Employment Rate: Aged 25-54: All Persons for the United States And Something About GDP

One weakness of the unemployment rate is that if people drop out of the labor force they cannot be counted as an unemployed person and the unemployment rate goes down. They are no longer actively seeking work and it might be because they are discouraged workers.

We could look at the employment to population ratio. But that includes everyone over 16 and that means that senior citizens are in the group but many of them have retired. The more that retire, the lower this ratio would be and that might be misleading.

But we have this ratio for people age 25-54 (which also eliminates college age people who might not be looking for work). To see this chart Click on the link from the Federal Reserve Bank of St. Louis.




They have the data up to March of this year, when 77.21% of those 25-54 year were employed. It was 79.81% in December of 2007, when the recession started. It probably has come up since March, but is still likely below 79.81%. Notice that it dropped quite a bit as a result of the recession but it has been coming back up the last few years.

Now to GDP. In Macro, I talked about Simon Kuznets. Click here to see some info about him from nobelprize.org. It mentions that he was born in what is now Belarus. Here is some info about his contributions that led to his Nobel Prize in economics:

"Extensive research on the economic growth of nations, developed methods for calculating the size of, and changes in, national income."

Gross domestic product grew at a 3.9% annual rate in the second quarter-previous estimate was 3.7%!

See U.S. 2nd Quarter GDP Grows 3.9%: Revised estimate shows economy entered 3rd quarter on strong note, but output could be moderating from the Wall Street Journal. Excerpt:

"The U.S. economy entered the third quarter of the year on a strong note, but recent data suggests output could be moderating over the final six months of 2015.

Gross domestic product, the broadest measure of goods and services produced across the economy, grew at a 3.9% seasonally adjusted annual rate in the second quarter, the Commerce Department said Friday. The agency had previously estimated a 3.7% expansion.

Economists surveyed by The Wall Street Journal had expected a 3.7% rate of growth, unchanged from the earlier estimate.

The Commerce Department has been steadily raising its estimate for the second quarter. The agency first pegged growth at 2.3% in July, before twice revising it upward."

That might not seem like a big deal, just .2% more than before. In my macro courses we read a chapter in the book The Economics of Macro Issues. The chapter discussed how nations with common law systems, where property rights are better protected than in nations with civil law systems, have higher growth rates. I pointed out to my classes that even a small difference in growth rates ends up causing a very big difference in per capita incomes due to the annual compounding effect.

The table below shows how much per capita income would be at various rates after 100 and 200 years. Assume we start with a per capita income of $1,000. If we grow 2.0% per year, after 100 years it will be $7,245. At 2.1% per year, it would be $7,791 or about $700 more. That is how much that little .1% matters. The difference over 200 years is about $11,000. After 100 years at 2.5% per year, per capita income would be $11,814. That is $4,000 more than the 2.0% rate. Small differences in growth rates add up to big differences over time.

Using the latest GDP figures for another example, if we grow 3.9% a year for the next 30 years, and if per capita GDP now is, say, $50,000, it would reach $157,557. But if it only grows 3.7% for 30 years, per capita GDP would be $148,707. That is about $10,000 less than if we grow 3.9%

Per Capita Income After 100 and 200 Years At Various Annual Growth Rates (Starting With $1,000)

Are These College Students Causing A Negative Externality?

See City of Colleges Takes Heat for Proposed Student Housing Ban by Amy Anthony of the Associated Press. Excerpts:

"Each fall, thousands of students flock to the city's many colleges, filling its large old homes and, sometimes, holding loud parties. Now a proposal to keep too many of those students from living together has drawn the ire of civil liberties advocates.

Providence [Rhode Island] officials are considering a zoning law that would limit the expansion of student housing in the city, the state's capital, including in neighborhoods near Providence College, a private Roman Catholic university, and Rhode Island College, a public institution. Specifically, the proposed law would prohibit more than three college students from living in a single-family home.

Democratic Councilwoman Jo-Ann Ryan, who represents and lives in the Elmhurst neighborhood near Providence College, said she introduced the legislation at the request of neighbors "completely and totally frustrated with the partying."

