Tag Archives: economics

Chart of the Week: The Business of Halloween

Measured by spending, Halloween is the second largest holiday in the U.S. after Christmas. The National Retail Federation estimates that Americans will spend $7.4 billion dollars celebrating Halloween this year. In total, 74% of households will buy something for Halloween and, among those, the average will spend $125.

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There’ll be a bumper crop of pumpkins, more than ever before, and worth about $149 million dollars.

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A full two-thirds of the population will buy a costume, spending an average of $77.52 each. That’s a record in terms of both spending and the sheer number of costumes sold.

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Interestingly, the holiday has evolved from primarily a children’s holiday to one celebrated by adults, especially millenials. Less than half of the money spent on costumes is going to costumes for children. Adults dress up (to the tune of $1.4 million) and their dress up their pets ($350 million). They also throw parties for other adults and patronize bars and clubs, which increasingly feature Halloween-themed events, food, and drinks.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

How (Some) Economists Are Like Doomsday Cult Members

Four years ago, twenty-three economists (mostly conservative) signed a letter to Ben Bernanke warning that the Fed’s quantitative easing policy – adding billions of dollars to the economy – would be disastrous. It would “debase the currency,” create high inflation, distort financial markets, and do nothing to reduce unemployment.

Four years later, it’s clear that they were wrong (as Paul Krugman never tires of reminding us). Have they changed their beliefs?

Of course not.

Bloomberg asked the letter-signers what they now thought about their prophecy.  Here’s the headline: “Fed Critics Say ’10 Letter Warning Inflation Still Right.”
This despite the actual low inflation:

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I don’t know why I assume that high-level economists would be more likely than some ordinary people to change their ideas to adjust for new facts. Fifty years ago, in The Structure of Scientific Revolutions, Thomas Kuhn showed that even in areas like chemistry and physics, scientists cling to their paradigms even in the face of accumulated anomalous facts. Why should big-shot economists be any different? It also occurs to me that it’s the most eminent in a profession who will be more resistant to change.  After all, it’s the people at the top who have the greatest amount invested in their ideas – publications, reputations, consultantships, and of course ego. Economists call these “sunk costs.”

So how do they maintain their beliefs?

Most of the 23 declined to comment; a few could not be reached (including Ronald McKinnon, who died the previous day).  Of those who responded, only one, Peter Wallison at the American Enterprise Institute, came close to saying, “My prediciton was wrong.”

“All of us, I think, who signed the letter have never seen anything like what’s happened here.”

Most of the others preferred denial:

“The letter was correct as stated.” (David Malpass. He worked in Treasury under Reagan and Bush I)

“The letter mentioned several things… and all have happened.” (John Taylor, Stanford)

“I think there’s plenty of inflation — not at the checkout counter, necessarily, but on Wall Street.” (Jim Grant of “Grant’s Interest Rate Observer.” Kinda makes you wonder how closely he’s been observing interest rates.)

Then there was equivocation. After Thursday night’s debacle – Giants 8, Pirates 0, knocking Pittsburgh out of the playoffs– someone reminded me, “Hey, didn’t you tell me that the Pirates would win the World Series?”

“Yes, but I didn’t say when.”

Some of the letter-signers used this same tactic, and just about as convincingly.

“Note that word ‘risk.’ And note the absence of a date.” (Niall Ferguson, Harvard)

“Inflation could come…” (Amity Shlaes, Calvin Coolidge Memorial Foundation)

The 1954 sociology classic When Prophecy Fails describes group built around a prediction that the world would soon be destroyed and that they, the believers, would be saved by flying saucers from outer space.  When it didn’t happen, they too faced the problem of cognitive dissonance – dissonance between belief and fact. But because they had been very specific about what would happen and when it would happen, they could not very well use the  denial and equivocation favored by the economists. Instead, they first by claimed that what had averted the disaster was their own faith. By meeting and planning and believing so strongly in their extraterrestrial rescuers, they had literally saved the world. The economists, by contrast, could not claim that their warnings saved us from inflation, for their warning – their predictions and prescriptions – had been ignored by Fed. So instead they argue that there actually is, or will be, serious inflation.

The other tactic that the millenarian group seized on was to start proselytizing – trying to convert others and to bring new members into the fold.  For the conservative economists, this tactic is practically a given, but it is not necessarily a change.  They had already been spreading their faith, as professors and as advisors (to policy makers, political candidates, wealthy investors, et al.). They haven’t necessarily redoubled their efforts, but the evidence has not given them pause.  They continue to publish their unreconstructed views to as wide an audience as possible.

