Volume 32 • Issue 4 • November 2018
Features: pg 5-6 Rotating Columns: pg 7-9
NAFE Events: pg 10-11 Photos from 2018 NAFE Receptions & Meetings featured throughout this issue
President’sLetter Mike Nieswiadomy, President, NAFE michael.nieswiadomy@unt.edu
Dear NAFE members: Fall is upon us. The cool air is invigorating and signals that it is time for our Fall and Winter meetings. The Southern Economic Association meetings was in our nation’s capital, Washington, D.C., Nov. 18-20, 2018. Gil Mathis organized an interesting conference with presentations by Elizabeth Arias of the Centers for Disease Control, and by representatives from the Bureau of Labor Statistics and the Congressional Budget Office. As we look into 2019, NAFE’s annual national meeting (in conjunction with the Allied Social Science Association) is scheduled for Jan. 4-8, 2019 in Atlanta. Dave Tucek and Scott Gilbert have put together a four-session program with 12 interesting papers. Art Eubank, Charles Baum and David Schap are organizing the Winter meeting Jan. 25-26, 2019 in San Juan, Puerto Rico. Chris Young is organizing the NAFE meetings at the Eastern Economic Association, Feb. 28 - March 3, 2019 in New York. Jack Ward and Steve Shapiro are organizing the International Meeting on May 25, 2019 in Evian-les-Baines, France. Christina Tapia is organizing the NAFE sessions at the Western Economic Association International meeting, June 29-30, 2018 in San Francisco. Please read this issue of The Forecast for more details about these conferences. I like to highlight a few NAFE members’ accomplishments in each issue. I want to recognize Patrick Anderson for receiving the 2018 Edmund Mennis Prize from the National Association for Business Economics for his paper “Business Location and Strategy Decisions: Comparing Modern and Traditional Methods”. Patrick will be presenting on this topic at our national meeting in Atlanta. I encourage you to vote in our elections for NAFE Vice Presidents (the candidates are Jerome Paige and Michele Angerstein-Gaines), and to participate in the vote for a change in the NAFE bylaws to allow the term of the Executive Director to be renewed for additional three-year terms at the discretion of the majority of the Board of Directors. Also, the Board
has received comments on the proposed changes in the SEP/PPP and will take these into consideration before submitting the changes to a full membership vote. I encourage you to join the NAFE-L email list to participate in forensic economic discussions. I also encourage you to attend the NAFE meetings. You will gain forensic economic insight and enjoy meeting fellow members. I look forward to meeting you and your guests. I have enjoyed my two years as President and appreciate the support that I have received. At the end of our Atlanta meetings, Kevin Cahill will take over as President. NAFE will be in good hands. • Above Photos: 1) Christina Tapia & David Tucek at the WEAI. 2) Attendees at the International Meeting in Bath, England
National Association of Forensic Economics, Inc.
Board of Directors P resident
Michael Nieswiadomy University of North Texas
P ast P resident
Lawrence Spizman Spizman Economic Associates
V ice P residents Western Region
In This Issue
1 • President’s Letter, Mike Nieswiadomy
Member News
3 • From the Executive Director, Marc Weinstein 3 • Welcome New Members! 4-5 • The Forecast Plays 20 Questions with Mike Nieswiadomy
Christina P. Tapia Northwest Economics, LLC
Southern Region
Gilbert Mathis Murray State University
Eastern Region
Christopher Young SOBEL & CO., LLC
Midwesst Region
William H. Rogers Lindenwood University
A t -L arge
Scott Gilbert Southern Illinois UniversityCarbondale
David Tucek Value Economics, LLC
Feature
5-6 • Contrary to the Hype – Real Trends in Nontraditional Work by Gad Levanon
Rotating Columns
What’s on your Nighttable?
7-8 • Book Review of David Pilling’s The Growth Delusion by Frank Slesnick • 8-9 Book Review of Steven Payson’s The Downsizing of Economics Professors: How it Will Happen, and Why it Will Succeed by Sam Miles
Meeting & Regional Updates 10-11 • Meetings & Regional Updates
E xecutive D irector Marc Weinstein Team Economics
E ditor , T he F orecast Lane Hudgins Lane Hudgins Analysis
“Expert Opinion” Column Editor David Schap College of the Holy Cross
P roduction E ditor Nancy L. Eldredge
Graphic Design, The Forecast Amanda Morgenstern Morgenstern Design 2
Please send comments, suggestions, and news items for The Forecast to the Production Editor, Nancy Eldredge, at the addresses below. Submissions from NAFE members are encouraged, and submissions guidelines are available online at http://nafe.net/TheForecast, or by contacting the editor, Lane Hudgins, at lane@lh-analysis.com. The Forecast – A Newsletter of the National Association of Forensic Economics is published four times per year by the National Association of Forensic Economics (NAFE). NAFE, its officers, editors and members, do not promote, endorse, or recommend any opinions, products, or services presented or discussed in this newsletter. All information found in this newsletter is for informational purposes only, is not intended as forensic economic, economic, or legal advice, and is not to be considered ‘peer-reviewed’. Views expressed in this newsletter are not necessarily the views of NAFE, its officers, editors or members. All portions of this publication are copyrighted and cannot be reprinted or reused without the permission of the National Association of Forensic Economics, or other copyright holders.
P.O. Box 394 Mount Union, PA 17066
nancy@nafe.net
Tel: 866.370.6233 Fax: 814.542.3253
nafe.net
Marc Weinstein, Executive Director, NAFE
In last year’s “NAFE Board of Directors Initiatives 2017” article (published in The Forecast Volume 31, Issue 4, November 2017), I outlined the current Board of Directors, the additional individuals who attend our two annual Board Meetings, and our overall tasks of managing the Association’s business. Starting with this article and moving forward, I intend to summarize NAFE’s annual initiatives in what I will refer to as the “State of the NAFE” and summarize some of the annual accomplishments, events, and other tidbits from the past year. Several years ago, I summed up the Board’s mission by coining the phrase, Promoting the Advancement of Forensic Economics, which continues to be the ultimate guide in assisting the Board in making decisions for the betterment of the organization. Clearly, none of our mission would be possible without the tremendous efforts performed by Nancy Eldredge, NAFE’s Administrator, and Production Editor for both the Journal of Forensic Economics (JFE) and The Forecast; Steve Shapiro, Jim Ciecka, and Kurt Krueger, Editors of the JFE; Lane Hudgins, Editor of The Forecast; and by the seven Board members as follows:
Welcome New Members! The following is a list of new NAFE members for the period July 1, 2017 through September 30, 2018.
