Category: Economic Literacy

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Bad economists are everywhere, and it is so easy to be good.

First published on Facebook on November 7, 2017

When I first started studying economics in the early 1970s, one fact quickly stood out. Everyone was an ‘economist.’ That is, everyone seemed to have opinions on all parts of the economy, every law, and every turn of events. I would then and since get disheartened reading stories from those who purport to expound on economics when in reality, they repeat only the commentary made in the press or by politicians whose comments are meant to divide and not inform. Most had part of ‘it’ right, but few seemed to get the big picture. Or if they declared the big picture, they were woefully short of evidence.

As one example, let me assure you that no economist ever introduced the “Trickle Down Economic Theory.” It is a political unicorn; it doesn’t exist and never has. Its roots are with the partisan. It is not a scientific theory. Those who use it show their ignorance or bias. There is so much of this going around (as they say).

Economics is very easy to understand at the level of principle. I love teaching it and watching the ah-ha moments happen as another principle finds its way from the text to the applied. Economics is a broad and deep study, and it takes time to incorporate all of the principles into a cogent and consistent body of knowledge. It is a scientific discipline, the queen of the social sciences, and the most analytical of business knowledge.

What disheartens me the most is the bad economists out there (using Frederic Bastiat’s simple definition of what is a good economist and what is a bad economist. A “bad economist” is one who cannot “see the unseen,” that is, they are not wise or knowledgeable enough to analyze a problem. This bad economist is simply ignorant. On the other hand are the economists who are “bad” and who are not ignorant but willfully misleading because they are driven by ideology or, most often, their paycheck is signed by someone who wants a particular point of view. Years ago, I referred to these as “agency economists.”

Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, — at the risk of a small present evil.

Frédéric Bastiat. That Which is Seen, and That Which is Not Seen, http://bastiat.org/en/twisatwins.html

Why would people buy into what the agency economists are selling? Perhaps the message resonates with a fear or a preconceived notion that is confirmed. So you believe what you hear, and before long, the “bad economist” experts have you believing that inequality in wages is always bad, tax cuts for the rich are always bad, capitalism itself has failed, and so many other pieces of nonsense.

Source: https://www.scienceabc.com/social-science/what-is-the-broken-window-fallacy.html

I don’t care how you vote, but I do care about the principles on which you make your decision. If you understand the principles of economics and want to vote opposite of me, then, by all means, do so with no ill will from me. If, on the other hand, you vote based solely on what “bad economists,” biased journalists, and biased politicians (a redundant saying) have said to you, each with their own persuasive point of view, and you do so without seeking to understand how what they tell you has to do with well established economic principles then I am saddened beyond belief.

N.B. My Undergraduate economics adviser referred to economics as a layering process, each course adds a new layer, and each has a greater chance of sticking. He liked pointing out this story. Dean Rusk, Secretary of State in the 1960s, was asked why he was hiring Ph.D. economists (good ones, history shows) into positions that did not require an economist. He replied that by the time an economist gets a Ph.D., they have been trained and vested in marginal analysis (a scientific manner of problem-solving), and every problem of state was a study of marginal changes and their impact. In other words, Dean Rusk would not have hired anyone who believed in trickle-down theory, nor a bad economist.

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Air Pollution is getting worse. No it really isn’t!

Originally posted to LinkedIn on October 26, 2022

A student today told me that air pollution was up. The fact is, that is not even close to the truth. Typically students (and many people) lean toward the pessimistic. It is little wonder with the constant blaring of bad news and fear-mongering from those whose agenda is attracting eyeballs or votes (or both). The truth, however, is a stubborn thing, but it is not always front and center.

Check out this graph from the US EPA from their report on Air Quality (https://www.epa.gov/air-trends/air-quality-national-summary, accessed October 26, 2022).


Source: EPA.gov image source https://www.epa.gov/system/files/images/2022-06/1970-2021%20Baby%20Graph_1.png

From 1970, aggregate emissions from 6 common pollutants are down 78%. CO2 alone is down 9%.

At the same time, we consumed 43% more energy, had a 62% growth in population, almost a 200% increase in miles traveled by gas-powered vehicles, and nearly a 300% growth in GDP. At the same time, our standard of living (measured by real GDP per capita) rose 244%. (source US BEA)

Most would conclude, I would observe, that with population and vehicle miles and GDP rising, of course, air quality has to suffer. But that is not the case. Why are people so pessimistic? The evidence everywhere is that the world improves.  

