Told to Eat Its Vegetables, America Orders Fries

New York Times article "Told to Eat Its Vegetables, America Orders Fries" (September 24th, 2010) gives potentially misleading statistics about vegetable-consumption in the United States and fails to tell a cohesive story about the incentives for healthy eating.

At restaurants, salads ordered as a main course at either lunch or dinner dropped by half since 1989, to a mere 5 percent, he said.

The profile of diners has changed significantly since 1989, making the average number of salads ordered at restaurants incomparable over time. This is because among modern diners, those who would have ordered salad if they were transported to 1989 may continue to order salad, making the mean number of salads ordered among this group constant between 1989 and 2010. However, this group does not include all restaurant go-ers. Some people who eat out today may not have done so in 1989.

Even if we believe that the population of restaurant goers is unchanged, some meals eaten out would not have been eaten out in 1989 because the number of meals eaten away from home has increased. According to a 1999 study in the Family Economics and Nutrition Review, titled "Contribution of Away-From-Home Foods to American Diet Quality" (available here), between 1989 and 1995, the percentage of meals eaten away from home increased by five percentage points (more than 20%) even though the number of meals eaten daily was unchanged. A graph of the trend is included below (click here to enlarge).

To its credit, the article makes some note of the difference between consumption trends in different demographic groups. What is missing is a solid economic interpretation.

To be sure, vegetables are making strides in certain circles. Women, as well as people who are older and more educated and have higher incomes, tend to eat more vegetables, said Dr. Foltz, the pediatrician who worked on the C.D.C. report.

Vegetables are commodities that cost a great deal in the short-run, but pay off in the long-run. We can think of the true price of vegetables as lower than the market price, since they make people richer in terms of health. Because the length of life (and productivity) is a function of health, avoiding vegetables costs those who make higher wages more (they lose more lifetime income by dying early from unhealthy eating). So, the total price of vegetables is lower for the wealthy than the poor, even though the market price is the same. We can also expect that health is a stronger determinant of life-span in later years, so the elderly, as well as women (who live longer than men on average) can be expected to consume more vegetables.

Value of College Degree Is Growing, Study Says

New York Times article "Value of College Degree Is Growing, Study Says" (September 21st, 2010) gets the correlation/causation distinction correct. However, it doesn't give the clear causal reasons why better educated and wealthier people eat more healthily and exercise more: while people often face the same price of an activity, they often face different shadow prices, the relevant price for making decisions.

The report, first issued in 2004 and updated in 2007, also described social benefits: those with a bachelor’s degree, it said, are more likely to volunteer, vote, exercise and have health insurance and pensions. They are also less likely to smoke, be obese or have low-birth-weight babies. It did not assert that a college education, by itself, was responsible for all those differences.

'Correlation is not the same as causation,' Ms. Baum said. 'But that said, the people who have done careful statistical analyses, controlling for demographic characteristics like income and family background, have overwhelmingly concluded that there’s some causation here, that some things that happen to you in college, for example, would make you more likely to adopt healthier behavior.'

Better educated and wealthier people have more incentive to live longer because their time is worth more. Take Kevin Murphy's shadow price of a cheeseburger example (briefly mentioned at the end of this interview). Eating unhealthy cheeseburgers shortens your life, but you gain happiness from them. The time of a low-wage person should be valued by that low-wage person as their wage (or outside wage, if the two are only approximately equal). While state-dependent utility disclaimers apply, the thrust of our argument will be robust to secondary and tertiary corrections.

Let us imagine that the time a rich person is willing to give up for an extra hour of his life is $200, but a poor person is only willing to give up $100. Then if a cheeseburger takes an hour off of an individual's life (for instance), then the true cost to a rich person is $204, while the cost to a poor person is $104. The shadow prices the two individuals face are different. Unhealthy decisions cost rich people more because they value their lives more.

When people decide to become educated, they induce themselves to have different marginal utilities and therefore make different decisions due to facing different shadow prices--a cheeseburger is more expensive for a rich person.

Recession Raises Poverty Rate to a 15-Year High

New York Times article "Recession Raises Poverty Rate to a 15-Year High" (September 16th, 2010) fails to acknowledge the poverty rate's intertemporally unstable nature. It compares poverty rates over time, an improper comparison due to the way poverty rates are calculated.

The share of residents in poverty climbed to 14.3 percent in 2009, the highest level recorded since 1994. The rise was steepest for children, with one in five affected, the bureau said.

