I Want to be Right

Not long ago I was in a Facebook debate and my interlocutor accused me of just wanting to be right. 

Interesting accusation.

Of course I want to be right. Why else would we be having this argument? But, you see, he wasn’t accusing me of wanting to be right but of wanting to appear right. Those are two very different things. One of them is just about the best reason for debate and argument you can have. The other is just about the worst. 

Anyone who has spent a lot of time arguing on the Internet has asked themselves what the point of it all is. The most prominent theory is the speculator theory: you will never convince your opponent but you might convince the folks watching. There’s merit to that, but it also rests on a questionable assumption, which is that the default purpose is to win the argument by persuading the other person and (when that fails) we need to find some alternative. OK, but I question if we’ve landed on the right alternative.

I don’t think the primary importance of a debate is persuading speculators. The most important person for you to persuade in a debate is yourself.

It’s a truism these days that nobody changes their mind, and we all like to one-up each other with increasingly cynical takes on human irrationality and intractability. The list of cognitive biases on Wikipedia is getting so long that you start to wonder how humans manage to reason at all. Moral relativism and radical non-judgmentalism are grist for yet more “you won’t believe this” headlines, and of course there’s the holy grail of misanthropic cynicism:the argumentative theory. As Haidt summarizes one scholarly article on it:

Reasoning was not designed to pursue the truth. Reasoning was designed by evolution to help us win arguments. That’s why they call it The Argumentative Theory of Reasoning. So, as they put it, “The evidence reviewed here shows not only that reasoning falls quite short of reliably delivering rational beliefs and rational decisions. It may even be, in a variety of cases, detrimental to rationality. Reasoning can lead to poor outcomes, not because humans are bad at it, but because they systematically strive for arguments that justify their beliefs or their actions. This explains the confirmation bias, motivated reasoning, and reason-based choice, among other things.

Jonathan Haidt in “Righteous Mind”

Reasoning was not designed to pursue truth.

Well, there you have it. Might as well just admit that Randall Munroe was right and all pack it in, then, right?

Not so fast.

This whole line of research has run away with itself. We’ve sped right past the point of dispassionate analysis and deep into sensationalization territory. Case in point: the backfire effect. 

According to RationalWiki “the effect is claimed to be that when, in the face of contradictory evidence, established beliefs do not change but actually get stronger.” The article goes on:

The backfire effect is an effect that was originally proposed by Brendan Nyhan and Jason Reifler in 2010 based on their research of a single survey item among conservatives… The effect was subsequently confirmed by other studies.

Entry on RationalWiki

If you’ve heard of it, it might be from a popular post by The Oatmeal. Take a minute to check it out. (I even linked to the clean version without all the profanity.)

Click the image to read the whole thing.

Wow. Humans are so irrational, that not only can you not convince them with facts, but if you present facts they believe the wrong stuff even more

Of course, it’s not really “humans” that are this bad at reasoning. It’s some humans. The original research was based on conservatives and the implicit subtext behind articles like the one on RationalWiki is that they are helplessly mired in irrational biases but we know how to conquer our biases, or at the very least make some small headway that separates us from the inferior masses. (Failing that, at least we’re raising awareness!) But I digress.

The important thing isn’t that this cynicism is always covertly at least a little one-sided, it’s that the original study has been really hard to replicate. From an article on Mashable:

[W]hat you should keep in mind while reading the cartoon is that the backfire effect can be hard to replicate in rigorous research. So hard, in fact, that a large-scale, peer-reviewed study presented last August at the American Political Science Association’s annual conference couldn’t reproduce the findings of the high-profile 2010 study that documented backfire effect.

Uh oh. Looks like the replication crisis–which has been just one part of the larger we-can’t-really-know-anything fad–has turned to bite the hand that feeds it. 

This whole post (the one I’m writing right now) is a bit weird for me, because when I started blogging my central focus was epistemic humility. And it’s still my driving concern. If I have a philosophical core, that’s it. And epistemic humility is all about the limits of what we (individually and collectively) can know. So, I never pictured myself being the one standing up and saying, “Hey, guys, you’ve taken this epistemic humility thing too far.” 

But that’s exactly what I’m saying.

Epistemic humility was never supposed to be a kind of “we can never know the truth for absolute certain so may as well give up” fatalism. Not for me, anyway. It was supposed to be about being humble in our pursuit of truth. Not in saying that the pursuit was doomed to fail so why bother trying.