I am not trying to simplify or dismiss real problems, but I am pointing out that the US is one of the world’s best examples of clean air. As countries get rich, they can spend more on cleaning their environment.

Ourworldindata.com says, “Death rates from air pollution are highest in low-to-middle income countries, with more than 100-fold differences in rates across the world.” Air quality is a normal good. As incomes rise and residents can move beyond mere survival demands, it becomes something they will demand. (https://ourworldindata.org/air-pollution).

The following graph shows worldwide death rates due to air pollution on the vertical axis. As countries become rich, they can afford to demand clean air. In the first graph below, countries defined as low-income are shown. The trend is downward for indoor air pollution, but the death rate due to all air pollution stands at 189 per 100,000 residents.

In the second graph, a similar trend is shown for countries the world bank classifies as rich, showing death rates from air pollution is falling. In 2019 the death rate from all air pollution in these high-income countries is 15 per 100,000 residents or less than 8 percent of the low-income countries. In other words, low-income countries, as of 2019, have shown a great reduction in air pollution deaths over time but have a death rate of almost 13 times the high-income countries.

When a country becomes richer, air quality gets better.

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Do you know how many minimum wage workers there are? Less than you think.

Originally posted on LinkedIn on March 7, 2021, Lightly updated on October 29, 2022.

Subtitle: Please, OHIO, do not pass the raise the wage act as a constitutional amendment.

Do you know how many workers are paid the minimum wage? How big is the problem?

In 2021 it was 1.091 million workers or 1.4 percent of the total wage and salary workers in the US (and less than 0.8 percent of all workers paid wage or salaried).

For nine years, I taught survey methods in a course then called Computer Skills for Economic Analysis. It featured lots of data work and programming leading to economic analysis. (It has since been remastered and renamed econometrics I required as core in the College of Business). One task was to have students update and administer a survey to at least 30 people, asking but not requiring them to try to survey a full age range of people (not just their same-age friends). What resulted was about 4,700 observations over the near-decade. It gave good practice in collecting and merging data and then analyzing questions.

Students and people are unrealistic and pessimistic

One thing that stood out was when we asked what was the unemployment and inflation rate; the answers were amazingly overstated. These were numbers that most people had no idea about, but when asked, they always tended to forecast worse than the actual rates and not by a few percentage points either. Pessimism seemed to reign, and students and respondents always leaned heavily toward the worst case.

The same is the case about whether the minimum wage should be raised, specifically how many people are affected by the minimum wage directly, that is, how many are paid at or below the minimum wage? I always found that even my class of economists overstated this number as well, and again not by a few percentage points.

Students saw being paid at or below minimum wage as a larger problem than it is. They saw the number of persons affected by minimum wage as a relatively large portion of the economy. And they didn’t correctly see the minimum wage as primarily being among the young, inexperienced, and uneducated.

Why they are so pessimistic is an important question not addressed here, but many in the media and political world do benefit from that pessimism.

What are the facts?

The answer to the question is in an annual report from the US Bureau of Labor Statistics, Characteristics of Minimum Wage Workers (the most recent report is for 2021 at https://www.bls.gov/opub/reports/minimum-wage/2021/home.htm (although the graph below was created on data for 2020 at https://www.bls.gov/opub/reports/minimum-wage/2020/home.htm).)

In 2021, after the COVID recession, fewer workers are paid at or below minimum wage, and they represent an even lower percentage of the total hourly workers than in 2020. (1.091 million and 1.4 percent). By the way, of the 1.091 million workers, only 181,000 were paid at the minimum wage, and 910,000 were paid below due to exceptions and carveouts in the law.

What else can we learn from the BLS report?

