Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, December 4, 2019

AI Summary. German households continue to save at high rates, with the household savings rate staying above 10% for much of the past decade even as other European countries saw declines. The article argues this savings glut contributes to persistent current account surpluses while limiting domestic consumption and investment.

Tom Fairless Wall Street Journal
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Germany’s high savings rate has persisted since the Hartz reforms in 2000s, with household savings above 10% for much of the past decade. @TomFairless reports for @WSJ.

Do high household savings rates limit German consumption and growth?

Core argument: Germany's household savings rate has stayed above 10% for much of the past decade, even as savings rates in other European countries declined.

Despite economic challenges, Germans continue to save at high rates, a trend that has persisted since the Hartz reforms in the early 2000s, which reduced the labor share and increased the savings rate. This behavior is evident in the data showing that Germany's household savings rate has remained above 10% for much of the past decade, even as other European countries have seen declines. The German savings glut has significant macroeconomic implications, contributing to persistent current account surpluses and affecting global trade balances. This high savings rate, while providing a buffer against economic uncertainty, also limits domestic consumption and investment, potentially stifling economic growth. The persistence of this trend suggests structural factors at play, including cultural attitudes towards saving and a cautious approach to spending, which continue to influence Germany's economic landscape.

Takeaways by Macro Roundup® AI

  1. Germany's household savings rate has stayed above 10% for much of the past decade, even as savings rates in other European countries declined.
  2. The Hartz labor-market reforms of the early 2000s reduced Germany's labor share and raised its savings rate, a pattern that has persisted since.
  3. Germany's savings glut contributes to persistent current account surpluses and affects global trade balances, while limiting domestic consumption and investment.

Great charts on German savings, though article falls for the thrifty Germany fallacy as opposed to reality that Germany ran deficits in the 1990 until the Hartz drove down the labor share, driving up the savings rate. As you can see on charts.

Germans Keep on Saving Their MoneyEven When It Hurts: Extended Excerpt Image 1


Tom Fairless and Patricia Kowsmann, "Germans Keep on Saving Their Money—Even When It Hurts,"Wall Street Journal, December 3, 2019, https://www.wsj.com/articles/germans-keep-on-saving-their-moneyeven-when-it-hurts-11575388824

AI Summary. On the international PISA student assessment, US Asian students averaged 549, third globally, and US White students averaged 521, above every predominantly white country except Estonia. US Hispanic students averaged 470, above all Latin American countries, and US Black students averaged 436, above countries including Malaysia and Thailand.

Steve Sailer The Unz Review
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US Asians scored 549, ranking 3rd globally, while US Whites scored 521, outperforming all predominantly white countries except Estonia.

Do US students outperform peers abroad when compared by racial group?

Core argument: US Asians averaged 549 on the 2018 PISA, ranking third globally, while US Whites averaged 521, outperforming every predominantly white country except Estonia.

The 2018 PISA results reveal significant disparities in performance among racial groups in the US, with US Asians scoring an average of 549, ranking third globally, and US Whites scoring 521, outperforming all predominantly white countries except Estonia. US Hispanics scored 470, surpassing all Latin American nations, while US Blacks scored 436, higher than countries like Malaysia and Thailand. These results highlight the varied educational outcomes across racial groups in the US, despite the country's high per-student spending. The data underscores the need for targeted educational policies to address these disparities and improve overall competitiveness in the global economy.

Takeaways by Macro Roundup® AI

  1. US Asians averaged 549 on the 2018 PISA, ranking third globally, while US Whites averaged 521, outperforming every predominantly white country except Estonia.
  2. US Hispanics scored 470 on the 2018 PISA, above all Latin American nations, and US Blacks scored 436, above countries including Malaysia and Thailand.
  3. The 2018 PISA results show wide variation in educational outcomes across US racial groups despite the country's high per-student spending.

Sailer updated his PISA by race category, US White (7th overall) and US Asians (3rd overall) do very well, US blacks and Hispanics not so much.

