AARP is Wrong About Inflation
I’m getting a 3.6 percent increase in my Social Security retirement benefits on January 1. This reflects the rise in the “cost of living.” I’m happy for the money, but it’s wrong: every economist who has studied the issue knows that the Consumer Price Index (CPI-U) used for this adjustment overstates inflation by failing to account for the fact that people substitute away from goods and services whose prices rise relatively rapidly.
For a decade the U.S. Bureau of Labor Statistics has published a measure that accounts for this substitution, the chained CPI (C-CPI-U). Over the last 10 years it has risen 24.4 percent, while the CPI-U has risen 27.4 percent (and 3.7 instead of 3.9 percent this past 12 months). The C-CPI-U is a better measure of the cost-of-living, and it should be used (although even it overstates inflation because it doesn’t account fully for improvement of products).
Unsurprisingly, groups claiming to represent us greedy geezers are vehemently against even this change, “This so-called ‘chained CPI,’ through compounding, would cut seniors’ benefits by thousands of dollars over their lifetimes ….,” said AARP Executive Vice President Nancy LeaMond.
Of course, nobody’s benefits would be cut. Rather, their future benefits would rise less rapidly and would reflect better the prices of the goods they consume. My advice to other geezers: suck it up—this is the right thing for society and the right thing logically.
Goldman Sachs Stumbles: The End of the “Vampire Squid”?
A few years ago, a friend of mine who used to work on Wall Street told me that the only stock anyone needed to own was Goldman Sachs. He was of course half-joking (I sure hope this wasn’t the advice he was giving clients), but his point was clear: whatever price increases were happening out in the world, whatever profits were there for the taking, no matter the market, you could be fairly certain that Goldman was on the scene.
The image of Goldman Sachs as some sort of omnivorous, ever-present beast was perpetuated by Matt Taibbi in his 2010 Rolling Stone article, in which he dubbed the firm “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” And that was just the second sentence.
It would appear that the squid has since had a few of its tentacles lopped off, or at least been shrunken down to size. For only the second time since it went public in 1999, Goldman Sachs has posted a quarterly loss. Read More »
How an Absent Father Affects Boys and Girls Differently
According to the U.S. Census Bureau, the share of children living in mother-only households has risen from 8 percent in 1960 to 23 percent in 2010. Freakonomics has a long-standing interest in the role parents play in the lives of their children, and while we usually find no merit in helicopter parenting, a basic level of involvement is obviously important. Past research has shown that a father’s involvement with his children is linked to all kinds of beneficial outcomes, from higher academic achievement, improved social and emotional well-being, to lower incidences of delinquency, risk taking, and other problem behaviors.
A new working paper from authors Deborah A. Cobb-Clark and Erdal Tekin examines the relationship between juvenile delinquency and the role of a father in the household, particularly in terms of the different effects an absent father has on boys and girls. They discovered, among other things, that sons benefit far more from a father (or father-figure) than daughters do. From the abstract:
Read More »…we find that adolescent boys engage in more delinquent behavior if there is no father figure in their lives. However, adolescent girls’ behavior is largely independent of the presence (or absence) of their fathers.
The Suburb as the Slum: Housing Voucher Shifts in America
A new working paper from the Brookings Institution’s Metropolitan Opportunity series examines a major demographic shift in housing voucher recipients from the cities to the suburbs. Authors Kenya Covington, Lance Freeman and Michael A. Stoll write: “Just as the suburbanization of poverty has gathered momentum, Americans who use housing choice vouchers (HCV) to help pay for their housing have increasingly moved into suburban areas as well.” The authors studied data from 2000 to 2008 to see how this shift has taken place.
They found that:
Nearly half of all HCV recipients lived in suburban areas in 2008. However, HCV recipients remained less suburbanized than the total population, the poor population, and affordable housing units generally.
Black HCV recipients suburbanized fastest over the 2000 to 2008 period, though white HCV recipients were still more suburbanized than their black or Latino counterparts by 2008. Black HCV recipients’ suburbanization rate increased by nearly 5 percent over this period, while for Latinos it increased by about 1 percent. The suburbanization rate for white HCV recipients declined slightly. Read More »
and 
. If you haven’t seen it yet, the movie features Steven Levitt and Stephen Dubner, and was made by a dream team of documentary directors. Paste Magazine named it one of the 