Social Econ Blog

I know my parents seem to like Sen. Smith (R - OR), but this is absolutely pathetic:

And even some Republicans who said voted for the bill said they expected the Supreme Court to strike down the legislation because of the habeas corpus provision, ultimately sending the legislation right back to Congress.

“We should have done it right, because we’re going to have to do it again,” said Senator Gordon Smith, a Republican from Oregon, who had voted to strike the habeas corpus provision, yet supported the bill.

How can a US Senator vote aye on a bill he already believes to be unconstitutional -- particularly when something as fundamental as habeas corpus is involved? He did it (like I am sure most Republicans) because of politics. As Sen. Obama said yesterday, "... I’m still ashamed. Because what we’re doing here today – a debate over the fundamental human rights of the accused – should be bigger than politics. This is serious."

Is it not your job, Sen. Smith, to pass legislation that upholds the Constitution? Why do you feel that your party's political gains should come at the expense of the American taxpayers who will foot the legal bills for your willful negligence? (And while I am at it, why do you think that your party's political gains should come at the expense of American service people abroad who now face greater danger and at the expense of America's reputation and standing in the world)?

"I am a real American, Fight for the rights of every man, I am a real American, fight for what's right, fight for your life!"

Hulk Hogan will need to change his theme song because politics is more important than our core values -- Americans' no longer fight for the rights of every man. Only people who the President says are ok have rights.

At least a few Democrats were willing to stand up and at least speak out against the trashing of America (although they apparently couldn't be bothered to actually DO anything to stop it). Perhaps my favorite thus far, surprisingly, was Sen. Clinton who recalled how a REAL American -- George Washington -- chose to treat captured enemy combatants who were fighting Americans on American soil:

During the Revolutionary War, between the signing of the Declaration of Independence, which set our founding ideals to paper, and the writing of our Constitution, which fortified those ideals under the rule of law, our values – our beliefs as Americans – were already being tested.

We were at war and victory was hardly assured, in fact the situation was closer to the opposite. New York City and Long Island had been captured. General George Washington and the continental army retreated across New Jersey to Pennsylvania, suffering tremendous casualties and a body blow to the cause of American Independence.

It was at this time, among these soldiers at this moment of defeat and despair, that Thomas Paine would write, "These are the times that try men's souls." Soon afterward, Washington led his soldiers across the Delaware River and onto victory in the Battle of Trenton. There he captured nearly 1000 foreign mercenaries and he faced a crucial choice.

How would General Washington treat these men? The British had already committed atrocities against Americans, including torture. As David Hackett Fischer describes in his Pulitzer Prize winning book, "Washington's Crossing," thousands of American prisoners of war were "treated with extreme cruelty by British captors." There are accounts of injured soldiers who surrendered being murdered instead of quartered. Countless Americans dying in prison hulks in New York harbor. Starvation and other acts of inhumanity perpetrated against Americans confined to churches in New York City.

The light of our ideals shone dimly in those early dark days, years from an end to the conflict, years before our improbable triumph and the birth of our democracy. General Washington wasn't that far from where the Continental Congress had met and signed the Declaration of Independence. But it's easy to imagine how far that must have seemed. General Washington announced a decision unique in human history, sending the following order for handling prisoners: "Treat them with humanity, and let them have no reason to complain of our Copying the brutal example of the British Army in their Treatment of our unfortunate brethren."

Therefore, George Washington, our commander-in-chief before he was our President, laid down the indelible marker of our nation's values even as we were struggling as a nation – and his courageous act reminds us that America was born out of faith in certain basic principles. In fact, it is these principles that made and still make our country exceptional and allow us to serve as an example. We are not bound together as a nation by bloodlines. We are not bound by ancient history; our nation is a new nation. Above all, we are bound by our values.

George Washington understood that how you treat enemy combatants could reverberate around the world. We must convict and punish the guilty in a way that reinforces their guilt before the world and does not undermine our constitutional values.

Read the whole thing.

You may also want to read:

Sen. Obama:

I may have only been in this body for a short while, but I am not naive to the political considerations that go along with many of the decisions we make here. I realize that soon, we will adjourn for the fall, and the campaigning will begin in earnest. And there will be 30-second attack ads and negative mail pieces, and we will be called everything from cut-and-run quitters to Defeatocrats to people who care more about the rights of terrorists than the protection of Americans. And I know that the vote before us was specifically designed and timed to add more fuel to that fire.

