Megan McArdle’s Hack Post on Elizabeth Warren’s Scholarship

So Megan McArdle wrote a long post attacking Elizabeth Warren as a scholar. What’s surprising is how little “there-there” there is to her critique. I would love to see nomination hearings based around how expansive of a definition to use for medical bankruptcies and watching Warren rip the face off of Senators when it comes to empirical methods. I doubt it is going to come to this, but I’ll go ahead and respond. (I’ve been waiting for part two to respond, which I assume may not show up.)

Because that isn’t what this is about. It’s about giving the impression that Warren is a weak scholar. Given that Warren is considered “the leading authority in the country on bankruptcy law,” being called a hack by McArdle, of all people, is something. Especially when we get a gem of a major screwup like this right out the door in the post:

Megan McArdle, blog post: 2. The response rate on their survey was only 20%. Given the deep shame surrounding bankruptcy, you have to worry that they got an unrepresentative sample. And how is that sample most likely to be unrepresentative? Well, one pretty likely way is that people who went bankrupt through no fault of their own–folks who got whacked by large and unpayable medical bills or a business closure–were more likely to respond than the people with drug or alcohol problems, profound depression that left them unable to work, compulsive gambling issues, and so forth….

Katie Porter, comments: Also, I would like to correct the misstatement, I believe of a commentator, that Ms. McCardle reproduces in her article above, that the response rate to the survey was 20%. The response rate was right at 50%, or just under that, depending on the exact metric for response rate used. More detail on the response rate for the written survey, as well as on the bias checks that were performed for sample selection bias, is also available in the above articles.

Megan McArdle, comments: They had a 50% response rate on the questionnaires, but by the time you got to the interviews, they were down to 20%. It’s in the article.

I have no idea what to make of this. Megan opens her critique by saying that there’s a massive bias in the data sample implied by the low response rate of 20%. A commenter politely responds that the response rate is 50%. She is very polite as the 50% is on the front page of the 2009 study. Megan then says she meant the interview rate.

Nobody is perfect, especially on the blogs. I’ve messed up data on this blog before, I’ve confused terms that I knew but didn’t catch in a proofread, and I’ve used data and terms that I thought meant one thing that turned out to mean another thing. Anytime someone points this out I correct it, or pause and double-check what I thought, or quietly ditch using that information. Humility is usually the best antidote to being a hack.

But notice how Megan just keeps on going. This is one of the major planks of her argument, that the sample is corrupted, and when someone points out that what she stated was factually incorrect she just changing the terms and keeps on going as if she what she wrote wasn’t wrong. How is a reader supposed to read this? Did she mean to say interview rate in the beginning? Does she think that a 50% response rate is too low? Useless without a 50% interview rate? Did she know at the time of writing the difference between the two terms? Does she want to reconsider her argument?

(It’s pretty similar to the classic McArdle instance of “It wasn’t a statistic–it was a hypothetical” when it came to US profits of pharma.)

Which is a shame. Like the hypothetical case there’s no pause, no reflection, so as a reader I just want to assume bad faith and move along.

But I won’t. Let’s continue.

Causes, Contributes

“4. Their methodology is quite explicitly designed to capture every case where medical bills, or medical loss of income, coexist with some other causal factor–but the medical issues are then always designated as causal in their discussion…If you’re a plumber who has a stroke, you may well end up in bankruptcy simply because you lose income while you can’t work (the medical bills may or may not play a large causal role).”

Another problem Megan has with Warren’s research is that Megan believes it says medical debt is the cause of bankruptcies instead of something that contributes to bankruptcies. Instead of simply being a contributor among many multi-causal problems Megan states that Warren believes that medical debts are the sole cause (“always designated as causal”) instead of a contributor among a multi-causal set of items.

Is that true? Let’s look at the title of the paper that kicks off this line of research: “Illness And Injury As Contributors To Bankruptcy.” (my bold, italics, and underline.) It’s in the #@$%@# title that it’s a contributor and not the sole cause!