One might think that individuals in the U.S. were only as well off as they were in 2004, when chained GDP/capita was approximately the same as it is this quarter. However, Corrections contends that we are actually even better than this. Below, find graphically depicted U.S. GDP over time in chained 2005 dollars (click to enlarge), and U.S. GDP per capita over time in chained 2005 dollars (click to enlarge). Note that chaining dollars is an attempt to introduce new products for comparison (otherwise, comparing cell phone prices from 1960 and today would not be well-defined).

The poverty rate from 1994 is measuring something completely different from the poverty rate in 2009. Poverty thresholds have changed multiple times, under a "sliding scale" approach. For example, in 1964, ~2.6% of U.S. households owned a color television. Circa 1994, 97% of U.S. households owned a color television. Beyond this, these televisions were not only cheaper, but were of better quality, programming, and durability.

Why is this relevant? Because increasing product quality is not properly measured, even with chained GDP. Below, we take minivans as an example.

In 2003, using Barry, Levinson and Pakes's instrumental method for demand estimation (also discussed in a previous post), Amil Petrin, in his phenomenal paper, "Quantifying the Benefits of New Products: The Case of the Minivan" (JPE 2002) estimates the value in dollars to consumers from the advent of the minivan by Chrysler in its first five years (1984-1988) as $2.8 billion in consumer surplus, and $2.9 billion in total surplus.

This surplus comes solely from an improvement in product quality that is largely unreflected in price due to monopolistic competition by competitors (GM and Ford introduced their own minivans in 1985). This sort of change will not be reflected by even chained GDP numbers. Because of increasing product differentiation (Petrin's "new goods" problem) and monopolistic competition (or competition), life is getting better than we're measuring with our best measures of product-chained GDP. Quality of life is higher.

Poverty indicators are not appropriate for "long" time spans because of innovation. Locally, we might think 2008 and 2009 are comparable. But in 1994, the internet had yet to be invented. Since then, as Austan Goolsbee and Peter Klenow estimate in "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet" (AER 2006) (gated) (ungated), the median individual gained $3000/year because of the advent (and widespread use) of the internet. The reason for this large gain is largely due to increased price competition and increased value of time. Since 1994, almost everyone in the United States is vastly better off than they were. (Another example might be how much individuals would have paid for a smart phone in 1994, given the millions that have them now and how "little" they paid for them relative for 1994 willingness-to-pay). This massive increase in consumer surplus generated from an increased value of time is unmeasured by GDP (underestimated) and poverty measures (overestimated). Use of these to compare long-run trends is ill-advised, especially when one has an ideological/Malthusian axe to grind.


Unfortunately, the notion that GDP growth generally underestimates utility gains is almost universally ignored in long-run intertemporal comparisons of utility.

Keeping Politics Safe for the Rich

New York Times editorial "Keeping Politics Safe for the Rich" (June 8th, 2010) misunderstands the idea of an implicit tax when writing about free speech. Specifically, it describes the idea of an implicit tax on political expression causing a "chilling" of freedom of speech to be "pretzel logic." The #1 standing of the Times in Corrections provides good evidence of familiarity with such logic.

The candidates argued that the matching funds “chilled” their freedom of speech because they were afraid to spend more than the limit that triggered the funds. A lower court agreed with that pretzel logic, but last month a panel of the United States Court of Appeals for the Ninth Circuit disagreed. It said the speech of the plaintiffs had not been chilled. “The essence of this claim is not that they have been silenced,” the panel said, “but that the speech of their opponents has been enabled.”

The actual causality of political victories and campaign spending is difficult for Corrections to discern (we expect, if political donations are a form of bribery or iterative bribery/wages, that the expected winner should be given more money, purely as a fact that he is expected to win, not because the money helps him win). However, even if we forego that qualm, the impact on political spending should look exactly like a tax.

The idea of the law is as follows.  Individuals can either be given a lump sum of money if they agree to forego large private campaign donations, or raise money but not receive the grant.  However, if an individual who raises their own money spends more than the lump sum amount the other individual has been given, then the lump-sum candidate gets some matching funds.  Corrections depicts this situation graphically below (click to enlarge): it is a graph of political spending ad effectiveness of that political spending for a donation-accepting individual.  As we see, our donation-accepting individual has an increasing effectiveness as he spends more money.  However, upon meeting the threshold, the effectiveness of his political spending declines, as his opponent is gaining matching funds to counter the impact of his commercials.