Member News
From the Executive Director
Cristina Benton, East Lansing, MI, U.S. John Berg, Mercer Island, WA, U.S. Matthew Cushing, Lincoln, NE, U.S. Thomas Dawson, Silver Spring, MD, U.S. Martin Gilson, Oakland, CA, U.S.
• President - Michael Nieswiadomy • Vice President East – Christopher Young • Vice President Midwest – William Rogers • Vice President South – Gilbert Mathis
• Vice President West – Christina Tapia • Vice President At-Large – Scott Gilbert • Vice President At Large – David Tucek
Collectively, the Board of Directors and the others noted above are responsible for the continued success of the National Association of Forensic Economics. I could not be prouder to assist with the mission and thank you all profoundly for your exceptional work. In 2018 and through the NAFE Sessions at the Southern Economic Association Annual Meeting in Washington, DC on November 18, 2018, the NAFE Board of Directors and others associated continued their pursuit at Promoting the Advancement of Forensic Economics by performing the following: • Organized six regional, national, or international sponsored meetings, as follows: ▪ The ASSA in Philadelphia, Pennsylvania ▪ The Winter (Caribbean) meeting in San Juan, Puerto, Rico (cancelled due to Hurricane Maria) ▪ The Eastern Economic Association in Boston, Massachusetts ▪ The International (Europe) meeting in Bath, England ▪ The Western Economic Association in Vancouver, British Columbia, Canada ▪ The Southern Economic Association in Washington, DC • Featured Kenneth R. Feinberg, Esquire, a leader in alternative dispute resolution who was Special Master of the September 11th Victims Compensation Fund, as our keynote speaker at our annual meeting in Philadelphia (ASSA) • Presented a special session on minimum wage policies that featured noted economists Orley Ashenfelter, WEAI President and Professor of Economics at Princeton University; David Green, Vancouver School of Economics; Jacob Vigdor, University of Washington; and Michael Reich, University of California, Berkley • Encouraged submissions towards the production of the Journal of Forensic Economics • Produced quarterly issues of The Forecast • Continued our extensive review and update of the NAFE Statement of Ethical Principles and Principles of Professional Practice (SEP/PPP) • Improved the NAFE-L email list serve, a valuable resource to our members • Promoted and marketed NAFE’s benefits by sponsoring receptions at various other economic organizations • Initiated a review of our membership demographics • Evaluated and executed long-term plans for the future leadership of the organization Additionally, and as the unofficial photographer for NAFE since 2010, I present the following chart of appearances on the cover of The Forecast through the first 11 issues (2016 through August 2018). Kindly note that I do not select the pictures and merely provide a variety of pictures from our various annual meetings. More recently, I have received assistance with photographs from Craig Allen and Mike Nieswiadomy and thank them for forwarding their photos:
Alfredo Gonzalez, Aguadilla, PR, U.S. Steele Jones, El Paso, TX, U.S. Valentina Kachanovskaya, Tucson, AZ, U.S. David Sutherland, Lehi, UT, U.S. Michael Visser, Santa Rosa, CA, U.S.
Appearances on the Cover of The Forecast (through first 11 issues)
Name
Cover Appearances*
Steve Shapiro Craig Allen Marc Weinstein David Rosenbaum David Tucek Larry Spizman Jack Ward Bill Brandt Gill Mathis Mike Niewsiadomy *minimum two appearances
8 4 4 3 3 3 3 2 2 2
Lastly, and on behalf of the entire membership, I am extremely grateful for the leadership and initiative of the Board of Directors, et al in 2018. I especially want to thank Michael Nieswiadomy for his wonderful Presidency over the past two years, and Gil Mathis and Scott Gilbert for their three years of commitment and service as Vice Presidents to the Board. I personally value their camaraderie and friendship and look forward to many more years of their participation at the various NAFE meetings. •
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Member News
The Forecast Plays 20 Questions with Mike Nieswiadomy As his term as NAFE’s President comes to an end, The Forecast is pleased that Mike Nieswiadomy agreed to be this issue’s featured member. Thank you, Mike. Where were you born and raised? I was born in Ft. Worth, Texas. I was raised in Mesquite and Dallas, Texas What did you want to be when you grew up? An engineer, like my Dad. Where did you go to school? Grade School: St. Pius X Catholic School; High School: Bishop Lynch H.S.; College: University of Dallas; Ph.D.: Texas A&M University First job? Farrell’s Ice Cream Parlor and Restaurant (a Seattle based company that spread nationally and was acquired by Marriott Corp.) in Town East Mall in Mesquite, Texas. I was a dish washer, busboy, soda fountain jerk, and a waiter. I also checked the trash dumpsters for lost silverware, etc. I once discovered that an enterprising new dishwasher found it quicker to throw away plates, glasses, silverware, etc. than to wash them. Management decided to not keep this student of efficiency.☺ We sang “Happy Birthday” and rang the bell for a lot of folks. It was a fun place to work. I made $1.25 per hour starting wage! How long have you lived at your current address? Since 1991 What is one word that describes you? I would like to say “Kind” but I need improvement in that area. So “tenacious” is probably the best adjective. Which words or phrases do you most overuse? I tell my students to “practice.” What is your most marked characteristic? Hard-working When and where are you happiest? When I am with my family. Early bird or night owl? Night owl Beach, city or mountains? Mountains What trait do you most admire in others? Kindness and compassion
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Mike Nieswiadomy on Wall Street
