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Tuesday, April 29, 2014

Even More on Welfare Reform

Writing about Donald Sterling, Michael Tomasky is the latest Democrat to irritate me by conceding that, yes Republicans had a point about AFDC and welfare reform was good.

He wrote

Now it’s certainly the case that Democrats and liberals have made mistakes over the years. The conservative critique of welfare policy in the 1980s had a considerable amount of merit, and the welfare-rights movements of the left were horribly self-marginalizing and self-defeating. So welfare certainly created a dependency problem, and for some families (though far fewer since Clinton enacted the overhaul), it still does. But that’s one policy.
I comment

On welfare and welfare reform, I note that the rate of deep poverty (less than half the poverty line) repeatedly set new records recently. The costs of welfare reform have been huge. The case that old welfare created dependency is I think weak even though it is widely accepted.

There is very strong quasi experimental evidence that access to food stamps caused higher female high school graduation rates and reduced a reasonable index of dependency

What was particularly bad about AFDC ? By the way, do you know that V "Concerned that some states were promoting family break-ups by limiting cash assistance to only single-parent families, Congress passed the Family Support Act of 1988, which required all states to provide assistance to intact families through the AFDC Unemployed Parent program (AFDC-UP)."

how about

"The major empirical finding is that contrary to the hopes of Congress, a state's provision of a UP program is not found to encourage two-parent families." That's about as close as one can get to a convincing test of a plausible argument for why AFDC might have effects opposite the documented effects of food stamps.

Saturday, April 26, 2014

Great Minds Link Alike

I'm pretty sure that Josh Marshall and Jon Chait don't know that the case of Cliven Bundy and all the other racist flakes who "spring up who espouse a lot of Republican positions, quickly get endorsed and trumpeted by a lot of Republican politicians and then suddenly turn out to be, well ... really racist." caused both of them to link to the classic Onion op-ed.

"Why do all these homosexuals keep sucking my cock?" It's like #bundyonion is totally trending or something.

Hey I linked to it too. Now I'm just like Josh Marsall and Jon Chait (I hope sitemeter understands what this should mean for this blog's traffic). Also click the link. You won't regret it. You know you are "Why do all these homosexuals keep sucking my cock?" curious.

Friday, April 25, 2014

Ed Kilgore was there

Ed Kilgore wrote From time immemorial, many Democrats who are really into “base mobilization” urged the party to go big on “populist” economic issues, while many Democrats who focused on “persuasion” strategies downplayed such issues.

We may be in a cycle where the old songs are archaic. Sure, a Democratic commitment to “economic populism” will help turn out “the base” insofar as it shows a renewed willingness by Obama and congressional Democrats to do something about the economy. But the most obvious value of the “populist” issues this year are that they are popular among swing voters.

I beg him to name names. I think the old songs have been archaic for at least 22 years. I also think that the "persuasion" Democrats were persuaded by money from rich individuals and large corporations to downplay populist strategies.

Ed Kilgore is now one of us. He has a past with the DLC, the Progressive Policy Institute and even the liberal New Republic. He knows all about the downplayers of populist strategies and their financing. I am thinking of a book something like David Brock's "Blinded by the Right" maybe entitled "Rendered Slightly Myopic by the Center."

Thursday, April 24, 2014

The Krugman Kahan Klein debate

Brad DeLong sent me to this wonderful post by Ezra Klein. Read it.

Psychologist Dan Kahan studies motivated reasoning, confirmation bias or, to use the technical term derp. He has found similar derpitude in liberal and conservative experimental subjects. Paul Krugman is puzzled as he thinks that Conservatives in the wild are way derpier than liberals in the wild. Kahan notes that this is exactly the perception that he would predict Krugman would have and that in response to Krugman's challenge to find examples of collective liberal derp similar to global warming denial he argues that the facts have a clear liberal bias, that the pattern which he agrees is in the data and which doesn't fit his hypothesis is due to coincidence.

I comment

Psychologist cure thyself. In the Krugman, Kahan, Klein debate (note to self not a good case for an acronym) Kahan essentially bases his case on the assertion that the facts have a clear liberal bias (OK the Krugman Kahan Colbert Klein debate KKCK).

In response to Krugman's question he (as perhaps unfairly paraphrased by Klein) said (note that the really embarrassing claims are not direct quotations lf Kahan)

"Kahan solves the problem by arguing that being right is irrelevant. "It's not whether one gets the answer right or wrong but how one reasons that counts," he argues. A liberal who works backwards from conclusions but happens to believe in climate change is "to be congratulated for being lucky that a position they unreasoningly subscribe to happens to be true," but nothing more."

