Principle #4 in Action

In Chapter 1 of my favorite text, we learn that people respond to incentives.  As this story remind us, bureaucrats are people too.

Managers in the Social Security Administration, struggling to handle a skyrocketing number of disability cases, had an unusual request for their workers this week: slow down. 

Social Security judges and employees in Florida, Alabama, Colorado, Georgia, Tennessee, Ohio and Arizona were among those instructed to set aside disability cases this week, with the slowdown allowing managers to boost their performance numbers for the coming fiscal year, which starts Monday. 

Top officials, in a bid to meet goals to win promotions or thousands of dollars in bonuses, directed many employees to refrain from issuing decisions on cases until next week, according to judges and union officials. This likely would delay benefits paid to thousands of Americans with pending applications, many of whom are financially needy and have waited for a government decision for more than a year.

The directive stemmed from a wrinkle in the federal calendar, in which this week fell between the federal government's 2011 and 2012 fiscal years. This happens every five or six years, as officials are allowed to count just 52 weeks in their calendar. Counting this week would make the current fiscal year 53 weeks long. That meant any applications for disability benefits completed between Monday and Friday wouldn't count toward the annual numerical targets set for Social Security judges or field offices.

explorer vests!

Thanks to all who entered Tuesday's giveaway!  I am really enjoying reading through everyone's crafting memories.  It is so hard to narrow down favorites, but I'll choose my top five over the weekend and post the winners on Monday.

This week I've kept busy sewing birthday presents for Oscar's friends.  He is in a playgroup with kids that have birthdays all within about a month and a half of each other.  It is wonderful, but makes for an extremely busy birthday party season!

Oscar has two little friends who are especially adventurous and love the outdoors.  I knew the Explorer Vest from the book Oliver + S: Little Things to Sew would be just perfect for them. 

I made the first (khaki colored) vest with the simpler flat pockets, but couldn't resist adding the pocket bellows the second time around.  I used the lining fabric, so the bellows would really stand out.  It was fun to add bright touches in hidden places, too.  Hello, colorful pocket flaps!  Sewing for boys does not have to be boring.

I think my favorite part is the giant back pocket.   Not sure how easily a toddler will get his treasures back there, but I'm sure it will be entertaining to watch him try.  :)

Oscar keeps asking when I'll make him an explorer vest (he wants the accompanying bug-catcher box), so I'm sure you'll see more versions in the future!

Left-Digit Bias

Chapter 22 of my favorite textbook discusses various ways in which individual decisionmaking deviates from standard notions of rationality.  Here is a new one to me (from the NBER Digest):

In Heuristic Thinking and Limited Attention in the Car Market (NBER Working Paper No. 17030), authors Nicola Lacetera, Devin Pope, and Justin Sydnor focus on the used car market and ask whether it is affected by consumers exhibiting a heuristic, or short cut, known as left-digit bias: the tendency to focus on the left-most digit of a number while partially ignoring other digits.

Using data that come from wholesale auctions encompassing more than 22 million used car transactions, the authors document significant price drops at each 10,000-mile threshold from 10,000 to 100,000 miles, ranging from about $150 to $200. For example, cars with odometer values between 79,900 and 79,999 miles, on average, are sold for approximately $210 more than cars with odometer values between 80,000 and 80,100 miles, but for only $10 less than cars with odometer readings between 79,800 and 79,899.

Fred Bergsten on Net Exports

In today's NY Times, Fred says government policy should focus more on increasing net exports.  He says a lot of wise things, especially regarding the need for better intellectual property protection abroad.  One part of the article, however, puzzles me.  He writes:

The artificially low value of the renminbi — it is 20 to 30 percent less than what it should be — amounts to a subsidy on Chinese exports and a tariff on imports from the United States and other countries.

Think about this for a moment.  As I discussed in this old Times column, the way China affects the exchange rate is by buying dollars in foreign exchange markets and using them to buy dollar-denominated assets (such as Treasury bonds).  Yet the exact same mechanism is at work whenever any foreigner invests in the United States.  All capital flows into the US raise the value of the dollar in foreign exchange markets and make our exports less competitive.  Does Fred object to all capital flows into the US?  Would he prefer some degree of capital flight from the US because it would lower the value of the dollar and promote exports?  That seems to be the logical implication of what he is saying, but I doubt that's what he intends to suggest.  So I am puzzled.