Do you have any hobbies? I am a runner. I won my age group in the Dallas 5K Turkey trot the last two years. I ran a 20:22 5K last year. I was a tennis player in college. I love to ski, but the mountains are far away from Texas and I can’t get Tom Roney to ski with me! ☺ Favorite indulgence? Chocolate. I had a grandfather who worked 49 years as a candy maker. What is something you still want to learn? Golf. But Stephen Dubner (Freakonomics co-author) says it takes 10,000 hours to be an expert at anything. I don’t have enough time! If you could say something to your younger self, what would it be? You chose a wonderful wife! How did you get so lucky? If you could change one thing about yourself what would it be? Be more empathetic. I am working on it. Describe your perfect day? Hiking in any National Park with my wife, Claire. My nephews call me “Hikin’ Mike.” What is the best present you ever received? My grandkids If you could invite one person to dinner – living or dead, fictional or real – who would it be? St. John Paul II, the only Polish Pope! What path led you to becoming a forensic economist? An attorney called and needed help on a case. How do you describe your profession and what you do to someone you just met? Assisting the court to determine an accurate, unbiased, estimate of a worker’s lost earnings in injury, death, or wrongful discharge cases or lost business profits. Favorite NAFE meeting location? Least Favorite? (Any reasons?) Many locations are great: San Diego, Vancouver, Seattle, Denver have scenic beauty. I did enjoy the history of Philadelphia (Marc Weinstein’s hometown.) But by far the prettiest was Lake Tahoe (1993) with its breathtaking views. Least favorite was Los Angeles when the hotel jewelry store was robbed (1988) by machine gun carrying bandits. How did you first become involved in NAFE? I discovered NAFE sessions at the WEAI meetings. Jim Rodgers convinced me to join. What is your favorite thing about NAFE? The camaraderie of fellow FEs and the interesting cases. •
Features
Contrary to the Hype – Real Trends in Nontraditional Work
1
Gad Levanon2
Since about 2015, the term “gig economy” has been everywhere. The growing perception has been that the share of nontraditional workers (or contingent, gig, on-demand, take your pick) has been dramatically rising and will continue to rise. In my presentations to our business members over the past three years, questions about the topic have often come up. The large majority of reports by researchers from consulting companies and academia in recent years have been supportive of this optimism. In particular, two of the leading labor economists in the world, Larry Katz and Alan Krueger, conducted a survey together with Rand Corporation and, in a very influential 2016 study, argued that the share of nontraditional workers increased by about 50 percent between 2005 and 2015. The Conference Board decided to investigate this topic, and this week, we released a new report which may surprise many business executives. We argue that the perception about the growth of the nontraditional workforce is out of line with hard data. By nontraditional we refer to independent contractors, workers in the temp help industry, and workers on premise employed by outsourcing companies (chart 1). It turns out that, according to the Bureau of Labor Statistics (BLS), the share of workers for which nontraditional work was their main job was not that different in 2017 than it was 20 years ago. While the number of independent contractors earning income through online labor market platforms (Uber, Upwork, TaskRabbit, Amazon Mechanical Turk) has been growing, except for the transportation sector, these platforms represent a tiny share of income and total hours worked in the US economy, and are highly concentrated in certain specific occupations. In 2016, 50 percent of all job ads on a large labor platform were in occupations that comprised just one percent of US employment.
Chart 1
1) Tom Rooney and Stephanie Rizzardi at the WEAI. 2) Claire Nieswiadomy & Rachel Brandt.
Source: U.S. Bureau of Labor Statistics.
With the benefit of hindsight, why would one expect to see an increase in the share of nontraditional workers? Why did this become a hot topic? Going back a few years to trace the evolution of this perception through the main reports and articles on the topic, we find that it relies very much on the expectations that online labor platforms will rapidly gain share. It was probably driven by the dramatic growth of Uber during 2013-2014 (chart 2). In general, technology dramatically impacted the US labor market between 1995-2010, making it easier to believe that technology would continue to do so in the future.
1. This article appeared November 2, 2018 in a Labor Markets Center Blog for The Conference Board and has been reprinted with permission from the author. 2. Gad Levanon is chief economist, North America for The Conference Board, where he oversees the labor market, US forecasting, and Help Wanted OnLine© programs. His research focuses on trends in US and global labor markets, the US economy, and forecasting using economic indicators. Levanon created The Conference Board Employment Trends Index™, a widely used measure that fills the need for a leading index of employment. He also writes a popular blog on labor markets for The Conference Board Human Capital Exchange™ as well as research reports. In 2016, he won the Consensus Economics forecast accuracy award for the US economy for his work at The Conference Board. Levanon is also an adjunct professor in the economics department at NYU. Before coming to The Conference Board, he worked at the Israeli Central Bank. He has published extensively in academic and professional journals. He received his PhD in economics from Princeton University, and holds undergraduate and master’s degrees from Tel Aviv University in Israel.
cont. on page 6...
5
Features
Chart 2
cont. from page 5...
So far, there is no doubt that the importance attributed to online labor platforms has been overestimated. Even though online labor market platforms have been around for more than a decade, they are still a tiny share of the labor market, except for transportation platforms. According to a recent JPMorgan report, only about 1 in a 1,000 of their clients earned income through non-transportation online labor platforms (chart 3). And only about 1 in 10,000 earned income in more than 9 months a year. My impression from talking to businesses is that the large majority of companies are still not using online labor platforms in any capacity. Now, things may change in the distant future, but for the near future, we don’t expect online labor platforms to be a major player. Nor do we expect to see a large increase in the share of nontraditional workers in a tight and tightening labor market, where nontraditional workers can more easily find traditional jobs if they wish to.
Source: Google Trends.