As Kahan said of Krugman this is perfect (for all I know perfected by unfair paraphrasing). There is nothing more characteristic of derp (the technical term for the phenomenon Kahan studies) than claiming that a pattern which doesn't fit the theory is due to pure coincidence.

Kahan also manages to (allow himself to be perhaps unfailrly presented as) the perfect strawman reductionist. The straw reductionist says that if you understand the parts you understand the whole, that the whole is the sum of the parts where the key bit is that summation is a liniear function. This is an unfair parody of true reductionists based on the assumed general linearity property of functions (also used by economists who assert that if assumptions are approximately true then their conclusions are approximately true).

But sometimes it is fair. Kahan as presented by Klein seems to think he can determine the behavior of groups of people (not predict with some confidence but know with enough certainty that he can dismiss data on the observed behavior of the groups) by studying individuals alone interacting with a computer (or piece of paper or experimenter reading a script and following a protocol -- I don't know exactly how the experiments were performed). As Klein notes, this assumption is absurd and should not be taken seriously even if it didn't lead Kahan to complain about the liberal bias of the facts or argue that a pattern (which Klein didn't quote him denying exists) is due to coincidence.

Now one methodological rule is don't assume all fields of inquiry other than your own are totally sterile wastes of time. If you are a psychologist, don't assume that sociologists, political scientists and historians have nothing to teach you. Another is Paul Krugman is usually right and if you debate with him you will probably end up looking like a fool. A third may be that the wonkospherical bubble is as impregnable as the conservabubble and that Krugman, Chait, Klein and DeLong with instinctively unite against you if you challenge any one of them.

I am interested in a further critique of Kahan. Something within pyschology as understood by myself -- a dilettante economist. I think I will go over to my blog as, stick toeven if you don't put a limit on comment length, you should.

OK here I am at my blog.

I want to stick to psychological experiments in which individuals interact with machines and such. It just isn't true that the behavior of liberals and conservatives is the same. The degree of derpitude seems to be similar, but people who self identify as Conservatives are more conservative in the ordinary sense of the word --

I think there is also independent evidence that US conservatives are somewhat more likely to be authoritarians -- more likely to say it is our duty to loyally follow are leaders and less likely to say we should question authority.

I didn't manage to google up the link, but there was an experiment in which people were offered capsules with numbers printed on them. If accepted they got a prize (which could be negative so accepting a capsule was risky). Same number on outside same reward or punishment for accepting. Political liberals tried more different capsules experimenting and taking losses to learn Political conservatives more nearly stuck to the tried and true.

Derps include contrarian derps who are convinced that everything you say must be wrong. They aren't pleasant but they are socially useful. Kahan has no data on contrarian-ness vs conformism.

Here the point is that there is evidence from experiments with one person at a time which suggest ways in which liberals and conservatives beliefs evolve over time (neither rationally updated given the data but less table for novelty loving liberals than for conservative conservatives). If one never mutates one never evolves. If one mutates and there is a very weak selection of beliefs which fit the facts (too weak to be noticible in one trial as in Kahan's study) the mutators's beliefs will evolve to fit the facts. We will also have more silly crazy notions which last a long while but not forever.

If people think that dissent is disloyalty, then they will be even less open to evidence when interacting with each other as a group than when isolated. If they think debate is generally good, they will ... well be not much more irrational when together than when alone.

OK so something against liberalism and pro-psychological reductionism. I have just (reluctantly) conceded that the core liberal belief that discussion and debate lead us to find the truth together is false. Consider two bunches of people and a forecast to be made. One approach is to ask people and then average their answers (so the belief based on the whole is, by construction, the sum of the beliefs of the parts oh then divided by the number of parts). Another is to bring people together to share their knowledge, critique each other's reasoning, discuss and reason together. I think it is demonstrated that the averaging approach gives more accurate beliefs about verifiable facts (better forecasts better guesses of I don't know the surface area of lake Superior whatever). I cite Robert Shiller wrote this somewhere.