The New 2018 PISA School Test Scores: USA! USA!: Extended Excerpt Image 1


"...every three years the one dissenting voice is usually … me. I ritually point out that each race within the U.S. (see the red bars in my graph) did pretty darn good compared to the rest of the world. (Keep in mind, though, that the U.S. usually spends more per public school student than all but a few tax havens like Luxembourg.) For example, the mean score on the three parts of the test — reading, math, and science — for U.S. Asians was 549, which would make them the third highest scoring place in the world, behind only the utopian city-state of Singapore and four rich cities in mainland China.... Can we trust the Chinese numbers? Beats me....(Scores are on an SAT-like 200 to 800 scale with 500 supposed to be the rich, or OECD, country mean, although the OECD mean was 488.) At 521, U.S. whites outscored all countries founded by whites (light blue bars) except Estonia. American whites edged Japan and South Korea by one point, which isn’t shabby. I’m not sure I believe these high scores for the U.S., but at least I don’t ignore them like everybody else does. (Three years ago, American whites outscored American Asians for some unexplained reason, but this time the U.S. racial ranking is back to normal with Asian-Americans on top.)U.S. Hispanics at 470 outscored all Latin American countries, with Chile scoring highest at 438.Mexico scored 416 and Dominican Republic came in last among Third World countries who bravely volunteered to take the test at 334. (I don’t know why the bar for DR got cut off at the bottom of the graph: after 26 years of use, MS Excel graphs remains an unpleasant mystery to me.) On the other hand, DR comes in first among baseball players, so they’ve got that going for them. U.S. blacks scored 436, which is higher than Malaysia, Romania, and Thailand. No truly black-run country took the test, but in past years, American blacks beat Trinidad, a part black, part Asian Indian island country with oil money...."
Steve Sailer, "The New 2018 PISA School Test Scores: USA! USA!,"The Unz Review, December 3, 2019, http://www.unz.com/isteve/the-new-2018-pisa-school-test-scores-usa-usa/

Friday, December 6, 2019

AI Summary. US 15-year-olds rank 30th in math and 8th in reading on the international PISA assessment, with no improvement since 2015 and two decades of flat scores on both PISA and the National Assessment of Educational Progress. State tests have reported large gains over the same period, often exceeding national assessment gains by 50–100%, raising doubts about their reliability for accountability.

Frederick M. Hess American Enterprise Institute
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The latest PISA results reveal a persistent disconnect btw international and state-level assessments, with US 15-year-olds ranking 30th in math and 8th in reading, showing no improvement since 2015.

Are state test gains overstating US student achievement?

Core argument: US 15-year-olds rank 30th in math and 8th in reading on PISA, with no improvement since 2015.

The latest PISA results reveal a persistent disconnect between international and state-level assessments, with US 15-year-olds ranking 30th in math and 8th in reading, showing no improvement since 2015. Despite two decades of stagnant PISA and NAEP scores, state tests have reported impressive gains, often outpacing NAEP by 50-100%. This disparity raises concerns about the reliability of state assessments, which are influenced by policymakers who define proficiency and monitor graduation rates. The inconsistency suggests potential inflation of state test results, casting doubt on their use for accountability and school improvement. As US education efforts face scrutiny, the gap between PISA/NAEP and state results underscores the need for a critical evaluation of assessment practices to ensure they accurately reflect student performance and inform effective policy decisions.

Takeaways by Macro Roundup® AI

  1. US 15-year-olds rank 30th in math and 8th in reading on PISA, with no improvement since 2015.
  2. State tests have reported gains often outpacing NAEP by 50–100%, even as PISA and NAEP scores have remained stagnant for two decades.
  3. The gap between state results and PISA/NAEP suggests potential inflation of state assessments, which are shaped by policymakers who define proficiency and monitor graduation rates, casting doubt on their use for accountability.

Frederick M. Hess, "PISA results offer more bad news for US schools," American Enterprise Institute, December 5, 2019, https://www.aei.org/education/pisa-results-offer-more-bad-news-for-us-schools/

PISA results offer more bad news for US schools

On Tuesday, the Program for International Student Assessment (PISA) reported its new results for how 15-year-olds are faring across about 80 nations. In what’s become a familiar theme, US math and reading scores were flat since the last test in 2015, with the US ranking 30th in the world in math and 8th in reading. As a New York Times headline stated, “‘It Just Isn’t Working’: PISA Test Scores Cast Doubt on U.S. Education Efforts.” Indeed, the results showed that about one-fifth of American 15-year-olds haven’t yet mastered the reading skills expected of a 10-year-old.