Our point, however, is that the same graph of effectiveness could have been produced by a simple system of taxation--say, 0% from $0 to the threshold, and 90% thereafter.  This is depicted graphically below (click to enlarge).  In this case, we would have to raise ten times as much post-threshold to have the same impact as we had before crossing the threshold--the response to individuals of Arizona's campaign finance system can be produced just as easily by an explicit tax on donations--surely a "chilling" of political speech and hardly "pretzel logic."

5 Myths about your taxes

Washington Post opinion "5 Myths about your taxes" (April 4th, 2010) offers an ill-concieved dismissal of tax "myths." Among them is a non-sequitur rebuttal to the notion that "Americans are overtaxed." Another suggests that the claim "Most people's tax returns are way too complicated" is erroneous, while giving no support for the argument.

Bottom line: We may hate our taxes, but we pay far less than people in other wealthy countries.

This does not take on the form of an argument to Corrections. Just because Americans pay less taxes than people in other countries does not mean that taxes are too high, or too low. The suggestion that European tax rates at optimal levels would amount to a joke to an economist. The only sensible way to argue optimal taxation is the Ramsey Tax problem or other optimal taxation arguments. Simple comparisons between countries give no insight.

The Post then claims that taxes are not too complicated:

But most Americans have relatively simple tax returns. Nearly two-thirds of us claim the standard deduction and don't have to itemize our deductible expenses.

However, it also gives data that its claim is not true.

Small wonder that three out of five tax filers pay someone to prepare their returns, and another one in five uses software.

When four out of five people need help filling out their returns, and three cannot do it on their own, it seems self-evident that taxes are too complicated for an individual to fill out on their own. If they could, they would not pay others or take up their own time with the frictions of having others fill out their paperwork. Corrections recognizes that it would be in the interests individuals with a very high shadow wage to pay others to fill out their taxes, but suggests that when three fifths of the population meets this criterion, it appears true, by definition, that taxes are too complicated.

The Case for a Climate Bill

New York Times Editorial "The Case for a Climate Bill" (January 23rd, 2010) offers a poor (though vague) economic analysis of a potential climate bill:

The cost to households, according to the Congressional Budget Office, would be small. A good program would create more jobs than it cost.

Job creation is not, in and of itself an economic good. For example, if the government mandated the creation of 100,000 salaried positions for people to count the amount of change thrown in trash cans each day, we would not conclude that this was money well spent. The people employed counting change could otherwise have been employed in activities that benefit society to a greater degree. There is a clear opportunity cost of job creation. Corrections notes this is possible because government regulation and subsidies can create a wedge by which more valuable jobs are bypassed due to implicit or explicit subsidies on government-encouraged jobs.

Also, as a note, even a small "cost to households" that results from any government intervention could easily offset the creation of a few jobs. If the new bill increases yearly energy costs for every citizen (about a quarter-billion of them) by one dollar, the bill would have to create 2,500 jobs paying $100,000 per year to make Americans as a whole unharmed, not including any supply-side calculations or the opportunity cost of that job creation. Ultimately, that a government bill creates jobs does not imply that the bill increases social welfare. A socially optimal outcome is often achieved by the private negotiations of the marketplace.

Unhealthy habits are what's killing us

CNN.com article "Unhealthy habits are what's killing us" (December 28th, 2009) appears to misunderstand that total utility of life comes from both quality of life and quantity. Furthermore, Corrections notes that higher rates of early death for minorities appears as a natural outcome of maximization, rather than a product of irrationality or a failure of willpower.

So if the U.S. health system does such a good job saving its middle-aged and elderly sick, why do Americans die comparatively young?

Answer: because Americans are much more likely to get sick in the first place.

And that likelihood owes very little to the health care system and a great deal to the bad choices American individuals make.

If you eat too much, exercise too little, drink too much, smoke, take drugs, fail to wear a seat belt or ignore gun safety, there is only so much a doctor or hospital can do for you.

Corrections does not see bad health and dying early as a bad decision. Total happiness comes from both quality and quantity of life. Individuals enjoy eating, drinking, smoking, and consuming drugs. The author begs the question whether or not Americans are actually making the right choices.

CNN.com has one additional observation that is not contradictory to a rational-individual hypothesis. Specifically, that minorities often engage in self-destructive behavior at higher rates than whites.

