Social Econ Blog

Since the previous post got me thinking about starving people, let me share some of a conversation that my friends and I had over dinner in France last week. After a scintillating discussion of what office supply you would be and why, Tony V came up with a brilliant question that belongs in one of these books of questions to start conversations (at least if one is ever published for economists).

After various modifications, he essentially asked:

Given the opportunity of accepting an additional million dollars of salary for as long as you work or anonymously increasing the income of every person in country Z (we settled on China for the purposes of our discussion) by X%, how large does X need to be in order for you to consider giving up the millions of dollars?

I will allow you to ponder the question a bit before biasing your thinking with some of the key points of our discussion.

For those interested, here are some basic facts that we didn't know when having our discussion, China's GDP is approx. $7T, so an X of 1 would represent a total increase to Chinese GDP of $70B. Keep in mind that the $70B is distributed in proportion to current income, so someone making $500 a year would get an additional $5 and someone making $100K would get an additional $1,000. So, roughly using the figures in this paper, 81 percent of the $70B (or $56.7B) would go to people with above median incomes and 32 percent (or $22.4B) would go to the top 10 percent of earners. In Beijing, income at the 80th percentile is approx $3,600 and at the 20th percentile it is approx $890.

Update: Tony V. provides more details here.

Seriously, does this make any sense at all?

Description: Poor people (in the US) are more obese than rich people.

Explanation: Liberals (and the UN) who thought that people starving (particularly in less developed countries) was a bad thing and worked raise awareness and combat starvation. Now, as a result, "government literally feed[s] these people to the point of obesity."

Although, I guess this statement is more sensible than the fact that there is enormous demand for someone to make such stupid arguments (in fact, apparently the market can support many such people). I am not exactly sure what the fact that so many people can make an enormous living essentially being blowhards who seldom (if ever) say anything insightful says about humans, but it certainly is not good.

For a more insightful explanation of the growth in obesity check out this recent post by Greg Mankiw (hint -- lower food prices -- particular for "junk food" has a lot to do with growing obesity).

A few weeks back, I discussed new research that finds an earnings premium for college-educated, left-handed men. Last week, while I was away, the economics blogoshpere was abuzz with new research on the advantages of another of my attributes -- being tall. Previously, I discussed the evidence that taller men earn more money -- specifically discussing the Nicola Persico, Andy Postlewaite, and Dan Silverman argument that this is due to the effect of height on self-esteem and social development in adolescence. However, a new NBER WP by Anne Case and Christina Paxson challenges this interpreting of the height premium by showing that taller children (who are more likely to become taller adults) perform better on cognitive tests. The abstract:

It has long been recognized that taller adults hold jobs of higher status and, on average, earn more than other workers. A large number of hypotheses have been put forward to explain the association between height and earnings. In developed countries, researchers have emphasized factors such as self esteem, social dominance, and discrimination. In this paper, we offer a simpler explanation: On average, taller people earn more because they are smarter. As early as age 3 — before schooling has had a chance to play a role — and throughout childhood, taller children perform significantly better on cognitive tests. The correlation between height in childhood and adulthood is approximately 0.7 for both men and women, so that tall children are much more likely to become tall adults. As adults, taller individuals are more likely to select into higher paying occupations that require more advanced verbal and numerical skills and greater intelligence, for which they earn handsome returns. Using four data sets from the US and the UK, we find that the height premium in adult earnings can be explained by childhood scores on cognitive tests. Furthermore, we show that taller adults select into occupations that have higher cognitive skill requirements and lower physical skill demands.

National Geographic publishes a very interesting interview with Egyptian author Alaa Al Aswany in which he provides anecdotal support to the model of hatred and terrorism I have discussed frequently here. Here are a few excerpts:

Where do you think the current fanaticism is coming from?

Poor areas, because the poor are desperate. The current regime here is dealing with them in an inhuman way, arresting and torturing them. Religion is being used as a cover for social unrest, a way to empower these people who are not empowered. In Egypt, there is an Islam for the rich and an Islam for the poor. And these two Islams have their own mosques, their own sheikhs. The rich use religion to ensure the status quo. They don't want any change. But poor people do want change, because they are now deprived of so much.

...

How do you think the Arab world sees 9/11?

The question is rather, how has 9/11 been introduced to the Arab world? I saw 9/11 as a crime, and I have written against it. But I believe that events are always manipulated by regimes for their own purposes. Just as the American government has used Osama bin Laden to deflect attention away from its own problems, many of the Arab governments used 9/11 to play on anti-American emotions. They were hoping to convert the negative emotions people harbored against their regimes and channel those emotions onto a foreign entity. They also need the problem of Israel for the same reason. I do not agree with Israeli policy toward the Palestinians, but Arab regimes use anti-Israel sentiment to postpone moving toward democracy.

You've talked about the importation of Saudi values to Egypt, would you elaborate on that?

Over the past 25 years, about a quarter of the Egyptian population has gone to Saudi Arabia at some point to work. Those workers were often uneducated Egyptians, and the Saudis were rich. The Egyptians were influenced by the Saudi interpretation of Islam and brought it back with them when they returned to Egypt. That interpretation—Wahhabism—is very strict and concerned mostly with form, from wearing the veil to enforced prayer five times a day. It is an aggressive, intolerant approach that institutionalizes Islam as a state religion rather than allowing people to interpret it in their own individual ways. The Saudis have spent millions to export Sunni Wahhabism throughout the Middle East, in part because many Arabs in the Gulf States are Shiite. The Saudi princes fear the spread of the Iranian Shiite brand of Islam, which is more revolutionary and allows for more individual rights. Throughout much of Islamic history, Sunni governance has been in the hands of sheikhs who were in league with governments. The Shiites were usually shut out of power, so they had time to think and come up with a new, more humanist interpretation. I'm not comparing Iranian human rights to those in England, but in relation to Saudi Arabia, Iran has more respect for individual political rights and the people's right to know what's happening. And I must remind you that the American administration has been the most powerful supporter of the medieval Saudi regime because of Saudi oil. To support them is like having a tiger in your house.

