Dollars and Jens
Thursday, April 27, 2006
financial risk
The Economist, on Goldman Sachs in particular and modern financial engineering in general.

Wednesday, April 19, 2006
Discrimination by Name

In economics there is a norm that authors are listed alphabetically... Citation counts, however, are historically assigned only to the first listed author and later listed authors are often buried under the et al. monster.

Do you think these effects are too tiny to matter? Take a look at the Yellow Pages and see how many firms choose A-names, AA-names, and AAA-names. Even more surprisingly, a new paper (free, working version, Winter 06, JEP) demonstrates that these effects have important consequences for careers in economics. Faculty members in top departments with surnames beginning with letters earlier in the alphabet are substantially more likely to be tenured, be fellows of the Econometrics Society, and even win Nobel prizes (let's see, Arrow, Buchanan Coase...hmmm). No such effects are found in psychology where the alphabetical norm is not followed.

So reports Tabarrok.

Wednesday, April 05, 2006
Delta Air Lines pilots, angered by management's effort to throw out their contract and impose deep pay cuts, voted by a wide margin to authorize a strike, union leaders said Tuesday.

The 94.7 percent favorable vote lets union leaders set a strike date. They didn't set a date immediately and gave no indication when they might act.
If they decide not to come to their jobs, it would almost certainly be a permanent decision; as is often the case for companies in bankruptcy, Delta's operations aren't in top health.
The company says the average 2005 earnings of pilots who worked the full year was more than $157,000. The union says pilots, on average, made $151,000.
This is in part because anyone with less than five years of seniority has already been laid off, and is not part of this average. (Presumably having to cut the least expensive employees first was part of the union contract.)

It would seem natural to me to give the pilots some sort of market wage, and give them a claim for the difference on par with those of other creditors. How easy it would be to fairly assess that number isn't known to me; I read elsewhere that new pilots right now would be starting around $15,000 or $20,000, but that's presumably a well below the appropriate market rate for these pilots.

Initial claims of unemployment
Excepting the post-Katrina period, none of the predictions I've seen for weekly initial unemployment claims have done as well as a simple exponential moving average from previous weeks. Of course, there's a lot of noise in the numbers in general; that the moving average is such a good predictor indicates that variation in the number is rather less than the noise in it. This is part of the reason I find it really annoying to hear mention of the change in the number from one week to the next; almost all the variation is noise. If you're really desperate to extract a trend given a single new week's worth of data, you probably least badly off to watch the change in the prediction you make, from one week to the next, by using that moving average. So here's how it works.

Tomorrow's number is expected to be about 303 13 — pretty close to predictions I've seen around 305. Tomorrow the announcement will come out; to extract some kind of trend, look at the "surprise" — how much the number exceeds 303 13 (negative if it's below that), plus two thirds of the upward (negative if downward) revision in last week's number. This total surprise is typically plus or minus a few thousand; if it gets to ten thousand or so, that starts to be worth noting, though really only if it persists for a couple weeks. To get next week's estimate, add one third of that surprise back into this week's (i.e. to 303 13).

I'll edit this at some point after the announcement to demonstrate the calculation described above.

Edit: The number this week was 299 (by which I mean 299,000), or -413 from the expectation; the number for last week was revised up from 302 to 304, so add 113 for a total "surprise" of -3. Next week's estimate is 30213. Thanks for playing.

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