to give this some more thought. When I studied psychology as an undergraduate and graduate student, we actually spent time talking about the water we try to swim in; besides falsificationism, a favorite topic was P.W. Bridgeman's operationalism. (That is, defining a phenomenon by detailing the operations one must perform in order to observe it.) If you try to operationalize the terms of your explanation of home-baked cookie preferences in a way that it could be empirically tested, or could predict other lunch (or clothing, or accessory) choices of children, I think you will see how much more work would need doing to bring it to a level that can be called scientific explanation. The fact that the scarcity/status story sounds plausible to many people is in no way evidence, it is hardly different from the 'culture' story in that regard
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Much of my career has been spent working for manufacturing firms as an engineering psychologist, on both product design and production systems. The first sentence of Roth's footnote is spot on - producers do not add one factor at a time, because goods are produced by production systems, which have developed to be more and more tightly coupled over the last century-plus. Further, the product is part of the system: high-production-volume products are designed differently than low-volume products; and the product and its production system are designed together (the rubric is Design for Manufacture and Assembly, DFMA). Services industries are adopting sytems approaches and process integration also; and even rather small businesses no longer resemble Thirsty Thelma's. Scale economies are even trickier than Prof. Rowe's SR/LR, firm/market scheme encompasses. As to Blinder, what to think about it is, you need much, much more data of that kind, of how firms actually operate. If you harbor doubts about the CEO's answers, ask the VP's of manufacturing and engineering, and their staffs, and on down.
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Nov 28, 2012