On my recent trip to France, a certain friend's knowledge of French was heavily influenced by the song "Les Poissons" from Disney's "The Little Mermaid." As such, we heard it many, many times. I really wished that I had counted. I am guessing certain refrains were sung more than 100 times. (It was somewhat similar to my little sister singing "Part of Your World" -- linked for your enjoyment sis -- a million times everyday after school when she was 8 or 9)

In his honor and because I haven't heard it yet today, here is the original:

Seriously, within a 5 or 6 minute walk of my hotel in Berlin, there are at least 20 bakeries, 20 ice cream shops, and 20 cafes. In the small, urban mall across the street there are 5 bakeries, 4 cafes, and 3 ice cream shops -- and the place isn't that big (and that doesn't include the other food and beverage options). Very strange local marketplace.

How is it that Americans end up so fat?

I will be traveling the for the next 10 days. I doubt I will be near the internet, so posting will be light to nonexistent.

From the NYTimes (h/t Josh Marshall):

More generally, the participants said, the president expressed frustration that Iraqis had not come to appreciate the sacrifices the United States had made in Iraq, and was puzzled as to how a recent anti-American rally in support of Hezbollah in Baghdad could draw such a large crowd. "I do think he was frustrated about why 10,000 Shiites would go into the streets and demonstrate against the United States," said another person who attended.

Bush and his fellow hawks just don't get it. When a foreigners invade and occupy your country, particularly when the foreigners are semi-hostile toward your religious beliefs, you are going to be afraid. Then, when the inevitable innocent people are killed, harmed, or harassed, fear is joined by anger and aggression.

This storyline is repeated again and again in both reality and fiction, so I can't believe that the Hawks didn't think that something like this would occur; I think they just fail to understand how much technology changes this process. First, the costs of coordinating an insurgency have fallen dramatically. Insurgent entrepreneursrs no longer have to rely exclusively on local capital and labor (or on capital from one of the sides of the cold war). Particularly, if fighting the global superpower, insurgents can access labor and capital from anyone with an interest in fighting the US or in destabilizing Iraq. Further, once in the field, more advanced weapons and communications technology allows insurgents to do more with less. Relative to past conflicts, the US should have expected to face a greater supply of insurgents, and they clearly didn't.

Second, failure to account for and immediately suppress insurgencies (which I am not sure is even possible) doomed the invasion. Fighting insurgents requires greater hostile military engagement and the collateral damage (not just lives, but also freedoms) that accompany it. Here, again, I think Hawks fail to understand how much technology magnifies the cost of collateral damage. It used to be that the adverse side effects of occupation were contained locally. Tragic stories trickled through the grapevine only occasionally reaching a wider audience when it happened to be witnessed by a reporter. Now, every death or injury is captured on film and every indignity or injustice posted on the internet and quickly spread around the world. Last week during the coverage of the terror plot, one interviewee reported that he receives several emails a day with photos of children killed in Iraq. When it is this easy to fan fear into the flames of anger and hatred, it is foolish to engage in actions that increase fear and provide ample real evidence (not to mention the amount of fake, but believable evidence) to turn fear into hatred. Such hatred easily transforms into terrorism.

That Bush is surprised and frustrated that this occurs is deeply troubling, although it explains alot.

Iranian President Mahmoud Ahmadinejad has joined the blogging community:

The launch of www.ahmadinejad.ir was reported on state TV, which urged users to send in messages to the president.

Mr Ahmadinejad's first posting, entitled autobiography, tells of his childhood, Iran's Islamic revolution, and the country's war with Iraq.

The blog includes a poll asking if users think the US and Israel are trying to trigger a new world war.

...

Mr Ahmadinejad's first entry on his blog, which is available in Persian, Arabic, English and French and includes an RSS feed to get future new entries to readers, is dated Friday.

...

The US is also heavily criticised by the president. At one point he describes it as "Great Satan USA" for what he says was its support for the "terrorist groups" which had tried to collapse Iran's Islamic government.

I welcome President Ahmadinejad to the blogging community. However, I hope in future posts he doesn't use it to promote group level hatred of the US. In an ideal world, this forum might allow good, thoughtful people in the West to connect virtually with the President promote greater understanding and tolerance of our positions and our society, and, hopefully, encourage him to soften his stance toward the West and not promote group level hatred (e.g., by ceasing to use terms like "Great Satan USA"). Of course, it is more probably more likely that he'll get flamed by a bunch of trolls and have a bunch of new material to increase hatred of the West if he wants to.

If my friends from grad school and I had formed a rock band, I am pretty certain that we would have produced a highly choreographed video with sweet Napoleon Dynomitesque dance moves like these.



I totally love the treadmill set up -- gives it a whole Napoleon meet Jamiroquai vibe.

If you enjoyed this video, you'll probably like Ok Go's other, backyard dance, video.

Mark Thoma points out something that is very frightening:

"...I think Iraq has gone not badly but well, is not a disaster or a crime or a delusion, but what's more is a noble, necessary effort." ...

"The only reason in my opinion that we're having as much trouble as we're having in Iraq is that we're not getting intelligence. . . . and you can only get that kind of intelligence by squeezing it out of prisoners. That's all there is to it."

