Pursuit of Truthiness

my gut tells me I know economics

Archive for the ‘about me’ Category

Who Pays the High Health Costs of Older Workers? Evidence From Prostate Cancer Screening Mandates

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After a 2-year journey through the journal system, chapter 2 of my dissertation is now published in Applied Economics. The paper focuses on one specific mandate that mostly benefits men over 50. I find that the cost of this mandate is passed on to men over 50 in the form of lower wages. Some men also lose access to employer insurance altogether.

Some of the general lessons from my work so far:

1) There are no free lunches: getting higher benefits means incurring higher costs

2) Laws passed with good intentions can backfire, hurting the very people they are intended to help

3) Employer-based health insurance messes up labor markets

Written by James Bailey

August 21, 2014 at 4:14 pm

Job Market Thoughts: Getting an Academic Job Coming Out of a Low-Ranked Program

*This post is meant to organize my thoughts on the economics job market I just went through ahead of a presentation on the market I will give to younger Temple grad students, but it may be useful for others*

The Basic Story

I went on the economics job market this year, my 5th year at Temple. I expected the market to be difficult, since academic economics is fairly hierarchical, rankings-obsessed, and pedigree-driven, and Temple was dead last in one recent ranking of graduate programs (though for the record, I think the department would do better in updated rankings). I applied broadly to academic jobs in the US, sending out about 120 applications; I did not apply outside of the US or academia. I had 12 job interviews, 2 flyouts, and one job offer. I will start as an assistant professor of economics at Creighton University this fall. I am happy with this placement: Creighton is a good school, one which impressed me more every time I learned more about it or interacted more with the people there. The teaching load is a decent 3-2 (3 classes in the Fall, 2 in in the Spring), and the money is very good.

I credit my relative success primarily to three things: getting two papers published, picking a hot field (Health Economics), and being willing to search broadly. I hope you notice that the second two things take essentially no effort on your part, so I highly recommend them.

I’m going to try to describe what went right and wrong on the market. I think it is good to hear lots of people’s stories; even as someone who had read many guides to the job market and listened to many stories, I found plenty to be surprised about.

Managing Expectations

You can definitely get a tenure-track academic job with a low-ranked economics PhD (we do have it good compared to other fields). The only question is how good the job will be. I tried to go in with low expectations, telling myself I had to be satisfied with a job teaching a 4-4 at West Podunk State, since in the grand scheme of things any tenure-track job is a good one. John List is our hero from going from grad school at Wyoming to being a professor at Chicago, but even he had to work his way up from an initial placement at Central Florida. You have to be truly excellent and/or lucky to place at a school as good as the one you are graduating from, much less a better one.

Apply Broadly

This doesn’t mean you shouldn’t apply to the better schools; applying usually only costs you a few minutes, and you never know what might happen. I was pleasantly surprised when I got 5 interviews at research schools (schools where the econ department has a PhD program), and stunned that one of them was from an Ivy League school with a top-10 econ department.

But applying broadly cuts both ways. Think three times before deciding you are above a certain job and so shouldn’t apply. First, the job might be better than you think- a lot of details only become clear in the interview (eg, some schools had much higher or lower teaching loads than I expected). Second, you might not do as well as you think- try to imagine whether you would really turn this department down if the job market has run its course and they are your only offer. Finally, getting more interviews and flyouts means more practice for you- within limits, limits us low-ranked people are unlikely to exceed, more interviews are better.

Pick a Good Field

Health, environmental, and urban are hot right now; theory and economic history are not. There are a lot of openings in general applied/empirical micro (which includes health, labor, and many other subfields), but there are also a lot of candidates. I was surprised by the extent to which field mattered. More than half of my interviews, and all of the best ones, were for positions that were only hiring in health. I also do labor economics and applied econometrics, but had only one interview for a labor-only position and one for econometrics-only. I had an even lower success rate with the open field and applied micro positions- 4 interviews, even though these made up the vast majority of positions I applied for.  It would have made sense to put more time into tailoring my applications to the health-only positions.