Acting on this information won't be easy: It violates too many taboos. Americans understandably treasure their right to make their own choices, including the choice to super-size it. And many are uncomfortably aware that self-destructive behavior is most often found among the poor and among minorities: Black women are more than three times as likely as white women to be severely obese.

This may be a rational discrepancy. If minorities also have lower wages, then their foregone earnings from dying early are less. The shadow cost of unhealthy behavior is lower--we should therefore expect higher rates of early death, coming not from irrationality or dynamic preferences, but from rational maximization.

Resolution: Get a Deal on a Gym Membership

New York Times article "Resolution: Get a Deal on a Gym Membership" (December 25th, 2009) requires incorrect assumptions on the U.S. fitness industry.  The article seems to assume that gym membership is procyclical (it increases when the economy is strong and decreases when the economy is weak). Corrections suggests that the opposite is quite possible.

But this year the frenzy has been ratcheted up a notch as clubs try to make up for the recession, which caused many corporate sponsorships to evaporate and many individual members to drop out or cut way back on costly extras like personal training and massage.

First, Corrections notes that according to the International Health, Racquet and Sportsclub Association (IHRSA) in 2006, there were 42.7 million health club members. In 2007, there were 41.5 million members. In 2008, there were 45.5 million health club members.

This makes sense. When individuals consume most goods, there are two inputs--commodities that they buy (t.v. sets, or gym memberships) and time they use to consume the good (tv-watching time, or time at the gym). While gym memberships cost money, we expect the larger portion of their cost comes in the form of time.

In a recession, when unemployment is high and wages are low, we expect that people will move away from money-intensive goods, such as expensive meals, and toward time-intensive goods, such as gym time, and its complement, gym memberships.

We may, however, expect revenues to go down, as shopping around for a gym, and going to a gym farther away becomes more feasible and thus gym memberships become more competitive. The general trends for gym membership are displayed in tabular form below.

Corrections will be sure to post the 2010 IHRSA results from next month.

A Stimulus That Could Save Money

New York Times article A Stimulus That Could Save Money (November 17th, 2009) cites a McKinsey & Company report that neglects the most fundamental economic thinking to argue that increasing home efficiency will reduce energy use.

The bottom line is that cash for caulkers would be trickier than cash for clunkers — yet would have the potential to do far more good. McKinsey, the consulting firm, estimates that households could reduce their energy use by 28 percent over the next decade. In terms of greenhouse gases, that would be the equivalent of taking half of all vehicles in this country off the road.

Corrections notes that far from decreasing energy use, the sign of an impact of increased efficiency on energy use is indeterminate. People don't want energy as an end consumable product; energy is purchased as an input into producing heat, light, or other consumable amenities. The real product they are purchasing, then, is heat and light. Therefore, we can write the "price" of a unit of heat as the price of electricity multiplied by how much electricity is required per unit of heat.

Therefore, we can see that a doubling of energy efficiency (halving the number of units of electricity per unit of light) is the same as halving the price of electricity. In other words, we may think of this "cash for caulkers" idea as reducing the effective price of light.

This is the point at which McKinsey & Company's analysis stops. They examine energy use as "business-as-usual", assuming "no material change in consumer utility or lifestyle preferences" (page 23 of the above report). Using our above analysis, we can say it is ludicrous to say that light use will remain the same if the price of electricity for light is reduced. As light is a normal good, we will observe light use increasing as price decreases. The remaining question is whether or not, when we halve the "price" of light, energy consumption more than doubles or not. If it increases by a factor greater than two, we should see energy use increasing.

The New York Times took McKinsey's mistaken assumption that consumption of light and heat would remain the same in the face of a decrease in their effective price, and concluded that the price of energy may decrease. In fact, from the Slutsky identity, it can be easy for energy use to increase, given that light and heat are normal goods, and the share of income spent on them is not low.  The possibility for the consumption of light to more than double after efficiency is doubled is depicted graphically below (click to enlarge), along with the possibility for it to increase by less than a factor of two.

Mathematically, the percentage change in heat consumption given a percent change in the effective price of heat will be determined by the Hicksian Elasticity of substitution (negative), the share of income spent on heat consumption and the income elasticity of heat (greater than zero). If our LHS is less than negative one, we will see our predicted increase in energy consumption.