Both domestic opposition and the international community, unhappily, are "defining torture down. The things they're calling 'torture' now have never been and have no business being considered torture." He keeps on: "It is an effort to disarm us that's succeeding to a frightening extent. No, it's worse than that. They're trying to make it impossible to fight terrorism. . . . Every weapon that's been developed to protect us from terrorism, and the Iraqis from internal terrorism, is under assault."

That is 2004 Presidential Medal of Freedom winner and prominent neo-conservative Norman Podhertz. That people that think like him are currently in charge of our foreign policy terrifies me.

The "weapons to fight terrorism" he so loves don't do anything to solve the long term problem. They are entirely attempts to shift in the supply curve by making it more difficult to carry out attacks; however, as I have discussed previously here and here, supply side policies are not likely to reduce terrorism much because demand for terror is inelastic.

Worse, the torture techniques he supports actually make the problem worse because they increase the amount of hatred toward the US. Stories and images of people being tortured and held without trial are easily interpreted as attacks on a specific religious and ethnic group -- particularly when the man responsible makes it sound like exactly that by saying we are at war with "ISLAMIC fascists." Harsh and injust treatment of members of a different group increases the demand for group-level hatred within that group without any special effort by the suppliers of hatred.

Don't believe me? Watch what happens to American views of Muslims in the next few weeks. Tony V is correct -- the recent threat of attacks is going to increase group level hatred of Muslims by Americans without any special efforts by those who typically supply this stuff. When members of a group actually do something hurtful and unjust to the members of a different group, the work suppliers of group level hatred do highlighting the threats posed by members of the other group pose is done for them by the most respectable news sources in the world (of course, according to Republicans, this makes the people who report and discuss these issues, but not the people who actually pose a threat to the other group, supporters of terrorism).

Don't' worry, though, suppliers of hatred also get a big boost out of this stuff. Rather than having to make things up to provoke hatred among their clients (like, I dunno, Saddam Hussein has WMD and ties to al Qaeda), they can use actual recent, verified events. Reliance on "true" events makes it much easier to confuse people into thinking that the other group (not simply insane people who happen to be members of the group) is evil. This lowers the cost of suppling hate substantially and pushes out the supply curve.

More supply + more demand => more hate.

More hate => suppliers of terror garners more support for their causes if they attempt to attack the "enemy" (i.e., demand for terror increases) AND more people are willing to join their efforts making it much cheaper for them to plan and execute attacks (i.e., supply increases).

More supply + more demand > decrease in supply from harsh interrogation, etc. => more terror.

This really isn't that hard to figure out.

In my course and in this blog (and even in my research), two of the main questions I focus on are (1) what are the important determinants of supply and demand in various social markets and (2) how do social interactions/participation in social groups affect individuals' decisions and outcomes? Jonathan Gruber and Daniel Hungerman have produced an interesting new working paper that examines both of these questions in the context of church attendance. They compare cities and states that repealed their blue laws (laws prohibiting retail activities on Sundays) to similar cities and states that did not. Assuming that the trends in church attendance are unrelated to the timing of the change in the law, their estimates may be interpreted causally. They show, first, that raising the price of church attendance by allowing people to shop and work on Sundays reduces church attendance, and, second, that those who stop going to church after the repeal of blue laws increase their drinking and drug use (suggesting that church attendance does change the behaviors of those at the margin).

Here is the abstract:

Recently economists have begun to consider the causes and consequences of religious participation. An unanswered question in this literature is the effect upon individuals of changes in the opportunity cost of religious participation. In this paper we identify a policy-driven change in the opportunity cost of religious participation based on state laws that prohibit retail activity on Sunday, known as "blue laws." Many states have repealed these laws in recent years, raising the opportunity cost of religious participation. We construct a model which predicts, under fairly general conditions, that allowing retail activity on Sundays will lower attendance levels but may increase or decrease religious donations. We then use a variety of datasets to show that when a state repeals its blue laws religious attendance falls, and that church donations and spending fall as well. These results do not seem to be driven by declines in religiosity prior to the law change, nor do we see comparable declines in membership or giving to nonreligious organizations after a state repeals its laws. We then assess the effects of changes in these laws on drinking and drug use behavior in the NLSY. We find that repealing blue laws leads to an increase in drinking and drug use, and that this increase is found only among the initially religious individuals who were affected by the blue laws. The effect is economically significant; for example, the gap in heavy drinking between religious and non religious individuals falls by about half after the laws are repealed.

This is scary:

NEW YORK A new Gallup poll finds that many Americans -- what it calls "substantial minorities" -- harbor "negative feelings or prejudices against people of the Muslim faith" in this country. Nearly one in four Americans, 22%, say they would not like to have a Muslim as a neighbor.

While Americans tend to disagree with the notion that Muslims living in the United States are sympathetic to al-Qaeda, a significant 34% believe they do back al-Qaeda. And fewer than half -- 49% -- believe U.S. Muslims are loyal to the United States.

Almost four in ten, 39%, advocate that Muslims here should carry special I.D. That same number admit that they do hold some "prejudice" against Muslims. Forty-four percent say their religious views are too "extreme."

In every case, Americans who actually know any Muslims are more sympathethic.

The poll was taken at the end of July and surveyed 1,007 adult Americans.

40% think there should be a special ID for Muslims?!!? A third think American Muslims back al-Qaeda?!!? Are you kidding me?!!?

In light of recent events, I think it is time for a refresher on the economic approach to reducing the threat of terrorism (note the careful avoidance of the absurd phrase "winning the war on terror").

The obvious objective of terrorists is the production terror which, they believe, will further some other cause. They typically produce terror by killing as many people as possible in highly visible fashion. Like suppliers of other products, terrorists seek the largest return at the lowest cost. As such, terrorists, like al Qaeda, have learned to focus their attacks on hard to secure but totally vital and highly visible aspects of Western society like planes, trains, and subways that are easily damaged by readily available and hard to detect technology.

