Crimes against Economic Analysis

Well, Sam Clovis is no longer under consideration to be the top scientist at USDA (a good thing given he has no scientific credentials). But Bill Beach is nominated to be Commissioner of Labor Statistics, i.e., heading BLS.

When last we heard of Bill Beach, he had just revised the fantastical forecasts of the Ryan (2011) plan. Recall:

Heritage (Center for Data Analysis) CDA re-adjusted the natural or structural rate of unemployment — and hence simulated unemployment — without having any reported impact on any of the other variables changing

In other words, Heritage’s CDA under Bill Beach’s leadership projected fantastical growth under the Ryan plan. As Macroeconomic Advisers put it:

  • We don’t believe this finding, which was generated by manipulating an econometric model that would not otherwise have produced the result.
  • That analysis implied other questionable results — some of them probably unintended — including over $1 trillion of net new borrowing from abroad over the coming decade and the construction of several million unoccupied houses.

  • We consider the analysis both flawed and contrived, and are concerned it will create the false impression among some legislators that implementation of the Budget Resolution would entail no short-run macroeconomic pain.

Then when roundly criticized about the forecasted 2.8% natural rate of unemployment, CDA re-simulated the CDA model, and magically only the natural rate of unemployment changed, and not a single other one…

Since leaving Heritage at the beginning of 2013, he’s been at Mercatus, VP in charge of policy research.

Well, now he’ll be heading BLS. Here’s Dr. Beach’s bio.

12 thoughts on “Crimes against Economic Analysis

  1. PeakTrader

    So, how qualified is Bill Beach compared to former commissioners of the BLS, which is part of the Labor Department? And, some Secretaries of Labor had little or no education in economics and certainly not in Labor Economics.

    There are plenty of excellent economists at the BLS, who will continue to do the work. The commissioner may be more of a political appointment. Perhaps. Bill Beach will use the statistics to steer a political objective, e.g. how much government debt will rise and promote balanced budgets.

      1. pgl

        “Dr. Erica L. Groshen earned a bachelor’s degree in economics and mathematics from the University of Wisconsin-Madison and a Ph.D. in economics from Harvard University. She was a visiting assistant professor of economics at Barnard College at Columbia University and an economist at the Federal Reserve Bank of Cleveland.

        Dr. Groshen joined the Federal Reserve Bank of New York in 1994 and held the position of Vice President in the Research and Statistics Group. She was a visiting economist at the Bank for International Settlements in Basel, Switzerland, in 1999–2000. She also served on advisory boards for BLS and the U.S. Census Bureau.

        Her economics research has focused on labor markets over the business cycle, regional economics, wage rigidity and dispersion, the male-female wage differential, and the role of employers in labor market outcomes.

        Erica L. Groshen became the 14th Commissioner of Labor Statistics in January 2013.”

        The last one is certainly more qualified than Trump’s choice.

  2. Steven Kopits

    On paper, Beach is qualified, but not in the top tier of previous commissioners, based on academic and professional credentials.

    The Heritage analysis mentioned appears to have been completed without an integrated spreadsheet model, and rather superficial consideration of likely values. A ‘natural rate of unemployment’ (whatever that is) of right around 3% is not necessarily impossible (after all, we have 12 states with unemployment rates under 3.5% currently — Wisconsin being one of them — and no one thinks the world is ending in any of these high performers), but such a view would require a substantial piece of analysis and argumentation on its own. We haven’t seen that kind of unemployment rate since the 1960s, which is why Heritage folded ex-post on the employment number.

    On the other hand, Heritage was spot on for total private non-farm employment, and the unemployment rate is actually closer to the Heritage numbers than to the baseline. Forecasting is hard, especially about the future.

    At the end of the day, what matters most is the integrity of data gathering, retention and access. We have had problems in this area before, notably from Hansen / Schmidt with the GISS (NASA) dataset, in which published numbers increasing deviate from both raw ground and satellite based data, in an organization headed by known and radical activists.

    I would hope we would avoid such an outcome on the other side at Labor. I would say Beach makes the minimum cut, but hardly engenders enthusiasm for the post.

  3. PeakTrader

    I recall talking to a counselor at the University of Colorado about a part-time Ph.D economics program, since a grad student in the Econ Department told me it’s very time consuming, and lots of students drop out, fail, or transfer to an easier program, like Humanities. He told me only George Mason University has one and it’s a different type of economics. I recall saying what about a school like the University of Montana, don’t they have one? He said no.

  4. Erik Poole

    PT: Up here in the white north (white as in snow, not skin colour, not cocaine), “giving good head” is a popular term, typically applied to heterosexual males trying to get ahead. 😉

    Then there is the less well known term of “blow job politics” but I would not would want to offend political sensibilities by getting into what that exactly means……

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