A wild party Sept. 5, part of an annual tradition at Providence College in which students celebrate the new academic year, resulted in dozens of arrests. The celebration has grown over the years to include students from the city's other schools, which include the Ivy League's Brown University and the prestigious Rhode Island School of Design."

"Besides the partying, Ryan said, residents worry landlords are buying all the single-family homes in her area to rent them to students.

"Those houses are getting snatched up, and they're creating mini-dormitories," she said.

But landlords say they've improved the neighborhood by remodeling once-vacant homes, leading to increased property values.

"Investors who have put over $2 million in rehab in that neighborhood have now been vilified and targeted, along with the students," said attorney Robert D'Amico, who owns several rental properties in Elmhurst.

D'Amico, who primarily rents to students, said the ordinance doesn't make sense.

"There is no direct correlation between the students living in single-family homes and the number of students roaming around the area and having red-cup parties," he said."

"Existing ordinances in Providence and Narragansett, home to a campus of the University of Rhode Island, allow police to put orange stickers on party houses, alerting landlords and tenants they'll be fined if police return because of disturbances."

'Spy car' worries raised by new Allstate patent

Click here to read the article by Becky Yerak of the Chicago Tribune.

The basic idea is that if you drive more safely, you have fewer accidents and insurance companies like that. Some of my students might recall one of the lessons from the supply and demand game. That was that one condition for markets to work optimally is that buyers and sellers have equal access to information. When they don't, markets won't work as well as they should.

For instance, in used car markets, the sellers know alot more about the product than the buyers. Economists have studied the problems this causes in the "market for lemons" research. If you want to sell your used car for $1,000, some people won't believe it is worth it. So they only offer maybe $800. If you believe your car is worth $1,000, you won't sell it. Then there are not enough sales in that market and the quantity is too low or sub-optimal. And many of the cars on the market are lemons.

But in insurance markets, buyers know more than the sellers. You know how risky you are but the insurance companies don't. Insurance companies want your premiums to reflect your risk. The riskier people need to pay higher premiums. If insurance companies can learn more about your driving habits, they can know better what to charge you.

Here is an excerpt from the article linked above:

"A patent issued earlier this month to Allstate mentions using sensors and cameras to record "potential sources of driver distraction within the vehicle (e.g. pets, phone usage, unsecured objects in vehicle)." It also mentions gathering information on the number and types of passengers — whether adults, children or teenagers.

And the Northbrook-based insurer isn't just interested in the motoring habits of its own policyholders.
Underscoring companies' interest in collecting and analyzing information on you, also known as big data, the patent also envisions gathering information on nearby cars so it can compare its policyholder's habits to other motorists in the area. The patent, called "traffic-based driving analysis," is for a server that will receive driving behavior data from sensors, cameras and other devices.

"So my car spies on me and on other drivers near me?" Bob Hunter, insurance director for the Consumer Federation of America and a former Texas insurance commissioner, said after reviewing the patent. "Even if I give permission for this intrusive technology, my car spies on unsuspecting passengers and even on unsuspecting pedestrians or cars passing by?"

Hunter wondered about the "liability for that intrusiveness" as well as the potential to pick up such sensitive data as ATM PINs. It's "the invasion of the spy car," he said.

Allstate said it filed the new patent a few years ago. Company spokeswoman Laura Strykowski said the "technology would provide drivers with broader information about traffic conditions and external factors that could better equip them to drive safe."

See also The EU Says Insurers Can No Longer Discriminate On The Basis Of Gender. Woman are generally safer drivers than men, so insurance companies charge men higher premiums. But the EU said they could no longer do this.

See also

Lose the Fat to Lower Your Insurance Rates
How Did Astronauts Of The 60s "Purchase" Life Insurance?

What happens if you give electricity away for free?

Here is the definition of a scarce good I use:

Scarce-A good or resource is scarce when the amount available is less than the amount people would want if it were given away free of charge.

The car maker Tesla offers a benefit to its customers: "Free charging at company-run stations is one of a handful of unique incentives aimed at Tesla owners."

That is from Tesla Owners Frustrated by Recharge Waits: Complaints about long lines to top-off batteries has sparked warnings to frequent users from the Wall Street Journal this past July.

"AMSTERDAM—Matthijs van Seventer won’t take his Model S electric sedan to the Tesla charging station in the southeast part of the city if he is in a hurry. The chargers are typically loaded with taxicabs serving Schiphol airport.

