## Saturday, June 27, 2009

### More on the Male-Female SAT Math Test Gap

It's well known that for the SAT mathematics test, a) male high school students in the U.S. have higher scores on average than females, b) the gap is large and statistically significant (+30 points), and c) the male-female math test score gap has persisted over time, since at least 1971, and probably much longer (see chart above, data here from the Dept. of Education).

One explantion for the female-male math test score gap is summarized here by Janet Hyde et al.:

In 2007 the SAT was taken by 798,030 females but only 690,500 males, a gap of more than 100,000 people. Assuming that SAT takers represent the top portion of the performance distribution, this surplus of females taking the SAT means that the female group dips farther down into the performance distribution than does the male group. It is therefore not surprising that females, on average, score somewhat lower than males. The gender gap is likely in large part a sampling artifact.

MP: In other words, it is only because more females than male take the SAT exam that males score higher on average than females, and if the sample sizes were more equal, the difference in mean math test scores would disappear.

Consistent with this explanation of the difference in mean math test scores would be the following assumption:

Ceteris paribus, if the number of females taking the math SAT exam relative to males (and female percentage of total) increases over time, the male-female math test score gap should INCREASE over time, since an increasing number of females (and increasing percent of total) taking the SAT should lower female mean math test scores over time relative to male math test scores. Reason? The increasing number of females taking the SAT will "dip further down into the performance distribution" over time.

Using
Census Bureau data, the chart below shows that females taking the SAT exam as a percent of the total increased from 50% in 1975 to 53.6%, as the male percentage has decreased from 50% to 46.4% over that period (see chart below).

According to the reasoning above, as the number of females taking the SAT exam increased over time (along with the percent of total) relative to males, the mean female score should have decreased relative to the male mean score, and the male-female gap should be INCREASING over time, theoretically.

But that is exactly the opposite of what has actually been happening. The chart below shows that the male-female gap has actually been decreasing over time, even as more females took the test relative to males, from a high of 46 points in 1977 to a gap of 33 points in 2008.

Bottom Line: The gender gap appears to be more than just a sampling artifact, since the decreasing male-female math test score gap is exactly the opposite of what the Hyde et al. hypothesis would predict.

Update: Additionally, if the number of females taking the test increases over time, the Hyde hypothesis would also predict a falling mean female math test score over time, when in fact we see the opposite: a rising female mean SAT math test score.

### Chart of the Day: Med. Equipment, Canada vs. U.S.

Source: Fraser Institute

“Advocates of single-payer health care systems tend to promote the allegedly lower monetary costs, but they ignore the lack of access to medical resources,” said Brett Skinner, Fraser Institute Director of Health, Pharmaceutical and Insurance Policy Research and lead author of the peer-reviewed study: "The Hidden Costs of Single Payer Health Insurance: A Comparison of the United States and Canada."

The study shows that health care in Canada appears to cost less relative to the United States because Canadian public health insurance does not cover many advanced medical treatments and technologies, common medical resources are in short supply, and access to health care is often severely delayed.

### New Blogs

News from 1930: A daily summary based upon news from the Wall Street Journal from the corresponding day in 1930.

John Stossel's Take: ABC News' Co-Anchor of "20/20" offers his libertarian views on the economy, education, health care and politics.

## Friday, June 26, 2009

### ECRI Leading Index: First Pos. Growth in 22 Months

NEW YORK, June 26 (Reuters) - A gauge of future U.S.economic growth rose, and its yearly growth rate turned positive, raising hopes that the end of the recession is insight, a research group said today. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 37-week high of 117.6 for the week ending June 19, from a downwardly revised 117.0 the previous week.

The index's annualized growth rate spiked to a 97-week high of 2.1% from minus 0.6% a week ago. It was ECRI's highest yearly growth reading since the week ended August 10, 2007, when it stood at 3.4% (see chart above).

"Following a 28-week upturn, WLI growth has broken into positive territory for the first time in over 22 months -- an affirmation that an end to the recession is at hand," said Lakshman Achuthan, managing director at ECRI.

### Milton Friedman on The Phil Donahue Show, 1979

Part 2 here.

Part 3 here. (Starting at about 1:00 in this segment is the famous part where Milton Friedman "schools" Phil on "greed.")

Part 4 here.

Part 5 here.

In 1979, Milton Friedman appeared on The Phil Donahue Show and discussed The Great Depression, the New Deal, the auto industry, auto (Chrysler) bailouts, greed, Amtrak, auto emissions regulation and airbags, Ralph Nader, tariffs, free trade, price controls and gas shortages, oil companies, etc., and other topics that are still relevant today.

### The Volatility Index (VIX) Falls to a 9-Month Low

The CBOE Volatility Index (VIX) closed yesterday (Thursday) below 27 for the first time since September 12 of last year, and reached a new 9-month low of 26.36. From the November highs that peaked at almost 81, the VIX has fallen by more than 67%.

### Cartoon of the Day

HT: Marc Mayfield

### Consumer Confidence Rises 4th Straight Month for the First Time Since the End of the 2001 Recession

LA TIMES -- Confidence among U.S. consumers rose this month for a fourth straight time, reflecting signs that the worst of the recession has passed. The Reuters/University of Michigan final index of consumer sentiment gained to 70.8, the highest level since February 2008, from 68.7 in May.

Recent reports show some areas of the economy, such as housing and manufacturing, are seeing a smaller pace of decline, consistent with the Federal Reserve's projection this week that the slump is "slowing." Government data today indicated that efforts to revive the economy are allowing consumers to spend even with unemployment at a 25-year high. The data also showed savings surged to the highest level since 1993.