Of the 1.091 million workers paid hourly at or below the minimum wage

  • 44.3 percent are 24 years or younger. (Table 1)
  • 52.0 percent are part-time workers (Table 1)
  • 52.8 percent are in the Southern states (Table 2)
  • 73.7 percent are in Service industries (Table 4)
  • 14.9 percent have less than a high school diploma (Table 6)
  • 34.4 percent have a high school diploma and no college (Table 6)
  • 27.2 have some college and no degree (Table 6)
  • 8.8 percent have an Associate degree (Table 6)
  • 12.3 percent have a Bachelor’s degree (Table 6)
  • 65.0 percent are never married (Table 8)
  • 16.4 percent are married, spouse present, and over 25. (Table 8)

In 2021, 76.1 million workers aged 16 and older in the United States were paid at hourly rates, representing 55.8 percent of all wage and salary workers. The percentages shown above are all based on hourly workers.

1.5 percent of hourly workers are paid at or below the minimum wage. This is the same as saying that 0.8 percent of all workers are paid at or below the minimum wage.

The size of the problem is very small.

And in Fall 2022, the Raise the Wage Act is on the Ohio Ballot

You can read the petition on the attorney general’s website here: https://www.ohioattorneygeneral.gov/getattachment/3d285cd7-aeea-4c65-948c-b1cea8a2da3a/Raise-the-Wage-Ohio-(Re-Submission).aspx.

This is bad legislation, and even more so by attempting to change the constitution. Ohio voters may want to pass this because they think it is going to do some good, but the good part will be swamped by the bad.

In another post, I wrote about the US raise the wage act introduced in 2021. (see https://econdatascience.com/understanding-the-minimum-wage-effects-on-the-economy)

The CBO said the act if passed, would reduce employment by 1.4 million persons, but in this post, you can see that only 1.091 million are currently paid at or below the minimum wage. The disemployment effects would be devastating. The CBO said it would lift 0.9 million out of poverty. But in that post, I show that poverty is already falling.

The worker who faces disemployment is the least productive among all of the low-wage workers. An employer having the potential of hiring a dropout with poor job skills and a student in college will almost always take the ‘better’ hire. At an extreme, the former never gets work and needs it the most, while the latter will, on their own, grow into a better job as they complete their education. So the minimum wage hurts those who advocates suggest it should help the most.

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Understanding the Minimum Wage Effects on the Economy

Originally published on LinkedIn on March 8, 2021

The Raise the Wage Act has been introduced in each US congress since 2017 by Bobby Scott in the House and Bernie Sanders in the Senate. It is back on the table in the 117th Congress. In their analysis, the Congressional Budget Office tells us that the increase of the minimum wage to $15 will raise 900,000 people out of poverty in exchange for a reduction of 1.4 million jobs. Tradeoffs are typical of all government interventions, some people gain, and some people lose. Whether you are in favor of a minimum wage increase comes down to how you weigh these two outcomes.

To quote the CBO report, under the Raise the Wage Act of 2021 by 2025 we will see:

Employment would be reduced by 1.4 million workers, and

The number of people in poverty would be reduced by 0.9 million.

CBO (https://www.cbo.gov/publication/56975)

[COVID concerns are discussed below, not all data include the years 2020 and the early months of 2021. Also, the report just cited suggests the deficit will increase by $54 billion, raise prices to all, including the federal government, and would change the distribution of spending. All fascinating aspects I do not talk about in this article.]

The minimum wage decreases employment

Employment effects: Economists have long known that there are negative effects of an increase in a minimum wage when set above the market wage in a labor market. When a minimum wage is effective (above market-level wages), both demanders and suppliers (employers and workers) adapt.

On the demand side, the rise of cost to employers will cause the employer to seek to (1) shift the cost onto consumers in the forms of higher prices (2) shift from dependency on low-wage workers (of lower productivity) into more skilled workers, (3) move away from low productivity labor towards automation and capital, or (4) scale back their production, or to some measure bits of all four possibilities. All four steps result in fewer minimum wage workers being demanded and hired.

On the supply side, those who do not work or who work at lower than minimum wages are more likely to seek a minimum wage job since it is more rewarding. This incentive effect pulls in more workers seeking the now more rewarding minimum wage jobs. Consider a thought experiment: What if there is a student in college who finds that the $7.25 minimum is not enough to compensate for her time away from studying? She essentially goes to college full-time from both a class and a study perspective. When the wage is raised from $7.25 to $15, this becomes more tempting, and she is more likely to enter the labor market and defer other uses of her time, possibly leading to less class or study time or both. She enters the labor market, drawn by the higher reward. An employer now has a richer pool of applicants to choose from now that she and others like her, who have more education and more productivity, are competing for the same jobs that dropouts are competing for. The employer will always hire the most (potentially) productive candidate in the pool of applicants. If she is selected, who is hurt? Answer: the least productive, for example, the dropout with no work experience, who already has a much tougher time getting a job.