I think even a lot of the doomsayers would agree with that. I quoted Jonathan Haidt on the argumentative theory earlier, and he’s one of my favorite writers. I’m pretty sure he’s not an epistemological nihilist. RationalWiki may get a little carried away with stuff like the backfire effect (they gave no notice on their site that other studies have failed to replicate the effect), but evidently they think there’s some benefit to telling people about it. Else, why bother having a wiki at all?

Taken to its extreme, epistemic humility is just as self-defeating as subjectivism. Subjectivism–the idea that truth is ultimately relative–is incoherent because if you say “all truth is relative” you’ve just made an objective claim. That’s the short version. For the longer version, read Thomas Nagel’s The Last Word

The same goes for all this breathless humans-are-incapable-of-changing-their-minds stuff. Nobody who does all the hard work of researching and writing and teaching can honestly believe that in their bones. At least, not if you think (as I do) that a person’s actions are the best measure of their actual beliefs, rather than their own (unreliable) self-assessments.

Here’s the thing, if you agree with the basic contours of epistemic humility–with most of the cognitive biases and even the argumentative hypothesis–you end up at a place where you think human belief is a reward-based activity like any other. We are not truth-seeking machines that automatically and objectively crunch sensory data to manufacture beliefs that are as true as possible given the input. Instead, we have instrumental beliefs. Beliefs that serve a purpose. A lot of the time that purpose is “make me feel good” as in “rationalize what I want to do already” or “help me fit in with this social clique”.

I know all this stuff, and my reaction is: so what?

So what if human belief is instrumental? Because you know what, you can choose to evaluate your beliefs by things like “does it match the evidence?” or “is it coherent with my other beliefs?” Even if all belief is ultimately instrumental, we still have the freedom to choose to make truth the metric of our beliefs. (Or, since we don’t have access to truth, surrogates like “conformance with evidence” and “logical consistency”.)

Now, this doesn’t make all those cognitive biases just go away. This doesn’t disprove the argumentative theory. Let’s say it’s true. Let’s say we evolved the capacity to reason to make convincing (rather than true) arguments. OK. Again I ask: so what? Who cares why we evolved the capacity, now that we have it we get to decide what to do with it. I’m pretty sure we did not evolve opposable thumbs for the purpose of texting on touch-screen phones. Yet here we are and they seem adequate to the task. 

What I’m saying is this: epistemic humility and the associated body of research tell us that humans don’t have to conform their beliefs to truth and that we are incapable of conforming our beliefs perfect to truth and that it’s hard to conform our beliefs even mostly to truth. OK. But nowhere is it written that we can make no progress at all. Nowhere is it written we cannot try or that–when we try earnestly–we are doomed to make absolutely no headway at all.

I want to be right. And I’m not apologizing for that. 

So how do Internet arguments come into this? One way that we become right–individually and collectively–is by fighting over things. It’s pretty similar to the theory behind our adversarial criminal justice system. Folks who grow up in common law countries (of which the US is one) might not realize that’s not the way all criminal justice systems work. The other major alternative is the inquisitorial system (which is used in countries like France and Italy).

In an inquisitorial system, the court is the one that conducts the investigation. In an adversarial system the court is supposed to be neutral territory where two opposing camps–the prosecution and the defense–lay out their case. That’s where the “adversarial” part comes in: the prosecutors and defenders are the adversaries. In theory, the truth arises from the conflict between the two sides. The court establishes rules of fair play (sharing evidence, not lying) and–within those bounds–the prosecutors’ and defenders’ job is not to present the truest argument but the best argument for their respective side. 

The analogy is not a perfect one, of course. For one thing, we also have a presumption of innocence in the criminal justice system because we’re not evaluating ideas we’re evaluating people. That presumption of innocence is crucial in a real criminal justice system, but it has no exact analogue in the court of ideas.

For another thing, we have a judge to oversee trials and enforce the rules. There’s no impartial judge when you have a debate with randos on the Internet. This is unfortunate, because it means that If we don’t police ourselves in our debates, then the whole process breaks down. There is no recourse.

When I say I want to be right, what am I saying, in this context? I’m saying that I want to know more at the end of a debate than I did at the start. That’s the goal. 

