Pursuit of Truthiness

my gut tells me I know economics

Selfish Reasons to Have More Kids

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American moms spend more time taking care of kids today than they did in the 1960’s. This is perhaps the most surprising of many bold but well-backed claims in economist Bryan Caplan’s book Selfish Reasons to Have More Kids.

“According to time diaries, modern parents spend an incredible amount of time taking care of their kids. As expected, dads do a lot more than they used to. Since 1965, when the average dad did only three hours of child care per week, we’ve more than doubled our efforts. Given how little dads used to do, though, doubling wasn’t hard. What’s amazing is the change in the typical mother’s workload: Today’s mom spends more time taking care of children than she did in the heydey of the stay-at-home mom [13 hours/week vs 10].”

The major argument of the book, backed up by many twin and adoption studies, is that parenting matters much less than we think- at least as far as children’s long-term outcomes are concerned. A lot of kids’ outcomes seem to be determined by factors outside parents’ control; the biggest way parents do influence their kids long-term outcomes is through genetics. Adopted kids generally end up with education, income, IQ, and many other outcomes being much more similar to their biological parents than their adoptive parents.

In turn, Caplan draws two main conclusions from this argument. One, lay off the tiger parenting, since all it accomplishes is to make kids miserable. Two, for those who do want to influence their kids: “The most effective way to get the kind of kids you want is to pick a spouse who has the traits you want your kids to have.”

Other interesting points:

US kids are about 4 times less likely to die during childhood today than they were in the “idyllic” 1950’s. The reason people think otherwise is because Law & Order SVU has replaced Leave it to Beaver on TV (and the rise of 24 hour news, et c). Homicides actually have gone up a bit, but this is overwhelmed by the massive decline in deaths from accidents and disease.

I thought that government “child bonus” payments were ineffective at promoting fertility, but Caplan cites research showing the opposite. Same with mandatory paid leave- the possible positive externalities of extra kids make me start to rethink my knee-jerk anti-regulation stance.

Artificial wombs are something I’d only heard of in science fiction. But apparently semi-functional prototypes already exist, and only government restrictions are holding back progress.

IVF + surrogacy = totally outsourced babies. Any rules against mass production and/or use by fertile people? This seems like a good way for any rich person to create an army of clones.

Written by James Bailey

January 25, 2016 at 7:48 pm

Posted in Uncategorized

Mad Economists

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Who is the closest person out there to being a “mad economist”, in the sense of a mad scientist?

I have a hard time thinking of anyone who really qualifies. I think this is because mad scientists do practical things that directly affect the real world- either by building crazy things (death ray, killer robot, 5 assed baboon, et c), or by using crazy methods for research (harming human/animal subjects, making their base underwater/ in an active volcano / on the moon).

Economists tend to be bound to relatively boring methods (doing math on a chalkboard or analyzing data on a computer) that lead to relatively boring outcomes (writing papers that expand our understanding of the world a bit and possibly tell policymakers what to do).

The recent trend toward lab and field experiments in economics certainly expands the possibilities for madness. Prisoners’ Dilemma experiments are a nice touch here, especially when someone decided to run them with actual prisoners. The Phillips machine was a fun one-off. But I can’t think of anything that rises to the level of psychology’s Milgram Experiment, much less the things that have been done in the “real” sciences of biology, chemistry and physics.

Occasionally economists get some power within companies, or start their own. But coming up with a new strategy for a hedge fund or designing auctions for Google doesn’t really get into “madness” territory either. Economists are forever telling the government what to do, but rarely get listened to. During total war they have been vested with lots of power over the economy, though I haven’t heard of any particularly crazy things they did with this power. Levitt’s long con to catch terrorists was a nice touch. Armen Alchian used economics to discover that lithium was the moderator for the atomic bomb, but his only plan to use that information was to write a paper about it, and he abandoned even that at the request of the government.

Image result for dr horrible

But is there anything an economist has done that rises to the level of a Tesla, Mengele, Musk, or TunaPig? Anything an economist might do that could match a single invention of Drs Kreiger, Evil, or Horrible?

Marx? GiveDirectly founders? Shleifer? Jeff Sachs?

In general, PhD economists (myself certainly included) are too much thinkers rather than doers. The closest people we have to mad economists are probably people who learned some undergraduate economics, then went out to change the world- people like Elon Musk or Dread Pirate Roberts.

Who am I forgetting? What would a real mad economist look like?