Chart 3
Our new report unpacks the forces constraining the growth of the nontraditional workforce and discusses the potential for online labor platforms to expand. In addition, we will be sharing our insights in our upcoming special webcast. While small and concentrated, we believe that the growth in online labor platforms is likely to occur in the occupations where they are currently concentrated in, such as computer services, artists and designers, language and writing related workers, drafters, and clerical and office support occupations. Executives interested in considering online labor platforms should take notice. • (Editor’s Note: Please visit The Conference Board website (https://www.conference-board. org/) to find additional information and reports referred to in this article.)
1) Jim Rodgers and Marc Weinstein at the WEAI in Vancouver
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Source: JPMorgan Chase Institute.
1
Frank Slesnick2
The Growth Delusion by David Pilling is an interesting book, which examines in detail why our most common measure of growth, GDP, is misleading in terms of what is important. By pursuing growth in GDP, our society has developed a disconnect between what the official statistics say and how people feel about their lives. The author states that he is not against growth, just our measure of growth. In a nutshell, Pilling cites the following as significant problems from using GDP as our standard measure of growth. 1. Things not sold in the market such as household services are not part of GDP. This raises significant policy issues. For example, encouraging a homemaker raising children to return to the labor market will increase measured GDP but sacrifice the value of a parent in charge of child rearing. 2. Leisure is another use of time which even in a broader definition of economic activity would normally not be counted. But leisure certainly has value. The fact that hours worked per week has fallen in the last several decades is ignored in our GDP accounting but certainly has figured into the welfare of our citizens. 3. Activities considered illegal are hidden from data. Further, even legal activities that an individual wishes to hide from authorities will not be recorded. Both this issue and the one described above concerning non-market economic activity make comparisons between countries difficult. 4. Some activities such as pollution do not reflect benefits to society but the cleanup of the Exxon Valdez oil spill added billions of dollars to GDP. 5. Almost all societies include a large public sector. However, government services are generally not priced, at least not at market value. Thus, a significant portion of GDP is estimated at the cost of the inputs required rather than their value. 6. GDP is a flow concept and does not adequately examine the wealth of a nation. If a country like Kuwait depletes its resources too rapidly, it may significantly increase GDP for a short period of time but its national wealth will likely have shrunk. 7. Although statisticians attempt to factor in improvements in the quality of products, most observers feel that the attempt is inadequate. 8. Finally, GDP says nothing about the distribution of income. Even if an economy grows rapidly, if most of the increase goes to a few of the wealthy, most would say that growth has less value than if spread out more evenly. There are, in this reviewer’s opinion, some problems with the book. The first problem is that all eight criticisms of GDP mentioned above can be found in most standard Principles of Economics textbooks. Thus, it is doubtful whether most forensic economists will read Pilling’s book and feel that they have gained significant new insights. (If one wants to read a more in-depth book on this subject, see Joseph Stiglitz, et al., Mismeasuring Our Lives, Why GDP Doesn’t Add Up, The New Press, 2010.) Another problem is that Pilling, who is an associate editor at the Financial Times, demonstrates an obvious anti-market bias throughout the book. Here are two examples. “You’d need to be drawing a pretty sizable check from Big Pharma to argue that Americans are getting good value for their health care dollar. So what exactly accounts for the inflated costs? The health industry’s formidable lobbying machine ensures that laws in Washington are made with the interests of health care providers in mind.” (Page 45) “We all know growth is good…Giving free rein to banks to do their thing is a recipe for higher GDP. Ergo giving free reign to banks must be good.” (Page 65) A third issue is that Pilling has a distinct dislike of economists. “We live in a society in which a priesthood of technically trained economists, wielding impenetrable mathematical formulas, sets the framework for debate.” (Page 10) And again, “Economists are precisely not the type of people you want to start messing about with nature. As soon as they get their hands on our
lakes and our forests, the danger is these will be commoditized and bought and sold into oblivion.” (Page 176) Pilling provides no evidence for these statements. Fourth, Pilling has a strange view how growth increases in a modern economy. In his interpretation, anything that adds to GDP would contribute to growth even if it has no value. Pilling states, “You can conjure a bigger economy out of thin air simply by wasting money; just look at U.S. health care.” No economist believes that it is helpful to increase spending if it has no value. Further, the book states that a major deficiency of our GDP accounting is that government spending is undervalued because it only counts the cost of inputs used. However, many believe that spending on such programs as Medicare and Medicaid, which are major contributors to our health care spending, have little value, at least at the margin. There are, however, many parts of the book that were quite interesting and informative. Pilling describes how adding additional measures to GDP will perhaps lead us to implement policies that will do a better job increasing the welfare of our citizens. Steve Landefeld, former director of the BEA, has estimated that if valuing normal household services were counted, that would increase GDP by 26%. Britain has taken this further by valuing household services as output produced rather than simply hours utilized. Household services are one of the major areas that are of concern to forensic economists and Pilling spends a fair amount of space talking about its proper measurement.
Rotating Columns - What’s on your Nighttable?
Book Review of David Pilling’s The Growth Delusion
In Chapter 5 (“The Internet Stole My GDP”), Pilling points out that not only are household services omitted from our GDP accounting, but we as a society are doing more things ourselves such as making airline reservations, ordering food off the internet, etc. Jobs such as airline reservation clerks may be disappearing, but consumers are taking up the slack. (If, in fact, such activities could be estimated, an interesting question is whether forensic economists might take them into account.) This also leads to the conclusion that we are likely underestimating real growth in our economy, which the author does recognize. cont. on page 8...
1. Tim Duggan Books, New York, 291 pages, $26. 2. Professor Emeritus of Economics, W. Fielding Rubel School of Business, Bellarmine University.
