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Articles by [email protected] (Casey B. Mulligan)

Misleading Baltimore Stats for Celebrating Lax on Crime

16 days ago

In 2020, the City of Baltimore stopped prosecuting "minor charges" such as drug crimes.  The headlines are that 2020 crime "went down a lot" from 2019.  Homicides fell by 13.Not mentioned is that, over a similar time frame (2020 Q1-Q3 vs 2019 Q1-Q3), "Opioid Intoxication Deaths" increased by 48 persons (at an annual rate).  That is an increase of 36 percent, compared to 21 percent for the rest of the state of Maryland or 3 percent for Baltimore 2018-2019. Of course a lot of unusual things happened during the pandemic, which was also experienced by the rest of Maryland and the world.  But is there any reason to be confident that lax enforcement of drug laws would not increase activity associated with fatally dangerous drugs?

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How Chicago Economics is Helping End a Pandemic: Interview with Murphy, Philipson, Topel

March 2, 2021

Covid-19 has disrupted much of human
life, but Operation Warp Speed has drastically mitigated the costs of the
virus. The $10 billion federal program launched in April 2020 encouraged and
accelerated the development and mass manufacturing of COVID-19 vaccines,
streamlined Federal approval for vaccines and their manufacture, and provided
Federal funds for private vaccine research and advance-purchase orders.  COVID-19 vaccines are currently being
administered to the general public at least six months earlier than expected.  Vaccinating the population against COVID-19
six months earlier was worth about $1.8 trillion to the U.S. alone
in terms of lives saved and accelerating the return to normal schooling, work,
socializing, etc. (Mulligan and Philipson 2020).

Operation Warp Speed is a

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White House Attitudes toward Fraud: Evidence from 75 ERPs

February 2, 2021

Judging from their Economic Reports, few Presidents have given much thought to the problems of fraud.  When they do, typically private sector fraud is cited as a reason for government regulation.  Prior to 2019, ERPs rarely included analysis of incentives to prevent fraud, and never explained why those incentives would be different when the victim of fraud is a private entity as opposed to taxpayers.  Does this reflect a (noneconomic) view that fraud is a consequence of bad people rather than poor incentives?ERPs hardly mentioned fraud before Clinton.  His ERPs cite financial fraud (especially credit card fraud, which had grown with the industry itself) and healthcare providers that fraudulently miscode treatments in order to enhance their receipts from government and other

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The Fallacy of the Heap Returns

January 16, 2021

The (il)logic of Obamaeconomics has returned:Each $100 of weekly unemployment bonus has hardly any negative effect (some might say "no statistically significant effect") on employment or GDP.Food stamp benefits have hardly any negative effect on employment or GDP.Rental assistance has hardly any negative effect on employment or GDP.Obamacare subsidies have hardly any negative effect on employment or GDP.Minimum wage increases have hardly any negative effect on employment or GDP.A new negative income tax has hardly any negative effect on employment or GDP.My writings rarely express disagreement with any of the bullets by themselves.  For the sake of argument, I am not disputing them here.Where I disagree is the assertion that the combination of all of the bullets, which is Biden’s pandemic

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Parler Competes Horizontally with Amazon, Apple, and Google?

January 13, 2021

Parler is a microblogging platform that was cut off from the internet by its web hosting service, Amazon.  Almost as drastic, Apple and Google took steps to prevent the use of Parler on their mobile operating systems.  Unlike Twitter, Amazon, Apple and Google do not describe themselves as microblogging platforms.  At first glance, these would seem to be vertical (i.e., supply chain) relationships with no potential to harm competition.  Wrong!For brevity, I will not go into the competitive effects of vertical relationships; the recent guidelines jointly issued by DOJ and FTC are thought provoking.  I will also not go into dynamic effects, such as the possibility that Parler’s success might ultimately prove to be complementary with "right wing"/"less woke" web hosting services that are

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Updates on Parler’s War with Big Tech

