The study Noah points to below is really quite amazing. It also gives a good excuse to raise a peeve of mine. Let’s assume the NBER study is sound, but also not incontestable. In other words, let’s assume that there are reasonable, data-based, disagreements about the extent to which unemployment benefits adversely affect the unemployment rate. As best I can tell, Paul Krugman was right when he wrote in his textbook:
“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”
But maybe he was also right (if far too defensive and crabby) when he said that the current unemployment crisis is different.
The simple fact is that this is an argument that can be had empirically, without questioning the motives or basic decency of combatants on either side. What annoys me is the way so many liberals don the costume of empiricism when it suits them, and take it off when demagoguery is a more convenient fit. For instance, last week Obama ridiculed the idea that extending benefits has any deleterious effect on the unemployment rate. “That really sells the American people short,” he said with considerable haughty dudgeon. “The long-term unemployed are not lazy. They are not lacking in motivation.” Is NBER selling the American people short? I haven’t read the study, but my hunch is that they don’t say anything about the long-term unemployed being lazy. President Obama is supposed to be the first among equals of the “reality based community.” Krugman is the self-appointed court intellectual of the same crowd. But neither can concede that people who disagree with them on this subject have some perfectly valid, reality-based, and quite possibly superior arguments on their side.
A longtime reader and economist writes:
Regarding pet peeves, here’s mine. There is no such thing as an NBER study. This a study by four respected economists (Marcus Hagedorn, Fatih Karahan, Iourii Manovskii, and Kurt Mitman). All the NBER does is provide a means for economists to circulate their work (the NBER working paper series). No one at the NBER endorses the methods, conclusions, or probably even proofreads it. All they check is whether the paper meets certain NBER guidelines like not actually proposing this or that policy. In effect, the NBER working paper series is the equivalent of a mailing list.
Same is true for universities. People at Harvard do studies. Harvard doesn’t.
Thanks from a longtime fan (and NBER member).