And yet, while I know all of this, I’m still disappointed, and I’m still ashamed. Because what we’re doing here today – a debate over the fundamental human rights of the accused – should be bigger than politics. This is serious.

If this was a debate with obvious ideological differences – heartfelt convictions that couldn’t be settled by compromise – I would understand. But it’s not. All of us – Democrats and Republicans – want to do whatever it takes to track down terrorists and bring them to justice as swiftly as possible. All of us want to give our President every tool necessary to do this. And all of us were willing to do that in this bill. Anyone who says otherwise is lying to the American people.

Sen Kerry:

Let me be clear about something—something that it seems few people are willing to say. This bill permits torture. It gives the President the discretion to interpret the meaning and application of the Geneva Conventions. No matter how much well-intended United States Senators would like to believe otherwise, it gives an Administration that lobbied for torture just what it wanted.

Sen. Feingold:

And that is why I am saddened that I must oppose this legislation. Because, Mr. President, the trials conducted under this legislation will send a very different signal to the world, one that I fear will put our own troops and personnel in jeopardy both now and in future conflicts. To take just a few examples, this legislation would permit an individual to be convicted on the basis of coerced testimony and hearsay, would not allow full judicial review of the conviction, and yet would allow someone convicted under these rules to be put to death. That is simply unacceptable. We would not stand for another country to try our citizens under those rules, and we should not stand for our own government to do so, either.

Sen Dodd:

Mr. President, the Administration and Republican leadership would have the American people believe that the War on Terror requires a choice between protecting America from terrorism and upholding the basic tenets upon which our country was founded -- but not both. This canard has been showcased in every recent election cycle.

I fully reject that reasoning. We can, and we must, balance our responsibilities to bring terrorists to justice, while at the same time protecting what it means to be America. To choose the rule of law over the passion of the moment takes courage. But it is the right thing to do if we are to uphold the values of equal justice and due process that are codified in our Constitution.

Brad Delong re-posts this question, originally posed by Daniel Davies in Feb. 2003, all the time. What's really remarkable (although tragic for our country) is that it is now late Sept. 2006, and still nothing satisfies these crieria:

Can anyone... give me one single example of something with the following three characteristics:

1. It is a policy initiative of the current Bush administration
2. It was significant enough in scale that I'd have heard of it (at a pinch, that I should have heard of it)
3. It wasn't in some important way completely f---- up during the execution.

Yet, now Congress -- or, more accurately, Republicans in Congress -- want to give this President "the power to jail pretty much anyone he wants for as long as he wants without charging them, to unilaterally reinterpret the Geneva Conventions, to authorize what normal people consider torture, and to deny justice to hundreds of men captured in error."

Seriously?

Please read this.

Last week, over at Econball, Tony V discussed this paper by Bethany Peters and Edward Stringham which argues that consuming alcohol increases your wages because it increases your social capital. Tony V correctly points out that Peters and Stringham’s conclusions are based on flawed empirical work.

Specifically, Peters and Stringham base their conclusions on a regression with the following form:

Ln(income) = a + B*Drink + C*Bar + X’d + e

where Drink = 1 if you drink alcohol, Bar = 1 if you visited a bar in the past month, and X is a vector of basic controls (age, race, gender, education, …).

Students of econometrics will recall that B and C provide unbiased estimates of the relationship between alcohol consumption and income under a variety of assumptions – the key one for our purposes being that the Drink and Bar variables are uncorrelated with the error term. It doesn’t take a lot of imagination to think that this assumption may not hold in this particular case.

First, it is possible (likely even) that an individual’s income affects their propensity to drink or visit bars (rather than strictly vice versa). In this case the relationship is endogenous and the coefficient estimates are unreliable.

Second, setting aside the endogeneity, the variables in the X vector do not adequately eliminate the correlation between the variables of interest and the error term. There are a number of obvious characteristics that determine both a person’s propensity to drink and their ability to earn that are not included in the regression. The most obvious of these is the person’s social capital itself.

I certainly believe that individuals with high social capital earn more money, but I also believe that individuals with more social capital are more likely to drink and to drink at bars. Failure to include sufficient controls for individuals’ social capital implies (setting aside bias introduced by endogenity) the coefficient estimates are largely reflecting the relationship between social capital and income, not the relationship between drinking and income.