Robert Shiller on Stock Valuations

Peter Diamond on Stimulus

More Competition

A new economics blog, focusing on the economics of the digital world.

Martha Stewart's Handmade Holiday Crafts - review and giveaway!

It's no secret that I love Martha - everything that comes from her company is pure perfection.  Today she is releasing a new book, Martha Stewart's Handmade Holiday Crafts: 225 Projects for Year-Round Celebrations.

 

From Easter eggs, to Father's Day gifts, to Christmas decorations, the book offers dozens of crafts for every holiday.  It feels like a collection of all the best "Good Things" projects and special holiday issues of the magazine, all bundled in one spot.

Of course, there is a fabulous Halloween section (Martha's favorite holiday), which is the perfect jump-start I needed to get started on Oscar's 3rd birthday party, a Halloween extravaganza (at least in his eyes).

I am excited to try the Jar-o'-lanterns, featured in the Halloween section.  (Photos by Eric Piasecki. Reprinted from the book Martha Stewart’s Handmade Holiday Crafts. Copyright © 2011 Martha Stewart Living Omnimedia, Inc.  Published by Clarkson Potter/Publishers, a division of Random House, Inc.)

Jar-o'-lanterns

Tools and Materials
Clean glass jars
Paintbrush

Oil-based enamel paint (black and orange or yellow)
Extra-wide masking tape

Jar-o-lantern template (marthastewart.com/holiday-crafts-book-extras)
Marker
Craft knife
Plastic-covered 20-gauge wire
Needle-nose pliers
Wire cutters

 1. Working in a well-ventilated area, coat the inside of a jar with orange or yellow paint. Apply a square of masking tape to the outside of each jar. Press out any air bubbles. Use a marker to draw face on tape. Cut out features with a craft knife to form a stencil. (Alternatively, download and print jar-o’-lantern templates, cut out features, and secure over the tape; cut around them to form stencil.)

2. Using black paint and a brush, fill in the features of the stencil. Let paint dry completely, then carefully peel off and discard tape.

3. For a handle, loop one end of the wire with pliers. Make a lasso shape to hug the neck of the jar. Bend remaining wire over for a handle. Cut wire; make another loop to hook onto ring. Slip ring over jar's mouth; tighten as necessary.

How cute are those?  All I need is some orange paint and I'm set to start.

Ok, onto the really fun part.  Would you like a copy of the book?  Today I'm giving away 5 copies of Martha Stewart's Handmade Holiday Crafts: 225 Projects for Year-Round Celebrations!

I'm going to run this giveaway a little differently, just for fun.  To enter:

• Leave a comment telling me your favorite crafting memory!  It can be anything - a success, a funny failure, just the sweet memory of crafting with someone special.  I'll choose my 5 favorites for the winners.  Make me smile.  :)
• One comment per person please.  If you accidentally leave duplicate comments, please delete the extras.
• Please leave me a way to contact you, either with an email address, or a public profile that leads to your blog.  Thanks!
• This giveaway is open to U.S. residents only.  So sorry, international friends!

This giveaway is open for 24 hours only!  Get your comment in by 9 a.m. PST, on September 28th.

One of my favorite crafting memories is when I got to meet Ms. Martha herself and talk to her about something I made.  It was October 2008, just 11 days after Oscar was born, and I had submitted a pair of baby booties to the MSLO employee art show.  She loved the shoes (I about passed out on the spot), but even more she loved Oscar, and took his picture.  The shoes and Oscar's little newborn face even flashed briefly on the show the next day.  My tiny celebrity!   It was a thrill.

Good luck!  I'm really looking forward to reading your crafting memories.

The Harvard guy in the NFL

Moneyball

My family and I saw the movie Moneyball last night.  It is much fun. Besides, I have to love any movie in which a key fact about a major protagonist is that he studied economics.

