Econ Test 1

trade concers

-production moves to cheaper places -poor working conditions -move to where environmental standards are worse- pollution haven -inequality in developing countries -education and infrastructure instead of specialziing

Last Week Tonight segment, why aren't replication studies performed more often?

-replication studies are not really published -scientists dont want to cause there is no reward for them -studies are rarely funded

Advantages and disadvantages of controlled, randomized experiments:

AD: -controlled two groups so you can see effects DISAD: -focused on narrow populations (not representative) high internal validity

What makes US residents less vulnerable to climate change

1. few american live in areas of risk 2. low population density 3. can afford defenses

Which of these is a thorny question that all pollsters need to grapple with when using data to make predictions?

1. who is a likely voter 2. What should be done to make the sample representative of the population

data is plural datum singular

Data vs datum

data and stats

Descriptive economics

on the line (A)

Efficient PPF point

Given the concerns expressed about trade's negative effects on some American workers, what does Mark Thoma recommend toward the end of the Fiscal Times post?

Enact policies that share the gains from trade more broadly (such as increased trade adjustment support to help displaced workers).

describes the situation in which two variables seem to be related

correlation

an increase in A is associated with a decrease in B (or vice versa)

negative correlation

always bad, especially 3D

pie charts

-represents all of the combinations of outputs that a society can produce if all of its resources are being used efficiently

PPF- production possibilities frontier

long tail right mode < median < mean

Positive Distributions:

-results may vary quite a bit between them -not replicable -not representative

Problems with small sample sizes

1. who says so 2. how do they know 3. what is missing 4. did someone change the subject 5. does it make sense

5 questions to ask about a statistic

Advantages and disadvantages of nonexperimental/observational studies

AD: -cheap and quick -large data sets -more representative DISAD: -may imply causation -self selection -questions of validity: doesnt rely on clear comparisons high external validity

- a map that displays info through multiple colors or shades - Since population density isn't the same everywhere, maps history data - we interpret data based off area

Choropleth

-Situation where multiple parties would obtain a better overall outcome if they managed to cooperate, but their individual incentives or the nature of their interaction makes it difficult to achieve -Seem to have the flavor of a multiplayer prisoner's dilemma, where each player has a dominant strategy not to cooperate, but this isn't true

Collective Action Problem

As the post in TheUpshot on campaign spending makes clear, spending more money on their political campaigns *causes* incumbents to lose their races more often. (That is, this is *why* incumbents lose their races.)

FALSE, not the reason why

As discussed in the IISD post on trade, which one of these describes a category of reasons that trade might impact the environment?

Market distortion effects: trade barriers may protect inefficient, polluting industries. Competitiveness effects: TaRde can put pressures to either raise or lower environmental standards. Magnifier effects: in the presence of externalities (i.e., the absence of proper pricing) trade can lead to environmental harm.

average

Mean

As seen in the IISD post, evidence for the existence of pollution havens is mixed and difficult to argue conclusively.

TRUE

FALSERONI: correlation doesn't equal causation, could be suggestive though

TRUE OR FALSE: correlation implies causation

Scarcity Choice

Two key concepts of economics

outside the line (B)

Unattainable PPF point

a competition where everyone pays some cost to participate but since many end up participating the outcome is about the same as if no one engaged in competition when you can be cool for doing something but everyone else does it so youre not cool anymore

arms race

is people who go to college different in important from those who don't go to college That is Ceteris Paribus does not hold Comparing salaries of those who went to college and those who didn't is like comparing apples to oranges (I.e.e it is not reasonable= to compare them directly This means that you cannot attribute the bump in earnings only to college attendance Much of it is about skills, networks, and other advantages

biggest problem with interpreting the college premium is

the benefits outweigh the total costs, including opportunity cost Z > X + Y

college is a good idea if

without context be wary of perctages and number facts ex. veterans affairs and agriculture budget with artwork and cartridges

context and numbers

-Pictographs that represent numbers -pictures may be wider or taller disproportionatly -problem because when we view pictographs of differing sizes we automatically mentally compare them according to their area

one dimensional pictures (pictographs)