To show that I am not just making this up, I turned to the National Longitudinal Survey of Adolescent Health and asked – among those who had not consumed alcohol during the past 12 months when they were first questioned (and were 12-18 years old), were the abstainers with more social capital in the first wave more likely to have started drinking by wave 2 or 3? If we observe that more socially adept adolescents are more likely to switch from abstainers to drinkers, than we can feel more confident that Peters and Stringham’s drinking variables are just proxies for unobserved social skills.

The lazy blogger (as opposed to rigorous academic) regressions I ran show that, among those who were not drinking at the time of the first wave, more socially adept adolescents were more likely to take up drinking by the second or third waves. Specifically, I regressed a binary variable for consumption of alcohol in waves 2 and 3 (which were18 months and 6 years after the first sampling) on three different social capital metrics (ln(size of social network), ln(number of school activities participating in), and whether or not the person had dated in the last 18 months) from the first wave and basic controls for age, gender, race, parent education and income. The relationship between the social capital metrics and the probability that respondents was drinking in the subsequent waves is presented in the table below.



The relationship between social capital and subsequent alcohol consumption is positive and significant nearly every case. To get a rough sense of the magnitudes, doubling the size of a students social network in wave 1 increases the probability that they are drinking by wave 2 by 4.5 percentage points or 14.5 percent (at the mean). Alternatively, doubling the number of high school memberships increases the propensity to drink in the second wave by 4.7 percentage points and having dated increases it by 9.7 percentage points.

While the relationship between drinking and income is at first striking, like the relationship between drinking and health, Peters and Stringham’s results appear to be the result of poor empirical technique. So it is probably best to not use these results to justify policy recommendations (as the Reason Foundation was so eager to do).

Steve Levitt:

And, finally, let’s hope you don’t have to sit next to me on your next flight. Not only do I put you at risk because I don’t turn off my iPod and thus interfere with airline communications, but TSA just confiscated my deodorant and my toothpaste. Of course they let me keep my contact lens solution. Hmmm…if I were a terrorist, don’t you think that I could figure out how to take the top off a bottle of contact lens solution and put my explosive liquids in there? It is totally pointless to enforce rules which impose costs on innocent people, but are easily circumvented by terrorists. Can anyone think this is accomplishing anything productive?

... on us. The case of Canadian Maher Arar and the case of German Khalid El-Masri -- two completely innocent men, abducted and tortured in secret prisons at the behest of the US government for months on end -- are, along with all the other people we don't even know about, a great blemish on our national reputation. Glenn Greenwald sums up my feelings when he writes:

So on top of operating secret torture gulags in Eastern Europe, we also kidnap people, charge them with no crime, give them no opportunity to defend themselves, deny them contact with their consulate in violation of international treaties (as the Canadian report complained about), send them off to be tortured for months, and then when it turns out that they are completely innocent, we block them from obtaining compensation in our courts because our Government claims that national security would be jeopardized if they were held accountable for their behavior.

How can you be an American citizen and not be completely outraged, embarrassed, and disgusted by this conduct? What the Bush administration is doing on so many levels is a grotesque betrayal of every national value and principle we have always claimed to embrace and for which we have fought, and which we claim we are defending as part of our current "war".

You see, growing up, I learned that in America you are innocent until proven guilty. Later on, when I learned statistics, my professors always relied on this fundamental aspect of the American justice system (and identity) to clarify hypothesis testing. The null hypothesis in the American justice system is that you are innocent. And just like prosecutors must prove beyond a reasonable doubt that the defendant is not, in fact, innocent, statisticians, in order to reject the null hypothesis, must be at least 95% certain that it is not true. We are told both as children in civics class and as students in statistics class, that we set such a high standard because type I error (convicting and innocent or rejecting a true null hypothesis) is substantially worse than type II error (letting someone guilty go free or failing to reject a false null hypothesis).

Unlike the fraidy-cats running our government (and their apologists), I do not think 9/11 changed this. When they say 9/11 changed everything, much of what they are saying is that it is now better to incarcerate and torture someone innocent (or simply invade the innocents' privacy via wiretapping and data mining), than to let someone guilty go free. Type II error is worse than Type I error.