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Rotating Columns - What’s on your Nighttable?
cont. from page 7... Two chapters relate to measuring GDP in other countries including several in Africa, as well as China and India. Pilling discusses the obvious issues such as their large underground economies and the fact that many goods and services are produced within the household. Further, emphasizing “measurable” growth may actually harm a country if it degrades the environment and increases income inequality. Having said that, Pilling does try to make it clear that growth itself is not a bad thing. “It is important to state something unequivocally. Growth – and by that I mean even raw growth as measured imperfectly by GDP – has the power to transform poor people’s lives.” (Page 124) In fact, Pilling believes that economic growth and social improvements are self-reinforcing. There is also a chapter titled “Wealth”, which attempts to show the value of drawing up a balance sheet as well as GDP, an income flow, for a country much as performed by companies. Wealth would include all forms of capital including physical, human, natural, and even cultural such as basic trust among individuals when they are interacting with one another either personally or in the marketplace.
Pilling believes that a proper accounting of the nation’s wealth will both place a higher priority on social investments such as education and health and force society to account for declines in wealth due to negative factors such as environmental decline. The last two chapters look at ways the author believes we can get a better measure of our growth that is more in line with the welfare of its citizens. He examines a measure used in the state of Maryland called the Genuine Progress Index (GPI) which adds leisure time and unpaid housework but also subtracts “regrettables” such as commuting time, pollution, and spending on crime prevention. It also takes into account income inequality as well as adding the benefits of undisturbed nature such as wetlands. Again, all these decisions are subjective, which the author readily admits. Scandinavian countries do very well, which lead one commentator to quip that such indexes measure how Scandinavian your country is. The concluding chapter states that the book is attempting to argue two things. First, that we ought to be skeptical of arguments that focus entirely on GDP growth. Rather we ought to consider other factors that both lead to understating and overstating how well we are doing. Second, there is the issue of what the author would advocate for replacing GDP. He makes the useful suggestion that we ought to continue using GDP but supplement it with other measures. Many of Pilling’s specific suggestions are those that are fairly mundane and would likely be accepted by most economists including measuring GDP per capita, changes in median income and income inequality, and net domestic product (which subtracts depreciation of capital goods). However, he also suggests examining both “wellbeing” and CO2 emissions. These are more problematic. The first is not easily measurable, but Pilling says it is worth developing a rough-and-ready benchmark to serve as a way of judging the costs and benefits of economic growth. CO2 emissions are measurable, but it is uncertain what its ultimate impact is on the world. Pilling, however, states that the overwhelming majority of scientists believe that climate change is a real danger so that tracking CO2 makes sense. For Pilling, “What’s the worst that could happen? More breathable air?” (Page 252) In summary, I would recommend this book. There are major issues with both the biased viewpoint of the author and the lack of real substantive recommendations. Nevertheless, it is a short and breezy read, written by a journalist, and does provide some novel and interesting insights. •
Book Review of Steven Payson’s The Downsizing of Economics Professors: How it Will Happen, and Why it Will Succeed 1
Sam Miles2
The Downsizing of Economic Professors: How it Will Happen, and Why it Will Succeed by Steven Payson expains why the majority of economics professors should be made obsolete through the implementation of massive open online courses (MOOCs). Payson encourages the reader to critically examine the current state, specifically the quality and cost, of post-secondary education in America and proposes solutions that, as he argues, can be easily implemented. In the first chapter of his book, Payson explains how economics professors have resisted the basic principles of economics. As technology evolves, jobs should also evolve or become obsolete. This has not occurred in the world of economics professors. The role of professors has changed with the progression of the internet. They used to be living bibliographies that students could seek out for help, now Google and Wikipedia have made that function obsolete. Payson also argues that by relying on citation count to determine the quality of an academic paper economists are greatly harming the profession. When a paper’s merits are judged solely on how many people have cited it a dangerous cycle is formed. There is little incentive to push the boundaries of the profession; as Payson points out a truly novel idea starts with a citation count of zero.
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In the second and third chapters Payson dives into a discussion of the effectiveness of MOOCs compared to traditional lectures. A long-held argument against on-line education is the quality gap. A frequently referenced issue is the unique perspective that a professor brings to a class. Payson points out that there are several incorrect assumptions underlying this argument. The first is that a live lecture guarantees a unique and valuable perspective. Of the thousands of economics professors only a handful have truly unique perspectives, thus the odds of a particular class having superior value are slim. Another assumption is that the professor will
be able to deliver a coherent lecture. The dual mandate of professors as researchers and teachers leads to widely imbalanced skill sets. Some professors, while brilliant theoretical academics, are not suited for teaching. This creates a classroom that is detrimental to the student’s education. An on-line lecture produced by a top economics lecturer would guarantee that a student receives a coherent lecture containing a unique perspective. Payson expands on this idea by confronting the many studies that say a live lecture yields higher retention rates of the core material. The flaw in these studies, as he views them, is that they are conducted using the same lecture. The true value of MOOCs is the ability to provide a superior product as compared to a live lecture for a fraction of the cost. Payson stresses that MOOCs present a very real problem for professors. The benefits MOOCs will have for students will come at the expense of professors. If 10% of the current population of professors can provide the same output with MOOCs, then would we need so many professors? Payson argues that shifting the role of some professors to that of lecturing (via MOOCs) only will lead to higher quality education. Furthermore, removing the burden of lecturing for professors interested solely in research should improve research as well. The real losers in this scenario are the professors