Your Advantages

You may not believe it, but there are some advantages to coming out of Temple. We get the chance to teach our own classes early and often, which is not common at higher-ranked schools; this can give us a big advantage when applying to teaching schools. Even better, sometimes the very fact that Temple is low-ranked can help you. Interviewing is difficult and costly for the schools too; schools can only interview 20-30 candidates at AEA’s, and fly out 2-6 candidates to campus. Most places are not trying to pick the absolute best economist on the market to offer a job to, because they know that person will turn them down. They want to pick the best economist who has a good chance of actually going to their school, and staying there.

As Thomas Schelling pointed out, in bargaining weakness can be strength. In this case, the weakness of your school strengthens your ability to credibly say you will accept an offer if the school gives you one. I was shocked to find out that even we can  end up being too good for our own good: I had a preliminary interview at the Southern Economic Association where the entire 40 minutes was them talking up the school and trying to figure out if I would actually be willing to come there; this no West Podunk State, but they were convinced that with my publications I would do better.

You Are A Human Being

We seem to forget this in grad school, stricken by the optimizer’s curse. The optimal behavior for succeeding in grad school, especially during coursework, is to become a boring math robot. But boring math robots are not who interviewers want to talk to and work with. During the job market, schools seem to select for confident but kind extroverts with good social skills. I sometimes struggled to be talkative, extroverted, and empathetic enough during flyouts. So try to regain your humanity as you near the job market.

You are more than your CV. I was surprised to see how important your overall life story can be on the market. When I told the interviewers at one school in a cold state that I grew up in Maine, they all paused to note this as a good thing- I could deal with the weather. I think Creighton was happy to hear that I had been willing to move to the midwest before, to go to college at the University of Tulsa. Several schools got to hear the story of how I met my wife in Nova Scotia. I hadn’t realized before having to explain it to interviewers that my life story was getting to be a complicated one, and that I have moved around an awful lot- Maine, Tulsa, Philadelphia, New Orleans, and West Florida, with a sprinkling of Nova Scotia and France. I think this helped with schools far from Philly (he’s been willing to move a lot before, so he should be willing to again) and hurt me with schools near Philly (one actually emailed me “there seems to be some confusion on our end as to which state you are currently living in”).

Jobs in Non-Economics Departments

Though I occasionally felt clueless about the market for jobs in economics departments, the markets in related fields were (and largely remain) a complete mystery to me.
Since my job market paper is about entrepreneurs, I thought I should apply for academic entrepreneurship positions. This field is young, so I don’t know if anyone understands it well yet. Most of the positions are in management departments.
As a health economist, I also applied to positions in schools of public health, usually in health policy & management departments. The market seems to run a bit later than economics. I’ve often heard that public health schools expect a larger quantity (and, according to economists, correspondingly lower quality) of publications, and this is clear in the job market- they ask applicants to send publications, rather than an unpublished job market paper. I encourage you to learn about the job market in other fields well ahead of time.

Mistakes:

Putting tailoring at the end of the cover letter, rather than the beginning (or both). If something makes you a particularly good match or particularly interested in them, hit them over the head with it- they aren’t going to carefully read 300 cover letters.

Do as little other work as possible during the fall of the job market. Teach as little as you can afford to (luckily, a Kauffman dissertation fellowship together with my wife kept me from being starving and homeless while I did no teaching last fall). I ended up coauthoring a whole paper during the fall, which reduced the time I spent on applications; this probably wasn’t smart.

Randomness

The whole process of the job market has a lot of weird elements. So much could depend on how tired someone on the search committee is when they get to your application, or when you walk in for your interview (once I got a big yawn from an interviewer right as they as their first question. I did not get the flyout). You will have to manage unexpected or misguided questions and comments. I got asked “illegal” questions (about marriage, kids, age) constantly; I laughed it off and answered them thinking it wouldn’t hurt me as a 20-something male with no kids. Even in hindsight I have little idea why some schools chose me for interviews and flyouts while others didn’t.

Start Now

My attitude on the job market throughout grad school was that no one was going to hire me just because Temple University gave me a PhD and some Temple professors had nice things to say about me. My goal was to get as many indications as I could from outside of Temple that I would be a good person to hire. This meant going after nationally-competitive fellowships, presenting at conferences, and above all publishing my work in academic journals. On the market I was pleasantly surprised how many people did know Temple and my advisors, but this is not something you want to rely on at a low-ranked place, and I don’t think I would have got either of my flyouts or any of the research-school interviews if I hadn’t published anything.