This is a fundamental rejection of the American ethos as I have always understood it. And there do not appear to be any benefits to justify this enormous cost. Even if you assume that all these sick policies actually reduce the threat of terrorism, and I certainly don't accept that assumption, you've only replaced one threat -- being killed or maimed by a terrorist -- with another -- being incarcerated and tortured with limited ability to prove your innocence. It is certainly not obvious to me which of these things is worse in expectation. So not even taking into account the fact that these policies increase the threat of terrorism by inflaming hatred and that embracing these policies requires the rejection of several core elements of American identity, it is not clear that such policies are worthwhile. How then, is it even worth debating this stuff after you add the other costs (increased terrorist threats and loss of national pride/identity)?

... here's yet another "expert" -- the recently retired director of the CIA's Political Islam Strategic Analysis Program -- explaining that US policies in the Middle East = stupid:

5. What is the likely political fallout from the Iraqi debacle and from the failures of the “war on terrorism”?

We've lost a generation of goodwill in the Muslim world. The President's democratization and reform program for the Middle East has all but disappeared, except for official rhetoric. That was the centerpiece of the President's policies for the region, and now no one is talking about it. We have lost credibility across the Islamic world regarding “democracy” and “representative government” and “justice.” We are devising new rules and regulations for holding people without charge. The FBI has been at Guantanamo for years, and no charges have been brought against anyone. The Islamic world says “you talk about human rights, but you're holding people without charging them.” The Islamic world has always viewed the war on terror as a war on Islam and we have not been able to disabuse them of that notion. Because of Guantanamo, Abu Ghraib, and other abuses we have lost on the concepts of justice, fairness and the rule of law, and that's the heart of the American idea. That's very serious, and that's where I see the danger in the years ahead.

Please stop forcing me to update my itunes software. I updated it slightly more than 1 month ago when I bought my new ipod. Now, in order to set up passes for the Daily Show and Colbert Report (I will be living without cable for the near future -- the horror!) you are requiring me to update itunes again. Seriously?!!? Even though I am sitting in an airport with nothing to do and I can operate other programs (like this one) while it is downloading, I still find this annoying.

That is all.

Clearly, I haven't had much time for blogging lately, and that will continue; however, if you are looking for something interesting to read, DKE wrote some good stuff over the past few days on:

the economics of slave redemptions

Ugandan dictator Idi Amin

and children accused of witchcraft in the Congo.

Check them out.

Tony V. takes a break from his usual bread and butter -- intellectual property, patents, etc. -- and applies his keen analytical mind to a social topic -- why New Yorkers have summer friends that they don't see in the city during the week or during the winter. I think his answer is spot on.

I have a friend who always refers to these new voting machines as "slot machines." However, my guess is that slot machines are substantially more secure than voting machines. Casinos protect and monitor their slot machines constantly. Voting machines are just kinda there.

In this extremely disturbing video, Princeton computer scientists demonstrate how, in less than 1 minute, they can introduce software that:

(a) makes the machine appear to work when tested
(b) steals the actually election
(c) removes all evidence it was there after the election
(d) can spread from machine to machine

I think it may be time to spend the money and have the patience to let humans conduct elections.

It is hard to believe that it has been 5 years since 9/11. I left the house about 5 minutes before the first plane hit the WTC and went to sit through some training on operating course websites so I could get a password to run the program to assign students to sections. By the time I emerged, the first tower was gone and within minutes of returning home the second had fallen. I spent the rest of the day, like most people, staring at the TV in horror. Over the course of the day, people just started to show up at our house, and the only other memory I have of 9/11 specifically was cooking dinner for the 15 or so people who assembled there.

I am not going to comment on the significance of 9/11 or what's happened since because, frankly, it makes me too angry.

Instead, I will take advantage of the miracle of youtube and let Jon Stewart remind you of that sad, but oddly more hopeful period.

This is just awesome. I love the Superman character in this. I would totally watch him in his own cartoon.



The Star Wars "How if should have ended" is also pretty good.

Thanks to Tony V for the pointer.