Chapter 4 focuses on the academic economist’s resistance to MOOCs. Payson begins the chapter by introducing an example of criteria used for quality assessment of a college course and asserts that these criteria should be used to evaluate MOOCs. Payson then presents examples of papers written by economists that aim to discredit MOOCs. The first, co-authored by MIT professors Abhijit Banerjee and Esther Duflo, focused on the difference in the performance of students who enrolled in an online class on time and those who registered late. The students who registered on time had a much higher completion rate, these authors then concluded that this was due to the nature of an online classroom being inferior to a traditional setting. The authors do not consider the fact that the class was offered for free and had no repercussions for dropping, quite unlike an actual college course. Payson stresses that in measuring the success of the online course the only relevant population is the participants who completed the course. The MOOCs gave over four thousand people an opportunity they would otherwise not have had - the opportunity to take a free course from MIT. The second paper Payson references is authored by Caroline Hoxby, a professor at Stanford. In this paper Hoxby describes the lifestyle that “highly selective” universities have and how MOOCs could undermine those institution’s core values. She argues that these institutions view students as investments that will mature and, as alumni, will donate to an endowment. Payson argues that this system of betting on which students will be rich is an inefficient system and ponders whether it is worthwhile to preserve it. By using principles from basic economics, it is easy to see that if MOOCs are successful, many institutions would go bankrupt. It is not hard to then conclude that by producing anti-MOOC propaganda, these economics professors are contradicting their own profession. In chapter 5 Payson attempts to analyze MOOCs objectively. He begins by looking at the “university experience”. If MOOCs were to become widely implemented, how would people value the traditional college experience? Universities would be free to face the true test of capitalism. MOOCs could offer universities a chance to shift money away from classrooms to labs and research facilities. Another feature of MOOCs is greatly expanding the accessibility of higher education. This has caused some institutions to voice concerns about their illustrious standards. Payson argues that online learning will actually increase standards at the most prestigious schools. Many qualified students are not able to currently attend top tier schools due to financial reasons. If this restriction were to be removed, the most qualified students, as opposed to the most financially able, would be eligible to receive degrees from top tier institutions. Payson next shifts his analysis to the effectiveness of MOOCs. Most of the arguments against MOOCs are grounded in the current reality of the platform. Payson urges the reader to envision the potential that a lecture could aspire to. A professor that is responsible for educating over 20,000 students will have a lot more pressure to create an interesting product than one who is responsible for only a small fraction of that number. Furthermore, the online classroom has the potential to be less biased. The increased quality of the new online lecture could compensate for whatever is lost from the live experience. A point that is lost when arguing against MOOCs is their ability to eliminate poor quality lectures. If presented with the choice between a poor-quality live lecture and the highest quality online lecture, I can only assume that most people would chose the latter.
of MOOCs to outweigh the harm to a select few workers. MOOCs could raise the education floor of society, leading to highly educated future generations. This book presents a novel solution to the problems plaguing higher education. Payson presents his arguments in a firm and sometimes aggressive manor but does so in a well-crafted way. After reading this book it is hard to argue that MOOCs do not have some role to play in the future of education. It is hard, however, to envision the MOOC usurping the traditional classroom. There is simply too much opposition and not only from academics. As a student of economics who has taken several online classes I feel that I am qualified to comment on the current state of the technology. The current overall quality of online classes is far inferior to that of a live lecturer of average talent. This is due, mainly, to poor use of the potential an online platform can provide. Most of the lectures for online classes that I have taken have simply been a disembodied professor reading a Power Point presentation. Other courses that have featured a video lecture have, in my experience, not done an adequate job of delivering the course material. That being said, I would gladly choose a well-constructed MOOC over a terrible live lecture. In my opinion the best courses are ones that take advantage of both live lecturing and online content and I believe that this is the path education will take in the future. In The Downsizing of Economics Professors Payson is just a few steps ahead. •
Rotating Columns - What’s on your Nighttable?
in the middle of the spectrum. In the new MOOC world there will be no need for them. This, as Payson sees it, may be the main source for the mounting resistance against MOOCs.
The last three chapters address the near future of MOOCs. Online education, in its current form, is already making great strides. Both the number of courses and the number of institutions offering courses are growing.The large library of free content presents the opportunity to design a new course entirely from existing material. Professors can also use this library to supplement their courses by giving students access to different perspectives. In chapter 7 Payson examines the role government should play in education. The government has a direct interest in increasing human capital. The easiest way to achieve this goal is through affordable education. How to provide this inexpensive education has been a great issue in recent political debate. MOOCs are a direct solution to this problem. Payson urges readers to write letters to their congressman on the potential impact of MOOCs. In the final chapter of his book, Payson looks at the impact MOOCs can have on the economics profession. Most economics professors would be out of jobs, or at least no longer be required to teach in this new system. Professors would not be the only ones affected, however, a free economics degree should theoretically lead to a great increase in demand for economics degrees. It is possible that this increase in demand, assuming other fields are not affected, could suppress the median wages of those with economics degrees in general. This burden would fall solely on the shoulders of recent graduates. But the decrease in wages should be temporary. As other fields adopt MOOCs the market for degrees should return to an equilibrium. It would not take long for the accessibility 1. Lexington Books, 2018, 149 pages. 2. Senior, Department of Economics, University of Illinois at Urbana-Champaign.
1) Steve Shapiro & David Schap at the EEA.
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Meeting & Regional Updates
Meeting Updates National Meeting
Schedule of Sessions 2019 2019 ASSA Annual Meeting Atlanta, GA - Meeting Dates: January 4-6, 2019 NAFE Sessions: January 4 & 5, 2019 Conference Information: https://www.aeaweb.org/conference/ Hotel Name: Atlanta Marriott Marquis Housing Link: https://www.aeaweb.org/ conference/2019-housing-information There will be four NAFE sessions held January 4th & 5th in conjunction with the 2019 ASSA Annual Meeting at the Atlanta Marriott Marquis hotel. NAFE sessions will begin Friday afternoon at 2:30 p.m. with a membership meeting and reception to follow beginning at 5:00 p.m. Three NAFE sessions will be held Saturday beginning at 8:00 a.m.