The movie, however, is fictionalized. In real life, the geek-genius who saved the team studied economics at Harvard. The movie, however, changes the character's name and says he studied at Yale.

Yale?  Seriously? Yale?

A Conversation with Robert Lucas

In today's Wall Street Journal.  Unfortunately, I think you need a subscription for this link to work.  (However, try Googling "Robert Lucas" in Google News, and I understand you can get around the paywall.)

Why I am not very worried about inflation just now

Click on graphic to enlarge.

Several people have asked me in recent days if the Fed's aggressive attempts to get the economy going will lead to galloping inflation to go along with our weak economic growth.  It is possible that this might occur down the road, of course, but I don't see it happening just now.  The slack labor market has kept growth in nominal wages low, and labor represents a large fraction of a typical firm's costs.  A persistent inflation problem is unlikely to develop until labor costs start rising significantly.  Notice in the graph above that the period of stagflation during the 1970s is well apparent in the nominal wage data.  The same thing is not happening now.  This is one reason I think the Fed is on the right track worrying more about the weak economy than about inflationary threats.

yarn-wrapped letters - made cheaper than cheap

I love the yarn-wrapped letter trend that seems to be so popular these days, but I can be a total cheapskate.  So when I went to make some word art for the kids' playroom, I made my own from scratch.

Instead of buying cardboard letter forms from the craft store, I cut my own out of foam board.  To make a template, simply find a font you like in MS Word (or a similar program), and print it out as large as you'd like your letter.  I used the font "Rockwell," in bold (not to be confused with "Rockwell Bold", which was a little too chunky for my taste). To get really big letters, you can print out multiple pages or get them blown up at a copy shop.

Then wrap, wrap, wrap your letters in yarn, until they are completely covered.  Use dabs of hot glue in the corners and around edges to keep the yarn in place.

As a bonus, the foam board letters are really thin and lightweight, and which helps them hang flat against the wall.  I hot glued round picture hangers I had on hand to the back of each letter to hang.

My letters got a lot tidier with practice, so if at first you don't succeed, try, try again.  I made this big letter G for our mantel using a thinner yarn and a little more patience.

So far, I've used less than a full piece of foam board and all other materials I've had on hand ... so this project is coming in under $2.   Not bad for a bit of DIY decor!

Three from National Affairs

1. John Cochrane on inflation and debt.
2. Scott Sumner on monetary policy.
3. Andrew Biggs on means testing.

Kotlikoff on the Corporate Tax

The Boston University economist is not a fan of the corporate income tax.

Wee Wonderfuls Mermaiden Doll

A (long) while back, I received a copy of the book, Wee Wonderfuls, 24 Dolls to Sew and Love.  It is a very charming book - I immediately bookmarked a bunch of projects.  Somehow, they got knocked down the to-do list, but with many toddler birthday parties in the coming months, I pulled the book out again.

Last night I made the Mermaiden Doll.  Hello, beautiful!

It is a small-sized doll, only about 7 inches tall, perfect for little girls who like to take things on the go.  All of the stitching details add a lot of personality.

If you are planning to make dolls for holiday gifts, this book is a great place to start.  I love how diverse each of the projects is.  There really is something for everyone (even little boys!).

Up next on my dolls to make list are the Hansel and Gretel wooden spoon puppets, doxie necklace, and Little Miss Storybook (pictured below, left to right).

This little mermaid was hard to say goodbye to, but she'll be in good hands.  The birthday girl has such a love of swimming, she is practically a fish.  I'm sure these two will get along nicely.

Have you started thinking about handmade holiday gifts?  What is on your to-do list?

Nobel Predictions

From Thomson-Reuters.

The Progressivity of the Tax System

With all the rhetoric floating around regarding the "Buffett rule," it might be worth trying extra hard to keep an eye on the facts.  Here is the progressivity of the current tax system, according to the Tax Policy Center.  If you can remember only one fact, make it this one: The middle class (middle quintile) pays 14.1 percent of its income in federal taxes, while the rich (top tenth of one percent of the population) pay 30.4 percent.