For my facebook obsessed readers, here's a big sudy of facebook social networks from 10 schools in Texas which I played a small role in developing (basically one of the authors contacted me to find out how I got my facebook data and I told him):

This paper documents the structure and composition of social networks on university campusesand investigates the processes that lead to their formation. We use a large dataset that identifies students in one another's social network on campus and link these data to university records on each student's demographic and school outcome characteristics. The campus networks exhibit common features of social networks, such as clusteredness. We document the factors that are the strongest predictors of whether two students are friends. Race is strongly related to social ties. In particular, blacks and Asians have disproportionately more same race friends than would arise from the random selection of friends, even after controlling for a
variety of measures of socioeconomic background, ability, and college activities. Also, two students are more likely to be friends if they share the same major, participate in the same campus activities, and, to a lesser extent, come from the same socioeconomic background. Next, we develop a model of the formation of social networks that decomposes the formation of social links into effects based upon the exogenous school environment and effects of endogenous choice arising from
preferences for certain characteristics in one's friends. We use student-level data from an actual social network to calibrate the model. Our model generates many of the characteristics common to social networks. We simulate network structures under alternative university policies. We find that changes in the school environment that affect the likelihood that two students interact have only a limited potential to reduce the segmentation of the social network.

Either people are really crazy or they really love to mess with surveyors:

A recent Scripps Howard/Ohio University poll of 1,010 Americans found that 36 percent suspect the U.S. government promoted the attacks or intentionally sat on its hands. Sixteen percent believe explosives brought down the towers. Twelve percent believe a cruise missile hit the Pentagon.

The new facebook newsfeed feature is apparently pretty controversial. It's even spawned an enormous anti-newsfeed facebook group and a Newsweek commentary. I'm with the author of the Newsweek commentary, I think it is pretty cool.

I like it for several reasons. First, it lowers the cost of obtaining information about what's going on in one's social network. Information about others is an important input into the social process. People with good information are highly valued in social markets (i.e., demand for them is high) because other people are interested in obtaining this information. More information also increases our value in social markets by encouraging us to be better friends. It increases our propensity to reach out to others in by lowering the cost of making contact (hey, I saw you did X ... that's cool), and it increases the efficiency of phone and face-to-face contact by replacing alot of the, "soooo, what have you been up to" awkwardness with more interesting conversation.

Second, newsfeed raises the cost of creating new facebook ties. As is, the social network side of social networking websites is a bit of joke. The friendship ties it documents are pretty week. However, if everything you do on your facebook profile is broadcast to all of your "friends", I imagine this might encourage greater reluctance to accept or make friend requests. Instead, people are now encouraged to limit their networks to the people they want to keep informed about and who they want to keep informed -- i.e., individuals' friendship networks might now more closely reflect their actual social networks.

Finally, as Andrew Romano points out in his Newsweek column, perhaps this will prompt people to be less neurotic about their profiles:

How necessary is it, I thought, to obsessively recalibrate my roster of favorite movies and music? Not very. In fact, it's kind of immature. Weaned on a sugary self-esteem diet, we've grown into a vain generation with an insatiable appetite for self-expression -- and plenty of places (Facebook, MySpace, blogs, AIM, etc.) to express ourselves. But it's important to realize that People Are Watching (luckily, Facebook is limited to friends; other online outlets aren't nearly as private). That's what social networking is all about. My new rule of thumb: don't do stuff online that you don't want your friends to know about. If you're embarrassed when a particular update appears on News Feed, it was probably gratuitous to begin with.

So I think newsfeed is good. I agree with my former student who emailed me on Monday when she discovered the changes, it will be cool to see how this feature affects people's behavior. At the vary least, I really want to know how this affects people's propensity to "make new friends" and how it affects people's propensity to change their profiles. So hopefully someone will do the research to provide me with these answers.

Over at Econball, Tony V. is perplexed by the fact that Oregon is not an extreme outlier with respect to its fraction of gas stations with convenience stores given its self-service laws. As he points out, Oregon’s 53% of gas stations with convenience stores in the 2002 Economic Census ranks behind New Jersey (25%) and Massachusetts (47%) and only a little above Connecticut (58%) and New York (60%). He hypothesizes that geography is responsible:

My gut is still that the reason Oregon doesn't look like NJ, but rather looks like northeastern states that allow self-service gas stations is that Oregon's geography would tend to give it a *very high* fraction of gas stations with convenience stores, but its full-service law brings it down to look like Northeastern states whose geography leads to fewer gas station-convenience store hybrids. Oregon's neighbors (Washington, Idaho, Nevada, and California) all have high percentages of gas stations with convenience stores (82.1%, 80.4%, 85.1%, and 69.9%). So Oregon is more than 26% points lower than the average of its neighbors, which is similar to the difference between New Jersey and the other northeastern states on in the table above.

