Did Inflation Make the Median Voter Poorer?

A new essay by J. Zachary Mazlish answers the title question in the affirmative: yes, inflation made the median voter poorer. The post is data-heavy, with lots of charts and different ways of slicing the data, which is great! But since I am called out by name (or rather, my evil twin, Jeremy Horpendahl), I want to respond specifically to the claim about my data, but also I’ll make a few broader points.

Here’s the Tweet of mine that he links to:

https://twitter.com/jmhorp/status/1854548669317455894

Regular readers will recognize the chart in that Tweet comes from an EWED post from April 2024. Mazlich says that my chart and others like it are “misleading for understanding the election because a) they compare wages now versus January 2020, rather than January 2021.”

Fair enough, but if you read my Tweet you will see that I am specifically responding to an NPR story which said, “if you look at the difference between what… groceries cost in 2019 and what it costs today, and what wages looked like in 2019 and today, the gap is really gigantic.” So, they are specifically using 2019 as a baseline in that story, and my chart specifically used that as the baseline too! That’s why I thought that chart was relevant.

It’s true, of course, that if you want to understand median voter sentiment about the Biden administration, you should probably start the data at the beginning of the Biden administration. But I was responding to the more general claim people make, that they are worse off than in 2019.

With that clarification out of the way, what does Mazlich’s broader post say?

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Don’t overthink it

If you’re trying to understand the US election outcome, this is the only graph you need:

I’m not saying “anti-incumbency” is everything. There are a lot of forces wrapped up within this graph. My unnuanced take is that that the pandemic hens came home to roost for incumbent parties. Every single bundle of pandemic policies, from the heaviest handed to the most laissez-faire, were characterized by inevitable trade-offs. People don’t like tradeoffs regardless of whether the bill is paid with a year of doubled fatalities, two years of tripled unemployment, or three years of quadrupled inflation. And that’s why I think incumbent parties, be it US Democrats or UK Tories, lost significant ground. If you want to parse it farther, you could argue US Republicans should be disappointed they didn’t win more given how well opposition parties performed elsewhere.

None of that will change the Take Economy, of course. Thousands of pundits, published or barstool, are all describing in exquisite detail exactly the manner in which this election is a referendum on how the Democrats handled exactly the issue they personally happen to care the most about. It doesn’t mean any one of their opinions is narrowly wrong. I’m sure there was a more perfect campaign to be run, if only because there always is and was.

National politics is rarely a referendum and it’s never just the will of the people. It’s a chaotic system. It’s the weather. We forecast the weather. We makes plans. We accomodate, mitigate, and celebrate. And yes, sometimes we just try to survive it. But we can’t control it.

It’s chaos, be kind.

Why Podcasts Succeeded in Gaining Influence Where MOOCs Failed

When MOOCs (Massive Open Online Courses) burst onto the education scene in the early 2010s, they were hailed as the future of learning. With the promise of democratizing education by providing free access to world-class courses from top universities.

Leading universities rushed to put their courses online, venture capital poured in, and platforms like Coursera and edX grew rapidly. Yet today, while MOOCs still exist, they’ve largely retreated to the margins of education. Meanwhile, long-form podcasts have emerged as a surprisingly powerful force in American intellectual life.

Is this ironic? I wanted to learn a bit about MOOCs while I took a walk before writing this blog post. I typed “MOOCs” into the Apple Podcasts search bar.

One of the first results was: John Cochrane on Education and MOOCs

I learned about MOOCs from Russ Roberts at a reasonable pace (when I listen to podcasts, I do it at 1x speed but I’m almost always doing something like driving or folding laundry).

I consider myself a lifelong learner. I buy and read books. Like hundreds of millions of people around the world, I like podcasts. I will attend lectures sometimes, especially if I personally know someone in the room. I did sit in classrooms for course credit throughout college and graduate school. I took extra classes that I did not need to graduate purely out of interest, and yet I have never once been tempted to sign up for a MOOC.

Enough introspection from me. My viral “tweet” this week was: “MOOCs never took off, as far as I can tell, and yet long-form podcasts are shaping the nation.”

Did MOOCs fail? Many millions of people signed up for MOOCs. A much smaller percentage of people completed MOOCs. Some users find MOOCs worth paying for.

