There is economic reasoning to argue that stimulus packages, aka deficit-funded government spending, can speed up recovery in times of a recession or a depression. Recessions, Keynesians and others argue, are caused by a lack of aggregate demand – something the stimulus packages make up for. But what I find most annoying about something like a stimulus package is that regardless of its results, both sides can claim victory.

Take the most recent stimulus. Unemployment has hit higher than Obama’s economic team said it would with the stimulus. This seems to be logical grounds for anti-stimulus folks to claim that the stimulus didn’t work. But no. People like Paul Krugman and Joseph Stiglitz argue instead that there wasn’t enough of a stimulus.

Take the opposite situation. The economy rebounds tremendously. We’re back at full employment and everyone is happy. This seems to be logical grounds for pro-stimulus folks to claim the stimulus worked. But no. Opponents like Greg Mankiw or Gary Becker could merely say that this recovery would have happened regardless of the stimulus.

Unfortunately, it seems that when it comes to macroeconomics, the sheer inconclusiveness of pretty much everything makes the policy debate that much more frustrating.

I was surprised how stumped the contestants got by these questions.

In my “Economics of Social Life” class, we explored sleep through an economic perspective. Researchers have tried to create models that predict, based on things like one’s income, education, hours worked, and gender, how many hours a certain person sleeps in a night. They have found that time slept, holding other factors constant:

  • Relates inversely to hours worked. No surprise here, I guess. The more time you work, the less time you have for sleep.
  • Relates inversely to good health. Sick people have to sleep more…
  • Is higher if you’re a male.
  • Relates inversely to earnings. Here, I suppose time spent sleeping is also time you could be working.
  • Relates inversely to education. This was the most interesting point, I think. One explanation is that educated people have more options on how to spend their time, so sleep is more costly to them.

Men, overall, sleep less than women. It is only when holding all of the other factors constant that we see men sleeping more than women.

What can we draw from these studies? Nothing new, I guess. I just thought it was interesting.

    I was having a conversation today with someone who, despite my best attempts, seemed to dismiss anything I said from an economist’s standpoint.

    People seem to distrust economists more than most professions. It could be because economists, like any other social scientists, often get things wrong (I suggest Paul Krugman’s NYT piece here and Scott Sumner’s critique). Or maybe people see economists as engulfed in a world of “greed! greed! greed!” and “profits are all that matters!” and “efficiency over welfare!” and “markets work everywhere perfectly.” Or maybe some economists’ views are so different than people’s emotional justifications for their opinions that they just dismiss economic opinion all together. In reality, economists’ political views are much more evenly dispersed across the political spectrum than people think.

    For things pertaining to wealth distribution, though any economist will acknowledge a degree of lost efficiency, much of the arguments for or against come down to subjective arguments that pertain to “social” costs and benefits and can’t be quantified in an economic study.

    There are, however, a few things that economists almost unanimously agree on that are in drastic contrast to the general population’s views, things where there is wide agreement that the planned benefits from such legislation are clearly outweighed by the costs. These include ending rent control, abolishing agricultural subsidies (this might be in line with the general population but never happens politically), and abolishing any sort of government legislation that outlaws outsourcing.

    But there’s one huge one. Free trade. That doesn’t mean “globalization”, the all-encompassing term used to describe anything that has happened in international relations in the last thirty years. It means removing tariffs, quotas, etc and allowing consulting individuals to trade goods they want at competitive prices.

    The biggest issue, I think, with people failing to acknowledge the benefits of free trade is that they often only analyze what is right in front of them. If a car factory closes down in Detroit and the jobs to build those cars go to India, people think free trade made the U.S. lose thousands of jobs. But what is less tangible are the jobs created by the increased efficiency.

    If anyone tells you they are opposed to free trade, ask them if they even understand the term comparative advantage. If they can’t, ask them why we would be better off all living like Robinson Crusoe’s and living in autarchy. That will probably at least bake their noodle.