I think this is basically correct. Driving long distances is pretty much what you do in Oregon (and the rest of the West), and driving long distances increases demand for convenience store gas station combinations regardless of whether or not you pump your own gas.

However, I think Tony V. misses another part of the explanation – turnpikes. A large fraction of people traveling long distances (to the extent that is possible) in New Jersey, Massachusetts, and New York rely on toll roads. People traveling on toll roads tend to be confined to the weird (to me) rest area things for their fuel, food, and plumbing needs. You don’t typically get off a toll road and pull into a town just to get a coke, burger, or gas.

This is not the case in Oregon. If you want gas or food while driving along an interstate in Oregon you pretty much have to pull off into a town. This increases supply of gas station convenience store combos because the market is not regulated/monopolized by the turnpike authorities, and it increases demand because people can get off whenever they feel like at an area with a wide variety of choices (at lower costs?) rather than having to drive to the next official rest area with the 1 or 2 officially sanctioned suppliers. In the West, every town along the interstate has a cluster of gas stations and fast food restaurants at the interstate exits. (In fact, most of the gas stations and fast food restaurants in such communities are within a few blocks of the exits.) As such, I was never surprised that Oregon had more gas station/convenience stores than New Jersey.

I am a little perplexed, though, by the rapid growth in the fraction of gas stations with convenience stores in Oregon in the relatively short period between 1997 and 2002. While Maryland and Hawaii increased their fraction of gas stations with convenience stores by as much or more, the percent of gas stations with convenience stores in Oregon jumped from 30% to 53% in only 5 years. That is a pretty rapid change. Although, given that – with the exception of New Jersey – the 10 states with the lowest fraction of gas stations with convenience stores in 1997 all experienced increases of 14 percentage points or more, perhaps I shouldn’t be that perplexed.

Update -- My brother points out that DEQ regulations forced gas stations to remove/replace undergrand storage tanks by the sometime in 1999. This may explain why there was a surge in the fraction of gas stations with convenience stores among states that had relatively few of these in 1997. The tank replacement was accompanied by old stations closing or undergoing major renovations.

Two unrelated gas station points:

1) I discovered recently that here in Cambridge 4 gas stations along Broadway and 2 out near Fresh Pond offer mini-serve at the same price as self-serve (I assume they will let you pump your own gas I only witnessed people having their gas pumped for them). I meant to go back and ask if the pumpers got tips or anything, but I’ve been too lazy. All 6 of these stations do not have convenience stores and only one of them is a “brand name” chain (a Citgo station).

2) In Toronto, gas station marquees are digital and the prices change all the time. My friend who lives there says that during the course of the day the price can swing by 10%, and he believes that there is even a daily price cycle (e.g., gas tends to be cheaper in the evening). I’d never heard of such a thing. Is this common elsewhere?

Tony V. has outlined his response to the question he and I both posted about last week:

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?

For him, X is greater than 10. That is, incomes in China would have to increase by more than 10% for him to forgo the million dollars/year.

For me, X is less than 1.

First, I believe many people would notice and value a 1% increase in their income. While I think it is possible that some people – particularly those, like me, whose monthly income far exceeds monthly expenses – would not notice a 1% change in income, most people’s basic consumption keeps them close enough to their budget constraint that I cannot believe that they would fail to notice and appreciate an expansion of their budget set. People who live close to their means tend to be acutely aware of how much money they have at all times, and, even in our very rich country, many people expend a great deal of effort to increase their incomes by 1% -- clipping coupons, recycling bottles and cans, shopping at second hand stores, and engaging in a host of other “penny pinching” behaviors – because their current incomes are inadequate to provide enough food, clothes, medicine, or Christmas presents for their children. I cannot imagine that the hundreds of millions of poor Chinese are any different.

Tony V. is correct to point out that framing will affect precisely what the transfer gets spent on and how happy it makes people (e.g., there are differences between giving people this transfer as a lump sum versus slightly changing their weekly salary, the prices they pay, or their tax rates), but regardless of how it arrives, in the end, it will be translated into 1% more goods and services (including more saving or less debt). (Maybe some of my readers with Chinese backgrounds might be able to help make this more concrete by describing what they think a 1% increase in Chinese incomes might get spent on for people at various points in the income distribution.)