“It’s barely viable,” he said standing near a row of superchargers, which for Tesla owners are the equivalent of gas pumps to quickly recharge their battery-powered vehicles. “When I arrived there was just one spot left.”

Mr. van Seventer’s frustration reflects a rare rift in what has typically been a cozy relationship between Tesla Motors Inc. and its thousands of owners around the world."

"Even as Tesla has poured millions of dollars in creating a global network of free charges, owners of the $76,200 and up luxury sedans feel there still aren’t enough.

Mimi Kim Jamil recently slipped into the last spot at the San Juan Capistrano (Calif.) Supercharger station where there are eight stalls and plugged in her 85 kilowatt-hour Model S. A moment later, two other Model S drivers pulled in behind.

Superchargers can recharge 80% of an 85 kilowatt-hour battery in about 30 minutes. While that’s much longer than the about five minutes needed to refuel a gasoline-powered car, it is more than 10 times faster than a typical Tesla home charger.

“I felt bad for them,” Ms. Jamil said, noting that the other seven Model S sedans were unattended, a sign that their owners may be picking up items at the nearby shopping center while their cars charged. The two drivers needing to charge “were just waiting, waiting, waiting.”"

"Superchargers are too often being used by people who are driving around town instead of those needing energy for longer road trips, creating lines of people waiting for juice.

“There are a few people who are quite aggressively using it for local supercharging,” he said. “We’ll sort of send them just a reminder note that it’s cool to do this occasionally, but it’s meant to be a long-distance thing.”

That didn’t sit well with some owners, because use of the chargers is included in the price of a Tesla, and advertised as being “free for life.” While many of its rivals spend big money on advertising, Tesla has invested millions of dollars in charging stations meant to be an extra incentive for buyers to consider its pricey electric car."

Here is another article on this topic: Tesla could have a problem with one of the best things about owning its cars by Benjamin Zhang of Business Insider.

In a related story Trees Are Scarce In San Antonio!

Another Semester Has Started

Welcome to any new students.  The entries usually have something to do with a basic economic principle that is related to a recent news story. If you want to learn more about me go to Why is college so hard? (you may have to be patient with this site but the article is not long)

If that link is not working try this one

Barter & Money

In my macro classes we played a barter game. Each student got a list of 10 items they owned and 10 items they needed to get. Each list was slightly different. All trades had to be 1 item for 1 other item. I set the lists up so that there would have to be many indirect trades (a player who had apples and wanted oranges would not be able to find a player who had oranges and wanted apples right away-you would most likely have to trade apples to get bananas to get tomatoes and then eventually get your oranges). The time limit was 25 minutes and the more items on your needs list that you finished with the more extra credit you got.

The point was to show how much easier trade is with money, which acts as a medium of exchange. It is interesting to note what has passed for money in different circumstances where you might expect barter. It seems like one item can emerge as a medium of exchange if it is something that people generally want. Here are some cases:

Cigarettes were used as money in World War II prisoner of war (POW) camps.

Mackerel in U. S. prisons.

Snickers bars at the annual Rainbow Gathering.

How Does The Fed Prefer To Measure Inflation?

CPI vs. PCE: Untangling the Alphabet Soup of Inflation Gauges-Fed’s preferred measure of consumer-price growth may not be the one you think, but both have their place by Jo Craven McGinty of the WSJ. Excerpts:

"But when the Fed reviews economic conditions to decide what actions it will take to influence inflation and employment, it sets aside the century-old measure [CPI] in favor of something called the personal consumption expenditures price index [PCE].

The PCE includes a broader range of expenditures than CPI. It’s weighted according to data provided in business surveys, rather than the less reliable consumer surveys used to weight the CPI. And it uses a formula that adjusts for changes in consumer behavior that occur in the short term, something the standard CPI formula doesn’t do.

The result is a more comprehensive, if less familiar, gauge of inflation. That’s important for the Fed, which regards a small amount of inflation as a sign of a healthy, growing economy."

"Like CPI, PCE tracks changes in real prices paid by consumers for goods and services, but the two indexes differ in several important ways. For starters, the CPI, which typically is slightly higher than the PCE, captures only what urban consumers spend out-of-pocket for a common basket of goods and services.