MP: The last time the Michigan consumer sentiment index increased in four consecutive months was the period from October 2001 to January 2002, which signalled the end of the 2001 recession (see shaded area in chart above). The four-month cumulative increase of 14.5 points in consumer sentiment from March to June 2009 (see shaded area in chart) is even greater than the 11.2 point increase in late 2001-early 2002.

### Florida Home Sales Increase for 9th Straight Month

ORLANDO, FL (June 23, 2009) – Florida’s existing home sales rose in May – the ninth month in a row that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors (FAR). Statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets. Also, for the first time in many months, the statewide median sales price in May for existing homes and for existing condos (\$144,400) rose over the previous month’s figure (\$138,500) by 4.26%.

Existing home sales rose 16% last month with a total of 13,921 homes sold statewide compared to 12,044 homes sold in May 2008, according to FAR (see chart above). Statewide existing home sales in May increased 6.2% over April’s statewide activity.

Florida’s median sales price for existing homes last month was \$144,400; a year ago, it was \$203,800 for a 29% decrease. However, the statewide existing home median price in May (\$144,400) was higher than the statewide median price reported in each of the previous four months (\$139,500 in Jan., \$141,900 in Feb., \$141,300 in Mar. and \$138,500 in Apr.).

MP: Just like in California, we now have both rising home sales (units) and rising median home prices in Florida for May, suggesting that both markets have probably bottomed and are now in the early states of recovery.

### California Home Prices Increase in May for Third Straight Month; Largest May Increase in History

LOS ANGELES (June 25)Home sales increased 35.2% in May in California compared with the same period a year ago, while the median price of an existing home declined 30.4%, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.) reported (see chart above).

“With affordability for first-time buyers at a record high, sales of existing, single-family homes continued to remain above the 500,000 level for the ninth consecutive month,” said C.A.R. President James Liptak. “Buyers are beginning to realize that the combination of favorable home prices, historically low mortgage rates, and first-time home buyer tax credits, may not align again for many years.

The median price of an existing, single-family detached home in California during May 2009 was \$267,570, a 30.4% decrease from the revised \$384,540 median for May 2008, C.A.R. reported. The May 2009 median price rose 4.2% compared with April’s \$256,700 median price.

“The statewide median price rose for the third consecutive month in May, posting the largest monthly increase on record for the month of May, according to statistics dating back to 1979,” said C.A.R. Chief Economist Leslie Appleton-Young. “Nearly all regions in the state reported positive month-to-month changes in median price."

C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in May 2009 was 4.2 months, compared with 8.7 months for the same period a year ago (see chart above). The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

WALL STREET JOURNAL
-- California's median price for an existing single-family house rose for the third straight month, a sign that the state's battered real-estate market may be bottoming out.

California's real-estate market, the nation's largest, is seen as a barometer of the U.S. economy. Housing prices soared during the boom, and their plummet during the market's collapse resulted in massive foreclosures and fueled the recession. Economists say the state's housing market will lag behind the nation's in recovering, so any indication of improvement in California bodes well for the rest of the U.S.

MP: Unit sales increasing in CA + Median home prices increasing in CA + Median number of days to sell a home decreasing in CA + Unsold inventory index (4.2 months) falling to less than 50% compared to a year ago (8.7 months) in CA + Fewer foreclosed properties among those being sold in CA =

REAL ESTATE MARKET IN RECOVERY

### Income, Spending, and Saving All Increase in May

WASHINGTON -- Households pushed their savings rate to the highest level in more than 15 years in May as a big boost in incomes from the government's stimulus program was devoted more to bolstering nest eggs than increased spending. The savings rate, which was hovering near zero in early 2008, surged to 6.9%, the highest level since December 1993 (see chart above).

The Commerce Department said consumer spending rose 0.3% in May, in line with expectations. But incomes jumped 1.4%, the biggest gain in a year and easily outpacing the 0.3% gain that economists expected (see chart above).

## Thursday, June 25, 2009

### Milton Friedman on The Phil Donahue Show, 1980

From 1980, when Milton Friedman appeared on The Phil Donahue Show to promote his new book "Free to Choose," and discussed topics that are still as relevant and current today as they were almost 30 years ago: deficit spending, regulation, Adam Smith, General Motors, bailing out Chrysler, monetary policy, airline mergers, auto safety, windfall profits tax, automobile dealers, subsidies, smoking laws, legalization of marijuana, monopoly, military spending, energy policy, etc.

HT: Peter Parlapiano

### Corporate Profits Increased in Q1, Largest in 3 Yrs.

The BEA reported today that corporate profits (data here) increased in the first quarter of 2009 by \$128 billion, the largest quarterly increase in more than three years, and the first quarterly increase in more than a year, following 4 consecutive quarterly decreases (see chart above).

### More on Math SAT Scores

From the Supporting Online Material for "Gender Similarities Characterize Math Performance," published in Science Magazine, July 2008:

Gender differences in performance on the SAT Mathematics test are widely publicized and contribute to the public’s view that males excel in mathematics, compared with females. In 2007, males scored an average of 533 ± 114 (mean ± SD = 114) on the Mathematics portion of the SAT, compared with an average of 499 ± 111 for girls. For many reasons, these data tell us nothing about gender differences in mathematics performance. Chief among these reasons is sampling. The SAT is taken almost exclusively by college-bound students, and even then, some college-bound students do not take it because their intended college requires some other test such as the ACT. Therefore, there is no well-defined sampling frame that would permit broader generalization. Perhaps more important is the fact that, coupled with the current trend for more females than males to attend college, the SAT is taken by more females than males.

