Running

There is nothing that makes my day better than being able to run west along the levy after the sun has gone down. Unfortunately, my schedule doesn't allow for that very often this fall, what with night classes and practice going until after the sun has set. But yesterday we had a furlough day (canceled class) and I was able to go for a run around 7pm.

I ride my bike to school almost every day (during the week), and usually the only days I can run are Friday - Sunday, so I'm getting exercise almost every day, but bike riding just isn't the same. I see that as a necessary evil as an alternative mode of transportation, but don't do it often just for fun. I much prefer to run for fun.

But while running makes my day good, running at dusk makes it even better. Not sure why, but I just love that time of day. The only problem is that I can never go for as long as I want because the sun beats me. So I have this tension between dusk making me want to run more, and being unable to run more because of dusk.

Which leads me to opportunity costs and trade-offs. I love it when everything leads back to economics.

And since I'm talking about econometrics

If anybody needs to buy me something in the future this comic is in shirt form. Only thing missing is the mouse-over text of, "Correlation doesn't imply causation, but it does waggle its eyebrows suggestively and gesture furtively while mouthing 'look over there'."

Actually, I may just end up buying it for myself. That's allowed, right?

Autoregression methods in Macroeconometrics

So, there's a lot of discussion about what economists should be doing. Are we merely to report? Explain? Forecast? Or (heaven forbid) prescribe? Anyways, one that I've always taken for granted as a necessary part of economic is the "explain" part. That should be the point of any area of study - understand and explain the 'why' of what's going on - because everything else requires and understanding of the basics. Medicine, for example, would be worthless if doctors didn't understand the whys of diseases and maladies. Now, some people may disagree, saying that we can often fix things without truly understanding why it works. To those people, I have to say that you're just guessing. If you prescribe something without understanding why it works, you have no idea what you're doing.

Anyways, back to economics. Much of macroeconomics is about trying to understand why economies behave the way they do. Macroeconomists study why (or if) countries converge in output, how quickly developing countries develop and why, what effect money has on output, and all sorts of other (interesting) things. So, we take data (and lots of it) and try to make functions for output, growth, and all sorts of fun things. But then came along a group of economists in the 1970s who said, "All you (stupid) economists from 1950 until today who were trying to explain why output changes? Well, you're prediction powers are crappy at best. But look! If we use no explanatory variables, we can do such a better job than you, you Keynesians!"

And along came the Box-Jenkins ARIMA method, which only uses lagged measurements of the dependent variable to explain, yep, that dependent variable.

So my question, is this: so what? Yay, you can much more accurately explain what's going on this year by looking at last year, but why? What could possibly be the point of a regression like that, besides an exercise in saying, "Look how close I can get while explaining absolutely nothing!"

Or am I the only one that thinks explanations (and therefore explanatory variables) are important?

It's like saying in medicine, "Let's explain how healthy this patient is based on how healthy they've been in the past!" Or in psychology, "We can guess how this person will behave based on how they've behaved in the past!"

And also....

... vector functions are my new favorite thing.

What to write about

I find that there is an inverse relationship between how much I blog and how much I'm on Facebook. I guess it just comes down to the simple fact that it's far easier to write one or two sentences about what I've been thinking about lately than try to string together a couple paragraphs. So prepare yourselves for a very random post.

Glee
Loved the first three episodes. Unfortunately for the show, episode four contained what will probably be the long term plot devices for the season, and they're really not that interesting to me - they do, in fact, border on the opposite of interesting. Luckily the show has hilarious music numbers going for it, so I'll keep watching, but I certainly hope that the writers and producers of the show can manage to come up with something better than plot revolving around pregnancy (faking it, lying about it, and worrying about it).

School - Thesis
This semester I'm supposed to do two projects that are intended to be used as jumping boards for my thesis. Now, I think we all know that the applied-side of things is not my strong point, mostly through inclination than any sort of lack of ability. When I'm handed at least a vague topic to apply, I can generally do a good job. But when it comes to thinking up a topic on my own, all it seems I'm able to do is think up topics that are impossible (at least at this point) to do. Exhibit A: I want to examine the income elasticity of demand for video game markets (in other words, examine if video games are an inferior or normal good and how much), but that data would require buying it (which I'm not going to do). Exhibit B: I want to examine household decision modeling, especially as pertains to divorce rates in the 1970s. No go, this time because that would involve far too much theory for a thesis. Can't I just take a test or something instead of writing a paper?

Soccer
Soccer is frustrating, and we'll just leave it at that for now.