“It represents what an average consumer buys in a typical year,” said François R. Velde, a senior economist with the Federal Reserve Bank of Chicago. “If it costs $1,000 this year and $1,200 the following year, it gives you an idea of how much the value of money has gone down.”

PCE, on the other hand, includes all goods and services consumed in the U.S. whether they are purchased by consumers or by employers or federal programs on behalf of consumers.

Medical expenses provide a good example of the differences in approach the gauges take. The CPI includes only the co-payments paid directly by consumers in its calculation, while the PCE captures co-payments as well as costs covered by employer-provided insurance and government programs."

"PCE, which is published by the U.S. Commerce Department’s Bureau of Economic Analysis, is derived from retail-sales data collected in business surveys, and in this data, medical care tends to carry the greatest weight. The CPI, on the other hand, is derived from consumer purchases reported in household surveys. Typically, consumers report spending more on shelter than anything else, giving that category more weight in the CPI."

"The CPI uses fixed weights generated from a basket of goods that is updated every two years, which doesn’t allow for the introduction of new products or price changes in the interim that might cause consumers to substitute one item for another.

The PCE accounts for this by using chained weighting. For example, if apples suddenly become very expensive, consumers may not buy as many. As a result, the apples will have one weight in one reporting period, and a different weight in the next. The chain-weight index essentially takes the average of the two."

What if companies pledge to adhere to social and environmental accountability guidelines?

See Etsy I.P.O. Tests Pledge to Balance Social Mission and Profit by HIROKO TABUCHI of the NY Times. Excerpts:

"Etsy is one of a growing number of companies, called B Corps, that pledge to adhere to social and environmental accountability guidelines set by a nonprofit organization called B Lab. And Etsy on Thursday became only the second for-profit company to go public out of more than 1,000 companies that have that certification."

“The success of our business model is based on the success of our sellers,” Mr. Dickerson said in an interview. “That means we don’t have to make a choice between people and profit.”

"It is also an experiment in corporate governance, a test of whether Wall Street will embrace a company that puts doing social and environmental good on the same pedestal with, if not ahead of, maximizing profits."

"Etsy declares in its public offering prospectus that it wants to change the decades-old conventional retail model of valuing profits over community. It states that its reputation depends on maintaining its B Corp status by continuing to offer employees stock options and paid time for volunteering, paying all part-time and temporary workers 40 percent above local living wages, teaching local women and minorities programming skills, and composting its food waste."

"If Etsy eventually reincorporates as a full-fledged benefit corporation, as required to do under B Lab rules, it could potentially become vulnerable to lawsuits from shareholders over any failure to achieve its social mission, in addition to the risk of potential litigation by shareholders over its fiduciary duties.

Still, “B Corps are reaching a tipping point in market acceptance,” said Jay Coen Gilbert, co-founder of B Lab, which assesses and certifies companies along social and environmental accountability standards. “The current shareholder model doesn’t meet the needs of entrepreneurs, business leaders and investors who want to make money and make a difference.”"

"B Lab has certified more than 1,000 companies in the United States as B Corps, including Patagonia, Warby Parker and Method. In addition, 27 states have adopted laws that can award companies status as “public benefit corporations,” letting them emphasize social or environmental concerns over profits, and more than a dozen others have introduced similar legislation."

"Under B Lab rules, companies incorporated in states with benefit corporation laws must eventually comply with their home states’ standards to maintain that benefit corporation status.

In Delaware, where Etsy is incorporated, even small shareholders of a public benefit corporation could sue the company, claiming it had failed to fulfill its social or environmental duties."

"B Corp legislation could allow companies to adopt values some would find objectionable and discriminatory, like religious beliefs, said Kent Greenfield, a professor at Boston College Law School. The Supreme Court justice Samuel A. Alito Jr., in his argument for last year’s Hobby Lobby ruling, cites B Corps as evidence that corporations can be religious.

“If you let companies opt in to their own set of obligations, there’s no constraint from them opting in to their view of ethics as something from the Old Testament,” Mr. Greenfield said."