Roland Fryer, Genius

Congratulations to my Harvard colleague for winning a MacArthur grant.

The Case for More Quantitative Easing

From Joe Nocera in the NY Times.

vinyl wipes case template

You asked for it, so here it is ... a template to make your own vinyl-decorated wipes case.

Supplies needed:

• Hard plastic travel wipes case (my template is made to fit the Huggies brand cases)
• Cut vinyl, contact paper, or scrapbook paper and mod podge - I'm going to show you how I used the vinyl
• scotch tape
• scissors
• wipes case template

First, print and cut out the pdf template (please select the "fit to printable area" option to get the correct sizing).   Get the template HERE.

Prepare your vinyl - I used my Silhouette machine to cut a design (for Silhouette users, this design is called "Butterfly Floral Lace Square").  You could also buy pre-cut vinyl, cut it by hand, or substitute pretty contact paper (there are some great contact paper patterns out there these days).  In my last post, a reader suggested using scrapbook paper and mod podging it to the wipes case.  I've never tried this, but I'm sure it would work!

Lay the template pieces on top of the vinyl, and using small pieces of scotch tape to hold them in place. 

Cut around each template to get one back piece and two front pieces.

Apply the vinyl to the wipes case, according to the material's instructions.  If you are using an intricately cut design, I would strongly recommend using transfer paper.

I used some of the leftover scraps to apply little pieces to the center case flap.

Make sure you firmly adhere the vinyl to the case, smoothing down all corners, and you're done!  Enjoy your one-of-a-kind wipes case.

And one more time ... here's another link for the wipes case template, in case you missed it.  :)

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Just Bunch Designs giveaway winner

Congratulations, Tiff - your comment was selected as the Just Bunch Designs giveaway winner, and you will receive three prints of your choice from the Just Bunch etsy shop.  I'll be in touch!

Stephanie is also offering Homemade by Jill readers a 15% discount on all orders for the next two weeks, using the code JILL15.   Happy Shopping!

20,000,000

That's how many times this this blog has been visited since I started it five years ago.

Taylor on the Fed's Mandate

John wants to end the dual mandate.

The President's New Tax Reform Proposal

You can read about it here. 

Disappointing, in my humble opinion, for reasons I discussed in this Times column. But not to worry: There is no chance it will become law in this congress. The proposal is about politics, not policy.

If the president were serious about tax reform, he would give his full-throated endorsement to the kind of tax reform ideas advanced by the Bowles-Simpson commission that he appointed, as I discussed in this column.

The Problem with Industrial Policy

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Harvard's Kindness Pledge

Virginia Postrel looks at the controversy.

retro homemaking night

Sorry to be so absent this week!  I've been prepping non-stop for another ladies event at my church, which was held last night.  I no longer have as much responsibility as I've had in the past (phew), but these things are always a lot of work.

 We had a retro-themed homemaking night, complete with classes about pressure cooking, making apple pies (in a jar - cute!), and sewing an apron.

Our tables were decorated with a fun assortment of vintage items, and a sweet bouquet of flowers in a can (idea from Rachel Ray, which I saw on Pinterest).

 I love my blue Singer.  I don't actually use it, but it sure is pretty, right?

My favorite part of the night (besides the fun activity, delicious food, and wonderful company, of course) was definitely getting all dolled up with retro hair and make up.

As a mom who is admittedly frumpy and often sports a wet french braid and no makeup, I felt fabulous last night!  How weird would it be if I started rocking a retro look more often?  Because it was kind of awesome.  I found really helpful hair and makeup tutorials on YouTube.  Is there anything you can't learn on YouTube?

I lead the apron sewing class (with lots of helpers - thanks Holly & Lori!), and we made the apron in a hour that I posted about previously.  Since we are always on tight budgets for these types of things, we had to find a great deal on fabric ... which last week lead me here:

the Fabric Barrel in Solvang, CA.  I kid you not, this was one of the nuttiest places I've ever been.  Crazy, I tell you!  There are two buildings, two stories each, plus a separate cafe, all manned by one lady.  On the bottom floors are several rooms of fabric, some on giant bolts, others just piled in bins, like the photo above.  All the fabric is 99 cents a yard, and you cut it yourself.  There is not an employee to be seen (she is busy in the cafe, cooking burgers).