As in other markets, reducing terrorism requires reducing demand for and/or the supply of terror. On the supply side, most of the tools used to inflict terror are cheap and easy to obtain. The most costly inputs are human. Specifically, terrorist masterminds require trustworthy people (i.e., people who will not turn them in) who are willing to risk jail (or worse) to plan and execute attacks. Unfortunately, the price of human inputs has fallen in recent years as the number of people willing to join terrorist organizations increased. Particularly troubling is the increase in supply of people willing to conduct suicide attacks. As long as terrorist masterminds can easily obtain people willing to die for the cause, we are in deep trouble.

Given that reducing the supply of terrorist acts is an obvious part of our objective, focusing on raising the cost of human inputs strikes me as the most effective strategy. Specifically, we need to increase the probability that those in contact with potential terrorists willingly contact law enforcement to report suspicious behavior (which apparently was the genesis of yesterday's arrests). More importantly, we need to try and understand what prompts individuals to join terrorist plots and, particularly, what makes them willing to become suicide attackers. Then, we need to aggressively change the situations/incentives that these individuals respond to.

Unfortunately, as I have discussed previously, supply side policies alone are unlikely to make a big dent in the threat of terrorism because demand for terror is probably very inelastic. Thus even policies which create big movements in the supply curve don't substantialy reduce terrorism. Unless the source of the reduction in supply also reduces demand, making suicide bombers (or other human inputs) more expensive probably only leads terrorists to change how they produce terror, not the amount of terror they produce. Ultimately, removing the threat of terror requires reducing the demand for terror.

Fortunately, I think there are options for simultaneously reducing both the supply and demand for terror. Hatred is an essential part of the terror market. Thus, reducing the supply and demand for hatred should be an important part of our strategy. I recommend reading Ed Glaeser's "Political Economy of Hatred" for a thorough discussion of this market.

This is the basic framework to use when thinking about these issues. Those of us opposed to current US foreign policy (e.g., the invasion of Iraq, use of torture, etc.) believe strongly that these actions have increased the threat of terrorism. These opinions are, at least in part, rooted in the belief that current policies increase the hatred that fuels terrorism. While we are not opposed to the concept that open, free, societies in the middle east would help reduce supply and demand for terror (by removing some of the incentives for hatred), we are skeptical that the US can create such societies in the middle east at will by using military force. Instead, we believe that the continuation of Bush's foreign policies leads to a net increase in the threats to US interests in both the short and long run because instead of reducing the key determinants of supply and demand these policies exacerbate them.

Update -- Kevin Drum speculates on the supply response to the latest attack being thwarted (and effectively demonstrates why it is so hard to reduce terrorism through supply-side policy):

I wonder: what lesson will al-Qaeda draw from this? Osama bin Laden may be a religious fanatic, but he's not stupid, and my guess is that he'll conclude that in a post-9/11 security environment it's simply impossible to keep a plot this big a secret. There are too many entry points and too many ways for a single mistake to derail the whole thing.

Bin Laden may be fond of big statements, but I wonder if this failure will convince him and his compatriots to think smaller? Is our future now more likely to be full of lots of little attacks rather than the occasional big one?

... he also provides the correct advice to people, like me, who are tired of being told that opposition to Bush foreign policy means you aren't interested in reducing terrorism:

Democrats have to make it absolutely clear, every single time somebody spouts this rubbish, that supporting the Iraq war doesn't mean you're "on offense against terrorism." Nor does opposing the war also mean you oppose fighting jihadism. The truth is closer to the exact opposite, and chapter and verse should follow if necessary.

Cape Perpetua is the highest point on the Oregon Coast. Shooting 803 feet almost straight up from the Pacific Ocean, it offers spectacular views (like the one shown below), and the 2,700 acre Cape Perpetua Scenic Area "boasts twice the botanical mass, per square acre, as the Amazon jungle in South America."


Cape Perpetua Lookout
Originally uploaded by gentlemanrook.

However, just off the coast, a 2,100 square mile area of the ocean that used to also be rich with life is now completely dead:

In years past, the reef a few miles from Oregon's Cape Perpetua was a small underwater gem. It was favored by the quillback, black and canary rockfish, which darted among boulders bedecked with sea stars and anemones.

On Tuesday, underwater video cameras remotely operated from this research vessel sent back a starkly different view — a reef barren of fish but littered with what researchers estimated as thousands of carcasses of decaying crabs.

Worms, normally dug into sea sand, drifted dead along the bottom.

"It's just a wasteland down there," said Francis Chan, an Oregon State University marine ecologist aboard the Elakha. "I didn't expect to see anything quite like this."

These crabs and worms died because they proved too slow to move away from an extraordinary swath of oxygen-depleted water.

Scientists call this a dead zone.

The cause:

The Pacific Northwest dead zone results from strong northerly winds that allow the cold water to surface without any mixer winds from the south. This produces a series of upwellings that pile too much oxygen-poor water into the coastal zone.

Researchers at OSU said the erratic wind patterns of recent years are consistent with changes predicted in computer models that attempt to simulate the effects of global warming. But they caution that at this point it is unclear what — if any — link the dead zone has to climate change.

"We can say that what we are seeing is totally consistent with the changes predicted by the models," said Jane Lubchenco, OSU marine ecologist.

Sad. Very, very sad.

When Stephen Colbert listed his favorite websites on last night's show, he listed kittenwar.com among them. Naturally, this mention caused the site to crash last night, but it is up and running now. I got to give the creators props from coming up with this idea -- submit your kitten's photo and have it paired against someone else's; viewers decide the winner. The current top kitten is Jango who has won 77% of his 596 battles, although I got to give Stretch some love for winning 75% of his/her 12,629 battles. At the other end of the kitten distribution is Madameduhamel who has lost 79% of her battlers.