What does the literature say about employment effects? Some say that economists have changed their thinking on the employment effects based on studies that show no negative employment impact. One economist remarks thusly and says they are reacting based on the entire literature.

David Newmark and Peter Shirley speak to the disagreement.

What is … puzzling, is the absence of agreement on what the research literature says – that is, how economists even summarize the body of evidence on the employment effects of minimum wages. Summaries range from “it is now well-established that higher minimum wages do not reduce employment,” to “the evidence is very mixed with effects centered on zero so there is no basis for a strong conclusion one way or the other,” to “most evidence points to adverse employment effects.”

David Newmark and Peter Shirley NBER working paper issued in January 2021, and revised in March 2021.

In the study, Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States? Newmark and Shirley say

… we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers.

And their conclusions?

Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.

David Newmark and Peter Shirley NBER working paper issued in January 2021, and revised in March 2021.

The Minimum wage increase will decrease Poverty

Ok, but what about poverty? How much will it decrease and is it effective?

The CBO says 0.9 million workers will be raised from poverty. Isn’t that worth the losses in employment?

Semega, et al. write:

The 2019 real median incomes of family households and nonfamily households increased 7.3 percent and 6.2 percent from their respective 2018 estimates (Figure 1 and Table A-1). This is the fifth consecutive annual increase in median household income for family households, and the second consecutive increase for nonfamily households.

The official poverty rate in 2019 was 10.5 percent, down 1.3 percentage points from 11.8 percent in 2018. This is the fifth consecutive annual decline in poverty. Since 2014, the poverty rate has fallen 4.3 percentage points, from 14.8 percent to 10.5 percent (Figure 7 and Table B-5).

Semega, et al. “Income and Poverty in the United States, 2019” US Census (report p60-270) September 15, 2020.

This means before we consider the increase in the minimum wage, that poverty has declined, and median household income has risen in each of the last five years. Incomes are on the rise, and poverty is in decline. The need for the increase in the minimum wage to reduce poverty, while laudable, will only add to the current decline. That is, it is easy to think that poverty is rising and we have to do something, while what we have been doing sees poverty diminishing and income rising.

But 0.9 million workers will be freed from poverty! Most of the minimum wage workers are young, 48 percent of the minimum wage workers are under the age of 25. And poverty amount the youth is already in decline since 2010 as can be seen in Table 11 from the Census report. The market without the minimum wage rise to $15 is already reducing poverty.

No alt text provided for this image

The CBO report says that the increase to $15 will decrease 0.9 million from poverty roles. Table 7 puts this in perspective as 0.9 million is about 2.6 % of the total persons in poverty based on the 2019 level. Clearly, the minimum wage is not a significant poverty reduction program for the US. That is, if the argument is that the rise in the minimum wage reduces poverty, the tradeoff is that a two-and-a-half percent reduction is worth the loss of employment and all other disruptions in the marketplace, such as rising prices of goods and services.

No alt text provided for this image

COVID ruins everything.

I saw that on a t-shirt, and it certainly offers much truth. Covid also changes the conversation above. Poverty rates may have risen, incomes may have fallen, and unemployment rates are much lower now, but not yet back to the levels of 2019. So COVID ruins this tale in part.

However, the COVID recession is passing; whether this quarter or a couple of quarters from now, it will end, and the recovery that has already begun will return us to the earlier paths or to some slightly adjusted paths. (Update: The NBER Business Cycle Dating Committee has officially declared the COVID recession started in March 2020 and ended in April 2020. )

We know that working from home will not end as workers, and some companies highly prefer this new structural setting. Some goods and services are likely gone not to return because of this structural change, but I imagine that it only hastened the pace of change and not completely bent trends in very opposite directions. Of course, time will tell, and that is what makes this time fascinating from an economy-watch perspective.