However, if you listen to the podcast with John Cochrane in 2014, you can see the promise that MOOCs failed to live up to. The idea was that many people who did not have access to a “top quality” education would get one through MOOCs. Turns out that access is not the bottleneck.

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Democracy is hard to forecast

Voting costs time and attention, arguably the only resources everyone is short on. The compensation is implicit, ephemeral, and uncertain. Never make the mistake of thinking you can predict exactly how much other people will behave when the price is subjective and wrapped in uncertainty.

A democracy is an endless cascade of institutions designed to pick winners. Those winners are themselves a product of the rules as much, if not more, than the preferences of voters. Rules will inevitably be gamed, sometimes in manners that seem unfair at best, antithetical to the ambitions of democracy at their worst. A good rule of thumb, however, is that the more unfair an outcome seems, the more fragile it is. A minority party that has gerrymandered voting districts to the hilt might have disproportionate power one day, but they are exactly one exogenous shock away from a electoral cascade event. Any political party is never more than one election away from the dustbin of history.

Polling is increasingly challenging and it’s hard not to feel like they are always fighting the last war. How do you find out what people want in a world where, as previously mentioned, time and attention are scarce? How do you poll people who won’t answer the phone and, even worse, those who do answer phone are decidedly different from those who do? Same thing for people on Facebook. Same thing for people at the mall. Same thing for anyone who uses one tool or media instead of another. It’s never been easier to learn about an exact subset of people, while never harder to learn about everyone.

The electoral college is an extremely dumb peculiar institution. Tuesday could be a tie or a two point differential, but the most likely outcome is a roughly 80 point blowout. The catch being that the blowout could go either way.

I voted (early) for Harris/Walz. I hope they win, but not sure I can say much else for sure. Democracy is hard.

Effort Transparency and Fairness Published at Public Choice

Please see my latest paper, out at Public Choice: Effort transparency and fairness

The published version is better, but you can find our old working paper at SSRN “Effort Transparency and Fairness

Abstract: We study how transparent information about effort impacts the allocation of earnings in a dictator game experiment. We manipulate information about the respective contributions to a joint endowment that a dictator can keep or share with a counterpart…

Employees within an organization are sensitive to whether they are being treated fairly. Greater organizational fairness is shown to improve job satisfaction, reduce employee turnover, and boost the organization’s reputation. To study how transparent information impacts fairness perceptions, we conduct a dictator game with a jointly earned endowment. 

The endowment is earned by completing a real effort task in the experiment, an analog to the labor employees contribute to employers. First, two players work independently to create a pool of money. Then, the subject assigned the role of the “dictator” allocates the final earnings between them.

In the transparent treatment, both dictators and recipients have access to complete information about their own effort levels and contributions, as well as those of their counterparts. In the non-transparent treatment, dictators have full information about the relative contributions of both players, but recipients do not know how much each person contributed to the endowment. The two treatments allow us to compare the behaviors of dictators who know they could be judged and held to reciprocity norms with dictators who do not face the same level of scrutiny.

*drumroll* results:

This graph shows the amount of money the dictators take from the recipient contribution, in cents.  There are two ways to look at this. Notice the spike next to zero. Most dictators do not take much from what their counterpart earned. They are *dictators*, meaning they could take everything. Most take almost nothing, regardless of the treatment. We interpret this to mean that they are acting out of a sense of fairness, and we apply a humanomics framework to explain this in the paper.

Also, there is significantly more taken in non-transparency. When the worker does not have good information on the meritocratic outcome, then some dictators feel like they can get away with taking more. Some of this happens through what we call “shading down” of the amount sent by the dictator under the cover of non-transparency.

There is more in the paper, but the last thing I’ll point out here is that the “worker” subjects (recipients) anticipate that this will happen. The recipients forecast that the dictator would take more under non-transparency. In our conclusion, we mention that, even though the dictator seems to be at an advantage in a non-transparent environment, the dictator still might choose a transparency policy if it affects which workers select into the team.

View and download your article*   This hyperlink is good for a limited number of free downloads of my paper with Demiral and Saglam, says Springer the publisher. Please don’t waste it, but if you want the article I might as well put it out there. I posted this on 11/2/2024, so there is no guarantee that the link will work for you.

Cite our article: Buchanan, J., Demiral, E.E. & Sağlam, Ü. Effort transparency and fairness. Public Choice (2024). https://doi.org/10.1007/s11127-024-01230-9

What if they’re listening?