I think hotornot.com should restructure their website in a similar fashion.

Stephen Colbert just had journalist/author Alexandra Robbins on discussing her book "The Overachievers." Here's the Publisher's Weekly blurb:

"In this engrossing anthropological study of the cult of overachieving that is prevalent in many middle- and upper-class schools, Robbins follows the lives of students from a Bethesda, Md., high school as they navigate the SAT and college application process ... The portraits of the teens are compelling and make for an easy read. Robbins provides a series of critiques of the system, including college rankings, parental pressure, the meaninglessness of standardized testing and the push for A.P. classes. She ends with a call to action, giving suggestions on how to alleviate teens' stress and panic at how far behind they feel."

Sounds interesting.

I think part of the explanation for the obsessiveness among the overachievers (and their parents) that I have discussed recently is the lack of supply response to the growth in demand for selective colleges. In spite of limited evidence that selective colleges produce better long term outcomes, demand for slots at top schools increased substantially over the past several decades. However, the number of slots in the top schools did not increase by much. This obviously createed a more competitive admissions process. However, more competitive admissions are also more arbitrary admissions. The attempt to control this semi-random process prompts much of the crazy, obsessive behavior. (I discussed the one of the associated behaviors, applying to a bunch of schools, in more detail in this previous post.)

It is weird, though, that the distribution of youth (at least as depicted in various media) appears to be drifting toward bimodality with the crazy, overachiever types in one group and the slacker, underachiever types in the other. I am not sure what to think about this (or if it even an accurate description of the world), but if true we should probably figure what is actually changing and what is ultimately responsible.

The latest music video from the Hoff. Probably not as funny as the "Hooked on a Feeling" video, but still pretty darn funny.

In contrast to my previous posts about over protective parents, this video suggests that at least some kids (with some form of adult assistance even) are willing to take risks and learn some physics the hard way. The voices appear to have an accent though (Australian?), so this doesn't appear to have occured in the US. (Thanks to Tony V. for the pointer.)

Apropos of my earlier post about growth in parents' obsessions about safety, my older sister pointed out a recent article in Psychology Today, "A Nation of Wimps" that describes the phenomenon and its disconcerting consequences in more detail:

No one doubts that there are significant economic forces pushing parents to invest so heavily in their children's outcome from an early age. But taking all the discomfort, disappointment and even the play out of development, especially while increasing pressure for success, turns out to be misguided by just about 180 degrees. With few challenges all their own, kids are unable to forge their creative adaptations to the normal vicissitudes of life. That not only makes them risk-averse, it makes them psychologically fragile, riddled with anxiety. In the process they're robbed of identity, meaning and a sense of accomplishment, to say nothing of a shot at real happiness. Forget, too, about perseverance, not simply a moral virtue but a necessary life skill. These turn out to be the spreading psychic fault lines of 21st-century youth. Whether we want to or not, we're on our way to creating a nation of wimps.

While, unsurprisingly, the article includes a great deal of discussion about the psychological effects of obsessive parenting, throughout my reading I kept trying to figure out the source of the changes in parents' attitudes. In my previous post, I speculated that the classic quality-quantity tradeoff may be responsible -- parents with fewer kids have placed all their parental hopes in one (or a few) basket(s), so they tend to be very worried about them.

I still think this is important, but my new hypothesis is that some of this may be a consequence of growing income inequality. In a winner take all society, particularly one where small differences in ability or signaled ability determine who "wins", it is easy to see why parents (concerned that their kids are among the winners) become obsessive about their child's performance. Unfortunately, as the article points out, parents' efforts to make their kids "perfect" may actually screw them up.

I am curious if there is some clever way to show a causal relationship between growth in income inequality and parenting behaviors (particularly "destructive" behaviors). I am unlikely to get around to writing such a paper, but should an enterprising student decide to supply such an analysis I would gladly read it.

... selection bias:

"Dirty song lyrics can prompt early teen sex: Degrading messages influence sexual behavior, study finds"

Much effort (including most of my own the past year) has been devoted to understanding what produces differences in labor market outcomes for men and women -- particularly at the professional level. Wall Street tends to produce the biggest gaps. Relative to other professionals, like lawyers or doctors, women who take (even very little) time off from working on Wall Street to have kids are substantially less likely to return. The environment is too intense to balance with children.

Of course, losing women means that Wall Street loses valuable human capital. However, demand for this human capital has apparently reached the critical stage -- yesterday the NYTimes published a large feature on Wall Street's attempts to fundamentally change its culture to be more accommodating to women:

... not simply because it is socially expedient but because the financial world needs a diverse work force to make money and court clients -- especially when clients themselves are not homogeneous.

We'll see if they can figure out how to actually accomodate women more successfully (hopefully the Harvard and Beyond study will provide information useful for such efforts).

The more I've studied these issues the more convinced I've become that there is money to be made from figuring out how to access mothers' underutilized human capital. This article suggests that Wall Street may have recognized this as well which is a good sign for those interested in improving opportunities for women. No program or task force can come close to producing the changes that stem from the awesome power of demand.

Another big article, this time by the AP, about American's growing loneliness drawing on the same study about the number of confidants I discussed previously here and here. This article augments the confidant finding by pointing out that the fraction one person households has increased from 10 percent to 25 percent since 1950 (a fact related to the facts that people remain unmarried longer and that people live longer now), by discussing psychologists experiences confronting loneliness, and by discussing various groups' responses to the issue.

I still don't get the alarmist tone of these articles. On Friday, Tony V sent me a link to a post by a sociologist at Columbia who's done work trying to estimate the number acquaintances people have that shows that the median person knows approximately 600 people. While I wouldn't argue this is a highly accurate estimates of the number of people we know, the estimates pass my sniff test.