From the abstract of the 2007 paper Megan hates: “Our 2001 study in 5 states found that medical problems contributed to at least 46.2% of all bankruptcies…CONCLUSIONS: Illness and medical bills contribute to a large and increasing share of US bankruptcies.” (my bold, italics, and underline.)

This may look like a little nitpick but it is important: bankruptcies are multi-causal, and as far as I can tell Warren’s research has always emphasized this. Certainly the titles and conclusions of her paper place emphasis on this. Megan is trying to imply a con job, that Warren is an ideologue who manipulates her results and her conclusions to be stronger than they deserve. That’s not true.

Data Data Everywhere

There’s a lot of this: “The authors have an odd tendency to ignore what the respondents themselves say. 32% of those surveyed about their 2007 bankruptcies–not 62%–reported that ‘medical problem of self or spouse was reason for bankruptcy.'”

Notice what is going on here. Warren and her co-authors realize that there are a lot of ways to interpret the data and, ethically, put the data out there so others can disagree and make counter-arguments. All the data results are there. Megan does make these counter-arguments but gives off the impression that something is being hidden, or a sneaky move is being made.

Which gets to the bigger complaint Megan has about the paper: “As I discussed at the time, early 2007 is a terrible, horrible, no good, very bad time to do any sort of study on bankruptcy… Bringing me to my next point: the paper thoroughly obscures the point that by their own calculations, the number of medical bankruptcies fell quite dramatically between 2001 and 2007.”

I still don’t get this complaint. There was an absolute overhaul in the way bankruptcy is carried out in 2005. Comparing the absolute numbers before and after wouldn’t be an apple-to-apples comparison. You can argue that no valid research could possibly done and that any empirical statistics should never be carried out on post-2005 data, which is what I think Megan argues, or that you acknowledge the data limitations, do your best to compensate and provide additional information, which Warren and the rest do under the section “Changes in the Law”, and carry on. I’m in the second camp.

I’m in Delaware.

“A pretty convincing paper argues that the single best predictor of bankruptcy is simply how much debt you’ve accumulated–not income, job loss, divorce, or what have you.”

This paper Megan finds convincing is a study of the population of the state of Delaware. Delaware. Nevermind that it puts together Delaware bankruptcy records with data from the Survey of Consumer Finance in a way designed to exacerbate data differences and corrupt instruments, which is a major problem. Are we comfortable thinking that Delaware can substitute in for the nation, especially when we have a representative nationwide sample with a 50% response rate like the one Warren uses?

And as Thomas Levenson points out:

But as McArdle completely failed to acknowledge, Zhu does so while using somewhat more stringent standard for counting medical expenses as a factor in bankruptcy than other scholars employed — as he explicitly acknowledges. He concedes the continuing significance of medically -induced bankruptcy. He acknowledges what he believes to be a weak underweighting of that factor (because some people pay for medical expenses on credit cards). And he notes that a number of other studies, not limited to those co-authored by Warren, come to different conclusions.

In other words: McArdle correctly describes one conclusion of this paper in a way that yields for its readers a false conclusion about what the paper itself actually says.

Megan herself says that she thinks health care costs contribute to a real number of bankruptcies. The question is how to best go about defining what constitutes a health care cost related bankruptcy. If you read McArdle’s post you would think that they use similar data and use similar methods but find different results. Instead, the study she likes uses Delaware and a consciously described more exclusive definition.

How you rate bankruptcy rates from medical conditions is going to be a function of how strictly you define a medical bankruptcy. Zhu has a higher-filter than Warren’s, so these results aren’t surprising. I could see using a stronger filter than Warren’s. The question is whether or not Warren’s filter is a good one. If you read Warren’s 2009 paper you see that her results are robust to alternative specifications: “Adopting an even more stringent threshold for medical debts (eg, eliminating those with medical debts below 10% of family income) would reduce our estimate by <1%.”

That Zhu paper is part of a dialogue that Warren started about the role of medical debt in bankruptcy. It’s weird for Megan to call Warren a hack but then applaud Zhu’s paper: it’s all part of the same continuum of research. If she likes Zhu’s paper she should thank Warren for starting the discussion.

