Monthly Archive for September, 2010

Quote Of The Day

“Researchers at the Highway Loss Data Institute compared rates of collision insurance claims in four states — California, Louisiana, Minnesota and Washington — before and after they enacted texting bans. Crash rates rose in three of the states after bans were enacted. The Highway Loss group theorizes that drivers try to evade police by lowering their phones when texting, increasing the risk by taking their eyes even further from the road and for a longer time.” —USA Today, via Andrew Sullivan

Quote Of The Day

“The right way to think about teacher compensation, I think, is this. You could have a system in which all teachers are paid the same amount. But we don’t have that system. Instead we have a system where veteran teachers are paid much more than novice teachers, and teachers with master’s degrees are paid more than teachers without master’s degrees. We could switch this to a system where teachers whose kids do much worse than average on value-added measures get fired, and teachers whose kids to much better than average get paid more than average teachers. The idea here wouldn’t so much be to create an “incentive” as simply to ensure that the best teachers aren’t tempted to leave the profession while the worst teachers are encouraged to do so. If you want to do something through a bonus/incentive mechanism, what would make sense is to offer teachers extra money to take on challenging assignments in high poverty schools.” — Matthew Yglesias

Quote Of The Day

“Eugene Steuerle pointed out at lunch last week that there is an adverse equilibrium in politics today. Democrats think that if they agree to spending cuts to reduce the deficit, then Republicans will take advantage of that by passing tax cuts. Meanwhile, Republicans think that if they agree to tax increases to reduce the deficit, then Democrats will take advantage of that by raising spending. The equilibrium strategy is for neither party to compromise on deficit reduction.” — Arnold Kling

Quote Of The Day

“This is sort of impressive:  Paul Krugman simultaneously castigates Republicans for the fiscal irresponsibility of wanting to extend tax cuts for the rich that cost about $700 billion–and for irresponsibly threatening the extension of tax cuts for the middle class which cost three times as much.  Yet you could read the entire column and not realize that it’s the middle class tax cuts which are the really expensive, budget-busting bit.” — Megan McArdle

Cash For Clunkers A Failure

Berkeley economist Atif Mian and Chicago economist Amir Sufi find:

A key rationale for fiscal stimulus is to boost consumption when aggregate demand is perceived to be inefficiently low. We examine the ability of the government to increase consumption by evaluating the impact of the 2009 “Cash for Clunkers” program on short and medium run auto purchases. Our empirical strategy exploits variation across U.S. cities in ex-ante exposure to the program as measured by the number of “clunkers” in the city as of the summer of 2008. We find that the program induced the purchase of an additional 360,000 cars in July and August of 2009. However, almost all of the additional purchases under the program were pulled forward from the very near future; the effect of the program on auto purchases is almost completely reversed by as early as March 2010 – only seven months after the program ended. The effect of the program on auto purchases was significantly more short-lived than previously suggested. We also find no evidence of an effect on employment, house prices, or household default rates in cities with higher exposure to the program.

Link via Freakonomics, who intuitively agrees with the finding.

Governor Christie Responds To A Teacher

What a great response:

[youtube:http://www.youtube.com/watch?v=PkuTm-ON904]

The Retirement Age

Arnold Kling explains why the term should be dropped:

Klein’s thinking is that people do not want to work longer, so raising the Social Security “retirement age” is a bad idea. His conclusion does not follow from his premise. To avoid this sort of error, we need to stop using the term “retirement age” to refer to the age at which one becomes eligible for government benefits.

Instead, think of it as the age of government dependency. If Klein does not think we should increase that along with longevity, then he is arguing that as lives get longer and longer, taxes on working-age citizens should get higher and higher.

Keeping the age of eligibility low may not necessarily help people to retire sooner. It may have the opposite effect. By keeping taxes high, it may reduce employment and wages for people of working age, thus making it harder for them to retire when they would like.