So I think liberals reason together less badly than conservatives. As evidence, I claim that I have been convinced by other liberals that the core tenet of the liberal faith is false

Monday, April 21, 2014

I gave Kevin Drum bad advice

I advised Kevin Drum to beware of Doug. bewareofdoug photo bewaredoug.gif Now I think he has way to favorable a take on the latest CBO score. He wrote
Ryan's 2014 Medicare plan is different still. The voucher is now based on the average bid, not the second-lowest bid, and the inflation cap is gone. The market will either produce savings or it won't. [skip] The CBO has analyzed the effect of Ryan's 2014 changes, and they conclude that by 2020 the Ryan plan would save a grand total of $15 billion per year. That's 2 percent of net Medicare spending.

Now, this is nothing to sneeze at. Savings are savings. However, like the cost containment proposals that are part of Obamacare, this represents a highly speculative estimate. We might get the 2 percent, we might get nothing.

I comment.

Recently I warned you to beware of Doug (Elmendorf head of the CBO). You guessed Obamacare would reduce the number of uninsured would be by 10 million by December 31. I guessed the CBO guess of 13 million would turn out to be about right. OK so now the CBO says 12 million so I can beware of Doug or note that they also reduced their exchange based QHP estimate by one million and look how that turned out.

But now I cast aside all fear of Doug and wonder how the hell anyone can imagine that the 2014 Ryan plan will reduce Medicare spending. We have some experience with something very much like it called Medicare advantage, which reduced spending by -14%, that is, increased spending by about 14%. Ryan2014 sure seems to me to be Medicare advantage on steroids, crack and crystal meth. What happens if the average plan costs much more than ordinary CMS Medicare ? It seems to me the plan would be to send the difference to all the people who stick with the CMS. Now I do not guess that this that would increase spending by 14 % -- there would be some competition between the private option providers instead of the Medicare advantage formula (about which you know more that I do). But I don't see any reason to doubt that the Ryan2014 proposal would cost more than unreformed Medicare.

You guess the reasonable range is 2% saving to 0% saving. That sounds to me to be vastly too kind to Ryan. If I had to guess, I'd guess his reform would cause spending to be at least $50 billion a year higher. This is a wild guess, but I don't see how anyone can have any doubt about the sign of the effect.

Friday, April 18, 2014

ingen kan tvivla på min absoluta lydnad av vår ledare Krugman

His bleg is my command. Paul Krugman requires an answer to The Question "How Do You Say “Nobody Could Have Predicted” In Swedish?" ingen kunde ha förutspått

Kossack Kontra Karter Kontumly

Kos et al (OK Kos et Jedius Lewifillius) understate the glorious accomplishments of Jimmy Carter (no I'm not kidding I mean it). They both have fun with Rand Paul's unwise question "When is the last time in our country we created millions of jobs?" and his incorrect false reality not based and totally absurd answer "It was under Ronald Reagan." Correct answer (if one rounds) since January (since then non farm employment has increased by about 1,684,000) or no rounding (and un-deseasonalized data are a bitch) in the past year (really past 11 months since last april) Been a longgggg time since we saw that (hell the kiddo is so young that maybe 11 months to him is like a decade to me although it is but as a blink of an eye to Aqua Buddha).

Unfortunately Kossacks seem not to have learned about the effete elite's tool called "division" (or maybe they believe in solidarity and oppose abhor and abnegate division). So they report employment growth per president and years per president but don't report employment growth per year by president.

It's not so hard The only challenge is Obama pres for 5 1/6 years from inauguration to last data with (non farm) employment growth of around 5,220,000 so oh just over a million a year.

Now compare

Bush II 0.16 million per year

Clinton 2.86 million per year

Bush I 0.65 million per year

Reagan 2.02 million per year

Carter 2.58 million per year

Yes the rate of employment growth per year (in jobs per year) was higher under Carter than Reagan. Of course given that employment grew under Carter growth in percent of employment per year was higher too. Yes growth per year was higher under Reagan than Obama,but Reagan wasn't inaugurated to manage an economy in free fall.

Here my complaint is that partisan Democrats (hell we are talking Kossacks) try to avoid mentioning Carter and therefore allow partisan Republicans and non partisan just about everyone to agree that the Carter presidency was a disaster. It was if all you care about is price stability. If you have sane, semi-sane or quarter-sane priorities it wasn't.

Thursday, April 17, 2014

Komment on Kos

Markos Moulitsas founder editor and owner of the number one traffic political blog, key to the election of two senators(Webb and Tester) vital to the Democratic Senate majority in the 110th congress wrote

"So to win back the majority, Republicans have to win those two seats in WV and SD, and four more from Arkansas, Louisiana, Michigan, Montana, and North Carolina. All the while, they must hold their two endangered seats in Kentucky and Georgia. That's called "running the board.""

