President Obama Appoints Betsey Stevenson to the CEA

Some big news: the White House has recently announced that the newest member of the Council of Economic Advisers will be my favorite economist, and a long-time friend of this blog, Betsey Stevenson.  She'll be joining Harvard's Jim Stock and the newly announced CEA Chairman, Jason Furman on the three-member council,  which serves as the President's main source of advice on economic policy. 

When I say that I'm thrilled about this news, I'm speaking not just as a dismal scientist, but also as Betsey's co-author, colleague, co-parent and domestic partner.  The CEA has a special role as a bridge between ivory tower academic economists and the levers of public policy.  They're our best hope for ensuring that the sharpest insights of economists can elbow past the political machinations that dominate D.C., and the list of past CEA members reads like a who's who of the economics profession.  And there's never been a more important time to be working as a labor economist than during a period of mass unemployment.

Honestly, I'm about as proud as an economist is allowed to be.

The Economics Revolution Will Be Televised

There’s a revolution underway in economics. It’s not due to the financial crisis, but rather something more mundane: Data, and computing power. At least that’s the claim that Betsey Stevenson and I make in our latest Bloomberg View column:

“Consider the stream of data you will create today. Your metro card will record what time you caught the train. Your Web browser will note how you go about your job, and how much you procrastinate. A mid-afternoon purchase at Starbucks will reveal your penchant for lattes and the occasional cookie. Your flow of e-mail traffic will trace out your professional and personal networks.

At the same time, computing power has made it extremely easy and cheap to analyze all the data you produce. An economist with a laptop can, in a matter of seconds, do the kind of number crunching it used to take a roomful of Ph.D.’s weeks to achieve. Just a few decades ago, economists used punch cards to program data analysis for their empirical studies.”

Two weeks ago, Harvard’s Raj Chetty gave a spectacular talk at the National Bureau of Economic Research, about what he called “The Transformative Potential of Administrative Data.” He documented that today’s cutting-edge research is based on crunching newly-available data from the vast databases which underlay our schools, welfare state and tax systems.  I’m just as optimistic that new data coming online from the private sector will prove to be just as useful.

The Secret Consensus Among Economists

If you follow the economic policy debate in the popular press, you would be excused for missing one of our best-kept secrets: There’s remarkable agreement among economists on most policy questions.  Unfortunately, this consensus remains obscured by the two laws of punditry: First, for any issue, there’s always at least one idiot willing to claim the spotlight to argue for it; and second, that idiot may sound more respectable if he calls himself an economist. 

How then can the quiet consensus compete with these squawking heads?  A wonderful innovation run by Brian Barry and Anil Kashyap at the University of Chicago’s Booth School Initial on Global Markets provides one answer: Data.  Their “Economic Experts Panel” involves 40 of the leading economists across the US who have agreed to respond on the economic policy question du jour.  The panel involves a geographically and ideologically diverse array of leading economists working across different fields.  The main thing that unites them is that they are outstanding economists who care about public policy.  The most striking result is just how often even this very diverse group of economists agree, even when there’s stark disagreement in Washington. 

That observation is the starting point for my latest column with Betsey Stevenson

Tax Deductions or Tax Expenditures?

Chances are, you’re going to spend tonight finalizing your taxes, making sure that you ferret every last deduction. And probably pretty pleased to be getting these deductions; but when you dig in a bit deeper, you may not be so sure — at least that’s what Betsey Stevenson and I argue in our latest column.

In fact, tax breaks are no different from either government handouts, or federal mandates, whether evaluated in terms of your finances, the government’s finances, or incentives:

Instead of looking at all the breaks for mortgage interest, health care, retirement savings and so on as deductions, picture the government writing you a check for each item. This equivalence between tax deductions and government spending leads economists to call them “tax expenditures.” Reformers have hit on an even more pointed description: spending through the tax code.

Our Labor Market Malaise

A lot of us were disappointed in the latest jobs report. Non-farm payrolls grew by only 54,000. By contrast, a good recovery requires growth of several hundred thousand jobs a month. But my dinner table conversations with Betsey helped me put it in perspective. (And yes, given her current job, this explains the somewhat political nature of this post.) Her comparison: Through the entire eight years of the (Dubya) Bush administration, non-farm payrolls grew by an average of only 11,000 per month. OK, the Great Recession explains some of this. But not a lot. Let’s cherry-pick the most favorable sample we can, focusing on the period through to the absolute peak in employment, which occurred in January 2008. This still yields average jobs growth of only 66,000.

Congratulations Betsey!

I can't tell whether I'm writing this as a very proud significant-other, a jealous co-author, or a pleased colleague, but whatever it is, I can't resist passing on some good news: Betsey Stevenson recently learned that the Labor and Employment Relations Association is awarding her the John Dunlop Scholar Award, typically awarded to a labor economist in the first decade of their careers. The award is "to recognize outstanding academic contributions to research by recent entrants to the field." It's a very flattering acknowledgment, and she's following in the footsteps of Jon Guryan, Alex Mas, Nick Bloom, David Lee, Marianne Bertrand, Armin Falk and David Autor, among other labor luminaries.

Subjective Well-Being Inside the Obama Administration

An interesting observation about the potential policy impact of "happiness economics" in this weekend's Financial Times from the always-astute Tim Harford...

Betsey Stevenson Answers Your Questions

We recently solicited your questions for Betsey Stevenson, a sometimes Freakonomics contributor and newly minted Chief Economist of the Department of Labor. Your questions were excellent and varied, and Betsey's responses cover everything from persistent unemployment to parental leave. Thanks to Betsey and everyone who participated.

A Labor Economist Goes to Washington: Bring Your Questions for Betsey Stevenson

The Freakonomics blog will have to do without Betsey Stevenson for the next year as she'll be serving as the Chief Economist of the Department of Labor (DOL). Betsey has agreed to answer your questions about her new position.

She Wins!

Jezebel, the blog devoted to "celebrity, sex, fashion," has just referred to the "hippest-economist-ever Betsey Stevenson."