The Best Guides

There were 3 guides I kept coming back to every time I got to a new stage of the market. “The Academic Job Search Handbook” is a good general guide to the market. John Cawley’s AEA-recommended guide is a good economics-specific take on the market. Scaling the Ivory Tower is a wonderful bigger-picture guide of how to succeed in academia, written for classical-liberal students but applicable to everyone. I think this guide in particular (and the advice of the Institute for Humane Studies in general) is a big part of why I finished relatively quickly (5 years, compared to a median of 5.5 for econ nationwide and probably 7 at Temple) and with two publications.

I wish you good luck when your turn on the market comes.

Written by James Bailey

February 23, 2014 at 2:35 pm

Who Pays for Obesity?

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Is obesity a true social problem, or just a problem that many individuals face?

Should the government use Bloomberg-style coercive regulations to try to fight obesity, or stick to funding medical and public health research? What if many people really are happier eating whatever they want and drinking Big Gulps than being thin- what right does everyone else have to make their decisions for them?

One reason you might claim that right is to say “I pay for part of their health care, and obesity raises health costs”. Your income taxes do pay for Medicare and Medicaid. But one other reason you might think you pay for the health costs of others is that high-cost people covered by your insurer (like the obese, on average)  raise premiums for everyone else.

Jay Bhattacharya and Kate Bundorf, economists at Stanford’s med school, found that this is not the case in their 2009 paper. They show that obese workers receive lower wages at firms that offer health insurance to their workers, and that the difference in wages is about equal to the difference in health costs. By comparison, when firms don’t offer health insurance, obese workers make the same as everyone else. They interpret this to mean that obese workers pay for their own higher health costs in the form of lower wages.

But as the authors acknowledge, this isn’t necessarily the case. Firms that offer health insurance are pretty different; they offer higher compensation overall, and operate in different industries. It is possible that being obese makes you less productive at these firms, but not at the kind of firms that don’t offer insurance, and this is the reason for the wage differential.

My paper, forthcoming in the November issue of Economics Letters (ungated version here), shows that Bhattacharya and Bundorf got it right. Obese workers really do pay for their higher health costs in the form of lower wages. I take advantage of state laws that require health insurance to cover diabetes. Because diabetes is about four times as prevalent among the obese, these laws raise the cost of insuring obese people relative to others. After these laws are passed, wages go down for obese workers with employer-provided health insurance by roughly the expected cost of diabetes treatment (the wage decrease is relative to non-obese workers and obese workers in states that didn’t pass the law). This means that obese workers are paying for their own higher costs rather than passing them on to you.

Most Americans are insured through their employers. This means that if obese people are passing their health costs on to others (causing an externality), it is through the smaller sectors of individual insurance, charity care, and government insurance. I leave it to you to decide whether the possibility that 10-15% of people pass on weight-related health costs to others means no one should have Big Gulps. Perhaps you can implement an ID system, where you can get the get the food and drink you want as long as you show your employer-based insurance card or step on a scale. Or not.

If despite this blog post, you would like to read more on the subject, check out  Bhattacharya and Sood’s overview in the Journal of Economic Perspectives (JEP is wonderful- totally free and often understandable to non-economists).

9 Books Which Have Influenced Me Most

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1. Icelandic Sagas, especially the Grettis Saga.  I admit I was pretty silly at age 18, but the tales are engaging and show how people can live and prosper in essentially stateless societies.

2. Proust, Recherche des Temps Perdu.  For the account of interior life.  Vastly superior in the original French.

3. Spinoza, Tractatus Theologico-Politicus.  It was after reading this that I realized the great books were becoming my friends.

4. Herbert Spencer, Social Statics.  Ideas don’t always imply what you may think.  Spencer’s premises are so close to those of Darwin and Marx yet his reasoning leads to very different conclusions.

5. Michel Foucault, The Order of Things.  Everyone reads Discipline and Punish but Foucault’s best insights are found here.

6.Douglas Hofstader, Gödel, Escher, Bach.  I would have got more out of this had I finished high school math first.