I comment:

kos and Putin, Kossacks and cossacks. Komrad Kossacks, It seems our fearless leader, like the shirtless leader of Russia, doesn't know "What would you need Alaska for?"

We may need that seat to have a Senate majority.

Sunday, April 13, 2014

Not ready for prime time thoughts on inflation expectations

Over at Angry Bear I have continued my imitation of an old economist who never learned modern macro theory or econometrics who is analyzing new data with old ideas and techniques (note that Stephen Colbert is not really conservative so don't assume that I am ignorant about developments in my field since 10 years before I became and economist (also note the key anti-weasel word "assume")).

My latest is to estimates some Phillips curves. From the exercise, I learn that Mark Sadowski knows more about the macro-monetary policy literature than I do (OK I knew that -- I focus on oh growth or something or maybe robust econometrics). Nick Rowe also suggested that the results are just what one expects if the FOMC successfully targets the inflation rate (this is true). I replied at length in comments and copy and paste my reply here

Nick Rowe

April 13, 2014 7:14 am

This sort of result is exactly what you should expect. if the central bank is targeting inflation. The whole point of inflation targeting is to ensure that expected inflation does not vary over time, so you should not be able to estimate any effect of expected inflation on actual inflation.


Robert: Nick yes. The results are consistent with what central bankers call "anchored inflation expectations" and would occur if inflation were successfully targeted. There are two problems. First inflation has not been successfully targeted, inflation has not been equal to the target -- this could be because the true target is 0 to 2% not 2 % (or 2-4% as a goal not a target in the 80s). Second TIPS breakevens *are* still correlated with lagged inflation. There are two facts (both reported at this blog) one is that lagged inflation has a negative correlation with wage inflation, the other is that the R squared od TIPS breakevens on lagged inflation is about 50%.

You can explain the styllized fact which I just reported, but not the one I reported February 25 2013

Also there are survey's of price level forecasts made by people chosen as experts. I haven't reported much on this, but I have been looking at median CPI forecasts from the Livingston survey

Here I note that Volcker seems to have had significantly less inflation fighting credibility than Arthur Burns -- a very standard argument for how actual expectations differ from adaptive expectations is in total contrast with the data.

Here I note that decade averages Livinston median forecast errors correspond almost exactly to decade averages of unemployment.

All are evidence that very crude models of expectations work very well -- when modelling expectations. Now the Livingston team changed the survey in 2003 and I haven't dowloaded data from post 2003 surveys. My excuse is that I am keeping them for out of sample forecasts and giving myself no chance to data snoop. The real reason is that I am lazy. So I only have one year ahead forecasts of inflation up to 2004 (forecasts made in 2003).

Here is a a scatter of lagged annual personal consumption deflator excluding food and energy inflation and the annual CPI inflation forecast calculated from the mediian Livinston CPI forecast. I look at data since 1990 (recall the expecations unaugmented Phillips curve fits the data 1990-2013 well). There is no sign from the Livingston survey that inflation expectations are anchored.

update:graph corrected (actually corrected twice)

Between the TIPS results (for recent years for which FRED has TIPS data) and the Livinston survey results (for older years before they changed the survey) I am willin to assert that inflation expectations are not anchored at all -- that TIPS purchasers and Livinston survey participants do not believe that the FOMC is successfully targeting inflation year by year (actually the TIPS breakevens are 5 year breakevens).

I should add that the median Livingston participant makes extremely anchored forecasts of inflation over the long term (10 years IIRC) forecasting around 2.5% (IIRC) in survey after survey.

Not ready for prime time, but I am convinced that the key issue is downward nominal rigidity not anchored inflation expectations.

Thursday, April 10, 2014

QODT Chait on Corn

Chait wrote "David Corn, who appears to possess incriminating video of everybody in America" I hasten to add that Corn obtains these videos by honorable means and has thereby provided a great service to his country and the world. So please please David don't release the video of me ... well you know the one. Wait what's that little two letter word "in". Ohhh not all US citizens, but all US residents. Well in that case I denounce David Corn as the big brother of the 21st century from the safety of Rome.

I for one welcome our large eared overlords

In the middle of an e-mail exchange on the topic of whether it is reasonable to speculate that Charles Koch suffers from paranoid schizophrenia I wrote

I think there is actually evidence that a strange race of alien beings (obviously including Obama) are taking over the planet. First point of contact somewhere in Indonesia. They have some mystical power -- call it charisma which makes them extremely popular.