January 12, 2021

Amazon turned off Parler’s servers last night, disconnecting Parler.com from the internet, and with it the social media accounts of almost 20 million people.Parler CEO also reported (yesterday AM on Fox Business) that attorneys, email, and other suppliers are refusing to supply his company.  Although he said that transferring the company’s software and data could be done in about 12 hours, today he wrote that "We will likely be down longer than expected" because of the time it takes to find vendors who are willing to supply the company.  Parler investor Dan Bongino said today that "Parler will be back by the end of the week."The Jan 6 violence and lawbreaking was reportedly organized on Facebook, but Facebook continues uninterrupted.I estimate that Parler has 20 million members (no bots),

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White House Attitudes toward “Screening Agencies” (looking at you FDA)

January 3, 2021

The Food and Drug Administration (FDA) has been part of many conversations in 2020.  To the great frustration of tens of millions, it has to approve COVID tests and arguably applies the wrong (from economic and health perspectives) standards in doing so.  It is also tasked with approving COVID treatments and vaccines.  Vaccine approvals came much quicker than experts expected, although IMO not quickly enough.With few exceptions, economists have “long been aware that the agency causes unnecessary deaths and suffering by” its “inexcusable delays in approval” (see esp. Klein and Tabarrok’s collection).  Judging from 74 years of Economic Reports of the President, the White House has not traditionally given this issue much attention.  When the FDA does appear, the sentiment generally confirms

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How Economics Helped End a Pandemic

December 18, 2020

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Last March Dr.
Fauci explained to a Senate committee that “a
vaccine … will take at least a year or year and a half” until it is
administered to the general public. In
his next testimony, he added, “I don’t give advice about economic things.”  If Dr. Fauci had
paid more attention to economics, at least what had reached his own inbox in
the prior year via the
White House Staff Secretary, he would have understood how different vaccine
development during a pandemic would be, and should be, from that in normal
times.

Dr. Fauci was refering
to the lengthy process that the Food and Drug Administration (FDA) has for approving
drugs, vaccines, and medical devices for use in the United States.  Long ago a wide
range of economists had concluded that the FDA process was too
cumbersome.

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Look at Article II of the Constitution before Censoring Trump

November 7, 2020

Article II, Section 1 of the U.S. Constitution says [emphasis added], Each state shall appoint, in such manner as the Legislature thereof may direct, a number of electors, equal to the whole number of Senators and Representatives to which the State may be entitled in the Congress….I am not a lawyer, let alone Constitutional scholar.  I welcome such scholars to engage and clarify what follows (suspecting that most of these scholars are currently retained by either Rs or Ds and therefore will not comment outside of legal proceedings).My point in what follows is about free expression of reasonable ideas, which is a set of ideas that includes elements that may be ultimately rejected by the U.S. Supreme Court as valid legal arguments.  I am not using the term "reasonable" as a legal opinion

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Canaries in the Coal Mine

November 4, 2020

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Although we still do not know the
winner of the electoral college, it is clear that the polls were systematically
wrong in the swing states and several others. 
Here is a recap, with links, of what we knew in advance
but few dared discuss openly.

Election forecasting became an
economics-free zone

I wrote
about this last week:

(1) Better information-aggregation
methods were showing less Biden lead and sometimes a Trump lead.

(2) The incentives for
individuals to truthfully participate in polls were skewed relative to a
neutral situation, and relative to 2016. 
Incentives matter!

(3) The costs to individuals of
participating in the election are different during a pandemic.  During this pandemic, perceptions of the new
costs were correlated with party affiliation.

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Do Election Forecasts Suffer from a Lack of Economics?

October 31, 2020

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Forecasts of this election are
certainly missing economics.  However,
lacking knowledge and skills of the other tools and methods for election forecasting,
I cannot say how much the absence of economics matters.  My only purpose here is to cite the missing
economics and attempt to assess the direction of the forecast bias as it
pertains to the Presidential election. 
The missing economics fit into three categories: information
aggregation, voter incentives to tell the truth, and voter incentives to
participate in the general election.

