Don't Quit Your Day Job…

Welcome to the Christmas/Holidays/Winter Solstice version of the DQYDJ weekender!  The three writers on the web site are Catholic (we’re from Boston, remember?) so this is being sent out on Christmas Eve for us.  Happy Holidays to you and your families, and enjoy this wrap up.

We’ll be back next week with more controversial stuff, but for now we leave you with the cream of the crop for the week!

Welcoming The Frugal Toad to our blogroll, linking great stuff, adding a Facebook page, an eBook from MD at Studenomics and so much more!

Oh no! The Social Security Administration recently released it’s Wage Statistics for 2010 to little (official) fanfare. To read a little financial press, it’s the end of the American Dream (buy guns and gold!), however. Here’s a little secret: the problem isn’t that employers are colluding to ratchet down the income of the United States. The true reason for the reduction in median income is the shifting demographics of employed workers. You can break it down in many ways, but I’ll break it down into age brackets… and you should be convinced that while unemployment is a problem, the falling wage is just a symptom of everything else, and not something you should spend too much time worrying about (let DQYDJ do it for you!).

“Oooh-yeah just like this
Come on little miss and do the twist” – Chubby Checker, The Twist
I thought the quote was pretty clever, but you could also attach one of a couple of subtitles on this post: “Why Thomas Sargent Deserves Half the Nobel Prize” or, if you like classic entertainment, “A Funny Thing Happened on the Way to the Dance”! Let’s stick with Thomas Sargent, who just won the Nobel Prize in Economics for his work in the field of “Rational Expectations”. “Rational Expectations” in Economics, as you might guess, refers to the changing expectations of the market (investors, citizens, whomever) to policies that will affect them. Basically, you cannot assume that the reaction to a new policy will have the desired effect.

Charitable contributions are an important part of the American political system and the American tax code. In this article, Cameron Daniels questions whether the tax exemption for charitable contributions is a good policy decision.

Live blogging for the midterm 2010 elections. Keep refreshing! 5-10 minute updates.

Substitution and Income Effect: These two terms are very familiar to anybody who has taken an intermediate course in macroeconomics. With the recent articles regarding volunteerism and labor statistics, I thought that it was very timely to write on these two very important concepts.

Let’s start with a thought experiment: if you were to receive a 10% increase in your hourly wage, would you increase, decrease, or maintain your hours worked? Believe it or not, any answer is correct, despite many assumptions regarding the positive slope of labor supply curves. The reason that any answer is correct lies in an understanding of substitution and income effects.

A popular topic in the blogosphere, given new life after comments by Nobel prize winning economist Paul Krugman, is the relative success of the United States vs. the states that make up the European Union. The European Union is a loose confederation of 27 countries in Europe, ranging from Spain to Estonia. Krugman goes so far to suggest that “[y]ou should always bear in mind that when the question is which to believe — official economic statistics or your own lying eyes — the eyes have it.”

A collection of links and carnival hosts for the week.

A recent unemployment report from the Bureau of Labor Statistics introduced some light into the dreary situation in which the economy finds itself. Yes; the official U-3 unemployment numbers are in- and the headline unemployment number is now 9.4% unemployment compared to the previous 9.5%. U-6, a broader measure of unemployment (specifically the total employed, marginally attached workers and part time workers who want to work full time in the civilian labor force and marginally attached workers) ticked down from 16.5% to 16.3%. On the surface, a pretty good report. However, some signs of weakness are right below the surface.