Wednesday, July 29, 2009

Why Do Academics Spend Time Consulting?

Not all of us have the same motivations. Gerald Gardner's consulting will look familiar to some labor economists. But, he did his study for the "right reasons" (to help the underdog rather than to make a buck). “What Gerry did was calculate the statistical chance that a woman could get a job in one of the male categories,” said Eleanor Smeal, the president of the Feminist Majority and a former president of NOW. “He calculated pay differentials. The disparities just flabbergasted him. He contributed the hard intellectual theory based on the math, and he made it understandable, powerfully so.”

This "research" was conducted in 1969. Is he the daddy of discrimination analysis?

Switching subjects, I must admit that this NY Times article puzzled me. In commodity markets, does speculation stabilize or destabilize price volatility?

Perhaps the advocates are saying that there is collusion and "Enron" style manipulation that speculators are betting on rather than expectations concerning market fundamentals? But, couldn't this be solved through credible SEC regulation?

If two parties are willing to trade with each other, doesn't this increase social welfare? When is there an externality spillover that negatively affects everyone else? I'm pretty sympathetic with the world view of Mr. Donohoe. Why are prices volatile?

"Craig S. Donohue, the chief executive of the CME Group, which owns both the Chicago Merc and the Nymex, denied that the volatility stemmed from financial traders. He also defended the so-called index funds that have enjoyed explosive growth in the last several years.

“Blaming speculators for high prices diverts attention from the real causes of rising prices and does not contribute to a solution,” Mr. Donohue told the commission. He warned that federal volume limits on financial traders could make things worse for consumers."