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Growth of the Internet


Posted: Mar 15 2014 by Nathan Grawe

This news story announces US plans to give up its central role in administering the internet. That got me wondering who in the world (literally!) uses the internet. UNData provides the answer, with a graph designed by Drastic Data. [Note: The Drastic Data site includes a link to the UN data and also allows you to re-cast the data in percentage terms. In case you are wondering, the UN internet data are reported by national statistical offices, so these statistics are likely of widely varying quality.]

The image makes two things clear:

1) Growth has been dramatic–though not literally exponential. We are apparently around 1 billion users, increasing at a pace of about 100 million users per year. At this rate we won't have the entire world online until the end of the 21st century (assuming the world population grows to approximately 9 billion and then stabilizes). Of course, because the last adopters will likely be harder to draw online due to poverty, we probably won't get anywhere near that many users.

2) Until 1997, the US made up more than half of internet users. Since then we have fallen to only 20% of the internet market.

3) Despite the US's decreasing role, we remain the dominant internet user. It looks like European users have only just recently risen equal US users. So, while "the rest of the world" has long overtaken the number of US users, no other homogeneous political group has matched the US use until just recently. Perhaps this explains why the pressure to shift internet control out of the US has taken so long to build considerable pressure.

QR of Equal Pay


Posted: Mar 12 2014 by Nathan Grawe

Around this time of year, news stories often turn to the "gender pay gap." In part, this is a response to gender-equality activists such as the American Association of University Women who celebrate Equal Pay Day to mark the day at which women make up the gender gap from the previous year. This year's State of the Union address gave us a head start on the conversation.

Given the attention, it seemed useful to apply a little QR to the topic to gain a deeper understanding. If you click the link above, you will quickly learn that the gender gap is 23%. But who is in the sample? It takes a little digging, but you eventually find the answer: "full-time, year-round workers." That's a start, but a student armed with 10 Foundational Quantitative Reasoning Questions would know to press further by wondering how the concept of "full-time" is defined. The answer turns out to be anyone working over 35 hours is employed full-time. That well-prepared student might then wonder what is controlled for in this analysis. The answer is nothing other than full time status–not even hours worked.

A recent Labor Department study reports that the wage gap shrinks by 71% (to around 5%) after controlling for well-documented income-altering factors other than sex like hours worked, age, number of children, marital status, union representation, race, education, and fraction of women working in the person's industry and occupation. In other words, the gender pay gap is largely explained by choices.

So, does that mean that we can largely ignore complaints of discrimination? Clearly not. That women and men on the same career path earn the same income does not rule out discrimination that limits work choices. Are there barriers in the education system or in hiring that make it harder for women to end up in higher-paying positions? Does society push women into lower paying life paths? These are hypotheses that cannot be ruled out by the data.

But the tools of QR can help us focus in on the real explanations for an important observation.

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Google It!


Posted: Mar 6 2014 by Nathan Grawe

I recently ran across an interesting example of how the internet continues to make data more and more accessible. Of course, it is now easier than ever to get at information that has always existed like stock prices or the Statistical Abstract of the United States.

But now the internet is also creating its own potentially useful data. "Google it!" Forecasting the US unemployment rate with a Gooble job search index explains how Google search statistics can improve forecasts of unemployment. The authors create a typical forecasting model based on past unemployment levels and data from the Survey of Professional Forecasters, a quarterly survey of experts carried out by the Philadelphia Fed. The authors then add a variable which captures the frequency of Google searches for "jobs." Including the Google search data reduces the model error by 30 to 40 percent.

It seems to me there is something really interesting in this idea. In economics, there are many behaviors we try to track: hiring, unemployment, consumption, investment, etc. I'm sure that is true of many fields. The problem is that there is a long lag between households' actions and when we get the data. Online activity gives us an alternative, real-time measure that may help us improve forecasts. [Note: I am less excited about what Google does with personally identifiable information. The data referred to here is aggregate activity that isn't linked to any particular person.]

If you are interested in looking into trends for search terms, go to www.google.com/insights/search/#.

Outlays of Distortion


Posted: Feb 24 2014 by Nathan Grawe

When you do your taxes, take a look toward the end of the 1040 instructions. Apparently the US government is collecting a little extra from Microsoft in exchange for promoting Excel's "fancy," tilted, 3-D pie chart. The tilt in this case appears to be laying the pie on an incline no greater than 15 degrees. Take a look:

1040-2014

I've never seen such a beautiful shot of the side of a pie chart before. While the pair of charts purportedly provide information about the distribution of income and outlays, the tilt is so distortionary that it is impossible to distinguish the 24% of the budget spent on National Defense from the 38% spent on Social Security, Medicare, and other retirement programs. That's a 50% difference obliterated by what Tufte terms "chart junk." Alternatively, there is no way you'd guess from looking that we spend almost the same on Social Programs as on National Defense.

While one could argue that little harm is done because no one really reads this page of the 1040 instructions, I'd still rather that my procrastination be rewarded with cleaner graphics.

Tax Pain


Posted: Feb 19 2014 by Nathan Grawe

Politifact has taken up an interesting question: What is the pain of the US federal tax code? They took up the topic by way of evaluating a claim by Sen. Wyden that Americans spend 6.1 billion hours and $160 billion complying with federal tax law.

Ultimately, Politifact conclude Wyden got those numbers right. In fact, they add some more measures of the pain:

  • The tax code is 3.8 million words, up more than 170% since 2001.
  • If you want a copy of the code all for yourself to consult as you do your taxes (and who wouldn't!), you'll need to buy 25 volumes and provide 9 feet of shelf space.
  • No doubt a result of the complexity, 99% of filers resort to help from software or tax preparers.
In a nice bit of best-practice journalism, Politifact goes a little further by asking "Compared to what?" 6.1 billion hours is "695,870 years..., averaging 44 hours for every completed tax return." Of course, there are sub-groups in the data and so the mean may or may not be representative of any group at all. I suspect there are some spending far longer on their returns to account for all of those lucky enough to file a 1040EZ.

If you put all of those hours into dollars (using the average compensation of US workers reported in the Statistical Abstract of the US), we devote more than $200 billion per year on taxes.

I hope this post gives you comfort as you work on your own taxes; you've got company!

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