Written by James Bailey

January 18, 2016 at 6:42 pm

Thoughts on Crime and Punishment

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  • Is Raskolnikov the least likeable protagonist of all time?
  • Great illustrations of what real poverty is like
    • Regular hunger, only one set of clothes (rags), turning to theft and prostitution
    • But not all sympathetic portrayal; one man drinks himself into poverty. Raskolnikov simply does nothing all day rather than work. Disdains going into business but then turns to murder.
    • Murder is hard to cover up when you are that poor! Have roommates, can’t afford a weapon and so must steal it, can’t throw away bloody clothes because they are your only set
  • Interesting half-parallel between Marmaladov and Raskolnikov. They both spend a lot of time wallowing in self-pity over their own weakness. M’s weakness is drinking away all his money while his kids go hungry. R’s “weakness” is having a conscience that tells him murder is wrong.
  • I’m not above being continually amused by funny Russian names
  • TVtropes seems surprisingly good at identifying the themes of this great work. (Attention conservation warning: TVtropes link)
  • Dostoevsky understood tobacco way earlier than medicine did!
    • “AH THESE cigarettes!” Porfiry Petrovitch ejaculated at last, having lighted one. “They are pernicious, positively pernicious, and yet I can’t give them up! I cough, I begin to have tickling in my throat and a difficulty in breathing. You know I am a coward, I went lately to Dr. B__n; he always gives at least half an hour to each patient. He positively laughed looking at me; he sounded me: ‘Tobacco’s bad for you,’ he said, ‘your lungs are affected.’ But how am I to give it up? What is there to take its place? I don’t drink, that’s the mischief, he-he-he, that I don’t. Everything is relative, Rodion Romanovitch, everything is relative!”
  • The book is interesting and readable, lots of subtlety but while reading it wasn’t clear to me why this is considered one of the all-time greats
    • This may be because it is hard to appreciate how original things were in their own time when they have since been heavily imitated. A bit of research seems to back this up
    • Many characters seem overly dramatic/histrionic
      • This may have been because Dostoevsky had a pretty dramatic personal life- spared execution at the last second thanks to a letter from the tsar; has his first seizure upon learning of the death of his father
    • I assumed throughout the whole book that Raskolnikov was a satire of Nietzsche’s ideas about ubermensch; then afterward I realize the book was published in 1866 and Nietzsche’s first publication was in 1870.

Written by James Bailey

January 15, 2016 at 12:35 pm

Better to remain silent and be thought a fool…

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“The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.” ― Frédéric Bastiat

Though Bastiat wrote in the 1800’s, this point (like his other main points) still seems woefully under-appreciated today. So often I hear people defending one sort of idea by pointing out the weak character or arguments of the idea’s opponents.

While this itself borders on fallacious reasoning, it seems to be simply how people work. Because of this, we should all consider from time to time whether to best thing we can do to advance our own ideas is to simply stay quiet, at least until we have thought more.

Dostoevsky has a great illustration of this idea through the character of Semyonovitch in Crime and Punishment:

Andrey Semyonovitch was an anæmic, scrofulous little man, with strangely flaxen mutton-chop whiskers of which he was very proud. He was a clerk and had almost always something wrong with his eyes. He was rather soft-hearted, but self-confident and sometimes extremely conceited in speech, which had an absurd effect, incongruous with his little figure. He was one of the lodgers most respected by Amalia Ivanovna, for he did not get drunk and paid regularly for his lodgings. Andrey Semyonovitch really was rather stupid; he attached himself to the cause of progress and “our younger generation” from enthusiasm. He was one of the numerous and varied legion of dullards, of half-animate abortions, conceited, half-educated coxcombs, who attach themselves to the idea most in fashion only to vulgarise it and who caricature every cause they serve, however sincerely.

Though Lebeziatnikov was so good-natured, he, too, was beginning to dislike Pyotr Petrovitch. This happened on both sides unconsciously. However simple Andrey Semyonovitch might be, he began to see that Pyotr Petrovitch was duping him and secretly despising him, and that “he was not the right sort of man.” He had tried expounding to him the system of Fourier and the Darwinian theory, but of late Pyotr Petrovitch began to listen too sarcastically and even to be rude. The fact was he had begun instinctively to guess that Lebeziatnikov was not merely a commonplace simpleton, but, perhaps, a liar, too, and that he had no connections of any consequence even in his own circle, but had simply picked things up third-hand; and that very likely he did not even know much about his own work of propaganda, for he was in too great a muddle….

Written by James Bailey

January 11, 2016 at 6:30 pm

Craft-Beer-O-Nomics

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A new article in the Journal of Wine Economics gives an informative and interesting history of beer in the United States, with a special focus on craft beer. While they do some statistical analysis at the end, most of the article tells a story that everyone should be able to understand. I could give you the basics of the story but I think their graphs do that best:

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We have gone from the dark ages of 1979 when Americans only drank Bud and Miller to the amazing variety of beer available today. Check out the article for stories of the people behind the craft beer revolution, and for an attempt to explain why it happened and why it happened in the states where it did.

Written by James Bailey

January 6, 2016 at 4:37 pm

Took our jobs, took our businesses? American entrepreneurs and immigration.

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Just about everyone has heard something of the debate over how immigrants affect the jobs and wages of natives. The general consensus in economics is that immigration has neutral to positive effects on the average native. This can happen because immigrants aren’t just substitutes for the native labor supply- they can also be complements for native labor, and their consumption increases the demand for American goods. Much ink has been spilled over the remaining contentious point of whether any major group of natives is harmed even if most Americans aren’t, with Borjas and some others finding that low skilled Americans see a slight wage decline, and Peri and others arguing they don’t.