In 2007 the SAT was taken by 798,030 females but only 690,500 males, a gap of more than 100,000 people. Assuming that SAT takers represent the top portion of the performance distribution, this surplus of females taking the SAT means that the female group dips farther down into the performance distribution than does the male group. It is therefore not surprising that females, on average, score somewhat lower than males. The gender gap is likely in large part a sampling artifact.

MP: In an email, Greg Mankiw also made this observation, and so did Junkyard_Hawg1985 in several comments on this CD post. I'm not completely convinced that a difference in sample sizes could account for such a large difference in mean SAT math test scores (+30 points in all years). And that 30+ point male-female math test score gap existed even back in 1971 when the sample size issue was probably reversed: more men probably took the test back then than women, and it was probably the male group that "dipped further down into the performance distribution" than the female group.

But even putting aside the issue of possible gender differences in mean SAT scores, we are still left with the huge gender disparity in math performance at the highest levels, which would have nothing to do with the sample size issue, and would have everything to do with the gender differences in the variability of test performance and/or intelligence.

As the table above shows, males outnumber females by almost 2 to 1 for SAT math test scores above 750, and by 1.6 males to 1 female for test scores between 700-740. For the 650-690 range, males outnumber females by a factor of 1.38 to 1, and for the 600-640 range the ratio is 1:15 males to every female. For all of the other ranges except the bottom one, females outnumber males. So we are still left with the outcome of superior male math performance, at least at the highest levels of achievement, if not on an average basis.

Then what about the issue of complete female dominance over males for the writing portion of the SAT exam, with a significantly higher mean score and overrepresentation at all of the highest score levels?

### Street Justice for German Financial Advisor

A group of wealthy pensioners has been accused of kidnapping and torturing a financial adviser who lost about \$4 million of their savings.

The pensioners, nicknamed the "Geritol Gang" by German police after an arthritis drug, face up to 15 years in jail if found guilty of subjecting German-American James Amburn to the alleged four-day ordeal.

### Government Health Plans Always Ration Care

President Obama objects when people use the word "rationing" in regards to government-run health care. But rationing is inevitable if we simply expand government control without fixing the way health care is reimbursed so that doctors and patients become sensitive to issues of price and quality.

What will be new about government-run health care is the instrument of regulatory control. There will be an omnipotent federal health board. The idea of an omnipotent board that makes unpopular decisions on access and price isn't a new construct. It's a European import. In countries such as France and Germany, layers of bureaucracy like health boards have been specifically engineered to delay the adoption of new medical products and services, thus lowering spending.

In France:

■ Assessment of medical products is done by the Committee for the Evaluation of Medicines.

■ Reimbursement rates are set by the National Union of Sickness Insurance Funds, a group that also negotiates pay to doctors.

In Germany:

■ The Federal Joint Committee regulates reimbursement and restrictions on prescribing, while the Institute for Quality and Efficiency in Healthcare does formal cost-effectiveness analysis.

■ The Social Insurance Organization, technically a part of the Federal Joint Committee, is in charge of setting prices through a defined formula that monitors doctors' prescribing behavior and sets their practice budgets.

■ In the past 12 months, the 15 medical products and services that cleared this process spent an average 35 months under review (the shortest review was 19 months, the longest 51).

In short, other countries where government plays a large role in health care aren't shy about rationing. Even Mr. Obama's budget director has acknowledged that rationing reduces costs.

~Scott Gottlieb, "Government Health Plans Always Ration Care," in today's Wall Street Journal via NCPA

As Steve Chapman wrote, "The administration pretends we can get generous government-sponsored coverage for everyone without higher taxes, higher insurance premiums or rationing of health care."

MP: In reality, with government-sponsered health coverage we will probably face a trifecta: higher taxes, higher premiums AND rationing.

### Quote of the Day

There's no brand loyalty that the offer of a "penny off" can't overcome it.

~A Marketing Aphorism, and opening quote of Chapter 3: "Demand Analysis and Optimal Pricing," in Managerial Economics by Samuelson and Marks

### Troubled Economy Increased Shoplifting Rates in 2008; Consumers and Employees Got More Greedy

LOS ANGELES, CA - Preliminary results of the latest National Retail Security Survey show that retail shrinkage averaged 1.52% of retail sales in 2008, up from 1.44% in 2007. According to the survey, total retail losses increased last year to \$36.5 billion, up from \$34.8 billion in 2007. According to the survey, the majority of retail shrinkage last year was due to employee theft, at \$15.9 billion, which represented almost half of losses (44%).

"While the economy plays a role in the amount of shoplifting around the country, these crimes are mostly the case of greed instead of need," said National Retail Federation's Joe LaRocca. "People aren't stealing to feed their families; they're stealing iPods, handbags, and other discretionary items."

MP: We hear a lot about corporate greed (526,000 Google hits), but don't hear very much about consumer greed (27,300 Google hits), and even less about employee greed (only 1,990 Google hits). But as the story above highlights, many consumers and employees are quite greedy themselves, and they helped themselves to more than \$36 billion worth of merchandise owned by the corporations that are so often accused of being "greedy," (or whose managers are accused of "greed").

Even the majority of consumers who don't shoplift, can still in fact be pretty ruthless, cutthroat and disloyal, read about it here.

### Wal-Mart Goes Upscale

ASSOCIATED PRESS -- The recession steered a new type of customer to Wal-Mart - deeper in the pockets and suddenly looking for bargains. Now the world's largest retailer has to figure out how to keep that customer when the economy recovers.