Second, unlike Tony V., I do have an additive component in my social welfare function. That a billion people live in China matters. Even if each individual Chinese person is only slightly better off, a small amount multiplied by a billion quickly becomes a very large amount. I just can’t ignore this.

One person at dinner argued that, even if I didn’t think that my marginal utility of an additional million dollars was that high, the world would be better off if I took the million and divided it among the N poorest people in China (or bought 50,000 mosquito nets for Africans or something). I am unconvinced by this approach. I just don’t think a million dollars can buy me or even people much poorer than me a great deal of happiness relative to the $70-90 BILLION dollars being giving up. I just simply don’t believe that the world is better off adopting a scheme that essentially levies a 1% tax on all income in China, takes $69,999,000,000 of the money raised and sets it on fire, and then takes the remaining million and gives it to the poorest people we can find. (Technically, there is a slight difference between taking 1% away from Chinese and preventing them from earning an additional 1%, but hopefully you get the idea.)

I guess this all means that, at least when the magnitudes are this large, I prefer something closer to a utilitarian social welfare function (sum up utility) over a Rawlsian one (maximize the welfare of the lowest member of society). I know that I am not consistent in this preference. There are certainly situations where I would be willing to “burn money” in order to make unfortunate people better off, but the “waste” in this scenario is much too large.

So, at least when China (or India) are involved, my X is less than 1 percent. Where precisely, I am not sure, but it is probably pretty well under 1 percent. I have no reservations about my choice.

David Ellwood apparently ran this speech yesterday at the initial faculty meeting at the Kennedy School. A friend pointed it out to me, noting that it is weird to see a President give a speech that is actually inspiring.

JFK speaks at the 90th Anniversary Convocation of Vanderbilt University:

If there is one unchanging theme that runs throughout these separate stories, it is that everything changes but change itself. We live in an age of movement and change, both evolutionary and revolutionary, both good and evil. And in such an age a university has a special obligation to hold fast to the best of the past and move fast with the best of the future.

…

The essence of Vanderbilt is still learning. The essence of its outlook is still liberty. And liberty and learning will be and must be the touchstones of Vanderbilt University and of any free University in this country or the world. I say two touchstones, yet they are almost inseparable, inseparable if not indistinguishable. For liberty without learning is always in peril, and learning without liberty is always in vain …

This nation is now engaged in a continuing debate about the rights of a portion of its citizens. That will go on, and those rights will expand until the standard first forged by the nation's Founders has been reached and all Americans enjoy equal opportunity and liberty under law.

But this nation was not founded solely on the principle of citizen-rights. Equally important, though too-often not discussed, is the citizen's responsibility. For our privileges can be no greater than our obligations. The protection of our rights can endure no longer when the performance of our responsibilities each can be neglected only at the peril of the other.

I speak to you today, therefore, not of your rights as Americans, but of your responsibilities. They are many in number and different in nature. They do not rest with equal weight upon the shoulders of all. Equality of opportunity does not mean equality of responsibility. All Americans must be responsible citizens, but some must be more responsible than others by virtue of their public or their private position, their role in the family or community, their prospects for the future, or their legacy from the past. Increased responsibility goes with increased ability. For those to whom much is given, much is required.

… I speak, in particular, therefore, of the responsibility of the educated citizen, including the students, the faculty, and the alumni of this great institution. The creation and maintenance of Vanderbilt University, like that of all great universities, has required considerable effort and expenditure, and I cannot believe that all of this was undertaken merely to give this school's graduates an economic advantage in the life struggle.

"Every man sent out from a university," said Professor Woodrow Wilson, "Every man sent out from a university should be a man of his nation as well as a man of his time." You have responsibilities, in short, to use your talents for the benefit of the society which helped develop those talents. You must decide, as Goethe put it, whether you will be an anvil or a hammer, whether you will give to the world in which you were reared and educated the broadest possible benefits of that education.

Of the many special obligations incumbent upon an educated citizen, I would cite three as outstanding: Your obligation to the pursuit of learning; your obligation to serve the public; your obligation to uphold the law. If the pursuit of learning is not defended by the educated citizen, it will not be defended at all.