The evidence ? Joko Widowo Mayor of Jakarta and super popular candidate for President of Indonesia. See Economist article entitled "Yes he can" See his face (OK the hair is different)

Born 1961 . Hmm who else was born 1961 ?

Implausible ? Maybe but I mean how likely is it that a half Kenyan whose middle name is Hussein and who just happened to have lived in Indonesia would be elected 11 years after September 11 and 2 years after arriving in Washington ? Are you willing to claim it is all a coincidence ? I am.

But just in case it isn't, I for one welcome our new large eared overlords. We haven't done a very good job on our own, and their results so far are promising.

Wednesday, April 09, 2014

More on Chait's Hate of Politifact

In the post below, I linkened to Jon Chait denouncing Politifact for calling the DNSC's add asserting that Republicans proposed eliminating Medicare the lie of the year 2011. I was actually looking for his earlier post denouncing Politifact for rating the claim "pants on fire". I didn't read the more recent (that is Dec 20 2011) post, but I'm glad I have since it includes the wonderful snark "Politifact has a shaky grasp on the term fact, which is a problem if you’re in the fact-assessing business." and "Is that “ending Medicare?” Well, it’s a matter of opinion. At some point, a change is dramatic enough that it is clearly ending the program. If you proposed to replace Medicare with a plan to give everybody two free aspirin on their 65th birthday, I would hope Politfact would concede that this would be “ending Medicare,” even if you call the free aspirin “Medicare.”"

(I like my own example in which the Medicare insurance program for the elderly is eliminated and a post office in Idaho is named "Medicare" but I'll take "two free asprin" and call it for Chait.)

In both posts, Chait notes that, when they should be discussing whether political claims of fact are true, Politifact denounces claims because they are criticisms of entitlement reform and Politifact thinks that entitlement reform is good.

In the lie of the year post

The item explaining this year’s choice largely consists of irrelevant filler. For instance, Politifact quotes a worried budget scold:
"In terms of creating a national conversation about fiscal reform, the last thing we need is demagoguing attacks against people who have put forward serious policy proposals," said Jason Peuquet, a policy analyst with the bipartisan Committee for a Responsible Federal Budget. "It’s very worrying."
Yes, if your agenda is to encourage politicians to propose deficit reduction, then you’ll be worried about any criticism of any deficit reduction proposal, accurate or otherwise. So what?
Notice here how criticism from a "bipartisan" organization is presented as fact checking. Evidently there can be no "bipartisan" errors and there were WMD in Iraq.

In the pants on fire post

"2. Politifact: "Republicans say that future spending projections for Medicare are not sustainable, and the program requires changes."

Obviously this has no relevance to the truth of the Democrats' ad."

This is in what is supposed to be a fact check of an ad which did not assert that the current Medicare program is sustainable. It is a matter of opinion, but also a matter of opinion which has nothing whatever to do with the claims of fact which are allegedly being checked.

In the Lie of the year post Chait goes on to conclude "But it’s not a partisan issue. Politifact had some genuine Democratic lies to choose from. Politifact is just a plain shoddy, not-very-smart group, and this is true when they’re calling Republicans liars as well."

Clicking the concluding clause leads to Chait complaining that Politifact falsely rates the true Republican assertion that the ACA includes Medicare cuts as false. It is clear that it is not a partisan issue, it is an ideological issue. Politifact considers criticism of any proposed Medicare cuts to be so bad that it's the moral equivalent of a lie (and I'm sure of proof that the critic is fat, stupid and a lousy tipper). This isn't partisanship, this is epistymology -- Politifact defines false to mean "either not corresponding to reality or criticizing cuts to the Medicare budget"

Well this too long post is two years too late too. The fact that MSM villagers inside the beltway (and in Florida) consider the desirablity of cutting social security and Medicare to be objective facts so that advocating such policy isn't advocacy is now about as well known as the location of Ukraine. But I still find it shocking.

Opinions on Shape of Planet don't differ, one side has a sense of shame.

It is too early to say that the Kochtopus has sung it's swan song, but is sure seems that they have thrown about as much bullshit in the melting pot as it can hold. Their latest attacks "In Iowa, they're going after Rep. Bruce Braley with a ... charge that he supported Obamacare ... and "health insurance companies stand to make billions" off the law." Now the Koch supported operatives don't really believe that anything which leads to high corporate profits is bad any more than Obama or Braley do. They are serving two capitalists by denouncing profit as theft and accusing democrats of being insufficiently hostile to profit. Of course, the phrase "both sides" in "opinions on shape of planet differ, both sides have a point" already invokes the unfortunate tendency to consider the range of respectably opinion to go from the main stream of the Democratic party on right (as in the case "Opinions on WMD in Iraq don't differ. Both sides don't have a point").