So Wal-Mart is bringing in more brand names, ditching scores of other products, and redesigning hundreds of stores to give them wider aisles, better lighting, and better sight lines.

It's more than just a cosmetic upgrade. That new breed of customer also spends about 40% more than the traditional Wal-Mart shopper, and the retailer senses an opportunity to accelerate its growth.

### Spain Has Spent About \$1m Per Green Job; and Has Lost More Than 2 Jobs for Every Green Job Created

WASHINGTON -- The Spanish professor is puzzled. Why, Gabriel Calzada wonders, is the U.S. president recommending that America emulate the Spanish model for creating "green jobs" in "alternative energy" even though Spain's unemployment rate is 18.1%-- more than double the European Union average -- partly because of spending on such jobs?

Calzada, 36, an economics professor at Universidad Rey Juan Carlos, has produced a report which, if true, is inconvenient for the Obama administration's green agenda, and for some budget assumptions that are dependent upon it.

~George Will's column "Tilting at Green Windmills"

The following are key points from the "Study of the Effects on Employment of Public Aid to Renewable Energy Sources":

1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”

2. We find that for every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.

3. The study calculates that since 2000 Spain spent €571,138 (\$800,000) to create each “green job”, including subsidies of more than €1 million (\$1.4 million) per wind industry job. The study calculates that the programs creating those jobs also resulted in the destruction of nearly 110,500 jobs elsewhere in the economy, or 2.2 jobs destroyed for every “green job” created.

### "Stimulus" Stimulates Lining Up at the Trough

Even if the "stimulus" package doesn't seem to be doing much to stimulate the economy, it is certainly stimulating many potential recipients of government money to start lining up at the trough. All you need is something that sounds like a "good thing" and the ability to sell the idea.

## Wednesday, June 24, 2009

### Significant Gender, Ethnic Differences on Math SAT

The 2008 SAT Math scores (see table above, click to enlarge) reveal statistically significant ethnic differences. Difference-of-means tests (not reported here) reveal that Asians score significantly higher on average than Whites, who score significantly higher on average than American Indians, who score significantly higher on average than Mexicans, who score significantly higher than other Hispanics, who score significantly higher than Puerto Ricans, who score significantly higher than Blacks/African Americans. All differences are statistically significant at the 1% level.

Additionally, gender differences on the math SAT exist for all ethnic groups, see table below. For each major ethnic group (Asian, White, American Indian, Other Hispanic, Mexican, Puerto Rican and Black), the mean score for males on the 2008 SAT exam are statistically significantly higher (1% level) than the mean score for females.

In many cases, the ethnic differences on the SAT math exam outweigh the gender differences. For example, Asian females score significantly higher on average than males of any other ethnic group, white females score significantly higher than males of any ethnic group except Asians, American Indian females score significantly higher than black or Puerto Rican males, and females from all ethnic groups except black/African-American score significantly higher than black males. All significant levels are 1%.

Bottom Line: There are statistically significant ethnic and gender differences on the SAT math exam.

### Why are MD Salaries So High? The Medical Cartel

Greg Mankiw features the chart above on physicians' salaries in the U.S. vs. various European countries and Canada, showing that MDs in the U.S. make about \$200,000, which is between 2 and 5 times as much as doctors make in other countries. How do we explain the significantly higher physician salaries in the U.S.?

One explanation is the restriction on the number of medical schools, and the subsequent restriction on the number of medical students, and ultimately the number of physicians. Consider the difference between law schools and medical schools.

In 1963, there were only 135 law schools in the U.S. (
data here), and now there are 200, which is almost a 50% increase over the last 45 years in the number of U.S. law schools. Unfortunately, we've witnessed exactly the opposite trend in the number of medical schools. There are 130 medical schools in the U.S. (data here), which is 22% fewer than the number of medical schools 100 years ago (166 medical schools, source), even though the U.S. population has increased by 300%. Consider also that the number of medical students in the U.S. has remained constant at 67,000 for at least the period between 1994 and 2005, according to this report, and perhaps much longer.

The charts below tell an interesting story (
data here):

The number of applicants to medical school keeps going up, by more than 21% between 2003 (34,786) and 2008 (42,231), despite the fact that the number of students admitted has gone up by only about 9% (from 16,538 to 18,036) over that period.

Because of the 21% increase in applicants since 2003 for only 9% more openings available in U.S. medical schools, the number of medical school applicants per available opening in medical schools increased from 2.1 in 2003 to 2.34 in 2008 (see chart below).

Because of the significant increase in applicants for a much smaller increase in available openings in medical school, the percent of medical school applicants accepted has decreased from 47.5% in 2003 to 42% in 2007, before increasing to 42.7% in 2008, see chart below.

Bottom Line: One reason we might have a "health care crisis" due to rising medical costs, and the world's highest physician salaries is that we turn away 57.3% of the applicants to medical schools. What we have is a form of a "medical cartel,: which significantly restricts the supply of physicians, and thereby gives its members monopoly power to charge above-market prices for their services.

In his classic book Capitalism and Freedom, Milton Friedman describes the American Medical Association (AMA) as the "strongest trade union in the United States" and documents the ways in which the AMA vigorously restricts competition. The Council on Medical Education and Hospitals of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA limits the supply of physicians. In the same way that OPEC was able to quadruple the price of oil in the 1970s by restricting output, the AMA has increased their fees by restricting the supply of physicians.