Conclusion

I end this with not only my opposition to any increase in the minimum wage but with three things that we tend to do that distort our sense of what action is important in the economy:

  1. We overreact with pessimism. We think things are always worse than they are. Much of this is fostered because bad news gets our attention faster.
  2. Even when the current trend is negative, we are often ignorant of what the long-term trend has been. Poverty may be temporarily turning up, but look at how much better we are now compared to decades ago. Transitory changes are sometimes painful, but ignorance of the size and direction of long-term trends may make us choose ill-advised policy prescriptions today.
  3. Economic principles never change; how we apply them does. Demand curves always slope downward, meaning when prices are higher, we will buy less. When wages are higher, we will employ less (how much less is the real question).
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Myers on Educating Economics Students, SAS Global Forum Proceedings

I am an Award Winner, educating economics students with SASI am a presenter, educating economics students with SAS

This year the SAS Global Forum canceled for good reasons. I was looking forward to walking amongst the cherry blossoms with my wife Kimberly. I remain excited about the opportunity to speak to SAS Educators about educating economics students and to highlight our SAS partnership at the University of Akron, College of Business Administration, Department of Economics. Thanks go to Josh Horstman for his invitation on behalf of the Global Forum Content Advisory Team.  I missed meeting up with all of the great people of the SAS Global Academic Programs including Lynn Letukas, director, and Rochelle Fisher, our program manager for the University of Akron. 

I had hoped to expand friendships with colleagues met and those to be met and those who I have met only online.  And, perhaps most of all, I am disappointed that I missed being presented with the 2020 SAS Distinguished Educator award. 

Honored and humbled

I am still honored and humbled by the 2020 SAS Distinguished Educator award and recall the congratulatory call from Lynn with the same original shock and pleasure. Also, I am honored to be invited to speak at the SAS Global Forum. Thanks to all involved, especially the conference chair, Lisa Mendez, who worked so hard to coordinate this gigantic global event. I was pleased to meet her at SCSUG and hear so much of the news about the upcoming event.

My Published Paper

Nevertheless, I want to announce that my paper is now published in the 2020 SAS Global Forum Proceedings. My paper titled Show Me the Money! (thanks to Josh for that part) Preparing Economics Students for Data Science Careers is embedded below and a link to download is on the floating menu bar. The paper is a combination of my journey over my four-decade career and description of our programs and SAS use in the Department of Economics and why economists make great data scientists.

If you take time to read it I would appreciate any feedback you have. We can discuss curriculum or whatever, and I hope to leave this as I retire from UA as a roadmap for faculty that follow.

Click to access 4705-2020.pdf

Enjoy and please contact me to discuss.

Other posts on educating economics students with SAS

Please check out other SAS education-related blog posts. A few examples of educating economics students:

SAS Boot Camp
SAS Coding, Problem Based Learning and preparing economists for data science careers: frustration to elation
SAS Certificate in Economic Data Analytics
Economic Freedom: Solve Problems, Tell Stories
Importance of Economic Analysis to Data Science

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ASSA2020 – Teaching econometric students with SAS(r)

As the new decade begins, I am preparing for my flight to San Diego where my colleague, Sucharita, and I will be interviewing for the Department of Economics as we seek to hire two tenure-track assistant professors for the department to replace the three faculty who are leaving in May. I always enjoy the ASSA (Allied Social Science Association) meetings, but this time I will miss all of the sessions and activities as we have a full interview schedule. As I have reported Data Scientist Jobs Are Increasing For Economists: Evidence from the AEA. We are looking for those who will teach data science to our students.

S285_sas100KIt has been 41 years since I began my academic career. I leave it at the end of this Spring semester and I will miss teaching econometrics and data science to our students. Those who know me understand my passion for SAS(r) in the econometrics curriculum and I am not dissuaded by the presence and importance of R and Python.  Students who learn to program in SAS, learn far more than the analytic power of the worlds leading analytical solution. They learn in one environment how to acquire data, to manipulate and manage that data, to analyze it with powerful procedures and to visualize and report results from that data.

SAS is a great skill for students and their proficiency with SAS prepares them both for careers in SAS and for careers using other languages and systems. I argue from the experience of my students that SAS provides a platform from which those students may easily learn any other language or system that an employer will have. I cannot say the same for R and Python, partly out of ignorance and partly because I have not heard or read that R and Python provide the same firm foundation for future learning of other languages and systems.