Note -- Since directly asking, "how many acquaintances you have?" is unlikely to produce meaningful responses, the social network analysts ask people a bunch of questions that are more easily answered like "how many people named Nicole do you know?" or "how many do you know who died in an auto accident last year?" Then they use the true distribution of the number of Nicoles in the population to estimate the how many people a person knows. They obviously define clearly what they mean by "know someone" ("you know them and they know you by sight or by name, that you could contact them, that they live within the United States, and that there has been some contact (either in person, by telephone or mail) in the past 2 years"), and they ask a number of the "how many" questions and then average the results together in order to reduce the noise in such an obviously noisy measure.

If the median person knows 600 people, is it really plausible that there are loads of sad lonely people out there?

It is possible, but to convince me I need to see some evidence that the "price" of translating acquaintances into more substantial friends has increased substantially. Otherwise, why do the sad and lonely remain sad and lonely? If there is demand for companionship, what is the source of the supply failure?

This is not to say that I oppose efforts to improve social capital. Quite the contrary, I am firmly in favor of efforts to make forming social ties easier. In particular, I would like to see more effort devoted to formal social skills training. I find it baffling that we spend enormous resources training people how to do math, write, and reason, but basically expect that people will just figure out how to interact with others on their own. Training people how to initiate and maintain social ties hopefully would reduce the biggest price associated with social interaction -- simply dealing with the other person. But I favor such programs not because I think we face a crisis of loneliness, but rather because I think that social capital is an important (and often overlooked) factor in production (in both regular and social markets).

So my ipod died. I think I was a bit too rough on it. I am not too distraught, though, because this gave me an excuse to buy one of the spiffy video ipods.

When I was deciding what to purchase off itunes to test out its video capabilities, I decided to go with Monday's Colbert Report because of its Oregon references.

Soon after starting the show last fall, Steven Colbert started referring to Oregon and California's Canada. Later, he referred to Oregon as Washington's Mexico. Then, on Monday, he referred to Oregon as Idaho's Portugal. I love Steven's fixation with Oregon, although I still can't figure who or what is behind it.

Anyhow, I would like to ask Steven Colbert (or any other t-shirt entrepreneur), if I could get a t-shirt with the graphic they show on the show when Steven talks about this stuff. Also, I would probably also buy a Canadian flag patch (like all the Canadian travelers use) shaped like Oregon.

The NYTimes publishes an article about the increasing tendency of men, particularly the less educated, to reach middle-age without marrying as part of its continuing series on the “new gender divide.” While the article presents several interesting explanations for how the marriage market has changed over the past 25 years, it is oddly organized and seems unfocused. The headline (Facing Middle Age With No Degree and No Wife) and first several paragraphs suggest that the article is about the differential growth in the propensity of men without college education to remain unmarried into their forties; however, the article devotes most of its space to factors like fears of divorce, comfort being alone, or difficulty finding the right person that likely affect everyone, and the authors do not explain why it is likely that these trends are more prevalent among less educated men.

The figure below presents the key descriptive facts that motivate the article.



Three trends stand out in the figure:

1) Among men and women in all education categories, the propensity to remain unmarried increased sharply between 1980 and 2004 (college women got an early start on this, but everyone else caught up during this period)
2) Within all education categories, the propensity to remain unmarried into their 40s increased more for men than for women.
3) Among both men and women, the likelihood of not marrying before 40 increased more for the less educated.

The setup of the article suggests that the discussion will cover the intersection of 2 and 3 – the decreasing likelihood that men without college degrees will marry before 40. As such, I would think that the authors would want to focus on explaining why, over the past 25 years, less educated men are more likely to remain unmarried than highly educated men and similarly educated women.

[An aside for students – to clearly establish the core motivating fact empirically one would want individual data for a large and representative sample of men and women between 40 and 44 years old in at least two periods (e.g., 1980 and 2004). Then you would want to run a regression of whether or not the individual was married on their gender, education, the interaction of gender and education, and other controls (like race, region, urban, etc.) separately for each sample. The authors of the Times article expect the interaction between male and low education categories to have grown more negative between the 1980 sample and 2004 sample (technically, one could do this in one regression by adding an additional variable for the sample and interacting it with the other stuff, but too many interactions confuse me – so I’d probably do it this way).]

The first part of the article does this. The authors outline how demand for less educated males in the marriage market fell as more women went to college (and presumably developed the taste for more educated males that accompanies this) and as the economic prospects of low education males plummeted (making them less desirable spouses for even those within their education category). The authors further speculate that weakening economic prospects induced men without college degrees to drop out of the marriage market (reducing supply) because their careers are hectic and unstable (and they fear these traits would carry over into their marriages).

These explanations work. They provide reasons, specific to low educated males, that explain why both demand and supply for them in the marriage market have fallen in the past 25 years.

The last two pages of the four page article, however, drift into general explanations for the decline in marriage propensity in all populations, and, as such, generate confusion. The authors talk about growing fears of divorce, general lack of desire to marry, and the inability to find someone to marry; however, none of these explanations seem peculiar to low educated males. These seem like general explanations for all groups increasing unwillingness to marry, and, relative to other factors, seem like relatively minor shocks compared to things like birth control and improved labor market opportunities for women that substantially reduced the returns to marriage.

On a slightly related note, I would love to see the BLS add some sort of question about active search for a spouse (or spouse like entity) to the CPS so that we could compute an unmarried rate analogous to the unemployment rate. This would give people like me who enjoy studying marriage markets a lot more interesting data to work with about entry and exit into the market (and its correlates).

