Jodi Beggs: Economists Do It With Models

Technically, “constant returns to scale” describes a production process where you get exactly twice as much stuff out if you put twice as much stuff in. Economists often argue that at least constant returns to scale should be achievable since, worst case scenario, you could just build a second identical factory next to the first one. As such, I want economic instructors to start using this as their example of constant returns to scale.

Personally, I won’t decide whether I am suspicious of the linear regression until someone tells me whether the slope is statistically significant. Also, if there are multiple explanatory variables that affect an outcome, a scatter plot that only looks at one of them at a time will generally looks like a mess even when all of the variables are individually important. In related news, this is a good opportunity to talk about the distinction between estimated effects (i.e. regression...

[unable to retrieve full-text content]I laughed, not gonna lie.

Tired of the disposition effect yet? This one’s short, I promise- just shows how the incentives for tax-motivated selling of losing stocks change over the year and cloud the disposition effect test statistics. As usual, you can see the whole behavioral economics playlist here in case you want to catch up or need a review.

This video shows the effect that tax-motivated selling of stocks has on the observed measure of the disposition effect. As told to my students at Northeastern University. For more information and a complete listing of videos and online articles by topic or textbook chapter, see http://www.economistsdoitwithmodels.com/economics-classroom/ For t-shirts and other EDIWM items, see http://www.economistsdoitwithmodels.com/merch/ By Jodi Beggs - Economists Do It With Models...

[unable to retrieve full-text content]On The Increasingly Unfortunate Economics Of Peanut Allergies…: Things get awkward when companies decide to maximize profit, if for no other reason than it highlights where policy makers have procrastinated on regulation in hopes that self-interested oganizations would just behave.

I didn’t tell you last time that the disposition effect result I discussed suffered from a potential econometric problem, so I make up for that here. As usual, you can see the whole behavioral economics playlist here in case you want to catch up or need a review.

This video discusses a potential econometric issue present in the basic empirical test for the disposition effect. As told to my students at Northeastern University. For more information and a complete listing of videos and online articles by topic or textbook chapter, see http://www.economistsdoitwithmodels.com/economics-classroom/ For t-shirts and other EDIWM items, see http://www.economistsdoitwithmodels.com/merch/ By Jodi Beggs - Economists Do It With Models...

So the internet seems pretty much obsessed with this story right about now… The headline, taken at face value, isn’t particularly surprising to economists- we are quick to point out that a pretty wide variety of items can count as “money”, provided that they perform a few functions: A medium of exchange A unit of account A store of value By this characterization, sure, ramen could serve as money- I guess ramen packs aren’t so large as to be too cumbersome to be traded, you could quote...

[unable to retrieve full-text content]Fine, We Can Talk About Exports Too, Coffee Edition…: I guess I agree that it’s unfair to talk about imports without talking about exports, and I do find it perplexing that people worry about the effects of imports on employment but don’t match that against the effects of exports on employment.