FRIDAY, JANUARY 4, 2019
NAFE SESSION I 2:30 PM - 4:30 PM Atlanta Marriott Marquis, International 4 Session: Stationarity Tests & Margin of Error in Forensic Economics Session Chair: William G. Brandt Brandt Forensic Economics (bill@brandtforensiceconomics.com) “Stationarity Tests on Medical Net Discount Rates” Robert Baumann, College of the Holy Cross (rbaumann@holycross.edu) David Schap, College of the Holy Cross (dschap@holycross.edu) “Stationarity of Equity Risk Premiums Derived from Duff and Phelps SBBI Data” Steven J. Shapiro, New York Institute of Technology (sshapi01@nyit.edu) Stephen Horner, Consulting Economist (smh@economicconsulting.com) “The Margin of Error on Damages Calculations in Class Action Wage and Hour Cases” Jeffrey S. Petersen, Allman & Petersen Economics, LLC (jeff@allmaneconomics.com) Phillip H. Allman, Allman & Petersen Economics, LLC (phil@allmaneconomics.com) Session Discussants: David Tucek, Scott Gilbert, Dwight Steward
NAFE SESSION IA – 5:00 PM - 6:00 PM Atlanta Marritt Marquis, International 4 NAFE Annual Membership Meeting NAFE SESSION IB – 6:00 PM NAFE Reception - Location TBA
10
SATURDAY, JANUARY 5, 2019
NAFE SESSION II 8:00 AM - 10:00 AM Atlanta Marriott Marquis, International 4 Session: Retirement & Bequest Issues in Forensic Economics Session Chair: Christina P. Tapia, Northwest Economics (christina@nweconomics.com) “Retirement Patterns of the Early and Middle Baby Boomers” Kevin E. Cahill, The Center on Aging & Work at Boston College (cahillkc@bc.edu) “Pension Treatment Under the Collateral Source Rule” Joseph I. Rosenberg, Joseph I. Rosenberg, CFA, LLC (jrosenberg123@gmail.com) “Legal Malpractice Damages Arising from Probate Matters” Craig Allen, Commonwealth Research Group, Inc. (c.allen.fcas@gmail.com) Session Discussants: Gregg Erickson, James D. Rodgers, Constantine Boukidis
NAFE SESSION III 10:15 AM - 12:15 PM Atlanta Marriott Marquis, International 4 Accounting for Earnings Capacity and Worklife Expectancy Session Chair: A. Frank Adams III, Adams Economic Consulting (afrankadams@gmail.com) “Earning Capacity in the Quantity Dimension: The State of the Science” Stephen Horner, Consulting Economist (smh@economicconsulting.com) Frank Slesnick, Bellarmine University (fslesnick@bellarmine.edu) Michele Angerstein-Gaines, Consulting Economist (mda@economicconsulting.com) “An Econometric Model of Worklife Expectancy and Normative Retirement” Scott Dale Gilbert, Southern Illinois University-Carbondale (gilberts@siu.edu) “An Overview of Refinements to the SCK Worklife Methodology” Gary R. Skoog, Legal Econometrics, Inc. (gskoog@umich.edu) James E. Ciecka, DePaul University (jciecka@depaul.edu) Kurt V. Krueger, John Ward Economics (krueger@johnwardeconomics.com) Session Discussants: William G. Brandt, William Rogers, Ed Foster
NAFE SESSION IV 2:30 PM - 4:30 PM Atlanta Marriott Marquis, International 4
Special Topics in Forensic Economics Session Chair: Lane Hudgins, Lane Hudgins Analysis (lane@lh-analysis.com)
“Business Strategy & Firm Location Decisions: Testing Traditional & Modern Methods” Patrick L. Anderson, Anderson Economic Group, (Panderson@andersoneconomicgroup.com) “Neutralizing the Adverse Effect of State and Federal Income Taxes (due to the Tax Cuts and Jobs Act of 2017) on Lump Sum Awards in Employment Cases” Michael Nieswiadomy, University of North Texas (michael.nieswiadomy@unt.edu) Thomas Loudat, Economic Consultant (tomloud@earthlink.net) “Mitigating Future Economic Damages in Disputes Involving Credit Damages” Roman Garagulagian, Forensic Economic Services (Roman@Rule703.com) Session Discussants: Frank Adams, Thomas Roney, Lane Hudgins
For additional information regarding the ASSA conference, click on the conference website at: https://www.aeaweb.org/conference/
David Tucek
(david.tucek@valueeconomics.com) & Scott Gilbert (gilberts@siu.edu)
- Meeting Organizers
- Vice-Presidents At Large
Winter Meeting
Call for Papers & Panel Proposals Nineteenth Annual NAFE Winter Meeting San Juan, Puerto Rico NAFE Session Dates: January 25 - 26, 2019 Meeting & Hotel Information, please contact Art Eubank (art@eubankeconomics.com) & Charles Baum (baumeconomics@gmail.com) Hotel: InterContinental San Juan Hotel The 19th Annual NAFE Winter Meeting will be held in San Juan, Puerto Rico on Friday and Saturday, January 25 and 26, 2019 at the InterContinental San Juan Hotel. (This hotel was the site of the 2015 Winter Meeting.) Paper Presenters, Discussants, Session Chairs, and Roundtable/Panel Discussion Proposals are being sought for four sessions, two on Friday morning, January 25, 2019, and two on Saturday morning, January 26, 2019. Please submit abstracts of papers, roundtable session proposals, and offers to serve as a Session Chair, Discussant, or Roundtable Organizer to Art Eubank or Charles Baum by December 1, 2018. In addition to paper presentation sessions, other sessions may be planned on the topics of (a) recent case experiences and (b) issues associated with running a forensic economics practice.
Attendees should please make their hotel reservations through Art Eubank, rather than on their own, as the negotiated room rates with the hotel and the conference room arrangements are based on a contracted guarantee of a minimum number of room nights being booked at the group rate. Art Eubank (art@eubankeconomics.com)
& Charles Baum
(baumeconomics@gmail.com)
- Meeting Organizers
Eastern Meeting Call for Papers
45th Annual Eastern Economic Association Conference New York, NY – Meeting Dates: February 28 - March 3, 2019 NAFE Session Dates: TBA Conference Information: https://www. ramapo.edu/eea/2018-conference/ Hotel Reservations: New York Sheraton Times Square Housing Link: Not yet available. Conference Registration Deadline: January 15, 2019 Hotel Reservations Deadline: February 1, 2019 QUESTIONS: Please email chris@redmapleeconomics.com or call at 347-522-0480. If you would like to submit a paper, please send a paper proposal to Christopher Young, Eastern VP NAFE, chris@redmapleeconomics. com, as soon as possible. In addition to our normal sessions, this year we are soliciting authors/presenters who have a desire to present papers on ethics in forensic economics. We are presently seeking three to four papers on this topic. If you have a desire to submit a paper on this topic, please send a proposal to Chris Young, identifying that you have an interest in this panel. At this moment in time, the conference registration is not open on the EEA website, but you can book your hotel. The hotel is the Sheraton New York City, Times Square. Unfortunately, at this time the EEA has not
provided any special information or link to register.I have registered at the hotel directly and identified myself as a participant in the EEA conference. There are many hotels in the area, some less expensive options should you desire to look elsewhere. As more information becomes available, I will share it with the NAFE membership. Wishing you all the best, and hoping to see you in New York.