That’s the curious thing about cognitive dissonance. The goal is to reduce the dissonance, and it really doesn’t matter how.  Of course, you could change your ideas, but letting go of long and deeply held ideas when the facts no longer co-operate is difficult. Apparently it’s easier to change the facts (by denial, equivocation, etc.). Or, equally effective in reducing the dissonance, you can convince others that you are right. That validation is just as effective as a friendly set of facts, especially if it comes from powerful and important people and comes with rewards both social and financial.

Jay Livingston is the chair of the Sociology Department at Montclair State University. You can follow him at Montclair SocioBlog or on Twitter.

Minimum Wage Hikes Work

As workers battle to raise the minimum wage it is nice to see more evidence that doing so helps both low wage workers and state economies.

Thirteen states raised their respective minimum wages in 2014:  AZ, CA, CT, FL, MO, MT, NJ, NY, OH, OR, RI, VT, and WA.  Elise Gould, an economist at the Economic Policy Institute, compared labor market changes in these thirteen states with changes in the rest of the states from the first half of 2013 to the first half of 2014.

Economic analyst Jared Bernstein summarizes the results as follows:

[Gould] compares the 10th percentile [lowest earners] wage growth among these thirteen states that increased their minimums with the rest that did not. The results are the first two bars in the figure below.

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Real wages for low-wage workers rose by just about 1% over the past year in the states that raised their minimum wages, and were flat (down 0.1%) in the other states.

OK, but did those increases bite into employment growth, as opponents typically insist must be the case? Not according to the other two sets of bars. They show that payroll employment growth was slightly faster in states that raised, and the decline in unemployment, slightly greater.

In short, raising the minimum wage did boost the earnings of those at the bottom of the income distribution.  Moreover, workers in states that raised the minimum wage also enjoyed greater employment growth and a greater decline in unemployment than did workers in states that did not.

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

Sat Stat: Staggering Graph Reveals the Cooptation of Economic Recoveries by the Rich

The graph below represents the share of the income growth that went to the richest 10% of Americans in ten different economic recoveries.  The chart comes from economist Pavlina Tcherneva.

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It’s quite clear from the far right blue and red columns that the top 10% have captured 100% of the income gains in the most recent economic “recovery,” while the bottom 90% have seen a decline in incomes even post-recession.

It’s also quite clear that the economic benefits of recoveries haven’t always gone to the rich, but that they have done so increasingly so over time. None of this is inevitable; change our economic policies, change the numbers.

Via Andrew Sullivan.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

For-Profit Colleges and the Conditions that Feed Them

One of the better things about social media is that if you manage to curate social feeds with just the right balance of entertaining spirits and brilliant intellects, it delivers unto you amazing content you would have otherwise missed.

I woke up one of these days — Sunday? Monday? I’m dissertating — to find dozens of messages from social media comrades about John Oliver’s take-down of for-profit colleges. You can watch it here:

It’s very satisfying.

It is particularly satisfying if you’ve experienced what education professor Kevin Kinser rightly points out is the oddly sporadic nature of public interest in a 100 year old institutional practice of selling education for profit. Oliver is one of the best in the entertainment-as-news genre. He reaches people that mainstream media does not. He makes difficult issues palatable for general, concerned audiences.

And if you think about debt, precarity, credentialism, and financial cronyism, like I do, it is gratifying to see someone like Oliver take on an issue most people could care less about until someone they care about borrows $50,000 for a veterinary assistant’s degree. Then they’re emailing you like the roof is on fire.

I do have a greater hope, though, than that something I study benefit from the spotlight of people like Oliver.

I wish we could talk about impoverished educations without ignoring impoverished conditions.

Here’s the thing, for-profit colleges have manipulated a system primed for manipulation. No doubt about that. But eliminating for-profit colleges does not eliminate the conditions that cause people to seek them out.

By and large, none of the people I have interviewed, observed or worked with is an idiot without agency. They have sometimes been lied to and led astray; occasionally they are bamboozled by sparkly advertising and aggressive sales tactics. They do sign documents they do not completely understand and they trust authority that has little incentive to counsel as opposed to sell. All of that is true.

But most students picked up the phone to “call today; start tomorrow” because they have been unemployed, underemployed, marginalized, and otherwise made vulnerable by socio-economic conditions.

So, by all means, crib Oliver’s letter. It’s a doozy.

