Wednesday, December 17, 2014

If all else fails just make it up

In the Washington Post today Jim Tankersley reports on the negative influence of finance on the economy. He reports that “In perhaps the starkest illustration, economists from Harvard University and the University of Chicago wrote in a recent paper that every dollar a worker earns in a research field spills over to make the economy $5 better off. Every dollar a similar worker earns in finance comes with a drain, making the economy 60 cents worse off.” I clicked on the link to the paper (Lockwood BB, Nathanson CG, Weyl GE. Taxation and the Allocation of Talent). As best I can tell it says no such thing. It seems to me that the authors are quite explicit that they do not have such estimates of the spillover effects of different occupations. They use a variety of guesses about what they might be to examine the implications of their model.

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