People like to say you never change anyone’s mind in a debate. What they really mean is that you never reverse someone’s mind in a debate. And, while that’s not literally true, it’s pretty close. It’s really, really rare for someone to go into a single debate as pro-life (or whatever) and come out as pro-choice (or whatever). I have never seen someone make a swing that dramatic in a single debate. I certainly never have.

But it would be absurd to say that I never “changed my mind” because of the debates I’ve had about abortion. I’ve changed my mind hundreds of time. I’ve abandoned bad arguments and adopted or invented new ones. I’ve learned all kinds of facts about law and history and biology that I didn’t know before. I’ve even changed my position many times. Just because the positions were different variations within the theme of pro-life doesn’t mean I’ve never “changed my mind”. If you expect people to walk in with one big, complex, set of ideas that are roughly aligned with a position (pro-life, pro-gun) and then walk out of a single conversation with whole new set of ideas that are aligned under the opposite position (pro-choice, anti-gun), then you’re setting that bar way too high.

But all of this only works if the folks having the argument follow the rules. And–without a judge to enforce them–that’s hard.

This is where the other kind of wanting to “be right” comes in. One of the most common things I see in a debate (whether I’m having it or not) is that folks want to avoid having to admit they were wrong

First, let me state emphatically that if you want to avoid admitting you were wrong you don’t actually care about being right in the sense that I mean it. Learning where you are wrong is just about the only way to become right! People who really want to “be right” embrace being wrong every time it happens because those are the stepping stones to truth. Every time you learn a belief or a position you took was wrong, you’re taking a step closer to being right.

But–going back to those folks who want to avoid appearing wrong–they don’t actually want to be right. They just want to appear right. They’re not worried about truth. They worried about prestige. Or ego. Or something else.

If you don’t care about being right and you only care about appearing right, then you don’t care about truth either. And these folks are toxic to the whole project of adversarial truth-seeking. Because they break the rules. 

What are the rules? Basic stuff like don’t lie, debate the issue not the person, etc. Maybe I’ll come up with a list. There’s a whole set of behaviors that can make your argument appear stronger while in fact all you’re doing is peeing in the pool for everyone who cares about truth. 

If you care about being right, then you will give your side of the debate your utmost. You’ll present the best evidence, use the tightest arguments, and throw in some rhetorical flourishes for good measure. But if you care about being right, then you will not break the rules to advance your argument (No lying!) and you also won’t just abandon your argument in midstream to switch to a new one that seems more promising. Anyone who does that–who swaps their claims mid-stream whenever they see one that shows a more promising temporary advantage–isn’t actually trying to be right. They’re trying to appear right. 

They’re not having an argument or a debate. They’re fighting for prestige or protecting their ego or doing something else that looks like an argument but isn’t actually one. 

I wrote this partially to vent. Partially to organize my feelings. But also to encourage folks not to give up hope, because if you believe that nobody cares about truth and changing minds is impossible then it becomes a self-fulfilling prophecy.

And you want to know the real danger of relativism and post-modernism and any other truth-adverse ideology? Once truth is off the table as the goal, the only thing remaining is power.

As long as people believe in truth, there is a fundamentally cooperative aspect to all arguments. Even if you passionately think someone is wrong, if you both believe in truth then there is a sense in which you’re playing the same game. There are rules. And, more than rules, there’s a common last resort you’re both appealing to. No matter how messy it gets and despite the fact that nobody ever has direct, flawless access to truth, even the bitterest ideological opponents have that shred of common ground: they both think they are right, which means they both thing “being right” is a thing you can, and should, strive to be.

But if you set that aside, then you sever the last thread between opponents and become nothing but enemies. If truth is not a viable recourse, all that is left is power. You have to destroy your opponent. Metaphorically at first. Literally if that fails. Nowhere does it say on the packaging of relativism “May lead to animosity and violence”. It’s supposed to do the opposite. It’s advertised as leading to tolerance and non-judgmentalism, but by taking truth off the table it does the opposite.

Humans are going to disagree. That’s inevitable. We will come into conflict. With truth as an option, there is no guarantee that the conflict will be non-violent, but it’s always an option. It can even be a conflict that exists in an environment of friendship, respect, and love. It’s possible for people who like and admire each other to have deep disagreements and to discuss them sharply but in a context of that mutual friendship. It’s not easy, but it’s possible. 