If we had 130 law schools (instead of 200) and 200 medical schools in the U.S. (instead of 130), it would probably go a long way to solving our "health care crisis." More MDs at much lower salaries along with fewer lawyers and lawsuits would be a good thing, wouldn't it? Can't breaking up the medical cartel, training more physicians, and lowering MD salaries be part of the discussion for health care reform?

### Falling Odds for Ben, Rising Odds for Pos. Q3 GDP

Falling Intrade odds for Bernanke's reappointment as Fed chair, from 75% to 60% in 17 days:

Rising Intrade odds for positive U.S. real GDP growth in Q3, from 25% to 50% in 115 days:

### SAT Math Scores Reveal HUGE Gender Differences

On a previous post, I documented the statistically significant male-female test score gap for the 2008 SAT math exam, and the graph above shows that this statistically significant difference of more than 30 points has persisted over time. Could the male-female SAT math test score gap be explained by: a) males taking more math classes than females in high school, or b) males demonstrating higher performance in high school math classes than females, or c) male high school students having higher GPAs than female students? The answers appear to be NO, using data from the 2008 SAT report.

Table 13 below (click to enlarge) shows that female high school students dominate male students at the highest GPA levels (A+, A and A-) by wide margins, and male students dominate female students at the lowest GPA levels (C, D, E or F). For example, there are 150 female students earning GPAs at the highest A+ level for every 100 male students, and there are 160 male students earning GPAs at the lowest D/E/F level for every 100 female students. Further, the overall GPA for all female students (3.38) is higher than the overall GPA for male students (3.23).

Table 14 below (click to enlarge) shows that there is essentially no male-female difference for average years of math study (3.9 years for males vs. 3.8 years for females) or math GPA (3.12 for both male and female students).

Table 15 below (click to enlarge) shows no male-female differences for: a) years of math study or b) highest level of math achieved, and shows that the 54% of students taking AP/Honors math classes are female vs. 46% male. That is, there are 117 female students taking AP/Honors math classes for every 100 male students.

Bottom Line: Female high school students are better students on average compared to male high school students, and they are equally or better prepared than males for the math SAT exam based on the number and level of math classes taken in high school. And yet, male students score significantly higher on the SAT math test than females, and the statistically significant male-female test score gap of more than 30 points persists over time.

Based on the statistical evidence, is there any other conclusion than this obvious one: In general and on average, male high school students in the U.S. are just plain better at math than female high school students? If there are other reasonable conclusions, please share them.

And yet, we hear statements like this: "There just aren't gender differences anymore in math performance,"
says University of Wisconsin-Madison psychology professor Janet Hyde. Stereotypes are very, very resistant to change," she says, "but as a scientist I have to challenge them with data."

Do those data include publicly available SAT score data showing statistically significant gender differences in math scores that persist over time? Apparently not.

## Tuesday, June 23, 2009

### Both the Mean and Variance of SAT Math Test Scores is Higher For Males Than for Females

The table above (click to enlarge) shows mean test scores and standard deviations for the SAT exam on the three different sections (reading, math and writing), broken down by gender (data available here, see Table 2) for the more than 1.5 million college-bound seniors who took the SAT in 2008.

Difference-of-means tests that I have calculated (not reported here) reveal that the mean male test scores are significantly higher than the mean female test scores for both reading and mathematics (at the 1% level of significance), and the mean female test scores for writing are significantly higher than male test scores (at the 1% level). Confirming the results of previous research, additional statistical tests confirm that the variability of male test scores is significantly greater than the variability of female test scores, for both the mathematics and reading exams.

SAT test score distributions are displayed in the table below (click to enlarge), and show the following:

For math test scores above 750, males outnumber females by almost 2 to 1, and for test scores between 700-740, the ratio is about 1.6 males for every female. For the 650-690 range, males outnumber females by a factor of 1.38 to 1, and for the 600-640 range the ratio is 1:15 males to every female. For all of the other ranges except the bottom one, females outnumber males. Overall, female SAT test takers (812,764) outnumbered males (704,226) by 1.15 to 1.
The difference between male and female test scores for the math section of the SAT has persisted over time, see chart below (data here, page 3).

Although the gap between male and female test scores has declined over time, and in 2008 was the smallest (33 points) since 1971 (see chart below). However, given the large sample size, even a difference in mean test scores of one point would still be statistically significant, so the gap would almost have to completely disappear before the average male and female scores would be statistically equivalent.

### Rising Grades, Falling Test Scores for HS Seniors

Click to enlarge.
Between 1998 and 2008, the percentage of college-bound high school seniors with a GPA equal to letter grades of A+, A or A- increased from 38% to 42%, while the average SAT scores for that group decreased by 15 points from 565 to 550 for the Reading section, and by 19 points from 578 to 569 for the Math section (data here from The College Board, Table 17).

### Existing Home Sales, Median Prices Increase in May

WASHINGTON (Dow Jones) -- Existing-home sales improved again in May, but falling prices and bloated supply promise to make a housing sector recovery slow.

MP: That's one way to look at it. Here are some alternative views:

1. The April to May increases in median home prices (3.84%) and mean home prices (3.26%) were the largest monthly price increases in more than a year (data here).

2. The monthly May increase in both median home prices (3.84%) and homes sold (2.36%) was only the second time in at least a year that both prices and unit sales increased in the same month.

3. The back-to-back increase in home sales in both April and May is the first time in at least a year of two consecutive monthly increases.

4. The most recent two-month increase in sales of 4.84% is the largest since April 2004 (source).

5. The 9.6 months supply of inventory in May is below last year's May level of 10.9 months by more than five weeks, and is at the second-lowest level in the last year.