Data Undercounting

Before moving on I want to point out that the coolest new research is that the 2007 data Warren uses is probably undercounting medical debt significantly. From Jacoby and Holman’s Managing Medical Bills on the Brink of Bankruptcy:

This paper presents original empirical evidence on financial interactions between medical providers and their patients who go bankrupt. We use a nationally representative sample of people who filed for bankruptcy in 2007 to compare two popular but hotly contested methods of measuring medical burden. By applying both methods to the same filers, we find that nearly four out of five respondents had some financial obligation for medical care not covered by insurance in the two years prior to filing as measured by the survey method. The court record method paints a different picture, with only half of the cases containing identifiable medical debt, and of substantially more modest amounts. We test several theories to explain the discrepancy and find we can account for it to a significant extent by filers’ methods of managing medical bills that make it difficult or impossible for the court record method to detect them. For example, we find the highest rates of mortgage and credit card use for medical bills among respondents with the largest discrepancies between the survey method and the court record method. Respondents who report medical bills as a reason they filed for bankruptcy mortgaged their homes for medical bills at nearly four times the frequency of other filers, and were about a third more likely to use credit cards for medical bills. We also find disparities by age, sex, race, and housing tenure that skew the court record measure. Our findings suggest that the advice offered by experts in “medical practice management” reduces providers’ financial exposure from patient liabilities. One implication of this “success” is that the court record method of measuring medical bills should not be used on a standalone basis to measure the impact of medical bills on financially distressed families. Also, the court record method should not be used to refute survey estimates of medical burden in debates over health care or bankruptcy reform.

It look like the 2007 data that Warren uses for the 2009 paper undercounts medical debt. The creditors from bankruptcy aren’t always clear on what is and is not medical debt so these authors hit the data to re-examine it. So the results are probably stronger. Cool.

Two-Income Trap

If you made it this far, I feel terrible for you. I feel like Virgil leading you through a Glibertarian Inferno.

As far as I can tell, Megan thinks the book Two-Income Trap is a good book. She has three critiques:

1) “The first is that Warren simply fails to grapple with what her thesis suggests about the net benefits of the two-earner family.” I’m not sure I understand what this means. I think, and there’s certainly nothing in the book to discount this, that Warren believes women having careers is a major net benefit both to women themselves and society as a whole. (Warren is a pretty accomplished person, after all.)

What she points out is that as a rising costs for certain goods (health care, education, and housing in particular) there isn’t a safety net if one income is lost via illness, divorce, or death via the family’s work structure. As someone familiar with risk management it makes perfect sense.

2) “Warren kind of waves her hands and mumbles about social programs and more supportive work environments. There is no possible solution outside of a more left-wing government.”

I completely grant that this books identifies a major problem for the economic security of the middle class but doesn’t completely solve it. True. Is that a serious knock? It is also true to me that the obvious solution is something like single-payer health care and free college. But one could also imagine a solution of a Hong Kong style health care, or more competition/consolidation of health care across state lines. I don’t think those are good solutions, but maybe you do. If the right wants to become relevant again, addressing these insecurities is incredibly important.

Side note: Is Warren a crazy left-winger? As Thomas Levenson brings up in a must-read beatdown of that post, Warren’s essential final point in the book is that ”…families need to safeguard themselves”. If you read this story from her money-planning guide “All Your Worth” she advises a family to be clearer in separating discretionary from non-discretionary spending and budgeting accordingly. Is this the sound of the proletariat seizing the means of production? Comrades: rise up and plan your monthly budget in a smarter way!

3) “Warren argues that housing consumption hasn’t actually increased much in the last few decades: by less than a room per house.” Housing price increases have vastly outstripped housing price consumption; housing prices have tripled since 1987. That easily surpasses a 20% increase in housing consumption, and that’s all that’s necessary for Warren’s point to carry. Ed Glaeser’s work actually supports Warren’s point. If housing supply is inelastic, then of course as populations grow the price of housing will be bid up. But again, if this is the biggest attack on the book I think it’s safe to declare it a victory.

