So I was thinking about the really interesting question of whether Obama's deficit among white voters (40-60) was a result of the rural-urban gap. I haven't seen any exit polling that breaks things down that far, so I've resorted to cobbling together an estimate from a mix of exit polling and census data.
If I were to spend more time on this, I could incorporate assumptions about voter turnout and the like. But my basic conclusion is that urban whites are probably slightly Romney-leaning and are, at best, split 50-50. The reasoning is fairly straightforward: urban minorities went for Obama around 80-20, and supply most of the margin of victory. I end up with an estimate of around a 20% margin for Romney in urban areas, which is probably around 5-10% when you take into account the various assumptions I make that would overestimate the % minority vote.
In order to do this I have to make a few assumptions, which means I'm certainly not 100% accurate. I assume that I can use national census data to estimate the % of each minority that voted for obama. Since minority turnout was slightly lower than white turnout, and this may have been even more the case in non-competitive states, I am probably overestimating by a few % the pro-Romney margin. I also assume that african-american, latino, and other minorities had the same pro-Obama gap in both rural and urban areas. If I had assumed that urban minorities were more pro-obama, this would mean a larger Romney margin among whites. Lastly, I assume that the census and CNN have roughly similar definitions of "urban," but I suspect that CNN classifies far more people as "rural" than the census does.
I estimate that Romney's margin of victory among whites was: 32% in rural areas, 25% in suburban areas, 20% in urban areas. Since Romney only won whites by 20%, it's clear that the differences between the census and exit poll data are shifting the results towards Romney. This is looking at the national level though--it seems likely that Obama did better among whites in Ohio, for example, since he won that low-minority state.
How do I get these number? To use urban voters for example:
19% AA * 87% margin of victory = 17% of Obama's margin comes from African American voters. 23%*44%=10% margin from Latino voters. Other minorities->3.5% margin. Basically, Obama probably won urban minorities by around 80-20, and they accounted for 30% of his margin of victory. However, Obama only won cities by 20%. Given that white voters brought Obama's margin down by 10% and are about 50% of city-dwellers, that means about a 20% pro-Romney margin.
One other major source of "error" could be if the exit polls used a different definition of urban. This, like lower minority turnout, would mean that I overestimate the percentage of minority voters and therefore assume a larger Romney margin among whites. There is no way to check this directly, but let's assume that I at least got the minority margin of victory (80-20, or 60% margin) right. And let's say I really think that Obama and Romney tied among whites in urban areas. In that case, whites would compose 66% of urban voters.
Friday, November 9, 2012
Sunday, April 18, 2010
ACA Selection process, alpha, and due diligence
If a sophisticated hedge fund manager came up to you today and gave you a list of 100 bonds he wanted to short, but you could pick and choose the ones you wanted to select, would knowing the intent of that manager effect your decision-making process? You bet.
The supposed basis for "alpha" is knowledge investors have that the general market does not. That means that the 100+ bonds Paulson selected for ACA may have been risky in ways that not even due diligence by a sophisticated investor could detect. If ACA had understood the selection process--even without knowing the identity of the shorting investor--it likely would have had real effects on its decision-making process.
ACA probably would have lost most of $950mil no matter how it selected bonds for its CDOs. However, even without the meltdown in the housing market, Goldman's actions objectively lowered ACA's expected return by exposing it to risks that it could not reasonably be expected to uncover. So I find the argument that ACA's "due diligence" should have negated the negative impacts of the selection process to be weaker than it might appear at first glance.
The supposed basis for "alpha" is knowledge investors have that the general market does not. That means that the 100+ bonds Paulson selected for ACA may have been risky in ways that not even due diligence by a sophisticated investor could detect. If ACA had understood the selection process--even without knowing the identity of the shorting investor--it likely would have had real effects on its decision-making process.
ACA probably would have lost most of $950mil no matter how it selected bonds for its CDOs. However, even without the meltdown in the housing market, Goldman's actions objectively lowered ACA's expected return by exposing it to risks that it could not reasonably be expected to uncover. So I find the argument that ACA's "due diligence" should have negated the negative impacts of the selection process to be weaker than it might appear at first glance.
Sunday, September 13, 2009
A Links List
So much news today, that people are liable to miss something.
Afghan Detainees given Rights. Now they actually get lawyers. Perhaps this indicates a radically new approach to Afghanistan?
Serena Williams makes Fox top story. Given that the Serena Williams incident certainly raises the specter of race (one wonders if the line judge might have felt threatened by, say, Justine Henin), I am just going to put it out there that the story may have made Fox's top headline for reasons other than an appeal to the tennis-watching demographic. True, the New York Times uses the same bizarre picture, but it doesn't have the caption, "Serena Threatens: I would take this ball and shove it down your throat". And it even has its own reporters covering the story.
