## Saturday, April 30, 2011

### Playtime!

I visited News from 1930 a while ago, where ikedim has a nifty sidebar graphic that changes when you move the mouse over it. So I looked at his page source to see how he did it. And now I finally found a use for the technique, as a way to compare graphs.

At right is John Taylor's graph. (I got it from Krugman.) It shows an "inverse" relation -- downsloping to the right -- between investment and unemployment. Unemployment is high when investment is low, unemployment is low when investment is high; thus, an inverse relationship. Just like the Phillips curve.

At Noahpinion, Noah doesn't think Taylor's graph is like the Phillips curve. He thinks it is a Phillips curve. Part of Noah's evidence is that, like a Phillips curve, when you enhance the graph by adding dots for more years, the dots on Taylor's graph are widely scattered, just like the dots on a Phillips curve.

Below is the first enhancement of the graph, showing red and blue dots. The blue are the same as in the graph I got from Krugman. The red dots show additional years. Most of those red dots are within or well above the blue band of dots.

When you put the mouse over this graph, it changes to show the second enhancement. Both enhancements, by the way, are from Justin Wolfers at Freakonomics.

What catches the eye first is red dots changing to blue. It's nifty, all right. But what I want you to see is down near the bottom, about in the middle of the graph. A whole blue cluster appears and disappears as you hover the mouse over the graph and move it off again.

When the graph is red-and-blue, the blue are the same as in the first graph above, showing points for the years 1990-2010. The red dots are points for the years 1970-1989. The red dots are much less orderly, and generally much higher, than the trend of the blue band.

When you move the mouse onto the graph, the blue dots remain, the red dots turn blue, and more blue dots appear. These new dots are points for the years 1948-1969. Most of these dots show investment in a mid-range, 14 to 16, and unemployment low, around 3 to 5 percent.

These new dots, showing low unemployment despite middling investment, are from the "golden age of postwar capitalism."