My friend Lori and I went together, with four toddlers in tow, and it was an adventure to say the least.  When we first walked in, I was so overwhelmed, I didn't think we would find a thing.

Fifty yards of fabric and 20 zippers later (zippers are 5 cents, buttons only a penny), we hauled our kids and our spoils over to the cafe for hot dogs, burgers, and root beer floats.

There were so many great knits ... and 99 cent fabric makes me kind of dizzy with excitement.  I can't wait to go again, but definitely without kids!

Anyway, that's what I've been up to.  I haven't forgotten about the vinyl wipes case template - I'll post it next week!

p.s. today is the last day to enter the Just Bunch Designs giveaway.  Don't forget to leave a comment if you haven't already.  :)

Steve Levitt's Daughter

A moving talk from the Chicago economist.

Hayek and Keynes

An excerpt from Silvia Nasar's new book, The Grand Pursuit: The Story of Economic Genius.

Krugman on Barro

Paul's comment on Robert's latest column confuses me.  Paul shows a graph establishing that the investment share of GDP is procyclical, as if that refutes Robert's viewpoint about what ails the economy.  But that fact is hardly a surprise.  As I put it recently, "the most volatile component of G.D.P. over the business cycle is spending on investment goods."  Moreover, I know Robert well enough, having been his colleague for about a quarter century, to know that he knows the macroeconomic time series as well as anyone.

The problem that Paul glosses over is that correlation does not imply causation.  Paul appears to jump to the conclusion that this correlation establishes that the the business cycle is the driving force behind investment spending.  But it could just as easily be the opposite (or a third factor driving both).  I am completely confused as to why Paul thinks this graph establishes much of anything at all.

I should note, as an aside, that Robert is the second most cited living economist.  That fact does not imply that everything he says is correct. (And indeed Robert and I disagree often in Harvard seminars.)  But it does suggest that one should not be so glib in summarily rejecting his point of view.

celebrating baby: Just Bunch Designs giveaway

I've been keeping a little secret from this blog, but I think it's time to spill the beans ... I'm 30 weeks pregnant!

I've spent most of this pregnancy feeling excited but also kind of scared to be the mom of three little ones (this will make 3 kids in 3 years).  It is going to be a big adjustment and will call for significant changes around here ... namely, I will have very little time (if any) to blog.  But I have two months to go, so in the meantime, let's celebrate!

Today I'm excited to offer a giveaway from Just Bunch Designs, an etsy shop that sells beautiful, original nursery collage prints.   Being a mom of two herself, Stephanie definitely has an eye for colorful children's art.  I love the way she mixes patterns and colors.  Here are a few of my favorites:

birds on a croc

 happy whale

I can fly elephant with balloons

I also love the kid's art for the bathroom.  My kids might need one of these reminders:

brush

Stephanie sent me a set of number prints, and they look so great in our new little playroom.  Oscar loves to count the objects in each picture.

Visit the Just Bunch blog, where Stephanie posts fun crafts and recipes.  I love her easy superhero mask (which comes with a free template!).

The giveaway this week is for three nursery prints of your choice!  If you'd love to win, please leave a comment on this post by midnight (PST), Friday, September 16th, and tell me your favorite print (or set of prints) from Just Bunch Designs.  

Giveaway Rules:  

• Only one entry per person.  If you accidentally enter more than once, please delete your duplicate comment(s).
• Contact information must be provided.  Either your profile must link back to a public blog, or you must include an email address on your comments.  Anonymous comments will be deleted. 
• One winner will be selected via random.org and announced on September 19th. 
• This giveaway is available to U.S. and international friends (yay!)

We're number one!

Ec 10, that is.

Fixing Our Sick Economy

Click here to read my column in Sunday's New York Times.

Update: My Harvard colleague Robert Barro has a related piece in the paper as well.