-best, highest valued foregone alternative -NOT all forgone alternatives -represented in the slope of the PPF

opportunity cost

The FiveThirtyEight article introduces the blog RetractionWatch, which is run by Ivan Oransky and Adam Marcus. According to Marcus, what are two of the most common reasons for retractions of published science?

plagiarism and image manipulations

-Ad companies and less reputable academics will report the results of tests with small sample sizes -Many of these studies might be done and it may be the case that the only one with the most favorable results is being reported, while the rest are buried

problems with advertising

absolute advantage definition and where to look

producer has this if they can produce same amount of the good with fewer resources look at intercepts of PPF- higher valued intercept has absolute advantage

-only significant results get published -exciting results get more attention -we arent exposed to all data or findings only the compelling stuff which distorts our image of reality

publication bias

highest value - lowest value

range

terms of trade

ratio to which goods are exhanged between producers

-external enforcer -repeated interaction- high stakes, trust, communication -social norms, ethics, morality

solutions to the prisoners dilemma

terms of trade beneficial:

terms must be a ratio that lies between two opp costs

comparative advantage definiiton and where to look

they have this is they can produce the good at a lower opp cost aka. who gives up the least of the other good they make -Steep slope = comparative advtange in vertical axis -shallow slope= comparative advantge on horizontal side

-individuals acting in own self interest behave contrary to the common good of all users by depleting a resource through their collective action -occurs when nobody has rights to an open access resource -A person has an incentive to exploit the resource as much as possible before someone else does- this exploitation leads to a collapse of the resource

tragedy of the commons

According to the Fiscal Times post by Mark Thoma, estimates on the impacts of trade find that it is a net *positive* for the United States overall (i.e., collectively speaking trade helps Americans more than it hurts Americans).

true

false: in the real world there is always some measurement error, always

true or false: data collections have no errors

You bear the the opportunity costs: Regardless of how your education is being financed or how much responsibility you have to pay (now or in the future) for college, it is your time

who bears the college opportunity cost

scarcity and resources

why are some combos on the ppf impossible

must give up one good to produce more of another, negative relationship?

why if PPF downward sloping

an increase in A is not associated with either an increase or decrease in B

No correlation

ceteris paribus

-all other things being equal -key to finding causation -anecdotes arent meaningful since ceteris paribus doesnt really hold

What's John Oliver's proposal for morning shows or other news outlets that cite--and usually misrepresent--scientific studies.

-dont mention the study -provide context and the source

In July 2012, in the wake of a mass shooting in Aurora, Colorado, the British weekly news magazine The Economist ran a scathing leader that made a case for tighter gun regulations in the United States. A week later they published a letter from one Frederic Ewing, who argued that since there are both lax gun controls and low rates of gun violence in New Hampshire (NH) and Vermont (VT) tighter gun restrictions have no apparent effect on rates of gun violence.

-no ceteris paribus -small sample to support his argument -may be reverse causation

reasons that the estimate of the income of the 1924 Yale graduates might be biased

-those who chose to respond to the survey may have higher incomes than those who ignore the survey

since 2006 which country has been emitting the most CO2

China

causation- best study method, second best

1st- randomized controlled experiments 2nd- natural experiment

Given a distribution of incomes (i.e., wages or salaries) of individuals or households, the median income is typically higher than the mean (i.e., the arithmetical average) income.

FALSE

models

Economic theory

-the study of how individuals and society choose to use the scarse resources that nature and previous generations have provided -οἰκονομία (oikonomia) - household management

Economics

How big is X? This will be different depending on: The institution (public vs private) Your status (in state vs out of state) Scholarships (need based and merit based) What are your outside opportunities? How big is Y?

How big the total costs are depends on

bow outward, non linear The slope will get steeper as we move from left to right and opportunity costs will not be constant

How to make PPF more realistic

inside the line (C)

Inefficient PPF point

According to the Mercatus Center post, who benefits when restrictions are placed on trade?