I actually came across Warren from this 2005 issue of The Boston Review, where Warren argued against the myth of overspending contra people like Juliet Schor and others who thought Americans were on a luxury fever trip. Warren pointed out that people actually spend less on clothing that they used to as a result of globalization and technology, but that the real squeeze on middle-class families came from increases in health care, education and housing.

This made me prepared for the wave of “consumption inequality isn’t that bad” arguments that washed over the internet last year. Because if you just look at discretionary spending, they are right! People get more cheaper. But if you look at the whole picture of what constitutes middle-class security, it is actually getting much more expensive. Now the big paper quoted by the consumption inequality camp only looked at discretion income. Christian Broda and John Romalis’s “The Welfare Implications of Rising Price Dispersion” is mostly about food. When pieced together, the idea that people are eating cheaper food to keep discretionary spending tight, are eating cat food to pay for health care, is a much different picture than simply looking at how cheap you can get a nice stereo.

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28 Responses to Megan McArdle’s Hack Post on Elizabeth Warren’s Scholarship

  1. wcw says:

    As I never tire of pointing out, my rules for The McMegan are the flip side of DeLong’s rules for Krugman: 1, remember that Megan McArdle is wrong; 2, if your analysis leads you to conclude that Megan McArdle is right, refer to rule #1.

    Her field is agitprop, not analysis.

  2. Brad Davis, Ph.D. says:

    Excellent discussion of McArdle’s rather naive attack on Warren. To me, it seems that McArdle’s problem arises from her clear bias – she is not attempting to comment on What Warren has said, or to clarify anything, she is, however, invested in demonstrating that Warren is wrong in her handling of very complex data and therefore an incompetent when considered for the position in government. In reading McArdle’s article, it appears that she is not cognizant of her own bias or how it affects her own perception. The result of this bias makes her her arguments weak at best, and often stupid.

    One of the characteristics of these data (bankruptcies, medical costs and such) is that the data are messy. There are many reasons for that, but in dealing with such data, one must make clear what assumptions were made in arriving at any conclusion – Warren does that – always. McArdle then takes the inherent messiness of the data an attempts to use that inherent property to bludgeon Warren – as though Warren is responsible for for that and has not taken it into account. Unless one reads the papers Warren wrote (which you have clearly done), the critique put forward by McArdle appears trenchant. Absent an analysis that shows that Warren’s analysis is wrong in its conclusion, McArdle’s critique becomes just an overly verbose expression of her bias. Thus McArdle provides cover for those who would ignore the realities of consumer finance. Unfortunately there are few ways to counter her attack.

    Thank you for the clarification here – I believe that Elizabeth Warren would make an excellent head of the consumer protection bureau. Given that she would insist on doing things right, whe will probably go teh way of Dawn Johnson – this administration is as eager to avoid competence in critical areas as was the Bush administration.

    At times I wish that McCain had won the election – then I would be able to say “I didn’t vote for this.”

    Brad

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  4. mdh says:

    what wcw said, a couple comments up from this one.

  5. El Cid says:

    There are actually many statistical techniques to control for sample size. A shit-brain hack like McArdle can’t be bothered to have any actual knowledge in her head before publishing. Thank goodness she had the right parental connections and social circles.

  6. brantl says:

    Yeah, she’s gotten her ass kicked by her own commenters, lately.

  7. If you’re a libertarian like McCardle you’re forced to grossly mislead and/or outright lie to get your libertarian goals advanced in a Democracy because only a tiny minority would support libertarianism if they knew how much pain, suffering, loss, third world level economy, science, and medicine, and decimation of growth in economy, science, and medicine it would cause to avoid losing even small amounts of economic freedom.

    Of course, a lot of libertarians just honestly don’t understand the dire economic implications of libertarianism (what’s an externality? what are transactions costs? zero marginal cost ideas in a high tech economy? etc.) or they would never support it. Perhaps McCardle is one of them, but from what I’ve seen it really looks like she has this your own your own, don’t come to me attitude you often see in hardcore libertarians.