According to Brian Wesbury and Bob Stein:

The data today are consistent with our outlook that the economy is recovering from a panic. Home sales, building activity, and the rate of decline in home prices all seem to be bottoming or have already formed a bottom. In fact, the level of existing home sales in May was the highest since October 2008.

### Economic Reports and Releases via NBER

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### Richmond Fed Index Rally Suggests Econ Recovery

Manufacturing activity in the central Atlantic region advanced somewhat faster in June, according to the Richmond Fed’s latest survey. The seasonally adjusted manufacturing index — our broadest measure of manufacturing activity — jumped to 6 from May’s reading of 4 (see chart above). Looking at the main components of activity, new orders expanded further, while factory shipments grew at a slightly slower rate and employment exhibited more moderate weakness. Other indicators were mostly positive. Backlogs increased for the first time since August 2007, while vendor delivery times stabilized and capacity utilization edged higher. In addition, manufacturers reported somewhat quicker growth in finished goods inventories.

MP: Signalling the end of the 2001 recession, the Richmond Fed Manufacturing Index was above zero by early 2002 when the U.S. economy was officially in economic recovery (see chart above). The Richmond Fed index has increased 61 points since the end of 2008, and has now been in positive territory for two consecutive months for the first time since the summer of 2007, suggesting that the recession has ended in the Richmond Fed region (MD, VA, WV, NC, SC and DC).

There have been a lot of somewhat-sensationalized descriptions by the media of the current recession ("Worst economic crisis since the Great Depression
®, "Great Depression II™," etc.), and I'm wondering how the media will describe the pending economic recovery? We'll probably be more likely to hear descriptions like "The Slowest/Weakest Most Sluggish Economic Recovery Since ______" than descriptions like "The Greatest/Fastest/Strongest Economic Recovery Since _____."

### ECRI: Recession Will Be Over By End of Summer; WLI Registers Largest Three-Month Gain in History

NEW YORK, June 19 (Reuters) - A gauge of future U.S. economic growth rose along with its yearly growth rate, reaffirming hope that yearly growth will turn positive in the summer months, a research group said on Friday. The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index (WLI) rose to a 36-week high of 117.1 for the week ending June 12, from an upwardly revised 116.2 the previous week (see chart above). In recent weeks, the group has forecast that the U.S. recession will end sometime during this summer, as its yearly economic growth reading rebounds from late-2008 lows.

The index's annualized growth rate spiked to an 85-week high of minus 0.6 percent from the prior week's revised rate of minus 3.5 percent (MP: And compares favorably to the year-end growth rate reading of -28.1%, see data here).

"With WLI annualized growth rocketing up almost 30 percentage points in six months (MP: from -28.1% in December), it's virtually pounding the table about the recession ending this summer," said Lakshman Achuthan, managing director at ECRI.

MP: The WLI has increased nine weeks in a row - the last time that happened was almost 20 years ago - and the index has increased in 13 out of the last 14 weeks (data here). The index of future economic activity is now at a 9-month high of 117.1, the highest level since October 3 of last year (see chart above). Further, the 12-point, three-month increase in the WLI from the early March low of 105.1 is the largest three-month gain in the history of the WLI back to 1967.

### Canadian Oil Sands: More Oil Than Saudi Arabia?

Canada's oil sands hold an estimated 170 billion barrels of oil that can be recovered with existing technology and as much as 1.7 trillion barrels -- more than five times the size of Saudi Arabia's reserves -- that could be produced with the use of new methods that are being developed.

As the only non-OPEC source with the capability for large production growth during the next several years, oil sands have the potential to reduce the Organization of Petroleum Exporting Countries' revenues, weakening the cartel and those members that often undertake policies hostile to U.S. interests.

By getting more of their oil from Canada, refineries in the Midwest are moving from being at the back of the crude oil supply line to the front. With these secure supplies, Midwest refineries are not as vulnerable to supply disruptions from overseas producers or hurricanes in the Gulf of Mexico.

So who would object to Canadian oil sands?

Eenvironmental groups like the Natural Resources Defense Council and the Sierra Club are trying to shut down Canadian oil sands production and block the expansion of refineries here in the U.S.

If the environmental groups truly cared about achieving results in their battle against global warming, they would better focus their energy on the construction of scores of power plants in rapidly developing economies like China and India that account for most of the increase in the world's carbon emissions. These developments pose the real global environmental danger, not the Canadian oil sands.

~From my editorial in today's Detroit News

## Monday, June 22, 2009

### Canada's Wait Times Exceed Benchmarks

Five years ago the governments of Canada resolved to improve wait times for health care by committing nearly \$6 billion to the cause. Although there are signs of improvement, the lack of uniform and timely information on wait times is just one symptom of the ‘unfinished business’relating to wait times in Canada. What’s going on?

■ Based on the UK's National Health Service target of 18-weeks from initial referral by a family physician to start of treatment, a majority of Canadian patients had wait times that exceeded the 18-week target. Access is particularly poor for: ophthalmology (adult strabismus), obstetrics and gynecology, gastroenterology, plastic surgery and orthopedics.

■ The median wait for radical (curative) cancer care was 46 days or nearly 7 weeks and the majority of these treatments exceeded the Canadian Association of Radiation Oncology benchmark for curative cancer treatment of 4 weeks (2 weeks for the consult wait and 2 weeks for treatment). This is troublesome given the clear link between a delay in radiation therapy and a chance of cure.

■ The study found that the median wait time from the time the patient presented at the Emergency Department to the time the patient was discharged (i.e., the patient did not need to be admitted to an inpatient bed) was almost 6 hours, while the average wait was nearly 9 hours, both much longer than the benchmark of 4 hours.