Take truth off the table, and that option disappears. This doesn’t mean we go straight from relativism to mutual annihilation, but it does mean the only thing left is radical partisanship where each side views the other as an alien “other”. Maybe that leads to violence, maybe not. But it can’t lead to friendship, love, and unity in the midst of disagreement.

So I’ll say it one more time: I want to be right.

I hope you do, too.

If that’s the case, then there’s a good chance we’ll get into some thundering arguments. We’ll say things we regret and offend each other. Nobody is a perfect, rational machine. Biases don’t go away and ego doesn’t disappear just because we are searching for truth. So we’ll make mistakes and, hopefully, we’ll also apologize and find common ground. We’ll change each other’s minds and teach each other things and grudgingly earn each other’s respect. Maybe we’ll learn to be friends long before we ever agree on anything.

Because if I care about being right and you care about being right, then we already have something deep inside of us that’s the same. And even if we disagree about every single other thing, we always will.

In Favor of Real Meritocracy

The meritocracy has come in for a lot of criticism recently, basically in the form of two arguments. 

There’s a book by Daniel Markovits called The Meritocracy Trap that basically argues that meritocracy makes everyone miserable and unequal by creating this horrific grind to get into the most elite colleges and then, after you get your elite degree, to grind away working 60 – 100 hours to maintain your position at the top of the corporate hierarchy. 

There was also a very interesting column by Ross Douthat that makes a separate but related point. According to Douthat, the WASP-y elite that dominated American society up until the early 20th century decided to “dissolve their own aristocracy” in favor of a meritocracy, but the meritocracy didn’t work out as planned because it sucks talent away from small locales (killing off the diverse regional cultures that we used to have) and because:

the meritocratic elite inevitably tends back toward aristocracy, because any definition of “merit” you choose will be easier for the children of these self-segregated meritocrats to achieve.

What Markovits and Douthat both admit without really admitting it is one simple fact: the meritocracy isn’t meritocratic.

Just to be clear, I’ll adopt Wikipedia’s definition of a meritocracy for this post:

Meritocracy is a political system in which economic goods and/or political power are vested in individual people on the basis of talent, effort, and achievement, rather than wealth or social class. Advancement in such a system is based on performance, as measured through examination or demonstrated achievement.

When people talk about meritocracy today, they’re almost always referring to the Ivy League and then–working forward and backward–to the kinds of feeder schools and programs that prepare kids to make it into the Ivy League and the types of high-powered jobs (and the culture surrounding them) that Ivy League students go onto after they graduate. 

My basic point is a pretty simple one: there’s nothing meritocratic about the Ivy League. The old WASP-y elite did not, as Douthat put it, “dissolve”. It just went into hiding. Americans like to pretend that we’re a classless society, but it’s a fiction. We do have class. And the nexus for class in the United States is the Ivy League. 

If Ivy League admission were really meritocratic, it would be based as much as possible on objective admission criteria. This is hard to do, because even when you pick something that is in a sense objective–like SAT scores–you can’t overcome the fact that wealthy parents can and will hire tutors to train their kids to artificially inflate their scores relative to the scores an equally bright, hard-working lower-class student can attain without all expensive tutoring and practice tests. 

Still, that’s nothing compared to the way that everything else that goes into college admissions–especially the litany of awards, clubs, and activities–tilts the game in favor of kids with parents who (1) know the unspoken rules of the game and (2) have cash to burn playing it. An expression I’ve heard before is that the Ivy League is basically privilege laundering racket. It has a facade of being meritocratic, but the game is rigged so that all it really does is perpetuate social class. “Legacy” admissions are just the tip of the iceberg in that regard.

What’s even more outrageous than the fiction of meritocratic admission to the Ivy League (or other elite, private schools) is the equally absurd fiction that students with Ivy League degrees have learned some objectively quantifiable skillset that students from, say, state schools have not. There’s no evidence for this. 

So students from outside the social elite face double discrimination: first, because they don’t have an equal chance to get into the Ivy Leagues and second, because then they can’t compete with Ivy League graduates on the job market. It doesn’t matter how hard you work or how much you learn, your Statue U degree is never going to stand out on a resume the way Harvard or Yale does.

There’s nothing meritocratic about that. And that’s the point. The Ivy League-based meritocracy is a lie.

So I empathize with criticisms of American meritocracy, but it’s not actually a meritocracy they’re criticizing. It’s a sham meritocracy that is, in fact, just a covert class system. 

