Monday, March 23, 2015

Turnout, Serrano, and the Outlier.

Percentage Voter Turnout Above (Below) Expected
Versus Number of Registered Voters
California Primary Election, June 4, 2014
Results available at  
Back in June of 2014, I took a look at the provisional results of the California Primary. It was partly due to a comment in a newspaper article arguing the Bay Area leads the State in voter turnout.  Based on the data, I concluded
that the northern counties, and those of the Sierra foothills should really hold the title.

I've wanted to revisit the final results for a while. I did so today. The coefficient of determination was essentially unchanged (R²=.757 versus R²=.758). In doing so, though, I realized there was a way to get at the point Paul Mitchell, the vice-president of Political Data Inc., had made to the newspaper reporter that led to my post in the first place.

Paul had contended that "[p]oor people from Sonoma are far more likely to cast a ballot than someone living in poverty in Echo Park [Los Angeles]." This time, after plotting the results, I then set the y-axis to 100% of turnout as predicted by the trend line, leaving the x-axis at the number of registered voters per county.  Graphing the data this way actually supports Paul's argument – that Sonoma County is the outlier from the trend.  Sonoma County comes in at 137% of expected turnout, the highest in the table.

Voter turnout has been on my mind because of a line from Serrano v. Priest that's come up here before.  In contemporary discussions of education, the "twin themes" of the Serrano I decision tend to be collapsed into one – "[t]he pivotal position of education to success in American society."  But it is the second of the twin themes, where Serrano I finds its support in Brown v. Board of Education, that causes me to return to this data.

I hand the microphone to California's former governor, circa 1954:
"[E]ducation is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship." [Emphasis added.]
The language is lofty, but not complicated. Democratic society is (of course) based on voting. In performing that public responsibility, education is a lens allowing us to distinguish the differences between competing choices. But Earl Warren (and a unanimous Supreme Court behind him) say it's more – that education is the foundation of good citizenship. Education doesn't just help us when we step into the voting booth, it shows when we choose to go to the polls in the first place.  Education is the self-evident spark, pump primer, and boot loader of democracy.

And so I take that proposition, and come back to the graph once more.  And I ask myself – is it education in Sonoma County that has led to this result?

And if I accept for a moment that the statement is true, I then must turn to the far more difficult question.  For what, then, would I point to about Sonoma County that has made this difference?

And what can the rest of California learn from Sonoma's experience?

Sunday, March 8, 2015

@RobertJShiller and the #EMRATIO.

There's been a tendency, every spring since the start of the Lesser Depression, for the business community to express, hopefully, that "this will be the year things turn." The first post I wrote noting this theme was on March 8, 2013. I thought this morning that, two years later to the day, I'd revisit the question.

Civilian Employment-Population Ratio
Federal Reserve Bank of St. Louis
I've been keeping an eye (thanks to Brad DeLong) on the Civilian Employment-Population Ratio from the St. Louis Fed for some time. It is generally the best measure of labor market conditions. If the economy rallies strongly, this is the ratio that should change substantially.

In March of 2013, the ratio was at 58.5. As of February 2015, it's at 59.3; the graph is on the right. There's essentially been no movement.

At the same time, though, the Shiller P/E Ratio, as of February 13, 2015, passed its pre-financial crisis high. This past week, the NASDAQ closed above 5,000 for the first time since the dot-com bubble. There is some local evidence of a speculative real estate bubble. Shiller himself recently released a new edition of his "Irrational Exuberance," where in the preface he expresses surprise at the events that have followed “the bursting of the speculative bubbles that led to the 2007-9 world financial crisis”:
"[E]vidence of bubbles has accelerated since the crisis. Valuations in the stock and bond markets have reached high levels in the United States and some other countries, and valuations in the housing market have been increasing rapidly in many countries."
So the data is there to support a narrative of asset price inflation unsupported by fundamentals, rather than the hopeful mantra of Main Street.

It is, of course, the why of this situation that is so puzzling to so many. If the economy presents meager prospects, shouldn't prices adjust to reflect? It is always tempting to fall back on Thomas Sargent and simply say that in an economic equilibrium, people are satisfied with their choices, and to add Herbert Stein's observation that "[i]f something cannot go on forever, it will stop."  But Shiller himself offered a potential explanation on why this phenomenon recurs, and I found that his point resonated, and so I link to his piece in the New York Times from last month:
"When there is unusual uncertainty about the future, and if not enough new business initiatives can be found to increase the supply of good investments, people will compete to bid up existing investable assets. They may go so far in bidding up prices that even though the assets may have horrible prospects, people will still want to hold them because they feel they have to save somewhere."