It’s spooky season and I just received perhaps the spookiest of student emails. We all know that students never read the syllabus, only want to know what’s on the exam, and can’t be bothered to pay attention. But, and hear me out…what if they are listening?

I got this email yesterday. It might be my favorite student email ever, even if it is direct evidence that my stream of consciousness while lecturing, from the students’ perspectives, must border on surreal at times. I don’t know that much of it is actually funny, but it’s interesting to see what actually sticks in a student’s mind. Notes in curly brackets { } are edits and additions from me, with a few small redactions to ensure the anonymity of the student:


From: {NAME REDACTED}

Halloween is the time to celebrate the spooky things in life, and what is scarier than being perceived? I have taken it upon myself to write down some of the silly things you say in class throughout the month of October to celebrate the scariest time of the year. I have compiled them all here and I think you should be proud of your wit. I think they are funnier without context, so in the spirit of politics, I will be leaving it out. 

“I’m just a decomposing corpse here on stage.”

“The good thing about a recession is it’s not a vibes-based measure.”

“[Imagine] You’re wearing a suit, mens or pant….”

“We’re not making assumptions about shapes… yet.”

“Can you imagine the ad campaigns for the eight year old vote?!”

“[In reference to Jesse Ventura, one might even imagine little hearts scribbled in the margins] He’s perfect” {Note: This was not said in admiration of his politics, but rather his existence as Jesse Ventura}

“{Irrelevant 3rd party candidate} is the antichrist, that’s all I know. They kicked my dog and I want to throw them into the 4th layer of hell.” 

(with the most deadpan tone and expression) “Yippee, we’re fine, we’re free, we’re great.”

“There’s crooks, and then there’s crooks”

“What I’m saying is, we’re all becoming monsters.” (very on theme to be honest)

“I cannot tell the difference between parody and reality.” (uh oh)

“White gets 1, grey gets 0, and professor Makowsky goes into a quiet rage.” 

“Get an amish pretzel with amish butter on it, ya know. Love yourself.”

“Stay away from the swamps, there’s luggage there that wants to eat you.”

At the moment (updated 10/22/24)

I am part of the exodus from Twitter to Bluesky. I still maintain my Twitter account, but do not post there. I do, however, still scroll both of my feeds on occasion. I am more optimistic for the future of Bluesky for a variety of reasons, not least of which is simply that it is improving with each week. The mechanics are excellent, there is far less garbage/noise/bots, and I never feel like I am party to anything with nefarious ambitions in the long or short run. There is a problem though.

It’s still kind of… boring. The echo chamber feeling at Bluesky is stronger, born almost exclusively of the selection effects of first and second movers from Twitter. I am rarely surprised on Bluesky, I never feel terribly challenged in an exciting way, unless you count the more frequent posting of squishy academic policy affirmations. There’s plenty of (warranted) election anxiety, but there’s no oppositional forces. There’s no tension.

Which is not to say Twitter is providing any of that in spades. Quite to the contrary, it’s a shell of its former self. The heaviest posters with the biggest followings have found plenty of reasons to stay, but for every big follower account, there were hundreds of medium sized accounts that pushed and pulled the conversation in interesting directions, providing both traction and the occasional surprise. A large share of medium accounts have abandoned ship, some moving to Bluesky, but far more have just dropped out of the medium entirely (apologies for the homonyms). There are interesting people left on Twitter, but they are inundated with bots, trolls, and milquetoast careerists only hanging around because they fell ass backwards into a couple thousand followers and feel too capital committed to move elsewhere. A once rich and diverse intellectual stew has been watered down into a thin broth of increasingly questionable nutritional value. And like a lot of spicy foods, I know I used to complain about the heat while I was eating it, but damned if I don’t miss it all the same.

Bluesky has passed the proof of concept. It works. It has value. Now we just need that final cohort to make the leap and bring the heat.

UPDATE ADDENDUM (10/22/24)

So THAT happened. Most people who are going to read it have already read it, but I did want to add two notes for future reference, both of which I tacked onto bluesky threads.