The problem is that if we blame the meritocracy and seek to circumvent it, we’re actually going to make things worse. I saw a WaPo headline that said “No one likes the SAT. It’s still the fairest thing about admissions.” And that’s basically what I’m saying: “objective” scores can be gamed, but not nearly as much as the qualitative stuff. If you got rid of the SAT on college admissions you would make it less meritocratic and also less fair. At least with the SAT someone from outside the elite social classes has a chance to compete. Without that? Forget it.

Ideally, we should work to make our system a little more meritocratic by downplaying prestige signals like Ivy League degrees and emphasizing objective measurements more. But we’re never going to eradicate class entirely, and we shouldn’t go to radical measures to attempt it. Pretty soon, the medicine ends up worse than the disease if we go that route. That’s why you end up with absurd, totalitarian arguments that parents shouldn’t read to their children and that having an intact, loving, biological family is cheating. That way lies madness.

We should also stop pretending that our society is fully meritocratic. It’s not. And the denial is perverse. This is where Douthat was right on target:

[E]ven as it restratifies society, the meritocratic order also insists that everything its high-achievers have is justly earned… This spirit discourages inherited responsibility and cultural stewardship; it brushes away the disciplines of duty; it makes the past seem irrelevant, because everyone is supposed to come from the same nowhere and rule based on technique alone. As a consequence, meritocrats are often educated to be bad leaders, and bad people…

Like Douthat, I’m not calling for a return to WASP-y domination. (Also like Douthat, I’d be excluded from that club.) A diverse elite is better than a monocultural elite. But there’s one vital thing that the WASPy elite had going for it that any elite (and there’s always an elite) should reclaim:

the WASPs had at least one clear advantage over their presently-floundering successors: They knew who and what they were.

What Anti-Poverty Programs Actually Reduce Poverty?

According to the Tax Policy Center,

The earned income tax credit (EITC) provides substantial support to low- and moderate-income working parents, but very little support to workers without qualifying children (often called childless workers). Workers receive a credit equal to a percentage of their earnings up to a maximum credit. Both the credit rate and the maximum credit vary by family size, with larger credits available to families with more children. After the credit reaches its maximum, it remains flat until earnings reach the phaseout point. Thereafter, it declines with each additional dollar of income until no credit is available (figure 1).

By design, the EITC only benefits working families. Families with children receive a much larger credit than workers without qualifying children. (A qualifying child must meet requirements based on relationship, age, residency, and tax filing status.) In 2018, the maximum credit for families with one child is $3,461, while the maximum credit for families with three or more children is $6,431.

…Research shows that the EITC encourages single people and primary earners in married couples to work (Dickert, Houser, and Sholz 1995; Eissa and Liebman 1996; Meyer and Rosenbaum 2000, 2001). The credit, however, appears to have little effect on the number of hours they work once employed. Although the EITC phaseout could cause people to reduce their hours (because credits are lost for each additional dollar of eanings, which is effectively a surtax on earnings in the phaseout range), there is little empirical evidence of this happening (Meyer 2002).

The one group of people that may reduce hours of work in response to the EITC incentives is lower-earning spouses in a married couple (Eissa and Hoynes 2006). On balance, though, the increase in work resulting from the EITC dwarfs the decline in participation among second earners in married couples.

If the EITC were treated like earnings, it would have been the single most effective antipoverty program for working-age people, lifting about 5.8 million people out of poverty, including 3 million children (CBPP 2018).

The EITC is concentrated among the lowest earners, with almost all of the credit going to households in the bottom three quintiles of the income distribution (figure 2). (Each quinitle contains 20 percent of the population, ranked by household income.) Very few households in the fourth quinitle receive an EITC (fewer than 0.5 percent).

Recent evidence supports this view of the EITC. From a brand new article in Contemporary Economic Policy:

First, the evidence suggests that longer-run effects[1]”Our working definition of “longer run” in this study is 10 years” (pg. 2).[/ref] of the EITC are to increase employment and to reduce poverty and public assistance, as long as we rely on national as well as state variation in EITC policy. Second, tighter welfare time limits also appear to reduce poverty and public assistance in the longer run. We also find some evidence that higher minimum wages, in the longer run, may lead to declines in poverty and the share of families on public assistance, whereas higher welfare benefits appear to have adverse longer-run effects, although the evidence on minimum wages and welfare benefits—and especially the evidence on minimum wages—is not robust to using only more recent data, nor to other changes. In our view, the most robust relationships we find are consistent with the EITC having beneficial longer-run impacts in terms of reducing poverty and public assistance, whereas there is essentially no evidence that more generous welfare delivers such longer-run benefits, and some evidence that more generous welfare has adverse longer-run effects on poverty and reliance on public assistance—especially with regard to time limits (pg. 21).