Tea Party March on Washington. 60,000-70,000 is the number ABC gives, everyone else says "tens of thousands". Strange that it's not on the NYTimes page, since it generally leans liberal, but this is fairly blatant. Definitely a show of force, but it's hard to tell what the impact will be, especially given the very visible extremism in the gathering.
Water and Waste. I was wondering what the visible effects of the Bush EPA would be, and this is definitely one. Believe it or not, if you don't regulate companies, they will do the most cost-effective thing--dumping toxic sludge into whereever is most convenient. More non-obvious is that the often underfunded state EPA's often take cues and resources from the national entity, so when I wouldn't be surprised if EPA quality drops during Republican administrations even in formerly reliable states.
Afghan Detainees given Rights. Now they actually get lawyers. Perhaps this indicates a radically new approach to Afghanistan?
Serena Williams makes Fox top story. Given that the Serena Williams incident certainly raises the specter of race (one wonders if the line judge might have felt threatened by, say, Justine Henin), I am just going to put it out there that the story may have made Fox's top headline for reasons other than an appeal to the tennis-watching demographic. True, the New York Times uses the same bizarre picture, but it doesn't have the caption, "Serena Threatens: I would take this ball and shove it down your throat". And it even has its own reporters covering the story.
Tea Party March on Washington. 60,000-70,000 is the number ABC gives, everyone else says "tens of thousands". Strange that it's not on the NYTimes page, since it generally leans liberal, but this is fairly blatant. Definitely a show of force, but it's hard to tell what the impact will be, especially given the very visible extremism in the gathering.
Water and Waste. I was wondering what the visible effects of the Bush EPA would be, and this is definitely one. Believe it or not, if you don't regulate companies, they will do the most cost-effective thing--dumping toxic sludge into whereever is most convenient. More non-obvious is that the often underfunded state EPA's often take cues and resources from the national entity, so when I wouldn't be surprised if EPA quality drops during Republican administrations even in formerly reliable states.
Wednesday, February 11, 2009
Experts, Bloggers, and Public Discourse
An interesting post over at Crooked Timber on an article by Clive Crook on how blogs are ruining economic debate somehow manages to avoid most of the interesting questions raised by the question itself. The question about the effect of low-level, publicly available economic discourse becomes more interesting when one remembers a similar situation, early in the decade, involving global warming and the "Skeptical Environmentalist". Ironically, back then it was the economically-minded who tended to focus on disunities in the scientific arena on climate change.
Now, in economics, we see the authority of economic "experts" challenged by those whose familiarity with economic theory comes largely through the blog/editorials of Paul Krugman or Tyler Cohen. And personally, I'm receptive to the idea that these issues should be fought out by scientists and experts.
But I would feel much more comfortable in that opinion if I had more faith in the discipline of economics. It is clear that mainstream economic thinking should be doubted, but not clear how this should happen. In other words, the question is about the relation between experts and debates within a discipline and non-experts outside the discipline who feel the need to have an opinion on the pressing issues of our time.
One opinion might be that the "interference" of the public and the loss of credibility of economists is actually a valuable occurrence. One might view this as a necessary test of the strength of the prevailing views in economics, and argue that in the case of global warming, the test was successfully met by the scientific community of climatologists. Based on this perspective, these occasional clashes strengthen disciplines and create higher standards for debate. Economics will certainly emerge from this recession a different field, although if it will be a better one remains to be seen.
On the contrary, the potential consequences of involving the "masses" in expert debates seem problematic, based on the examples mentioned so far. On the one hand, having an informed public seems like a good thing, even if it tends to be informed in partisan, often irrational ways. On the other hand, at some point policy decisions need to be made based on some sort of expert knowledge. If the average layperson feels as though they not only disagree with the decision the government is making, but are also privy to a better understanding of the problem (through their favorite blogger) than the experts themselves, this might lead democratic leaders to shift their agendas. Or put off action on climate change until a scientific "consensus" is reached. While this phenomenon is nothing new, the increasing interconnectedness between "science" and policy makes this a pressing issue our democracy that other disciplines will probably also have to face in the future.
Now, in economics, we see the authority of economic "experts" challenged by those whose familiarity with economic theory comes largely through the blog/editorials of Paul Krugman or Tyler Cohen. And personally, I'm receptive to the idea that these issues should be fought out by scientists and experts.
But I would feel much more comfortable in that opinion if I had more faith in the discipline of economics. It is clear that mainstream economic thinking should be doubted, but not clear how this should happen. In other words, the question is about the relation between experts and debates within a discipline and non-experts outside the discipline who feel the need to have an opinion on the pressing issues of our time.