In his book The Wealth of Nations, Adam Smith wrote about how self-interested people were led by the "invisible hand" to make society better off:

"But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestick industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the publick interest, nor knows how much he is promoting it. By preferring the support of domestick to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the publick good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it."

From the Online Library of Liberty.

The B Corps are suggesting that people start businesses to intentionally try to help society while Adam Smith thought society benefited more if people pursued their own self-interest.

Of course, Smith is more complex than this. Adam Smith's "other" book was called The Theory of Moral Sentiments. One point he made there was that we are able to sympathize with other people by trying imagine what they are going through. I wrote about that in a post once called Science Proves That Adam Smith Was Right Over 200 Years Ago (sort of)

Do Tax Rates Affect Where Tennis Players Decide To Live?

See How Tennis Stars Handle the Tax Man’s Topspin: Players like Nadal and the Williams sisters show excellent footwork when protecting their income by Allysia Finley (from the WSJ in January). Excerpts: 

"The top five French players on the men’s circuit—Jo-Wilfried Tsonga,Gael Monfils,Gilles Simon,Julien Benneteau and Richard Gasquet, as well as Germany’s Philipp Kohlschreiber, all claim residence in Switzerland, ostensibly to avoid paying their home countries’ punitive 45% top personal income-tax rates (not including surcharges or social-security contributions).

Many Swiss cantons assess taxes on the living expenses of foreign high-rollers (typically fives times the market rate for renting out their residence) rather than on their income. As a result, Switzerland has become a tax haven for thousands of wealthy Europeans. Maybe New Jersey Gov. Chris Christie should consider applying the Swiss tax model in the Garden State. Jersey City might become the Geneva for New York’s professional athletes.

Yet the most popular haven for tennis players is the principality of Monaco, which doesn’t tax foreigners’ world-wide income. (French athletes choose Switzerland because la République Française taxes its citizens who live in Monaco.) Swedish tennis legends Bjorn Borg and Mats Wilander escaped to Monte Carlo during their primes in the 1970s and ’80s to dodge their home country’s 90% top marginal rate, which has since fallen to 57%. In 2002 Germany charged six-time Grand Slam title-winner Boris Becker with tax evasion for falsely claiming Monaco as his primary residence.

Today, Monaco is the putative home of many of the world’s top-ranked men and women players.  They include Serbia’s Novak Djokovic (1), the Czech Republic’s Petra Kvitova (4), Tomas Berdych (7) and Lucie Safarova (16); Canada’s Milos Raonic (8); Denmark’s Caroline Wozniacki (8); Bulgaria’s Grigor Dimitrov (11); and Ukraine’s Alexandr Dolgopolov (23). Players who hail from former communist countries are especially keen, it seems, on keeping their hard-earned money.

The U.S. has its own Monaco: no-income-tax Florida. It’s no coincidence that America’s top-ranked players Serena (1) and Venus Williams (18) and John Isner (21), as well as Russia’s Maria Sharapova (2) and Japan’s Kei Nishikori (5) live in the Sunshine State. So do twins Mike and Bob Bryan, who have won 16 Grand Slam doubles titles. Like the Williamses, they come from California, where the 13.3% state income-tax rate is the nation’s highest."

Odysseus Started The Industrial Revolution

Factory work may have been a commitment device to get everyone to work hard. Odysseus tying himself to the mast was also a commitment device. Dean Karlan, Yale economics professor explains how commitment devices work:

"This idea of forcing one’s own future behavior dates back in our culture at least to Odysseus, who had his crew tie him to the ship’s mast so he wouldn’t be tempted by the sirens; and Cortes, who burned his ships to show his army that there would be no going back.

Economists call this method of pushing your future self into some behavior a “commitment device.” [Related: a Freakonomics podcast on the topic is called "Save Me From Myself."] From my WSJ op-ed:

Most of us don’t have crews and soldiers at our disposal, but many people still find ways to influence their future selves. Some compulsive shoppers will freeze their credit cards in blocks of ice to make sure they can’t get at them too readily when tempted. Some who are particularly prone to the siren song of their pillows in the morning place their alarm clock far from their bed, on the other side of the room, forcing their future self out of bed to shut it off. When MIT graduate student Guri Nanda developed an alarm clock, Clocky, that rolls off a night stand and hides when it goes off, the market beat a path to her door."