For there will always be those who scoff at intellectuals, who cry out against research, who seek to limit our educational system. Modern cynics and skeptics see no more reason for landing a man on the moon -- which we shall do -- than the cynics and skeptics of half a millennium ago saw for the discovery of this country. They see no harm in paying those to whom they entrust the minds of their children a smaller wage than is paid to those to whom they entrust the care of their plumbing.

But the educated citizen knows how much more there is to know. He knows that knowledge is power -- more so today than ever before. He knows that only an educated and informed people will be a free people; that the ignorance of one voter in a democracy impairs the security of all; and that if we can, as Jefferson put it, "enlighten the people generally," "tyranny and the oppressions of mind and body will vanish like evil spirits at the dawn of day." And, therefore, the educated citizen has a special obligation to encourage the pursuit of learning, to promote exploration of the unknown, to preserve the freedom of inquiry, to support the advancement of research, and to assist at every level of government the improvement of education for all Americans -- from grade school to graduate school.

read and/or listen to the rest here.

Former Iranian President Mohammed Khatami is giving a talk at the Kennedy School on Sunday. However, he will not be receiving the state police escort, etc. typically provided to high level visitors because Gov. Mitt Romney doesn't like him and doesn't think that Harvard should give him a platform.

Kudos to Mitt Romney for engaging in a completely meaningless gesture in a desperate attempt to impress future Republican Presidential Primary voters.

Even if you disagree with his words and deeds and think he is totally crazy, Khatami was the President of Iran for most of the last decade. I cannot think of a single bad thing that might result from hearing him speak. I would have thought that someone interested in leading this county, like Romney, would have jumped at this unique opportunity to be face-to-face with such an important figure from one of our greatest adversaries.

I don't get it.

Apparently, I've had alot going for me since childhood. Previously, I've linked to studies which discuss the advantages of being tall and left-handed, and now I learn that people born in late winter (like me) score higher on childhood intelligence tests according to this new study, but the effect is driven by the age you start school:

Reading ability at age 9 and arithmetic ability at age 11 were both related to season of birth (children born in late Winter or Spring performed better), but this association virtually disappeared once age at starting primary school and age relative to class peers were taken into account. That is, season of birth was only related to later intelligence because it affected the age children started school, with those who started school younger or older than the average tending to score less well on later intelligence tests.

I also find it interesting that the people this study identifies as performing better on childhood intelligence tests (those born from Feb-April) are among the least likely to become Congressmen.

(h/t Tyler Cowen)

The introduction to this paper by Ori Heffetz nicely expresses much of what drew me to social economics:

We all live in society and depend on each other for achieving most of our personal goals. These clearly include all goals that are directly related to our place in society and are only meaningful in a social context. For most of us, however, even mere physical survival depends on our ability to function in a social setting. We neither can nor want to live away from society.

Our ability to function in a social setting is in turn affected by what others think about us. And since others are unlikely to have perfect information about us, they are constantly watching us, updating their opinions and beliefs about who we are. Consequently, every aspect of our behavior that is observable by society may be interpreted as a signal.

In the signaling game we call life, when deciding upon a course of action, we consider not only the direct effects of our choice on our welfare, but also the indirect (or social ) effects resulting from society observing our choice. Balancing these two effects, we may choose actions that are suboptimal in their direct effects, but, considering their value as a signal, are overall optimal (for the decision-making individual).

In the socio-cultural context most familiar to us—that of a consumer society with a consumer culture—many of the choices we make and the actions we take are consumption related. Indeed, consumption is so pervasive in our lives that both in everyday conversation and in the academic economics literature, individuals are often simply referred to as consumers. And as consumers, an important channel through which we can send signals to society is our consumption behavior. The main idea behind this paper is that, as some consumer expenditures are more visible to society than others, a “signaling by consuming” model might help explain consumer expenditure patterns. Using such a model, we derive empirical predictions regarding total expenditure elasticities of demand, and we show that these depend on the visibility (or non-visibility) of the goods consumed. We construct a survey-based measure of the relative visibility of different consumption categories, and we apply it to explore how well our predictions fare with available data on household consumption. We find mixed but suggestive evidence that our survey-based measure could predict up to 20 percent of observed variation in elasticities across consumption categories.

Alan Krueger provides a non-technical summary of the article here. (h/t Brad Delong)