At the time of writing (Oct 30),
the RealClearPolitics
Poll Average is Biden +7.9 (51.4-43.5) nationally and +3.1 (48.9-45.9) in
the top battleground states.[1]  Based on a very similar dataset, FiveThirtyEight
puts Biden’s chance of winning at

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Unions and Inequality: Looking at the Obvious

August 21, 2020

At the same time that a particular labor union (teachers) has successfully pushed to keep school buildings closed, we are reminded that unions are part of the "solution to inequality."  As an update to an old literature on unions and inequality, let’s first look at distributional effects of closing school buildings.The chart shows that closing school buildings reduces learning for all groups, but especially low-income and minority pupils.  So the actions of teacher unions today (they are far more likely to have their schools closed) will add to inequality in the future as the pupils enter the labor market.Now let’s look at today’s labor market.  The weekly cash earnings of teachers are 22 percent more than those of nonteachers.  As a result of being offered more and richer fringe benefits

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Are Regulations “Job Killing”?

July 17, 2020

The traditional models of regulations and growth treat regulation as an adverse productivity shock (more inputs for the same output) in order to help the environment, fairness, or some other social good.  But a productivity shock has opposing income and substitution effects on labor supply.  Arguably a regulation that works as a productivity shock has no aggregate effect on jobs.Reminded how Gary Becker many times told me that "somebody benefits," I do not endorse the productivity-shock model of regulation, at least as relates to the Federal regulations added and removed over the past 20 years.  In economics jargon, the "rectangle" created in a market by regulation is not entirely wasted: some of it is a transfer to special interests and therefore not an income effect in the aggregate.

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Shoddy Executive Order Bears Fingerprints of Navarro and Krugman

June 24, 2020

An immigration Executive Order was issued two days ago.  I read it yesterday and gathered my thoughts and relevant memories over the subsequent 24 hours.

The EO contains immigration regulations and purported economic justifications for the regulations.

The EO’s economic justification is essentially that it is good to suppress labor supply during a recession.  I disagreed with such a conclusion when it was offered years ago by Krugman, Eggertson, and others.  The conclusion is just as wrong when it comes from President Donald Trump.

The empirical fact, which is not a surprise from a theoretical point of view, is that labor supply and demand matter just as much at the margin during a recession as they do during an expansion.  See Chapter 8 “Recession-era Effects of Factor Supply

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Dueling Memoirs: Mulligan vs. Bolton

June 23, 2020

What do readers have to say?
Style

A New York Times Review says that Bolton’s memoir "has been written with so little discernible attention to style and narrative form…."

One reader (who asked to remain anonymous because he/she fears retribution at work) finds You’re Hired! to be an "extremely well-written book." Brian Blase found it to be "enjoyable and easy to read."

Tone

Back to the review of Bolton, "Underneath it all courses a festering obsession with his enemies …the book is bloated with self-importance."

Pages xii and xviii of You’re Hired! explain how I was "the Apprentice" and that readers should be "prepared to be as amazed and humbled as I was."

By Joe Grogan’s reading, You’re Hired! is an "an insightful, honest, book …  free from score settling and self

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The Higher Ed Market after Floyd

June 6, 2020

@GlennLoury objects to what university administrators are doing. They are economic actors too, who will not benefit from a repeat of 1968, so it is predictable that their reactions might risk some scholarship, reason, and learning.But there is also competition in the industry and thereby an opportunity for an (aspiring?) administrator who expresses the interests of the many individuals who have not yet reached the fashionable conclusions. Something like the famous Zimmer letter. This competition might play out slowly given that (barring regulatory favors) universities will now compete in another important dimension: whether 2020-21 students are allowed to purchase a college education that does more than Zoom (which would have made 1968 impossible).
Moreover the Zimmer letter was not

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Labor Market Recovery Begins when States Begin to Open

June 4, 2020

The first chart below is an estimate of weekly US employment per adult.  It suggests that the bottom was the week ending May 7, and that a recovery may have begun.