 See What Can We Learn From Congress and African Farmers About Losing Weight?

Something like this came up recently in the New York Times, in reference to factory work and the Industrial Revolution. See Looking at Productivity as a State of Mind. From the NY Times, 9-27. By SENDHIL MULLAINATHAN, a professor of economics at Harvard. Excerpts:

"Greg Clark, a professor of economics at the University of California, Davis, has gone so far as to argue that the Industrial Revolution was in part a self-control revolution. Many economists, beginning with Adam Smith, have argued that factories — an important innovation of the Industrial Revolution — blossomed because they allowed workers to specialize and be more productive.

Professor Clark argues that work rules truly differentiated the factory. People working at home could start and finish when they wanted, a very appealing sort of flexibility, but it had a major drawback, he said. People ended up doing less work that way.

Factories imposed discipline. They enforced strict work hours. There were rules for when you could go home and for when you had to show up at the beginning of your shift. If you arrived late you could be locked out for the day. For workers being paid piece rates, this certainly got them up and at work on time. You can even see something similar with the assembly line. Those operations dictate a certain pace of work. Like a running partner, an assembly line enforces a certain speed.

As Professor Clark provocatively puts it: “Workers effectively hired capitalists to make them work harder. They lacked the self-control to achieve higher earnings on their own.”

The data entry workers in our study, centuries later, might have agreed with that statement. In fact, 73 percent of them did agree to this statement: “It would be good if there were rules against being absent because it would help me come to work more often.”"

The workers, like Odyssues, tied themselves to the mast to resist the temptation of slacking. This made it possible for factories to generate the large output of the Industrial Revolution.

Student loan delinquency is higher than for other borrowing

Click here to read the article. Excerpts:

"Student loans had a higher delinquency rate than credit cards, auto loans and home mortgages over the past three years, the Federal Reserve Bank of New York reported recently.

Outstanding student loans in the country have reached $1.16 trillion, an increase of $77 billion from a year ago. About 11.3 percent were in default – more than 90 days delinquent – in the last quarter of 2014, compared with 11.1 percent in the previous quarter.

By comparison, 3.5 percent of car loans were past due, as were just 3.1 percent of mortgage loans."

"Outstanding household debt increased to $11.83 trillion, a 1 percent rise over the previous quarter. Home mortgages and student loans, which increased by $39 billion and $31 billion, respectively, are the biggest contributors to the rise in debt.

The student loan delinquency rate – payments missed for fewer than 90 days – may be much bigger than the default rate shown in the report. An earlier report by the New York Fed said the delinquency rate for student loans was 21 percent in 2012."

"During the recent financial crisis, Americans reduced other debts but they continued education financing, according to the New York Fed.

“I’m not that surprised, too much, about the findings,” said Mike Branch, a certificated financial planner at Focus Financial, based in Minneapolis.

He does college-planning workshops for parents of high school students.

“Schools are selling kids the idea of student loans,” Branch said. “They tell those young students, particularly teenagers still at high schools, not to worry too much about the money because they can borrow. But those kids really have no idea what it takes to pay those loans back, and how much money they’ll have to make, and how that’s going to affect their lives after college.”"

Are Computer Programs Replacing Journalists?

See If an Algorithm Wrote This, How Would You Even Know? by SHELLEY PODOLNY of the NY Times.

In my macroeconomics class, we talk about the types of unemployment. Here is one of them:

Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs.

One example of this is when you are replaced by a machine. We don’t have as many bank tellers any more because people use ATMs. Another example is when there is a fall in demand for your product, so you get laid off, like with typewriters since people now use computers. A third example is geographical, when the jobs are not in your region of the country.

This article might be an example of this type of unemployment. Excerpts:

"these days, a shocking amount of what we’re reading is created not by humans, but by computer algorithms"

"Companies in this business aim to relieve humans from the burden of the writing process by using algorithms and natural language generators to create written content. Feed their platforms some data — financial earnings statistics, let’s say — and poof! In seconds, out comes a narrative that tells whatever story needs to be told."

"These robo-writers don’t just regurgitate data, either; they create human-sounding stories in whatever voice — from staid to sassy — befits the intended audience."