  1. What I actually miss is the policy/econ/metrics nerds having esoteric discussion full of rivalry and verve. Yes, it was parallel to all kinds of trash, but it was sufficiently insulated. I have quite purposely come to Bluesky because Twitter is now full of nazis, bots, and nazi bots. I promise I don’t miss the nazis
  2. I’ll admit I didn’t expect the word “tension” to get parsed as “negative approbation” , trauma, horrific violence, or hate. I could blame this on the internet, but this is my fault. I’ve been around long enough I should have know better. There is a reason why I tend to write things that come off pre-emptively defensive or as if they are equivocating. I try to prevent misinterpretation, willful or earnest, of my words. I should have done a better job here.
  3. People are rightfully protective of Bluesky as a space separate from Twitter. That said, there are definitely a lot of trolls and bots already in place trying to turning any discourse into a hatefest.

Un Poco Loco, But Effective? Almost 1 Year of President Milei

I don’t like to follow politics, much less politics in another country. Policy on the other hand? I’m always hooked.

Most of us have heard of President Javier Milei by now. He became Argentina’s president in December of 2023. Prior, he had been in charge of a private pension company, a university professor who taught macroeconomics, had hosted a radio show, and has written several books. See his Wikipedia entry for more.

What makes him worth talking about is that he appears a little… unique. He’s boisterous and rattles off economic stories and principles like he wants you to get up and do something about it. To anyone in the US, he looks and behaves like a weird 3rd-party candidate – sideburns and all. He’s different. Here he is bombastically identifying which government departments he would eliminate:

I’ve enjoyed the spectacle, but haven’t paid super close attention. I know that he is libertarian in political outlook, drops references to Austrian economists and their ideas by the handful, and doesn’t mince words. Here he is talking at the Davos World Forum (English & Dubbed).

So what?

Argentina has a long history of high inflation and debt defaults. Every president always says that they’ll fix it, and then they don’t. There have been periods of lower inflation, but they don’t persist. Among Milei’s stated goals was to end that cycle and bring down inflation. His plan was to substantially reign in deficit spending by eliminating entire areas of government. We’re now approaching a year since Milei took office, and I thought that I would check in. Below is the CPI for Argentina since 2018. As soon as Milei took office prices spiked, but have started coming down more recently. Similarly, the Argentine Peso has fallen in value by 50% since he’s taken office. Ouch!

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Bonkers BBC Weather App: 18,995 mile/hour Winds in U.K.

Last week as the U.S. National Weather Service was warning Florida residents of incoming 120 mile/hour winds, folks in the U.K were informed by the BBC weather app that the wind speed outside was – – wait for it – – 18,995 mph.  Hurricane force winds were displayed for many cities worldwide. Not to mention temperatures of around 400 F for Nottingham, New York, and Sydney.

The BBC of course issued retractions and apologies, blaming a third-party data supplier. Said supplier, meteorological forecasting company DTN has apologized for what it called a “technical error”.

I had my Brave browser do an AI search/summary on the topic, “What measures does the BBC take to prevent or mitigate the impact of third-party supplier issues on its weather forecasting app?”. Here is what it told me:

Based on the provided search results, the BBC takes the following measures to prevent or mitigate the impact of third-party supplier issues on its weather forecasting app:

  • Diversified data sources: The BBC uses multiple data suppliers, including MeteoGroup, to ensure that its forecasts are accurate and reliable. This diversification helps to reduce dependence on a single supplier and minimizes the impact of issues with a particular supplier.
  • Real-time updates: The BBC’s weather app provides real-time updates, which enable it to quickly respond to and correct any errors or inaccuracies caused by third-party supplier issues.
  • Error detection and correction: The BBC’s weather experts closely monitor forecasts and are able to detect and correct errors or inaccuracies caused by third-party supplier issues.
  • Technical redundancy: The BBC has implemented technical redundancy measures, such as backup systems and fail-safes, to minimize the impact of third-party supplier issues on its weather forecasting app.
  • Collaboration with other organizations: The BBC collaborates with other organizations, such as the Met Office and Scottish airline Loganair, to improve forecast accuracy and mitigate the impact of third-party supplier issues.
  • Investment in technology and AI: The BBC invests in advanced technology and artificial intelligence to improve the accuracy and reliability of its weather forecasts, reducing the reliance on third-party suppliers and minimizing the impact of issues.
  • Monitoring and maintenance: The BBC regularly monitors and maintains its weather forecasting app and underlying systems to identify and address potential issues before they become critical.

These measures demonstrate the BBC’s proactive approach to mitigating the impact of third-party supplier issues on its weather forecasting app, ensuring that users receive accurate and reliable forecasts.