The estimated recovery may not look large on the scale of the current depression, but it is about 7.5 million employees above May 7 and 3 million employees above late April.  Note that the entire recovery from the 2008-9 recession was "only" 7 million employees above population growth and took ten years rather than a week or two.

At about the same time, states began ending their stay-at-home orders.  E.g., Texas May 1 and California May 8.  I expect another increase in early June as more reopening occurs.  A big increase will occur when UI bonuses expire, which may be as early as August.

The imputation is based on the

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Measuring Employment between Monthly Surveys

April 27, 2020

The Employment Situation Report by the Bureau of Labor Statistics comes only monthly.  It measures only the seven-day week (or, with the establishment survey, pay period) including the 12th of the prior month, which means that this month four very interesting weeks will be skipped and that the report on that April week will not be released until May 8.

Three data sources provide employment information on at least one of the missing four weeks, with the results shown in the chart below.  The results suggest that employment has fallen more than 20 million and perhaps as much as 36 million by April 11.  This does not begin to count employees who had their hours reduced.

One is an attempt by Bick and Blandin (2020) to imitate the BLS household survey for the week of Sunday

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Show us the fevers

April 20, 2020

By all accounts, hundreds of millions of us are confined to home despite being perfectly healthy.  The purpose of all of this, we’re told, is to make sure that we do not bump into people infected with the coronavirus.

The wise people forcing us to do so owe us some evidence that in fact the virus is out there in sufficient quantities to merit draconian measures.  They point us to deaths in New York hospitals, and growing numbers of positive test results.  But those presumably were infections that occurred weeks ago (perhaps also some false positives).

Smart thermometers suggest that hardly anyone has had a fever for a couple of weeks now.  Perhaps this data is faulty or easily misinterpreted, but the wise people owe at least an explanation to the hundreds of millions of people

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30+ million out of a job

April 20, 2020

A one-size-fits-all policy, even at the state level, has been a mistake from the beginning.  Instead policy should be favoring decentralized mechanisms over direct control and ensuring that the chosen regulations deliver more net benefits than less stringent alternatives.  It is too bad that governments are causing so much harm at this critical moment by ignoring these longstanding principles of government regulation.

Expressed at an annual rate, the shutdown is already costing $7 trillion, or about $15,000 per household per quarter.  Employment had already fallen 28 million by April 1 and continues to fall as the shutdown continues.  Not only is the shutdown costly, but it is a cost-ineffective way of reducing the health harms

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Shutdown reduces the flow of GDP by 28 percent

April 17, 2020

New data from Alexander Bick and Adam Blandin suggest that the flow of real GDP is 28 percent less than it would be under normal circumstances.  Using two entirely different methods, I previously forecasted 25 percent and 26 percent.  Below are the details of my calculations from Bick and Blandin.

Bick and Blandin (2020) find that working hours per working age adult circa April 1 declined 27 percent from February.  Moreover, among those working in February 2020, between 59 and 61 percent are now absent from their workplaces either due to not working or working at home.  If half of the capital in those workplaces is idle and not replaced by utilizing capital located in home offices, then capital utilization has fallen by 30 percent and GDP by 28 percent.

The GDP calculation assumes

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What’s Wrong with this Reasoning?

April 5, 2020

FACT: the population density of NYC is 27K per square mile
FACT: the population density of Indianapolis is 2K per square mile
FACT: COVID-19 was able to be introduced and spread in a city with only 2K susceptible people per square mile (Indianapolis is such a city).

Conclusion: COVID-19 will continue to spread in NYC until either (i) the number of susceptible people falls to 2K per square mile or (ii) a vaccine.  i.e., until more than 90% of NYC has contracted and recovered from COVID-19.  [This conclusion says nothing about time frame; i.e., it could be years]

Does the conclusion follow from the three facts?