Inefficient firms, whose costs are too high to compete in the absence of trade restricitions.

What conclusion does TheUpshot post on the effects of campaign spending make about the policies regulating how campaigns raise and spend money?

Limits on campaign spending are more likely to favor incumbents.

As reported in the FiveThirtyEight article, what was the result when 29 research teams analyzed the data on soccer referees issuing red cards?

Most of the teams found statistically significant results showing that referees were more likely to give red cards to dark-skinned players.

long tail to the left Mean < median < mode

Negative distributions:

mean, median, mode are almost all the same, or the same

Normal distributions: Mean, medium, mode

As mentioned in chapter 7 of How to Lie with Statistics, what sort of data would be the best for trying to compare the relative safety of various modes of transportation?

Number of fatalities per million passenger miles

-Pure coincidence -Reverse causation -Some other factor

Other factors of correlation

an increase in A is associated with an increase in B

Positive correlation

can be true or false statement of fact

Positive statements

a latin phrase that translates to "after this, therefore because of this" (a preceded b therefore a caused b)

Post hoc ergo propter hoc

-Tragedy of the commons and split or steal question/game is a variation -Each player has a dominant strategy There is one action that is clearly better for them regardless of the other player -When each player follows their dominant strategy, the outcome is worse for both players than if they had both chose their own strategy -When each follows their own self-interest it leads to a bad outcome for everyone -Nash equilibrium is what is best for both players

Prisoners dilemma

In chapter 10 of How to Lie with Statistics, which of these was the *primary* concern expressed by Huff about the study that showed that British males bathed more often than British females? which was the most important?

The study can only speak to what the respondents *say* they do, not what they actually do

As asserted in the Agriculture section toward the end of the IISD post, why would it be important from an environmental perspective to reduce rich-country farm subsidies based on production?

They encourage overproduction: farming on land that wouldn't otherwise be cultivated or used for the subsidized crop.

Which one of these is NOT an argument the authors of the Mercatus Center post would make or agree with?

Trade deficits are bad for developed economies and should be avoided whenever possible.

As illustrated in the second and third figures of the Vox post, the opportunity cost of college (i.e., the income that could have been earned by working during those years) is greater than the cost of tuition.

True

According Tim Harford why is it so hard to say "no"?

We place more weight on present comfort (or discomfort) than we do on future effort (or future flexibility).

experiments and experimental economics

empirical economics

As Rebecca Goldin explains, lumping together everyone with a bachelor's degree and comparing their employment outcomes to everyone with only a high school diploma *underestimates* the benefit of going to college for the group of students in the middle who are deciding whether or not to go to college.

false

As explained by the Vox post, none of the academic studies on the recent effects of trade with China suggest that the concerns raised by White House officials about the decline of manufacturing are plausible or valid.

false

-The other options you didnt choose -this is unavoidable and fundamental to what it means to make a decision -the best foregone alternative is the opportunity cost

foregone alternatives

manipulated axis, pie charts, picture representations

graph chicanery

Adam smith

highlighted the gains when parties with opposite absolute advantages specialize and trade.

-manipulating the scale -having an inconsistent scale -omitting the scale altogether

how graphs can exaggerate and manipulate

Chapter 1 of How to Lie with Statistics discusses a survey run during the Second World War by the National Opinion Research Center among hundreds of blacks living in a city in the South. What concern about collecting data does this episode specifically illustrate?

identity of interviewer effects the respondent

Refers to the increasing opportunity cost of production that occurs as you move along the production

law of increasing relative cost

specialziation

make the good you are more efficient in

if the gap between two measures is less than the margin of error we cannot really say they are different or one is larger

margin of error gap between two numbers

middle, if two numbers add and divide by 2

median

most

mode

benefit -(minus) cost how you calculate the value of the forgone alternative

net benefit

statements of opinion no objective way to determine if they are "true"

normative statements

david ricardo

noted that what matters aren't the resource costs but the opportunity costs. Even if there is only a comparative advantage, trade will be beneficial.