Lest people get the impression from the previous post about the Wonder Bur that Grants Pass, OR is a sad and unpleasant place, let me post a bit more because it is really a very nice place.

Here are the two standard images of GP -- the "It's the Climate" sign (which for those interested was one of 4 signs that boosters hung downtown in the early 20th century touting the various virtues of Grants Pass the others, if I remember the research for my 8th grade history paper had to do with timber and agriculture) :



... and Caveman Bridge over the Rogue River (I like this photo because it captures another of GP's great features -- the sunsets)



The main thing I love about Grants Pass is being outside. The climate is amazing. We have 4 distinct seasons. People in New England often dismiss places like California by complaining that they lack seasons. Grants Pass has 4 seasons, but it lacks the extremes of Boston. The average LOW temp in January is 33 and the HIGH is 47, and the rain Oregon is "famous" for falls much more on the coast and the Willamette Valley -- Southern Oregon has twice as many clear days and 2/3s the rainy days of Portland. Further, while it can get hot in the summer, there is very little humidity and it cools off substantially overnight. So one tends to want to be outside in Southern Oregon.

The nice climate meshes well with the stunning beauty and recreational opportunities. When I am home (and it is not December during which the weather is pretty dismal -- heavy rain or fog seem to dominate when I am home at Christmas time), I want to be outside playing golf ...


(note to the parents -- I know you don't really deal with this stuff anymore, but would it be that hard to get some better photos of Dutcher Creek posted online?)

... or rafting or hiking along the Rogue (although there has been less rafting since my brother destroyed our raft on the rocks in this photo; way to go bro' -- in his defense it is an extremely tricky rapid) ...


100_2582.JPG
Originally uploaded by Irv Wiswall.

100_2614.JPG
Originally uploaded by Irv Wiswall.

... or heading the short distance through the Redwood Forest ...


Jedediah Smith Redwood Forest 004
Originally uploaded by Tmaupin.

... to the Oregon Coast.


Dimensions
Originally uploaded by HD .

(The photographer who took this last photo is quite good. I highly recommend clicking this link and looking at the slide show of his Souther Oregon pictures. He really captures the diverse landscape of Southern Oregon beautifully (and he doesn't even include any photos of Southern Oregon's most famous landmark Crater Lake).)

Anyhow, as should be fairly apparent by now, Grants Pass, and Oregon more generally, rule! If you've never been, you should go. If you've already been, you should go again.

Wonder Bar cocktails
Originally uploaded by cordelia..

I found this photo on flickr. It is a good photo of a cool sign. If I didn't know any better, I could easily imgine that this was the sign to some hip, retro-cocktail lounge.

Of course, I do know better. The Wonder Bur -- or the "Wonder Blur" to locals -- is a bar in my hometown, Grants Pass, Oregon. Shortly after my 21st birthday, my friends demanded that we go to the mysterious Blur now that we were legal. I can honestly say that, at least in 1997, the Wonder Bur had to be one of the most depressing places on the planet. I think we lasted about 10 minutes. Four fresh 21-year old, college kids at home for either spring or summer vacation (I can't remember) visiting the Blur on a lark didn't really mesh with the hard luck, hard drinking 50+ set that was predominant at the Blur.

Maybe the Blur has been revitalized in the past decade -- my parents tell me that people actually go downtown now -- which definitely wasn't true 10 years ago, but I was stunned by the difference between the feelings evoked by the photo and my own recollections of the Wonder Bur.

The LATimes runs a feature on Joe Francis -- creator of the "Girls Gone Wild" empire. While the article is pretty disturbing (and ultimately unflattering toward Mr. Francis), I was particularly perplexed by one prospective girl's motivation for participation:

I ask her why she wants to appear on "Girls Gone Wild" and she looks me in the eye and says, "I want everybody to see me because I'm hot. ... If you do this, you might get noticed by somebody to be an actress or a model." I ask her why she wants to get noticed. "You want people to say, 'Hey, I saw you.' Everybody wants to be famous in some way. Getting famous will get me anything I want. If I walk into somebody's house and said, 'Give me this,' I could have it."

Now, I am all for people investing in their social capital, but I just don't get this stuff. Are there really net increases in these girls social capital (in both the short and long run)? Do they actually enhance their social status? Are they ever "discovered"? I gotta think that the expected benefits are pretty low. So either these girls totally misperceive the benefits or they just don't think that the costs are that high. Now, I am total prude, so I think the costs are high; however, maybe they don't think it is that big a deal. I am curious, though, how much alcohol and the crowd change the perceived costs. That is, in the absence of alcohol and/or a raucous crowd how many of these girls would pose for these videos? Related to this, how much ex post regret and shame is there? Do people fail to consider these costs, do they just discount them substantially, or do these costs just not exist among this population?

Anyhow, this is a very strange labor market where the "compensation" for "services rendered" is almost entirely social (the t-shirt they receive can't really be an important part of the compensation). That a company can obtain the vital piece of capital for their products at essentially no cost to them simply by offering people a chance at "fame" is, for lack of a better term, fascinating.

According to a new study of CEO succession by Morten Bennedsen and Kasper M. Nielsen, Francisco Pérez-González, and Daniel Wolfenzon it is pretty costly:

in a sample of 5,000 Danish firms from 1994 to 2002, firm performance (measured by the ratio of operating income to assets) improved only after a nonrelative took over. The ratio of operating income to assets averaged 3.3 percent in their sample—for a firm with a million dollars in assets, that puts annual operating income at $33,000. Company performance improved 1.3 percentage points ($13,000 in annual income per million in assets) after the succession of outside-the-family CEOs. And it declined 0.1 percentage points ($1,000 in annual income per million in assets) when scion CEOs were chosen.