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Where did the fevers go?

April 2, 2020

This website tracks real time fevers using thermometers connected to the internet.  A first glance at their map suggests to me that:

fevers spiked two week ago.
The timing of the spike is similar across the country,
but magnitude greater in those regions with more COVID-19 deaths.
The time difference in the peak across counties is at most a few days.

Does this mean that the rest of the country is not significantly lagging NYC?  Or that COVID-19 fevers are a small fraction of all fevers?

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What’s Happening with Drug Abuse?

March 31, 2020

I don’t know where to find very recent counts of drug overdoses.  Below is alcohol sales, showing that the sales increase is greater for higher alcohol content (up to 75 percent for spirits).

If the increase in drug overdoses were also 75 percent, that would be an increase of about 1000 fatalities per week.

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Is a Shutdown an Overreaction?

March 31, 2020

60,000 – 80,000 Americans died from the 2017-18 flu, without exceeding the capacity of ICU beds.  This flu was experienced around the world.  Not a single country found it worth shutting down their economies in that situation.

In 2020 the forecast is that about 90,000 Americans will die from COVID-19, including some deaths due to insufficient ICU capacity.  Shutting down "nonessential" businesses is now the norm.

This forecast comes from the Institute for Health Metrics and Evaluation IMHE at the University of Washington.  Unlike me, IMHE are not amateurs with contagious disease time series.  With "about 500 statisticians, computer scientists, and epidemiologists on staff, IHME is a data-crunching powerhouse. Every year it releases the Global Burden of Disease study…."

At what

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Notes on 2020 CARES Act, in reading order

March 30, 2020

Note that this law is just one of multiple new COVID-19 relief laws.  These are my notes on the labor market provisions in the law, which are all of Titles I and II, and parts of Title III.

Title I KEEPING AMERICAN WORKERS PAID AND EMPLOYED ACT
A.k.a., 7(a) loans
"Loans" to small businesses that maintain their payrolls
Payroll does not include any payments to employees making $100K+ annually
The loan amount is capped by the prorated amount of payroll for the prior year
The loans can be forgiven in whole or part
The forgiveness is capped by the minimum of
$10 million;
the sum of ongoing payroll, rent, utilities, interest;
the loan amount (itself capped at 2.5 times average monthly in the prior year).
The forgiveness is free from business tax.
For this act, a small business is less than

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An example of 7(a) perversion

March 30, 2020

Let’s say that you have 700 employees in the prior year, earning an average of $50K.

If you continue that between now and the end of Q2, Title I of the 2020 CARES Act will give you nothing.

BUT if you fire at last 201 of those employees, and THEN apply for a $10 million 7(a) loan, the entire $10 million will be forgiven at the end of Q2 as long as you keep enough of the 499 employees that remain.  Moreover, you pay no business tax on the forgiven amount.

You are eligible for the $10 million loan because your prior year payroll was over $10 million.  You are eligible for $10 million forgiveness because your payroll still exceeds $10 million.

In effect, the Federal government has paid you $50K per employee, tax free, to fire people pursuant to a provision called "KEEPING

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Notes on Families First Coronavirus Response Act, in reading order

March 30, 2020

Note that this law is just one of multiple new COVID-19 relief laws.

Division A

Section 1101.  Schools are incentivized to remain closed more days.
Titles II-IV, VI.  Small amounts given to agencies to be spent at the Cabinet member’s discretion.
Title V.  $1 billion for HHS to pay COVID-19 expenses for the uninsured.

Division B

Titles I and II.  School lunch money is now available when school is closed "due to COVID-19."
This incentivizes to schools remain closed more days, especially those getting the most school lunch money.
Will add the learning gap between poor and affluent schools.
Title III.  Raise limits on the duration of time that a household can participate in SNAP/Food Stamps.

Division C

Section 3102.  "Emergency Family and Medical Leave Expansion Act."

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