Tag Archives: changed-since

The CARD Act Has Saved Us $12 Billion Per Year

Mother Jones

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Who do credit card companies make the most money from? Answer: the poor, by far, because they rack up the highest fees and the highest interest expense. Card issuers also make some money on the rich, because they buy a lot of stuff. This generates interchange fees (usually 2-3 percent of the amount charged) that exceed the cost the reward points they dole out to attract these customers.

It’s the customers in the middle who cost them. They don’t buy enough stuff to generate lots interchange fees, but they aren’t poor enough to get themselves stuck with lots of late fees and interest charges. The chart below shows this. Folks with FICO scores between 660 and 730 (representing about a third of all customers) are net losses for credit card companies.

This comes from a paper written last year about the effect of the CARD Act, a law passed in 2009 that modestly regulated the credit card industry. The authors’ conclusion: “The CARD Act successfully reduced borrowing costs, in particular for borrowers with the lowest FICO scores. We find no evidence for offsetting increases in other costs or a decline in credit volume.” All in all, the CARD Act saved consumers—mostly lower-income consumers—about $12 billion per year. For much more, see today’s Harold Pollack interview with one of the authors here.

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The CARD Act Has Saved Us $12 Billion Per Year

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Chart of the Day: World Trade Is Down 2% This Year

Mother Jones

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Here is your chart to ponder today. It shows the total level of world trade:

You can see the huge dip during the 2008-09 recession, followed by a steady recovery. Until this year, that is. During the past six months, world trade has declined by about 2 percent.

Most of this loss was made up in June, but monthly figures are volatile and June could be just a temporary artifact. Time will tell. Most likely, this is yet another indication of a weak global economy, one that’s going to get even weaker if China’s recent troubles portend a genuine recession.

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Chart of the Day: World Trade Is Down 2% This Year

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Good Stuff on the Intertubes Today

Mother Jones

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Everyone is writing about my pet topics today!

Aaron Carroll busts the myth that you should drink eight glasses of water every day.
Kiera Butler sings the praises of food irradiation.
Dylan Matthews writes that Intuit and H&R Block continue to oppose any effort to make taxes easier to file.
Larry Summers makes the case for continued low interest rates because “the global economy has difficulty generating demand for all that can be produced.”

Go read them all.

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Good Stuff on the Intertubes Today

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Test Scores Are Up! (Except In the One Place It Actually Matters)

Mother Jones

I periodically try to remind everyone that test scores for American students have not, in fact, plummeted over the past few decades. In fact, they’re up. To the extent that standardized tests can measure learning, American kids simply aren’t doing any worse than kids in the past. They’re doing better.

But there’s always been a caveat: this is only for grade school and middle school kids. All those test score gains wash out in high school, and today brings the latest evidence of this. Scores from the 2013 NAEP—widely considered the most reliable national measure of student achievement—are now available for 12th graders, and they confirm what we’ve known for a while. In reading, scores have been basically flat since 1992, and the scores for every racial subgroup have been pretty flat too. Math has only been tested since 2005, and scores have risen a few points since then. But not enough to demonstrate any kind of trend.

There are technical issues with testing 12th graders that can affect these scores. As dropout rates go down, for example, the test population becomes less proficient. And senioritis can affect how much effort kids put into these tests. Still, the best evidence indicates that we’re making pretty good progress improving the proficiency of students all the way through middle school, but we still haven’t cracked the code for high school. And in the end, that’s all that matters. It’s great that fourth graders are doing better, but if all those gains wash away in the final three years of high school, we’re not ending up any better than before.

UPDATE: Actually, math has been tested since 1990, but the test was revised in 2005 and scores before then aren’t comparable to current scores. A crude comparison suggests that scores actually have increased for 12th graders since 1990, perhaps by as much as ten points, though this is in direct contradiction to the long-term NAEP, which shows no gains at all for 17-year-olds. My own guess, based on both of these results, is that math scores have increased slightly since 1990, but probably not enough to really be noticeable.

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Test Scores Are Up! (Except In the One Place It Actually Matters)

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