These results are disappointing, but not surprising. As we noted last spring, US student performance on PISA has been stagnant — for two decades, since 2000. While scholars have raised legitimate questions about how much faith we should put in PISA, the results mirror what we see on the gold standard domestic assessment, the National Assessment of Educational Progress (NAEP). Indeed, the new NAEP results, released just last month, reported a continued, decade-long stagnation in US student achievement.

The remarkable thing, as we observed in the spring, is that these grim results have been accompanied by close to twenty years of impressive gains on annual state tests — the kinds of outcomes eagerly touted by state leaders, and required first by the federal No Child Left Behind Act and now by its successor, the Every Student Succeeds Act. The ongoing disparity between measures such as PISA and NAEP, on one hand, and state tests, on the other, should leave us leery when it comes to these ubiquitous assessments, which get used for everything from accountability systems to school improvement plans to research into which reforms “work.”

As we wrote last spring, “The politicos and state education officials claiming credit for these gains are the same ones who choose state tests, define what qualifies as ‘proficient,’ and monitor graduation rates to guard against funny business. The results are tied into state accountability systems, where lousy results can produce practical and political headaches. Thus, policymakers have both the means and the incentive to inflate the numbers any way they can.” And there’s good cause to believe that such shenanigans are all too common: Researchers have reported that gains on state assessments tend to outpace gains on the far more reliable NAEP by an astounding 50 to 100 percent.

The PISA and NAEP results are disconcerting. They should prompt plenty of hard questions, including about how much faith we should have in state tests which too often provide a fundamentally misleading picture of how American students are faring.

“…US student performance on PISA has been stagnant — for two decades, since 2000….these grim results have been accompanied by close to twenty years of impressive gains on annual state tests — the kinds of outcomes eagerly touted by state leaders…. Researchers have reported that gains on state assessments tend to outpace gains on the far more reliable NAEP by an astounding 50 to 100 percent….”

Ed Commented:Steve, "researchers" is hyperlinked in the article. Please take a look at the research and summarize.

AI Summary. Adjusted for demographic shifts, the share of Americans employed has risen above its 1999-2000 average and continues to widen that lead, while the demographically-adjusted labor force participation rate is within 20 basis points of its 1999-2000 average.

Ernie Tedeschi ernietedeschi
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Demographically-adjusted LFPR shows a positive trend, with age-adjusted EPOP & LFPR rising by a few basis points. Adjusted EPOP has surpassed its 1999-2000 average, reflecting a robust labor market.

Has American labor force participation recovered once demographic shifts are accounted for?

Core argument: The demographically-adjusted employment-population ratio has risen above its 1999–2000 average and continues to widen that lead, with both the age-adjusted EPOP and labor force participation rate up by a few basis points.

Recent updates to the demographically-adjusted LFPR [Labor Force Participation Rate] indicate a positive trend, with both the age-adjusted EPOP [Employment-Population Ratio] and LFPR rising by a few basis points. The adjusted EPOP has surpassed its 1999-2000 average and continues to widen its lead, reflecting a robust labor market. Meanwhile, the adjusted LFPR is now within 20 basis points of its 1999-2000 average, suggesting a near return to pre-recession participation levels. These metrics highlight the resilience of the labor force when accounting for demographic shifts, providing valuable insights for economists and policymakers in assessing the true health of the labor market. The data underscores the importance of considering demographic adjustments to accurately interpret labor market dynamics and inform economic policy decisions.

Takeaways by Macro Roundup® AI

  1. The demographically-adjusted employment-population ratio has risen above its 1999–2000 average and continues to widen that lead, with both the age-adjusted EPOP and labor force participation rate up by a few basis points.
  2. The demographically-adjusted labor force participation rate sits within 20 basis points of its 1999–2000 average, suggesting a near return to pre-recession participation levels.
  3. Adjusting the labor force participation rate and employment-population ratio for demographic shifts informs interpretation of labor market dynamics and economic policy decisions.

