Heckman on the econometrics of prayer and God

So I was trolling the IZA website for new working papers today and found a really interesting little paper by James Heckman - prolific Chicago economist.

It estimated (if I understand him right) the effect of prayer on God's attitude towards man, by assuming that prayer is an increasing function of God's attitude towards man. As the attitude becomes more positive, people pray more. You can derive God's attitude towards man as a function of prayer from this prayer function and the population distribution of prayer (as captured by survey data).

I'm still a little confused by how all this works, but Heckman is a smart guy. I'm sure his math is right, I'm just not sure what implicit assumptions he's making to make the math right.

But it does make me wonder - we've seen all kinds of studies about how "prayer makes people in hospitals heal faster" - but you don't see social scientists doing this much. You don't see anything on the effect of prayer on neighborhood crime, or income, etc. It would be an interesting exercise simply because of what it would take to identify an unbiased estimate. After all, conceivably you'll pray more if you have a higher inherent likelihood at having a rough go at things - so that should negatively bias the effect of prayer. You'd have to find some instrument or exclusion principle predicting prayer. But it could work and that would be an interesting thing to write about.

But even once you get the unbiased estimate you still have Weber's conundrum - did you really estimate that Providence was shining down on the faithful, or did you just pick up some normative or cultural artifact that is positively (but spuriously) correlated with the prayer itself. And again - simply the exercise of working through these possibilities would be interesting, but its doubtful you could come out with anything conclusive.

So why don't more economists do this? Why don't we look at the effect of prayer intensity in different metropolitan areas on the performance of sports teams? Or national religiosity and whether they're victorious in a war? Or just a simple "health and wealth gospel" look at the effect of religiosity on earnings. I'm sure we've had studies that say "religious people on average earn X more dollars than non-religious people", but that's a different endeavor from trying to identify an unbiased estimator for the causal effect of prayer.

And of course I forgot to mention - Heckman's results! He finds a positive effect of no prayer on God's attitude, with a negative effect of some but very little prayer, and a positive effect of a significant amount of prayer.

Krugman on Lehman

Interesting Krugman blog post on Lehman's precarious position right now.

Basically, all these assurances the federal government has been making - now for a sale of Lehman Brothers, previously for Bear Stearns - are really quite comparable to the support the feds have provided to deposit institutions for awhile through the FDIC. As Krugman puts it, it's a "heads stockholders win, tails taxpayers lose" arrangement. That government assumption of risk naturally lead to government regulation of depository institutions when the FDIC was created... the analagous argument for not regulating investment banks is becoming harder to refute as the federal government increasinly steps in to take risks in this market.

Interesting Virginia Gubernatorial Candidate

Very interesting news about the race for Virginia governor following Kaine's departure: apparently chairman of the Democratic Party and McLean native Terry McAuliffe is considering a bid.

I'm not sure what to think of this possibility. I don't know McAuliffe well at all, but he always struck me as a very partisan Democrat. He was a rabid Clinton supporter during the primary. I'm not necessarily sure he is excessively liberal - but clearly he is political and partisan. UVA professor Larry Sabato has reservations about McAuliffe as well, saying:

"I don't think he knows much about Virginia's geography, people or policies. I'm sure he could get briefed quickly, but that's not usually how Virginians pick a governor."

That gives me reservations. But one thing McAuliffe would definitely bring to Virginia is a high degree of comfort with national politics. A McAuliffe administration would presumably be very in sync with an Obama administration, and could guarantee that Virginia is able to take full advantage of any federal initiatives on education, energy, etc. And once he is done in the governor's office, McAuliffe could make an easy transition to elected or appointed office at the federal level, further raising the national profile of Virginians that I've mentioned in previous posts.

Let me be perfectly clear - this is not an endorsement. I want to read up a lot more on what McAuliffe believes outside his duties as a Democratic party chairman. But I am intrigued.

This makes me wonder about something else - now that the VP possibility is gone, I wonder what Kaine is going to do when his term ends...

SOOOOOO stupid

Really stupid criticism raised by the McCain campaign about Obama using the statement "lipstick on a pig"... claiming that he's calling Palin a pig.

How childish can you get? "Like lipstick on a pig" is a very common English idiom. Give me a break. And as the article reports, Obama has been using the phrase in his stump speeches long before Palin came along.

There are some incredibly stupid accusations going back and forth and its getting tiring. It's distracting from the real issues.

Gross Flows from the CPS!

John Haltiwanger, of the University of Maryland, is famous for introducing and popularizing the "job flows" approach to understanding labor market dynamics, rather than relying on changes in stock measures of employment and unemployment. He and his CES gang at Census has made gross job flow data for the manufacturing industry available for some time. More recently, the BLS has given us the JOLTS survey and the BED survey, which also provide this kind of data. Census also has the QWI which is derived from the LEHD.

But new to me - and now available from the BLS - is what they call "labor force status flow data" derived from the CPS, or what Haltiwanger has called "worker flows". Worker flows complement the job flows that Haltiwanger has done a lot of work with already.

This is really cool. People could always derive worker flows from the monthly CPS, but for someone like me who doesn't have the time to do that, this is really exciting!

I'll add on more later, including links to the other data sources I mentioned above and more on the significance of all this. I just don't have time now. For those who are curious, the Monthly Labor Review recently published an article contrasting three of these data sources (JOLTS, BED, and this new CPS data). This article first alerted me to the availability of this data.

Budget Mess

The CBO projects that fiscal year 2008 will end with a $407 billion deficit, which is more than double last year's deficit and only a little less than double what the CBO was predicting we'd end up with back in January.

Keep in mind also that the federal government just acquired the gigantic institutions of the American housing market, otherwise known as Fannie Mae and Freddie Mac. The CBO doesn't think that this will impact the deficit too much - but it still means that tax payers are taking on a lot of risk they didn't have before.

None of this should be surprising - we're in a recession. Governments are supposed to run deficits during recessions. Still, though - I think I'd be more comforted by that traditional Keynesian logic if we hadn't been running deficits before the recession too!

This is going to tie up any big-spending, big-tax-cutting plans that either candidate has for January (or at least it should tie up those plans). Thankfully, the candidates' proposals so far have been fairly modest; some additions to the deficit, but not an egregious amount. Still - we need to do better than "not egregious".

One more thing - When I was looking for this report on the CBO website, I discovered that Peter Orszag - the director of the CBO - actually has a blog! Pretty cool, huh? It's weird though - it looks like you're not able to comment on any of the posts! Which basically makes it a website, not a blog - but it's still kind of cool that an organization like the CBO actually has one.

A few cool updates...

I'm REALLY excited to read this new book that came in for birthday: "The Race Between Education and Technology"!! It's about the supply and demand of educated labor since 1900 - and how technological growth has outpaced educational growth since about 1980... implications of that for wages, inequality, etc. Right in line with my SEA presentation (which I really need to write). As soon as I'm done with my current pirate book I'm going to start reading this.

Also really impressed with the HBO miniseries on John Adams... started watching that from the beginning this weekend. I saw episodes 3 and 4 I think, but never saw the first two. Really really good and worth renting.

Finally - I bottled my "Blonde Bombshell" - a wheat ale. It's my first batch to go into glass bottles!!!!! I also brewed hard cider, which should be ready around halloween.