"when presented with sports stories [some written by humans, some by computers] ... study respondents couldn’t tell the difference."

"Then we have Quakebot, the algorithm The Los Angeles Times uses to analyze geological data. It was the “author” of the first news report of the 4.7 magnitude earthquake that hit Southern California last year, published on the newspaper’s website just moments after the event. The newspaper also uses algorithms to enhance its homicide reporting."

"90 percent of news could be algorithmically generated by the mid-2020s, much of it without human intervention."

The article even has a quiz you can take to see if you can tell the difference between a human written article and a computer written article. If journalists lose their jobs to computers, maybe professors are next. Are you even sure who or what wrote this blog post?

Here are two related posts:

Robot Journalists-A Case Of Structural Unemployment?

Structural Unemployment In The News-Computers Can Now Tell Jokes 

WHAT do you get when you cross a fragrance with an actor?

Answer: a smell Gibson.

Robot jockeys in camel races

50 College Majors With the Best Return on Investment

From Business News Daily. Excerpts:

"Topping this year's rankings were computer programming and entrepreneurship, both of which have average annual salaries of more than $85,000 for graduates and above-average job growth. Overall, degrees in information technology, computers programming/computer science, business/management, medical support, and retail and administration were the five categories that offer the largest return on investment."

Here is the top 10:

1. Computer programming, specific applications
2. Entrepreneurship/entrepreneurial studies
3. Network and system administration
4. Information technology
5. Computer software technology
6. Osteopathic medicine/osteopathy
7. Business/commerce, general
8. Computer systems networking and telecommunications
9. Business administration and management, general
10. Computer and information systems security/information assurance

$60,000 fine for driving14 mph over the speed limit

See Why Finland fined this driver $60,000 for going 14 mph over the limit. Excerpts:

"Reima Kuisla was on his way to the airport when he got caught going 103 km/h (64 mph) in an 80km/h (50 mph) zone, setting him back 54,024 euros. It’s a seemingly excessive penalty until you realize how Finland calculates its fines.

Unlike in the United States, where the flat fine is based on location and speed over the limit, Finland bases the penalty also as a percentage of daily income, according to the previous year’s tax return. Since Reima Kuisla earned over 6.5 million euros ($7 million) in 2013, he had a penalty equivalent to a brand-new BMW M3. The rationale is that the fine should sting for anyone, whether they’re scraping by or living in the lap of luxury."

"He wasn’t the only one to pay a hefty sum in Finland — a Nokia executive had pay 116,000 euros (over $103,00) back in 2002 for speeding on a Harley. Say what you will about excessive fines, but that's a penalty no one forgets."

CPI Lower Than A Year Ago

See Gas’s Drop Drives U.S. Into Deflation Territory: Consumer-price gauge shows 0.1% year-over-year decline in January, first since October 2009, amid sharp fall in gas costs from the WSJ.

The Bureau of Labor Statistics has records going back to 1913. See CPI Detailed Report: Data for January 2015. It is a PDF file and you need to find Table 24.

It might be easier to see all the data at this site.

The base year (or period) is 1982-84. The Consumer Price Index was closest to 100 in 1983 when it was 99.6. For all of 2014 it was 236.736. That means it took $236.736 to buy what cost $100 in 1983.

The CPI in January 2014 was 233.916. The CPI in January 2015 was 233.707. So that was down. Prices rose 0.8% from December 2013 to December 2014, though.

Excerpt from the WSJ article:

"Driven by a tumble in oil prices since mid-2014, the consumer-price index fell 0.1% in January from a year earlier, the Labor Department said Thursday. It was the first year-over-year decrease since October 2009. Prices fell 0.7% from December.

While the reading indicates little upward price pressure across the U.S. economy, it’s different from the downward forces plaguing other major economies.

“We haven’t suddenly become the eurozone or Japan,” said Richard Moody, chief economist at Regions Financial Corp. The dip in overall prices doesn’t reflect the “underlying health of the U.S. economy.”

In Japan and parts of Europe, negative forces such as weak demand and constrained credit caused a drop in prices for a broad swath of goods and services.

In the U.S., falling consumer prices can be pinpointed to a single sector: energy. Energy costs fell almost 20% over the past year, and gasoline prices alone fell by more than a third.

