Archive for April 19th, 2019

Course on detection of academic bullshit..

April 19, 2019

Ananth Nageswaran in this post tells us about this course which helps detect academic bullshit.

The world is awash in bullshit. Politicians are unconstrained by facts. Science is conducted by press release. Higher education rewards bullshit over analytic thought. Startup culture elevates bullshit to high art. Advertisers wink conspiratorially and invite us to join them in seeing through all the bullshit — and take advantage of our lowered guard to bombard us with bullshit of the second order. The majority of administrative activity, whether in private business or the public sphere, seems to be little more than a sophisticated exercise in the combinatorial reassembly of bullshit.

We’re sick of it. It’s time to do something, and as educators, one constructive thing we know how to do is to teach people. So, the aim of this course is to help students navigate the bullshit-rich modern environment by identifying bullshit, seeing through it, and combating it with effective analysis and argument.

What do we mean, exactly, by bullshit and calling bullshit? As a first approximation:

Bullshit involves language, statistical figures, data graphics, and other forms of presentation intended to persuade by impressing and overwhelming a reader or listener, with a blatant disregard for truth and logical coherence.

Calling bullshit is a performative utterance, a speech act in which one publicly repudiates something objectionable. The scope of targets is broader than bullshit alone. You can call bullshit on bullshit, but you can also call bullshit on lies, treachery, trickery, or injustice.

In this course we will teach you how to spot the former and effectively perform the latter.

While bullshit may reach its apogee in the political domain, this is not a course on political bullshit. Instead, we will focus on bullshit that comes clad in the trappings of scholarly discourse. Traditionally, such highbrow nonsense has come couched in big words and fancy rhetoric, but more and more we see it presented instead in the guise of big data and fancy algorithms — and these quantitative, statistical, and computational forms of bullshit are those that we will be addressing in the present course.

Of course an advertisement is trying to sell you something, but do you know whether the TED talk you watched last night is also bullshit — and if so, can you explain why? Can you see the problem with the latest New York Times or Washington Post article fawning over some startup’s big data analytics? Can you tell when a clinical trial reported in the New England Journal or JAMA is trustworthy, and when it is just a veiled press release for some big pharma company?

Our aim in this course is to teach you how to think critically about the data and models that constitute evidence in the social and natural sciences.

Carl T. Bergstrom and Jevin West
Seattle, WA.



What explains India’s farm distress? Demand or Supply?

April 19, 2019

Hrish Damodaran had earlier written a piece on how India was suffering from an oversupply in case of food supplies leading to decline in prices. This was used to explain the current distress in farm not just by Harish but several others.

Rosan Kishore in HT provides a rebuttal to the narrative. He says it is not a case of oversupply but of decline in demand. This is just like Keynes arguing his case for Great Depression as well!:

In an article published in The Indian Express on 18 April, Harish Damodaran has argued that “production glut, not dearth of cold storage and processing infrastructure, is the real cause of farm distress (in India) today”. The argument, if true, has serious ramifications for Indian agriculture. This is because it suggests that the only way to deal with farm distress is to reduce agricultural production in the country.

This is an interesting argument, but does it have a macroeconomic justification? The article cites problems of potato and sugar cane farmers in some districts of Uttar Pradesh, but such anecdotal evidence may not warrant the radical inference. Indeed, such an argument focuses almost entirely on supply side factors without looking at demand side issues. And two, it does not recognise the fundamental asymmetry which characterizes global agricultural markets.

Whether or not a particular commodity is in excess supply in a market also depends on the level of demand for it, which is a function of many things including purchasing power and preferences. For example, if all billionaires were to vanish from the world tomorrow, we would suddenly have a glut of private jets. Similarly, if the number of billionaires suddenly doubled in six months, there would be a severe scarcity for these jets. Both of these situations can arise without any change in the supply of private jets in the world.

What many commentators do not realise is that demand for food also varies drastically among countries. This becomes clear by a comparison using the data published by the Food and Agricultural Organisation (FAO). The relevant category to look at in the FAO database is per capita supply of food items.

India is nowhere close to reaching peak food consumption levels in the world. This (price crash for food items) could have happened if mass purchasing powers have come under squeeze in the recent period. Unfortunately, there is no consumption expenditure data to accept or reject this claim. The recently leaked findings of the National Sample Survey Office (NSSO) employment survey did suggest that the Indian economy has fared badly on the employment front. If these findings are true, there is bound to have been a negative impact on mass purchasing powers. To be sure, farm incomes have also suffered in India due to the adverse turn in international food prices, which have brought down export opportunities and earnings and also created problems for crops such as sugar cane.