One often-cited reason that immigration can benefit natives is that immigrant entrepreneurs start businesses that end up hiring Americans. But this point relies on one crucial assumption- that the immigrant-founded businesses aren’t simply displacing native-founded ones. While there has been a huge body of research on whether immigrants take American jobs and wages or not, there has been drastically less written on whether immigrants “take” American businesses. Perhaps immigrants willing to accept lower profits push out native businesses.

Keshar Ghimire, an economics PhD candidate at Temple University, answers the question in his innovative job market paper. A straightforward way to go about this would be to see whether states with more immigrant-founded businesses have fewer native ones. Keshar does this and finds that states with more immigrant-founded businesses actually have more native ones. But, he argues, this may simply be because some states are better for business and so attract both types of entrepreneurs, rather than immigrant entrepreneurs actually causing natives to start businesses.

To determine the real effect of immigrant businesses on native ones, he needs to find a change in the number of immigrant entrepreneurs in a state that wasn’t just caused by changing business conditions affecting everyone; it should be something that only affected immigrants. He finds such a change following the 1996 welfare reform. The national reform largely removed immigrants from eligibility for welfare. But 15 “generous” states allowed immigrants access to the new State Children’s Health Insurance Program (S-CHIP), which provides insurance for children whose families have relatively low income but who are too wealthy to qualify for Medicaid. Keshar finds that these states got a huge 22% increase in immigrant entrepreneurship. While my own work shows that health insurance isn’t always a barrier to entrepreneurship, one good study found that Medicare leads to a similar increase, so I find this plausible.

So what happened to native entrepreneurs in the 15 states that got this big influx of immigrant entrepreneurs? Keshar finds that they were not scared off. There was no change in the amount of unincorporated businesses owned by natives in these states relative to the others. The number of natives with incorporated businesses actually went up- so much that every two new immigrant businesses lead to one new native business. It turns out that just like workers, businesses can complement each other rather than only compete.

In sum, more immigrant entrepreneurship actually attracts native entrepreneurs rather than scares them away. I hope that this finding will make it in front of states considering S-CHIP eligibility, and in front of the US Congress debating immigration- especially on whether we should create a “founder visa” easing the way in for those who plan to start businesses, as some other countries have.

Written by James Bailey

December 17, 2015 at 1:04 pm

The Reverse Syrian Refugee Crisis of 1915

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In 1915 there was a flood of refugees from the Armenian genocide being forced into Syria, on a sort of Trail of Tears. I just learned of this from the excellent book, Lawrence in Arabia, that I’m currently in the middle of:

“As for where this potentially vast sea of internal deportees might be sent, Talaat and Enver had already selected a spot: gathered up from across Anatolia, most would be herded down to the barren reaches of northern Syria. The insanity inherent in this scheme, of uprooting a vast population and casting it into a land already devastated by the deprivations of war, would play out to obscene result: by best estimate, some 800,000 of the Armenian deportees were to perish—starved, shot, or beaten to death—en route.

The consensus among historians is that [Ottomian provincial governor] Djemal Pasha stood very much apart from his Young Turk coleaders in his response to the expulsions. In June, the first survivors of the death marches began to trickle into the north Syrian city of Aleppo, a way station toward their intended destination, the “relocation zone” of Deir al-Zour some one hundred miles to the east. Visiting Aleppo, Djemal Pasha was horrified by what he saw. Reiterating a March decree that commanded his army to protect the Armenians, he lobbied Constantinople to impose the order on military units where it really mattered, in Anatolia. That plea was ignored.

Getting no satisfaction from Constantinople, Djemal allowed thousands of Armenians to remain in Aleppo rather than continue their death march, and despite the deepening hunger and food shortages spreading through Syria, he ordered an increase of government food aid to the refugees. Testament to his love of order and regulations, he issued a rash of new edicts directing that the army regulate and maintain the food supply for the Armenians, that cars and horses be procured for their transportation, even that each refugee be given a financial allowance. But implicit in the stacks of documents that the Syrian governor signed in his office each day was the notion that his regime actually had the wherewithal to carry out these initiatives, never mind that all evidence—evidence that started just outside Djemal’s office windows and stretched to the farthest corners of his realm—argued otherwise. It was as if he fancied himself the administrator of a canton of peacetime Switzerland, rather than of a poor and highly fractured region the size of Italy that was being ravaged by war, hunger, and disease. In the face of the Armenian crisis, as with so many other problems that came his way, Djemal responded with a mixture of bluster, threats, and pleas, and when none of that worked, he simply averted his gaze. By September, with the crisis worsening, he issued a new edict, making it a criminal offense to photograph the Armenians.”

Written by James Bailey

December 10, 2015 at 3:59 pm

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