The authors argue that these effects are causal. They show that having a first-born son increases the probability of passing the company to a family member (companies pass within families 40 percent of the time if the first born child is a son, but only 30 percent of the time if the first born child is a daughter). They use this to instrument for the decision to appoint a family member CEO and find:

Firms in which the CEO dad had a male firstborn, a factor that by itself should have no effect on the firm's subsequent operating performance, experience a $10,000 larger deterioration in income per million dollars in assets after a succession.

These are some interesting findings that suggest both that people who complain about nepotism may be justified in their criticism and that families are willing to pay a significant price to keep companies "within the family."

Of course, in light of the paper discussed in the previous post, having a first born son may not be as random as once believed. As such, the IV estimation strategy they employ may be invalid if the parental characteristics that affect the probability of having a first born son correlate with the unobserved determinants of firm performance.

A rash of "bizarre" papers have hit the blogoshere today, so in case you missed them ...

1) Tony V points us to a new NBER working paper by Christopher S. Ruebeck, Joseph E. Harrington, Jr. and Robert Moffitt that finds that college-educated, left-handed men earn 15% more (score!). I really should have worked harder on this when I toyed around with the same data and idea 3 years ago.

We examine whether handedness is related to performance in the labor market and, in particular, earnings. We find a significant wage effect for left-handed men with high levels of education. This positive wage effect is strongest among those who have lower than average earnings relative to those of similar high education. This effect is not found among women.

2) Tyler Cowen links to another new NBER working paper by Andrea Ichino, Enrico Moretti(that I was too chicken to discuss when I read it last week) that argues that absenteeism related to menstrual cycles explain 12% of the gender gap in earnings:

In most Western countries illness-related absenteeism is higher among female workers than among male workers. Using the personnel dataset of a large Italian bank, we show that the probability of an absence due to illness increases for females, relative to males, approximately 28 days after a previous illness. This difference disappears for workers age 45 or older. We interpret this as evidence that the menstrual cycle raises female absenteeism. Absences with a 28-day cycle explain a significant fraction of the male-female absenteeism gap. To investigate the effect of absenteeism on earnings, we use a simple signaling model in which employers cannot directly observe workers' productivity, and therefore use observable characteristics -- including absenteeism -- to set wages. Since men are absent from work because of health and shirking reasons, while women face an additional exogenous source of health shocks due to menstruation, the signal extraction based on absenteeism is more informative about shirking for males than for females. Consistent with the predictions of the model, we find that the relationship between earnings and absenteeism is more negative for males than for females. Furthermore, this difference declines with seniority, as employers learn more about their workers' true productivity. Finally, we calculate the earnings cost for women associated with menstruation. We find that higher absenteeism induced by the 28-day cycle explains 11.8 percent of the earnings gender differential.

3) He also links to a related paper which finds that menstration also affects female behavior in lab experiments:

We find systematic evidence that demographic characteristics, especially gender, race and the number of siblings, education backgrounds, as well as menstrual cycle, significantly affect bidder behavior in the first and second-price sealed-bid auction in the laboratory. In particular, we find that women bid significantly higher than men in the first-price auction, while the likelihood of dominant strategy play in the secondprice auction is not different between men and women. This finding provides support for the hypothesis that risk attitude rather than cognitive ability is the main driving force for the gender gap in competitive environments. At a biological level, we find that, in the first-price auction, during menstruation, when levels of estrogen and progesterone are the lowest, women do not bid differently from men. The gender difference in the first-price auction is driven by women during other phases of the menstrual cycle with higher levels of estrogen and progesterone.

4) Stephen Dubner links to some wild evolutionary biology research using the National Longitudinal Survey of Adolescent Health which finds that individuals rated more attractive by their interviewers are 36% more likely to have girl for their first child.

According to this news article, "Selection pressure means when parents have traits they can pass on that are better for boys than for girls, they are more likely to have boys. Such traits include large size, strength and aggression, which might help a man compete for mates. On the other hand, parents with heritable traits that are more advantageous to girls are more likely to have daughters."

Beauty is apparently just one "female" trait. Kanazawa has done previous research suggesting that nurses, social workers and kindergarten teachers -- those with "empathic" traits -- also had more daughters than sons. Meanwhile, he found that scientists, mathematicians and engineers are more likely to have sons than daughters.

5) (not new research, but interesting nonetheless) Kevin Drum wonders if cost of living adjustments are responsible for the disconnect between productivity growth and wages (he essentially argues that norms and expectations regarding wage increases changed, left unsaid is that this leave the CEOs to claim the residual -- given that I've not found a satisfactory explanation for the disconnect between productivity growth and wage growth for the bottom 90% of the wage distribution, I throw it out there for consideration):

As everyone knows, median wages (adjusted for inflation) increased steadily from the end of World War II through the 60s. Then, in the mid-70s, they suddenly stagnated. Depending on who and how you measure things, median wages have either gone up slightly, stayed flat, or gone down slightly since then. But whichever measure you use, wages haven't come anywhere close to keeping up with economic growth over the past 30 years.

Why? Lots of reasons (though many of them, like globalization, have been considerably overstated), but here's one the might have contributed: the widespread acceptance of COLAs (cost of living adjustments) that took hold during the inflationary 70s. During that decade it became increasingly common to view wage increases as a response to inflation and to institutionalize COLAs as a way of dealing with this.

But the end effect was that eventually COLAs became a ceiling for wage increases, not a floor, and workers increasingly began to see that as fair. They were happy as long as they were "keeping up."

But of course, "keeping up" is literally all it is. A COLA increase is nothing more than a way of keeping your wages exactly the same. So for the past 30 years, workers have been getting COLA increases and thinking that's fair, without fully realizing that in the past workers used to get real increases. Back in the 50s and 60s, as the economy grew everyone got richer.