    • David in NYC says:

      Interesting that you should mention “externalities” here, because it brings to mind a personal experience with the queen of the glibertarians, Ayn Rand.

      Shortly after I received my BA, my boss at my first job convinced Ayn Rand to come speak to his department (he was a well-connected Yalie, so I assume he pulled some strings to get her to come). So, after she gave a short presentation about the wonders of Randian thinking and “going Galt” (though, to be fair, she did not use that terminology), the floor was opened to questions.

      At this point, I — being a recently-graduated, smart-ass economics major — asked her a simple question about, yes, “externalities” and how that affected one’s ability to pull oneself up by one’s bootstraps. IIRC, I asked in the context of a successful businessman being wiped out by a natural disaster (“act of God”, as they put it in the parts of your insurance where they describe when they won’t pay you).

      Not only could she not provide a direct, coherent response to my question, but she also did not even understand my terminology. For example, I had to clarify what I meant by “externality” because she acted completely befuddled by the term.

      And thus did I discover a very long time ago that Ayn Rand and her camp followers were, basically, just making sh*t up. Or, as others have put it, a libertarian is just a Republican who wants to smoke pot.

  8. Tom says:

    Thank you for the kind props to my post on this subject, and even more for the comprehensive, point by point way in which you hammer the case against McArdle’s hackery here.

    It’s an endless job, beating back against this particular source of blather, but it needs to be done.

  9. curv3ball says:

    It’s an endless job, beating back against this particular source of blather, but it needs to be done.

    Indeed, and you gents are doing a fine job of it.

  10. I mean you really have to think about what it means to be a hardcore libertarian. The government doesn’t require anyone to do anything, other than not commit crimes. So,

    – No free public schooling. You want to send your kids to school, you pay for it. No making me pay taxes to send your kids to school.

    – No Medicare or Social Security for our seniors – You want health care and a pension Grandma, you should have saved up enough money.

    – No free public vaccinations, or required vaccinations – Someone gives you polio, just try to find that person and prove it in court to get enough of a settlement to make you as well off as before – Good luck!

    – No governemnt money spent on research to cure cancer and aids and advance basic science – You want it, you pay for it, even though it’s impossible to patent, there’s a massive free rider problem, and private companies will keep it secret so it’s utilized by just a tiny fraction of the worlds scientists, rather than all of them, at zero transactions cost, on the internet if the government pays for it.

    And on and on so we’re a third world country.

    So you can see why hardcore libertarians can’t generally be upfront and honest if they’re ever going to advance their philosophical goals in a democracy. You can’t win at the ballot box if only a tiny minority want what you want.

    • Ryan W says:

      Re: Richard H. Serlin

      While some libertarians are fairly hard core beyond the point of reasonableness, there’s room for a lot of movement in a more libertarian direction before any serious problems kick in.

      There are a few issues here;

      1. “No free public schooling.”

      True, but historically there have been private schools which were quite effective. And many fiscal conservatives would probably be happy with something similar to vouchers so they had some educational choice and competition.

      2. “No Medicare or Social Security for our seniors”
      Of course, the flip side is that this means more money for people in the prime of their lives since they don’t have to pay into these programs. Would you rather have $80,000 on your 25th birthday or $300,000 in free medical bills when you’re 80. At least some people would choose the former instead of the latter. It’s a lot more efficient for people to spend their own money on what they want, including medicine, than having to negotiate with several bureaucracies and insurance agencies to determine if a person gets their desired care. Insurance is a horribly inefficient way to purchase anything. If we purchased groceries with insurance, apples would be $3 each and would correspond to a ‘standard of food’ similar to the old granny smiths, not the nice, imported Fujis.

      3. “No free public vaccinations, or required vaccinations”

      Personally, vaccinations are one of the handful of intrusive government projects I’d actually support.

      But these statements are misleading. You can get waivers now.

      And vaccinations are one medical service which isn’t beyond any American’s capacity to pay, even without insurance.