As a final point, we can add that we expect energy companies, as monopolies, to be pricing on the elastic part of the demand curve for energy in general. Monopolies never price on the inelastic portion of a demand curve. To the point that prices are set by the government for energy companies, it is important to note that the more inelastic price is, the more companies have an incentive to lobby and change price, and our suggestion that energy should already be priced on the elastic portion of the demand curve remains intact.

Atop Towering Cliffs, a Lonely Campaign to Combat Japanese Suicide

New York Times article "At Japanese Cliffs, a Campaign to Combat Suicide" (December 17th, 2009) takes a moral stance for suicide prevention, where economics paints a less clear picture.

While preventing suicides is a universally difficult task, it is particularly challenging in Japan. Depression remains a taboo topic here, making it hard for those most at risk to seek the help of family and friends. Many Japanese view suicide as an issue of private choice rather than public health, and there are few efforts to highlight the problem.

There are a cornucopia of arguments for why we might want to discourage suicide. Cases in which we might are in a dynamic world with shifting preferences, and in which a private means of "tying Odysseus to the mast" is absent. Or where individuals have incomplete knowledge about the present and future. These are conditions under which potential suicides would be better off with prevention.

But suicide can represent an advantageous lower bound on utility. With that in mind, we may not want to prevent all suicides. This situation is graphically depicted below (click to enlarge).

The argument that interventions avert suicides is not one of these. Adding pressure on an individual not to commit suicide can decrease overall utility while increasing the marginal utility of staying alive. If we apply social pressure to raise the shadow cost of suicides, it is by no means clear what channel through which averting suicide works--one in which suicides are made worse off, or better off.  The situation in which we are worse off is depicted below (click to enlarge).

Pittsburgh Sets Vote on Adding Tax on Tuition

New York Times article "Pittsburgh Sets Vote on Adding Tax on Tuition" (December 15th, 2009) provides an inadequate analysis of the consequences of Pittsburgh's proposed tax on tuition:

On Wednesday, the City Council is expected to give preliminary approval to Mayor Luke Ravenstahl’s proposal for a 1 percent tuition tax on students attending college in Pittsburgh, which he says will raise $16.2 million in annual revenue that is needed to pay pensions for retired city employees. Final Council action will be on Monday.

When considering the tax, there are three aspects to consider: the marginal student's decision, the marginal dollar of the University, and the incidence of the tax.

The price elasticity of demand for education from Carnegie Mellon (and other colleges in Pittsburgh) is likely quite elastic, while price elasticity of demand for education is likely to be highly inelastic. Goods become more elastic as fraction of expenditure increases for normal goods like education. Therefore, we expect full time students, poorer students, and students with less lifetime income to be the marginal exiting individuals. We might expect Carnegie Mellon's english students to leave the program more quickly than its engineering students. We expect that "national" students are more elastic than "local" students and would leave more quickly. In the long run (presumably four years as the pre-tax stock of students fully depreciates) the composition of local colleges will change, presumably to include more wealthy and local students.

The price elasticity of supply for education from Carnegie Mellon (and other colleges in Pittsburgh) is likely to be relatively inelastic in the short run and relatively elastic in the long run, especially as the composition of students shifts.

The incidence of the tax, therefore, is likely to fall primarily on Universities at first, and, as it is able to shift capital and become a more local university populated by wealthier students.

Correction's conjecture about the direction of our four relevant variables is graphically displayed below (click to enlarge).

The Jobless Gender Gap

Wall Street Journal opinion editorial "The Jobless Gender Gap" (November 27th, 2009) presents an informative piece, with what may be too-simplistic an analysis of the recession's unemployment gender gap.  It argues that the unemployment rate for men has risen because traditionally male sectors have been hit harder, and that government stimulus spending has been unevenly distributed to women, who have lost fewer jobs.

What has happened to men is fundamentally a product of the times.  This recession made America's already declining manufacturing sector decline more rapidly.  About half of all job losses have been in manufacturing and construction, overwhelmingly male sectors.

And

Government policy has also exacerbated this trend.  The stimulus dollars were disproportionately directed away from those who lost the most jobs.  The Obama administration estimated early this year that more than four in 10 stimulus jobs were going to women, about twice women's estimated job losses.

There are a number of concerns raised by this line of argument.  First and foremost, it is worth noting that numbers delivered from political entities  naturally suffer from a principal-agent problem.