Consumer prices outside of energy advanced a healthy 1.9% in January from a year earlier. Prices for many staples are growing even faster. Food costs are up 3.2% from a year earlier, shelter costs rose 2.9% and medical care advanced 2.3%.

Removing both food and energy costs, consumer prices rose 0.2% last month and are up 1.6% from January 2014. The year-over-year change in so-called core prices held steady in January from December, after trending down from a recent peak of 2% last May."

All is not well (financially) in the world of college football

See Time for a Presidential Panel to Investigate College Sports by Andrew Zimbalist in The Chronicle of Higher Education. He is a professor of economics at Smith College who specializes in the economics of sports. Excerpts:

"The median revenue of athletic programs within the Football Bowl Subdivision (FBS) of Division I grew to $61.9-million in 2012-13 from 28.2-million in 2003-4—an inflation-adjusted increase of 76 percent. And it continues to grow. College football’s new playoff system, which held its national championship game last night, yielded a 12-year contract with ESPN worth $7.3-billion."

"only a couple dozen universities that are pulling in the big bucks. According to the NCAA’s most recent figures, out of 128 schools in FBS, only 20 athletic programs have an operating surplus."

"Overall, the median operating deficit in FBS athletic departments is approximately $12-million."

"So, what’s going on—how can losses be piling up as revenues soar? First, costs are growing faster than revenues. There are no stockholders in Division I athletics. That is, athletic departments do not have to answer to a board of directors or company owners who are looking for profits to go up each quarter so the company’s stock price will rise.

Athletic departments are not profit maximizers. They are win maximizers."

"Without pressure to maximize profits, when revenues rise, the athletic directors find ways to spend it in pursuit of winning."

"the top athletes at FBS schools produce a value well in excess of $1-million. The surplus produced by these players goes in part to the coaches who recruit them and in part to support the "nonrevenue" sports at the school."

"The NCAA now allows colleges to provide four-year scholarships to players, to increase the value of a full-ride scholarship by several thousand dollars to cover the full cost of attendance, and to provide better benefits."

"these additional costs of $1-million-plus will (a) make it more difficult for the vast majority of colleges—unable to afford the financial burden—to compete effectively on the playing field, (b) force these colleges into larger athletic deficits, robbing funds from the academic budget, or (c) impel some colleges to follow the lead of the University of Alabama at Birmingham and end their football program."

"college sports is faced with increased inequality and greater insolvency. Every extra dollar going to intercollegiate athletics is a dollar lost to academic programming. At the top 24 spenders in college sports between 2005 and 2012, football coaches’ salaries calculated on a per-player basis rose more than 60 percent (several now exceed $5-million and in 41 of 50 states a head coach is the highest-paid public official in the state), while academic spending per student dropped 2 percent."

"The NCAA functions as a trade association of the athletic directors, conference commissioners, and coaches, especially those from the big five conferences, and has proven time after time that it is incapable of constructively reforming itself."

"Congress can stand idly by, as it is wont to do, and refuse to get involved in the business of college sports. Or, it can recognize that it is already involved in that business—via an elaborate network of tax preferences and subsidies"

Study Finds Wealth Gap in Graduation Rates

By Melissa Korn of the Wall Street Journal. Excerpts:

"In 2013, 77% of adults from families in the top income quartile earned at least a bachelor’s degree by the time they turned 24, up from 40% in 1970"

"In the lowest income quartile, 9% of people earned a bachelor’s degree by age 24 in 2013, up from 6% in 1970."

"Forty-five percent of dependent 18- to 24-year-olds from the lowest income quartile—with family income of $34,160 or less—enrolled in 2012, up from 28% in 1970. The enrollment rate of the highest-income students—with family income of $108,650 or more—also rose, to 81% from 74%, so the gap in enrollment between the two groups shrank.

Still, most low-income students who pursue degrees fail to make it to graduation. About one in five students from the lowest income bracket completed a bachelor’s degree by age 24 in 2013, about flat with the 1970 figure. Among students from top-earning families, meanwhile, 99% of students who enrolled completed their degrees, up from 55% in 1970, the report said."

So the college graduation rate for the upper quartile is 8.5 times higher than for the bottom quartile (because 77/9 is about 8.5).