Moreover, the median wait time for patients requiring an inpatient bed-that is, from the time the patient presented at the ED to the time they were admitted to an inpatient bed-was
19 hours (average is 23.5 hours or nearly one full day), which is substantially higher than the established thresholds (e.g., more than three times the 6 hour guideline for high-level acuity patients). The longer wait for patients to be admitted is often due to the inability to find an available hospital inpatient bed.

### Chart of the Day:TIPS Derived Inflation Expectation

Update: Both charts above and the comments below have been updated, based on using 10-year constant maturity yields for both Treasury series (thanks to Michael Pond for suggesting this).

The top chart shows the weekly, bond market-based 10-year TIPS-derived expected inflation back to 2003, calculated as the difference between 10-year regular, nominal Treasury yields and 10-year Treasury inflation-indexed yields, both on a constant maturity basis (St. Louis Fed data here for 10-year TIPS and here for regular 10-year Treasuries; see the bottom chart for those yields separately.

After an unusual period in late 2008 resulting in a narrowing spread when the TIPS 10-year yields were unusually high and approaching 3%, and regular Treasury yields were unusually low and approaching 2%, the Treasury market seems to have stabilized, and the bond market's 10-year expectation of inflation is back around 2.5%, consistent with the inflationary expectations from 2003-2007.

### Canada's Health Care System: Poor Value

The beginning of May marks the end of income tax season in Canada. Over one-half of the personal income taxes Canadians just paid in aggregate are required to cover the cost of our taxpayerfunded health care program. Given this level of expenditure, you might expect that Canadians receive world-class access to health care. But the evidence demonstrates that this is not so.

Consider Canada’s waiting lists, which are among the longest in the developed world.

■ In 2007, waiting lists for access to health care in Canada reached a new all-time high of 18.3 weeks from general practitioner referral to treatment by a specialist. Despite substantial increases in both health spending and federal cash transfers to the provinces for health care over the last decade or so, this wait time is 54% longer than the overall median wait time of 11.9 weeks back in 1997.

■ Canadians were more likely to experience waiting times of more than six months for elective surgery than Australians, Germans, the Dutch, and New Zealanders, but slightly less likely than patients in the United Kingdom;

■ Canadians were least likely among the six nations to wait less than one month for elective surgery;

■ Canadians were most likely to wait six days or longer to see a doctor when ill, and were least likely among the six universal access nations surveyed to receive an appointment the same
day or the next day; and,

■ Canadians were least likely to wait less than one hour and most likely to wait two hours or more for access to an emergency room among the six universal access nations surveyed

That is hardly the sort of access you might expect from the developed world’s third most expensive universal access health insurance system.

~Nadeem Esmail of the Fraser Institute

HT: NCPA

### Buy American = Fewer American Jobs, Not More

Cartoon by Henry Payne.
When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with our economic partners. Now Canada and China are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector. Other countries may follow suit.

The tragic losers of “Buy America” are free trade agreements and potential job growth in the American economy. Seductively, “Buy America” promises workers they can have it all: cheap goods from China, oil from Canada, as well as protection from global competition. But real life just doesn’t work that way. In reality, “Buy America” is shorthand for fewer jobs as other countries retaliate.

Trillions of international dollars pass through America each year not because we are isolated, but because we are the hub of the world. Terrorists twice attacked the World Trade Center because the building symbolized international trade. They destroyed a building and murdered thousands of innocent Americans, but they failed to vanquish world trade. Sadly, politicians who erect barriers to trade are hostile not only to trade but to our country and to our jobs.

~Diana Furchtgott-Roth

### The Uninsured and Static vs. Dynamic Assumptions

Although 70% of insured Americans rate their health care arrangements good or excellent, radical reform of health care is supposedly necessary because there are 45.7 million uninsured. That number is, however, a "snapshot" of a nation in which more than 20 million working Americans change jobs every year. Many of them are briefly uninsured between jobs. If all the uninsured were assembled for a group photograph, and six months later the then-uninsured were assembled for another photograph, about half the people in the photos would be different.

~George Will

MP: Many of those discussing the "problems" of income, wealth or wage inequality often must be troubled because they are making the underlying assumption that individuals and households in the U.S. are permanently stuck in a certain income or wealth quintile (bottom or top) or income percent (top or bottom 10%), without acknowledging the dynamic movements up and down the income and wealth quintiles over time. Those who are troubled by the 45.7 million insured Americans are probably making a similar flawed, underlying assumption about the uninsured: that those individuals or households insured in a certain year remained permanently insured, and those individuals or households who are uninsured in a certain year remain permanently uninsured with no possibility of ever getting insurance without government intervention, with no interaction between the two groups.

As George Will reminds us, the "uninsured" are often temporarily, not permanently uninsured, and the composition of the 45.7 million uninsured changes all the time, i.e. it's not like a private club closed to new members.

The unrealistic assumption of static group compositions over time (for income, wealth, or the uninsured, wages, etc.), and a rejection of the more realistic assumption of dynamic group changes, generally and inevitably leads to one policy conclusion: government intervention. Or at the very least, the assumption of static group compositions strengthens the case for government intervention and the assumption of dynamic group compositions weakens the case for government intervention.