Let’s stick with programs that work.

Do Tariffs Cancel Out the Benefits of Deregulation?

In June, the Council of Economic Advisers released a report on the economic effects of the Trump administration’s deregulation. They estimate “that after 5 to 10 years, this new approach to Federal regulation will have raised real incomes by $3,100 per household per year. Twenty notable Federal deregulatory actions alone will be saving American consumers and businesses about $220 billion per year after they go into full effect. They will increase real (after-inflation) incomes by about 1.3 percent” (pg. 1).

David Henderson (former senior economist in Reagan’s Council of Economic Advisers) writes, “Do the authors make a good case for their estimate? Yes…I wonder, though, what the numbers would look like if they included the negative effects on real income of increased restrictions on immigration and increased restrictions on trade with Iran. (I’m putting aside increased tariffs, which also hurt real U.S. income, because tariffs are generally categorized as taxes, not regulation.)”

But what if we did include the tariffs? A recent policy brief suggests that the current savings from deregulation will actually be cancelled out by the new tariffs. As the table shows below, the savings due to deregulation stack up to $46.5 billion as of June. However, the tariffs imposed between January 2017 and June 2019 rack up to a dead loss of $13.6 billion. By the end of 2019, however, the dead loss will rack up another $32.1 billion. If the currently planned tariffs are put into effect on top of the already existing ones, then we’re looking at a dead loss of up to $121.1 billion.

Maybe if economists start putting clap emojis in their work, people will finally get that tariffs aren’t good for the economy.

Demographics & Inequality: 2018 Edition

Every year, economist Mark Perry draws on Census Bureau reports to paint of picture of the demographics of inequality. Looking at 2018 data, he constructed the following table:

Once again, he concludes,

Household demographics, including the average number of earners per household and the marital status, age, and education of householders are all very highly correlated with American’s household income. Specifically, high-income households have a greater average number of income-earners than households in lower-income quintiles, and individuals in high-income households are far more likely than individuals in low-income households to be well-educated, married, working full-time, and in their prime earning years. In contrast, individuals in lower-income households are far more likely than their counterparts in higher-income households to be less-educated, working part-time, either very young (under 35 years) or very old (over 65 years), and living in single-parent or single households.

The good news about the Census Bureau is that the key demographic factors that explain differences in household income are not fixed over our lifetimes and are largely under our control (e.g., staying in school and graduating, getting and staying married, working full-time, etc.), which means that individuals and households are not destined to remain in a single income quintile forever. Fortunately, studies that track people over time find evidence of significant income mobility in America such that individuals and households move up and down the income quintiles over their lifetimes, as the key demographic variables highlighted above change, see related CD posts herehere and here. Those links highlight the research of social scientists Thomas Hirschl (Cornell) and Mark Rank (Washington University) showing that as a result of dynamic income mobility nearly 70% of Americans will be in the top income quintile for at least one year while almost one-third will be in the top quintile for ten years or more (see chart below).

What’s more, Perry points out elsewhere that the new data demonstrate that the middle class is shrinking…along with the lower class. Meanwhile, the percentage of high-income households has more than tripled since 1967:

In short, the percentage of middle and lower-income households has declined because they’ve been moving up.

The Paradox of Trade Liberalization

From a brand new study in the Journal of International Economics:

Using household survey data for 54 low and middle income countries harmonized with trade and tariff data, this paper offers a quantitative assessment of the income gains and inequality costs of trade liberalization and the potential trade-off between them.

A stylized yet comprehensive model that allows for a rich range of first-order effects on household consumption and income is used to quantify welfare gains or losses for households in different parts of the expenditure distribution. These welfare impacts are subsequently explored by deploying the Atkinson social welfare function that allows us to decompose inequality adjusted gains into aggregate gains and equality (distributional) gains.