School - Econometrics
So, this semester my evening classes are Advanced Economic Theory and Applied Econometrics. Now, this is a pretty good combination of applied and theory - in theory, that is. It turns out that I'm really taking Advanced Applied Econometrics and Applications of Econometrics. One class goes over the theory, reasoning, and uses of econometrics with some applications, and the other class goes through applications and corrections for econometrics with some theory. Don't get me wrong, I enjoy econometrics, but I love me some economic theory. At least in theory you feel like you're getting somewhere. In econometrics - especially macroeconometrics - it's almost like there is no right answer. I read an article titled The Standard Error of Regressions which tried to argue that economists incorrectly use regression analysis. The argument wasn't great, but the article did have an interesting throw away point that I immediately latched onto because it's one of my biggest complaints in macroeconomics - that regression analysis never seems to prove anything. Half the time this is because of ridiculously low R2 statistics in articles that get published, but the other half the time it's because we all know that it's pretty easy to data-mine with the available software packages. As the article says, "The low and falling cost of calculation... has meant that statistical significance has been valued at its cost. Essentially no one believes a finding of statistical significance or insignificance. This is bad for the temper of the field. My statistical significance is a 'finding'; yours is an ornamented prejudice. Contrary to the decisive rhetoric of rejection in the mechanical test, statistical significance has not in fact changed the minds of economic scientists."

Econometrics Articles

This is just a sample of what I'll be spending most of my time reading this semester:

"Since we will be interested in departures from the maintained hypothesis that innovations "e" are i.i.d., we also include the heteroskedastic-consistent unit root test of Phillips and Perron (1988). This test does not rely on a "nite order AR, but instead employs a correction for serial correlation based in part on the spectral representation of the innovation sequence at frequency zero. The quadratic spectral kernel is used to estimate the spectrum, and Andrews' (1991) procedure is used to determine the number of autocovariance terms used. The Phillips}Perron (PP) test has the same limiting distribution as ADF."

Classes, such as they are

This semester I'm taking 5 classes, teaching 1, and attending another (for the one I'm teaching). This translates to being on campus for at least 8 hours almost every day (and for 12 hours on Wednesdays). I'm not sure how this is going to work, especially as the semester gets on and I have some important papers due during prime test time.

At least my professors seem to be interesting this semester. Only one is seemingly horrible - unfortunately he's teaching a series, and I'll probably be taking part B next semester. I've also discovered that Indian is not one of the accents I can easily understand. British is fine, but not Indian. It also is not helpful that this professor's handwriting is tiny and illegible, and that he insists on standing in front of what he's written much of the time.

I'm teaching an adjunct section for Econ 1A, which basically means that twice a week for an hour I help students review and understand what was covered in Introduction to Macroeconomics. It should be fun, and thankfully I have some of the handouts and notes from somebody who's done it before, so I shouldn't have to do much prep.

My graduate classes this semester are probably going to leave something to be desired, not because they won't be interesting, but because I think there's going to be very little theory involved in them. Both are centered around statistics, which is definitely not my favorite math subject. I may get a bit more appreciation for it because one of my other classes is Introduction to Probability Theory, but I doubt it. I think I'll have to find some theory articles (or perhaps some articles on methodology) to read during my (lack of) free time.

Two of my favorite things

"If theory adjudicates the rules of science, then so does philosophy (methodology). In the absence of demarcation, philosophy is just very general, very abstract science and has the same kind of prescriptive force for the practice of science as any scientific theory. Because of its generality and abstractness it will have less detailed bearing on day-to-day science then, say, prescriptions about the calibration of pH meters, but it must have the same kind of bearing."

Annoyed

Today as I was riding to class I passed two police cruisers parked along the bike path. I figured they were there responding to something, but since there were no cones or anything up, I was still allowed to pass. Only upon seeing two more parked ahead and hearing a shout did I realize I was wrong. There was an officer running after me waving (how he expected to get my attention that way is beyond me). Luckily, I stopped and turned of Soren.

I was promptly told that there were dogs out searching for somebody and I would have to find a new way to campus. It's a good thing I was getting to campus early.

Then, after I had to go back and cross to the other side of the river, as I approached campus, the trail was blocked off due to tree triming. So I had to get off my bike and walk it up the gravel path (it's a road bike, not a mountain one).

Unfortunately I'm rational enough to understand that both of these things are necessary, just personally annoying.

Finally, I had to stay after class 10 minutes just to be able to copy down everything from the board because my professor insists on standing in front of what he writes (and writing almost illegibly).

So my girls had better be on their best behavior at practice today, because I really don't think I'm going to handle much more annoyance well.