      “Someone gives you polio, just try to find that person and prove it in court”

      This is almost deliberately misleading. If you take a vaccine, you’re not vulnerable to polio. The most reasonable argument for compulsory mass vaccination is herd immunity which protects those few individuals who cannot get vaccinated for medical reasons.

      “You want health care and a pension Grandma, you should have saved up enough money.”

      It’s entirely possible to purchase a private pension if you want one. You pay for the current system anyways. Do you think it’s free? Basically, your argument seems to boil down to; it is somehow rude to let people control all their own money. We should force them to save some for retirement. Which some people may believe, but it’s hardly a fait acompli moral truth.

      “No governemnt money spent on research to cure cancer and aids and advance basic science”

      There are plenty of private foundations dedicated to such research. Look at Bill Gates’s funding of HIV research. It’s not like money simply disappears if the government doesn’t spend it. The argument that you need to make, then, is that such private spending is somehow less cost-effective than public spending.

      Consider that even folks like Warren Buffett, who advocate more taxation, make their donations out to private charities rather than writing another check to the government. Their revealed preference speaks volumes about whether they think the government is a worthy charity.

      Patenting may or may not be something that libertarians are opposed to. Outside of medical patents or, more generally, patents which require some massive investment to be recouped, patents seem to do more harm than good. There’s a limit to how well you can conceal your trade secret and still actually sell a product.

      “there’s a massive free rider problem”

      There’s already a massive free rider problem regarding drugs. Look at all the various countries whose governments collectively bargain down the price of the drugs that they use. The result is that America pays vastly more than Canada for drugs. And don’t even get me started on Mexico. Granted, we get better drugs for this, since the pharmaceutical companies are able to make some money on their patent.

      “And on and on so we’re a third world country.”

      This simply doesn’t follow. Most third world countries are highly socialistic and consequently highly corrupt. I’d venture to say that the problem with the Philippines (where I’ve worked) is not a lack of socialism but the fact that the government is simply too corrupt to function. A smaller government might very well cause certain problems. But even if we assume that American charity doesn’t take over for a smaller government, the result of smaller government would be more similar to Rome than to a third world nation.

      It’s worth remembering that Zimbabwe’s GDP plummeted when it tried to redistribute wealth.

      It’s also worth remembering that currently we don’t even pay for the programs we have, and we’re going to saddle our kids with a massive debt burden.

      I appreciate many things the government does; firefighters prevent the externality of my neighbor’s burning house and lack of care from incinerating mine. Environmental laws, to an extent, keep my food and water clean. Labeling laws allow me to make choices based on informed consent. The police help keep down organized crime. (Though the police pensions in California should be considered criminal in their own right)

      And so on. There’s a need for some government. But the notion that increased libertarianism will make America a third world nation is no more reasonable than saying any increase in centralized power is a step towards totalitarianism and Nazi Germany.

  11. Mongo, A Dog says:

    Once, I believed Libertarian arguments (particularly those of Alan Greenspan) made so much sense. I also though McArdle was hot.

    Then the lithium kicked in.

  12. Pingback: Why Friends Don’t Let Friends Cite The Atlantic’s “Business and Economics Editor”: Further to the Megan McArdle is Always Wrong chronicles. « The Inverse Square Blog

  13. Charles II says:

    Ideology always trumps facts and reason in a one-party state. In our case, the state is run by The Business Party. Therefore, since we are Forbidden by the Party to have universal, affordable health care, any facts or reason that suggest otherwise must be wrong.

    This is, as Atrios says, how empires fall: in a cloud of self-deceit and bulls–t.

  14. WM says:

    Hi,

    before I make my point I want to make some things clear
    1) I am a fan of this blog and of Mike’s analysis in general
    2) I think Warren would be a great person to head the consumer financial protection agency
    3) I can’t think of a time when I have agreed with Megan McArdle before

    Having said that, and with all due respect, I think this post (Mike’s) is exactly wrong on the substance: Warren and her co-authors HAVE produced a methodologically poor series of papers on the link between bankruptcy and health.