That all sounds great in theory, but in practice something failed last week. I guess there is so far no fool-proof substitute for having a pair of human eyeballs look at material before it is flung out into cyberspace. But that might cost money.

Nobody is saying, but it would not surprise me if the BBC adds yet another layer of auto-checking to its robo-forecasts, to at least flag physically unrealistic numbers.

Apropos of everything

Robert Nozick and John Rawls were intellectual rivals, friendly colleagues, and even members of the same reading group. Their conversations, at least the ones we were privy to through their iterations of published work, were dedicated to reconciling the role of the state in manifesting the best possible world. Nozick, it can be said in a gratuituous oversimplification, favored a minimal government while Rawls, similarly oversimplified, favored a larger, wider reaching set of government institutions. Both were well aware of the risks and rewards of concentrating power within government institutions, they simply arrived at different conclusions based on risks each wanted to minimize versus those they were willing to incur.

My mental model of the evolution of government (influenced heavily by Nozick and refined towards the end by Rawls) goes something like this:

  1. 100,000 years ago roving bands of humans grow to thrive in their environment by solving collective action problems, largely through familial relations. Larger groups have more success hunting, foraging, and protecting themselves from predators.
  2. Eventually some groups get so good at collective action that they begin to prey on other smaller groups. These “bandits” gain more through resources taken by force than they would strictly producing resources through hunting and foraging.
  3. This creates an arms race in group size, with bigger groups having the advantage while facing the diminishing marginal returns imposed by difficultings in maintaining the integrity of collective action in the face of individual incentives to free ride i.e. its hard to get people to pull their weight when their parents aren’t watching.
  4. Some groups mitigate these difficulties, growing larger still. At some threshold of group size, the rewards to mobilitity are overtaken by the rewards to maintaining institutions and resources (freshwater, shelter, opportunities for agriculture), leading to stationary groups.
  5. These stationary groups begin to act as “stationary bandits”, extracting resources from both outsiders for the benefit of their group and from their members for the benefit of their highest status members.
  6. Differing institutions evolve across groups, varying the actions prescribed and proscribed for leaders, members (citizens), and non-members. Some groups are highly restrictive, others less so. Some groups are more extractive, funneling resources to a select minority. Some groups redistribute more , others less.
  7. Democracy evolves specifically as an institution to replace hereditary lines, a deviation from the familial lines that sat the origin of the state all the way back at step 1. Its correlation with other institutions is less certain, though it does seem to move hand-in-hand with personal property rights and market-based economies. Democracies begin to differentiate themselves based on the internal, subsidiary institutions they favor and instantiate.

A lot of my political leanings can be found not in favoring Nozick or Rawls, but in the risk immediately preceding their point of divergence. When I look at well-functioning modern democracies, I see an exception to the historical rule. I see thousands of years of stationary bandits voraciously extracting resources while high status members taking desperate action to maintain power in a world where property rights are weak and collective action is tenuous. Rawls saw a growing state as a opportunity to create justice through fairer, more equitable outcomes. Nozick saw a growing state as a further concentration of power that, no matter how potentially benevolent today, would eventually attract the most selfish and venial, leading to corruption and return to the purest stationary bandit, only now with the newfound scale.

Both strike as me as perfectly reasonable concerns about very real risks. Which do I believe the greater risk? Depends on the news and what I had for breakfast that day. In the current political context, both in the US and several other democracies, I am of the growing opinion they would be in broad agreement that the biggest risk is not the perversion of democracy from suboptimal policies and subsidiary institutions (step 7), but rather a disastrous reversion to the pre-democratic institutions (step 6).

The most underrated aspect of democracy may very well be its fragility. While historical rarity may not be undeniable evidence of inherent fragility, but it would certainly suggest that once achieved it is worth the overwhelming dedication of resources, including the sacrifice of welfare optimality, to ensure its perserverance.

It cost a lot to get here. A lot. Sacrifices that are hard to even conceive of, let alone empathize with, while living within the profound luxury of modern life. I have no doubt that many of us will find ourselves underwhelmed with the policy platforms of the full menu of viable candidates made available to voters at every level of national and local office in a few weeks. So take this little scribbling for exactly what it is: an argument to vote against candidates that reduce the probability of our constitutional republic remaining intact. By comparison, all the other differences add up to a historical rounding error.