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Wednesday, March 30, 2011

Do School Vouchers Work? Yes, No, Maybe So

There was an interesting story on the news last night and in this morning's paper. A study found that voucher students in Milwaukee test lower than non-voucher students.

Like many issues that are both statistical and political, there's a fair amount of posturing surrounding this one but let's try to focus on the data.

On this particular test, the average scores of voucher students were clearly lower than those of Milwaukee students overall. That's not open to debate. The question is, what does it mean? Voucher critics want to present this as evidence that vouchers don't work (i.e. a causal link between vouchers and performance). Voucher fans present a list of flaws in the study to refute the causal claims of the critics.

If the test scores were reversed, you'd probably read opposite comments by the same people. Voucher critics would say what was wrong with the study and voucher fans would claim the study "proves" vouchers work.

If you don't believe me, check out this article or this one. These came out today and cover different studies potentially implying that vouchers "work". The arguments aren't quite the opposite of yesterday, but they're close.

Thursday, March 24, 2011

House M.D. Tells it Like it is

House M.D., March 14th 2011 episode: Taub uncovers information implying that a patient has plans to set off bombs at school. He and Masters discuss what to do with the information. The last line says it all.

Masters: What are you gonna do?
Taub: What do you think I should do?
Masters: So you can do the opposite? There are kids all over the country doing dumb, potentially violent things, but the percentage of them who would actually kill anybody is minuscule.
Taub: So I shouldn't do anything?
Masters: Mm... while the odds are low, the fallout could be huge. Tens or even hundreds of lives.
Taub: So I should call the cops.
Masters: Of course, over-identification with the subject could skew the calculation towards being over-protective. Or, alternatively...
Taub: You suck at this.
Masters: Hate the statistics, not the statistician.

Thursday, March 17, 2011

Will the Baby Boomers Ever Retire?

I got a copy of On Balance: The Magazine for Wisconsin CPAs in the mail today. An article on today's job market contains the following: "In three to five years, a tremendous number of professionals in accounting, financial services, and government will retire ... That's good news for job seekers ..."

Today is March 17th, 2011. The funny thing is, I've been hearing about mass retirements in the next "three to five years" since the 1990s.

I was talking to my advisor about PhD dissertation topics and suggested that I could research how firms manage the loss of institutional knowledge in the face of mass retirements. Being wiser than me, he shot the idea down. Considering that I finished my dissertation in 1995 (on a totally different topic), I clearly heard about the upcoming wave of retirements a long time ago.

Somehow though, the wave of retirements and the resulting labor shortage hasn't happened. It stays just around the corner. How is this possible? Don't they say "demographics is destiny"?

The problem isn't demographics - it's projecting future trends based on past results.

The oldest Boomers are in their mid-60's today and were in their mid-40's when I first started to hear about the upcoming retirement wave. No one actually thought that Boomers would retire in their mid-40's but they were observing the group just ahead of the Boomers.

It wasn't uncommon for high level executives to retire in their early to mid 50's. After 30+ years of 70+ hour workweeks many of them had made a lot of money and knew that they had hit their personal corporate ceiling. They were never going to be CEO. Their bodies and minds were feeling the effects of 30+ years of stress so they decided to get out and enjoy retirement while they were still able.

Similarly, many civil service employees found that, not only had they peaked in their government organizations, but they had maximized their pensions. While they didn't have the financial resources of the corporate execs, they had a solid pension with health insurance so many of them decided to retire and pursue other interests.

Therefore, it wasn't crazy to think that many of the Boomers would follow the same pattern when they hit their 50's. That wasn't very far away. By 2000, the leading edge of Boomers would be in their mid-50's. The projections seemed to make sense.

Then reality happened. Boomers are the first generation to be heavily invested in 401k retirement plans and the 1999 tech stock crash played havoc with the entire market. Some folks on the verge of retirement decided to hold off a few years to rebuild their portfolios. Based on the last 10 years of stock market performance, some are still waiting.

Another pattern occurred too. Many of the "young" retirees from the early 1990's wanted to go back to work. Perhaps they got bored playing golf after four or five years. Perhaps their investments hadn't done as well as they hoped. Perhaps it was both. Regardless, they wanted at least part of their old work lives back but they couldn't get it. Whether they had grown obsolete or it was age discrimination, most of them were not able to get the kinds of positions they wanted.

The Boomers were watching. The lesson? Be careful about walking away too early because you can't come back.

As a result, the Boomers are holding on to their jobs longer than expected. In my field, college teaching, mandatory retirement ages have largely been eliminated. The Chronicle of Higher Education frequently has articles on conflicts between those seeking college teaching positions and older professors who will not retire. It's not much different in the corporate world.

So what's going to happen? Will there be a "tremendous number" of retirements in "three to five years"? I don't know for sure, but I don't think so. Of course the Boomers will all eventually retire or die but I think they'll go by attrition rather than en masse. Most of the Boomers I know simply do not have the resources to retire any time soon. Some will be forced to retire when their health fails. Others might get a nice inheritance along the way and decide that they finally have the resources to retire. Others will work well into their 60's and even their 70's either because they have to or they just plain want to.

Note: my stories/characters (executives, civil service employees, and Boomers) are blended from multiple individuals I know. However, that makes my analysis anecdotal rather than purely data based (data is not the plural of anecdote). Where and how might you find actual data to support or refute my theory of why the wave of retirements predicted nearly 20 years ago still hasn't happened?

Wednesday, March 9, 2011

Correlation and Cause: Does Walmart make you fat?

I just learned of a study analyzing the presence of Walmarts and obesity rates.

You can download the entire paper but at least read the abstract carefully. At one point the author says one variable "explains" the other. But just before that, he says one variable "increases" the other. Claiming that one variable increases another is a much stronger claim than "explains" and largely implies "cause".

Do you think that a causal claim is appropriate? Will building more Walmarts really make people fatter or can something else explain the association?

Thursday, March 3, 2011

Social Security and You (Part 2)

I ran across an article on Social Security funding and thought it was a good time to write a follow-up to my previous post on Social Security.

I hope that some of you did the work to answer the questions in that post and that you now have an idea of how much you pay for Social Security. Whether you think that amount is a lot or a little isn't necessarily the issue. Knowing what you pay will help you evaluate statements that others make about Social Security's costs, benefits, and viability.

Those "statements that others make" include my own. Here they are...

I was in my mid-teens and working at one of my first jobs (and paying Social Security taxes) when I first read an article about Social Security going "bankrupt" in about 50 years. It didn't take great brain power to add "mid-teens" and "50 years" to determine that it would go kaput right about the time that I was supposed to start getting paid instead of paying. That struck me as kind of a raw deal.

Since then, both sides of the political aisle have tweaked Social Security at the edges and pretended that they've done something significant but the "bankrupt" year has only been pushed back about 10 years. Now it's projected that I might get as much as six years of Social Security payments before there are real problems. I guess that's an improvement, but it still seems like a raw deal considering that I will have paid into the system for over 50 years.

If you're younger than me, I believe that the deal just gets worse. However, this all sounds a lot like one guy's opinion. What about the data? I strongly suggest reading The Coming Generational Storm by Laurence J. Kotlikoff and Scott Burns. It's a well-researched, data-driven analysis of Social Security but written in a readable style.

You don't have to buy it. If your local public library doesn't have a copy, ask them to buy one. Those are your tax dollars too.