## Sunday, June 21, 2009

### Wal-Mart Creates 3,000 New Jobs So Far in June

Logan, Utah: 350 new jobs (average wage \$10.98 per hour)

Conway, SC: 400 new jobs (\$11.29 per hour)

Miamisburg, OH: 200 new jobs (\$11.34 per hour)

Weaverville, NC: 350 new jobs (\$11.30 per hour)

Durham, SC: 530 new jobs (\$11.30 per hour)

Charlotte, NC: 300 new jobs (\$11.30 per hour)

Jefferson City, MO: 350 new jobs (\$11.27 per hour)

Metairie, LA: 300 new jobs (\$11 per hour)

Carlyle, IL: 50 new jobs (\$11.70 per hour)

Phoenix, AZ: 120 new jobs (\$11.17 per hour)

Cocoa, FL: 220 new jobs

### Markets in Everything: Direct Donor-Student Loans

NY TIMES -- Unithrive, which made its debut last month, matches alumni lenders and cash-strapped Harvard students, who post photographs and biographical information and can request up to \$2,000. The loans are interest-free and payable within five years of graduation.

The nonprofit site is the brainchild of three recent Harvard graduates, who hope it can help ease the crisis in paying for college, especially if it is one day rolled out to other colleges that cannot afford to be as generous as their alma mater, which already awards scholarships to all students with demonstrated need.

The appeal of direct donor-to-student loans, Unithrive’s founders say, is that alumni will have a personal connection to current students: those requesting loans list hometowns, majors and classes they have taken. Alumni can lend to students with whom they feel a bond. They are promised updates 3 times a year from students they support - not unlike the letters that sponsors of poor children in Africa receive through the Christian Children’s Fund.

### Happy Father's Day; Welcome The "Lipstick Economy" And Major Jobless Rate and Degree Gaps

As the top chart above shows, the male-female jobless rate gap of 2.5% is truly unprecedented. During and following the last two recessions of 1990-1991 and 2001, the male unemployment rate was about 1% higher than the female unemployment rate. But there has never been any recession in U.S. history, or any time during even a non-recessionary period, when the male unemployment rate was this much (2.5%) higher than the female jobless rate.

As the bottom chart above shows, 1981 was the last year that men received more college degrees than women, and the female-male "degree gap" has increased in every year since, and is projected by the Department of Education to increase further through 2017 when women will receive 158 college degrees (at all levels) for every 100 degrees received by men.

On this Father's Day, we should maybe recognize that we are witnessing what might possibly be a permanent structural change in the labor market and higher education, which will have profound and lasting implications for family roles, career choices, divorce settlements and child custody decisions by family courts, public policy, etc.

For example, just thinking out loud here, would it be possible in the future that a college-educated, professional woman working full-time would pay alimony to her unemployed ex-husband who hasn't found employment since the Great Mancession of 2008, and he might also get primary custody of the children and be paid child support?

### Inflation Smackdown: Laffer vs. Blinder

Arthur Laffer in the WSJ on June 11, "Get Ready for Inflation and Higher Interest Rates":

As bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

The percentage increase in the monetary base is the largest increase in the past 50 years by a factor of 10. It is so far outside the realm of our prior experiential base that historical comparisons are rendered difficult if not meaningless.

Banks now have huge amounts of excess reserves, enabling them to make lots of net new loans. At present, banks are doing just what we would expect them to do. They are making new loans and increasing overall bank liabilities (i.e., money). The 12-month growth rate of M1 is now in the 15% range, and close to its highest level in the past half century.

Alan Blinder counters in today's NY Times article "Why Inflation Isn’t the Danger:"

The mountain of reserves on banks’ balance sheets has, in turn, filled the inflation hawks with apprehension. But their concerns are misplaced. To understand why, start with the basic economics of banking, money and inflation. In normal times, banks don’t want excess reserves, which yield them no profit. So they quickly lend out any idle funds they receive. Under such conditions, Fed expansions of bank reserves lead to expansions of credit and the money supply and, if there is too much of that, to higher inflation.

In abnormal times like these, however, providing frightened banks with the reserves they demand will fuel neither money nor credit growth — and is therefore not inflationary.

MP: The chart above shows the significant growth in both the monetary base and excess reserves over the last year. According to Laffer, banks are lending out the excess reserves, which will be inflationary, and according to Blinder, banks are holding onto the excess reserves, which will not fuel inflation.

Who's correct? The graph below of the Total Loans and Leases of all commercial banks suggests that Blinder is more correct, at least for now. Total bank loans peaked in late 2008 and have actually been gradually declining since last October, falling by almost \$200 billion from the peak. And the graph above shows that excess reserves at banks have increased lately, which is consistent with the recent decline in bank loans. As the Fed has expanded the monetary base and bank reserves, banks have been holding a majority of those increased reserves as excess reserves, and they are NOT lending them out.

Blinder also argues that the bond market does not seem too worried about future inflation:

The market’s implied forecast of future inflation is indicated by the difference between the nominal interest rates on regular Treasury debt and the corresponding real interest rates on Treasury Inflation Protected Securities, or TIPS. These estimates change daily. But on Friday, the five-year expected inflation rate was about 1.6% and the 10-year expected rate was about 1.9%. Notice that the latter matches the Fed’s inflation target rate of just under 2%. I don’t think that’s a coincidence.

MP: The chart below shows the recent history of 10-year Treasury yields from both regular and inflation-indexed notes and illustrates Blinder's point of inflationary expectations of about 2%, based on the difference in yields between regular 10-year Treasuries of 4% and 10-year inflation-indexed Treasuries of about 2%.

Bottom Line: Both the bond market data showing contained expectations of inflation at around 2%, and the commercial banking data showing declining loan volume, seem to support Blinder's position more than Laffer's. I'm leaning toward Blinder's position for now. Inflation is not any kind of "clear and present danger," at least not yet.