Every new Ph.D. economist we interview will be proficient in STATA, few will be proficient in SAS, and many will not list SAS in their skill set.  The willingness of the candidate to learn and teach SAS is critical to our Economics  and Business Data Analytics programs. The University of Akron partners with SAS Global Academic Programs and offers a joint Certificate in Economic Data Analytics to each qualified graduate. Our students are ready to turn data into action using SAS and the unique qualities of critical thinking, problem solving and story telling that is part of all economic curriculums. Economists do put the science into data science. Data Science is far more than predictive analytics. You can make predictive analytics work beautifully in many cases, but there is no substitution for knowing why something works. Economists are masters of explanation and causality, and have the statistical prowess to back it up.

In an earlier blog posting I reviewed the data science textbook I used last semester (A Data Science Book Adoption: Getting Started with Data Science) and in one of the figures I showed that in Ohio while there were over 600 jobs lisiting ‘SAS; there were just fewer than 30 listing ‘STATA.’  Today as I write this there are 521 SAS listings and only 15 STATA listings in Ohio, and nationwide the numbers are 17K SAS jobs to 1.5K STATA jobs. (Indeed.com). I think we are on the right track.

Teaching economics and econometrics with SAS gives students a firm foundation for productive and profitable analytic careers in all data science fields. And our students have done very well in that space.

Wish us luck as we look for two new assistant professors of economics who will contribute to our students’ success. And for those who have read this far, I have been honored as the SAS Distinguished Educator for 2020 and will receive that award at the SAS Global Forum in Washington DC (March 29-April 1). I will also speak on educating economics students for data science careers. You too can attend, register here. Message me at LinkedIn if you are coming, I would love to see you. – Steven C. Myers (Akron)

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Economic Freedom: Solve Problems, Tell Stories

Time and time again we hear employers wanting two qualities out of their data scientists, be able to solve problems and tell stories. How important is economic freedom? Does it lead to greater standards of living? The answer can be shown in tables of results well laid out, but visualizing those results has an even greater impact and better tells the story.

If a “picture is worth a thousand words” then a SAS SGPLOT is worth many pages of tables or results. Can you see the story here?

Economic Freedom is shown to be associated with ever higher standards of living across countries.

The problem is whether countries with higher levels of economic freedom also have higher standards of living. It appears that is true. The association seems undeniable. Is it causal? That is another question that the visual begs. Chicken and Egg reasoning doesn’t seem likely here. It does appeal that the association is one way. For that to be established, we have to answer is economic freedom necessary for higher standards of living. And we have to determine that if the economic freedom had not been accomplished would the standard of living not been as high.

More on that in a future post on the importance of “why.” For now, enjoy the fact that their seems to be a key to make the world better off. Oh, not just from this graph, but from countless successes in countries in the past. My undergraduate analytic students are expanding on this finding to see if their choices from the 1600 World Development Indicators of the World Bank hold up in the same way as GDP per-capita does here in this graph. We/they modify the question to “Do countries that have higher economic freedom also have greater human progress?” I am anxious to see what they find.

The Economic Freedom data comes to us from The Heritage Foundation. Let me know what you think about the visual.

This is a followup to my post on my blog at econdatascience.com “Bubble Chart in SAS SGPLOT like Hans Rosing.”

The SAS PROC SGPLOT code to create the graph is on my GITHUB repository. It makes use of Block command for the banding and selective labeling based on large residuals from a quadratic regression. The quadratic parametric regression and the loess non-parametric regression are to suggest the trend relationship.

Sorry Data not included.

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Bubble Chart in SAS SGPLOT like Hans Rosing

Robert Allison blogs as the SAS Graph Guy. He recreates using SAS PROC SGPLOT the famous bubble chart from Hans Rosing of Gapminder Institute. Hans shows that life expectancy and income per person have dramatically changed over the years. Because Hans Rosing is a ot the father of visualizations, Robert produces this graph (shown here) and this very cool animation.

I can’t wait to see  Economic Freedom and income per person soon in one of these graphs. My students are trying to do this right now.  At this point in the term they are acquiring two datasets from Heritage on 168 countries, which contain the index of economic freedom for 2013 and 2018. Then they are cleaning and joining them so they can reproduce the following figure and table in SAS PROC SGPLOT for each year.