But maybe keep in mind that moving inequality around isn’t exactly the same as addressing inequality.

Tressie McMillan Cottom is a PhD candidate in the Sociology Department at Emory University in Atlanta, GA.  Her doctoral research is a comparative study of the expansion of for-profit colleges.  You can follow her on twitter and at her blog, where this post originally appeared.

Saturday Stat: New Orleans Weathers the Great Recession

Partly because the city had just begun to recovery from Hurricane Katrina when the Great Recession began, it suffered less job loss relative to its pre-recession state and GDP actually grew 3.9% between 2008 and 2011. No other southern metropolitan area cracked 2% in the same period.

Charles Davidson, writing for EconSouth, offers the following evidence of New Orleans’ resilience in the face of the Great Recession. Chart 1 shows that it lost a smaller percentage of its jobs than the U.S. as a whole.

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This is even more significant as it looks, as New Orleans had been in economic decline for decades before Katrina.  Davidson reports that “the economy in New Orleans has reversed decades of decline and outperformed the nation and other southern metropolitan areas.  Consider: the job growth in New Orleans shown in Chart 2 may not look impressive, but compare it to the extraordinary declines of its neighbors.

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Thanks to greater diversification of its economy, record tourism, and rising investment money, the city may be setting itself up for a revival.

Cross-posted at Pacific Standard.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Saturday Stat: 23% of U.S. Children Live in Poverty

If the well-being of our children is an indicator of the health of our society we definitely should be concerned.  Almost one-fourth of all children in the U.S. live in poverty.

The Annie E. Casey Foundation publishes an annual data book on the status of American children.  Here are a few key quotes from 2014 (all data refer to children 18 and under, unless otherwise specified):

  • Nationally, 23 percent of children (16.4 million) lived in poor families in 2012, up from 19 percent in 2005 (13.4 million), representing an increase of 3 million more children in poverty.
  • In 2012, three in 10 children (23.1 million) lived in families where no parent had full-time, year-round employment. Since 2008, the number of such children climbed by 2.9 million.
  • Across the nation, 38 percent of children (27.8 million) lived in households with a high housing cost burden in 2012, compared with 37 percent in 2005 (27.4 million).

As alarming as these statistics are, they hide the terrible and continuing weight of racism.  Emily Badger, writing in the Washington Post, produced the following charts based on tables from the data book.

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Children live in poverty because they live in families in poverty.  Sadly, despite the fact that we have been in a so-called economic expansion since 2009, most working people continue to struggle.  The Los Angeles Times reported that “four out of 10 American households were straining financially five years after the Great Recession — many struggling with tight credit, education debt and retirement issues, according to a new Federal Reserve survey of consumers.”

Martin Hart-Landsberg is a professor of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

What Does It Mean to be Authentically Cajun?

Flashback Friday.

The term “Cajun” refers to a group of people who settled in Southern Louisiana after being exiled from Acadia (now Nova Scotia, New Brunswick, and Prince Edward Island) in the mid 1700s.  For a very long time, being Cajun meant living, humbly, off the land and bayou (small-scale agriculture, hunting, fishing, and trapping).  Unique cuisine and music developed among these communities.

In Blue Collar Bayou, Jaques Henry and Carl Bankston III explain that today more than 70% live in urban areas and most work in blue collar jobs in service industries, factories, or the oil industry. “Like other working-class and middle-class Americans,’ they write, “the Southwestern Louisianan of today is much more likely to buy dinner at the Super Kmart than to trap it in the bayou” (p. 188).

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But they don’t argue that young Cajuns who live urban lifestyles and work in factories are no longer authentically Cajun.  Instead, they suggest that the whole notion of ethnic authenticity is dependent on economic change.

When our economy was a production economy (that is, who you are is what you make), it made sense that Cajun-ness was linked to how one made a living.  But, today, in a consumption economy (when our identities are tied up with what we buy), it makes sense that Cajun-ness involves consumption of products like food and music.

Of course, commodifying Cajun-ness (making it something that you can buy) means that, now, anyone can purchase and consume it.  Henry and Bankston see this more as a paradox than a problem, arguing that the objectification and marketing of “Cajun” certainly makes it sellable to non-Cajuns, but does not take away from its meaningfulness to Cajuns themselves.  Tourism, they argue, “encourages Cajuns to act out their culture both for commercial gain and cultural preservation” (p. 187).

Photos borrowed from GQ, EW, and My New Orleans.  Originally posted in 2009.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.