One opinion might be that the "interference" of the public and the loss of credibility of economists is actually a valuable occurrence. One might view this as a necessary test of the strength of the prevailing views in economics, and argue that in the case of global warming, the test was successfully met by the scientific community of climatologists. Based on this perspective, these occasional clashes strengthen disciplines and create higher standards for debate. Economics will certainly emerge from this recession a different field, although if it will be a better one remains to be seen.
On the contrary, the potential consequences of involving the "masses" in expert debates seem problematic, based on the examples mentioned so far. On the one hand, having an informed public seems like a good thing, even if it tends to be informed in partisan, often irrational ways. On the other hand, at some point policy decisions need to be made based on some sort of expert knowledge. If the average layperson feels as though they not only disagree with the decision the government is making, but are also privy to a better understanding of the problem (through their favorite blogger) than the experts themselves, this might lead democratic leaders to shift their agendas. Or put off action on climate change until a scientific "consensus" is reached. While this phenomenon is nothing new, the increasing interconnectedness between "science" and policy makes this a pressing issue our democracy that other disciplines will probably also have to face in the future.
Tuesday, February 10, 2009
Bailout, part 2
Now that Obama seems to finally have to support he needs for the much-needed stimulus, it is worth considering the recently proposed treasury plan by Geither.
The case for the Treasury plan rests on the assumption that without such a plan, banks will not lend money and this will keep the U.S. mired in recession. It is not surprising that many economists have this perspective, in part because financial markets and lending have become the focus of economics over the past 20 years. This is not only because of the shift towards neoclassical economics but also because a lot of economists went on to careers in finance, and also because market data is among the most accessible in the world. Now that the crisis has hit, economists are eying the financial system, and guessing that things will not improve until lending occurs again.
It is certainly true that the economic system of six months ago was heavily reliant on credit and lending, but is the current one? People are hesitant to fund buying with lending, probably for good reason. Even if the banks dangle out interest-free loans to those who can prove their credit-worthiness, I don't see people taking them at the moment. It seems unlikely that many businesses or individuals are going to take on more debt than is worthwhile, given the current conditions.
And will banks lend without a bailout? Certainly some will go bankrupt, but banks with a proper approach to evaluating the riskiness of borrower should continue to lend money at as high a rate as they can.
It wasn't the banks that created this recession, it was a shift in consumer spending and saving as a result of high oil prices and the collapse of the financial system. Although the stimulus can replace some of private demand, a larger one risks realigning the economy towards industries benefiting from the stimulus. The economy will only start to grow again when consumer confidence recovers, but debt-fueled spending is a thing of the past. The goal of the government at the moment should not be recovery, but rather employment and a positive restructuring of the economy.
So I would argue that something like $250 billion should suffice to protect consumers from bank failure. In addition, measures should be put in place to encourage banks to resolve the bad assets on their books (the 'stress test' that is the best part of the current bailout package).
The case for the Treasury plan rests on the assumption that without such a plan, banks will not lend money and this will keep the U.S. mired in recession. It is not surprising that many economists have this perspective, in part because financial markets and lending have become the focus of economics over the past 20 years. This is not only because of the shift towards neoclassical economics but also because a lot of economists went on to careers in finance, and also because market data is among the most accessible in the world. Now that the crisis has hit, economists are eying the financial system, and guessing that things will not improve until lending occurs again.
It is certainly true that the economic system of six months ago was heavily reliant on credit and lending, but is the current one? People are hesitant to fund buying with lending, probably for good reason. Even if the banks dangle out interest-free loans to those who can prove their credit-worthiness, I don't see people taking them at the moment. It seems unlikely that many businesses or individuals are going to take on more debt than is worthwhile, given the current conditions.
And will banks lend without a bailout? Certainly some will go bankrupt, but banks with a proper approach to evaluating the riskiness of borrower should continue to lend money at as high a rate as they can.
It wasn't the banks that created this recession, it was a shift in consumer spending and saving as a result of high oil prices and the collapse of the financial system. Although the stimulus can replace some of private demand, a larger one risks realigning the economy towards industries benefiting from the stimulus. The economy will only start to grow again when consumer confidence recovers, but debt-fueled spending is a thing of the past. The goal of the government at the moment should not be recovery, but rather employment and a positive restructuring of the economy.
So I would argue that something like $250 billion should suffice to protect consumers from bank failure. In addition, measures should be put in place to encourage banks to resolve the bad assets on their books (the 'stress test' that is the best part of the current bailout package).
Saturday, February 7, 2009
Obama: Bailout to Stimulus
I decided to hold off on comments about Obama and the stimulus until he was actually in office, but now, as they say, the gloves come off.
I've been a little skeptical of Obama's economic team's belief that there are no real consequences to running up the deficit. This seems to be generated by a sort of "crass Keynesianism" that assumes that deficits, no matter how they are spent, will help the economy. Obama's willingness to renege on his campaign promise of more progressive taxation indicates a potentially disturbing budgetary bipartisanship that is based on the assumption that deficit spending can be used to support both parties' agendas (tax cuts and gov't spending) at the same time.