 

 

 

 

 

 

 

 

 

 

 

 

I have written about this project in prior terms here. Once they have this data joined and the above figures reproduced then they will move on to the final project for this semester. They will be looking through the 1600 World Development Indicators of the World Bank.  Each team of students will choose 5 and will join that to their data to answer the question:

Does Economic Freedom lead to greater Human Progress?

I may share their results, for now this is some pretty cool graphics from the SAS Graph Guy. 

 

 

 

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Data Scientist Jobs Are Increasing For Economists: Evidence from the AEA

Economists, especially Econometricians, are in hot demand in the field of Data Science. Last March I posted Amazon’s Secret Weapon:  Economic Data Sciences which was one of many similar articles on the high demand. It is the entire premise of this blog and my work at university is to highlight this and point economists and our business data analytic students in that direction. Our curriculum is centered on SAS because having the students learning to program at a base level and to learn the power of SAS is a good basis for future job employment (see Data Analytic Jobs in Ohio – May/June 2019).

Because we are looking for a couple of PhD economists for tenure track positions, I thought to wander around in JOE (Job Openings for Economists) and eventually wandered into wondering how many Data Science jobs were directly advertising in the JOE competing with academic positions (including ours). 

So to sharpen my SAS SGPLOT skills i collected some data and found that indeed Data Scientists are in increasing demand over time in JOE , bur not as much as exists in the general market of Indeed.com.  Clearly in JOE job listings in the August to December timeline are the best time to find a data science job, and August 2019 should grow as more jobs are added leading up to the ASSA meetings in San Diego in January. If you’re there look me up, but I suspect I will be in an interviewing room from dawn to dusk. 

Enjoy! Comments welcomed. 

 

Updated to final 2019-2020 numbers
Preliminary 2019-2020 numbers
What do you think about the SGPLOT?
5/5

For those wanting to see the SAS code

My apologies, Elementor does not handle txt code so well, or I have not yet figured that out. (Small amount of research shows the lack of a code widgit  is a problem with Elementor.)

Code with data and image are available at https://github.com/campnmug/SGPLOT_Jobs

data ds;
input date MMDDYY10. total DStitle NotDStitle;
t=_n_;
Datalines;
2/1/2014 0 0 0
8/1/2014 2 2 0
2/1/2015 0 0 0
8/1/2015 5 2 3
2/1/2016 1 1 0
8/1/2016 11 5 6
2/1/2017 1 1 0
8/1/2017 12 6 6
2/1/2018 2 1 1
8/1/2018 14 11 3
2/1/2019 7 4 3
8/1/2019 12 6 6
;
run;
Title1 bold 'Data Scientist Jobs Are Increasing For Economists: Evidence from the AEA';
Title2 color=CX666666 'Advertisement for Data Scientists in Job Openings for Economists (JOE)';
title3 color=CX666666 "Counts shown are the result of a search of all listings for 'Data Scientist'";
proc sgplot;
vbar date / response = total discreteoffset=-.0 datalabel DATALABELATTRS=(Family=Arial Size=10 Weight=Bold)
legendlabel="Total Data Scientist Jobs" dataskin=gloss;
vbar date / response = DStitle transparency=.25 discreteoffset=+.0 datalabel DATALABELATTRS=(Family=Arial Size=10 Weight=Bold)
legendlabel="Job title is 'Data Scientist' " dataskin=gloss;
yaxis display = none ;
xaxis display = ( nolabel);
inset "To put this in perspective:" " " 
"Most 'Data Scientist' and 'Economist' jobs" 
"are not advertised in JOE" 
"A search for 'Economist' and 'Data Scientist'" 
"on Indeed.com yields 514 jobs on Oct 14, 2019" 
/ position=topleft border
TEXTATTRS=(Color=maroon Family=Arial Size=8 
Style=Italic Weight=Bold);
inset "Aug 2019" "preliminary" 
/ position=topright noborder
TEXTATTRS=(Color=black Family=Arial Size=8 
Style=Italic );

format date worddate12.;
footnote1 Justify=left 'JOE listings are at https://www.aeaweb.org/joe/listings'; 
footnote2 Justify=left 'Only active listings in either the Aug-Jan or Feb-Jul timeline were searched.'; 
footnote3 Justify=left 'Search conducted on Oct 14, 2019, so the last count will grow as new jobs are entered into the system.'; 
footnote4 ' ';
footnote5 Justify=left bold Italic color = CX666666 'Created by Steven C. Myers at EconDataScience.com' ;
run;
run cancel
Posted on

Poverty Progress

Between 1980 and today the world is getting better, humans are making amazing progress. 