Also, agrarian distress is not something which has suddenly appeared in India in the past couple of years. Viability of the average Indian farmer has been in crisis for a long time now. What many people do not realise is that this is not a problem which is unique to India. Even in a country like the US, where farming is extremely mechanised and practiced on very large farms, prices cannot cover the cost of production for important crops such as wheat and cotton. Statistics from the United States Department of Agriculture show that the difference between value of output and total costs has been continuously negative in the US.


RBI’s MPC member also supports rate changes other than in multiples of 25 bps..

April 19, 2019

RBI Governor Shaktikanta Das created interest and debates over why central banks need to change policy rates in multiples of 25 bps.

SK Ghosh of SBI pointed to evidence from China where rates were changed in non-multiples of 25 bps.

Further, in RBI MPC minutes of meeting held on 7-Apr-2019 were released yday. One of the members, Prof Ravindra Dholakia said:

As per the mandate given to the MPC, under such circumstances, we need to give a sustained boost to the economy. I, therefore, vote for a change of stance from neutral to accommodative with a 25 bps cut in the policy repo rate, though I would have preferred to cut it by 35-40 bps this time.

The discussions seem to have started in the MPC itself…

Prof Dholakia also calls core inflation as ‘so-called’:

I have been consistently arguing that unless the real growth exceeds 8-8.5 percent per annum, the output gap reflecting the unemployment gap in the economy is not likely to close. Till that point, there would be downward pressure on the labour market and market determined wages and thereby on the so-called ‘core’ inflation.



Ireland establishes a Bank Culture Board

April 19, 2019

In my earlier article in Moneycontrol, I argued how culture in banking or lack of it has become one of the key agendas for central bankers. I had pointed how Ireland is one of the main countries looking to do something about improving culture in its banks.

Taking the agenda forward, the they have set up a Irish Banking Culture Board (IBCB) :


Evolution of Fed’s inflation target from 1.5% to 2%..

April 19, 2019

Adam Shapiro and Daniel J. Wilson of San Francisco Fed in this research trace the numerical value of Fed’s inflation target:

A narrative analysis of the historical FOMC meeting transcripts indicates that FOMC participants generally expressed a preference for an inflation target around 1½% from 2000 to around 2007. By the end of the Great Recession in 2009, however, the consensus had clearly shifted to 2%. This became the official target announced to the public in 2012. One plausible explanation for this shift is that hitting the zero lower bound in a low inflation environment brought the potential benefits of a higher inflation target to the forefront. As many academic studies and even FOMC participants have discussed, a higher inflation target could potentially lower the risk of hitting the zero lower bound in future recessions.

We also found that actual inflation from 2000 to 2007 was considerably above the 1½% consensus preferred target. Does this imply the FOMC failed in meeting its objectives during this period? Not necessarily. First, while FOMC participants may explicitly state in private their preferred rate of inflation, the committee’s monetary policy actions may be consistent with a different target. Second, the FOMC’s objectives may have included higher economic growth in addition to having inflation near its target, as found in Shapiro and Wilson (2019). With such multiple objectives, achieving higher growth over a given period could involve some trade-off with inflation being above target.

When and who mentioned inflation target first?

Discussions of explicit inflation targeting did not begin to appear in the FOMC meetings until around 1994. Before then, FOMC participants occasionally mentioned an objective of “price stability” without relating that to an explicit inflation target. One illuminating exception was a statement by Federal Reserve Board Governor David Mullins in the November 1993 meeting that suggested an implicit target moving below 3% by that time: “I think there’s a real payoff not just from stabilizing inflation in the 3–4% range but in moving lower.”

The first serious consideration of an explicit inflation target we could find comes from St. Louis Fed President Thomas Meltzer in 1994. At the July meeting that year, he said, “If we don’t make an explicit statement in this FOMC testimony with respect to our long-run expectations on inflation that goes beyond ‘we think price stability is good,’ and get more specific in terms of a target range, then at the very least I think we have to make it clear that we consider 3% inflation to be unacceptable.” A few meetings later, in November 1994, he stated: “I feel that it may be time for us to consider setting a specific inflation target that looks out into the future. I think, and this point was made as well, that it could make our job considerably easier in circumstances like the present—with upward cyclical inflationary pressures—if people were willing to look out to a longer-range target and that added to credibility.”


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