Ernie's updated his demographically-adjusted LFPR on the new jobs numbers. Age-adjusted EPOP and LFPR both rose a few bps. Adjusted EPOP remains above, and is widening its lead over its 1999-2000 average. Adjusted LFPR is within 20bp of its 1999-2000 average.

Demographically-adjusted LFPR: Extended Excerpt Image 1


Demographically-adjusted LFPR: Extended Excerpt Image 2

Ernie Tedeschi, "Demographically-adjusted LFPR," December 6 2019, https://twitter.com/ernietedeschi/status/1202950281849450498

AI Summary. A study by the Center on Education Policy finds state tests generally show larger achievement gains than the National Assessment of Educational Progress, with median annual proficiency gains of 1.3% versus 0.5% in grade 4 math and 1.8% versus 1% in grade 8 math. The authors attribute the gap partly to score inflation from targeted test preparation.

Naomi Chudowsky MIT
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New study by @NaomiChudowsky finds state test results often overstate educational gains compared to NAEP, with median average annual gains in grade 4 math proficiency at 1.3% on state tests vs 0.5% on NAEP.

Do state tests overstate student achievement gains compared with national assessments?

Core argument: A Center of Education Policy study reports median average annual gains in grade 4 math proficiency of 1.3% on state tests versus 0.5% on NAEP, and 1.8% versus 1% in grade 8 math.

A study by the Center of Education Policy highlights a significant discrepancy between state test results and NAEP [National Assessment of Educational Progress] outcomes, revealing that state tests often overstate educational gains. For instance, the median average annual gain in grade 4 math proficiency was 1.3% on state tests compared to 0.5% on NAEP, while for grade 8 math, the figures were 1.8% and 1%, respectively. This disparity may stem from state tests being more aligned with local standards, score inflation due to targeted test preparation, and the lower stakes of NAEP for students and teachers. Despite these differences, both assessments generally show positive trends, with state tests indicating larger gains. However, in some cases, NAEP gains surpassed those of state tests, particularly in grade 4 reading. This suggests a need for careful interpretation of state test results when assessing educational progress.

Takeaways by Macro Roundup® AI

  1. A Center of Education Policy study reports median average annual gains in grade 4 math proficiency of 1.3% on state tests versus 0.5% on NAEP, and 1.8% versus 1% in grade 8 math.
  2. The study suggests the gap between state test and NAEP gains may stem from state tests' closer alignment with local standards, score inflation from targeted test preparation, and NAEP's lower stakes for students and teachers.
  3. Both state tests and NAEP generally show positive trends, with state tests indicating larger gains, though NAEP gains exceeded state test gains in some cases, particularly in grade 4 reading.

CEP research looks at the disconnect between state testing and NAEP results and finds that while NAEP generally aligns with state trends, they move in the same direction the magnitudes of the state trends are significantly overstated versus the NAEP results. For example the median average annual gain in the percentage proficient on state tests was larger then on NAEP - for grade 4 math, state test showed a median average annual gain of 1.3, where NAEP showed a.5. For 8th grade math those numbers were 1.8, and 1 respectively. (Table 6).

They speculate that several factors might be causing the spread, 1) state test are more aligned with state educational standards. 2) score inflation due to narrow test preparation. 3) Motivation, neither students or parents get individual NAEP results so the test are lower stakes for teachers and students alike versus state exams.4) Y/Y changes in test difficultly.

"...Since 2005, test scores have increased in most states with sufficient data. States with test score gains between 2005 and 2009 far outnumbered those with declines on two different assessments (state tests and NAEP) and two different indicators (percentages scoring proficient/basic and mean scores)..... Within the same state, trends on NAEP usually moved in the same direction as trends on state tests.States with positive trends between 2005 and 2009 on their own tests tended to show positive trends on NAEP. This pattern was apparent in percentages proficient/basic and, to an even greater extent, in mean scores.....Gains on state tests tended to be larger in size than gains on NAEP.This was not always the case, however. In a limited number of states, gains on NAEP were larger than gains on state tests, especially in grade 4 reading...."

Naomi Chudowsky and Victor Chudowsky, "Rising Scores on State Tests and NAEP," Center of Education Policy, September 2010, https://www.cep-dc.org/displayDocument.cfm