GDP per-capita in the US rose from $28,590 to $54,542, almost doubling as measured in 2010 dollars.

Worldwide, extreme poverty fell by over half as measured by the world bank.  (42 percent of the world’s population was in extreme poverty in 1981, but by 2015 only 9.9% of the world was in that state).

The number of wage salary workers that are paid at or below the federal minimum wage in the US fell from 15% to 2%.

The US Official Rate of Poverty rose by 0.5 percentage points.

Wait. What?

The world is improving even if you don’t think so.

Ask your friends about the drop in extreme poverty. I bet most get it wrong. My evidence is from the Misconception Study conducted by Gapminder Foundation. In fact, take their test to see how many misconceptions you have about the world. (It is right on the front page at https://www.gapminder.org/). Out of 12 questions administered to thousands across the world, the average score for every group is less than if the answer had been chosen by random. 

Once misconception is the world is getting worse, when indeed it is really getting much much better. But stories of better do not lead the news, only stories of woe. Further if you got your education in the 70s and 80s as I did you may have many misconceptions simply because you believe data learned correctly then has not changed. 

Why has the official poverty rate not fallen with all this world wide progress?

If world extreme poverty is down, why is the US official poverty rate so flat, nearly the same now as almost 50 years ago? The first problem is world wide poverty is bench marked on an absolute income standard. The OPR in the US is a relative income standard. They measure very different things. 

The second problem is income is the wrong measure for poverty. Using bad measures of important concepts like poverty creates a misconception that the problem is much worse and virtually unsolvable and attracts policy prescriptions to do exactly the wrong thing. 

The World Bank expects Extreme Poverty to essentially vanish by 2030. The US government has made no such forecast by any year in the future. 

 

What is the better measure of US poverty?

Meyer and Sullivan track what it costs to consume at a level not to be in poverty, that is, to create a consumption poverty rate (CPR) that is shown on the last track. The better question is not do the US poor have enough income, but do they have enough consumption? Without getting into what poverty programs are good and bad, the case of food stamps, now SNAP, is such instructive. Take two families with identical income and one of them received one or more consumption based forms of assistance such as SNAP and clearly one is relatively better off. The OPR does no consider any assistance to the people in poverty that they measure. 

But a goal to eradicate poverty needs to be based against an absolute standard with policy clearly targeting families to get them across that standard. We do not want people deprived. It is not about income, its about existence beyond deprivation. 

One of the reasons for the consumption poverty rate (CPR)  is consumption is a better predictor of deprivation than income. (Perhaps two people have the same income, but one cannot afford to put good food on the table, who is worse off?).

You can find their excellent paper here (https://leo.nd.edu/assets/249750/meyer_sullivan_cpr_2016_1_.pdf)

To listen to the news media and the advocacy groups everything is a crisis and a disaster and the world and the US is getting worse. The nice thing about data is it proves the obverse, the world and the US is getting better at a rate begun in about 1980 that is astonishing. But good news does not bleed and therefore will not lead.

So here is what is remarkable: From 1980 to 2015 the consumption poverty rate fell by 9.4 percentage points, while the official poverty rate rose by 0.5 percentage points.

So what make more sense, that the US has a poverty rate of 13.5 (in 2015) that is virtually impossible to lessen or eliminate, or a Poverty rate based on consumption that is 3.5% of the population that we might be able to further reduce.  

I would like to see the end of poverty wouldn’t you? 

Be a Data Skeptic and do your own research

We hear constantly about bias reporting and fake news and you should be motivated to be skeptical about any data you hear reported and motivated to search out the actual facts.

In other cases, such as the FBI’s hate crime data, the data are not reliable without understanding how it is collected. The data is fine, but year to year comparisons are not easily possible because of the data design. (see The importance of data skepticism. Hate crimes did not rise 17% in one year. )

Many data websites do exist to help you find actual facts. 

Some of the best fact based sites are
https://Justfacts.org
https://Gapminder.org
https://Fred.org
https://humanprogress.org.

So the message is be humble, don’t believe everything at face value and learn how and do your own research.