Obama's stance towards the bailout has also been worrisome. I think it is fair to say that aside from Paulsen and Bernanke, Obama might be the person most responsible for the management of TARP so far. The bailout has been criticized for lacking any oversight (of the treasury or of banks) and also increased the deficit dramatically right before Obama took office. Why did Obama vocally support the bailout despite these flaws?
One potential reason is that Obama seriously believed that the bailout was necessary to slow the rate at which the economy collapsed. But even if this was the case, he could still have pushed for changes in how the money was spent. Three problems with the bailout are particularly glaring: a) banks have continued distributing hefty bonuses despite receiving TARP funds, b) there was little oversight and transparency to how the money was given out and spent, and c) there were no efforts to institute substantive changes at banks receiving funds. The fact that Obama did little to address these problems (until yesterday--more on that later) begs a motive. Here are four options:
The recently-introduced bill capping executive compensation is a step in the right direction, but it reads more like a PR move than a substantive measure. Illicit bonuses have been an open secret for the past few months, and most of last year's bonuses have already been distributed. This bill is too little, too late, and does not do anything about bonuses that have already been given out.
So although I am optimistic about Obama's administration in general, there is a lot of ground for skepticism about its economic policy. It is likely to run up the deficit further while not necessarily repealing the Bush tax cuts. It is also likely to adhere to a dubious watered down economics that emphasizes deficit spending. Ironically, it has also suddenly transformed the Republicans into the sensible check on democratic excesses, a shift that would have hardly seemed possible a few months ago. It also risks alienating Obama from more fiscally responsible voters and democrats. However, it's only a few weeks into his term, and hopefully things will improve--centrist democrats seem to be helping him figure things out.
I've been a little skeptical of Obama's economic team's belief that there are no real consequences to running up the deficit. This seems to be generated by a sort of "crass Keynesianism" that assumes that deficits, no matter how they are spent, will help the economy. Obama's willingness to renege on his campaign promise of more progressive taxation indicates a potentially disturbing budgetary bipartisanship that is based on the assumption that deficit spending can be used to support both parties' agendas (tax cuts and gov't spending) at the same time.
Obama's stance towards the bailout has also been worrisome. I think it is fair to say that aside from Paulsen and Bernanke, Obama might be the person most responsible for the management of TARP so far. The bailout has been criticized for lacking any oversight (of the treasury or of banks) and also increased the deficit dramatically right before Obama took office. Why did Obama vocally support the bailout despite these flaws?
One potential reason is that Obama seriously believed that the bailout was necessary to slow the rate at which the economy collapsed. But even if this was the case, he could still have pushed for changes in how the money was spent. Three problems with the bailout are particularly glaring: a) banks have continued distributing hefty bonuses despite receiving TARP funds, b) there was little oversight and transparency to how the money was given out and spent, and c) there were no efforts to institute substantive changes at banks receiving funds. The fact that Obama did little to address these problems (until yesterday--more on that later) begs a motive. Here are four options:
- He thought TARP was necessary, and thought any dissent would seriously weaken it
- He thought that passing TARP would make Americans more receptive to future stimulus spending
- He was influenced by lobbying from bankers and other involved constituencies
- He was, and remains, reliant on his economic team, whose close ties to the banking industry gave them a pro-banking perspective
The recently-introduced bill capping executive compensation is a step in the right direction, but it reads more like a PR move than a substantive measure. Illicit bonuses have been an open secret for the past few months, and most of last year's bonuses have already been distributed. This bill is too little, too late, and does not do anything about bonuses that have already been given out.
So although I am optimistic about Obama's administration in general, there is a lot of ground for skepticism about its economic policy. It is likely to run up the deficit further while not necessarily repealing the Bush tax cuts. It is also likely to adhere to a dubious watered down economics that emphasizes deficit spending. Ironically, it has also suddenly transformed the Republicans into the sensible check on democratic excesses, a shift that would have hardly seemed possible a few months ago. It also risks alienating Obama from more fiscally responsible voters and democrats. However, it's only a few weeks into his term, and hopefully things will improve--centrist democrats seem to be helping him figure things out.
Sunday, October 19, 2008
Power Outage
The irony: Chargers game delayed due to power failure. (details)
I'm surprised that three helium balloons could cut off power for an entire football stadium, particularly one that seats about a quarter of Buffalo's population (attendance was 71,000).
Perhaps the balloon was released by terrorists? (I hear they're getting younger and younger)
I'm surprised that three helium balloons could cut off power for an entire football stadium, particularly one that seats about a quarter of Buffalo's population (attendance was 71,000).
Perhaps the balloon was released by terrorists? (I hear they're getting younger and younger)
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