Liberalization is estimated to lead to income gains in 45 countries in our study, and to income losses in 9 countries. The developing world as a whole would enjoy gains of about 1.9% of real household expenditures, on average. These income gains are negatively correlated with equality gains, such that liberalization typically entails a trade-off between average incomes and income inequality. In fact, such trade-offs arise in 45 out of 54 countries, and are primarily the result of trade exacerbating income inequality. By contrast, consumption gains tend to be more evenly spread across households.

While trade-offs are prevalent, our findings also suggest that liberalization would be welfare enhancing in the vast majority of countries in our study: in a large part of the developing world, the current structure of tariff protection is inducing sizable welfare losses. Explaining what drives these patterns is beyond the scope of this paper but an interesting avenue for future research (pg. 16).

I’m sure this offers a bit of a conundrum for those who have conflated concerns over inequality with caring for the poor.

Is Religious Faith a Global Force for Good?

Image result for family

According to a new report from the Institute for Family Studies and the Wheatley Institution, religion appears to be a net gain “in 11 countries in the Americas, Europe, and Oceania.” From the executive summary:

When it comes to relationship quality in heterosexual relationships, highly religious couples enjoy higher-quality relationships and more sexual satisfaction, compared to less/mixed religious couples and secular couples. For instance, women in highly religious relationships are about 50% more likely to report that they are strongly satisfied with their sexual relationship than their secular and less religious counterparts. Joint decision-making, however, is more common among men in shared secular relationships and women in highly religious relationships, compared to their peers in less/mixed religious couples.

When it comes to fertility, data from low-fertility countries in the Americas, East Asia, and Europe show that religion’s positive influence on fertility has become stronger in recent decades. Today, people ages 18-49 who attend religious services regularly have 0.27 more children than those who never, or practically never, attend. The report also indicates that marriage plays an important role in explaining religion’s continued positive influence on childbearing because religious men and women are more likely to marry compared to their more secular peers, and the married have more children than the unmarried.

When it comes to domestic violence, religious couples in heterosexual relationships do not have an advantage over secular couples or less/mixed religious couples. Measures of intimate partner violence (IPV)—which includes physical abuse, as well as sexual abuse, emotional abuse, and controlling behaviors—do not differ in a statistically significant way by religiosity. Slightly more than 20% of the men in our sample report perpetuating IPV, and a bit more than 20% of the women in our sample indicate that they have been victims of IPV in their relationship. Our results suggest, then, that religion is not protective against domestic violence for this sample of couples from the Americas, Europe, and Oceania. However, religion is not an increased risk factor for domestic violence in these countries, either.

The relationships between faith, feminism, and family outcomes are complex. The impact of gender ideology on the outcomes covered in this report, for instance, often varies by the religiosity of our respondents. When it comes to relationship quality, we find a J-Curve in overall relationship quality for women, such that women in shared secular, progressive relationships enjoy comparatively high levels of relationship quality, whereas women in the ideological and religious middle report lower levels of relationship quality, as do traditionalist women in secular relationships; but women in highly religious relationships, especially traditionalists, report the highest levels of relationship quality. For domestic violence, we find that progressive women in secular relationships report comparatively low levels of IPV compared to conservative women in less/mixed religious relationships. In sum, the impact of gender ideology on contemporary family life may vary a great deal by whether or not a couple is highly religious, nominally religious, or secular.

There’s also some useful data on family prayer and worldwide family structure, socioeconomic conditions, family satisfaction, and attitudes and norms. Check it out.

Does Trade Promote Economic Growth?

Earlier this year, I did a literature review for class on the effects of trade on poverty. One section in particular focused on the link between trade and growth. A new Peterson Institute working paper by Douglas Irwin performed a similar service and I’m disappointed that I hadn’t come across it in time for my own paper.

So what are his conclusions?

The findings from recent research have been remarkably consistent. For developing countries that are behind the technological frontier and have significant import restrictions, there appears to be a measurable economic payoff from more liberal trade policies. As table 1 reports, a variety of studies using different measures of policy have found that economic growth is roughly 1.0–1.5 percentage points higher than a benchmark after trade reform. Several studies suggest that this gain cumulated to about 10–20 percent higher income after a decade. The effect is heterogeneous across countries, because countries differ in the extent of their reforms and the context in which reform took place (pg. 21).

 

Glad to know my own research was on point.

What Would the World Look Like Without FDI?