7. Roger Penrose, The Emperor’s New Mind. Thought-provoking but in the end I was not convinced.

8. Sir Arthur Conan Doyle, The British Campaign in France and Flanders: 1914. All his war journalism is excellent, however in this book above all one gets the sense that Conan Doyle wants to tell the story of a few heroic characters but is unable to do so as they keep dying too quickly. Just as the Great War challenged ideas of what military conflict meant, so too did it challenge conventional ideas of heroism and narrative.

9. Neal Stephenson, Snow Crash.  For the internet, for the microstates, for the Babylonian-Pentecostal mind control, but most of all for reshaping my idea of what protagonists could be named.

Just Kidding!!!

I’ve only even read the last two.  Some of the others are on the to-read list, especially GEB.

Do check out the link though, the idea is hilarious.

Written by James Bailey

April 5, 2010 at 5:02 pm

Returns to Like-Mindedness and Diversity

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I’m spending this week at a seminar put on by the Institute for Humane Studies, which involves people listening to lectures on lots of topics from a libertarian perspective and drinking free beer.  It is odd being in a place where most people around me also love to talk about economics and libertarianism, since the vast majority of Americans are not libertarians or economics majors.  But is this newfound consensus a good thing?

In some ways its great; conversations can flow at a much higher level when you can presume that most participants have taken the same classes and read the same books.  There aren’t many other places people laugh at my “how many Austrian economists does it take to screw in a light bulb?” jokes.

On the other hand, there is the potential for “groupthink”, the lack of imagination and the lazy arguments that are so easy to succumb to when there is no real live person to represent opposing views.  So a diversity of opinion can be good just to keep everyone on their intellectual best behavior.

But there can be a greater benefit to diversity than merely avoiding groupthink.  Sometimes the interplay between varying ideas allows great progress to be made; there can be an intellectual division of labor and specialization.  Richard Feynman said that other physicists thought him a math genius, but in reality he was not better at math than them, he just had a different approach; and though their approaches may be equally good on the whole, they would only come to him with problems to which their approach had failed.  There’s no reason this can’t apply in economics, or even to some extent in political philosophy.

Another way of thinking about this is the diminishing marginal returns of a political philosophy; perhaps a conservative could come here and argue libertarians out of the worst 10% of their ideas, or vice-versa in the real political world if a minority of libertarians can keep the worst 10% of the ruling party’s ideas from becoming policy.

Written by James Bailey

July 12, 2009 at 5:51 pm

Thought Catalyst

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Brain output is quite variable, presumably because brain input is similarly variable.

So when is it that you think best?

For me, its in math classes.  My brain recognizes the diffuculty of the problems being presented, calls up the reserve power, then proceeds to apply it to any problem except the one being presented.  I should really just hang out in math classes all day without taking them and their associated grades.

Written by James Bailey

July 7, 2008 at 2:49 pm

Economics Subfield Interests

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Like all areas of inquiry in the modern era, economics has been broken off into progressively narrower subfields, so that as the sum of human knowledge expands people can still feel as if they have mastered their “field”, however narrowly it has been defined.

With a healthy supply of youthful arrogance and naiveté, I hope I can reach a much broader understanding.

So what is worth studying in economics?

The practical answer is: econometrics. Econometricians are able to use their knowledge of economics, math and statistics to draw inferences from mounds of raw data. In the era of the internet, data is becoming ubiquitous, so its analysis is at a premium; econometricians can go into government, academia, or even the private sector.

The ambitious (power-craving) answer is: Applied macroeconomics. This is the most sure stepping stone to obtaining powerful, unelected government positions in the Federal Reserve, Treasury, or Council of Economic Advisers.

The ambitious (important mystery-solving) answer is: Development, health care, or macroeconomics. These fields each study complicated systems which effect just about everyone in the world. They are each fields into which many highly intelligent and driven people have poured their lives into studying; these people have discovered some simple rules, but the fields remain full of problems that have not been fully solved. These are the fields where the biggest payoff to society at large would accrue if they were to be “figured out”.

Our approach to each of these, especially health care, is likely to undergo sweeping changes in the near future. There is broad agreement of the need to reform health care policy, but very little agreement or understanding of what these reforms could look like. It is extremely possible that the desire for change, the pent-up political will, will be spent making a bad system worse. I hope that when the health care revolution comes, I will be at the policy-wonk barricades fighting for brighter, better-utility future.

Written by James Bailey

June 9, 2008 at 5:27 pm