A Plan for Zero Unemployment

From economist Steve Allen:

There were 14m unemployed workers in August.  The $447b stimulus package could be used to generate a check of almost $32,000 to each and every one of them.  As a condition of receiving that check, they would be asked to work at some organization, for profit or nonprofit, for one year.  These jobs would last just as long as the stimulus package and some of them would no doubt turn into real jobs.  Isn't this a plan everyone could support?

Paul Samuelson on Social Security

A friend calls to my attention this quotation from Paul Samuelson.  It is from a Newsweek column written in 1967, but it has some modern relevance.  Of course, at the time, Samuelson was not focused on the large unfunded liabilities we now face.

The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)!

How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.

More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.

Social Security is squarely based on what has been called the eighth wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived.

Warren Buffett's Taxes, again

I was disappointed to hear the President tonight raise the canard about Warren Buffett's allegedly low tax rate.  The story is, at the very least, deeply misleading.  I addressed the issue several years ago in this column.

an even easier diaper wipes case

There is no fooling you guys - most of you were spot on with your guesses about Ruby's costume in the last post.   I'll wait until I've actually sewn something wearable before I make a reveal though Snow White or Wonder Woman?  I'm sure you'll lose sleep over the anticipation.  :)

This week I made a diaper wipes case for a friend's baby shower,  but I wasn't in the mood for hot-gluing (every once and a while I like to save my fingertips).

Instead, I got out my vinyl and cut an all-over pattern using my Silhouette machine.    The front had the pattern only, fudged slightly on that center flap.

The back has the same pattern repeated, and the mommy-to-be's last name in the center.  I doubt she'll ever grab the wrong case at the playground now.

You don't need a Silhouette to make one of these (although that certainly makes the process quicker and more precise).   Vinyl can always be cut by hand, and I think even Contact Paper would work well.  I recommend using a premium or outdoor vinyl if you can get your hands on it, since the adhesive is stronger and hold up to more abuse.

I saved my template pieces for the front and back of the case, so let me know if you'd like me to post them!
UPDATE:  You can find the wipes case template posted HERE.

Austan Goolsbee plays...

Wait, wait, don't tell me.  Very funny.

Economics Teaching Conference

I have mentioned this event before, but organizers tell me there are still a few open slots for this conference at the end of October.  I am among the keynote speakers.

any guesses?

The fabric for Ruby's Halloween costume arrived today (yes, I know it is early, but with Oscar having an October birthday, I'm trying to get a jump on things).

Lots of metallic spandex, a bit of sequined knit, and a splash of gold faux leather, just for good measure.

Any guesses?

Something for Nothing

Maybe it is narcissistic of me, but I have a soft spot for novels by and about economists (a small genre, to be sure).  I enjoyed this new one by Michael Klein.

Reflections of a Former Student

Ed Balls is a prominent British politician.  He is now the shadow chancellor, which means he is the chief economics spokesman for the opposition Labour Party.  Long ago, however, he was a student of mine, as he notes in this essay on the current global economy.

chalkboard contact paper

Here I go, jumping on the chalkboard bandwagon ...

We recently moved into a new house, but since we are still renting, I can't really go crazy with the chalkboard paint.   We did, however, purchase the refrigerator, so I went ahead and ordered a roll of chalkboard contact paper, hoping it would do the trick.

It is so easy, and really works like a real chalkboard.  And did I mention it is easy?  You literally peel and stick (you can also pull it off and reposition).

I cut off a big piece for the kids to doodle on for the bottom of the fridge, and used my Silhouette to cut a smaller, prettier shape (you can run contact paper through the machine just like vinyl) to make notes on up top ... grocery lists, love notes, or whatever else springs to mind.

For best results, prep the chalkboard by rubbing a piece of chalk all over the surface, then erase, and repeat.   Now you're ready for maximum doodling!   My kids love it, and I love not having them attached to my leg while I'm trying to fix lunch.

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Theory versus Practice

Click on graphic to enlarge.

Ten Principles of Economics, in Limericks

From Dr. Goose.