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.