What would happen if foreign direct investment (FDI) simply disappeared? Or, more specifically, what would “a hypothetical world without outward and inward FDI from and to low- and lower-middle-income countries” look like? A brand new study tries to quantify this hypothetical. They find,

On average, the gains from FDI in the poorer countries in the world amount to 7% of world’s trade in 2011, the year of our counterfactual analysis. Second, all countries lose from the counterfactual elimination of FDI in the poorer countries.  Third, the impact is heterogeneous. Poorer countries lose the most, but the impact varies widely even within this group – some lose over 50% and some very little. The impact on countries in the rest of the world is significant as well. Some countries lose a lot (e.g. Luxembourg, Singapore, and Ireland) while others (such as India, Ecuador, and Dominican Republic) lose less. Pakistan and Sri Lanka actually see an increase in their total exports due to the elimination of FDI.

Figure 1 Percentage change in total exports from eliminating outward and inward FDI to and from low- and lower-middle-income countries

There’s more:

On average, the gains from FDI amount to 6% of world’s welfare in 2011. Further, all countries in the world have benefited from FDI, but the effects are very heterogeneous. The directly affected low- and lower-middle-income countries see welfare changes up to over 50% (Morocco and Nigeria), while some of the remaining 68 countries, such as Ecuador, Turkmenistan, and Dominican Republic are hardly affected. A higher country-specific production share of FDI leads to larger welfare losses, all else equal.  Intuitively, a larger importance of FDI in production leads to larger welfare losses when restricting FDI. A larger net log FDI position leads to larger welfare losses. Intuitively, if a country has more inward than outward FDI, restricting FDI will lead to larger welfare losses, as FDI is complementary to other production factors and therefore overall income increases more than FDI payments.

Figure 2 Welfare effects of eliminating outward and inward FDI to and from low- and lower-middle-income countries (%)

The authors conclude, “Overall, the analysis reveals that FDI is indeed an important component of the modern world economic system. The results suggest positive payoffs to policies designed to facilitate FDI, particularly those concerning protection of intellectual property.”

How Does Occupational Licensing Impact Immigrants?

From a recent working paper out of the Center for Growth & Opportunity:

We use two sources of data—the Current Population Survey (CPS) and the Survey of Income and Program Participation (SIPP)—to explore the differences in occupational licensing between natives and immigrants. Each dataset provides unique advantages, allowing us to paint a clearer picture of how occupational licensing differs between natives and immigrants than would be possible by using either dataset alone.

Though the CPS and SIPP differ in some key ways, where comparable our results are quite similar between the two datasets. We find that immigrants are significantly less likely to have an occupational license than natives; this gap is larger for men than for women and is especially large for the highest education level. The wage premium from having a license may not differ between natives and immigrants when controlling for English language ability, suggesting that though immigrants are less likely to have a license, they seem to benefit at least as much as natives from having one. Licensed workers tend to work more hours per week than otherwise similar unlicensed workers, so the wage premium understates the earnings premium.

Using the CPS, we find that the native/immigrant licensing gap declines with years since migration, consistent with immigrants assimilating toward natives. We also find large differences in licensing rates by region of origin; in particular, women from the Caribbean, Southeast Asia, and Africa have a higher probability of having a license than otherwise similar natives.

Using the SIPP, we find that a lack of English language proficiency lowers the probability that an immigrant has a license, even when controlling for other individual characteristics such as education level. Utilizing the richer set of occupational licensing questions available in the SIPP, we find no evidence to suggest that license characteristics differ between natives and immigrants, and thus we find no evidence that natives and immigrants are acquiring different types of licenses.

Our results suggest that occupational licensing disproportionately affects immigrants, especially male immigrants, those lacking English proficiency, and the most educated group. Indeed, insofar as occupational licensing helps to protect incumbent (largely native) workers in an occupation from competition, it is unsurprising that immigrants are particularly impacted (pg. 18-19).

They also find, “Skill-based immigration would favor immigrants with high levels of education. Our results indicate that it is precisely this group that exhibits the largest licensing attainment gap with natives. Increasing the flow of immigrants from this education level may lead to substantial occupational mismatch for this group of immigrants if they face difficulty in acquiring licenses needed to work in their pre-migration occupations” (pg. 20).

Regressive regulations like this are low-hanging fruit that can easily be changed.