    I am a student in the late stages of an economics PhD who was until recently looking into writing a paper on this topic – until I failed to get the right data from a health insurer. I have read the literature on this, and have been rather exhaustingly trained in empirical methods. If I were to present a paper like Warren at al.’s I would ruin my career as an empirical researcher before it began.

    I agree that some of McArdle’s points are off target, but the key point is that the data they use is ill suited to identifying a causal link between health shocks and bankruptcy, and so we learn nothing from it. Their data cannot determine whether individuals with high medical costs would have declared bankruptcy in the absence of such costs, so we are left with uninformative correlations. I personally believe health shocks cause a large proportion of bankruptcies, but Warren at al.’s work does not add evidence for this belief.

    So far, the best paper in this literature is Notowidigdo and Gross (2009). The link is here: http://www.nber.org/~notom/papers/Gross_Notowidigdo_20090921.pdf.

    They conclude that “out-of-pocket medical costs are pivotal in roughly 26 percent of personal bankruptcies among low-income households.” And their conclusion actually follows from their evidence.

    Warren has many virtues, but she and her co-authors have not been careful empirical researchers in this series of papers. As I said earlier though, I would support her as head of the CFPA.

  15. Pope Ratzo says:

    It makes me uncomfortable, but I can come to no other conclusion but that Ms McArdle wants to intentionally misinform her readers.

    She can’t be this sloppy except on purpose. I have taught English composition and by the end of a semester not one of my young students makes the kind of mistakes (or misstatement) that McArdle makes in every one of her articles.

    I miss the Atlantic. I used to subscribe and now I wouldn’t even pick it up in a library.

  16. Sisyphus says:

    But the post above doesn’t take into account the strongest argument against Warren’s arguments in “The Two Income Trap,” which is that Warren seems to intentionally ignore the increase in tax liability during her study period. Taxes are actually the single largest percentage increase line item, but Warren basically brushes them under the rug.

    McCardle pointed it out in her post, and she is really borrowing from an analysis of Todd Zywicki on Volokh Conspiracy. But it’s an important point regardless of the source. Increased tax liability is a major contributor to the decrease in discretionary income Warren finds, probably the most important contributor. And unlike additional housing or education, those aren’t expenses people can choose.

  17. Beauzeaux says:

    I am not fond of Megan McArdle. I am a great admirer of Elizabeth Warren.

    HHowever, I am not fond of the use throughout this post of “Megan” vs. “Warren.” Writing about a woman and always using a first name is infantilizing her. I admit that it’s a great temptation because McArdle is an idiot, but it’s a bad habit and I recommend against it.

    • RhZ says:

      What? That’s idiocy. Using a first name exclusively infantilizes someone?

      Since when? Is it ok if we alternate Megan with McMegan?

      Is it ok if the writing refers to a man?

  18. Jaim says:

    Nice piece. You have to wonder how much longer The Atlantic can afford to have such an obvious Republican apparatchik on the payroll.

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  20. Mike says:

    Beauzeaux,

    Thank you for pointing out that I was doing that. I will hide behind the alliteration in her name that it blurs together into McMegan in my head, but I shouldn’t do that. No disrespect was meant to anyone through that, and I will watch myself on it in the future.

    WM,

    I am actually going to write something about this in the near future, maybe tonight, but to me the problem some have with her isn’t her empirics but with the fact that it isn’t rational agent modeling. That she uses the tools of economics well but skeptically and isn’t an economist. I used to be part of the exogenous/endogenous credit risk modeling debates back in the day, so I tend to take a skeptical look at both and weigh their strengths and weaknesses, so I agree with her approach.

    But you are right that it would get laughed at at an economics department: where’s the bellman equations!? Where’s the algebra and the backwards recursion!? To me, this is a major selling point though.

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  24. I gave up the Atlantic years ago. I have a problem with arrogance, though I could always tolerate it with Harper’s. At least Lapham had a worldview….that didn’t involve business interests. Fallows, not so much.

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