Unemployment explanations

28 Stuart_Armstrong 07 November 2014 05:12PM

When I knew nothing of economics, unemployment wasn't mysterious. People wanted a job, and couldn't get one - well, people often want stuff they can't get. Nothing strange there, just one of those things.

Then I learnt some simple economics, and it became more mysterious. The employment market is a market, with the salary being the price. Why doesn't this market clear? Why doesn't the price (salary) simply adjust, and then everyone gets a job? It seemed profoundly mysterious that this didn't happen.

I've been gradually introducing myself to more economics (mostly indirectly) and I've encountered a lot of explanations for this perpetual market failure. Thus the mystery of unemployment is, if not resolved, at least somewhat explained. Since I would really have enjoyed reading a collection of unemployment explanations when I was initially puzzled (almost any explanation of unemployment you read in the press is worthless) I thought I'd do this for others. So here is my (entirely personal and idiosyncratic) summary of the main explanations I've encountered.

 

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Optimal Employment

60 Louie 31 January 2011 12:50PM

Related to: Best career models for doing research?, (Virtual) Employment Open Thread

In the spirit of offering some practical real world advice, let's talk about employment rationality. Let’s talk about optimal employment.1

You're young, smart, and hoping to have a positive impact on the world. Maybe you finished college, maybe you didn't. You want to pay your bills but also have time to pursue your intellectual goals. You want a low-stress job that doesn't leave you drained at the end of the day. And it would be nice to earn lots of extra money, because whatever you value, money tends to be a good way to get it.

And it is possible to find easily obtained, low-stress jobs with flexible hours that allow you to save as much money as someone in the USA making $100,000/yr... if you leave the USA to look for them.

Your instinctive reaction is probably that there’s no free lunch, so I must be mistaken or dishonest. And while you may have the right prior, I hope to persuade you that these jobs exist and tell you how to get one if you're interested.

This, I think, is a special opportunity for rationalists, an illustration that we can get better life outcomes from our investment in rationality - better outcomes such as low-stress jobs that leave us with ample discretionary income and enough free time to pursue whatever else we're interested in, obtained by being willing to break habits and think in numbers.

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How to Save the World

73 Louie 01 December 2010 05:17PM

Most of us want to make the world a better place. But what should we do if we want to generate the most positive impact possible? It’s definitely not an easy problem. Lots of smart, talented people with the best of intentions have tried to end war, eliminate poverty, cure disease, stop hunger, prevent animal suffering, and save the environment. As you may have noticed, we’re still working on all of those. So the track record of people trying to permanently solve the world's biggest problems isn’t that spectacular. This isn’t just a “look to your left, look to your right, one of you won’t be here next year”-kind of thing, this is more like “behold the trail of dead and dying who line the path before you, and despair”. So how can you make your attempt to save the world turn out significantly better than the generations of others who've tried this already?

It turns out there actually are a number of things we can do to substantially increase our odds of doing the most good. Here's a brief summary of some on the most crucial considerations that one needs to take into account when soberly approaching the task of doing the most good possible (aka "saving the world").

1. Patch your moral intuition (with math!) - Human moral intuition is really useful. But it tends to fail us at precisely the wrong times -- like when a problem gets too big [“millions of people dying? *yawn*”] or when it involves uncertainty [“you can only save 60% of them? call me when you can save everyone!”]. Unfortunately, these happen to be the defining characteristics of the world’s most difficult problems. Think about it. If your standard moral intuition were enough to confront the world’s biggest challenges, they wouldn’t be the world’s biggest challenges anymore... they’d be “those problems we solved already cause they were natural for us to understand”. If you’re trying to do things that have never been done before, use all the tools available to you. That means setting aside your emotional numbness by using math to feel what your moral intuition can’t. You can also do better by acquainting yourself with some of the more common human biases. It turns out your brain isn't always right. Yes, even your brain. So knowing the ways in which it systematically gets things wrong is a good way to avoid making the most obvious errors when setting out to help save the world.

2. Identify a cause with lots of leverage - It’s noble to try and save the world, but it’s ineffective and unrealistic to try and do it all on your own. So let’s start out by joining forces with an established organization who’s already working on what you care about. Seriously, unless you’re already ridiculously rich + brilliant or ludicrously influential, going solo or further fragmenting the philanthropic world by creating US-Charity#1,238,202 is almost certainly a mistake. Now that we’re all working together here, let's keep in mind that only a few charitable organizations are truly great investments -- and the vast majority just aren’t. So maximize your leverage by investing your time and money into supporting the best non-profits with the largest expected pay-offs.

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