Chris Young (chris@redmapleeconomics.com) Vice-President – Eastern Region
International Meeting Meeting Announcement
16th Annual International Conference of the National Association of Forensic Economics Location: Evian-les-Bains, France Meeting Date: May 25, 2019 Hotel Name: Hilton Hotel in Evian Hotel Link: http://www3.hilton.com/en/ hotels/france/hilton-evian-les-bainsXEBHIHI/index.html We have selected Evian-les-Bains in France for our 2019 meeting on May 25 (Saturday). Steve Shapiro and I will be coordinating the meeting and program. We have selected the Hilton in Evian as our meeting location http://www3.hilton.com/en/hotels/france/ hilton-evian-les-bains-XEBHIHI/index.html. The Hilton has an excellent rating and is on the lake front in the center of town. The typical way to get to Evian is from the Geneva, Switzerland airport. The Evian Hilton will handle our meeting on May 25 with lunch and a dinner with wine for the group (a very nice lake view dining room). Our room rates at the Hilton are 179 Euros/night for a single including breakfast and 199 Euros/night for a double. The registration rate is $320 for two and $220 for a single. This will cover the meeting, dinner and extra functions. If you have an interest in attending, please contact John Ward at ward@johnward. economics.com
John Ward (wardjo@umkc.edu) & Steve Shapiro (sshapiro@analyticresources.com) - Meeting Organizers
Western Meeting
Call for Papers & Discussants 94th Annual Conference of the Western Economic Association International San Francisco, CA Meeting Dates: June 28-30, 2019
Conference Information: http://weai.org/AC2019 Hotel Name: TBD
Please save the dates June 29-30, 2019 for the 94th Annual Conference of the Western Economic Association International to be held in San Francisco, California. NAFE will hold three sessions on each date June 29th (Saturday) and June 30th (Sunday) for a total of six sessions.
Christina P. Tapia (christina@nweconomics.com) Vice President – Western Region
Midwestern Meeting
Information not yet Available 56th Annual Conference of the Missouri Valley Economic Association Meeting Dates & Location: TBA
Meeting & Regional Updates
The rooms at the InterContinental San Juan Hotel are Club area rooms with Club Lounge privileges. The per night room rates for January 24, 25, and 26 are: single or double room (one or two persons in room) $339 plus 9% tax for a total per night cost of $369.51. These room rates are also available for three nights before January 24, 2019 and 3 nights after January 26, 2019 on a first-come, first-served basis, and, subject to availability.
William Rogers (william@whrogersecon.com) Vice President – Midwestern Region
Southern Meeting
2019 Meeting Information TBA 89th Annual Meeting, Southern Economic Association Meeting Dates & Location: TBA NAFE sessions held in conjunction with the 2018 Southern Economic Association’s 88th Annual Meeting have recently concluded. Please check the next issue of The Forecast for a recap and photos from these sessions as well as any available information about NAFE sessions at next year’s SEA.
Gil Mathis - Meeting Organizer Vice President – Southern Region
Meetings of Other Associations American Academy of Economic & Financial Experts
AAEFE 31st Annual Meeting Las Vegas, NV – April 25 & 26, 2019 Hotel: New York New York Hotel & Casino Conference Information: www.aaefe.org/annual-meeting
Bill Brandt (bill@brandtforensiceconomics.com) - Meeting Organizer
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Volume 32 • Issue 4 • November 2018
Journal of Forensic Economics P.O. Box 394 Mount Union, PA 17066-0394 CHANGE SERVICE REQUESTED
NAFE Events
Mark your calendars for these upcoming NAFE meetings and sessions 2019 AMERICAN ECONOMIC ASSOCIATION – ASSA Atlanta – NAFE Sessions: January 4-5, 2019 NAFE Membership Meeting: January 4, 2019 See the President’s Letter, pg 1, and the Notice to Members at the right, regarding the SEP/PPP vote that was previously scheduled to take place at this meeting. NAFE WINTER MEETING San Juan, Puerto Rico NAFE Meeting Dates: January 25-26, 2019 EASTERN ECONOMIC ASSOCIATION New York City – EEA Meeting Dates: February 28-March 3, 2019 (NAFE Session dates to be determined) NAFE INTERNATIONAL MEETING Evian-les-Bains, France – NAFE Meeting Date: May 25, 2019 WESTERN ECONOMIC ASSOCIATION INTERNATIONAL San Francisco, CA – NAFE Sessions: June 29-30, 2019 MISSOURI VALLEY ECONOMIC ASSOCIATION - TBA SOUTHERN ECONOMIC ASSOCIATION - TBA
Look for meeting details inside
Notice to Members
SEP/PPP Voting Has Been Postponed The August 2018 issue of The Forecast reported that a membership vote on proposed amendments to the NAFE Statement of Ethical Principles/ Principles of Professional Practice (SEP/PPP) would be held during the membership meeting to take place January 4, 2019 in conjunction with NAFE sessions at the ASSA meeting in Atlanta. Please note that this vote has been postponed to allow for consideration of member comments on proposed changes. Information regarding any proposed changes and amendments to the SEP/PPP and membership voting will be announced in upcoming issues of The Forecast. Please contact NAFE Executive Director Marc Weinstein if you have any questions.