Secondly, and more interestingly, it is unclear that we would expect what happens to men to be "a product of the times."  If employers can easily substitute men's labor for that of women, then we expect that if men are fired, the wages of women go down.  Men are now competing for their jobs.  However, it is not difficult to believe that women, even working women, could have a higher shadow wage than men.  This can mean a higher unemployment rate for women, in spite of the fact that their specific industry was not hit by the recession.

It is worth noting that the industries people are employed in are dynamic--just because men lost jobs in one industry does not mean they will not gain jobs in another.

Government panel can't put a price on human life

Houston Chronicle viewpoint "Government panel can't put a price on human life" (November 24th, 2009), while titularly correct, fails to realize that human life always has a price, whether the government explicitly acknowledges it or not.

If cost-benefit becomes a primary objective in government-run health care, then government would be in the business of putting a market value on human life, no different than a property appraiser values a home. We know Americans do not want this type of rationing, which would deprive our citizens of life-saving screenings just because they might not be worth the cost on the front end. You can't put a price on human life. [Emphasis added].

And,

We must reduce the costs of health care, but we should instead embrace a number of initiatives, such as electronic medical records, civil justice reform, insurance reform and disease prevention. One thing we can never mark down is the price of human life. It is absolutely priceless.

The fact of the matter is that everyone, including the government, puts a price on human life.  We all price human life--even our own lives--every time that we participate in a life-risking activity. In fact, anytime a person acts to change the inputs in the valuation of others, he provides economists with his shadow price for the lives of others (like deciding to drive 5 mph faster, so deciding to risk one more life per million, in order to clock-in a moment sooner at work).

Perhaps the point of the article is that the government should not put a price on human life, though we ourselves may. While a reasonable position, even then we must realize that at minimum, the government must make cost/benefit calculations about the value of human life in military affairs. It would be very astonishing indeed to find out that the government decided to invest all of tax-payers' money in arming the troops. At some point, we must decide when additional military spending is no longer worth spending. So long as we have government that spends money, it must have an implicit valuation of human life.

Maybe, though, the government doesn't extend such valuations to the civilian sector?  Of course not.  It seems, for example, that mandatory seat belt use laws cost $69 per life saved, while the introduction of an airbag saves $120,000 per life saved, and requiring back center seat belts save one life ever $360,000 spent because of the regulation. Finally, sickle cell screening for non-Black low risk newborns would cost $34,000,000,000 per life saved. Should the government mandate sickle cell screening?

Then perhaps it's the argument that government should never make an explicit valuation of human life. Let's say we get a moral benefit from having government that does not put an explicit value on human life. Even then, the moral benefit we gain might be able to be priced out. Would we be willing to put an explicit value on human life in order to save one hundred thousand lives? One million? Even the government's putting an explicit price on lives has its own value.

The article's proper phrase might be: the price of the government putting an explicit price on lives is too high. While we certainly may agree that the government has no place in healthcare or in setting prices on human lives in that respect, it is important to remember that the cost of the government not putting an explicit price in any realm will be inefficiency.  In this setting, inefficiency translates to a higher death toll.  Ideally, the government would discover an efficient price of life, and would prevent millions of deaths.  The real phrase for the article should have been: Prices are not the problem here, government is.

The GOP's no-exit strategy

Washington Post editorial "The GOP's no-exit strategy" (November 19th, 2009) bemoans a spate of procedural delays in the U.S. Senate.

As of last Monday, the Senate majority had filed 58 cloture motions requiring 32 recorded votes. One of the more outrageous cases involved an extension in unemployment benefits, a no-brainer in light of the dismal economy.

Passing extended unemployment may be a very unwise decision, and certainly is not a "no-brainer". Individuals respond to incentives, and an extension of jobless benefits from six months by an additional thirteen weeks adds to the shadow price of taking a job now, causing people to take their time looking for a new job. Given that during a recession with relatively high unemployment we expect labor supply to be relatively inelastic with respect to wages (i.e. it's hard to find a good job), we must conclude that even in search model, which would normally predict greater placement efficiency due to unemployment benefits (i.e. the longer everyone looks, the better the jobs they find), it takes a great suspension of disbelief to think that lengthening unemployment benefits makes sense in this economy.

Proper economic solutions would avoid the large implicit tax that individuals face when deciding to accept work or put it off for the future (in a manner similar to fixes for the welfare trap--partial reduction in benefits when one works, rather than complete reductions).