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Think Tank: The economists strike back edition

1. Gary King and Andrew Gelman examine why presidential-campaign polls are so unpredictable even though presidential-campaign outcomes are extremely predictable.

2. Donald Marron and Phillip Swagel offer a proposal for reforming Fannie and Freddie.

3. Doug Elmendorf, the director of the Congressional Budget Office, explains the budget deficit to a seventh-grader.

4. The Urban Institute looks at the distributional effects of various Social Security reforms.

5. Harvard's Robert Stavin looks at various issues in designing an effective cap-and-trade system.

By Ezra Klein  |  June 7, 2010; 10:31 AM ET
Categories:  Think Tank  
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Comments

"Gary King and Andrew Gelman examine why presidential-campaign polls are so unpredictable even though presidential-campaign outcomes are extremely predictable."

Although, they acknowledge they can only demonstrate correlations, not causality. More to the point, it really doesn't matter. Polling isn't going to change, the use of polls isn't going to change, and candidates will continue to compete no matter if presidential elections can be predicted ahead of time. Just because it was inevitable that John Kerry would lose, he wouldn't get out of the campaign.

And what does such a system say about the 2000 election? Whatever it says, it's probably more accurate than the opinion polls, but still . . .

Posted by: Kevin_Willis | June 7, 2010 11:03 AM | Report abuse

"4. The Urban Institute looks at the distributional effects of various Social Security reforms."

I thought Social Security was fine, and there was no need for any kind of SS reform, when Bush was proposing it. The idea Social Security might need fixing was laughable. But now, according the the Urban Institute, "Social Security is on an unsustainable path."

Hmmm.

Posted by: Kevin_Willis | June 7, 2010 11:08 AM | Report abuse

Elmendorf: "For the economy as a whole, the more people save, the more money is available for businesses to invest in factories, office buildings, and equipment."

This frightens me because it betrays a brutal misunderstanding of economic models since Keynes:

"Keynes' intellectual revolution was to shift economists from thinking [that] a dog called savings wagged his tail labelled investment to ... a model in which a dog called investment wagged his tail labelled savings." (James Meade, 1975)

After Keynes published, we grew to understand that the level of investment *determines* the level of savings, and not the other way around. This has massive implications for the shape of policy, and Elmendorf of all people should understand the basic principles of modern economics.

Posted by: bbdaniels | June 7, 2010 11:24 AM | Report abuse

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