81 Comments
Jan 27·edited Jan 27Liked by Noah Smith

I have to say I think the reason elite colleges are dropping standardized tests is mostly that it makes it harder to sue them over admissions practices. Students for Fair Admissions v Harvard relied on having SAT/ACT scores to show the admissions process was biased against Asian-Americans. You can't do that without test scores!

Basically, people (especially left-wing people) are inclined to trust college administrators and view them as "one of us," but they absolutely should not do that. College administrators are every bit the slippery, dishonest C-suite types CEOs are.

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Jan 27·edited Jan 27Liked by Noah Smith

I think it's time for a moderate version of supply side economics. Rather than the Reagan era version that for some reason focused on tax cuts (when all you have is a hammer...), we should keep talking about how good the increasing supply of energy, housing, and other goods and services is for the economy. Education and cognitive labor in general seem like they will also see a huge expansion in supply with the advent of ever-better AI.

What's left? We're just getting started on housing, so there's a lot more work to do there. Healthcare, elder care, and childcare seem like tricky ones. I'm not betting on humanoid robots coming through in those areas any time soon. New wonder drugs and personalized therapies will help... Maybe we just need to make society so much richer with everything else we're doing that we can afford a few sectors that still suffer from Baumol's?

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Jan 27Liked by Noah Smith

Not to nitpick (ok, totally to nitpick), but Horpedahl's chart is absolutely not a log-log graph as you describe it but rather a semi-log (or log-lin) graph, because the horizontal axis is linear.

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So, the medical administrative apparatus is only the size of an elephant, not an apatosaurus. Some comfort in that.

https://cdn.britannica.com/52/8052-050-B535C6B6/Apatosaurus-adult-elephants-rest-body-whiplash-tail.jpg

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Jan 27Liked by Noah Smith

Erik's "I'm looking for a head of special projects for my personal team" ad he uses to open Econ 102 kind of makes him sound like a supervillain.

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Worth noting that the share of US wealth belonging to millennials is way down compared to when boomers were that same age, so that's an interesting dynamic even if the average is improving. I'm also curious whether millennials have greater wealth inequality within their cohort versus when boomers or gen X were that age.

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Jan 27·edited Jan 27Liked by Noah Smith

It seems Furman and Krugman are both in

basic agreement about PCE vs CPI. I easily could misunderstand. PCE if I understand a bit, factors Rents, which you mention Noah, over CPI.

A macroeconomic paradigm shift?

My whole take was inflation was driven mostly by the supply spiking frailty of it's inane interdependence , than stimulus.

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Jan 27Liked by Noah Smith

There is no reason for The Fed to change interest rates at all. As you said it’s a Goldilocks economy, with good growth, low inflation and full employment. Why would they do anything differently?

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> So really, when you’re looking at this graph, you’re looking at the average per capita wealth of 30-year-old Americans.

Which is twice the size of gen X. This is hard to believe to be honest and I feel that using an average, rather than a median here, is highly suspect in all cases of measuring wealth.

The median 30 year old doesn’t own a house (only 35% of 25-29 year olds do).

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Jan 27Liked by Noah Smith

It's so weird for me to see what you really look like in that youtube convo, for so long I thought that avatar (of Whitman?) was what you looked like. Are you sure you are not an imposter? :)

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Now, the fact that where students went to high school is an even better predictor of college success IS an interesting fact. Regardless of the prediction capability of test scores - this other issue tells us a lot about how we fund american schools and how much issues like poverty and opportunity carry forward right from the beginning. I realize Noah was focused on the test score issue, but to me this is the far bigger one.

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Jan 27·edited Jan 27

Re: standardized tests. I have been involved with admissions for a fairly competitive graduate STEM department. I agree that standardized test scores are reasonably predictive when one uses them coarsely to bucket strong vs. relatively weak scores. What concerns me is the use of scores to differentiate between “good” and “excellent” (ie 90th percentile vs. perfect scores.) My concern is that at this level they may not reflect a student’s cognitive ability, but may be more a reflection of test-taking ability and (sadly, to a greater extent) test-taking preparation effort. I can only cite anecdotal experience here, but as a graduate advisor it has not been my experience that this good vs. perfect test scores distinction (particularly in math) captures the skills needed to deeply grasp advance topics and do creative research. But competitive schools really do want scores to work that way. I wish we could gather some data on outcomes that addressed this.

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Medical Administration: I agree that the ratio of administrators to practitioners has increased. Largely the drive has been to keep up with government regulations changes over the last 15 years. As no one knows the optimal formula, the spamming for administrators has been a shot in the dark to find margins. Having said that, the elusive goal to improve public morbidity and mortality, still remain with the practitioners. But the essence remains at the feet of the educators who have been unable to leverage science. Worse yet, there has been inability to generate hypotheses for science to test. Practitioners are left rudderless.

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On the millenial wealth - hard to really judge things from this chart - as Noah noted, it is an "average" not a median. And averages in the US are notoriously skewed by the wealthy. I know Noah talks about possibly misleading charts, but to me this is one of those. And the fact that so much is real estate value speaks to this even more - again possibly a big skew due to the very wealthy (average vs median).

NOW, this doesn't mean that Noah's point is Wrong, but just that I don't think this data particularly verifies it one way or the other.

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"Note also that this is a log-log graph." Actually, no. The abscissa in the graph that Noah claims is log-log is obviously linear, the distance on the abscissa in the plot is exactly the same for 20-30, 30-40, and 40-50. It would actually be useful to plot the log-log graph, which to a scientist replotting this data on a log-log graph shows that what matters is primarily the exponential accumulation of wealth with age, although a majority of large wealth accumulation occurs after age 50. On the log-linear graph posted wealth increases by a factor of 10 ($40,000 to $400,000) with an increase from 26-50 (ca. 2x) on the abscissa. Wealth accumulation for many starts later in life and continues well past 50 which would display more vividly on a log-log plot. I have a large group of friends from college and graduate school who have increased their wealth exponentially (correct use of term) from 40 to 60. Some are still working which appears hard to stop when you're making over $1M/yr, but most have retired.

Does this graph tell us anything? Is it something a competent scientist would ever use? At age 28 Millenials and Gen-X are equal, at age 30 Millenials are 2x Gen-X. Is this data jump reasonable? No! Average Net worth peaks in the 65-69yr old range and median net worth peaks in the 70-74 age range. Does any of that show in this graph? No!

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