In reality there are more than two sides. For example the Koch propaganda seems to correspond to the sincere views of Jane Hamsher who was (and for all I know still is) sure that the ACA was a bill to be killed because it was soft on health insurance industry profits.

But not even a very serious centrist villager could believe in a Teadog firebagger alliance of those who attack capitalism from the right and from the left. I think it is clear that opportunistic betrayal of the sacred tenets of hippy punching is the one thing that can make those guys admit, say, that they were totally wrong about Paul Ryan and worse much worse, that Paul Krugman was right.

When Ryan attacked the Medicare cuts in the ACA (and also in his budgets) he betrayed the VSP cause of cutting entitlements. To them acceptable debate includes any number of magic asterixes and claims that the CBO has scored something when it was ordered to assume that reduced tax rates don't imply reduced revenue (by Ryan who absolutely has the authority to order them to do that when scoring his roadmap as he did). But Mediscare is beyond the bounds (This also includes the true claim rated pants on fire with 4 Pinocchios and lie of the year that oh say Ryan wants to end Medicare and replace it with a fundamentally different program which he, exercizing his first amendment rights, choses to name "Medicare")

Waldman[n] minds think alike

Waldmann is a rare name in the USA and even Waldman isn't so common. Oddly there are many prominent Waldmans on the internet (including Kagro X). I find it odd to find Paul Waldman's name in The Washington Post (right at at the moment). But I just had a very odd experience. Waldman wrote something which I very strongly believe and like to argue ... well he wrote it better than I would have. The point is I almost feel as if I wrote
We like to pretend that science and religion can carve out their unique spheres (what Stephen Jay Gould called "non-overlapping magisteria"), but as well-intentioned as that may be, it's just not true.

Monday, April 07, 2014

Komment on Krugman on Kapital

Krugman suspects that super rich class interest has something to do with fear of inflation. I comment I am very sympathetic to inflation phobia phobia. I didn't get the big fuss in the 70s (OK I wasn't managing a budget -- for most of them I lived with mom and dad and 78-9 in college dorms). But there are other explanations of the pattern. 1. Open letters and such are signed by people in the same social network -- They get their friends to sign. People sign proclamations and petitions by their natural allies on the I'll sign yours today if you sign mine tomorrow principle. A better source of data would be say the U Chicago survey of prominent economists. 2. Republicans are against expansionary policy when Democrats are in the White House. They had no problem with fiscal stimulus in 2008. I recall Reganauts bashing Volcker in 81-2 (Volcker -- a Democrat hmm). 3. The 70s weren't especially horrible, but, in the 20th century, they are unique (except for 37-8) because the economy did badly with a Democrat in the White House. It wouldn't make sense to look to the source of income of the 0.1% to find why Carter is considered by Republicans to be a particularly bad President. Most recent Presidents who were much worse are Republicans (the exception may be Johnson with Vietnam but in that he was acting like a Republican). There are clear partisan reasons to advocate tight monetary policy now and to portray the 70s as worse than '81-2 or '08-now. I don't think it is proven that the partisan gap is principally based on class interests.

Krugman on Kapital

I comment on Kevin Drum commenting on Paul Krugman (do click the links) I think that Krugman is wildly over theorizing and that even you (Drum) and Cowan are over theorizing a little. It is absolutely clear that when you ask people why they fear inflation they assert that inflation implies increasing prices without increasing wages (or nominal incomes generally). Most people assume that the alternative to double digit inflation was stable prices with the same high nominal wage growth without reduced employment. Let's ask a Nobel memorial prize winner who asked research assistants to ask people . There is nothing there about the rich and the poor or about COLAs or anything as sophisticated as you, Cowan and especially Krugman assume. As noted by Krugman, the median household didn't do so badly in the 70s. Look you could also try for a political economy (Krugman) or psychology (Drum) based explanation for why the median US adult wants the foreign aid budget to be cut by 5% of total Federal Spending (without noting the detail that it is currently less than 1%). I shouldn't be totally surprised that two economists slip in the assumption that people are more or less rational, but with your more relevant educational qualifications you should know better (you usually do especially if by economists one means economists other than Krugman).